Will 2014 the year of the plankton in the lower food chain of the financial market?

Author and financial manager georg von wallwitz to the present and future of the (shares) fund industry

The author and financial manager georg von wallwitz conveys in his much noted essayist work "odysseus and the wiesel – a mutual introduction to the financial markets" on a readily readable way, insight into philosophical history and thinking in the financial industry. At least since the financial crisis in criticism, the expensive and little customizable products, which created the fund industry, especially with regard to the stock markets. In the interview georg of wallwitz explains why he does not believe in loudness and gives an outlook on the ongoing boron year.

In her book, they criticize wide parts of the financial industry as unpunty parasites, which of the company overall more damage than serve. I quote from your book: "there are many people selling products that are crap. The financial industry has no unique selling proposition." can you learn why some sectors may allow more than others to trade unpunished against customer interests? A is always there where information asymmetry prevails, from which the provider benefits, for example in the area of cosmetics. This is no less the case in the financial industry than in many other sectors. The customer believes in the idea that still makes something meaningful behind the packaging. The core of the secrecy, which represents the financial industry as a necessary prerequisite for serious banks, is often only a justification to act behind the scenes unmolested. This creates special information asymmetry. Another quote from your work: "but the unobstaceable information advantage, the banks and wealth administrators, means that the game will be unfair again and again. Winners and losers are then fixed from the outset." has not really improved since the financial crisis and the possibly higher sensitivity for financial ies in the population? Georg von wallwitz: that is hard to say. The people are more likely to be more deliberately, that they are often pulled over the table. You hardly know what to do about it. But guilt are not only the sellers of financial products, but to a good part also the investors, where the greed eats the brain. If one comes around the corner, ten and more percent return promises, and people engage in it, unfortunately one can only conclude that man wants to be exchanged. Albermine yield goals will not disappear so easily from the world, they sell themselves too well. And another last book excerpt: "really unappetizing it will only be at the bottom of the food chain, the plankton, the so-called private clients. Often enough there are brought there without shame and without moral concerns good belonging people around their savings. Shares are sold, which internally with the short "pos" be marked, which is for piece of shit. Bonds are sold, which the bank no longer wants to have in their own beers because they no longer dare to the ier. It will be funds or "structures" (also like "certificates" called what sounds safe) that are loaded with tremendous bonds and very little spiritual effort." how does it look for six to seven years after the financial crisis, the business as usual at? Georg von wallwitz: i’ll explain it with an example from our everyday life: we had a case in our buro, where a man who began to erect at alzheimer’s for a while, from pages of a coarse bank almost every month with a new ship’s fund was supplied. At these, it was involved in the commission of the bank. And the consultant has exploited that for the customer of the ship funds every time a new story was. Some fund providers in germany have developed very creative hidden steam models that criticize consumer protectioners. At least it will change something? Georg von wallwitz: the fund industry is a bit stronger in the focus of the european regulators, so the identification of a total cost ratio (total expense ratio) was allowed to be a good and real thing so that the cost system becomes more transparent. Which performance and emergency model is based on your company to make a fair deal for all sides? Georg von wallwitz: we are also overpaid in some ways what i did not want to hide. Since the time of philosopher and theologian thomas of aquin, the righteous payment will be defined, which consolidates the production costs of the product and the market supply price. We lie in the middle between the local price, are cheaper than the average, but of course also significantly higher than the manufacturing cost. After the theory of marginal costs, we are repaid, but underpaid after the gear practice. On average, we are 0.6 percent in a building model, with the larger depots, of course, the smaller deposits always subsidize a bit later – although they pay a higher percentage. For 40 euros a month you can not operate individual portfolio management. In the sense, we have built a small robin hood factor, which does not take place in the fee for hourly rate at the end of the hourly rate. On the other hand, german providers are obviously too conservative with the money of investors last year, so that the success of foreign representatives, believe the numbers, is much better off. How do you see the german fund industry in the international context? Georg von wallwitz: the german investors tend to be very risked. For this, the stock is simply not anchored enough. The wealth administrator then has an asymmetric risk profile when the market goes up ten percent, then everything seems to be bad under seven percent return. And in the other case, when there is ten percent down, then everything is what is about minus three percent, in the perception of the investor bad. The keeping the wealth manager rather to be careful. A underperformance in a rising market is not taken this long as a underperformance in a falling market. This asymmetry is also available through surveys to satisfaction with the products. They themselves were some time in the fund industry at some well-known providers. What did she motivate it to get out there and to raise its own company in the wealth administration? Georg von wallwitz: i am from the ground on the type of self-like and also write bookers, which did not go, i was employed. I have told a top sleeve and my supervisor again and again what you can do better. That did not matter. A classic career would have been so securely installed. Of course i have also seen the chance to make myself self-standing with your own company. Is not it like dr. Jekyll and mr. Hyde a certain inner contradiction, on the one hand no moral, but still a critical book on the strange bustle of the fund industry and even parallel to list its own products in this area? Georg von wallwitz: there is also a book, which say i was 20 years at goldman sachs and now calculate with everything now. I do not write a billing book, because i am particularly appreciated the social benefit of the financial industry, all the unappetiticities of recent years. It is not my claim to put me morally on the high ross. Also, i do not challenge the abolition or nationalization of the financial industry, especially since in other industries does not take much better. I liked characterizing how the industry works primarily, something that is still reading in ten years. Literature only to write for the day, has no appeal for me. The mechanisms that i show will continue to work in the future. But what is clear that the financial industry ames a key role due to its particular importance, because a deutsche bank could not be replaced as a mobile radio company that makes bankruptcy. Therefore, it must be particularly regulated. Let’s see something detached from the personal environment into the events of the fund providers. The most famous representatives of these species are the three coarse specialists union investment for the volksbanken, deka for the savings banks and dws for private banks (deutsche bank). How do you have the market come true since the financial crisis? Georg von wallwitz: honestly, we currently have neither from the union nor from the deka products in our depots. These are largely sold on their own house channels and are usually in the ratings about morningstar not far above.

Bitcoins are pure bauble

in other words, see also alternative approaches? There are new business models in the industry that could be seen as a customer-friendly and much more cost-effective.B. Etfs etc.To)? Here is a rethinking from the social randoms? Georg von wallwitz: the balanced dax fund certainly has no gross future. But even with the etfs, there is a strange behavior, because many people are losing the nerves prematurely, when the course is falling. The money-weighted performance is usually well below the time-weighted, which shows that the investor often contributes not enough discipline to consistently carry out his once strategy. Currently, in the young internet scene, numerous new network-based variants such as crowdfunding and crowdinvesting, where a financial swarm is doing together, to demand certain projects or companies together. Is this for you a new game type of the herd shoot or a constructive approach to control the money deliberately in certain channels? Georg von wallwitz: there is also there probably numerous charlatans. This is always the case where money is in the game. Progkon could be a case again, which makes some investors drawing attention to the risks of unconventional money translation. But in principle, crowdfunding is certainly a good thing as a concept. To give the hairdresser next door, there is certainly a better idea than investing in any leverage products. What about social trading, where first structures are also out of the model deposits created by users themselves, which then other investors can entrust their money (as examples of this trend see about the providers wikifolio, etoro or ayondo). What do you think of the idea? Georg von wallwitz: that’s, so to speak, the investment club reloaded, so old wine in new clehours. But neither one nor from the other i understand something. Keep the bitcoin revolution of the virtual merritious units rather for a part of the problem in the financial industry due to lack of control and control as well as the rough speculation dynamics, or is it a first harbinger that the financial industry in the former form will no longer be survived in a few years? Georg von wallwitz: i think that’s pure bauble. Bitcoins are neither a preservation nor an asset. Where do you see the commission-oriented banking landscape in 10 years, the entrance to the old business model seems to be quite rough overall? Georg von wallwitz: it can well be that the regulation leads so far, the commission-made banking business such as in the great britain or holland the case. I see the process with a laughing and crying eye. It’s good if people saw the costs they paid for advice or product. But you can not fool yourself, the industry will continue to continue, only the coarsely wind bags were harder than in the past. The stock markets and leading indices have produced new highest stone at the turn of the year. As you know, the life punishes the one who comes to spat, namely the small investor, which may now be pushed through the media, ready for entry into the next share goods. Say, 2014 will be the year of the plankton in the lower food chain of the financial industry? Georg von wallwitz: the attractive trend is my coming after a while more intact. The small investor has not invested in my feeling. If succinctly on the cocktail parties is succinctly talked about stocks, it may be time to leave the party. So it could be a very good year, although the number of favored stocks is definitely very transparent. And still a personal question: how do you put your money on and what you like to give it out? Georg von wallwitz: i currently give a lot of money for the schools of the children and after that, not really much remains. In the investment i am a stock mench, in good as in bad days. Private i am more risky than with the money of my clients, where i have set the focus in boring blue chips, which i will continue to spare for my children. But the knowledge is not even nothing of the existence of their depots, over which they can have in ten or fifty years.

Lothar lochmaier works as a free trade and economic journalist in berlin. He is the author of the telepolis book: the bank are – opportunities and future perspectives of social banking. In addition, he operates the award-winning weblog social banking 2.0.