Are Children Hazardous to Your Health?

Plus, is it really all that important that your advisor be a fiduciary?

Ric Edelman:   It's Tuesday, September 10th, and among all of the other political debates that are occurring in the presidential election, immigration is one of the top debates going on right now. And while we're debating immigration here in the U.S., South Korea is recruiting immigrants to serve as housekeepers, to help ease the workloads of women with housekeeping and childcare duties, and as a result of all that, hoping that these new immigrant housekeepers will encourage women to have more children. 

The government plans to bring in 1200 of these workers by next summer. Why is South Korea doing this? Because they have one of the world's lowest fertility rates, 0.68 babies. You need 2.1 in order to sustain the population. They're only at 0.68. The president of South Korea calls its lack of babies a national emergency. 

The mayor of Seoul has warned of population extinction. And so, the government's trying everything. They're paying women to have kids. They're building houses for young families. They're providing financial support for fertility treatments. They're giving tax breaks to newlyweds. They're building more nurseries. They're offering 18 months of maternity leave. They're paying for child seats in cabs. And now, they're importing housekeepers to serve as child caregivers. Corporations are getting in on this too in South Korea. One big company is giving workers a $75,000 bonus for every baby they have. And two big banks are offering five years of parental leave for childcare.  

It's not just South Korea that's trying to get crafty. Look at Finland. They've got so few children that they're importing, not caregivers like South Korea, in Finland they're importing the children themselves. Finland is recruiting elementary school children from poor countries to fill the empty seats in their classrooms. Kids from Myanmar, Vietnam, Tanzania. These kids will all get a free education all through high school. Finland says that by 2030, just 5-6 years from now, it's going to have 10 percent fewer 4–18-year-olds than it has now. Hundreds of local schools have already closed, and that means small towns are on the verge of disappearing. The idea is to import a new generation since the Finns are not birthing their own. Some small schools already have more foreign students than Finnish ones.  

 And while governments worldwide are struggling to convince women that they need to get pregnant, the Surgeon General here in the U. S. has just announced that being a parent is dangerous to your health. He said last week that parents are under dangerous levels of stress. A report from the American Psychological Association says nearly half of parents report overwhelming stress most of the time, twice as often as adults who are not parents. People with kids are lonelier, too, according to a report from Cigna.  

In the face of all this, why would a woman want to have a child? In fact, 44%, nearly half of women 18 to 49, say they will never have kids. And a lot of women are saying, not only do they not want a child, they don't want a husband either. Men are saying this about wives too, especially in their 60s. People in their 60s or older are more likely to be divorced or never married than at any time in the past 30 years. 53 percent of women, 65 plus are divorced, widowed, or never married, compared to 30 percent of men. Women outlive men, we know this, and older women don't want to be a nurse to a new husband as they age. They also don't want to jeopardize their own financial stability by supporting a new husband. 

So, more than half of women who were divorced or widowed said they don't want to get married again. Only 30 percent of divorced and widowed men say that.  The bottom line, here in the U. S., our fertility rate has hit the lowest level ever last year, 1. 6 births per women. In the 50s, we were at 3. 7.  Is it any surprise? 

The annual cost of raising kids is up 35 percent since the 1980s. Family health insurance is up 47 percent in just the last 10 years. A middle-class family, according to the U. S. Department of Agriculture, now spends over $300,000 raising a child to age 17. And then comes college and wedding costs. That's per child. 

Parents are much less likely today to say they are financially secure than adults without kids, according to the Federal Reserve. In fact, nearly 30 percent of those who are homeless are. It's a political issue, Kamala Harris says she wants to give parents $9,600 for each child, J.D. Vance says he wants the number to be $5,000 per child, on top of Donald Trump's offer to cut taxes to give families more money. So it'll be a hot potato in the political election this year, and you know what all this means? It means you are less likely than ever to be a grandparent. That's the fun part of being a parent, isn't it? 

But only half of adults over age 50 are grandparents today. That's down 10 percent in just the last five years.   

Dana wrote to me with a question. She's from Tujunga, California. And here's what she wrote: 

Ric, you have advocated “Fiduciary" for as long as I have listened to you. Your recent podcast on this raised questions for me. How does the SEC monitor the registration? How is the ADV enforced? How do the regulations quantify what is "In my best interest?" Your advice is greatly appreciated. 

Ric Edelman: So yeah, let's not get terribly caught up in this, Dana. My fear is that you are thinking that by hiring a fiduciary, you are going to avoid crime or fraud or abuse. I think you probably will, but I think you are looking for a proactive benefit when, in fact, I think it may be a reactive one. 

You see, how does the SEC monitor the registration? Well, the SEC, audits and examines RIAs frequently. I can recall fondly many an occasion where the SEC would come knocking saying, “Hello, here we are. Show us your books and records.” The SEC is very, very thorough in its annual examinations or biannual examinations of financial advisors. 

The bigger the advisor, the more frequent the exam, and the SEC is very diligent in examining all the books and records of the firm to verify that the firm and its advisors are, in fact, honoring their regulatory obligation to serve the client's best interests. That's how the SEC enforces the ADV, (the Federal Registration Statement that advisors have to provide the SEC). 

But you also asked the question, how do the regulations quantify what is in my best interest? I mean, what's in my best interest is an opinion, right? Isn't that a judgment call? How do you quantify that?  Well, what you have to remember is that this is all a relative scale. It is RIAs, Registered Investment Advisors, that are required to act as a fiduciary...required to act in your best interest.  There is a massive amount of case law in courts all across the country, all the way up to the Supreme Court, that defines fiduciary -  that define best interest. And it is a pretty easy standard for prosecutors, for SEC examiners, for regulation enforcement officers to say whether you are or are not adhering to the fiduciary obligation. That is a relative statement, however, against stockbrokers who do not have that obligation to serve your best interest. They only have to provide you investments that are suitable and appropriate, but not necessarily best for you. 

And insurance agents don't even have to do that. All they have to do is show utmost good faith, which is the lowest standard of all. So, this is why I encourage you to work with an RIA who is therefore a fiduciary. They must adhere to the strictest standard of duty of care compared to stockbrokers and insurance agents. 

And at the end of the day, if something does go awry, I think the SEC is most likely to identify it quickly. Because they are examining RIAs. They don't examine insurance agents. They aren't looking at stockbrokers. They leave that to FINRA and if there is a problem uncovered, you have the best odds of getting redress when you file an arbitration claim or you file a lawsuit. So, is it perfect? Is it going to prevent you from getting defrauded? No, it's not perfect. And it might not prevent it, but it does offer the best opportunity for redress. So maybe it's just the category of the best of bad choices, or the least worst.  It's the best we've got.   

Hey, today is September 10th. You know what that means...tonight is the presidential debate between Donald Trump and Kamala Harris. And I think we're going to break a record for a viewership of this. 

I think everybody's really looking forward to it. I know I am, if only for its entertainment value. I'm hopeful that there's going to be something worth talking about tomorrow, as a result of what happens tonight. And if that's the case, that's what I'm going to share with you tomorrow on the podcast.  So, watch tonight and we'll chat about it tomorrow. 

Also today at 1:00pm is my webinar for you on Bitcoin and Ethereum. How do you make an informed crypto allocation decision? Should you choose Bitcoin? Should you choose Ethereum or should you invest a little bit into both? David Alderman, the research analyst at Franklin Templeton Digital Assets is going to be joining me.  This webinar is free. If you're a financial advisor, you get one CE credit.  You can register right now. The links are in the show notes.  

If you're curious about Bitcoin and Ethereum and understanding how they're different, and their respective risk-reward profiles and a whole lot more, you'll want to join us for that event.  That's today at 1:00mp, EDT PM. I'll see you there.  

And then on Wednesday, we have another webinar for you on the bond market. Jerome Schneider from PIMCO is going to be joining me. We're going to be talking about the coming cut in interest rates, what it means for your bonds and your cash allocation. Two great webinars this week. 

Today on crypto, Wednesday on bonds. See you at both. You can register for both of these events. The links are in the show notes. 

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Links from today’s show: 

9/10 Webinar – Bitcoin, Ethereum, or Both? How to Make an Informed Crypto Allocation Decision: https://dacfp.com/events/bitcoin-ethereum-or-both-how-to-make-an-informed-crypto-allocation-decision/

9/11 Webinar – Rates are Poised to Drop, Now What?: https://www.thetayf.com/pages/rates-poised-to-drop-now-what

Become Certified in Blockchain and Digital Assets: https://dacfp.com/certification/ 

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