Democracy and capitalism are dependent on an informed citizenry.  We are proud to introduce the first independent cloud-based interactive tools, education and platforms that end the information imbalance that has created billions of dollars of unnecessary losses for retirement investors, globally.

Long-gone are defined-benefit pensions for all but government workers and members of Congress. Today’s retirement saver is paying high, “bundled” fees for inferior and conflicted advice and product. The current “Advisor” distribution channel hides costs, charges excessive fees and is not incentivized to seek superior investment returns.

The Derivative Project addresses the imbalance between the Main Street Investor and Wall Street through investor education and a soon to be released one of a kind retirement platform.

Industry after industry has been transformed as new players identify redundant layers of distribution that can be stripped away with technology and in doing so provide consumers with a new more efficient and effective value proposition. This is not the case with retirement product distribution. The Derivative Project will continue to articulate the need for substantive policy reform in this Blog. Individual retirement savers looking to take charge of their retirement future through transparency and technology should visit Not On My Nickel Blog and Not On My Nickel About Us page, to get ready for the new platform.

During the 2008-2009 financial crisis, over $2 trillion of Americans retirement savings were needlessly lost, as a result of excessive speculation in derivatives. The financial institutions, that reaped profits from this speculation, while creating havoc and chaos for individuals and corporations worldwide, were in turn bailed out by U.S. taxpayers. These financial institutions were never fined or charged. At the same time, these financial institutions are loathe to extend the same benevolent attitude to the retirement investors.

Regulators were and are absent still today.  Many 2010 Target Date Funds lost close to 40% of their value, forcing many retired Americans back into the work force, often in entry level jobs, after saving for over 40 years to retire with dignity. Wall Street designed these ineffective products. The Department of Labor approved them. This is a captive regulatory body.  We seek the changes to ensure this will never happen again.

Created in March 2008, The Derivative Project is a retail investor advocacy organization dedicated to initially protect retirement accounts from excessive speculation in derivatives. Post Dodd-Frank we moved to:

1.) Educate retail retirement investors concerning the why of the 2008-2009 collapse of the equity markets. Unchecked counter-party credit risk with OTC derivatives, through excessive speculation, created systemic risk. Retirement financial advisors were not trained to understand the intersection of OTC derivatives and our commercial banking system. Further, financial advisors were conflicted—if they moved their retirement investors’ life savings to cash the advisors would lose their fees. For those close to retirement, financial advisors should have been protecting retirees’ (or those close to retirement) assets. These “advisors” breached their fiduciary duty and placed their interests over safeguarding American’s nest eggs, through a combination of self-interest and lack of professionalism/training.

2.) Educate retail investors concerning misleading perceptions of the relative safety of money market funds, due to substantial mission creep of these funds and “buried” risks in these funds from losses in misplaced products, such as Structured Investment Vehicles (SIV’s) asset-backed commercial paper conduits. Money market funds have been stuffed full of poor loans and credits that are funded with short-term financing, for an entity’s long-term funding needs. Many of the entities are high risk credits and when interest rates rise, the systemic risk of entities, backed by bank guarantees, financing long-term funding needs with short-term debt, will create a new house of cards. Further, through money market voluntary recapture programs, retirement investors will once again lose out on recouping losses from a flat interest rate environment and will again fall behind, as Wall Street gets ahead.

3.) Work with Congress and potential Congressional candidates on education of derivative reforms and increased investor protection to ensure those SEC registered investment advisors have the requisite experience, education and training to judge what is a safe product for a retail retirement account. Brokers are salespeople and there are no requirements for specialized training and experience. Sales personnel should not be permitted to provide investment advice to retail retirement accounts for a fee. This should strictly be under the preview of an experienced money manager, with a minimum of five year SEC filed returns and stated investment philosophy also demonstrated over a minimum of five years and filed with the SEC, as most regulated investment companies are required to do, under the Investment Company Act of 1940.

In our Archived Website. you may read our written testimony with Congress and regulators and Past Blogs, seeking to create change through existing regulatory systems. The message is clear. Wall Street will not change. The profits are too great profits that are coming directly from every American retirement investors nest egg.

The Derivative Project Today

The Derivative Project is focused on ongoing education and awareness of the imbalance between the Main Street Investor and Wall Street.

Individuals now have over $4.9 trillion dollars in Individual Retirement Accounts (IRA’s). Yet when securities laws are breached retirement investors have no legal recourse. They have no private right of action in an IRA and any IRA, opened up at a broker dealer, is subject to mandatory arbitration, run by the financial services industry (FINRA.) FINRA makes up the rules and enforces the rules. The individual retirement investor has no chance of recouping their hard earned life savings from a “court” run by the financial services industry. Day in and day out, the SEC reports Ponzi schemes and frauds by financial intermediaries preying on Americans’ life savings.

To better protect the individual retirement saver the Derivative Project

… Supports the ban of mandatory arbitration for all retail retirement accounts and a right of private action for every retirement accounts.

… Challenges that brokers are fiduciaries under Wrap Accounts. Wrap Accounts, where “brokers” are both sales personnel and “SEC registered investment advisers” are confusing to investors, promote conflicted sales practices and should be banned by the SEC.

… Believes individuals must accept personal responsibility for their financial future. Financial intermediaries are costly to society, through taxpayer funds for regulation, and add no value to society or to retirement investors overall. There is a better model.

… Recognizes individuals are capable of engaging and selecting their core retirement investment options, on their own, without costly and ineffective financial intermediaries.

The Derivative Project has created Not On My Nickel to empower individuals to take charge. Not On My Nickel will soon provide the first dedicated retirement platform and its groundbreaking investment selection app will soon be available. It is the first “App” to deliver the long overdue retirement investor transparency that serves to eliminate the costly, ineffective financial intermediary layers, which are costing retirement investors dearly, without providing any value. Financial education can no longer be provided by the financial services industry. The conflicts are too great.

Not On My Nickel

Not On My Nickel is the private sector alternative to eliminate redundant, costly intermediaries, archaic distribution systems and wasteful government regulation.

Realizing, the breadth and depth of the financial services’ industry control through both FINRA and the SEC, we realized no amount of lobbying Congress, the SEC or the Executive Branch would protect the individual retirement investor. The individual must be given the tools, technology and transparency to take charge of their own retirement future.

In 2013, we launched, in beta, Not On My Nickel, the first dedicated service to empower retirement investors to take charge of their retirement future through tools, technology and transparency. Not On My Nickels first year results have moved the service to a new phase, our soon to be released retirement distribution platform.

After five years of advocacy to protect retirement investors, the message is clear. Individuals must accept personal responsibility for their financial future. They will through the proper tools and technology. Financial intermediaries and redundant distribution systems are costly to society, through taxpayer funds for regulation and inefficiencies to the consumer. There is a better model.

The Derivative Project will continue to address public policy issues and Not On My Nickel will provide the means for the individual investor to take charge of their retirement future, eliminating unnecessary barriers to performance and redundant costs. The information imbalance will end and the retirement investor will have, for the first time since the advent of defined contribution plans, both (1) bona-fide transparency to ensure access to superior performance and (2) the low-cost provider.