Have you played Monopoly lately?
When I was growing up, it was the game of choice. Four to six players would try to buy property and corner the market. But my favorite place to land was Free Parking.
We had a house rule that Free Parking always had $500. And any fines or taxes paid went in to Free Parking. The person who landed there got all that loot.
So imagine our surprise when, upon reading the rules, we found that Free Parking was just that: a “free” place to park your token—no cash benefits. Our house rule had the effect of increasing the money supply and adding an additional chance element to the game.
In America we love free things: free samples at the supermarket; free pony rides at the county fair; and free parking at the library, hospital, and town hall. Only, nothing is really free. Usually people providing free services are using these as a way to interact with potential customers. Most people understand this.
That’s why I was amused recently when a recent study concluded that the consultations provided by fund companies for 401(k) participants often just plug that company’s investment products. And they recorded outrage when the salesman—er—advisor suggested a high-fee long-lockup annuity product. Could we file this under “D” for “duh”?
In the real Monopoly, Free Parking doesn’t provide cash. And in real life free advice is often worth less than what you pay for it.
Douglas R. Tengdin, CFA
Chief Investment Officer
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