By Al Jacobs
In this first “Straight Talk” of the New Year, I will be discussing the cost of a college education, how special fees are used by universities to evade tuition increase limits and sharing my thoughts on an often overlooked, yet very familiar, source of financial advice.
WHAT PRICE SUCCESS?
Although there will be no tuition increases in store for students in the California State University system, it appears that various fees are due to rise over the next five years. With tuition at all 23 CSU campuses frozen by California law at $5,472 per year, the Board of Regents found the fee route a way to circumvent that limit. And some of these fee increases are substantial. At Cal State Fullerton, for example, annual fees triple from $121 to $362, with other schools in the system boosting the tab to as much as $780.
In reality, the cost to attend Cal State is remarkably reasonable when compared to most other universities in the nation. Many institutions with no better academic credentials than Cal State, but which profess to be prestigious, manage to extract sums in excess of $50,000 per year from their hapless students. They arrange this by sophisticated public relations campaigns and an accommodating media. Actually, diligent application for two years at a community college followed by the junior and senior years at any reputable state university will result in as impressive an education as can be gotten by four years at Harvard or Yale. However, such a claim by a credentialed educator would be branded as sacrilegious.
Despite my satisfaction with Cal State and a belief that their total costs are eminently fair, I find fault with the added fees—though for a semantic reason. The fees are proclaimed to be for student services such as extended academic advising, increased Wi-Fi networks and programs for student veterans. In actuality, they’re merely a tuition increase by another name—which may well be justified. But my principal objection is the contrived description by which the fees have been publicized. They are known as “Success Fees.” I contend this adds insult to injury. You might expect duplicitous marketing of this sort from a gambling house looking to attract dimwits to their slot machines, but students at a university deserve an honest representation as to how their involuntary contributions will really be used.
A final word: I firmly believe that education is the path to success, but I contend that it must be pursued in a way which excludes—or at least minimizes—student debt. The Cal State system, or its equivalent in other states of the union, is the way to go.
THE FACE IN THE MIRROR
My next topic is financial advice; but before I say a word on the subject, let me inform you that I’m not—I repeat, not—a financial planner, nor have I ever been one. And in my lifetime I’ve never hired one. For the past half-century the investment advice I’ve relied upon comes from the face in my mirror. Though at times the counsel proved less than astute, one thing I’ve never doubted: The face in the mirror always has my best interests at heart.
As you might guess, I’m inclined to advocate that each of us choose ourselves as financial advisor. In reality, however, many persons cannot rely upon themselves to oversee their investments. Whatever reasons may be given, it invariably comes down to a matter of temperament. Supervising an investment program requires a systematic mindset, a degree of personal discipline and orientation to detail. Most certainly it helps to be compulsive. Individuals lacking these traits, and who normally perform the function badly, are the logical clients for the financial professionals. It’s from this circumstance that problems arise.
To state it bluntly, few financial advisors will serve you well. If they’re commission-compensated, expect recommendations which generate for them the largest commissions. For the fee-based variety, with remuneration dictated by a percentage paid on controlled assets, your counselor will normally endorse whatever results in the maximum dollar value of assets. And don’t expect enhanced performance because your overseer is licensed, registered or certified. These devices are mere window-dressing. Comedian Mel Brooks most accurately described certified: “You’re a nice guy; we like you; you’re certified.”
I’ll leave you with this final thought: Ideally, your advisor shouldn’t profit unless you do. However, as members of the advisory trade do not operate this way, there’s usually nowhere else to go. If you suspect the face in your mirror is not quite up to the task, your best bet is a financially astute friend or relative who provides counsel gratis, often inviting you to join in as a fellow investor. I’ve involved myself in this fashion for many years and it works well.
Al Jacobs, a longtime Dana Point resident and a professional investor for nearly a half-century, distributes a monthly newsletter in which he shares financial knowledge and experience. It is available at www.roadtoprosperity.net.
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