My son recently introduced me to the Yuka app for my phone and I’ll admit it has opened my eyes to many of the food and cosmetic products I’ve ingested or used on my body. The app claims to help you “make the right choices for your health.” I’ve actually thrown out products after understanding some of the ingredients. There are foods you expect to be bad, but I never would have realized the difference in certain brands of crackers, or lip balm, or toothpaste.
The app is very easy to use. You just scan the bar code of a product, and the app will give you the product’s score—which can range from zero to 100. If the product has a score below 50, the app will give you a list of recommendations.
In the past week, I’ve scanned everything I’ve come across at home and in the office, and every product at the grocery store before putting it into the cart. I’ve made quite a few brand changes.
Initially, when I was in my skeptical stage with the app, I went to the company’s website to see what they were about. A few things impressed me right away. The first was that they were 100% independent. If this company were influenced by sponsors, I would have walked away immediately. Here is a list of things they mention as important:
- 100% Independent—No affiliations that would compromise objectivity
- No ads—They are not paid by anyone who they may offend
- No influence from outside brands or manufacturers
- Data Protection—They do not sell user information
- Transparent Funding—Revenue comes from users, not outside brands
This has me dreaming of a scan code analyzer for investment portfolios. Yes, there are many sponsored “analyzers” out on the web but most of the output is confusing and not nearly as useful as the Yuka app is for cereal research.
A useful portfolio analyzer would give the investor a quick score based on what really matters. We’ve looked at hundreds of investment portfolios over the years and not many would receive a score above 30/100. Here are the characteristics that matter most.
- Total costs—Most investors have no idea what they are really paying in fees and hidden costs
- Diversification across all asset classes (in appropriate weights)—Portfolios are usually loaded with yesterday’s winners and lack broad global diversification
- Appropriateness of risk level
- Tax efficiency (or too often inefficiency)
- The use of questionable holdings (insurance products like variable and indexed annuities, structured products, hedge funds, etc.)
- Portfolio turnover rate, aka excess trading
We imagine that if investors could just scan their investment portfolio with their phone and get a score from zero to 100, most would be as shocked as I was when I scanned my favorite bag of pretzels. Sure, they tasted good, but when the ingredients were examined, my stomach started to hurt.
Getting back to the mission statement of Yuka… just like I was impressed they were 100% independent, you would also want to own investments that were not sold because of a monetary influence from an outside source that was in conflict of your best interest. Unfortunately, this is not the norm. So, until someone comes up with a Yuka app for investment portfolios, investors can do their homework to find independent, 100% fiduciary, qualified, fee-only advisors who will be able to build an appropriate portfolio. For those of you fortunate enough to already work with such an advisor, you can now focus your energy on determining which items in your cupboard should be replaced.