News & Insights

What Your Investment Advisor Should Be Doing to Protect Your Confidentiality

by Financial Alternatives on 4/2/2018

Here are some things your investment advisor should be doing to protect your client confidentiality.

Silence and privacy are the most undervalued assets in a client’s portfolio. We say this to acknowledge an often overlooked facet of investment management and financial planning: client confidentiality. This is something that many financial advisors and even their clients don’t pay enough attention to until it is too late. Is your advisor doing what your advisor should be doing to protect your confidentiality? Read on to figure it out. 

The Affluent Person’s #1 Fear is Being Discovered 

Anyone who has been taken advantage of financially knows too well that wealth can sometimes attract unsavory types and bring out the greed in people. Most affluent people live in fear (and in fact it is their #1 fear) of having others in their lives –including some of their friends and relatives – know how much money they have. They could end up being judged or criticized and the awkwardness it creates may be harmful to relationships. 

Aside from the social fears, there are real risks to having the public know how much money you have. You face a higher risk of being kidnapped or robbed. And that leads to the affluent person’s second biggest fear – losing it all.  

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posted in BlogGeneral

Beware the Ides of March: Are You Your Own Retirement’s Worst Enemy?

by Financial Alternatives on 3/7/2018

The Ides of March commemorate Julius Caesar, the Emperor who significantly expanded the Roman Empire — only to meet his demise by a conspiracy carried out by his own people.  Just as Caesar’s fate turned to misfortune as a result of his tragic flaw, we see people who are their wealth’s worst enemy. If you’re making these retirement planning mistakes, it’s best to seek counsel before the bright day brings forth the adder.

Making Emotional Decisions

In our decades of experience, we’ve seen examples of perfectly rational, logical people who make emotional decisions that lead to their finances becoming compromised. Unfortunately, being called in to be the independent voice of reason after the fact is a step too late.

A common emotional trap that people run into when managing their own money includes holding on to company stock or an inherited position for nostalgia reasons. This can lead to dangerously undiversified portfolios.

Timing the Market

Very few people get this right. Most of the time, trying to sell at the top of the market and buy when the market has dipped creates more trouble than it prevents. Even professional money managers can’t successfully time the market.

Choose an advisor who will balance your needs for principle protection, income, and growth against market conditions. This approach, rather than one of reactive trading, is the best way to create long term growth.

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posted in BlogGeneralPersonal Finance

How Are Your Financial Institutions and Advisor Compensated? It’s Important.

by Jim Freeman, CFP® on 1/19/2018

Wells Fargo is the latest example of a financial institution harming its clients by creating a compensation structure that incentivized employees to act contrary to their clients’ best interest.

Regulators found over 3.5 million fake credit card and bank accounts created by Wells Fargo employees who were pressured by managers to meet unrealistic sales goals. Wells Fargo was also caught selling nearly 1,500 renters and term life insurance policies to clients without their knowledge.

How in the world could this ever happen?

Some Wells Fargo customers said bank employees lied to them saying they were giving them a quote when in fact they were unknowingly being signed up for a policy.

When these issues were initially uncovered, Wells Fargo fired thousands and tried to lay the blame on these rouge employees. But as the truth came out, it was obvious that the problem lay with management’s incentive compensation structure. In reality it was the leadership who had put extreme pressure on employees to sell products in an effort in increase profits and thereby increase bonuses.

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posted in BlogPersonal Finance

What High Earners Should Know About the Tax Cuts and Jobs Act

by Ellen Li, MSBA, CFP® on 1/5/2018

Understanding the implications of the 2017 Tax Cuts and Jobs Act is important for any high earner, or high earning family, who wants to maintain its financial success.

As illustrated below, the recent tax reform will modify the tax rate for high income earners. But that’s just where it begins. High earners should also be aware of how the tax code will significantly impact the decisions you are making about your healthcare, business, and gifting decisions.

Table Source: “Highlights of the Final Tax Cuts and Jobs Act, “ by Tim Steffen, 2017 (http://www.investmentnews.com/assets/docs/CI1136191218.PDF)
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posted in BlogGeneralPersonal Finance

5 Year-End Tax Planning Tips for 2017

by Chris Jaccard, CFP®, CFA on 12/1/2017

Here are a some tax-planning techniques and strategies you can still consider in the last few weeks of the year:

1. Watch out for large mutual fund distributions this year

Many mutual funds have realized large gains and typically distribute those gains in November and December.  Don’t buy a mutual fund in your brokerage account right before it makes a 10%, 20%, or 30% (of NAV) distribution – it just turns part of your purchase into a taxable event!  Look for widely published estimates, and if expected to be large, make sure you buy shares after a fund’s ex-dividend date.

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posted in BlogPersonal Finance

Stock Returns – The Uncommon Average

by Jim Freeman, CFP® on 11/10/2017

The US stock market has delivered an average annual return of around 10% since 1926 (as measured by the S&P 500 Index through 2016). But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful to see the range of outcomes experienced by investors historically. For example, how often have the stock market’s annual returns actually aligned with its long-term average?

Exhibit 1 shows calendar year returns for the S&P 500 Index since 1926. The shaded band marks the historical average of 10%, plus or minus 2 percentage points. The S&P 500 had a return within this range in only six of the past 91 calendar years. In most years the index’s return was outside of the range, often above or below by a wide margin, with no obvious pattern. For investors, this data highlights the importance of looking beyond average returns and being aware of the range of potential outcomes.

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posted in BlogInvestments

Embracing Retirement by Making the Right Housing Decisions

by Ellen Li, MSBA, CFP® on 9/22/2017

As a busy financial advisor and  mother, I like to balance myself with the practice of yoga. To me, yoga is more than just the practice of body movement, it’s  also an exercise of mental discipline.  Recently one of my favorite instructors used “embrace change” as our mantra and it really resonated  with me both  professionally and personally.

At Financial Alternatives, we recently helped two clients make new housing choices in their retirement years — one client remodeled their house and redesigned the living space on the first floor to make living there safer and more comfortable. The second client decided to move to an assisted living facility. In both cases, it was a transition, a new change that our clients embraced with courage and wisdom.  Stories such as these show the importance of making the right housing decisions  during your retirement years. These decisions could  have a tremendous effect on you  both financially and emotionally.

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posted in BlogGeneralPersonal Finance

5 Steps to Take After the Equifax Breach

by Chris Jaccard, CFP®, CFA on 9/14/2017

Background

Now that some of the dust has settled on one of the worst cyber security breaches in history, we think everyone should go through the 5 steps listed below.  Why everyone?  Because there is no way to be certain if you have been affected by the Equifax breach or not.  I entered false info to test Equifax’s verification site including a last name of “test” and a SSN of “123456” only to find that it positively identified me as a person impacted by the breach.  [9/16/17 Update: Equifax’s Chief Information Officer and Chief Security Officer are “retiring” and their internal investigation continues.]

Also, please make sure everyone in your family has taken these steps including your spouse, kids in college, domestic partner, and perhaps even minor children.

Step 1: Review Your Credit Report

Use the Annual Credit Report site to review your credit report from at least one of the three listed credit reporting agencies (“CRAs”).  By law, you are allowed one copy every 12 months, so we suggest you request a report from one of the three CRAs every 4 months.  Check for rogue activity or inaccuracies, and contact the CRAs to address the issue.

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posted in BlogGeneralPersonal Finance

Thank Vanguard for Lower Investment Costs. What Makes Them Different?

by Jim Freeman, CFP® on 9/5/2017

Most investors do not know this but The Vanguard Group is radically different from all other investment firms. What makes them different is that they are owned by the funds they manage – a unique arrangement that eliminates conflicting loyalties.

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posted in BlogGeneral

Thoughts on S&P’s decision to exclude non-voting stock from indexes

by Chris Jaccard, CFP®, CFA on 8/3/2017

This week the company that maintains the S&P 500 index announced that they will start excluding companies from their indexes that issue multiple classes of shares.  So newer issues of stock from companies like Snap Inc. (SNAP) – that do not have voting rights – will not be included in many popular indexes.  This follows similar statements from FTSE Russell and MSCI earlier in the year.

These announcements highlight a couple of key reminders for investors.  First, there is a significant human element even with indexes that claim to be strictly rule-based.  Second, although index providers and professionals agree that corporate governance matters, there is no consensus on how to encourage better practices while still maintaining indexes that represent public companies.

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posted in BlogInvestments

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Disclaimer

Posts are general in nature and do not constitute the rendering of legal, investment, accounting or other professional advice.