News & Insights

7 Financial Tips for Newly Married Couples

by Jim Freeman, CFP® on 2/13/2019

Marriage is a union in many ways. You may have the emotional aspects covered, but what about making the dollars and cents work? Financial tension is a big reason that many marriages fail. Read our seven financial tips for newly married couples to hear some tips for starting off on the right foot.

#1 Have the hard conversations

Why is it so hard to talk about money? Because of the feelings and assumptions that go along with it.

For example, you may have been raised to believe that high earning people are more successful than those who don’t make as much. You don’t want to confront anyone about this, or even worse, be confronted about your own level of earnings. Or, maybe you are harboring a feeling of shame because you spent more money than you should have on something.

The list goes on and on…

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posted in BlogGeneralPersonal Finance

How Accountants Should Find a Financial Advisor to Work With

by Financial Alternatives on 1/15/2019

How can accountants find a great financial advisor to partner with?

Finding the right financial advisor to partner with from a practical standpoint has been, well, a source of much frustration for many CPAs we know. So we’re putting together a sketch of how accountants who want to expand their margins, offer a higher level of service to their clients, and grow their practices through partnering with a financial advisor should go about finding the right one.

#1 How is the advisor compensated?

It matters.

The way an advisor is compensated can create conflicts of interest that influence how their clients – and your clients – will be treated.

Advisors can get paid in many ways, each bringing varying levels of objectivity. Some advisors are paid on commissions – either fully or partially. This may mean that the advisor is held to a suitability standard and must make sure that the recommendations he or she makes are proper given the client’s profile. However there is nothing to say that they are the most proper solutions available given the opportunity set, or that the client’s best interests are truly placed before the person advising him or her.

It would be a wise decision for accountants to consider fee-only Registered Investment Advisor (RIA) firms who work in the sole best interest of the client. These advisors are fiduciaries in the true sense of the word. They are obligated to put the client’s best interest before their own.

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The Surprising Truth about Women and Stock Options

by Financial Alternatives on 12/10/2018

The surprising truth about women and stock options.

A recent article in Bloomberg revealed some shocking data about women being underpaid relative to men – in the progressive technology sector, of all places. As per a study by Carta, “women hold 47 cents for every dollar of equity men do” (Greenfield, 2018). These results should not be taken lightly; here’s why this imbalance may matter for female executives and what they can do to change it.

What the Imbalance Looks Like in Reality

It’s surprising to think that in an industry known for innovation and transparency such a striking disparity would prevail. But nonetheless, let’s suppose that it’s true; what if women do in fact hold less equity in technology start up firms than men.

So what?

Let’s see how this translates in reality. Think about a man and woman who are equivalently skilled and qualified, performing the same job responsibilities for which both earn a salary. For the sake of discussion, we’ll call them John and Sally.

Throughout the year, John and Sally chug along merrily taking home their paychecks each week. It’s a known fact that women tend to be underpaid relative to men when it comes to salary. But a salary is a set amount and it’s not likely she earns less than 20-30% of what he does even given the “gender discount.”

What does it mean when a woman holds less of a stake in a highly profitable tech firm that, say for example, goes through a $50MM IPO?

Let’s apply the 47 cent ratio mentioned above. Let’s say this applies universally across the company. There is $50MM of equity to be divided up; women get $16MM while men get $34MM. According to these numbers, Sally takes home $1.6MM while John takes home $3.4MM.

It’s massive.

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Financial Survival Tips for the Sandwich Generation

by Ellen Li, MSBA, CFP® on 9/20/2018

Here are some Financial Survival Tips for the Sandwich Generation

Planning a financial life for yourself is complicated enough with competing goals such as pursuing a career, raising a family, saving for college and saving for retirement. But what about when an aging parent needs help or when an adult child moves home? If you’re a member of the sandwich generation, the people in their 30s or 40s who bear the responsibility for financially taking care of both their parents and/or children at the same time as themselves, here are some financial survival tips.

Meet Sandy of the Sandwich Generation

Being sandwiched in between several conflicting and serious responsibilities isn’t something anyone necessarily plans for, but as the following example illustrates, it’s easy enough for almost anyone to end up there.

Let’s take Sandy, a married 47 year old radiologist from La Jolla, California.  As a physician specialist, she makes a decent living, but the income didn’t come without a cost. She’s battling her student loans, even at this stage in the game. She’s earning a high salary, but at the same time much of it is consumed by taxes and professional expenses such as insurance and continuing educational requirements.  Moreover, because of the demands of her work, Sandy is often forced to hire support staff to assist with her home and domestic responsibilities.

Sound familiar?

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posted in BlogGeneralPersonal Finance

Is your CPA a Tax Preparer or a Tax Planner?

by Jim Freeman, CFP® on 8/14/2018

Tax planning ranks low on the list of activities people enjoy. Yet despite how astronomically large the tax bill can be in April, after tax season many people do not sit back down with their tax professionals to do in-depth planning. As a result, simple things getting overlooked on a regular basis that needlessly cost taxpayers thousands of dollars.

The goal of today’s blog is to give you a partial checklist and, most importantly, to inspire you to bring this topic up with your tax advisor and to initiate an annual tax planning protocol.

Below I’ve highlighted a few of the more commonly neglected categories:

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posted in BlogGeneralPersonal Finance

Introducing eMoney, a Financial Planning Beneficence for our clients!

by Ellen Li, MSBA, CFP® on 8/1/2018

As of this month, Financial Alternatives is rolling out a Personal Financial Management platform called eMoney for our clients. This portal will provide clients with secure access to real time values of all of their accounts across various custodians including held-away 401K accounts and liabilities such as student loans, mortgages, and credit cards.

What benefits does eMoney provide for our clients?

You can see the whole picture by logging on to just one platform

Gone is the day when you have to wait for Fidelity or Schwab’s month end statements or Financial Alternative’s quarterly reports to get an integrated look at your financial situation, from all angles and leaving no stone unturned.

You’ll no longer need to provide your bank account or liability statements for your annual review if you link the accounts in eMoney. Also, you won’t have to worry about keeping track of multiple account log ins anymore as your information will all be held in one place.

You can reduce time spent on creating a budget

eMoney isn’t just about investments.  Clients can add their bank accounts to this platform as well. Just as Mint does, you can see your checking balances and bills.

Procrastination is a huge problem when it comes to budgeting. Who wants to repeatedly track down every last bill or savings account statement? Reduce time spent on the administrative aspects and you’ll find time spent on creating your budget to be more productive.

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posted in BlogGeneralPersonal Finance

Avoiding the Web Can Be Bad For Your Financial Health!

by Chris Jaccard, CFP®, CFA on 7/23/2018

With cybercrime constantly making headlines, it’s no wonder that some people have resorted to avoiding the web altogether as a way to prevent exposure to this risk.

Think again.

Unfortunately, the premise that you can’t be hacked because you haven’t set up online accounts with your bank, utility company, brokerage firm, etc., isn’t a sound one anymore. Many years ago this may have been true, but the unfortunate reality is that nowadays there is nowhere to hide from cybercrime.

The Allure of Anonymity

Despite the advantages that our cyberconnected world has delivered to our doorstep, it seems like this change isn’t one that people welcome with complete open arms.

According to a study by Pew Research Center, 86% of adult internet users have resorted to tactics to enable them to travel the web incognito. Examples include clearing or disabling cookies, trying to mask your identity, using a fake name, or using an anonymous browsing service (as per Rainie et al, 2013). It’s clear that most people have a desire for more online privacy.

Technology can empower our lives and strengthen our ability to connect with the people and things that we want in our lives. Yet there is a price for this progress. In today’s world it seems as if everything is connected to the internet somehow. As far as we’ve come, however, we’re still in the dark about controlling the flow of information so that it doesn’t get into the wrong hands in the midst of all of this.

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posted in BlogGeneralPersonal Finance

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

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

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Disclaimer

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