Do You Understand Your Employee Benefits?

As we approach the end of 2018 many employers are scheduling their benefits meeting requiring you to select yours before the end of the year. Not all benefit options are the same and understanding each is crucial to making an informed decision. Ask your HR department or the advisor or agent representing the benefit what you don’t understand or ask them to provide you additional information prior to the benefits selection deadline. Many insurance and health benefits don’t allow you to change them once selected. However, employer-sponsored retirement plans allow you to select different funds, rebalance and change payroll contributions at any time  per federal law.

Retirement Plan Options & Employer Match. You may have multiple choices of providers or funds available for you to choose from. Not all employer retirement plan providers provide assistance on fund selection or on-going advice. I can help you with the following:

  • Determining how the retirement plan fund options fit your risk profile
  • Including your company retirement plan assets in your financial plan
  • Monitoring the fund options and offer guidance on rebalancing
  • Rolling over your former employers plan into an IRA

Employer-Sponsored Life Insurance. Life insurance is the most inexpensive way to add protection to your family and your assets if you die. Employer life insurance plans ‘group’ you with other employees to reduce the cost of the insurance. Many times there is a need for additional life insurance outside of their employer plan since the death benefit is usually limited and based on your income. Questions to ask:

  • Is this life insurance portable if I leave?
  • Will I still be insured after age 65 (some plans drop you after this age) if I’m still employed?
  • Can I add more insurance or am I committed to a certain death benefit amount?
  • Can I insure other members of my family?
  • Death can cause the early liquidation of assets if there isn’t adequate life insurance.

Employer-Sponsored Disability Insurance. Not being able to work due to injury can quickly deplete financial assets. Disability insurance replaces lost income from a short-term injury or disability or a permanent disability. Social Security Disability benefits won’t replace 100% of your income. Purchasing additional disability insurance coverage is a good idea if you’re in your prime earning years. Ask, so you understand:

  • Is disability insurance is underwritten based on my profession, age, and my possible risk of injury at work?
  • If I take Social Security Disability Benefits if I’m injured, is my Social Security Retirement Benefit reduced or eliminated in retirement?

Employer-Sponsored Health Insurance Solutions. Your company may provide you with health insurance choices that you are unable to modify. Ask your insurance provider:

  • Are there additional coverage choices for vision, dental, wellness, or indemnity insurance coverage based on my job role?
  • Can I customize a health insurance plan based on my specific needs?
  • Can I insure additional family members?

Part of asset protection is having insurance coverage in place so that you don’t have to prematurely liquidate personal savings, investment accounts or retirement accounts. I am here to assist you in any way I can with the information you’re being provided regarding your employee benefits.

5 Questions Answered: Social Security Retirement Benefits

  1. How is my social security calculated?  Social Security is calculated using your 35 highest paid earnings years and then averaged using the benefits calculation formula.  You must have worked full time for at least 10 years to qualify for any social security retirement benefit.  Currently, full retirement benefits age is between age 66 and 67 (October 2018). More adjustments by the Social Security Administration for the full benefit payment age are anticipated affecting calculations for those born after 1967.  To see what your payment may be based on your age visit
  2. Will Social Security Be There For Me?  Social Security will pay promised benefits through 2033.  After that it will pay about 75% of benefits.  Options to raise taxes to cover this shortage or to decrease benefits after 2035 are being discussed. American workers currently employed pay for those currently receiving benefits; benefits paid into Social Security are not ‘banked’ for an individual’s future use.
  3. What is Social Security? A Retirement Plan?  Social Security is considered insurance and was proposed by President Roosevelt and Congress and signed into law in 1935.  It was never intended to be enough to completely fund retirement for individuals but meant to supplement an individual’s retirement investments and savings.
  4. How do I file for Social Security Retirement Benefits?  You can file by visiting an office, by calling (800) SSA-1213, or online at You can file up to 4 months before you want payments to begin.
  5. Can My family receive benefits upon my death for certain situations?  If you die your surviving spouse can be paid up to 100% of your payment if they are at least Full Retirement Age or receive a reduced amount as early as age 60.  An individual can be paid 75% of your benefits at any age if they are caring for your child under age 16.  Your unmarried child can be paid 75% of your benefits if they are under 18, under 19 and in high school or at any age if they were permanently disabled before age 22.  Your parent over age 62 can be paid your benefits if they were dependent upon you.

The continuation of Social Security Retirement benefits after 2033 continues to be a hot topic as the U.S. population ages and younger generations continue to decline in population. Fewer Social Security taxes paid into the Social Security system will continue to impact future payments. Individuals reaching full retirement age after 2035 may want to consider contributing more to their after-tax and pre-tax retirement accounts or purchasing a fixed annuity as a replacement for decreased or lost Social Security Retirement benefits.

Happy Retirement, LIBOR

There’s a number that is going away soon that has an impact on your life; it’s called LIBOR.  LIBOR (London Interbank Offered Rate) is used to determine the interest rates banks charge each other for overnight, one-month, three-month, six-month, and one-year loans.  LIBOR is a substantial number because it decides, in part, the interest rate you will pay for loans, credit cards, and even your mortgage or refinance.  Banks add their markup (another percentage) to LIBOR to calculate what to charge consumers.  LIBOR has been the benchmark for banks throughout the world since 1969 but will be phased out worldwide by the end of 2021.

LIBOR seemed to work well until the financial crisis when inaccurate bank reporting to LIBOR made way for rate manipulation.  Unlike a stock price which calculates on the buying and selling of the public, LIBOR compiles information from a bank’s observation or reporting of their daily rate, which is voluntary.  By making up false information during the financial crisis, some banks profited illegally.  For this reason, regulators worldwide arephasing out LIBOR.

In the United States, LIBOR is being replaced by SOFR (Secured Overnight Financing Rate), which is already approved for rate calculation.  SOFR has compiled information back to 2014 and began publishing earlier this summer.  SOFR uses the Federal Reserve’s fed funds rateand the yield on the ten-year Treasury note and others, using real data on the previous day’s trading on our currency.

Currently, traders in the United States have already started to see the LIBOR-SOFR rate as we transition toward LIBOR’s retirement.

Calling All Investor Types

Some investors are the do it yourself type and manage their accounts with minimal assistance from a financial advisor.  Other people are eager to have an advisor manage their investments for them.  Whatever type of investor you are, no single investor knows everything about the stock market.  Even from time to time, knowledgeable investors ask for advice.

Working with a financial advisor can benefit both types of investors.  An advisor is a resource for what you may not know about your investments, other types of investments or additional information you may need to make an informed decision.  Working with an advisor doesn’t mean you have to hand over control of your finances.  Always be upfront about you expect from working with an advisor.  Open communication is essential for both parties to understand what the preferred way for you to receive investment advice.

The best way to avoid problems is to understand what type of investor you are through your investor profile.  Your Investor Profile or style is determined by:

Objective Traits – Personal or social traits such as gender, age, income, family, even tax situation

Subjective Attitudes – Part of the emotions and beliefs you have

Balancing Risk vs. Reward – Are you able to tolerate more significant risk to have a greater reward or prefer less risk and are content with a reasonable return?

Area of Focus – The types of investments (ex. stocks, bonds) and sectors of investments (ex. Technology) in your portfolio.

Investment Strategies – Help to shape your investor profile by the types of investing you prefer (ex. ethical, growth, index)

Valuation Methods – Help to develop your investor profile through valuation methods (ex. Fundamental analysis, technical analysis, quantitative analysis).

I can help you with specific accounts, or help with your entire portfolio.  It’s really up to you, and you always have choices.

Tariffs and Trade Wars: The Impact into Q3

After months of verbal threats between the EU, China and the US, tariffs, and counter-tariffs started in July 2018, leaving American consumers and investors wondering how much of an impact it will have on them.  Already three months into the trade war, consumers are not swaying from buying imports despite the increasing costs.  In July, the US Trade Deficit increased to $50.1 billion, a 9.6 percent increase from the previous month (according to the U.S. Census) while imports increased .9% to a record $261.2 billion, proving that Americans’ demand for imports remains strong.  August’s data is expected to be out the first week of October and indications are it will be higher than the July’s. It’s notable that the EU and China exported the most goods into the US of any of the trade partners during this time.

What will the impact be as the tariffs continue?  Increased costs of goods (including food, clothing and other necessities) may cause households to have the less discretionary cash to spend on other items considered non-essential, such as electronics, entertainment, automobiles or even events.  If costs continue to rise, Americans may eventually choose to not spend on goods produced in the United States either.

The counter-tariffs imposed to hurt foreign buyers will impact American companies, farmers and workers, and eventually overall company profits as countries impose their tariffs on US goods.  Many retirement savings accounts invest in US-based companies which may see decreased earnings and share values as tariffs apply to their products.  Eventually, this could reflect in the account values of American investors. Retaliation has started from other countries by the US being left out of new trade agreements as the current administration considers pulling out of the World Trade Organization.

Despite the tariffs and trade war, it is positive that the American economy has remained strong  throughout the latest quarter.

Because we are in the early stages of the trade war economists are unable to predict how prices and portfolios will fare in the future.  The trade war landscape is changing day-by-day which is why now may be a good time to review your portfolio if you have concerns.

The Great Wealth Transfer

Over the next twenty years, there will be a wealth transfer that exceeds $30 trillion as the Baby Boomer generation passes the remainder of their wealth to the Millennials and subsequent generations.  The Baby Boomers (born 1946-1964) are considered the wealthiest generation, currently controlling 70% of all the disposable income in the United States. Its imperative families develop a plan to transfer assets since the transfer of wealth is inevitable.  For most families, the transferring wealth was acquired during this lifetime and not inherited from the previous generation.

When starting to plan for wealth transfer pre-retirees should prepare for their retirement first, healthcare costs second, and the remaining transferring assets last.  Although some individuals choose not to involve their family members that will become the beneficiaries of their assets, including qualified tax and legal professionals are important.  But don’t write off including your heirs in all aspects of wealth transfer planning if you’d like more than just one generation to benefit.

Preparing your heirs to take over your estate eventually passing their remaining assets on to their beneficiaries is equally important.  Heirs that are unprepared in managing money, investments or seeking financial guidance from qualified professionals seldom have enough inheritance left over for their heirs.  Some families choose to ‘train’ heirs by teaching how to wisely invest so they can give some away through philanthropy.  Without financial education, frequent investment decision making and a purpose to preserve the inherited wealth, many estate transfers rarely survive.  The complexities of wealth preservation are not taught in school or other institutions and can only demonstrate through modeling, professional guidance, and the generation’s intention to pass their wealth forward.

If the generation set to inherit from the Baby Boomers does a good job preserving what they inherit, it’s possible it could easily provide financial benefits to others for the next thirty to forty years.  And that’s worth planning.

As financial advisors, we spend a lot of time preparing for building wealth, but not passing it on to subsequent generations.  If you would like guidance on The Great Wealth Transfer and my working with your beneficiaries, I welcome a meeting with all of you.

End of Year Money Moves

It’s that time of year again; kids go back to school, the election season is near, fall holiday planning starts, and suddenly we all move closer to the end of 2018.   As we approach the last quarter of the year, remember these ‘money moves’ that you still have time to make:

  1.  Add to Your 401K.  Now is the time to make additional contributions if you are not already maximizing.  Some companies include bonuses in the last paycheck of the year.  Consider giving yourself the ‘gift’ of the bonus down the road with a higher balance retirement account.
  2. Rebalance Your Investment Accounts.  Meet with me to rebalance your accounts and reassess your financial plan with updated information.
  3. Check Your Budget.  Analyze saving and spending, and readjust if necessary.  Finish this year by updating your budget to start next year with a spending plan.
  4. Make Purchases With Cash.  If you spend on holiday gifts, plan to pay with cash (or debit cards) and keep credit card balances low.  Cash purchases are often less than credit purchases per item.
  5. Meet With Your Tax Professional.  Discussing options to off-set taxes you will need to pay for 2018 can save you money.  It’s better to be prepared and have time to make some changes then be ‘shocked’ at filing time.  This year will see the Tax Cuts and Jobs Act takes effect in full force.
  6. Complete a New Risk Assessment and Financial Plan.  If you haven’t done either of these in a few years, now is the time to update all information and update your financial plan.

Regardless of how busy you may be at the end of the year, procrastination can hurt your progress toward your goals.  Financial planning is for everyone irrespective of age or income and is about your financial situation today so that you can plan for your financial future.

I highly recommend doing these simple steps before 2018 is over and look forward to working with you.

Contact a Financial Advisor in Las Vegas.

Estate Plans and Wills: Not Just for Retirees

Regardless of your age, having a will or estate plan is essential for many reasons, and isn’t just limited to passing assets at death. A will provides necessary asset passing, although many times isn’t enough when situations become more complicated.  Although estate plans and wills typically become active at death, they can be helpful during catastrophic life events, while still living.  One such document that is part of both an estate plan and a will is a Medical Directive, which provides the blueprint for your wishes in the event of a debilitating injury or illness.

Without estate plan and will documents in place, the decision is left to your family to make decisions.  At times these decisions may lead to conflict among family members, additional expenses paid by heirs or from your estate, or an extended probate at death as its run through the court system in your state of residence.

There’s just as much planning for living as there is for dying, which is why there is no reason to wait to have either done. We recommend working with an attorney that specializes in this type of law (and not everything else).  As you age, have children or acquire more assets, your situation changes and so should your estate plan. There are common mistakes to avoid in every estate plan or will to prevent:

Naming Beneficiaries and Contingent Beneficiaries.  Update name changes, changing and removing beneficiaries should be done periodically to ensure your estate plan has the most recent information.  Common mistakes include misspelling names, incorrect dates of birth, and the wrong former last name of a beneficiary.  This pertains to investment accounts that require recipients.  Naming a child as a beneficiary requires legal due diligence, as minor can’t inherit assets and need an adult to manage the assets until the child is eighteen years old (or older).

Naming Specific Investments.  As people age, the likelihood of an investment no longer owned by the grantor is likely, unless the estate plan or will has been updated to remove it.  If a specific asset is named to pass to an individual and no longer part of the estate, it may cause extended probate or lead to the asset being repurchased or ‘equalized’ through another monetary settlement to the beneficiary.

Not Naming the Beneficiary of your Financial Accounts or Life Insurance Policies as your Estate.  If you intend to have the estate plan be the final legal document  that contains everything in your estate, you can eliminate problems later.  Having some accounts or policies that name an individual and some that name the estate may cause heirs to contest the estate plan or will.  Your attorney will determine which is best for your situation and wishes.

Having a will or estate plan drafted by a legal professional is strongly encouraged as an integral piece of financial planning.  Secondly, keep us updated on your desire to changes beneficiaries, contingent beneficiaries, and changes to investment accounts we may not manage but have included in your financial plan.    Lastly, please provide us with a copy of your estate plan, will, and other relevant legal documents as they pertain to your investments to help ensure the information we have is streamlined.  We are here to provide you with any necessary financial records requested by your legal professional as you create or update your estate plans and wills.

Why it ‘Pays to Be Nice’ When Divorcing

Divorce is a common occurrence in the US, with 50% of all first marriages ending in divorce. According to the American Psychological Society, that is even higher for those marrying a second time.  Marriages end for many reasons from infidelity, stress, personality changes, and financial.  They are not only devastating to the children and extended family but devastating to your assets and ability to accumulate future assets. Divorce requires assets to be divided, attorneys to receive payments (on-going sometimes), and the divorcing couple soon finds themselves having to live on less to make ends meet.  Studies find that the divorced spouses need more than a 30% increase in their income to maintain the same standard of living they had before divorcing.

When emotions come into play, divorces often turn into battles to take assets, leaving a financial battle scar on the other spouse.  Divorce doesn’t have to be this way. Uncontested divorces cost hundreds of dollars, whereas divorces taking months or even years can end up costing thousands of dollars- usually paid from the settlement of assets.  The cost of ending a marriage, having to live on less, and decreased income (for those paying alimony or child support) from becoming a single-earner household, can make divorce almost as destructive to your retirement savings as the Great Recession was.  Aside from the above reasons, retirement assets are usually divided to ‘equalize’ the retirement savings of each spouse.

When marriages are going well, couples participate together in financial planning, developing personal budgets, and savings and spending plans.  The same should happen when anticipating a divorce, during divorce proceedings, and after the marriage ends.  Financial advisors are in a position to discuss with both spouses (at the same meeting if amicable) the effects of fighting over assets, a plan to maintain retirement savings going forward, and keep the couple on track to retire as planned.  If solutions can happen without fighting between attorneys, the couple stands to win by ‘playing nice,’ saving what they worked so hard to achieve before the marriage fell apart.  The impending divorce now becomes ‘business,’ but understanding what you want and why can have positive financial outcomes for both parties.

Financial advisors can’t provide legal advice when it comes to divorce but can provide financial guidance regarding the liquidating of assets, effects on retirement accounts and future retirement savings, budgeting for a single-earner household, and other economic questions you may have.  During this time joint investment accounts, personal investment accounts, and all financial records must be disclosed to the other party.  Our Financial Advisory office will remain impartial as we view each client as vital while we continue advising both of you.

Donor-Advised Funds: A Solution to Itemized Deductions Loss While ‘Doing Good’

For families who previously used itemized deductions for charitable giving when filing their taxes, The Tax Cuts and Jobs Act (TCJA) will remove this benefit, resulting in default to the standard deduction for their 2018 filing.  This effects a household choosing to use charitable giving as a tax deduction, increasing the tax cost to them by 7%.  The change has charities anticipating that donations may be down since the new act is likely to discourage charitable giving.  TCJA also caps state and local tax deductions.  The act of giving to better society is the prime reason many families choose to donate; the tax deduction is a bonus.

There is a solution to the tax benefits of giving through Donor-Advised Funds (DAF)s.  Donor-Advised Funds allow the donor to bunch more substantial contributions together instead of making yearly contributions, helping to push their itemized deductions above the standard deduction level.  Some features of DAFs:

  • Most or all of the DAF contribution is tax-deductible when moving money into it at the time its set up.
  •  The DAF doesn’t need to indicate the charity
  •  The DAF allows for multiple charities to benefit, not just one as required when setting up a foundation.
  • If invested effectively, the funds can grow tax-free, resulting in considerable donations later.
  •  Donations from the fund issue as ‘grants’ to a charity, or multiple charities

Critics of DAFs argue that in extreme cases, donors don’t have to distribute money to charities until their death.  They also feel that if one wants to donate, they should without a DAF, and not in a way that creates more expense.  However, for those that do donate, DAFs ensure not only a tax benefit but a human benefit as well.

DAFs allow the donor to make contributions from their IRAs (donor must be over 70 ½ years old), up to $100,000 per year to charity.  DAFs can satisfy the required minimum distribution (RMD) from IRAs, but can’t accept contributions from a 401(k) account.  The IRS has guidelines on DAFs to follow, or consult your tax professional for the latest changes.

If you have questions on DAFs and how they may fit into your charitable giving plan we welcome your inquiry.  DAFs are an integral part of giving to help make the world a better place.

The Value of Planning for Life’s Messes

Planning is valuable for many reasons and helps to ‘normalize’ things when you find yourself in the middle of an unexpected life event.  A death, a critical illness, job loss, new family member, an inheritance, divorce, or a catastrophic event that can cause a major financial detour.  How you plan will help determine how you survive and normalize after these events.

Planning can be as simple as making sure you have the right insurance coverage, from personal insurance such as medical and critical illness insurance, property insurance and an emergency fund.  All insurance is to offset risk, cover expenses, and to protect other assets such as retirement accounts that you’ve accumulated.  An additional item is to have a will in case something happens to you so that your loved ones carry out your wishes.

Some people consider financial planning to include risks that are health related.  If you or a family member had a major medical event or condition, would you have the financial assets to cover all the expenses and cover your loss of income related to the medical event?  How would it impact your portfolio and ability to accumulate assets?  Which assets would you choose to liquidate first?

With life’s always changing events, planning for the unexpected when experiencing a significant life event is essential.  It is possible to run scenarios within a financial plan to see outcomes of specific circumstances and how they may impact you.  If you get detoured by an event or wrong investment decision, planning can help you to recover quickly to a ‘new normal.’  Life can be messy and what you do now will make the difference in what may happen later.  No one can predict the future, but it helps to prepare ourselves now as much as we can.

If you would like to visit regarding planning for potential risks and how it may impact your portfolio, please contact our office.

Social Security Retirement Benefits: Why Waiting May Be the Best Decision

Taking Social Security Benefits can be a guessing game unless you do your research to figure out what age to take benefits the best for you.  Do you receive benefits at the earliest age or wait until your full benefit age?  Will you die in early retirement or live a longer life than you imagined?  These are the challenging questions many pre-retirees ask because it can add up to thousands of dollars over your lifetime.  Most people want to get their benefits sooner than later, not realizing that the odds are in their favor for living longer than they thought.  Pre-retirees need to plan for the long-haul, or so to speak each generation, on average, is living longer than the previous.

Finding out your ‘break even’ age for Social Security is important to determine what age is best to start taking benefits.  Once you make the decision and start benefits at a specific age, you can’t change your decision since it is essentially ‘locked-in’ for life.  Benefit amounts will not increase, aside from the occasional small cost of living increases.

The best way to determine when to start taking benefits is by running a break-even analysis to find your break-even benefit age.  The break-even age is when an individual’s total lifetime Social Security benefits received would be equal to the benefit amount, but using a different claiming age.  When doing your pre-retirement income planning, the break-even analysis is a crucial piece of information to consider.

Deciding to start Social Security benefits at the first opportunity or delaying benefits is a personal decision.  Factors to consider are other retirement assets available and their value, genetic health factors, and outstanding debt and lifestyle considerations.  If you would like more information on social security benefits and implementing it into your financial plan along with other assets, contact our office for a meeting.

Fiduciary Financial Advice

One thing that has plagued the financial services industry is ‘trust’ of the industry.  Unfortunately, there are many reasons that some people have developed a distrust of financial companies and the individuals that work for them.  It may be due to the media, entertainment (movies), or a personal situation that has happened in the past.  When advisors work with clients, they take on the role of a Fiduciary, which involves acting in the best interest of all clients. Serving as a fiduciary helps clients reach their financial goals.

Working within our business model, we take ‘fiduciary relationships’ seriously.  A ‘Fiduciary’ is a company or a person who holds a legal or ethical relationship of trust with one or more parties (person or group of people).  A Fiduciary has a legal responsibility to take care of money or other assets for another individual.  Part of being a fiduciary and working with clients involves transparency, full disclosure, and 24/7 access for clients to have all relevant information regarding their assets at any time.  It also includes giving clients information that advisors have access to prior to making an investment decision.

Part of the ‘distrust’ that has plagued the industry can be summed up with the storylines of two movies, The Big Short and The Wolf of Wall Street,in which clients are taken advantage of for a ‘salesman’ to profit.  Unfortunately, this happens in real life when there is no disclosure and no ‘fiduciary standard’ enforced at the firm, or by the individuals working for the firm.

Our processes are client-centric, and based on a conflict-free financial advice model.   We welcome your inquiry, as well as you questioning and understanding our advice as we work with you.

Why the Technology (and Person) Managing Your Money Matters

Money and technology are so closely related that if a financial advisor isn’t employing the latest technology, how will it equate to risk for you and your money?  When it comes to managing your money, you expect your financial advisor to have the best technology resources available to do the job.

Since the last recession, the financial services industry is leading the way in technology development, with healthcare second and other sectors closely following.  Among the new technologies, Artificial Intelligence (AI) and machine learning are in first place for the top development trend in financial services.  The acceptance of AI at large financial companies has still deemed a threat to the old system of money management, but continues to be widely accepted by established advisors (ages 35-44) even more so than advisors that are new to the industry.  New technology is helping clients and advisors to be more efficient in managing assets and their risk.

One of the new developments using AI is in behavioral finance software that determines client behaviors and their adversity to risk before selecting funds, ETFs and other assets to be managed inside portfolios.  No longer should selection be done manually when AI can search funds with precision based on client behavioral perimeters.  Without an assessment of client behaviors before market activity, potential losses may impact the client and be more difficult to recover.

When behavioral finance software combines with risk profiling, the assessment of misaligned investment choices can be overridden helping to build better portfolios based on scientific data and not solely on past performance.  Without behavioral considerations, misaligned investment choices aren’t just possible, but likely.

Investment managers must continuously upgrade their technology infrastructure  to keep up with client expectations and best practices to continually improve the client experience and make advisors better at their jobs.  While robo technology, or portfolio automation, continues to become an accepted part of the investment equation for younger clients with fewer assets, to clients transferring wealth to future generations, artificial intelligence and machine learning are the next great frontier.

The New Senior Safe Act: S$A Provides Immunity for Reporting

On May 24th, 2018 President Trump signed The New Senior Safe Act into federal law, encouraging financial professionals to report senior financial abuse.  Since financial advisors and bank employees are usually the first to witness clients making money withdraws that are not common, the law rewrites protocol and protection for those that report abuse.  The old law left loopholes citing ‘customer privacy’ when reporting to authorities the suspected fraud.  Bank employees and financial advisors had their ‘hands tied’ even if reporting was in the client’s best interest; previously reporting suspected financial abuse or fraud required obtaining the client’s permission to report it.

The new S$A Law  moves the reporting to the federal level, over-riding the 25 states that still have customer privacy laws preventing the financial professional or company from reporting without client consent.  Although not a mandate, the new law encourages and protects the individual reporting abuse or fraud from scrutiny or termination by their employer due to company client privacy rules.

To have protection under the new law, the financial company is required to have a training program that addresses identifying, documenting and reporting protocol. The new law is a positive step in protecting financial professionals and their employees as well as financial clients.  Since most seniors view their financial professional as someone they can trust, many disclose information about a person, transaction, or scam unknowingly to the professional, who now is in a position to help stop it.  Regular conversations with seniors about their finances may reveal abuse or concerns they have about a family member or friend asking for money.

The most common ways scammers get to seniors is through telemarketing (phone), the internet, or through personal contact of a stranger forming a new ‘friendship’ with the senior, or through their family member.  As people age, their ability to decipher fraud becomes less likely to happen, making them easier targets.

If you or someone you know has concerns they may be a victim of

Understanding Credit Utilization and Its Impact on Credit Scoring

Credit scores are used in our country as a method to determine an individual’s financial responsibility.  The three-digit credit score means more than just the possibility of fiscal responsibility to the lender. They are part of a formula called credit utilization.  Understanding how your ‘number’ fluctuates regardless of making payments on time, can help you get more from your credit score.

It is possible to make payments on time and still have a low credit score.  Your credit utilization ratio is the relationship between your credit balances and your credit limits, expressed as a percentage.  It is a measurement of what you owe against your overall ability to borrow.  Simply put, if you have credit limits that are the same as your credit balance, regardless of consistent and on-time payments you will have a lower score.

One thing to remember about credit utilization is that it calculates at the specific time your available credit determines, which is once a month shortly after the statement closing date on each of your accounts.  Credit Utilization is all about the information relayed by the credit issuer to the reporting agencies.

Tips to ‘Beat the System’ of Credit Utilization:

  1. Keep Balances 30% below the credit limit each month even if you pay it off monthly
  2. Don’t make minimum payments-double or triple payments if you can’t pay off the entire balance
  3. Remember FICO Calculates a score using credit utilization from 30%-Amounts owed, 10%- Types of credit in use, 35%-Payment history, 10%-New Credit, and 15%- Length of credit history

The lending business-which can’t survive without borrowing to consumers-has found a way to score probability (credit utilization) in a way that is not always in the consumer’s favor.  So how long can credit utilization hurt your score? The answer is as long as it takes you to pay off your debts.

If it takes you years to eliminate your debt, it will take years before your credit score improves.  However, paying off accounts with lower balances first while working toward paying off larger balances will help you improve your score almost immediately.

Questions Every Investor Should Ask Their Advisor

Many investors evaluate not only their portfolio performance but also their relationship with their financial advisor from time to time.  Many times people base their evaluation of their advisor on their portfolio performance, but there are other components to consider.  Asking these questions can help you determine if you and your advisor are mutually aligned:

Question #1: Are you a fiduciary? 

A fiduciary has a legal and moral responsibility to take care of your assets and act in your best interest.  A fiduciary is a financial advisor (person) who receives compensation for the management of your assets and the financial advice they give.

Why is this important?  There is a critical distinction between being a steward of a client’s assets vs. pitching products to generate a sale.

Question #2: What fees do I pay?

There is no such thing as an investment that doesn’t cost you anything.  You should always ask so that you know what you’re paying for.

Fees that are a part of the assets under management include fund management fees, portfolio management or asset-based fees, platform fees, charges on commissions, trades, M&E fees, and rider fees.  All costs associated with your portfolio are dependent on where the funds sit.  We welcome your inquiry on what your specific fees are for each fund in your portfolio.

Question #3: How are you compensated, and by whom?

Advisor compensation can be very complicated when it involves commissions.  Many times there is compensation for advice as well that may not include commissions.  In reality, commissions are usually how an advisor makes their income, by selling you investment products. The commissions are paid to the advisor who sells you a product from the fund-company or broker-dealer; if they don’t sell you something they don’t get paid. 

Understanding advisor compensation is essential for determining an investment’s true cost.

Question #4: Where do my portfolio and investment recommendations originate at your firm?

Many times when you purchase investment products, the product itself sits with the broker-dealer or at the wirehouse.  Sometimes the firm, not the advisor, often is responsible for creating portfolios.  The recommendations advisors give you in these circumstances originate from the broker-dealer or wirehouse based on the portfolios they’ve designed.  There may be other recommendations or products that ensure the client’s portfolio meets their situation, timeline, or risk tolerance.

Question #5: Who handles my account?

Depending on your situation, your account may sit at a broker-dealer or with a wirehouse.  You may need to have one person assist you with one transaction while another helps you with something different if you rely on customer service if you don’t work directly with a financial advisor.

In other business models, the advisor will focus on specialties they each have.  They will help you because each client is a client of their firm.   You have access to each member of their team depending on your circumstances, which may change from time to time and require individualized help or advice.

Asking questions of your advisor is your right; after all, they work for you.  If you have questions about our relationship or your investments, please don’t hesitate to ask.

Financial Literacy: The Best Strategy for Preserving Wealth

How did you learn to manage money and understand the value of investing?  Did your parents relay to you what they knew about money or did you read books on budgeting and investing in figuring it out yourself?   The reality is that many of us did learn through trial and error.

An alarming statistic is that in the US only 14 states require a class in personal finance and 20 states require a class in economics to graduate from high school.  If you aren’t teaching your family about money management and investing, they aren’t getting it.  One of the ways families maintain wealth and pass it to future generations is through financial literacy. Financial education will preserve the wealth of the current generation and onward if you adopt it as part of your family’s legacy to educate versus becoming a statistic.

If you don’t consider yourself an expert in financial literacy, we would like to help take some pressure off of you.   Understanding how money works and learning to resist the temptation of spending more than one earns should start at an early age and be reinforced through the teen and college years.

Even children at a young age understand their purse or wallet being empty and not being able to buy a treat when they go to the store.  Not giving in when they have no money and purchasing it anyway doesn’t teach them anything.  Even in a crowded store with your child throwing a temper tantrum, some lessons will last their entire life, if you take the time to teach them.

How do you start the conversation with children?  By asking them what they think investing is, naming types of investments, and what they want to learn about money and investing.  Teaching concepts and terms related to investing, its importance, and managing their money is part of the conversation.  If you think about it, this is very similar to how we start the discussion with adults after our initial meeting; what do you know about investing, why is it important to you, and how should we invest so that you can live a more fulfilled life?

Focusing on the importance of math, giving the next generation a look into the world of investing starts with basic Finance 101; the bank accounts for spending and saving, brokerage accounts, and the ‘why’ behind investing.  Children don’t always equate that an investment can be anything from a house to a brokerage account being used to save for retirement.  If we give our children the basics of money management, we help them develop the best strategy to preserve their wealth, the wealth of their children, and so on.  There’s no better strategy to preserve wealth than financial education for this and the next generation.

Suitable Investments and You

suit·a·bil·i·ty:  The quality of being right or appropriate for a particular person, purpose, or situation.

The definition of suitability seems quite easy to understand and should be clear when it comes to investment recommendations to clients.  However, many times when clients come to our firm the investments they have are not suitable for them.  We base this conclusion on a set of objectives to consider.  Determining suitability includes an examination of the client’s demographics such as age, income, willingness to take on risk, and aversion to risk.  Additional factors include how long until the client liquidates the investment, likelihood of recovery from loss, and current financial health including personal debt, and tax considerations.  A suitable investment for a forty-five-year-old will look very different than an investment for someone entering retirement.

Only after getting to know our client through these objectives, or ‘facts’ can we start to develop an investment strategy.  Suitability is not always clear-cut and is often in flux.  What seems like a suitable investment one day can change with the correction of the stock market, suddenly becoming an unsuitable one.  For this reason, constant monitoring of investments coupled with performance and the ever-evolving circumstances of the client make suitability critical to an overall investment strategy.  We ask a lot of questions during our meetings for this reason.

The client has a crucial role in their suitability as investor knowledge and understanding come into play inside their portfolio.  However, this doesn’t that mean that if an investor understands the investment and all associated risks, is it a suitable one.  Unsuitable investments can ruin a portfolio and can be a source of on-going stress for the investor.  Our recommendations consider suitability, but for those investors that execute an investment on their initiatives outside our advice, there is not much the securities regulators, or we can do.  Advice and suitability must come first, asset allocation second, and the execution of the investment last as a continuous process.

Suitability is part of fiduciary standards.  We operate our business in this manner and are legally bound to recommend only suitable investments to our clients.

The Second Half of Life- Discovering Your Passion

At some point along your life’s journey, you might find yourself at a crossroads looking back thinking, “Is this it?  Is this all there is to life?” while considering the path ahead of you.  It can happen at any time- you’ve spent your life building something that has taken all your blood, sweat, and tears and you realize you’re looking ahead to the remainder of your life and pondering how you will be remembered.  For many, this is the impetus for a life change– not the money they accumulated or the business they built, but what they intend to do with the years they have left, and what legacy they will leave.

As a society, we tend to focus on the first half of life and not the second half, which many times can become the most fulfilling.  The first part of life is filled with plans, projections, and goals to get to the next phase of our business (or life).  It’s easy to become consumed with what you need to do to achieve success, but the joy often fades when success comes.  Sometimes the more successful one becomes, the harder it is to find happiness and fulfillment.  Success and money suddenly aren’t as compelling as they once were.

When people discover their passion, sometimes they realize that all of the successes and skills gained and wealth accumulated, can be used to better the lives of others, and ultimately the planet.  Bill and Melinda Gates, The Buffet Family and other successful entrepreneurs have been inspiring examples of prioritizing higher causes and donating significant wealth during their second half of life.  For these individuals, it has become their focus to create something impactful, lasting, and personally fulfilling instead of just retiring with a pile of cash.

You alone have to decide if your life goal is success or significance- it’s your life.  It takes opening your eyes, looking inside yourself, and determining if you’re happy with the life you’ve created.  If you’re not satisfied, commit to discovering your passion, whatever that may be. Saving for your second half of life is essential, but so is having a love for it.

Positive Impacts of the Financial Crisis

The financial services industry is still recovering from the effects of the financial crisis.  Positive impacts from the crisis include new regulations and clients taking an increasingly active role in their economic destiny.  Reinforcing this is that all participants—financial advisors, clients, and regulators—are all welcoming the greater transparency and convenience  that new financial technology (FinTech) is bringing to the relationship.

Another positive of the crisis is that it has created new client experiences and a new role for financial advisors. Clients are now in charge more than ever and know what they want and expect.  They demand real-time information in everything they do, whether it be shopping or accessing investment information.  The smartphone, in particular, has facilitated this. Investors clamoring for transparency and technology helps create a new, more empowered investor.  Financial firms that do not address these changes run the risk of losing their clients.

Today is a pivotal time for an industry that was previously shrouded in secrecy before the financial crisis. Today, financial intelligence—through transparency and more high-value advice—is the only way that the financial services industry can survive.  Online access and portfolio automation have allowed clients full access to their accounts and greater insight into its workings.  This gives investors more piece of mind and a longer-term view of their goals while allowing the advisor to be more strategic with their advice.

FinTech helps the advisor focus on the role they should occupy—the giver of financial advice.  This advice takes into consideration the whole client, their evolving situations, values, and expectations.  With transparency and technology at the forefront, a higher value relationship between the client and their advisor is happening.  Time is not wasted on administrative tasks since technology takes care of the heavy lifting.  Clients have full access to update information and make changes themselves, with technology notifying the advisor.

With regulatory changes after the crisis and the new technology developed by startups and financial companies, there isn’t a better time to be an investor or a financial advisor.  FinTech tools are available to us to see the real-time performance and plan accordingly to an investor’s ever-changing situation.  We encourage all investors to take an active role in their financial lives by discovering and using the technology tools available today and the new tools in the future.

Tariffs, Trade Wars, and Your Investments

Since President Trump announced his intention to impose tariffs on all countries the stock market has been reacting-based on investor concerns in reaction to the media.   All indications at the time of this writing are that the tariffs would be applied to all countries, although that remains unknown.  This development has risen the speculation of a trade war with the US’s major trading partners including the EU, China, Canada, and Mexico. Trump has softened his stance by indicating that countries that treat the US fairly would get relief from the tariff, although that remains unknown.  A global market doesn’t avoid harm from the strategic targeting of tariffs; international fallout may follow.

But is the possibility of a trade war and tariffs on imports as dramatic as it sounds?  Consider that the relationship between the US and its trade partners is quite frankly, lopsided.  The US imports four times more than it exports to the trade partner countries.  Political retaliation from other countries toward the US can negatively impact imports coming into the US resulting in increased costs on items such as clothing, food, and lifestyle items such as electronics.  Agricultural exports will suffer additionally after experiencing a decline the past two years.  We can only assume we are in for a bumpy ride if this ‘tariff talk’ continues.

The US may stand to benefit from buying more goods from its own home-based companies if imports become too expensive.  Although certain imports are deemed necessary, such as food not grown in our climate, is a trade war stand-off enough to bulletproof the US economy?  For now, the trade war and tariff talk is merely a war of words as the proposed tariffs will not go into effect until June 2018.  Factors to consider:

  • Tariffs and trade wars typically lead to higher inflation and lower economic growth which has a negative impact on the markets.
  • While trade restrictions will create headwinds for the equity markets, ultimately it is high valuations that have a bigger long-term impact.
  • Inflation protection strategies should benefit from potentially higher inflation if this policy shift does materialize.
  • Limited duration of fixed income should buffer from rising rates driven by higher inflation caused by these policies.

These factors may not apply to all investors which is why we welcome your questions regarding your portfolio and how it may impact.

Personal Training Advice Style

For those of you that have ever hired a personal trainer–you know what that experience is all about.  The first day is the one that you will never forget because it was hard both physically and mentally.  You probably found out that you weren’t as strong as you thought you were or maybe that you didn’t prepare well enough.  But it made you stronger in the long run.

Working with a financial advisor, believe it or not, can be a similar experience.  It is common for most people to have some level of emotional duress when thinking about money.  The stress compounds when investors come seeking to break their bad investing habits or when they’re emotionally recovering from a bad experience with their former advisor or broker.  A financial advisor should work with you to correct mistakes made by offering on-going advice, as painful as it may be.

There are benefits to getting ‘personal training’ regarding your investments. By helping you break down bad habits and recover from poor financial relationships, your financial plan can be a form of ‘financial therapy. This sets you up for long-term prosperity that is more self-sustaining. In other words, you grow to be more empowered to manage your day-to-day finances.  Providing more strategic advice is often of higher value in the long-term.

Perhaps the most significant difference between an actual physical personal training and a financial advice personal training is the fact that we must listen to you more than a personal trainer ever would.  By us asking you the right questions and listening, you’re able to accurately reflect upon what went right or wrong in your previous financial relationships. This element of critical thinking is the personal training aspect that allows an investor to break down so they can be built back up with a financial plan.

The sting of financial pain can lead investors to a better place. The first step towards improving an investor’s well-being, however, is through asking questions and listening intently. This type of personal training sets the stage for financial empowerment and well-being for investors. Financial advisors experience divorce, death, business success (and failure), and personal growth from the front row seat of their clients’ lives, all by bringing each client through their training.

7 Common Ways to Mishandle Your Inheritance and Waste Thousands of Dollars

Receiving a large sum of money through an inheritance or other windfall can be stressful, exciting, and confusing all at once. Managing a large sum of cash can seem overwhelming, particularly if it’s an experience you’ve never had before. Here are seven common inheritance mistakes and how you can best avoid them. Follow these tips and you’ll find yourself benefitting from your inheritance not just in the short-term, but for decades to come.

Spending without a plan in place

Many people who receive a large inheritance are so overwhelmed that they get right to spending. They justify each purchase by saying that it’s only a small chunk of what they received. But those small chunks add up to big portions of your sum, and before you know it you’ve depleted much of your inheritance. Try to take things slow at first, at least until you have a set plan in place.

Making big changes all at once

Large inheritances can bring about the chance for big lifestyle changes. That might mean a new, bigger house, or the ability to quit working. But we advise holding off on these decisions. A huge sum of money might seem like it will last forever at first, but that’s not always the case. Resist the urge to immediately upgrade your lifestyle all at once.

Missing out on investment opportunities

The world of investing can be strange and foreign to the unexperienced. They might feel safer just leaving their lump sum of cash in a bank where nothing can “happen to it.” But smart, carefully guided investing is a vital way to stretch out the impact of your inheritance to have a long-lasting impact on your future.

Spreading yourself too thin

Even with the best intentions, it’s easy to forget the foundation of long-term saving and investing. It can be tempting to immediately begin giving away your sum of money to children, loved ones, or even charities. But remember that you can’t take care of others long-term if you haven’t taken care of your own situation first. Plan for your own future, then begin to think about helping others with theirs.

Forgetting about the future

It might seem like your life has changed all at once. You’ve likely lost a loved one, you’ve come into a great deal of money, and you have all kinds of decisions to make. Just remember that smart planning now will lead to a stable, enjoyable life in the long-term. Don’t sacrifice lasting financial security for short term thrills or financial excitement.

Being your own financial manager

Abraham Lincoln once said that any lawyer who represents himself has a fool for a client. The same could be said for an individual who’s come into a great sum of money. When you come into a large inheritance, there are a lot of personal and emotional factors wrapped up into it. Your relationship with the deceased, your family members and friends who might benefit from some of that money, and other thoughts can affect your thinking. You need someone on your team who can be truly impartial, giving you unbiased and experienced advice to help plan for your future.

Taxes and other liabilities

There will be certain tax consequences surrounding any decision you make so you should consider how to be as tax efficient as possible. You should consider how to structure yourself for appropriate asset/liability protection. Could this money go to your spouse? Could this money get taken by creditors? Could I lose this money in a divorce?

It’s heartbreaking how often we see individuals miss out on building a lasting financial foundation for themselves because they don’t know the options available to them. It’s particularly difficult when we know that we can offer free information about investment options, saving plans and financial planning solutions.

Set up an appointment with us today so that we can learn about your situation and walk you through every solution available to you.

Privacy, Social Media and You

In April 2018 Facebook’s CEO, Mark Zuckerberg’s admittance of Facebook user’s data used by Cambridge Analytica in our last presidential election has caused an emotional reaction in Americans and lawmakers alike.  Zuckerberg admitted that controls to prevent such a leak were not in place and that, he too, believes social media will need to be regulated in the future.  To avoid your social media profile from being used for personal or political gain by those wanting control and what will it take to ensure personal privacy and protection of your sensitive personal data going forward?

With this specific instance, information was obtained by the downloading of third-party apps onto the personal smartphones of unsuspecting legal age voters.  Because Facebook operates in an unregulated industry, no foresight had been given to notify those whose personal information was being used for a political purpose until the story leaked to the media and was made public.

With the sharing of personal information-sometimes by the person themselves-where does that leave privacy and personal information when it comes to your investments?  The financial services industry operates under the regulation of the Federal Government (the SEC) and FINRA, which requires each financial company to develop protocols for transparency and notification to customers if or when their information compromises.  Aside from technology in place to protect financial customer information, the customer must also play a role in their own personal privacy.

To help you to determine if you may be compromising your privacy and personal information:

Review your social media profile and ‘turn off’ public view of your information such as date of birth, contact information, and education and employment information.  Limit this information, along with photos, only to connections. You may want to eliminate personal information from your profile.

Use Apps only from financial companies you do business with and don’t use apps that aggregate access to all companies through a third party app-especially if they’re not a financial company.  Compiling online access to multiple companies through one app source puts you at risk for all your financial passwords and profiles.

Be aware of what you’re putting on the internet each time you ‘like’ or comment on a social post.  Artificial Intelligence captures your reaction to ad targeting-which is what happened this past election.  Those that commented or ‘liked’ posts were the recipients of more targeting; certain geographic areas were targeted during the 2016 election.

Lastly, have varied login and password credentials for each account you have-from the electric company to your retirement accounts.  Do not use the same information as if one is compromises they may all be.  We leave our digital path on the internet each time we login if we are not logging in and out securely each time with different credentials.

Is Early Retirement a Reality?

We all desire the flexible lifestyle, to not work or work when we want.   Wouldn’t it be great to spend more of our lives not working than working?  There have been countless financial plans created with this target in mind, but it may not be a reality to stop one’s career before reaching the full retirement age Social Security has set for us. 

Early retirement won’t be an option for many as most American’s haven’t saved enough for retirement-and may never.  The median retirement savings balance for US adults aged 56 to 61 is $17,000 according to the Economic Policy Institute.  That’s not even enough to cover a year’s worth of food and utilities in retirement!  What could we be doing better to increase the possibility of more American’s having the ability to retire early?  Saving! 

You may be preparing to retire early or on time if you’ve been saving consistently and planning.  If this is your situation, congratulations!  To be sure your early retirement is a reality, consider these facts:

  • Leaving the workforce before full retirement age (according to Social Security) stops 401(k) contributions, Social Security Accumulation, and employer health insurance benefits.
  • Drawing pre-tax retirement savings before age 59 ½ results in an IRS penalty, further depleting your savings.
  • Health Insurance will now become your responsibility to pay as you are not eligible for Medicare until full retirement age.  Even when you’re able to use Medicare, it doesn’t cover everything, and you still need to pay for additional coverages like dental, vision, prescription, and a percentage of costs for all medical service.  Medicare is not that great of coverage- ask a retiree!

The best way to meet your retirement goals for considering early retirement is to set a budget now for saving and spending-the save first, spend second philosophy.  Secondly, plan for the unexpected-poor health, bad financial markets, job loss and overhead debt payments.  Lastly, continue financial planning with financial advice to help make retirement a reality when you’re financially ready.

The Inflation Factor

Despite the fallout to investor’s portfolios, job losses, and the overall downward turn of the American economy during the recession, we have benefitted from relatively low inflation rates.  While the US and other countries control monetary policy, there is never a way to avoid inflation after a recession; it’s part of the economic cycle.  Borrowing and buying power become expensive and our dollar doesn’t go as far during a period of high inflation.  We are already starting to see inflation creeping up- food costs, housing, durable goods, as well as the reaction of the stock market to impending inflation (and other factors).  Remember how much a candy bar cost when you were a kid?  That’s the perfect illustration of inflation; things overtime become more expensive.

How does inflation affect your portfolio as you enter retirement and can it withstand future inflation hikes?  If you’re unsure, having a financial plan run with a high rate of inflation can give you an idea how your portfolio may be hurt.

Some investors have the misconception that once you retire, financial planning and keeping part of your portfolio in the stock market should stop.  When you retire, you are no longer working or contributing toward retirement savings accounts and still need to generate income inside your portfolio.  During retirement, it becomes even more critical to continue to monitor and restructure your portfolio so that it continues to make gains the remainder of your life.  This includes being invested enough in the stock market so that your portfolio outperforms the inflation rate.

There are two things investors can do if they’re opposed to keeping their retirement portfolios in the stock market to adjust to inflation; cut back on what you buy or return to work so you can continue accumulating retirement assets.  Even the best-constructed retirement portfolios are not completely ‘bullet-proof’ when it comes to inflation.  Inflation is one of the unknowns in financial planning; we have no idea until we get there how it will impact us.

Contact our office for a meeting if you would like to visit regarding your retirement portfolio and inflation.  Like everything else, inflation is an ever-changing beast that needs tending to throughout retirement planning and spending.

The Cost of Credit

2017 was a bad year for the credit industry- data breaches and multiple lawsuits.  But it’s becoming apparent that Americans overall are going to have a worse 2018 compared to last year as the trend of acquiring more debt increases.  Aside from having to shell out money for damages caused in 2017, the credit industry will have a very lucrative 2018 even after paying fines and settlements thanks in part to the American consumer.

Factors contributing to increasing credit card debt among Americans includes more access by those considered ‘subprime borrowers,’ increased costs for food and housing and continuous spending on unnecessary items.  After all, we are a society that values keeping up with the Jones’ which causes many to borrow to achieve the lifestyle they desire.  But at what expense?

If your debt level has outpaced your savings, it may be time you take a serious look at your financial picture.  You should be decreasing your debt and increasing your savings (retirement, personal, emergency) over time.  The latest Financial Security Index Survey from Bankrate shows the opposite is happening.  Surprisingly 17% of Americans indicated that they have no credit card debt, but also have no savings to show for it! Americans are failing to realize that their savings need to outpace their debt.  Preparing by having an emergency fund to offset a health-related condition that prevents working or retirement planning to someday retire without decreasing lifestyles can only happen when debt is under control or eliminated. 

Here are a few facts about credit you need to consider:

  1. Having your credit score accessed frequently will affect your score.  You will lower your score due to multiple inquiries if the inquiries are to obtain credit, not for other reasons such as employment. Avoid accepting every credit offer you’re getting at the check-out.
  2. Only paying the minimum payment each month will hurt you.  The higher the balance and the length of time you carry a balance has a negative effect on your financial health and credit score over time.
  3. Not every credit score that you access online is a true FICO score and may not be the one your lender uses.  If you apply for credit, the lender has to provide you a copy of the score they received when they pulled your credit; don’t be fooled into believing credit cards are the access point to bank lending for home, auto, and other loans.
  4. Late payments lower your score.  Even one a year has a negative result on your ability to secure loans.
  5. Employment history doesn’t affect credit scores, but some lenders look at employment history to determine if you’re financially stable enough to make monthly payments.
  6. The more you make and save doesn’t help a credit score.  Your bank accounts and investment accounts are not a part of the FICO (debt) calculation, but if you don’t have anything left over at the end of the month because of your debt, you can’t save and invest.
  7. Bad Credit never goes away.  It takes seven years to remove bankruptcy and collections on credit, but over time it does go away, and your score can improve if you’ve managed your credit positively.

Reasons Why You Should Definitely Consider A Company 401(k) Plan, Even If You’re A Small Business

The ability for a business to offer a 401(k) plan is often seen as the benchmark of a large, successful company. Organizations with retirement benefits have been shown to attract better talent, while roughly a quarter of small businesses say that employees who leave for another company cite a lack of these benefits as a primary reason for leaving. But what about small/medium-sized businesses and less-than-established companies?

Many small & medium businesses still don’t offer 401(k) plans, usually because they think the cost will be too expensive for their business to bear. 27% of companies say they would consider offering these benefits if costs were lower, but nearly the same number don’t do so because of concerns about matching employee contributions.

(Statistics provided by Capital One)

Did you know that you can offer your employees 401(k) benefits without having to match? Some companies even offer profit-share matching as an alternative solution.

The Matching Myth

Many small and medium businesses put off offering benefits because they believe that they’ll be required to match contributions. But the decision of whether to match or not is completely up to you. One alternative is to offer a share of business profits that adjusts based on your business success. Some owners prefer this approach because it makes employees feel more personally invested in the success of the company.

Lower Costs Than Expected

In fact, 401(k) costs, in general, can be much lower for your small business than you might think. Admin costs for a company with 10 benefit participants can be less than $1,000 a year, while the government offers a $500 tax credit for each of the first three years of benefits. With over half of all small business owners saying that offering a plan helps attract and retain top-quality employees, the cost to benefit ratio can work in many companies’ favor.

Attract Talent, and Keep the Talent You Have

Of the small business owners that started offering 401(k) benefits for the first time, a quarter of them did so as a direct result of employee demand. If employees are demanding these benefits be made available at their companies, it’s a powerful sign that they may be one of the most effective ways to attract and retain top talent.

Don’t Forget About the Owner

A 401(k) doesn’t just provide appealing benefits to your employees—it’s also a potential means of protecting yourself for retirement. As an owner, you’re responsible for your own savings and retirement plan. Alarmingly, less than half of all small business owners are saving at least ten percent of their income. 25% have no savings at all, and nearly a third are depending entirely on selling their business sometime down the line to fund their retirement. But this can bring the risk of approaching retirement with far less than expected, and no backup plan in sight.

Establishing a 401(k) plan at your small business can not only show that you’re invested in your employees but can also provide a powerful investment in yourself.


No business owner, regardless of the size of their business, can completely rule out offering a 401(k) retirement plan for their employees. Regardless of what owners ultimately decide is right for their unique situation, it’s worthwhile to take the time to become educated about the facts and data behind 401(k)s for small businesses.

Planning for The New Tax Plan

Many Americans have already filed their taxes for 2017, but the majority will be filing this month and finding out how the new tax plan is impacting them (if at all) for this spring’s filing.  Some changes have already taken place such as the adjusted withholding in February’s paychecks resulting in slightly higher take-home pay.  However, the impact is expected to be felt next tax season when filing for 2018.  If you haven’t already done so, now is a great time to visit with your tax professional and do some strategic tax planning.

The New Tax Cuts and Jobs Act of 2017 keep the seven individual tax brackets but lower tax rates.  Due to inflation over time income levels will rise and will move people into higher tax brackets.  One way to lower your tax rate is by contributing more to your pre-tax retirement accounts to reduce your personal income.  Visit with your tax professional regarding if this will make a difference going forward and adjust your contribution accordingly. The deduction for retirement savings remain in place so use it to your advantage while you can.  Saving more is never a bad idea, and when you need to offset taxes due by maximizing contributions you benefit twice.  The new plan doubles the standard deduction but eliminates personal exemptions which should encourage pre-tax retirement savings.

Next year’s tax filing will be unusual for those that were utilizing the mortgage interest deduction for homes valued over $1 million; the limit for the deduction is on loans of $500,000 or less.  As home prices increase, those entering the housing market will be impacted in many areas of the country.

Some ‘oddball’ changes in the plan affect those divorcing in 2018 and paying alimony; it will no longer be a deduction for the payer but will be for the receiver.  Additional changes are the doubling of the child care tax credit, and expansion of medical expenses to 7.5% of adjusted gross income for all age groups.

Due to the complexity of the new tax plan, it will become imperative for you to seek professional advice to make sure you’re aware of all the changes going forward.  Keep your tax professional aware of all tax-related personal changes, pre-tax retirement savings contributions, and other factors such as inheritance or upcoming plans for retiring in the next one to three years.  If our office can be of assistance in this area, please let us know.

Let’s Talk Robo

Have you seen the TV commercials about a machine or robot as your investment advisor?  As funny as they may be, they may be giving you the wrong idea of what a robo-advisor really is.  A robo-advisor is technology (an automation platform) that allows automation for certain aspects of portfolio management.  One of the misnomers in the industry about automated platforms (robo-advisor) is that they constitute advice. This has led to the misunderstanding that a robo-advisor provides advice.  They do not advise but instead provide a way to implement the customized advice of a human adviser through technology.

There are two uses of robo-advisors in the financial services industry.  The first one is online shops where an investor uses the technology on their own to make their investment decisions through automation.  There is no human advisor involved, and technology has given options for you to select based on the information you inputted into the technology platform.  In the ‘robo shop’ life changes you experience are unknown to the technology, and it remains on its trajectory unless you make a selection yourself to change it.  This option is for those ‘do it yourself’ investors that usually don’t work with a human advisor.

Another way robo-advisors (aka the technology) are active is through real financial advisors.  This robo technology used by financial advisors is highly efficient, low cost, and allows transparent investment management and client communication through the use automated platforms. If properly utilized, robo technology promotes engagement between the client and the advisor, and assists in monitoring and adjusting client portfolios to keep the client moving forward to their financial future. It is this second benefit that opens the door for using automated platforms for all clients under the direction of a human advisor.  In this instance, robo platforms make the advisor more efficient and allow the client access to better financial offerings.

Financial advisor las vegas

When The Stock Market Corrects

If you’ve been sensitive to the stock market performance in the last weeks, you’re not alone.  Regardless of how your investments fare during market corrections, being aware of your anxiety in light of what you’re seeing, reading or hearing can make a difference in portfolio performance.  We’ve all done it; reacted either internally or externally when watching the news and the reporter says, “The Dow Fell 400 points today”.  But is it a big enough deal that you should react to it?

The relationship between percentage changes and basis points determines the valuation difference in a financial instrument, such as the stock market.  The Basis Point (BPS), is used to calculate changes in interest rates, equity indexes (stock market), and the yield of fixed income securities.  A basis is 1/100th of 1%.  In the case of the Dow ‘falling’ 400 points, that would be 4%.  As the media reports performance for the day, remember that there are 20-22 trading days each month.  Reacting to declining market performance news on one day may cause you to make a premature decision.

In light of stock market corrections, political issues, scandals, and ‘fake news,’ keeping yourself removed from media as much as possible may be healthy for you (and your investments).  Every day we are exposed to stories that affect us and our financial decisions.  Liquidating your investments in a down market versus waiting for share prices to increase before trading has caused many people to hurt themselves.  It is up to you to consider how expensive information may be to you if you react to it.

When it comes your investments, there may be times that your asset allocation needs to be addressed in order for your portfolio to weather market corrections.  Adjusting based on short-term performance may not be the answer, but developing an overall strategy is something to consider.  If you’re concerned about stock market performance and your overall portfolio, it’s time for us to have a conversation about it.  Together we can determine at what time and under what conditions we should be reacting to basis point changes.

extinction of pension plans las vegas

The Extinction of Pension Plans: Is a Buyout Right for You?

If you’re an employee working for a company that has a pension plan, you’re among an estimated 4% of Americans that still benefit from this type of retirement plan.  Most companies have moved to a dual plan or removed the pension entirely.  Traditional government workers are among the few who benefit from pension plans.  The likelihood of public-sector pension plans having enough to cover future generation payments at the levels promised is looking bleak for many states.  Even the Federal Government is offering differing plan types depending on the job grading and classification of the employee, especially for younger workers.

In recent years employers with pension plans have offered employees who are not yet at retirement age the option to take a pension buyout. The reason for the change from pension to traditional 401k plans is simple; we are living longer than previous generations and companies can no longer afford to fund them at 100% and want employees to participate in their savings.  When receiving a pension buyout offer, there are usually several options:

  • Take the value of your pension as a lump-sum payment to roll over to an IRA. The advantage is managing this money yourself and allowing it to grow to a level that would provide a more significant benefit than taking your payments on a monthly basis.
  • Take a monthly payout now (earlier than your normal retirement age), with tax consequences.
  • Do nothing and take your original pension payment (or a lump-sum if offered) at your normal retirement age.

Factors to consider:

  • If you take one of the buyout options will it put you in a better financial position than doing nothing while waiting until your anticipated retirement age?
  • Are you comfortable managing a lump-sum or do you and your advisor have a plan for it?
  • Is your financial and/or health situation poor so that taking the monthly payments now would make sense?

These types of offers are likely to continue due to the increasing costs of administering pension plans and the desire to get the liabilities associated with the pension payments off the books.  If you’re an employee offered a pension buyout, you still need to continue saving money by participating in the 401k or other plan replacing the pension.

If you receive a pension buyout offer, we can help you evaluate it and help you make the best decision for your situation.

Contact our Las Vegas Financial Advisor office to learn more.

Legacy Planning as Part of Life Planning

Leaving a legacy through the passing assets today and after your death is a process that requires correct planning and execution.  With the recent Tax Cuts and Job Act of 2017, updated tax codes, and an ever-changing political environment, legacy planning requires consulting with multiple professionals in order to pass assets without financial consequences.  Legacy planning should always be a team effort involving an attorney, tax specialist, and your financial advisor if planning involves securities assets, or will benefit more than one generation, non-profit, or other entity.  Transferring wealth has no ‘right or wrong’ way, but is best the way that you prefer.

Regard your wealth transfer as ‘leaving a legacy for others’, which should include protecting others while you pass on your values and financial dreams for them.  Some people consider transferring wealth to benefit their children and their children’s children, and if the wealth is great enough, endowments can be created to benefit many people.  The complexity of the wealth transfer increases with the number of assets you own, the people it is being created to benefit, and the length of time you want the assets to last.  Legacy wealth transfer may become complex due to the types of assets you own, just like a family can be complex due to different personalities.

Not all people wait until the end of their life to start legacy planning.  It can be a part of your life today as none of us know when our lives will end.  Important things to consider are how much control you want to have, to understand issues from not distributing assets among family members, and if assets should transfer now and the remainder at death.  Transferring wealth through estate and legacy planning should not be a ‘quick decision’ decided in only one appointment.  Not considering all consequences can be costly.

Once your legacy plan is created talk to your family about it.  Invite open dialog, and address their concerns so they can understand the reason behind your decisions.  Let them know the resources of information that helped you decide to leave a legacy may help eliminate concerns when family members know you consulted legal, tax, and asset professionals.  You may not choose to disclose specific information regarding the wealth transfer, which is your decision.  Informing family members that there is an estate plan in place many times eliminates concern regarding asset transfer.

If you have any questions about legacy planning, feel free to reach out to schedule a meeting.

Tax Season (aka Scam Season) is Here

With the significant 2017 cybersecurity leaks involving the personal information of millions of Americans, this year’s tax season is expected to be one of the worst ever for tax scams.  Aside from cybersecurity leaks, the mailing of 1099s and W2s results in many people not receiving them through mailbox theft, which is contributing to more cases of tax returns being fraudulently filed.  Many companies now have employees pick up these tax filing forms from the HR department as a means to protect the personal information of their employees.  Scammers also target HR departments via emails requesting employee information while posing as the IRS, which has corporations on edge to maintain the security of employee information.

This year’s scam season officially opens January 29th, 2018 and runs through April 17, 2018; interestingly the same dates as the 2017 IRS tax filing season.  Scammers are ready and waiting to file tax returns in the names of other people.  Experts advise filing early ahead of scammers to make sure you get your return and someone else doesn’t.  Hundreds of thousands of people will file their taxes this year expecting a return, only to find out the return was sent somewhere else.  What can you do to protect yourself?

File Early.  The sooner you file, the more chance you have to be ahead of the scammer who will likely file multiple returns.

File Electronically with Request for Direct Deposit.  Electronic filing is faster than paper filing.  Secondly, select direct deposit into your bank account to offset the chance your paper check will be stolen from your mailbox if you are expecting a return.  Mailing the tax return your filing from your mailbox is a bad idea as your mail to the IRS runs the chance of being stolen.

Run your Credit Report.  Your credit report will contain an active address for you and previous addresses.  If you see a discrepancy and unknown address in your profile, you may be the target of a scam.  Alert the credit reporting agencies immediately, and all companies where you have credit.

If there’s anything that should motivate you to get your taxes filed early, it’s the increased potential for tax scam the longer you wait.  Happy filing!

Fear, Greed, and Your Portfolio

Finance, in general, has been based on rational and logical theories, and for most part, tends to be somewhat ‘predictable.’  Early financial theories assumed that people behave rationally and predictably, and that outside factors and emotions do not influence people when it comes to making financial decisions.  However, behavioral finance has proven people behave irrationally and differently in the real world.  The human brain has difficulty assessing risk (fear) and possibility (greed), which causes our emotions to affect our decision-making process.  Investors make irrational decisions when it comes to their own investments.  Investors react stronger (it’s painful) to financial loss, than to gain.  This is what has the most impact on our portfolio aside from investment performance.  Fear and greed are such powerful emotions that there is now a Fear & Greed Index that tracks what is driving the stock market today!

In thinking about yourself, do you react to televised market commentary or to ‘Herd Instinct’ causing you invest in something because everyone else is?  When the market declines are you fearful of loss and sell or invest or hold onto an investment in a down market?  Fear and greed can be beneficial to your portfolio or have the opposite effect.

As Warren Buffet said, “Be fearful when others are greedy and greedy when others are fearful.”

Discussing your fears and financial dreams can give both the investor and financial advisor a better understanding of what may cause bad decisions leading to errors that you may not recover from.

Hearing the term ‘greed’ isn’t bad unless it leads to thoughts of confusion, questioning decisions, or changes in behavior similar to ‘gambling’ on an investment.  As an investor, you can have a ‘financial crisis’ by not fully thinking about what you want and how you will react to changes in the markets.  You need to know yourself before you can determine your goals and start to invest.

How much market fluctuation can you tolerate?  Are you comfortable with separating money into different investment options to help fund each goal you have?  Are you comfortable with investment advice and the monitoring of your portfolio?  The best way to harness fear and greed to your benefit is by understanding your investor profile:

Objective Traits– Personal or social traits such as gender, age, income, family, even tax situation

Subjective Attitudes– Part of the emotions and beliefs of the investor.

Balancing Risk vs. Reward– Tolerating more risk in order to have the higher reward or less risk and contentment with a reasonable return.

Area of Focus– Types of investments (ex. Stocks, bonds) and sectors of investments (ex. Technology).

Investment Strategies– Helps to shape the investor profile by the type of investing the investor uses (ex. ethical, growth, indexes)

Valuation Methods– Helps to develop the investor profile through the valuation method (ex. Fundamental analysis, technical analysis, quantitative analysis).

las vegas financial firm

Is Retirement Really About Numbers?

For some people retirement is all about the numbers; the age you plan to retire, how much money you need, and so forth.  We have built our planning processes in financial services based on numbers and algorithms in financial planning software to help us contrive a number or group of numbers that are uniquely yours.  But is retirement really about numbers?

Numbers give us a baseline to help you financially plan for today and the future.  Your numbers can change throughout your life.  Maybe you’re already retired or are within ten to twenty years of retiring, but one thing is clear; numbers play a role in all aspects of your financial life:

Economic conditions affect your retirement savings.  This includes inflation and the economy.  Inflation determines how much it costs you to live today and how much things will cost when you retire.  The economic conditions that affect your employer decide whether if you will have a job.   Both of these are caveats in financial planning since both are unknown; we can only make assumptions based on today’s information and can’t guarantee anything in the future.  If that leaves you concerned, you’re not alone.  The best option is to plan for the unknown and put yourself in a position that if a job loss happens, it doesn’t wreak havoc on your finances while you’re looking for work.  There’s not much we can do about the economy, but keeping expenses low will help you if prices dramatically rise or if you suddenly are without a job.

The age you retire relates to two things, your health, and your financial resources.  According to the RAND Corporation Center for the Study of Aging, when people are in their late 50’s they start to consider if they should continue working or collect social security as early as possible.  This decision is related to their health, and if they’re economically stressed.  These individuals tend to retire as soon as possible.  Healthy people continue to want to work because of the financial reward of growing their retirement savings and maintaining their current lifestyle.  They start to look forward to other jobs they always wanted to do later in life or advance in the career they’re currently in.

Accumulating retirement savings and developing a spending plan is beneficial at any age.  Accumulating assets is important prior to retirement.  If you don’t have a spending plan during the accumulation stage it may be more difficult for you to save for your retirement.  A spending plan in retirement is important as you will not be able to accumulate assets due to no longer working and be on a limited income.

Retirement uses numbers to plan your financial future.  This is the best way for advisors to give clients something to understand in theory but also show through software, written financial plans, and concrete information.  Retirement really is about numbers when you use them to set realistic goals and stick to them.  Our Las Vegas financial firm is ready to assist you in finding and managing your numbers.

Alternative Investments Las Vegas

Bitcoin, Cannabis, and Other Alternative Investments – Las Vegas, NV

If you’re considering alternative investments this year, you should thoroughly think through the consequences of investing in some of the most popular ones in the media.  Although Bitcoin and the Cannabis business may be on Wall Street’s radar, it’s not necessarily for good reasons.  Both are still considered speculative and are not investable asset classes; they are not categorized as alternative investments in the stock market, and may not ever be.  However, Blockchain technology is something that many financial institutions are investing in due to the security benefits it provides.  Bitcoin doesn’t pay dividends, the tokens have no cash flows, and there is no way to determine demand growth or provide valuation measures.  And then there is cannabis, which still has its hands full with the federal government regardless of states deciding to go rogue on allowing sales to the public.

Cryptocurrency exchanges (such as Bitcoin) have come through technology development, and are virtual, digital (website) exchange that can reside in any country, or countries, and managed by multiple individuals.  Traders have to be ‘verified’ but are not limited to number of times they trade, etc.; as traders in the US market are.  There is no regulation, and no knowledge of who the ‘currency trader’ is.  For this reason, cryptocurrency investing may result in a significant loss of capital, and just like other markets has no guarantee of profit.  Time and technology development will weed out fraudulent cryptocurrency exchanges, but we advise waiting to see how the US financial sector will view cryptocurrency in the coming year.

Last month the State of California legalized the sale of Cannabistwhich has increased Interest in this alternative investment.  The resulting media commentary regarding other states following California may be speculation, but California is being viewed by many Americans as being leader in opening up of cannabis business nationwide.  Regardless if a state allows medical or recreational cannabis sales, one thing is clear; investing in this type of business may just go up in smoke!  Because Cannabis and drug sales are on the ‘naughty list’ for traditional lenders, many dispensaries look to private investors.  There is no regulation or legal process if your lenders default; this business is viewed as illegal at the federal level which is why we caution you on this alternative investment.

Alternative investments may have a place in your portfolio with other types of investments that are meeting a specific need you have.  If you are curious about alternative investments, you are invited to make an appointment to discuss them.  Together we can determine which ones may be a legitimate alternative that meets an investment objective you have.

Be More Money Savvy in 2018 While Saving for Retirement

Start Saving More NOW!   If you started saving for retirement early, chances are you’ll hit your retirement goal.  If you’re like most Americans, you didn’t start right away and are playing ‘catch-up’! Don’t put off saving later, start now!  If you didn’t start in your 20s, it’s time to start maximizing your savings now because you still have time to make a difference in what you will accumulate.

Don’t Spend More Than You Make.  Overspending, credit card debt, and debt in general, will hamper your saving if you’re putting all of your extra income into paying down debt.  The important thing is to not live beyond your means; easier said than done, right?  Controlling your spending and developing a budget should be a priority for you in 2018.

Max Out Your Retirement Contributions.  Roth IRA contributions are $5500 if you’re under 50, $6500 if you’re over 50.  In your Pre-Tax retirement accounts, max your contributions at $18,500 and if you’re over 50, $24,500.

Save Extra Unexpected Money.  Maybe you’ve received a bonus at work or inherited money recently.  Instead of spending it on things you don’t need, or a lavish vacation, save some of it!  And for those of you expecting a tax return, add it to your emergency fund, start or max-fund a Roth IRA, or invest it into another investment.  If you have debt, pay it off using that refund!

Get Your Employer Retirement Account Match.  Make sure you’re putting enough into your retirement plan at work to get the matching dollars from your employer.  If you’re not saving enough to receive a matching contribution from your employer (commonly a 2-4% match), you’re throwing away ‘free money.’

Take Some Risk.  If you have all of your retirement savings in an interest only account, you will not keep up with inflation in retirement.  Visit with your financial advisor about having some of your portfolios in the stock market, after having an investor profile completed.

Be Aware of Tax Implications.  Part of your retirement savings should be in tax-sheltered accounts.  Discuss account options and tax benefits with your financial advisor and your tax professional so you fully understand how taxes will affect your retirement savings now and when you retire.  If you’re anticipating retiring in the next 1-2 years, this is crucial as many new retirees don’t realize that their tax brackets may change as a result of liquidating too much from their pre-tax retirement accounts the first five years of their retirement.

Monitor Your Investments.  Always meet for a financial review at least yearly to determine if your risk tolerance, fund choices, and timeline until retirement are still on target.  Getting financial help is never a bad investment.

Let’s set up a time to discuss your financial goals for 2018!

4 Must-Know Components to Successful Retirement and Healthy Aging

With a one in five chance of living beyond our 90th birthday, planning for a successful retirement and healthy aging should be something we all do.  Retirement is now considered a time to be active where people stay socially connected, continue working in some capacity, and are choosing to be involved in their communities.  Retirement today has changed from what ‘retirement’ meant even fifty years ago.  Retirement use to be the non-active part of one’s life, where you disengaged from your previous lifestyle.

Today,  more and more studies are finding that people in good health have a positive view of retiring and plan for it, while those in poor health don’t think they’ll make it to retirement and don’t save for retirement.  The Transamerica Retirement Study 2017 partnered with AEGON to study the correlation between good health and retirement success. This study identified that financial planning along with staying healthy led to a greater chance of achieving what’s considered a ‘successful retirement’.  Successful retirement and healthy aging has the following components:

Being Ready to Retire.  The individual has the ability to decide when they want to retire from their ‘profession’ and welcomes it once they determine they’re ready.  They feel they have achieved all they want to in their career, and look forward to the next chapter of their life.

Leisure Time and Working.  The retiree balances their schedule of work and leisure and views working as something they choose to do because they enjoy it, not because they have to.  Their work may be a part-time paid position, or volunteering that benefits their community in some way.  Work becomes a leisure time activity for them.

Financial Security.  Because the individual has been saving and planning for retirement, they feel financially secure and don’t stress about running out of money in retirement.  They work with a financial advisor and revise their plan as they age while liquidating their retirement assets.  They have a ‘spending down’ plan and a strategy to offset inflation as they age.

Health.  The plan to have a healthy aging needs to start long before retirement.  Retirees that are enjoying good health in retirement have taken steps along the way; good nutrition, exercise, no smoking or excessive alcohol use, and monitor their health with yearly checkups while maintaining a healthy weight.  Healthy aging includes insuring your assets will not prematurely liquidated through purchasing insurance solutions prior to retirement and during retirement.

Having a successful retirement and healthy aging starts long before you’re considering retirement.  Please contact our Las Vegas Financial Advisory to visit regarding your plans for a successful retirement and healthy aging.

The New Tax Plan and You

If you’re like some Americans, you may be wondering how the new tax plan is going to affect you.  To say “the new tax plan isn’t going to affect me” may be an incorrect statement; sooner or later the new plan will change something in your financial life.  It doesn’t matter if you’re on ‘one side of the isle or the other’ or in the ‘middle,’ there will be changes.  None of us know how the new tax plan will affect retirement savings plans, personal deductions, your ‘take-home pay,’ or our country’s deficit in the future.  Here are the new tax plan’s features to take into consideration as you plan for your situation:

401(k) Retirement Savings Plans: Future legislation will determine if 401(k) plans remain pre-tax contribution accounts or become more like current day Roth IRA accounts where contributions are after-tax and grow tax-free.  This is being proposed (and will be considered) as a way for the US government to bring in more money to offset the tax cuts in this new tax plan.

Secondly, House Republicans are considering capping the 401(k) worker contribution limit to $2400 per year when it takes effect.

Retirement Pre-Tax Savings Recommendation:  Max out your pre-tax retirement savings contributions for 2017, 2018, and until this change takes effect (if it does).  Regardless, save, Save, SAVE because you should never rely on the government to take care of you and solve your retirement problems.

Mortgage Interest Deduction:  Currently mortgage interest deductions are limited to deducting interest on a $1 million and under loan.  The new tax plan cuts the maximum loan amount in half to a $500,000 and under loans, affecting mortgage holders that live in high-cost housing markets and millennials as they enter home ownership.

Mortgage Interest Deduction Recommendation:  Avoid multiple loans and re-financing as a tax-saving strategy and get that home loan paid off as soon as you can.  Carrying mortgage debt is not a benefit to you and especially not for those with notes over $500,000 with this plan.

Take Home Pay:  With changes to individual tax brackets, the new plan moves from seven to four tax brackets.  There has been a lot of hype on this proposal; savings will be for child-less, single Americans if they itemize their taxes. Some lawmakers believe this will hurt families who have benefitted under the current tax brackets.  The US doesn’t have a flat tax rate; our taxes are calculated on a progressive scale. No one knows if we will have more take-home pay due to this plan, or will ‘pay in’ when we file our taxes.

New Tax Plan Personal Income Tax Recommendations:  Visit your tax professional to determine how the new tax plan will affect you.  Double check to validate you are maximizing your personal with-holdings or are with-holding enough to avoid paying in when you file.  Until this one takes effect, we really don’t know what it will do to paychecks, which is why it is essential to work with a tax professional.

Discussing your financial plan, including taxes, with a financial professional is never a bad idea. We highly recommend it. If you’d like your questions answered, give our Las Vegas financial advisors a call today.

Filial Laws: Avoid a Financial Crisis for Your Family

If you’re not familiar with Filial Laws, it’s time you take notice of what they are and how these laws can impact your financial future.  A few decades ago, our US welfare system would cover nursing home and medical costs for someone without the financial resources to so.  Back then the children were ‘off the hook’ to pay, and in some cases, beneficiaries still had access to their parent’s assets and avoided surrendering assets for unpaid bills.  Many people today still think that is current policy; it’s not and the likelihood of you paying for your parents or another family member is a real possibility.  Filial laws take into account the situation of the individual as being ‘impoverished’ and don’t always apply to someone who is elderly.

Filial responsibility is ‘A duty owed by an adult child (and siblings) to care for ‘necessities of life’ for their parents.  This means payment of medical bills, nursing home care, and costs to help the individual.  Under filial laws, there is the possibility that the duty can be extended to other family members besides the children.  In other countries, these types of laws have been enforced for generations and are a part of a culture where ‘family takes care of the family’.  As of December 2017, 30 states in the US have Filial Laws. 

Because you’re planning financially for yourself as you age, you also need to consider planning for your parents.  Have a conversation with them regarding long-term care insurance and/or, if they have the resources to pay for care.  This may lead you to the conclusion to cover the costs yourself to avoid being sued.  If you’re a pre-retiree or retired, you need to plan for long-term care in order to avoid passing the bill for your care to your children or grandchildren.

After decades of this law not being enforced, and with the aging population, our society is seeing more people entering the nursing home that either doesn’t have the financial resources or didn’t plan for it. Filial Laws come into play when an individual is already receiving state support, and have a medical bill or nursing home bill they can’t pay, or their cost of care is exceeding their Social Security Benefits, they don’t qualify for Medicaid, and the caregiver (hospital/nursing home) believes that the patient’s child has the money to pay the bill.

As your financial advisor, I recommend discussing your plan to pay for your care or a family member’s care, so your assets are not depleted prematurely due to Filial Laws.

New Year, New Plan

The Starting of the New Year has many of us making resolutions to make changes in some part of our lives.  Whether it is health or money related, starting the New Year off with a plan feels good!  Even though 80% of New Year’s Resolutions fail by the end of first quarter, having ‘resolutions’ is a positive thing; keeping them helps you change.  These proven steps will help you in your planning process to keep your resolutions, and meet your goals:

  1. Keep it simple.  Make resolutions easy (not complicated) with a simple plan, and take ‘baby steps’ as needed.
  2. Chart it out.  Like a financial plan, write down your resolutions or chart it so you can see your progress.  Secondly, plan a start date and an ending date for your resolution (goal)
  3. Make relevant and realistic resolutions. If you intend to save more, set up automatic savings options out of your paycheck or bank account.  If you plan to exercise each day, start out with a few days a week that may be more realistic for you until your exercise becomes habitual.
  4. Believe you can achieve your goals.  If you intend to reduce your debt this year, believe in yourself and resolve to quit spending.
  5. Share it.  Sharing your resolutions with someone you trust that will keep you on track makes you accountable.  Tell others about your progress, and you’re failures when you fall away from your plan.

If you haven’t drafted your list of 2018 Financial Resolutions, it’s time to get started.  Without goals being met it may be difficult for you achieve long-term financial goals:

1.  Get Out of Debt.  Carrying a balance on your credit cards will cost you in the long run.  The average US household has $8377in credit card debt, and 38% of households carry that debt long-term.

Page 5, Article #4 continued…

2.  Follow A Budget.  People that are aware of their spending are aware of how much they need to save for retirement and other financial goals.  Without budgeting you are more likely to ‘splurge spend’ more than you should. 

3.  Save and Invest.  An estimated 69% of Americans have less than $1000 in a savings account, and roughly one-third have zero in retirement savings.  If this is you, make it a priority to increase your savings (and have an emergency fund) and retirement savings.  If you are already saving, increase your savings at your financial institution and your retirement savings contributions.

If you need help or have questions regarding your financial goals for 2018, contact our Las Vegas Financial Advisory office for a meeting.  Let’s make 2018 a great financial year!

Retirement Plan Savings las vegas

What’s New for Retirement Plan Savers in 2018?

The answer to that is not much, but the allowable pre-tax contributions in most traditional retirement plans will see a small increase for 2018.  Here’s what you need to know if you plan to contribute the most you can in 2018 into your pre-tax retirement accounts:

401(k)s, 403(b)s, and most 457 plans will see a $500 allowable increase for those under age 50 to $18,500.  The ‘catch-up’ provision for those older than age 50 will stay the same at $6000 for 2018.  However, if you don’t turn 50 until December 31st, 2018, the IRS will still allow you to make your $6000 extra contribution in 2018 (of course).

Defined Contribution Plan contributions will increase to $55,000.

SEP IRAs and Solo 401(k)s (for the self-employed and business owners) goes up to $1000 to a limit of $55,000 that they can contribute as an employer in 2018.  The contribution amount is a percentage of salary, so make sure you consult your tax professional on the allowable limit for 2018 before you contribute.

SIMPLE IRAs will not have an increase.  The max contribution remains at $12,500 with the catch up provision for those age 50 and older still the same at $3000 per year.

Defined Benefit Plans are for those high-earning corporate self-employed and will have an increase of $5000 to a maximum contribution limit of $220,000 in 2018.

There is a lot of adverse reporting and fear-mongering in the media about what the current administration and Congress may or may not do to pre-tax retirement savings.  Regardless of political drama that may or may not lead to IRS changes affecting savings vehicles, one thing is clear- you need to save for retirement regardless of how it may affect your taxes.  If you would like to discuss your pre-tax retirement accounts, or how drawing down your retirement savings may impact you, please contact our Las Vegas financial advisory office for a meeting.

women and retirement las vegas

Women and Retirement: Overcoming Savings Obstacles – Las Vegas, NV

Women in the US today are better educated and have more opportunities than their mothers and grandmothers.  But even though women have more opportunities than in the past, they face obstacles that can impact their potential for retirement savings.  Lower pay than male counterparts, time off from their career to care for children or another family member, and longevity are all factors affecting a women’s ability to save and have enough to live off of in retirement.

Women are great savers when they are participating in a retirement savings plan such as a 401(k) or similar offering, but the participation rate is less for women than men, and they save 4% less than their male counterparts.  Women (56% of the current working) are more likely to ‘guess’ at their retirement income savings needs and believe that $500,000 is enough in retirement.  Men are less likely to guess as reported in the 2017 Transamerica Center for Retirement Study and reportedly used a financial calculator to arrive at their retirement savings number.

Women participating in the study identified things that they felt would help them to save more, regardless of obstacles; having access to accurate information regarding saving and investing for retirement, greater tax incentives for participating, a financial advisor, and a greater sense of urgency to save.

Interestingly all women, and especially Baby Boomer women, expressed not knowing enough about social security benefits.  Many cited concerns about Social Security not being available to them when they retire and worries over the retirement priorities of the President and Congress.

What can women do to overcome savings obstacles?  Start by taking charge of YOUR financial future:

  1. Start saving and get into the ‘habit’ of saving each month
  2. Participate in a retirement plan at your employer, or another plan type if there isn’t one.
  3. Find an advisor you trust and work with them to develop a financial plan.
  4. Become involved in your family finances, not just trusting someone else to ‘take care of it.’
  5. Get educated about investing for retirement
  6. Have a backup plan; death, divorce, and being unable to work before retirement is a reality check

If you have concerns about the obstacles you may be facing regarding saving for retirement, contact our Las Vegas Financial Advisor office to have a conversation and develop a plan that meets your personal needs.

Do You Know What You’re Paying For? (Las Vegas, NV)

Much is being said regarding the changes happening in the financial services industry right now.  You may have heard some news stories through the media regarding disclosure, compensation, and fiduciary responsibility.  Those that are already disclosing fees, advisor compensation, and are a fiduciary are already operating on these parameters; those that are not conducting their business in this way are opposing changes to the industry.  Unfortunately, it has left some financial clients confused.

As a client, you have the right to choose the model works best for you when you choose a financial professional to work with.  However, you need to be informed of the differences and should feel comfortable asking questions pertaining to fees on your accounts, how much your financial professional makes from you, and if they operate as a fiduciary.  Here are some key differences that impact what you pay for in working with your financial professional:

A Financial Advisor- Is a fiduciary that has a legal and moral responsibility to take care of your assets and act in your best interest; this is a financial advisor (person) who works for a Registered Investment Advisor firm and holds a Series 65 or 66 license in addition to other licenses.  They are compensated for the advice they give and the management of your assets, based on a percentage of assets under management.

A Registered Representative (Financial Representative) – Is a professional who is compensated based on the products they recommend when you purchase those products or buy or sell shares in your accounts.  They typically work for a broker-dealer or an insurance company and represent the products those two entities sell.  They may or may not offer financial advice and can’t charge for it.  The license they hold that designates them as a representative is a Series 63 in addition to others.

Many financial professionals have numerous securities licenses that allow them to work with specific investment vehicles and may choose to have advanced designations obtained through additional specialized education.  All licensed individuals need to complete continuing education on-going to remain licensed.

When it comes to fees on your account, there is no such thing as a ‘fee-free’ investment.  You will either pay fees upfront when you buy a product or shares or pay fees that are included in the assets under management through your agreement with your financial advisor.  Regardless, there is a way to compare fees of both financial professionals which should be disclosed to you when you decide to do business with that person.  All you need to do is ask so that you know what you’re paying for.  We welcome your questions regarding how we are compensated for working with you.

Contact our Las Vegas Financial Advisory office to learn more.

Social Security: Will You Get Your Money? (Las Vegas, NV)

If you are currently receiving Social Security retirement benefits and it is a big part of your retirement income, congratulations! You are the second or possibly third generation that has benefited from what was initially an excellent plan for workers in our country.

If you are part of the generation that is 45 to 55 years old today, this benefit will be much different for you. Under current law, people in this generation have had their retirement age estimator benefits changed to keep up with the demand for benefits currently burdening our Social Security system. We have fewer workers paying into the system than earlier generations due to an aging population, lower birthrate, and other economic factors.  Those that are paying into social security now are benefitting those individuals receiving benefits currently; the money is not kept in an account for you for when you retire.  Secondly, social security tax collected now also benefits Medicare recipients.

The Social Security website’s Retirement Estimator is for those who are applying for or receiving benefits. For those who are not in that group, the website page provides the following disclosure and direction to another estimator calculator:

We can’t provide your actual benefit amount until you apply for benefits. And that amount may differ from the estimates provided because:

  • Your earnings may increase or decrease in the future.
  • After you start receiving benefits, they will be adjusted for cost-of-living increases.
  • Your estimated benefits are based on current law. The law governing benefit amounts may change because, by 2034, the payroll taxes collected will be enough to pay only about 77 cents for each dollar of scheduled benefits.
  • Your benefit amount may be affected by military service, railroad employment or pensions earned through work on which you did not pay Social Security tax.

So what can you do regarding your retirement benefits possibly being decreased when you retire? Do not include it as part of your retirement income. Plan to make up the difference through other investment options and account types. If you receive your anticipated Social Security Retirement benefit you will have more retirement income than you planned.

I can provide you with a plan that includes additional options to offset the shortage, which is estimated to be 25% less in the future compared to the generation currently receiving benefit payments. For further information on updates to Social Security, familiarize yourself with the Board of Trustees 2017 Report and the Social Security Administration website.

Caregiving: A Decision That May Impact Your Retirement

Many of us have been a caregiver while we were raising children, now some of us are caring for a loved one out of necessity as the older family member is no longer able to care for themselves.  A recent 2017 Transamerica Center for Retirement Studies report indicates that 42% of Generation Xers and 42% of Baby Boomers are caring for a parent, and 57% of Individuals born before 1946 are currently caring for a spouse or loved one.  Care recipients suffer from a wide range of conditions, with half having a permanent one.  The five most common conditions are arthritis, dementia/Alzheimer’s disease, high blood pressure, diabetes, and depression and or anxiety.

Caregivers help with a wide range of duties such as household chores, social and companion needs, health-related and personal care, and managing finances.  Caregivers are also the bridge between Medicare or Medicaid services, and many learn medical and nursing tasks from professionals to better care for their loved one.  If you are caring for an adult family member (other than a spouse), discuss what legal documents are required to represent that individual legally with a professional.

Where does that leave the caregiver in regards to employment and saving for retirement?  The report indicated that half of caregivers are employed with many trying to maintain full time employment.  However, over 76% reported they have had to adjust their hours or are planning to leave their jobs.  Many in the survey expressed that they didn’t consider the financial implications of becoming a caregiver.  If you are a caregiver or think you may become one for an adult family member, this should be a part of your financial planning process.

In the same way that a financial plan recommends reducing debt and saving more for retirement, a financial plan can be done to show working year’s savings and years of no savings and what that may mean for you.  When you become a caregiver, not having to liquidate savings to provide care to someone will make a significant impact on your retirement.

If you think you may have to care for someone and leave your job, having no debt is essential.  Becoming a caregiver is a life-changing decision and remember to plan for yourself.  Your plan should include considering long-term insurance so that when you need care you have the resources to do so.  If you are or may become a caregiver, please contact our Las Vegas Financial Advisory office for a meeting so that we can help you financially plan for this phase of your life.

Planning to Invest in a Vacation Home Using the IRS 1031 Exchange Rule? – Las Vegas, NV

You may be considering investing in a vacation home as part of your retirement goals or just because you feel it’s a good investment.  With real estate prices back to where they were pre-2008 in most of the US, those looking to add a vacation home to their portfolio are considering buying before prices rise.  The good news is that the favorable home prices are helping the housing market recovery. Before you invest, make sure you know the tax advantages (or disadvantages) a vacation home investment may bring you if you plan to sell a property to fund a vacation home.

Understanding 1031 exchanges can make the difference between paying thousands of dollars in taxes when you sell one piece of property to buy another one, such as a vacation home.  The property must be of ‘like-kind,’ in other words a business or investment property exchanged for another business or investment property.  Because this can be complicated, you consult a tax professional if you are considering a 1031 exchange transaction.  A sale and purchase of this type is a business transaction requiring different Tax ID numbers assigned to each property.  A qualifying exchange allows you to defer capital gains from one property if you buy a comparable property within the federal prescribed time limit.  Additionally, the property sold and the property purchased must be in one of the 50 US states, with territories of the US not included in this provision.

If you are considering a 1031 exchange, be advised that if our US law-makers approve a reduction in personal tax brackets, the additional taxes needed to offset the change may result in the 1031 exchange provision being eliminated at some point which may impact you in the future.  For now, the 1031 tax provision is in place for those that invest in real estate and seek tax benefits on those investments.

For those that purchase a vacation home as an additional property and don’t use the 1031 exchange provision, you still need to do your due diligence on understanding property tax rates for non-residents, vehicle licensing requirements, and other non-resident fees that may impact your vacation home purchase.  If you add a vacation home to your portfolio keep your advisor informed so that he/she can add it to your financial plan and asset information.

If you’d like to discuss this and/or any other investment topic, please contact our Las Vegas Financial Advisory Office

Financial Planning Las Vegas

It’s Time For Fourth Quarter Financial Reviews – Las Vegas, NV

Here we are in the last quarter of 2017!  Reviewing your retirement accounts is essential, but do you realize the benefits of evaluating at the end of the year? Fall tends to be a time many people start thinking about next year and what they want to accomplish.  The benefits of a fourth-quarter review  are many:

Get on Top of Your Taxes- Your tax professional and financial advisor may suggest an extra contribution into pre-tax accounts by the end of this year.  If you didn’t maximize contributions you still have time this quarter to make a one and lower your taxable income.

Make Your Bonus a Bonus- End of year bonuses can be deposited into your retirement account at your request as a pre-tax contribution.  If you receive a bonus with taxes already taken out, consider adding it to your other after-tax retirement accounts.  Fourth quarter is when many companies announce end of year bonuses.  If you didn’t plan on extra money, use it wisely to increase your retirement savings or reduce debt.

Plan for Next Year- Start the New Year strong with a financial plan in place after our review.  You’re now in position to start your plan immediately next year.  People with a written financial plan are more likely to follow and monitor their plan throughout the year.

Review This Year’s Performance- Reviewing fund and stock performance throughout this past year helps to make portfolio changes for next year.  If your choices didn’t perform to our expectations, it’s time to re-evaluate.

Rebalance Yearly- Over the year portfolios may become unbalanced due to changes in the market value of your funds or stocks.  By rebalancing in the fourth quarter of the year, you’re ready to start the New Year with your portfolio reflecting your investment strategy and tolerance to risk.

Give our Las Vegas office a call to set up your end of the year financial review to prepare your portfolio for 2018.