Reporting to Protect Seniors From Financial Abuse
July 5th, 2016 marked the passing of The Senior Safe Act of 2016. What this bill means to you, and the financial services industry, is another layer of protection for seniors who may be, or are, at risk of financial abuse by another individual.
In the past, financial advisors could be liable for disclosing information regarding possible senior financial abuse to regulators that is considered ‘private’. In some instances, family members that were taking advantage of a senior adult could seek recourse from the financial advisor reporting them who disclosed information about the senior adult’s financial information.
With the passing of this bill, advisors and firms that have had training on elder financial abuse, can report to state and federal regulators, law enforcement, adult protective services, or any other appropriate agency suspected elder financial abuse of a client by another adult without fear of being sued or prosecuted for disclosing private information about the victim.
If you have suspicion of senior financial abuse, contact your local law enforcement agency, or The Secretary of State office in the senior’s state of residence.
Why ‘Brexit’ Matters
‘Brexit’, which is an abbreviation for the referendum that British voters passed to leave the European Union on June 23rd, has been front and center in our media. So why does this vote matter to investors worldwide and here at home? These are the reasons:
1. Markets hate Uncertainty. Our 401(k)’s, IRAs, and other investments are invested into companies that do worldwide business. The company values are effected by global economic conditions, which in turn has to do with how much they are selling in the world market and their profits, or losses. This impacts our retirement savings.
2. Businesses May Have Fallout. If there is a decrease in the monetary value (in this case The Euro), oversees companies may not purchase US goods from US businesses. Global economic buying and selling can change.
3. Speculation May Cause Further Worldwide Recession. Reaction to what may or may not happen in the markets can cause investors to make bad decisions. It can also cause everyday purchasing by consumers to slow due to what they are seeing in media coverage.
4. Weakened Euro Values. The Euro, which is the currency of 19 of the 28 member European Union states has decreased in value, which impacts the buying power of these countries. On the flip side, the US Dollar has increased in purchasing power in these countries
Because we do not know how ‘Brexit’ will play out, evaluate making any changes to your portfolio before you have all the information. It is not recommended liquidating in a down market situation. If you have any concerns, please contact our office to schedule a meeting.
Diversify? Here’s Why!
Many investors have heard the term ‘Diversify’ but don’t always understand it or why they should choose to diversify their portfolios. In some instances investment choices in their company retirement plans can limit investment options, offsetting investor knowledge or experience. Additionally, investors may choose to invest in ‘similar’ asset classes because of their ‘comfort level’ in comparison to other investment sectors, geographical areas, or investment classes.
Because of how volatile our markets have been over the past few years, examine your investments and add different asset classes to your portfolio if make sense to your personal situation. Not putting ‘all of your eggs in one basket’ is important because we can’t determine if what is performing now will continue to perform in the future. That includes investing on a worldwide perspective.
There is no formula to finding the top performers in sector, region, or asset class. Therefore, it makes sense to not concentrate all of your investments in one area. Diversification should include differing asset classes from various regions in many types of business types in order to avoid the peaks and valleys that each can bring.
For a complete portfolio analysis and to update your diversification, a minimum of a once a year meeting is highly recommended.
What Are You Paying For?
Investment costs are part of your financial life and can’t be avoided; there is no such thing as a ‘free investment’. Understanding all of the costs associated with your portfolio can help you determine the full impact over years of saving and investing, many times over 30 or more years. Costs represent dollars that aren’t being invested.
The first thing to understanding what you’re paying for is to ask questions. Many investors don’t understand all that is involved in investment costs. Here is a short list of costs that may be impacting you:
1. Advisory Fees. This is paid yearly to an investment advisor providing advice and managing your portfolio. This may be paid to an individual, company, or both who share in the fee revenue
2. Commission. This is paid when you either buy or sell a security. Depending on your advisory fee, this may be included (in what’s called a ‘wrap account’). Your advisor can help you understand how this may or may not impact you.
3. Annual Operating Expenses. This is paid by the fund from assets to cover management fees and other expenses directly to the company that holds the fund.
If you have a 401(k) retirement plan, you may have costs associated with that plan. In rare instances, your employer may be paying these for you. Most plans pass the cost to the employees that are participating in the company retirement plan.
There may be other investment costs associated with your portfolio depending on the types of funds you have. One way to find out what you pay is to have a financial review and ask to have your funds evaluated for costs with a breakdown of each.
One should remember that investments should be evaluated on how they fit with your goals, timeline, and portfolio as a whole, and not entirely on their cost.