Why the Technology (and Person) Managing Your Money Matters

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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

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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

The Second Half of Life- Discovering Your Passion

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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.

Advice on IRA Contribution for Las Vegas Residents

Richard London’s Quick Reminder About IRA Contributions

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Just a reminder, this is IRA season and below are some key numbers to pay attention to.

For 2014, here is the max contribution limits:

Traditional IRA – $5,500 ($6,500 if you are 50 and older)

Roth IRA – $5,500 ($6,500 if you are 50 and older)

SEP IRA – $52,000 (is up to 25% of your total income or 20% of adjusted income, up to a maximum of $260,000 in income)

For some other information, max income for 2014 for social security wage base is $117,000.

There is some stipulations on whether or not your Traditional IRA contribution for 2014 is deductible. Please contact me to find out if you are able to contribute to your IRA by April 15th for a 2014 tax deduction. I can speak to your CPA to make sure your contribution makes sense.

For a consultation with Richard London CFP® or for more information on IRA contributions, please call (702) 318-1376 today!