Our mission statement is “to provide like-minded individuals with financial and emotional security.” While our day to day focus is managing investment portfolios and creating financial plans so that our clients can realize their retirement goals, we also want to help them to have a rewarding and fulfilling life once they have reached retirement. It is important to us to concentrate in our area of expertise and to seek other professionals who are experts in fields ranging from tax planning to elder care to travel. We keep a list of these contacts so that we pass along their names to our clients when they have a need for their services.
We recently became aware of a new company that focuses on the non-financial aspects of retirement, called LifeScape Retirement. They work with individuals to assess what a fulfilling retirement will look like, and then develop a plan so that their goals are realized.
I see many people who spend so much time focusing on whether or not they will have enough money to retire that they forget to think about what life will look like once they get there. Or they may have a list of all of the things they want to do in retirement, but after a few years they’ve checked everything off their list and do not know what to do next.
Since the average life expectancy for a 60 year old is 30 years, your retirement may last nearly as long as your career. My clients that seem to be the happiest after leaving the workforce are those with a purpose, whether it’s spending time with their grandchildren, traveling, starting a second career, volunteering or all of the above. Asking what you will do to challenge yourself in retirement is a good way to create your vision for the next stage of your life.
Chris Carleton, CFP®
clcarleton@taaginc.com
http://www.taaginc.com
Friday, July 23, 2010
Monday, July 19, 2010
Financial Reform?
The Dodd-Frank Wall Street Reform and Consumer Protection Act that cleared Congress on Friday, like the health care reform legislation before it, is a complicated document. The US Chamber of Commerce estimated that the 2,319 page bill will generate 533 new regulations, 60 studies and 94 reports. Until the regulations are finalized, and the studies and reports completed, it won’t be clear how it will affect all of us, but there are some observations that can be made now.
Put Clients’ Interests First at All Times
Jane Bryant Quinn, the financial journalist, did a great job of describing the Fiduciary standard and its importance to consumers while the issue was still being debated: (http://janebryantquinn.com/2010/05/will-brokers-have-to-put-your-interests-first/). This standard, unfortunately, did not make it through the lobbying and political process. Insurance agents and investment brokers marketing financial planning and investment products will still NOT be held to the same standard of client care that the Asset Advisory Group follows as a Registered Investment Advisor. Instead, the financial reform requires the SEC to do a second study on the subject. Is it conceivable that someone could do a study and conclude the person giving you financial advice should NOT put your interests first? Stay tuned for the study…..
Consumer Protections
A new Consumer Financial Protection Bureau has been created with the purpose of ‘protecting consumers from unfair, deceptive and abusive financial products and practices.’ My first concern is how will they determine what products and practices are abusive and unfair? If they don’t think the financial community should have to put their clients’ interests first, will selling you a mutual fund that charges a high commission up-front with an annual expense of 2.85% a year be considered unfair? On the positive side, there will be a national, toll-free, consumer complaint hotline for people to report problems. This is a great first step, but how will they follow up on these complaints? Many people reported their concerns about Bernie Madoff to the SEC, but no action was ever taken against him.
Ending the Gambling Risk
Banks and brokerage firms sell products to clients, but they also use their own money to trade investments to make a profit for themselves, a practice known as proprietary trading. Problems developed because these trades were sometimes in conflict with their clients – brokerage firms would sell their clients a product while simultaneously betting against it in their own accounts. Banks also began to take more and more trading risk as they enjoyed the profits it added to their bottom line. When this trading contributed to the failure of companies like Merrill Lynch, AIG and Lehman Brothers, the government was asked to step in to save them. The Volker Rule, contained in the Act, requires regulators to implement laws that will prohibit proprietary trading, investment in and sponsorship of hedge funds and proprietary equity funds – the investments that took down Lehman and forced others to be bailed out. The problem is the laws will be developed after – you guessed it – another study; to be conducted by the new Financial Stability Oversight Council, so it remains to be seen how this will all work out.
The bottom line is there will be much more debate and discussion as the newly created Consumer Financial Protection Bureau and Financial Stability Oversight Council mentioned here, as well as the new Office of National Insurance, Office of Credit Ratings and SEC Investment Advisory Committee are formed. Their studies, decisions and regulations will change the financial industry landscape.
Jeannette A. Jones, CPA, CFP®
jjones@taaginc.com
http://www.taaginc.com/
Put Clients’ Interests First at All Times
Jane Bryant Quinn, the financial journalist, did a great job of describing the Fiduciary standard and its importance to consumers while the issue was still being debated: (http://janebryantquinn.com/2010/05/will-brokers-have-to-put-your-interests-first/). This standard, unfortunately, did not make it through the lobbying and political process. Insurance agents and investment brokers marketing financial planning and investment products will still NOT be held to the same standard of client care that the Asset Advisory Group follows as a Registered Investment Advisor. Instead, the financial reform requires the SEC to do a second study on the subject. Is it conceivable that someone could do a study and conclude the person giving you financial advice should NOT put your interests first? Stay tuned for the study…..
Consumer Protections
A new Consumer Financial Protection Bureau has been created with the purpose of ‘protecting consumers from unfair, deceptive and abusive financial products and practices.’ My first concern is how will they determine what products and practices are abusive and unfair? If they don’t think the financial community should have to put their clients’ interests first, will selling you a mutual fund that charges a high commission up-front with an annual expense of 2.85% a year be considered unfair? On the positive side, there will be a national, toll-free, consumer complaint hotline for people to report problems. This is a great first step, but how will they follow up on these complaints? Many people reported their concerns about Bernie Madoff to the SEC, but no action was ever taken against him.
Ending the Gambling Risk
Banks and brokerage firms sell products to clients, but they also use their own money to trade investments to make a profit for themselves, a practice known as proprietary trading. Problems developed because these trades were sometimes in conflict with their clients – brokerage firms would sell their clients a product while simultaneously betting against it in their own accounts. Banks also began to take more and more trading risk as they enjoyed the profits it added to their bottom line. When this trading contributed to the failure of companies like Merrill Lynch, AIG and Lehman Brothers, the government was asked to step in to save them. The Volker Rule, contained in the Act, requires regulators to implement laws that will prohibit proprietary trading, investment in and sponsorship of hedge funds and proprietary equity funds – the investments that took down Lehman and forced others to be bailed out. The problem is the laws will be developed after – you guessed it – another study; to be conducted by the new Financial Stability Oversight Council, so it remains to be seen how this will all work out.
The bottom line is there will be much more debate and discussion as the newly created Consumer Financial Protection Bureau and Financial Stability Oversight Council mentioned here, as well as the new Office of National Insurance, Office of Credit Ratings and SEC Investment Advisory Committee are formed. Their studies, decisions and regulations will change the financial industry landscape.
Jeannette A. Jones, CPA, CFP®
jjones@taaginc.com
http://www.taaginc.com/
Friday, July 9, 2010
Free Agent Forecasting
What can LeBron James teach us about financial experts forecasting the future?
I’m probably in the minority of those of us who participate in this blog as a fan of the National Basketball Association, so some of this information may be new to some of you. That said, if you have picked up a paper, watched a news broadcast or have even a fleeting interest in sports, you have probably at least heard LeBron James’ name over the last several weeks.
For the uninitiated, LeBron James is one of the top players in the NBA. As of the end of this season, he’d spent his entire career playing for his hometown Cleveland Cavaliers. On July 1st, LeBron became an unrestricted free agent and could choose to stay at home or test the waters in a new market.
When did the media start forecasting where he would go? Last week? Last month? Actually, the first news stories speculating about his future began as early as 2008. Things built to a roar over the last basketball season and ended in full blown mayhem over the last month. The event culminated in LeBron dictating terms to ESPN for a one hour prime time TV special last Thursday in which he announced his decision to leave home for the warm air and blue waters of Miami, Florida.
The point to all of this is how important it was for someone, anyone to break the story of where he was going in advance of the announcement. Reporters and other so-called “experts” postured and positioned to be first to break the story and reap the rewards if they did. If you were to believe each report, it was all but guaranteed by these experts that LeBron was to sign with six different teams at any given time.
Did these reporters really have trusted sources that could verify each and every one of these scenarios? No, they were placing a bet. The bet was that they’d leak a scenario based on flimsy information and, if proven right, would claim that they broke the news first.
So what does all of this teach us about reporting on the markets? Part of the 24 hour news, sports and entertainment cycle that we all live with are lots of business writers, economists and other experts that benefit greatly if their forecasts end up paying off. Like with the sports reporters, it can mean book deals, lucrative media contracts and other such offers that can certainly boost the lifestyle of said “expert”. These industry incentives have shifted and are now there to encourage guessing or betting on the correct forecast over focusing on accuracy.
In the end, someone is going to be right, but can you pick that person in advance and would you be comfortable enough if you thought you could to risk your savings on that bet? For most of us, the answer is no, yet many investors choose that path on a daily basis.
The race for accuracy has been replaced by the race to be first. To sports fans, the misinformation that results is a minor annoyance as we watch egos pick which city will earn the right to pay players millions of dollars each season. But with investing, it’s a dangerous game that can toy with investors’ emotions. Rise above the fray, have a concrete plan in place, stick to it and tune out the noise.
Chip Workman, CFP®
cworkman@taaginc.com
http://www.taaginc.com
I’m probably in the minority of those of us who participate in this blog as a fan of the National Basketball Association, so some of this information may be new to some of you. That said, if you have picked up a paper, watched a news broadcast or have even a fleeting interest in sports, you have probably at least heard LeBron James’ name over the last several weeks.
For the uninitiated, LeBron James is one of the top players in the NBA. As of the end of this season, he’d spent his entire career playing for his hometown Cleveland Cavaliers. On July 1st, LeBron became an unrestricted free agent and could choose to stay at home or test the waters in a new market.
When did the media start forecasting where he would go? Last week? Last month? Actually, the first news stories speculating about his future began as early as 2008. Things built to a roar over the last basketball season and ended in full blown mayhem over the last month. The event culminated in LeBron dictating terms to ESPN for a one hour prime time TV special last Thursday in which he announced his decision to leave home for the warm air and blue waters of Miami, Florida.
The point to all of this is how important it was for someone, anyone to break the story of where he was going in advance of the announcement. Reporters and other so-called “experts” postured and positioned to be first to break the story and reap the rewards if they did. If you were to believe each report, it was all but guaranteed by these experts that LeBron was to sign with six different teams at any given time.
Did these reporters really have trusted sources that could verify each and every one of these scenarios? No, they were placing a bet. The bet was that they’d leak a scenario based on flimsy information and, if proven right, would claim that they broke the news first.
So what does all of this teach us about reporting on the markets? Part of the 24 hour news, sports and entertainment cycle that we all live with are lots of business writers, economists and other experts that benefit greatly if their forecasts end up paying off. Like with the sports reporters, it can mean book deals, lucrative media contracts and other such offers that can certainly boost the lifestyle of said “expert”. These industry incentives have shifted and are now there to encourage guessing or betting on the correct forecast over focusing on accuracy.
In the end, someone is going to be right, but can you pick that person in advance and would you be comfortable enough if you thought you could to risk your savings on that bet? For most of us, the answer is no, yet many investors choose that path on a daily basis.
The race for accuracy has been replaced by the race to be first. To sports fans, the misinformation that results is a minor annoyance as we watch egos pick which city will earn the right to pay players millions of dollars each season. But with investing, it’s a dangerous game that can toy with investors’ emotions. Rise above the fray, have a concrete plan in place, stick to it and tune out the noise.
Chip Workman, CFP®
cworkman@taaginc.com
http://www.taaginc.com
Monday, July 5, 2010
Investor Protection Gets Knocked Out of the Financial Reform Law
(from Jane Bryant Quinn's website, janebryantquinn.com, 6/25/2010 - read the article directly here)
Senator Tim Johnson socked investors with what might be a knockout punch, during negotiations on the financial reform bill. Investor protection is down for the count. The new law, when passed, is going to leave you out.
Johnson, a South Dakota Democrat, laughs at the concept of “fiduciary duty”—the idea that people who advise you on investments should to put your financial interests ahead of their own.
At present, registered Investment advisers have a fiduciary duty toward you and your money. But there’s an exception for stockbrokers and insurance agents. They can—and do—advise you to buy financial products that benefit themselves more than they benefit you.
For example, it’s okay for them to offer you high-cost mutual funds when low-cost funds are available that invest the same way. It’s okay for them to sell you a high-cost, out-of-state 529 college savings plan when your own state’s plan costs less and gives you a tax deduction, too.
The version of financial reform passed by the House of Representatives would have stopped all that. The House brought brokers and insurance agents under the fiduciary rules when they offer personal financial advice.
The bill passed by the Senate punted, by telling the Securities and Exchange Commission to study the issue. The House and Senate are now negotiating their differences.
Suddenly, out of the blue, Johnson swept in—not with a compromise, but with an even broader anti-investor proposal. When the SEC eventually does the study, limits will be put on its findings. It won’t be allowed to decide that brokers should be subject to the fiduciary rules unless there is virtually no other way of protecting investors from unscrupulous advice.
Barbara Roper, director of investor protection for the Consumer Federation of America, calls the provision a “poison pill.” It ensures that brokers can continue to violate your trust. The Senate negotiators passed Johnson’s proposal on a voice vote, without revealing the names of the Senators who supported it.
Johnson, known as the “senator from Citibank,” habitually sides with the financial industry and against consumers. He’s the only Democrat who opposed last year’s legislation to curb credit card abuses.
Next year, he’s in line to become the chair of the Senate Banking Committee. If that happens, you can kiss any further reforms good-bye. You can also expect his committee to be sympathetic to bills that roll current protections back.
At this writing, nothing is final. But the House will probably accept the Senate’s punt. Johnson’s aggressive language might be watered down, but brokers and insurance agents won’t have to change their ways anytime soon. Remember this, when they give you advice. You can’t trust them. They put their own interests first.
Senator Tim Johnson socked investors with what might be a knockout punch, during negotiations on the financial reform bill. Investor protection is down for the count. The new law, when passed, is going to leave you out.
Johnson, a South Dakota Democrat, laughs at the concept of “fiduciary duty”—the idea that people who advise you on investments should to put your financial interests ahead of their own.
At present, registered Investment advisers have a fiduciary duty toward you and your money. But there’s an exception for stockbrokers and insurance agents. They can—and do—advise you to buy financial products that benefit themselves more than they benefit you.
For example, it’s okay for them to offer you high-cost mutual funds when low-cost funds are available that invest the same way. It’s okay for them to sell you a high-cost, out-of-state 529 college savings plan when your own state’s plan costs less and gives you a tax deduction, too.
The version of financial reform passed by the House of Representatives would have stopped all that. The House brought brokers and insurance agents under the fiduciary rules when they offer personal financial advice.
The bill passed by the Senate punted, by telling the Securities and Exchange Commission to study the issue. The House and Senate are now negotiating their differences.
Suddenly, out of the blue, Johnson swept in—not with a compromise, but with an even broader anti-investor proposal. When the SEC eventually does the study, limits will be put on its findings. It won’t be allowed to decide that brokers should be subject to the fiduciary rules unless there is virtually no other way of protecting investors from unscrupulous advice.
Barbara Roper, director of investor protection for the Consumer Federation of America, calls the provision a “poison pill.” It ensures that brokers can continue to violate your trust. The Senate negotiators passed Johnson’s proposal on a voice vote, without revealing the names of the Senators who supported it.
Johnson, known as the “senator from Citibank,” habitually sides with the financial industry and against consumers. He’s the only Democrat who opposed last year’s legislation to curb credit card abuses.
Next year, he’s in line to become the chair of the Senate Banking Committee. If that happens, you can kiss any further reforms good-bye. You can also expect his committee to be sympathetic to bills that roll current protections back.
At this writing, nothing is final. But the House will probably accept the Senate’s punt. Johnson’s aggressive language might be watered down, but brokers and insurance agents won’t have to change their ways anytime soon. Remember this, when they give you advice. You can’t trust them. They put their own interests first.
Subscribe to:
Posts (Atom)
Posts
