reCap BLOG

Charitable Giving Benefits in 2025

Mon, 15 Dec 2025 20:55:19 GMT

Charitable Giving Benefits in 2025

2025 offers a unique opportunity to maximize charitable deductions before new limits take effect in 2026.

No AGI floor or deduction cap in 2025
2026 introduces a 0.50% AGI floor and 35% deduction cap
IRA Qualified Charitable Distributions (QCDs) bypass both limitations and remain the most tax-efficient giving strategy
Accelerating gifts or bunching into 2025 can significantly increase tax savings

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Market Conditions Q4 2025

Wed, 05 Nov 2025 21:02:55 GMT

Market Conditions Q4 2025

Please see our Q4 2025 Market Conditions for updated data and comments on market returns, price trends, forward earnings, monetary policy, economic data, interest rates, and historical asset class returns.

Market Conditions

Data Driven Insights on Long-Term Portfolio Wealth Building

Mon, 08 Sep 2025 15:22:17 GMT

Built to Last: Data-Driven Insights on Long-Term Portfolio Management and Wealth Building

Please see our latest research deck - “Built to Last: Data-Driven Insights on Long-Term Portfolio Management and Wealth Building.” We explore the core principles of long-term investing: the historical resilience and consistency of Stocks, managing drawdowns without derailing long-term goals, the trade-offs between stability and growth, strategic portfolio construction based on cash flow and risk tolerance. This deck offers a clear, evidence-based framework for making smarter investment decisions.

Built to Last

Market Conditions Q3 2025

Mon, 07 Jul 2025 15:18:54 GMT

Market Conditions Q3 2025

Please see our Q3 2025 Market Conditions for updated data and comments on market returns, price trends, forward earnings, monetary policy, economic data, interest rates, and historical asset class returns.

Market Conditions

Market Conditions Q2 2025

zabrams@capitaladvisorsltd.com (Zach Abrams) — Wed, 23 Apr 2025 13:54:12 GMT

Market Conditions Q2 2025

Please see our Q2 2025 Market Conditions for updated data and comments on market returns, price trends, forward earnings, monetary policy, economic data, interest rates, and historical asset class returns.

Market Conditions

Retirement Planning Checklist

zabrams@capitaladvisorsltd.com (Zach Abrams) — Wed, 12 Mar 2025 14:20:46 GMT

Retirement Planning Checklist

Retirement planning helps assess financial health while addressing needs and managing risks to support long-term goals and legacy.

Personal Readiness - Find Joy and Purpose
Business Succession Planning
Practical Transition Steps
Cash Flow Model Forecast
Income Management
Estate Review

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Social Security Fairness Act

NCreviston@capitaladvisorsltd.com (Nate Creviston) — Tue, 07 Jan 2025 19:15:27 GMT

Social Security Fairness Act

Details

The Social Security Fairness Act was recently signed into law, affecting two 40-year-old provisions that reduced the benefits of public employees who received pensions not covered by Social Security payroll taxes. An example of affected groups includes teachers, postal workers, police officers, firefighters, nurses and other public sector employees.

The Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) were intended to prevent individuals who received state or local pensions from being able to “double-dip” into retirement benefits. The unions representing public service workers argued that those provisions unfairly penalized them. Estimates show that the bill should lead to an average monthly increase of $360/month for public employees, their spouses, and survivors. The Congressional Budget Office estimates it will cost $196 Billon over the next ten years.

Next Steps

For those who have previously applied for Social Security benefits and are being partially or completely offset, no action is needed except to verify your current mailing address and direct deposit information. You can access this information through your online account at ssa.gov or by calling the Social Security Administration at 800-772-1213.

Under the new law, if you are currently having your Social Security benefits reduced by the GPO or WEP, you can expect to see your benefits recalculated and increased. Current recipients are expected to receive a lump sum payment for benefits backdated to January 2024.

For those who have not previously filed for Social Security Benefits, follow the link to apply online or call the phone number listed above to set up an appointment.

If you are someone who has yet to file to receive benefits for Social Security but who intends to receive a pension from non-covered employment, then you will not be affected by the GPO or WEP.

This is a rapidly developing retirement income planning topic that is expected to impact nearly 3 million current or former public employees. If you are one of them, please reach out to your advisor at Capital Advisors Ltd.

Neil Waxman Discusses Holistic Financial Planning with Investopedia

nwaxman@capitaladvisorsltd.com (Neil Waxman) — Thu, 29 Aug 2024 12:52:00 GMT

5 Key Investment Strategies to Learn Before Trading

Choosing a Stock Market Strategy That Fits Your Portfolio Objectives and Skills

Link to Article

BEN TAYLOR

Updated June 18, 2024

An investment strategy is a set of principles that guides your investment decisions. With seemingly countless theories and approaches on offer, from simplistic learn-this-one-trick pop investing books to dense tomes by financial doctorates filled with statistical tests of long-term financial data, it's easy to feel overwhelmed and uncertain about where to start. However, by focusing on a few key investment strategies, even beginning traders can lay a solid foundation for long-term success in the market.

Before trading, it's crucial to understand the fundamental principles and techniques that have stood the test of time. When properly applied, these strategies have helped many investors manage risks and maximize their returns. Whether you're aiming to build a balanced portfolio, capitalize on market trends, or generate steady income, having a grasp of these trading essentials is vital.

Below, we'll explore five key investment strategies that every aspiring trader should learn before entering the market. From value and growth investing to dollar-cost averaging, we'll break down the core principles and advantages of each, giving you a clear understanding of how they work and when to apply them.

KEY TAKEAWAYS

Before choosing a stock market strategy, thoroughly assess your financial situation, risk tolerance, and investment goals. This self-awareness should be the basis of any approach you take.
Passive index investing involves putting your money into index-tracking mutual or exchange-traded funds (ETFs), offering built-in diversification and a hands-off approach.
Investors who follow growth strategies should review the executive teams of the firms they're investing in and news about the economy and relevant sectors.
Momentum investors buy stocks trending upward and short sell them since they view them as likely to come back down to earth.
Dollar-cost averaging removes the pressure of trying to time the market perfectly. It's a disciplined approach that involves investing consistently over time, regardless of market fluctuations.

Getting Started

Before choosing an investment strategy , it's important to gather some basic information about your finances. Let's get you started with these important strategic questions:

Strategic Question 1: How Are Your Finances?

Even though you don't need much money to start, you shouldn't begin investing until you can afford to do so. If you have debts or other obligations, consider the impact investing will have on your short-term cash flow before you start putting money into your portfolio.

Most advisors recommend paying down your debts and having a three-to-six-month emergency fund before socking significant amounts into an investment portfolio. As you build toward getting ready to trade, you should sort out how much you can afford to put into your stock market account.

Strategic Question 2: What Are Your Financial Goals?

Next, set out your objectives. Everyone has different needs, so you should determine yours. Are you saving for retirement? Are you looking to make big purchases like a home or car? Are you saving for your or your children's education? Answering these questions will help you narrow down a strategy since each approach requires different levels of liquidity, opportunities, and risk.

Ensure you can afford to invest before you start putting money away. Prioritize paying off high-interest debt, for example, before setting money aside for the future.

Strategic Question 3: What Is Your Risk Tolerance?

Next, figure out your risk tolerance. This is determined by answers that can be put into numbers and some that can't. First, there's your age, income, and how long you have until retirement. Investors who are younger have time on their side to recuperate losses, so it's often recommended that younger investors hold more risk than those who are older.

Your risk tolerance is also highly psychological and deeply personal. People who grew up in the same home and have very similar experiences and income can have very different reactions to specific financial situations. How would you feel if your investments dropped 30% overnight? How would you react if your portfolio is worth $1,000 less today than yesterday? Sometimes, the best strategy for making money could make you deeply uncomfortable. Your investment strategy will need to align with where your comfort level ultimately is.

Strategic Question 4: Can You Handle Market Volatility?

Relatedly, you'll need to be able to handle the ups and downs of the market. Alyson Claire Basso, a managing principal of Hayden Wealth Management in Middleton, Massachusetts, told us she makes it a point with her clients "to discuss past market experiences and potential future market volatility. This way, they feel prepared and know that volatility is something we’ve planned for." This discipline is important when thinking about investment strategies. "We talk about their financial goals and how sticking to their plan can help them ride out the rough patches. I also remind them that diversified investing helps spread out risk, so they're not putting all their eggs in one basket."

Once you've answered the strategic questions above, you'll want to learn the basics of investing: how to read stock charts , etc., and then begin picking some of your favorite companies and analyzing their financial statements. You'll also need to keep up to date with recent news about industries you're interested in investing in. It's a good idea to have a basic understanding of what you're getting into so you're not investing mindlessly.

Risk isn't necessarily bad in investing. Higher-risk investments are often rewarded with higher returns. "A holistic financial plan balances threats, opportunities, risks, and rewards," said Neil R. Waxman, a managing director of Capital Advisors in Shaker Heights, Ohio. Waxman emphasized the importance of understanding how risks and rewards can be balanced while providing cash flow to those who need it. "A client who understands these connections and has a clear game plan" will have "the perspective and vision needed to be a patient investor."

Strategy 1: Passive Index Investing

Passive index investing has gained significant popularity since the introduction of passive index-based mutual funds in the 1970s and then similar ETFs in 1993. Unlike actively managed funds, where an individual or team makes decisions on the underlying assets in an attempt to beat the market, passive mutual funds and ETFs track an index like the S&P 500; they don't work to beat the market so much as match it.

Since the S&P 500, an index of the 500 largest publicly traded American companies, has been up over time, this has been a winning strategy for many investors. Below is a chart of the percentage of large-cap domestic equity funds that have underperformed the S&P 500 since 2001:

In addition, the hands-off approach means fund managers charge lower fees given the less work required vs. active management. The passive investing strategy has the benefit of lower turnover. When assets move in and out of the fund at a slower pace, it results in fewer transaction costs and realized capital gains , which can lead to potential savings when tax filing season arrives.

Pros and Cons of Passive Index Investing

Pros

Lower costs because of minimal trading, research, and management fees
Simplicity and ease of implementation through passive funds
Broad diversification across multiple sectors
Potential for long-term growth in line with the market
Greater flexibility for investors to execute a buy-and-hold strategy

Cons

Can't outperform the market
Exposure to market downturns and volatility
Missed opportunities in specific sectors or regions
Reliance on the performance of the underlying index or sector
Potential for tracking errors (lack of a perfect match in performance) between the fund and the underlying index

Who Benefits From Passive Index Investing

Passive index investing can be a great choice for beginner investors starting to explore the stock market. It's an ideal entry point for those who may feel overwhelmed by the complexity of the financial markets. Investing in index funds or ETFs that track broad market indexes allows you to gain exposure to a diverse range of companies and sectors without the need for extensive research or stock-picking skills.

But this isn't just a rookie move: experienced investors also invest heavily in such funds, which now make up about half of all volume traded in mutual and exchange-traded funds combined. Long-term investors benefit greatly from passive index investing, particularly those saving for retirement or other distant goals. The buy-and-hold nature of passive index investing allows investors to ride out short-term market fluctuations and benefit from the power of compound growth over time. In addition, the lower fees of passive investing can lead to significant savings over time.

Strategy 2: Value Investing

Pros and Cons of Value Investing

Pros

There's long-term opportunity for large gains as market prices meet up with a company's true intrinsic value.
Value companies often have stronger risk/reward relationships.
Value investing is rooted in fundamental analysis and supported by financial metrics.
Value companies are more likely to issue dividends as they aren't as reliant on cash for growth.

Cons

Value companies are often hard to find.
Successful value investments take time, and investors must be more patient.
Even after holding long-term, there's no guarantee of success since the company may even be in worse shape than before.
Investing only in sectors that are underperforming decreases your portfolio's diversification.

Value investors are your bargain shoppers of the investing world. They look for stocks with prices they believe don’t reflect the security's intrinsic value. Value investing is premised, in part, on the idea that some degree of irrationality exists in the market. This irrationality, in theory, presents prospects to get a stock at a discounted price and make money from it .

It’s not necessary for value investors to comb through volumes of financial data to find deals. Thousands of value mutual funds and exchange-traded funds (ETFs) offer shares in baskets of stocks thought to be undervalued. For example, the Russell 1000 Value Index is a popular benchmark for value investors, and several mutual funds track this index.

For those who don’t have time to perform exhaustive research, the price-earnings ratio (P/E) is an often-used measure for quickly identifying undervalued or cheap stocks. The metric derives from dividing a stock’s share price by its earnings per share (EPS). Value investors seek companies with a low P/E ratio; a lower P/E ratio means you’re paying less per $1 of current earnings.

For a nuanced guide to using the P/E ratio to evaluate stocks, see Investopedia's Are Stocks With Low P/E Ratios Always Better?

Who Benefits From Value Investing

Value investing is best for investors looking to hold their securities long-term. If you're investing in value companies, it may take years (or longer) for the businesses to scale up. Value investing focuses on the big picture and often attempts to approach investing with a gradual growth mindset.

People often cite legendary investor Warren Buffett , who sees himself as the epitome of a value investor. Consider Buffett’s words when he made a substantial investment in the airline industry . He explained that airlines "had a bad first century." Then he said, "And they got that century out of the way, I hope." This illustrates much of the value investing approach: choices are based on decades of trends and with decades of future performance in mind.

A rich set of academic studies has found that value investing can produce superior returns over the long term.3 However, value investing has had periods where it has underperformed growth investing, especially when tech stocks have posted outsized price gains.

Strategy 3: Growth Investing

Pros and Cons of Growth Investing

Pros

Growth stocks and funds aim for shorter-term capital appreciation. If you make profits, it'll usually be quicker than value stocks.
Once growth companies begin to grow, they often experience the sharpest and greatest stock price increases.
Growth investing doesn't rely as heavily on fundamental analysis and can be easier to begin investing in.
Growth companies can often be boosted by momentum; once growth begins, future periods of continued growth (and stock appreciation) are more likely.

Cons

Growth stocks are often more volatile. Good times are good, but if a company isn't growing, its stock price will suffer.
Depending on macroeconomic conditions, growth stocks may be long-term holds. For example, increasing interest rates works against growth companies.
Growth companies rely on capital for expansion, so don't expect dividends in the short term.
Growth companies often trade at high multiples of earnings; entry into growth stocks may be higher than entry into other types of stocks.

Rather than look for low-cost deals, growth investors want investments that offer strong upside potential for future earnings. It could be said that a growth investor is often looking for the “next big thing.” However, this strategy isn't a reckless embrace of speculative investing . Instead, it involves evaluating a company's health and potential to grow.

A drawback to growth investing is a lack of dividends. When a company is growing, it often needs capital to sustain its expansion. This doesn’t leave much (or any) cash left for dividends. Moreover, with faster earnings growth comes higher valuations, which are, for most investors, a higher risk proposition.

While there is no definitive list of hard metrics to guide a growth strategy, there are a few factors an investor should consider. Growth stocks tend to do comparatively well during periods of falling interest rates, as newer companies find it less expensive to borrow to fuel their expansion. It's essential to keep in mind, however, that at the first sign of a downturn in the economy, growth stocks are often the first to get hit.

Growth investors also need to carefully consider the management of a business’s executive team . Achieving growth is among the most difficult challenges for a firm. Therefore, a stellar leadership team is required. You'll also need to evaluate the competition. A company may enjoy stellar growth, but if its primary product is easily replicated, the long-term prospects are dim.

Who Benefits From Growth Investing

Growth investing is inherently riskier and generally only thrives during certain economic conditions. Investors looking for shorter investing horizons with greater potential than value companies are best suited for growth investing. Growth investing is also ideal for investors not concerned with investment cash flow or dividends.

According to a study from New York University’s Stern School of Business, “While growth investing underperforms value investing, especially over long periods, it is also true that there are sub-periods, where growth investing dominates.” The challenge, of course, is determining if these “sub-periods” are occurring. While trying to time the market is often unwise, growth investing is most suitable for investors who believe strong market conditions lie ahead.

Because growth companies are generally smaller and younger with less market presence, they are more likely to go bankrupt than value companies. It could be that growth investing is better for investors with higher disposable income as there is more downside for the loss of capital than other investing strategies.

Strategy 4: Momentum Investing

Pros and Cons of Momentum Trading

Pros

Higher risk means higher reward, and there's greater potential short-term gains using momentum trading.
Momentum trading is done in the short term, and there's no need to tie up capital for long periods of time.
This style of trading can be seen as simpler as it doesn't rely on bigger picture elements.
Momentum trading is often the most exciting style of trading. With quick price action changes, it is a much more engaging style than strategies that require holding securities long term.

Cons

Momentum trading requires a high degree of skill to properly gauge entry and exit points.
Momentum trading relies on market volatility; without prices quickly rising or dropping, there may not be suitable trades to be had.
Depending on your investment vehicles, there's increased risk for short-term capital gains.
Losses can happen very quickly; without notice, an entry and exit point may no longer exist and you're stuck with the losses coming your way.

Momentum investors ride the wave. They believe winners keep winning and losers keep losing. They look to buy stocks experiencing an uptrend. Because they believe losers continue to drop, they may choose to short sell these securities.

Momentum investors are heavily reliant on technical analysis . They use a strictly data-driven approach to trading and look for patterns in stock prices to guide their purchasing decisions. This adds weight to how a security has been trading in the short term.

Momentum investors act in defiance of the efficient-market hypothesis, which states that asset prices fully reflect all information available to the public. A momentum investor believes that given all the publicly disclosed information, there are still material short-term price moves that can be taken advantage of. Despite some shortcomings, momentum investing has its appeal. Consider, for example, the MSCI World Momentum Index, which has averaged annual gains of 10.75% since its inception in 1994 through June 2022, compared with 7.59% for its benchmark over the same period.

Who Benefits From Momentum Investing?

Traders who adhere to a momentum strategy must always be at the switch and ready to buy and sell. Profits build over months, not years. This contrasts simple buy-and-hold strategies that take a "set it and forget it" approach.

In addition to being heavily active with trading, momentum investing often calls for a skilled ability to use technical analysis. Momentum investing relies on data for proper entry and exit points, and these points are continually changing based on market sentiment. For those with little interest in watching the market closely there are momentum-style ETFs .

Strategy 5: Dollar-Cost Averaging

Pros and Cons of Dollar Cost Averaging

Pros

DCA can be combined with the other strategies mentioned above.
During periods of declining prices, your average cost basis will decrease, increasing potential future gains.
DCA removes the emotional element of investing, requiring reoccurring investments regardless of how the markets are doing.
Once set up, DCA can be incredibly passive and require minimal maintenance.

Cons

DCA can be difficult to automate especially if you are not familiar with your broker's platform.
During periods of declining prices, your average cost basis will decrease, increasing your future tax liability.
You must have steady, stable cash flow to invest to DCA.
Investors may be tempted not to monitor DCA accounts; however, investments—even automated ones—should be reviewed periodically.

Dollar-cost averaging (DCA) is when you make regular investments over time, as when you set aside part of your paycheck for your 401(k). It can be and often is used with the other strategies above. However, the point of this is discipline: even if the market is going down or you're most worried about investing, you still put away a set amount periodically. This means you benefit when stocks are low and you can buy more with the same amount of funds.

This disciplined approach becomes particularly powerful when you use automated features that invest for you. The benefit of the DCA strategy is that it avoids the market timing strategy, which can be painful and ill-fated for many people. Even seasoned investors occasionally feel the temptation to buy when they think prices are low, only to discover that their market timing was wrong.

When investments happen in regular increments, you capture prices at all levels, from high to low. These periodic investments effectively lower the average per-share cost of the purchases and cut the potential taxable basis when you sell later on.

Who Benefits From Dollar-Cost Averaging?

DCA is a wise choice for most investors. It keeps you committed to saving while reducing the level of risk and the effects of volatility . Most investors are not in a position to make a single, large investment. A DCA approach is an effective countermeasure to the cognitive bias inherent to humans. New and experienced investors alike are susceptible to hard-wired flaws in judgment.

Loss aversion bias, for example, causes us to view the gain or loss of an amount of money asymmetrically. In addition, confirmation bias leads us to focus on and remember information that confirms our long-held beliefs while ignoring contradictory information that may be important. DCA circumvents these common problems by removing human frailties from the equation.

You must have ongoing cash flow and reoccurring disposable income for a workable DCA strategy. Many online brokers have options to set up reoccurring deposits. You can adjust them based on changes in your personal cash flow or investment preference.

You've Picked Your Strategy, Now What?

Suppose you've narrowed down a strategy; great! There are still a few things you'll need to do before you make the first deposit into your investment account. First, figure out how much money you need to start investing. This includes your upfront investment and how much you can continue investing.

You'll also need to decide on the best way for you to invest. Do you intend to go to a traditional financial advisor or broker, or is a passive, worry-free approach better for you? If you choose the latter, consider signing up with a robo-advisor .

Consider your investment vehicles. Cash accounts can be immediately withdrawn but often have the greatest consequences. Accounts like 401ks can't be touched until you retire without fees and have more limited options, but your company may match your investment. Different types of IRAs also have various levels of flexibility.

It also pays to diversify. To reduce the risk of one type of asset bringing down your entire portfolio, consider spreading your investments across stocks, bonds , mutual funds, ETFs, and alternative assets. If you're socially conscious, you may consider responsible investing . Now is the time to figure out what you want your investment portfolio to be made of and what it will look like.

How Do I Set Up an Investment Strategy?

A general investment strategy is formed based on your long-term goals. How much are you trying to save? What is your timeline for saving? What are you trying to achieve? Once you have your financial goals in place, you can set target performance on returns and savings, then find assets that mesh with that plan.

For example, your goal may be to save $1 million. To reach this, you need to invest $10,000 per year for 29 years and achieve 8% annual returns. Armed with this information, you can analyze various historical investment performances to try and find an asset class that achieves your strategic target.

What Is Warren Buffett's Investment Strategy?

Warren Buffett has long been widely regarded as among the world's most skilled and successful investors. Warren Buffett's investing strategy is based on the principles of value investing. He focuses on identifying undervalued companies with strong fundamentals, consistent earnings, and competitive advantages (which he calls " economic moats "). Buffett believes in long-term investing, holding stocks for many years or even decades. He also emphasizes the importance of understanding the businesses he invests in and only investing within his "circle of competence." Lastly, Buffett prefers companies with strong management teams, low debt, and the ability to generate high returns on invested capital.

How Does Risk Tolerance Affect an Investment Strategy?

Risk tolerance is the amount of risk that an investor is willing to endure. It plays a significant role in determining the type of investment strategy that someone chooses and how much they opt to invest. Investors with longer time horizons might be more willing to take on a riskier investment, while investors focused on a short-term financial goal might be more risk-averse.

What Is the Safest Investment Strategy for Earning High Returns?

There's always a risk-return trade-off. In other words, the safer your investments are, the lower the expected returns over time (and vice versa). That said, there are ways to maximize investment returns while minimizing risk. One effective approach is to create a well-diversified portfolio across various asset classes, such as stocks, bonds, real estate, and commodities.

By spreading your investments across different sectors and industries, you can cut the impact of any single investment's performance on your overall portfolio. This helps to mitigate unsystematic risk, which is the risk associated with individual companies or sectors. A good way to follow this strategy is to use low-cost index funds or ETFs and follow the model of modern portfolio theory . This provides for a passive long-term portfolio that maximizes return for a given level of risk.

What Is the Least-Risky Thing to Invest In?

Cash is, by definition, the lowest-risk asset since it cannot incur a loss ($1 always = $1), but it will lose purchasing power because of inflation over time. U.S. Treasuries are also considered one of the safest investments, as they are backed by the full faith and credit of the U.S. government. Treasuries have various maturities, ranging from short-term Treasury bills (T-bills) to longer-term Treasury notes and bonds.

While Treasuries are generally considered risk-free in terms of default risk, they are still subject to interest rate risk. When interest rates rise, the value of existing bonds declines, as newer bonds are issued with higher yields.

The Bottom Line

How you choose your strategy may be more important than the strategy itself. Indeed, any of these strategies can generate a significant return if the investor makes a choice and commits to it. It is essential to choose because the sooner you start, the greater the effects of compounding .

Remember, don’t focus exclusively on annual returns when choosing a strategy. Take the approach that suits your goals, income, and risk tolerance . With a plan in place and your goals set, you'll be on a prudent long-term investment journey.

SEE IMPORTANT DISCLOSURES IN LINK

Nate Creviston Discusses Legacy Planning With Retirement News

Fri, 09 Aug 2024 12:36:50 GMT

How Do You Approach the Topic of Legacy Planning?

Link to Article

Navigating the sensitive and complex world of legacy planning, we turned to seasoned Financial Advisors and Certified Financial Planners for their expertise. From discussing the essentials of legacy planning to demystifying estate planning for clients, these seven financial professionals offer their creative solutions and approaches.

Discuss Legacy Planning Essentials
Explore Non-Monetary Legacy Values
Align Estate Plan with Personal Values
Strategies for Joyful Asset Inheritance
Reframe Legacy as Love and Wisdom Sharing
Involve Heirs in Financial Planning Early
Demystify Estate Planning for Clients

Discuss Legacy Planning Essentials

Legacy is a sensitive subject to broach with clients; however, some professionals might argue this inevitable conversation is, in its own way, as important as all investment strategy and tax mitigation discussions expanded upon throughout the advisor-client relationship.

To properly assess a client's legacy planning needs, there are three main questions that need to be discussed in great detail: 1) What is the monetary value of the desired legacy, and why? 2) How thoroughly do we want to explore the tax implications of said legacy? 3) How removed from potential risks do we want this legacy to be?

The solution to a client's legacy needs can be as simple as taking out an inexpensive term life insurance policy to provide blanket coverage for the household, and as complex as discussing Roth conversions in a traditional IRA and the establishment of a trust and proper estate planning. The answer to each one of those questions will inevitably lead the conversation in the most appropriate direction.

Ian Alvarez Financial Advisor, Northwestern Mutual

Explore Non-Monetary Legacy Values

We begin our legacy planning process with questions that don't involve dollar amounts. For example, is it important to you to be remembered in your community? What impact would you like to have on your children, grandchildren, great-grandchildren, and beyond? The solution will largely depend on these answers, but can include a will, various types of personal or charitable trusts, a family foundation, and/or a donor-advised fund.

Benjamin Abitz Certified Financial Planner, TMRW Wealth

Align Estate Plan with Personal Values

When discussing legacy planning with clients, I start by understanding their values and goals for their legacy. I explain the importance of a well-structured estate plan, which includes wills, trusts, and beneficiary designations. One creative solution I recommend is setting up a charitable remainder trust, which provides income to the client during their lifetime and benefits a chosen charity after their passing. This approach not only fulfills philanthropic desires but also offers potential tax advantages. Clear communication and a personalized strategy ensure that their legacy aligns with their wishes and provides for their loved ones.

Chad Lively Lead Financial Planner, Lively Financial LLC

Strategies for Joyful Asset Inheritance

My top three legacy planning strategies are:

1. Moving assets that are a pain to inherit into assets that are a joy to inherit. Painful assets include things like partial ownership in real estate, partial ownership in a business, or partial ownership in a car. Joyful assets are cash, Roth IRA, and full ownership in a special family heirloom.

2. Look into a dynasty 529 plan, as seen on my blog, where you could build a multi-decade-long education fund for your family in a very tax-efficient manner.

3. Consider writing a letter to your loved ones explaining how you hope they use the gifts you are bestowing on them. And consider making gifts before you die so that you can be a part of the joy!

Stephen Boatman Principal & Financial Planner, Flat Fee Financial

Reframe Legacy as Love and Wisdom Sharing

The age, experiences, or stage of life the client is in can make the subject easier or more challenging to approach. Adapting to that client's state of mind, one effective approach is to reframe the topic from being about them and how they're remembered to being about those people or causes they care most about.

For example, speaking to a veteran, you might ask, "If your child was about to deploy to a region of conflict, what would be your best advice to prepare them for the battles ahead?" Then, expound: Life is full of conflicts; how might you best prepare those you love for the battles they'll certainly face after you're gone?

People are most remembered for how they've helped others more than specific accomplishments. Framing the topic as a literal, once-in-a-lifetime opportunity to share their love, wisdom, and resources is more dynamic than asking them to reflect on their own mortality. From this perspective, not only is the subject of legacy more approachable, it becomes more meaningful and personally fulfilling for the clients themselves.

Frank Molinar, CFP Principal/Owner, Molinar & Co Financial Advocates

Involve Heirs in Financial Planning Early

It's very important to us to determine exactly what the word "legacy" means to our clients. Most hear the word and think they have to have their name on a building or a fully-funded scholarship when they pass away. This is not the reality for most; for some, it could be taking their family on a large vacation either while alive or after they have passed away. It could be providing lasting memories for those close to you from shared experiences. There's a large spectrum of what our clients want to provide for others.

If the intention is to pass down wealth to second or third generations, then there are a few key steps we take in order to ensure a successful transition:

The first step in successful legacy planning is to involve the second generation as soon as possible; the more they know about their parents' financial plan, the more successful the transition will be.

The second step is making sure there is a solid financial planning knowledge base for the second generation to build upon. No amount of inheritance will outlast spending problems or poor investment strategies.

Then we can start to get creative with clients. Do we need to lock up money in trusts for minor children until they obtain certain threshold ages? Do we need to not distribute money until they have earned a college degree? Do we need to put further restrictions on inheritance money for a problem child? These are all questions we get answered in initial estate planning meetings.

With the sunsetting Tax Cuts and Jobs Act in 2025, advisors should be having more estate planning conversations with high-net-worth clients. The shift back to pre-2017 lifetime exemption levels will affect many high-net-worth families, and they need a plan in place before then.

Nate Creviston Manager, Wealth Management, Capital Advisors Ltd.

Demystify Estate Planning for Clients

As part of our financial goal determination process, we ask if one of your goals is to leave a large estate to your children. Most feel that they have already given their children an education and tools, so they plan to enjoy spending their money on themselves. However, they think a will and a trust are only for the super-rich. We show them that this is no longer true, as the landscape of estate planning has evolved with the advent of online platforms.

The advisor's reluctance to address these topics is often more of a taboo than the client's, and many clients are grateful that we broach these subjects because most people do not discuss them.

Alonso Rodriguez Segarra Hourly Planner, Advise Financial

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Neil Waxman Discusses How to Talk to Clients About Market Volatility with Investopedia

nwaxman@capitaladvisorsltd.com (Neil Waxman) — Tue, 30 Jul 2024 16:52:24 GMT

How To Talk to Clients About Market Volatility

PETER GRATTON

Link to Article

Updated June 03, 2024

Part of the Series

Financial Advisor Guide to Client Management

The stock market tends to go up in the long run. However, the long term has been punctuated by horrific dips and dives. How should you counsel clients who might overreact during these times?

Whether markets are turbulent or relatively peaceful, financial advisors need to be farsighted enough to ensure their clients know what to expect should volatility occur. We contacted standout advisors throughout the U.S. and, below, give you the best advice on helping clients when volatility strikes.

KEY TAKEAWAYS

· Market volatility can be difficult for clients to gauge, so it's crucial that you become a good listener and communicator to help them manage their emotions.

· Encouraging clients to stick with their financial plan and understand that short-term blips often smooth out over longer horizons can help them stay on track.

· Good advisors prepare clients from the beginning for volatility before it happens.

· They also ensure clients have a portfolio that can handle all but the most extreme kinds of volatility.

Get Out Ahead of the Bad News

If volatility is beginning to rock the markets and you're only now talking to clients about volatility, this means something has gone wrong in your advising relationships. "For the most part, talking to clients about market volatility during times of market volatility is too little, too late," said David Flores Wilson, a certified financial planner at Sincerus Advisory in New York City. "A better approach is to talk about likely future market volatility when they are first engaged as clients."

Lora J. Hoff, a certified financial planner at Investment Planners in Dallas, Texas, agreed. "It is critical to set expectations early and often. With every new client and at every client review, I discuss normal market returns and volatility. Whether the client is coming off a great return period or a downturn, I talk about how this will be a part of the overall roller coaster ride to achieve a long-term reasonable positive return," she said.

COMMUNICATION IS KEY

Alyson Claire Basso of Hayden Wealth Management said, "By being transparent and accessible, we build trust and long-lasting relationships with our clients, positioning them for success regardless of market conditions."

Wilson gave an example of how he prepares clients from their first meetings: "We illustrate, based on their risk tolerance, what they could expect regarding potential downside. For example, we might propose a diversified portfolio that can be expected to go down 18% in any given year within a 99% confidence level and then get their feedback on this potential downside risk. If this worst-case scenario is too jarring, then we’ll adjust."

In this example, Wilson prepared his client for what volatility would look like, and now the client has signed off on the risks involved.

Benjamin Burkhart, a financial advisor at LPL Financial in Red Lion, Pennsylvania, said he looks for relatable analogies to explain market movements. He tries to get across how success in the market over the long term often means some retrenchment. Burkhart said he might tell a client, "Think of a healthy market like a balloon. You don't want to blow up the balloon quickly until it pops. Instead, you blow it up, let a little air out, then blow it up more. Letting the air out allows more room to grow." "We've found that using analogies with an optimistic and positive tone to explain volatility and pullbacks has been very effective."

Listen Far More Than You Talk

During market downturns, when portfolio values have plummeted, clients may face losses equal to years of savings, pushing their financial goals and dreams further out of reach.

It's crucial to get in touch with all your clients during volatile economic conditions—or they might not be your clients for long. Matt Bacon, a financial advisor at Carmichael Hill in Gaithersburg, Maryland, said, "We've picked up many clients who were dissatisfied with the amount of communication they were getting from their advisor." This often matters more than the fact that the market is volatile. "Clients understand that markets go down from time to time and that we can't control a bear market. They're much less forgiving when they don't understand why it's going down this time, how their portfolio is affected, or what they should be doing going forward."

Empathetic communication is thus key. "During times of market upheaval, my approach has always been to reach out to clients to talk with them about what may be on their mind before they begin to worry themselves about all the things that can go wrong," said Alyson Claire Basso, managing principal of Hayden Wealth Management in Middleton, Massachusetts. "I make a point to discuss past market experiences and potential future market volatility."

"This way, they know that volatility is something we’ve planned for," she said.

Reach Out Before They Have a Chance to Call

Pick out clients who are more at risk and ensure you speak to them first if market events are sudden and moving quickly. Let your clients know you're available to discuss any concerns and consider scheduling meetings to review their portfolios and financial situations.

Avoid the Numbers for Now

However, this is not the time to wax on about asset allocation and standard deviation or fall back on technical descriptions of recent market gyrations. Focus on the human element rather than technical discussions—more data might freak them out (since all the numbers are generally bad) and is less needed than hearing their concerns.

"Advisors should be hesitant to discuss numbers and data during a financial downturn because the client's fears are very emotional and irrational at that point," said Brian M. Schmehil, managing director of Wealth Management at the Mather Group. "Lead with numbers throughout the year, but when volatility occurs, it is important to empathize." If needed, you might have to "call out some extreme views or expectations the client may have."

Even though, as a financial expert, your instincts will lead you to think a sober review of the number is in order, listening is more crucial now. "Understanding what is giving them stress and anxiety, but then explaining why those feelings might not be rational, is a great way to pull clients from the edge of making a bad decision," Schmehil advised.

It also helps you bank trust that you're going to need if the volatility lasts longer than expected. "It's all about communication," Basso said. "It's not just about whether they're making money or not, but how well you're keeping them in the loop. It is crucial to manage expectations, especially when things get rocky. By being there for clients, listening, and keeping them informed, we build trust and loyalty, even when the market is unpredictable."

Remind Them of the Long-Term View

Schmehil said that when the market starts to swing, "It's the advisor's responsibility to educate the client on the value of taking risks and having a long-term perspective." As long as the advisor secures the client's short-term cash needs, the client should be willing to listen as the advisor notes the relationship between risks and rewards.

"This doesn't mean the client should like losing money, but they should expect most of their portfolio not to go up in one straight line." It's important to let the client know they "will still be successful so they continue to have a long-term perspective," he said.

Talk About Previous Pullbacks and the Bull Markets After

Once a market rallies from one of its nosedives, the financial media are typically full of sobering stories about investors who sold at the bottom, only to miss out on the recovery. "Regularly reminding them of how much markets went down in prior pullbacks like the 2008 financial crisis, the COVID pullback in 2020, and the 1998 Asia debt crisis helps them mentally prepare for inevitable market volatility," Wilson said.

Depending on how long they've been clients, you might show them how their portfolio has performed since they started investing. Reviewing a decade-long period, for example, might make the declines seem less significant. There's a reason people examining data suggest "zooming out": you can better see the long-term trend instead of myopically concentrating on the smaller, current movements.

Ask Them What Would Ease Their Stress

A good question to ask a client looking to cut their exposure to stocks is, "If we sell now, when will you get back in?" While most clients understand that timing the market is nearly impossible, many struggle to reconcile the data with their emotions.

Michael Resnick, senior wealth advisor at the Alera Group in Deerfield, Illinois, gave an example from the beginning of the pandemic. He had a client who couldn't sleep because he couldn't stop thinking about how market volatility was hurting his savings—stocks were dropping fast as news of the potential economic shutdown was taking hold.

The client asked Resnick to liquidate his portfolio so he had the security of at least having his funds in cash. "I knew that would derail his plans for retirement. Instead of moving everything into cash, I asked him, 'How much do we need to move into cash for you to sleep better?' His response was an additional 20% into bonds. ... This gave him peace of mind and saved his portfolio, as well as his retirement." In this way, a small intervention moved his client away from selling off everything, and instead, he adjusted his bond holdings.

Keep Things in Perspective

Given this last example, Resnick said that when helping clients through bouts of volatility, "The importance of behavioral finance cannot be overlooked." Behavioral finance suggests not just the obvious—that human beings are not prone to being the rational actors depicted in Economics 101 textbooks—but that the market itself is better understood through such behaviors. For clients facing a market upheaval, common insights taken away from the field would suggest that during periods of market turbulence, clients typically rely on cognitive biases.

One of the most likely biases an investor might face loss aversion , where the pain of losing money is more intense than the pleasure of gaining an equivalent amount. This can lead to panic selling or abandoning a well-structured investment plan. Neil Waxman, managing director of Capital Advisors in Shaker Heights, Ohio, suggested that advisors talk to clients about loss aversion and other cognitive biases so they can better stick to long-term investment strategies.

Waxman said recency bias is another issue that's likely to arise when there's volatility. "Recency bias is the tendency to base decisions on what has occurred most recently and project it indefinitely into the future. Bear markets can lead investors to continue to think the worst, even when the markets eventually recover," he said.

Behavioral finance also highlights the role of framing , which involves how people respond differently depending on how information is presented. Advisors can use positive framing to help clients view market downturns as a chance to look for prospects likely to head back up once funds start moving back into the market.

Helping clients keep recent market news in perspective is essential, especially during periods of volatility. For Waxman, this means "providing clients with insights" on cognitive biases or common tendencies and a "vision delivered by a sound financial road map."

“Stability is destabilizing.”

Bull markets also present a time for an advisor to keep clients focused on the long term. Economist Hyman Minsky's "instability hypothesis" states that investors seeing low risk in a booming market are led to increasingly take more and more risks (since the market is booming, they have no ill effects), which in turn can lead to a crisis as too many invest in shaky assets. Minksy has a famous dictum that follows from this: “Stability is destabilizing.”

Focus on The Plan

Being a good advisor isn't just about how you react to changing stock market conditions but how you have already factored in potential volatility for your client from the get-go. As Schmehil put it, "It is the advisor's responsibility to put clients in a portfolio that isn't too risky to force a knee-jerk reaction from the client.

Ideally, once volatility occurs, your clients' portfolios will have already captured prior gains. However, if your clients think there is too much risk in their investment holdings, it may be suitable to adjust their portfolios.

When deciding what to buy or sell during volatility, ensure your clients know the long-term ramifications of their actions. Shedding a risky asset may temporarily relieve their stress, but realizing that you sold a high-potential asset at its lowest price might haunt them ever after. Your role is to ensure your clients remain true to their long-term financial goals.

Remind your clients that neither financial advisors nor clients can predict or influence the market. All you can do is prepare as best you can before major events occur.

What Is Stock Market Volatility?

Volatility in investing refers to rapid changes in an asset's price. Investments that are more volatile experience great changes in their value compared with less volatile, stable investments.

Is Volatility Good?

Volatile assets gain or lose value quickly. There may be more buying or arbitrage opportunities with volatile assets, though they may not retain their value and are considered riskier investments. Securities with higher volatility often compensate investors with greater returns in exchange for bearing higher risk.

How Do Financial Advisors Handle Volatility?

Financial advisors must calm the emotions of their clients during difficult markets. Good advisors keep their clients focused on their long-term goals and do not get distracted by short-term price fluctuations.

The Bottom Line

As a financial advisor, you truly earn your keep during plunging market conditions when volatility can be high. It's easy to share good news when a client's portfolio is thriving, but it takes skill and empathy to navigate conversations when trading screens are littered with red and many charts have chart lines going down and to the right.

Remember, providing advice is as much about managing client behavior as allocating assets and building portfolios. If your clients are spooked, it may be a sign that you haven't communicated enough or properly educated them about market fluctuations and volatility.

Even if your clients understand that certain risks are inevitable and can't be mitigated entirely, they still want reassurance from you, their trusted advisor . If you don't reach out to them during turbulent times, someone else might, and you risk losing a client in the process. By prioritizing regular communication, setting clear expectations, and focusing on your clients' long-term financial plans, you can help them weather declines and periods of negative market volatility with confidence and peace of mind.

Personalized Advice When You Need It

Put your financial goals in motion with an expert-built portfolio and receive ongoing advice and annual check-ins to ensure your plan is on track. With J.P. Morgan Personal Advisors, you can get a professionally designed investment portfolio that meets your needs and automatically rebalances as the market shifts. Fill out this short form to get started.

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Nate Creviston Discusses Annual Financial Planning Checklists with Investopedia

Tue, 09 Jul 2024 17:18:31 GMT

Your Annual Financial Planning Checklist

REBECCA LAKE

Link to Article

Financial Health Checklist

If you’ve taken on the task of mapping out your annual financial plan, you deserve a pat on the back. Making sure you’ve covered all the bases is important to both your short-term and long-term financial health. Keeping track of your progress with an annual financial planning checklist makes it easier to see which tasks have been completed and which you still need to tackle.

KEY TAKEAWAYS

An annual financial plan allows you to determine your financial situation at any given moment.
It should include examining all your assets and liabilities, deciding on your goals, and selecting the methods you intend to employ to achieve them.
The annual plan can be broken up into items to be done quarterly, not all at once.
Your annual plan should change or be updated if there are major events (birth, death, marriage, etc.).
Check off every strategy you’ve considered, even if you decide not to pursue it.

What Is an Annual Financial Plan?

An annual financial plan takes a snapshot of the state of your personal finances. It balances your assets against your liabilities while considering your financial goals and what you may need to do to realize them. Your liabilities should include any loans, credit cards, and other personal debts. Don’t forget to include your mortgage, rent, utility bills, and other monthly expenses. It’s a good idea to look at your financial plan annually, as well as after any major life event, such as marriage, divorce, birth, a death in the family, or any major event that can substantially affect your finances.

Kim Abmeyer, founder of Abmeyer Wealth Management in Dallas, Texas, suggests what her firm does with many clients. She breaks down the annual financial plan into quarterly reviews, "addressing cash flow planning for the year ahead, estate planning, risk management, and end-of-year gifting and retirement planning. It seems less daunting for clients to work through it this way."

Nate Creviston, Manager of Wealth Management at Capital Advisors in Shaker Heights, Ohio, said the rise in fraud means everyone should consider the need for cybersecurity insurance as part of their annual checklist. "This is a rider that can be added to most homeowner or renter policies to protect against cyber and identity theft," he said.

While it's less overwhelming to break up your financial checklist into quarterly tasks, Georgia Lord, a certified financial planner at Corbett Road in Brooklyn, New York, said this doesn't mean revamping your annual plan more often. "I stress to clients that a financial plan is a living, breathing document that can and should be reviewed periodically. However, there is such a thing as reviewing or changing your financial plan too often. Typically, once a year is sufficient—or when you have a significant life event such as a large purchase, birth, death in the family, or retirement."

Your financial plan for the year should factor in your goals and what you’ll need to accomplish to achieve them. This can include retirement planning, tax planning, and investing.

You need a checklist so that you don’t forget something important that you should be monitoring. It is vital to check off every item on the list, even if you don’t intend to implement some of them, like refinancing a mortgage, for example. It's helpful to know that you considered all options and possibilities. Build a list with the ideas below, and check off each step below as you go. This will help you get a complete picture of your finances.

Create a Personal Financial Inventory

Your financial inventory is important because it gives you a snapshot of the health of your bottom line. The annual self-check-in should include the following:

A list of assets, including items such as your emergency fund , retirement accounts, other investment and savings accounts, real estate equity, and education savings (any valuable jewelry, such as an engagement ring, belongs here too)
A list of debts, including your mortgage, student loans, car loans, credit cards, and other loans
Your credit utilization ratio , which is the percentage of a borrower’s available credit that you are using
A credit report with your credit score. Creviston said you should be looking to identify fraudulent activity and errors.
Lord suggests assessing your spending and expenses to see if there are costs that can be cut, such as subscriptions you no longer use or need.
A review of the fees you’re paying to a financial advisor, if any, and the services they provide

Even though you'll want to procrastinate on this—as people do with their tax filing and other financial duties—doing it can have real benefits, Abmeyer said. "We've uncovered life insurance needs as well as opportunities to stop premiums on policies clients no longer need. We've uncovered misaligned investment strategies when their planning needs are reviewed."

Set Financial Goals

Once you have completed a personal financial inventory, you can move on to setting goals for the next 12 months. You should divide them into short-term, midterm, and long-term goals. This is the time to ask yourself if any of your goals have changed, Lord said.

Short-Term Goals

Establish a budget , which can be made easier by using budgeting apps to manage your money.
Create an emergency fund or increase your emergency fund savings. "Make sure you have a fully funded emergency savings account with three to six months of your expenses in cash," Creviston said.
Plan to pay off your credit cards.

Mid-Term Goals

Get life insurance and disability income insurance .
Think about your dreams, such as buying a home, renovating a house, saving money to start a family, or sending children to college.

Long-Term Goals:

Determine how much of a nest egg you’ll need to save for a comfortable retirement. "If you’re in your working years, make sure you’re contributing 10% to 20% of your salary to your retirement accounts," Creviston said.
Figure out how to increase your retirement savings.

Create a Family Plan

You should think about certain things on the financial front if you want to have children or if you plan to care for aging relatives. These are some of the items that should be on your family plan list:

If you have children, determine how much you’ll need to save for future college expenses.
Choose the right college savings account.
If you are caring for older parents, explore whether long-term care insurance or life insurance can help.
Consider whether you should purchase long-term care insurance or life insurance for yourself or your spouse.
Start planning how you will time your retirement, including your strategy for when you will claim Social Security .

Review Your Retirement Savings

Saving for retirement in an individual retirement account (IRA) or a 401(k) plan is a smart way to receive some tax advantages while preparing for the future. As you review your annual financial plan, consider the following:

Decide whether a Roth or traditional IRA is best for you.
Consider if there's a need to convert a traditional IRA to a Roth IRA . When either your income or the value of your account is lower, it can be a good time to make this change at the lowest possible cost.
Do the same for your 401(k), which can also be Roth or regular.
Roll over any old 401(k) accounts from any previous employers.
If you’re self-employed, get an update on the limits for a simplified employee pension plan or other self-employment retirement accounts and maximize your contributions.
Increase or decrease your annual contribution to your retirement account.

Review Your Investments

Investors need to take stock of where their investments are during the annual financial planning process. This is especially true when the economy undergoes a shift.

Check your asset allocation . For example, if stocks are taking a dive, you may consider adding real estate or fixed-income investments into your portfolio mix to offset some of the volatility.
Determine which investments will best meet your asset allocation goals and whether your current investments still fit that profile.

Rebalance Your Portfolio

Periodically rebalancing your portfolio ensures that you’re not carrying too much risk or wasting your investment dollars on securities that aren’t generating a decent rate of return. It also ensures that your current portfolio reflects your investment strategy, as changes in the market often cause a shift that needs to be corrected to maintain the diversification you originally planned.

Look at which asset classes you have in your portfolio and where the gaps are. If necessary, refocus your investments to even things out.
Consider the expense of managing your portfolio and decide whether it’s time to try a robo-advisor or another strategy to reduce costs.

When making your plan, don’t forget to consider the tax implications of any financial changes you make.

Review Your Taxes for Investments

While you’re looking over your portfolio and rebalancing, don’t forget to factor in how selling off assets may affect your tax liability. If you’re selling investments at a profit, you’ll be responsible for paying short- or long-term capital gains tax , depending on how long you held the assets. This step can wait until the end of the year. When you get to that point, you’ll want to consider these strategies:

Look at possibilities for tax-loss harvesting . This is when you sell off "losing" assets before year end to bank the negative to offset gains in other parts of your portfolio, thus lowering your overall income and hence your tax bill.
Explore whether it makes sense to use appreciated securities to make charitable donations or support lower-income family members.

David Flores Wilson, a certified financial planner at Sincerus Advisory in New York City, said his firm uses a special checklist near the end of the year, which you can do on your own or with an advisor. His fourth-quarter list looks at if you're up to date with your tax withholding amounts (have you been making quarterly payments to the Internal Revenue Service for freelance and other income to be taxed?), charitable giving, and tax-loss harvesting.

Update Your Emergency Plan

A sizable emergency fund is helpful when financial troubles descend, so be sure you have saved enough.

Building your emergency savings should be a top priority if you don’t have three to six months’ worth of expenses tucked away.
Invest in insurance. Are you covered in case of a temporary disability, for example?
Make sure you have both financial and medical powers of attorney in place.

Look Ahead to Future Savings

As you move through the year, think about where else you could be saving money to fully fund your emergency savings and put aside more for the future. Consider whether you can do any of the following:

Refinance your mortgage
Compare car insurance premiums across different companies
Lower your food bill
Use flexible spending or health savings accounts
Cut spending on cable TV or streaming services
Curb your energy bill
Divert your paycheck to savings by contributing more to retirement accounts or funneling money directly from your paycheck into an emergency savings account

Getting Help With Planning

Finally, you can certainly do this on your own, but if you have an advisor, Lord suggested going through your checklist with your advisor. "I enjoy having conversations with clients while going through a checklist. Through this, I am able to hear firsthand any changes to a client’s financial goals or circumstances and the nuances within."

You can also use financial planning apps to track your expenses and income, simplifying your financial life, but not all programs are created equal. As you wrap up your annual financial plan, review the apps and software you’re using to see if they still fit your needs. If you’re not putting any budgeting and other apps to work yet, take the time to review the options and see how they can help you manage your money.

What Are Some Alternative Sources of Income?

These are ways to supplement your income beyond your main job or retirement and Social Security benefits, if retired. Some sources include investing in a rental property and becoming a landlord, which can provide regular income. If funds are tight, you are old enough, and you own your home, explore whether a reverse mortgage could be a good solution for you. There are also dividend stocks, which can provide distributions throughout the year.

Do I Need Professional Help to Complete My Checklist?

If your finances are relatively simple, you should be fine creating and checking your own list. However, the more complicated your finances are, the more you should consider hiring a tax specialist, financial advisor, and perhaps an estate-planning lawyer to help you see the fullest picture possible. A professional can help you understand your asset allocation, taxes, estate planning needs, and insurance requirements.

The Bottom Line

An annual financial plan is an exceptionally valuable tool for maintaining peace of mind about your finances today and in the future. Best-case scenario: You’ve checked off all the items on this punch list by now. If not, don’t hesitate to put time on your calendar to do so.

You'll gain a clear understanding of where your money is going, how much your investments are earning, and how much you're putting away for retirement. You may also find easy ways to save money you wouldn't notice otherwise.

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Neil Waxman Discusses "Financial Social Work" and the financial planning process with Investopedia

nwaxman@capitaladvisorsltd.com (Neil Waxman) — Fri, 21 Jun 2024 13:52:03 GMT

Top Tips for Young Financial Advisors

By PETER GRATTON

Link to Article

The financial advisory industry faces a significant demographic shift, with the average age of advisors in the U.S. at 56 and about 20% set to retire in the coming years.12 This suggests plenty of changeover toward younger talent over the next decade, which also means that younger advisors will have a greater chance than previous generations to shape the industry. But first, they need to get their footing in a challenging and competitive career that often throws unexpected obstacles their way.

To help aspiring and early-career financial advisors navigate their early careers, we sought the insights and advice of experienced professionals. In addition to the six main tips outlined in this article, we've included standout bonus tips throughout the piece. From emphasizing the importance of lifelong learning to finding a niche and honing communication skills, these advisors share the lessons they wish they had known when starting.

KEY TAKEAWAYS

Continuous learning is crucial for financial advisors to stay up-to-date on the latest trends in investments and planning, especially given the ever-changing landscape of taxes and regulations.
Finding a niche early in your career and becoming known for it can help attract prospects and set you apart in a competitive industry.
Teaching financial concepts can reinforce your knowledge and boost your confidence when speaking to prospective clients.
Empathy for clients' financial stresses while recognizing their decisions are their own is essential for long-term success as an advisor.
Staying motivated to serve clients is crucial since that will keep your own goals in mind when facing tougher parts of your early journey.

The Field Young Advisors Are Entering

We can quickly sketch three significant shifts underway as newer advisors are entering the field:

1) Economic Changes:

Brian M. Schmehil, managing director of wealth management for the Mather Group in Chicago, said all advisors, not just newer ones, are adjusting to recent economic changes. He noted that higher inflation has "put pressure on certain asset classes, forcing advisors and their clients to rethink portfolio construction."

He also pointed to advances in healthcare that are expanding the time retirees are expected to live on their retirement savings—perhaps for up to 50 years in the near future. Changes to Social Security and other programs could face demographic pressures that lower benefits for younger workers. There are other generational challenges: student debt is causing many to put off saving for retirement and buying their first homes, and no doubt further shifts are in the offing.

Ashley Folkes, a financial advisor in Hoover, Alabama, said not to assume you'd be better leaving your current firm. "Staying with a good firm and team can bring excellent rewards. With the average advisor's age being high, young advisors have a unique opportunity for succession plans if they remain with a firm, learn its processes, and build strong relationships with clients through exceptional customer service and client experience," he said.

2) Technological Changes:

As if that weren't enough, Schmehil pointed to technological shifts that might continue to lower the fees advisors can charge for portfolio management, a task that will increasingly be automated. The rise of robo-advisors and other technology-driven products presents challenges and prospects for young advisors. “Portfolio management fees are decreasing as it has become commoditized service," he said. "However, advisors who provide more value-added services have been able to maintain or even increase their overall fees."

The income for advisors has not declined even as what was once central to their work has become more of an off-the-shelf or app-based, automatic service—a fate one can't say of many industries undergoing similar changes. "Young advisors need to continue to gain specialized knowledge to be able to compete in the ever-changing marketplace and leverage technology to better serve a larger set of clients,” Schmehil said.

While young advisors are anxious that AI-driven processes could lead to job losses in the sector, the advisors we contacted were anything but naive about such fears. After all, they had survived past threats to jobs in the industry. Yet, they were relatively uniform in saying that automation could be a boon if it relieves advisors of the administrative tasks that take advisors away from the one-on-one service to clients.

As it is now, about a third of advisors say they don't have the time they want for clients, given their other tasks. In addition, clients overwhelmingly prefer human advisors over their automated alternatives, meaning doing away with human advisors isn't going to be the answer. As such, younger advisors must take the best parts of automation while centering their practice on client interactions. As Schmehil puts it, "The key is to leverage technology but also have heavy human interaction when required."

3) Broadening What It Means To Be an Advisor:

The kind of interactions advisors have with clients has been changing for a long time. First, there are the services that advisors offer. "Clients increasingly are looking for one place to handle everything, so being capable of offering tax and estate planning is imperative," Schmehil said. Robo-advisors will have their place, but they have limits. They "fare well when investors are comfortable sitting on autopilot, making money," he said. "But the market doesn't always cooperate, and their service model doesn't work in times of distress."

In 2023, Schmehil's firm established an "innovation lab" to anticipate client needs – to offer "what they want before they know they want it"—and keep ahead of changing trends. Younger advisors without such resources may be encouraged to know that Schmehil and other industry standouts aren't fixated on the latest tech trends. "The desire will always be there to have a human being assist you in making sense of everything and ensuring you don't let your emotions get the best of you," Schmehil said. With these trends in mind, let's share the top tips for younger advisors.

Tip 1: Advising Is About People

David Gibson, a financial advisor in Northern Ireland, said he thinks that technology will never replace the human connection in financial advising. "In my experience, once you’ve been through coaching and counseling as an advisor ... you are better equipped to have conversations with clients about what matters to them. The investment element could be done quite easily by AI in the future, but getting out of clients what’s important to them is key to developing a financial plan... I’m less convinced that AI could do that well.”

Neil R. Waxman, a CFP® professional at Capital Advisors in Shaker Heights, Ohio, said something similar. His firm thinks of its role as engaged in "financial social work," and younger advisors will find success by "respecting the role that human factors play in the financial planning process." Waxman said, "Ignoring these emotional and human drivers can result in predominantly legalistic and tax-driven plans" that often miss the mark.

"Your client's financial stresses are not yours. You are their guide, not their keeper," said Brian M. Schmehil of the Mather Group. "If you take on all your clients' financial issues and stresses, you're going to have a tough time being an advisor. That doesn't mean you shouldn't have empathy."

This highlights a crucial first tip for aspiring advisors. While the technical knowledge advisors have trained on is essential, much of your work will involve building relationships and understanding the emotional terrain your clients are journeying through. This shift in focus from products to people is a crucial part of financial advising today.

Tip 2: Keep Studying

It's likely the last thing you'll want to read if you've recently finished exams or coursework. Nevertheless, more work now could boost your career in the long term. Gibson stressed the value of obtaining advanced qualifications early. "Get chartered and certified level qualifications ASAP," he said. "It demonstrates to clients the highest level of technical competence and will be what employers are looking for."

Doing it while you're young is challenging enough, especially if you're working full-time, but it'll be more difficult to pick back up with studying later on. As Gibson points out, "It's tempting to sit back once you've achieved a certain level. But once you're in the 'studying for exams' zone, just keep going and get the qualification—it's much harder to get back into the exam mindset after a prolonged break from study."

However, even after you get your credentials and exams out of the way, you'll still need to make a habit of learning. It won't just be for the next credential. Ashley Folkes, a financial advisor in Hoover, Alabama, said a commitment to lifelong learning is a nonnegotiable part of the trade.

"In a constantly evolving industry, staying up-to-date on the latest trends, regulations, and best practices is essential," Folkes said. "Your clients deserve an advisor who is up-to-date on the latest trends in investments and planning, especially given the ever-changing landscape of taxes and regulations."

Young advisors should always be reading books and articles, taking online training courses, volunteering with professional organizations, and securing new educational credentials to continue enhancing their value to both clients and employers.

However, you're not expected to know it all out of the gate. Yes, you're going to feel out of your depth at times, Schmehil said. "You're supposed to be nervous and stressed when starting out. You lack knowledge and thus confidence." But, he added, "The nerves also show you care."

Schmehil suggested "getting reps," as you would at the gym, to strengthen your muscles. For an advisor, that's working with prospects and clients. "Learn as much as you can every day, and eventually, you'll have the knowledge and confidence to make a difference in a lot of people's lives. That's when it gets fun," he said.

Tip 3: Advising Is Teaching

Dennis R. Huergo, a certified financial planner at the Wealth Enhancement Group in Warren, New Jersey, suggested one way to get more "reps," as Schmehil suggested, is to take advantage of any opportunities to teach finance to others. He noted something professors and teachers know well: the best way to become an expert on a topic is to teach it. This helps you identify any gaps in your knowledge, develop examples that resonate with clients, and solidify your understanding.

Huergo recalled when a young woman at a library seminar said, "I dislike IRAs [individual retirement accounts] because I can't get my money out until I'm 60." He knew it wasn't correct but patiently explained various tax code provisions. "I felt more secure in my IRA knowledge after this encounter and even referenced study materials to ensure I hadn't missed anything."

In another presentation, an attendee asked, "Does a late filing or payment on taxes hurt my credit?" While this question might seem rudimentary to a professional, Huergo said such inquiries challenge advisors to strengthen their knowledge.

"I've found that explaining financial concepts, even seemingly simple ones, to a lay audience is helpful because the questions they ask challenge our most fundamental understanding of financial concepts," Huergo said. "It will also boost your confidence when speaking to prospective clients."

Having that confidence will hopefully stop you from trying to prove yourself by dropping complicated financial jargon. Experts of all stripes know that expertise is best shown explaining complicated things in simple language, not simple things in complicated ways.

“There is a temptation to over-share your technical knowledge or jargon to compensate for the fact you may be newly qualified or just young in age," said Joshua Nash, a Dubai-based chartered financial planner. "This will come across as you are insecure and won't gain the trust of your prospective client, who already assumes you have the required knowledge, skills, [and] qualifications.”

One of the best ways to become a top advisor is to learn from those with more experience. “Spend time watching and observing experienced advisors to develop soft skills, including conversation themes," said Minesh Patel, a chartered financial planner in England.

Tip 4: Find a Niche

Folkes told us he wished he'd received this advice earlier in her career. "Identify a niche early in your career and become known for it." "Some of the most successful advisors specialize in specific strategies or planning techniques," Folkes added. "Prospecting can be challenging, but being recognized as the best in a particular area will attract prospects to you."

By developing expertise in a particular area, advisors can attract clients seeking specialized knowledge and tailored products. Nash said your niche could be something that already sets you apart. "It could be that, as a young advisor, you have a greater understanding of influencer finances and sponsorship deals, and you can make this your niche," he said.

David Flores Wilson, a certified financial planner at Sincerus Advisory in New York City, said a niche can be good, but he pointed to potential drawbacks: "A niche can backfire if you don’t have sustained passion for it down the line. Moreover, your niche could be less favorable during certain times. For example, focusing on pre-IPO tech startup executives was very lucrative a few years ago, but is likely less profitable in the current market."

Tip 5: Build Relationships

For young financial advisors, building strong relationships with clients and establishing a presence in the community is vital for long-term success.

Minesh Patel, a chartered financial planner in England, told us it's important to start by getting to know clients and their lifestyles. "The assets and income support and facilitate their lifestyle, and this should be at the forefront of an advisor's focus," he said. When meeting with clients, ask open-ended questions that allow them the space to tell you about themselves.

Nash agreed. "Ask great questions to get an understanding of what the client needs from you. Your aim here is to uncover the emotional triggers that lead them to this point." This way, you can "move the conversation on to the why and not the how."

"When I’m in a room with the top financial advisors across the nation, there’s a clear indication ... they wake up most mornings asking themselves what they can do to better their client’s lives. I’m a firm believer that the money will come if you do right by your clients," said Valerie Leonard, one of Investopedia's 100 Top Financial Advisors and CEO of EverThrive Financial Group in Birmingham, Alabama.

To hone these skills, Patel recommends that young advisors "spend time watching and observing experienced advisors to develop soft skills, including conversation themes." In addition to engaging with clients, young advisors should actively participate in their communities to build their networks and establish themselves as trusted resources. "Whether it be a religion, charity, walking, sports, or volunteering, be a part of a group where you are known as the 'go-to financial advisor,'" Nash suggested. "You can build genuine relationships, and it's a great way to break down a lot of trust barriers people have with financial advisors."

However, it's important to approach these interactions with authenticity and a genuine desire to help others. Clients and community members can quickly detect insincerity, damaging an advisor's reputation and hindering their ability to build lasting relationships.

"I’ve gained so much personally from my favorite groups, whether or not they have directly led to new business, I know they have helped me grow as a person and business owner," said Stephanie McCullough, founder of Sofia Financial in Berwyn, Pennsylvania, and an Investopedia Top 10 Financial Advisor.

Tip 6: Have Fun Doing It

Starting a new career can be stressful. However, it's important you don't lose your enthusiasm. "Your work will be infinitely better ... if you enjoy the process of becoming a first-class financial planner," Patel said. "People like to work with people who bring enjoyment and joy to others.”

Schmehil said that if your intentions are there and you're always open with your clients, "the rest will follow." But if you don't, "your clients suffer." If you're an advisor, you're not only interested in finance but how to help people with finances. A focus on that will see you through, Schmehil said. "The profession is for people who see the honor in serving and taking care of others."

Why Are There So Many Financial Advisor Jobs?

Many financial advisors are in their late 50s and closing in on retirement. There's also massive turnover at the beginning of careers, with some years seeing about 70% of advisors washing out their first year.1

How Can I Succeed as a Financial Advisor Just Starting Out?

Building a book of clients is the most difficult task. Young financial advisors should prioritize building strong, trust-based relationships with their clients. This involves actively listening to clients' needs, understanding their financial goals, and providing personalized advice that goes beyond mere investment management.

How Can Young Financial Advisors Attract and Retain Clients in a Competitive Market?

To attract and retain clients, young financial advisors should leverage social media and digital marketing to build their brand and reach a broader audience. Providing educational content, such as blog posts, webinars, and social media updates, can establish you as a knowledgeable and trustworthy professional. Networking is also vital: attending industry events, joining professional associations, and connecting with other advisors can lead to valuable referrals and partnerships.

The Bottom Line

To succeed in this competitive and evolving field, young advisors must be assertive in their approach to professional development, client engagement, and community involvement. By prioritizing continuous learning, young advisors can build a strong foundation of knowledge and skills that will serve them throughout their careers. Identifying and focusing on a specific niche can help them differentiate themselves and attract clients seeking specialized expertise.

Equally important is the ability to engage with clients on a personal level that builds trust. Success in the financial advisory industry requires technical knowledge, interpersonal skills, and a genuine commitment to helping others. By embracing these principles and consistently working to improve themselves and their practices, young advisors can navigate the industry's challenges to have a rewarding, impactful career.

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Nate Creviston Discusses Risk Tolerance Metrics with Investopedia

Tue, 11 Jun 2024 14:24:19 GMT

Understanding Your Clients' Willingness and Ability to Take Risk

J.B. MAVERICK

June 3rd, 2024

As a financial advisor, it's essential to tailor your clients' portfolios to their goals and comfort level with risk. Not doing so could lead to unnecessary stress, anxiety, and potentially devastating losses.

Every client is different. Some wealthy individuals may be reluctant to take chances, while those with fewer assets may be eager for a wager aimed at high returns. It's your job to assess their psychological comfort with risk and create a portfolio that aligns with their needs and reflects their finances.

"Psychological components play a large factor in clients' tolerance toward risk," Nate Creviston, manager of wealth management and portfolio analysis at Capital Advisors in Shaker Heights, Ohio, told us. "Simply put, some are more comfortable taking risks if they know that mathematically, over long periods, they will outperform others who aren't comfortable taking on risks. However, clients who are risk-averse aren't wrong. They deserve to have a portfolio tailored to their comfortability and goals."

KEY TAKEAWAYS

Financial advisors need to recommend investments that align with the client's willingness and ability to take on risk.
Risk tolerance considers aspects of a client's personality, background with money, how they handle losses, goals, and priorities.
Risk capacity evaluates their income, time horizon, age, future income needs, and family situation.
Questionnaires or surveys can help financial advisors create a risk assessment for each client.
Higher returns are associated with higher risks, making risks inescapable in investing.

An appropriate portfolio should derive from the investor's willingness (risk tolerance) and ability to take on (risk capacity) hazards in the market. Investors must also understand the nature of the risks and the possible consequences. By taking the time to understand your client's risk tolerance, you can create a portfolio that helps them sleep better at night while still working toward their financial objectives.

Understanding Risk Tolerance

In finance, risk is the likelihood that an investment's outcome will differ from the expected returns. When creating a portfolio, investors and their financial advisors should understand the risks associated with each asset.

While risk is inherent to the market, not all risks are created equal. For example, fixed-income instruments such as bonds are generally safer than equities, but a blue chip stock may be less risky than a poorly-rated junk bond.

Below is how U.S. investors described their risk tolerance, according to a 2023 Financial Industry Regulatory Authority report.

Risk Tolerance and Risk Capacity

Risk tolerance is often confused with risk capacity, mainly because they are related, though distinct concepts. Risk capacity is your ability to handle financial losses. Generally speaking, the more wealth you have, the greater your risk capacity. Risk tolerance is related to your willingness to wager in the market—do you need a sure thing before putting money on the table, or are you a bit devil may care about the odds?

This will be related to your risk capacity since your risk tolerance will typically change how much you will put at stake and how much of a hazard you consider it to be to your financial well-being. Losing a few hundred dollars could be devastating to someone living paycheck to paycheck, far less so to someone worth millions.

Experience and Risk Tolerance

"Risk tolerance is a very capricious thing," said David Demming, a 40-plus-year financial advising veteran and president of Demming Financial Services in Aurora, Ohio. "It's only mitigated by experience," that is, knowledge of the regular volatility of the market.

How To Assess a Client's Risk Tolerance

Risk tolerance refers to the client's mental and emotional ability to handle risk or the level of uncertainty they can withstand without it causing stress and anxiety. Advisors must respect and align their recommendations with the client's comfort level.

Several factors influence risk tolerance, including age, financial stability, and investment goals. For example, a young investor with a stable income and long-term investment horizon may be more willing to take on higher risk for potentially higher returns. Meanwhile, an older investor nearing retirement may prioritize capital preservation and have a lower risk tolerance.

The opposite of risk tolerance is risk aversion . If an individual would rather miss out on potential gains than take the chance of losing money, that client is relatively risk-averse. In contrast, a risk-seeking client desires the highest possible return and is willing to endure significant portfolio fluctuations to achieve it.

Advisors often use surveys to gauge clients' risk tolerance. "Questionnaires are a great starting point for understanding a client's ability to handle risk and attitudes around investment risk. An open discussion about what thoughts came up as they were taking the assessment usually adds the necessary context required to settle on the right allocation for a client," said Eric Kimbro, a certified financial planner with Stone Kimbro in Costa Mesa, California.

Creviston, too, noted the importance of getting the client to speak more expansively on this topic. "We use a few metrics to help define a client's risk tolerance, but the main method we use is open conversation. We believe a lot is missed if the client is only filling out a questionnaire that puts them into one of five categories," he said. Creviston suggested that it's not enough to obtain a measure of their tolerance, but why it's at the level it is. "You might miss that their risk-averse attitude comes from a family event that left them unable to tolerate risk, you might miss that they’ve taken a lot of risk in the past, but have lost a lot of money due to red flags being ignored," he said.

Risk Capacity

Li Tian, a financial advisor in San Marcos, California, isn't afraid to go deep with her clients to get the best understanding of their risk tolerance. "I've found face-to-face (or via video conference) conversations with the clients, about their situation, families, even their relationship with money growing up, can help me to discover important nuances that a simple questionnaire would not be able to capture." It also provides, she said, "a better understanding of their history … and can help me to confirm (or lean sideways) from their baseline questionnaire conclusions. Their history might also shine a better light on their psychology that they may not be aware of themselves."

The other side of the coin is risk capacity , or the ability to take on risk without endangering the client's long-term goals. This is far easier to measure than risk tolerance and can be determined by the amount and type of assets in a client's portfolio.

Risk capacity depends on a client’s potential need for liquidity (quick access to cash) and how quickly they need to meet their financial goals. It can be assessed through a review of assets and liabilities. An investor with many assets and few liabilities has an elevated ability to take on risk. Conversely, an individual with few assets and high liabilities has less of an ability to take on risk.

However, a client's risk capacity isn't proportional to their risk capacity. "Even if [clients] have a large risk capacity but a low-risk tolerance, they might never feel comfortable when their portfolio drops more than 20% during a bear market," Creviston said.

Many times, a client might be used to certain assets that provide habitual types of returns. "We often have clients with significant amounts of private real estate holdings, for example, and no need to take on excess public market risk. It’s important to tailor a customized portfolio to this type of client knowing that they can count on a certain dollar amount each year coming from rent payments," Creviston said. "This isn’t the case in the public markets . We can count on an average 10% return in the S&P 500 over 10-year rolling periods, but the volatility year to year differs from a lot of other asset classes our clients might be exposed to."

Factors That Drive a Client's Risk Tolerance

Many people have risk tolerances that are sui generis—it's unique to them and hard to explain given their background and present finances. Still, for most people, you can identify certain factors or drivers influencing their willingness to take on investment risk. Here are the most important:

Age and time horizon: Younger investors normally have a longer time horizon, which allows them to take on more risk since they simply have more time to recover from potential losses. As people draw closer to retirement, they prefer less risky investments to preserve their capital.
Income and finances: Clients with a stable and high income are usually more comfortable taking on higher risks since they have a reliable source of funds.
Financial obligations: High debt or financial responsibilities (e.g., mortgage, education expenses, young children) often reduce a client's risk tolerance.
Investment experience: Experienced Investors are more likely to understand market volatility and thus may be more comfortable with higher-risk investments. In addition, clients with successful investment histories may be more willing to take risks. Meanwhile, those who feel snake bitten—they have had significant losses—may be more cautious and risk-averse.
Personal attitudes: This is a catchall for differentiating those whose personalities are the primary driver of risk tolerance, not metrics about their income, etc. For example, risk-seeking individuals enjoy the excitement of taking risks and are more likely to invest in assets that meet that for them. Risk-averse people prefer stability and prefer conservative investments to avoid losses.
Investment goals: Clients aiming for significant portfolio growth may be willing to accept higher risk for those potential rewards. Clients focused on preserving their existing capital will prefer lower-risk investments.
Market conditions: During rising or bull markets, clients may feel more confident and willing to take on more risk. In fact, economists like Hyman Minsky have argued that it's endemic to the capitalist system that people generally take on more risk as a bull market goes on, leading to the boom and bust cycles that have plagued economic history. The opposite is also the case, which is why Minsky argued for the government to compensate for the lack of demand in the broader economy when the market was falling. In declining markets, clients are very often more risk-averse and seek safer investments.
Liquidity needs: Clients needing quick access to their funds are less likely to take on high-risk investments that may be illiquid or volatile. Those without those needs may be more comfortable with less liquid, higher-risk investments.

Financial advisors can better understand their clients' risk tolerance by considering these factors and providing tailored strategies that align with their clients' profiles and goals.

Types of Risk

The most familiar types of risk are those that can be measured directly. For example, the probability that a winter storm will affect shipping or crop yields can be reliably calculated, based on previous events.

Other risks are harder to quantify: there is no reliable way to measure the chance that lawmakers will pass a new trade restriction or that equities will enter a bear market. Still, even an imperfect understanding of these dangers can help investment professionals choose the best assets for their clients.

Liquidity Risk

The following are some sources of risk and common mitigation strategies:

Liquidity risk refers to the danger that the client may need to cash out their assets at short notice. This is not always a necessity, but most investors still find it comforting to know that they are able to cover sudden or unanticipated costs.

Liquidity risk varies among different investments. For example, a financial advisor may advise private equity investments for clients who are less concerned with fast access to cash, allowing the potential for significantly higher returns. Meanwhile, clients concerned about liquidity would benefit from investments in exchange-traded funds (ETFs) and large-cap stocks that can readily be liquidated for their fair market value.

Market Risk

Market risk is the threat that asset prices will fall, either because of declining investor expectations or as part of a wider downturn. The dot-com bubble in the late 1990s and the Great Recession after 2008 are classic examples of market risk since even highly rated stocks suffered from plunging prices.

Market risk can be mitigated by diversifying one's portfolio, especially among assets that are not correlated . This does not eliminate market risk, but it makes it less likely that all the assets in a portfolio will decline at the same time.

What Are the Risks of Employing a Financial Advisor?

While investment advisors are strictly regulated, there are concerns that some financial advisors may not have their client's best interests in mind. For example, some advisors may earn a commission from selling certain investments, or they may be paid on a per-trade basis—giving them a monetary incentive to recommend trades that may not be warranted. In other cases, an advisor may provide good advice that does not justify their high fees. These concerns can be allayed by considering a fee-only advisor or researching the background of your advisor and ensuring they are a fiduciary .

What Is Risk Management in Finance?

Managing risk involves identifying, measuring, and reducing the uncertainties associated with investing. Risk is an inescapable part of finance since the highest returns come with the greatest risks. By learning more about the risks associated with a particular investment, an advisor can determine if that investment is suitable for a specific client's risk assessment.

What Are the Least Risky Investments?

Historically, fixed-income securities like government and highly rated corporate bonds tend to have the lowest risk. However, these also tend to have lower returns than other assets. While equities tend to outperform bond markets, they are also riskier. This risk can be somewhat mitigated by investing in passive index ETF rather than individual stocks.

The Bottom Line

Understanding a client's risk tolerance is crucial when tailoring your investment advice. Factors driving risk tolerance include age, income stability, investment experience, and personal attitudes toward risk. Market conditions, economic environment, liquidity needs, and psychological factors also play significant roles.

To assess a client's risk tolerance and risk capacity, advisors should talk openly with their clients to uncover these underlying drivers. This not only helps in crafting a suitable investment plan but also builds trust and confidence in the advisor-client relationship. By prioritizing an understanding of risk tolerance, advisors can better navigate market fluctuations and economic uncertainties, guiding clients toward achieving their long-term financial objectives with greater peace of mind.

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Nate Creviston Discusses Retiree Asset Allocation During A High Interest Rate Environment

Sun, 24 Sep 2023 11:59:50 GMT

Retirement Investors are finally getting good returns from the "safest assets in the world"

For a long time, cash had so little returns that baby boomers had no choice but to invest more in riskier stocks as they approached retirement to get the yields they needed. But since the Federal Reserve started jacking up its benchmark interest rate , that’s shifting and cash investments are seeing some of the largest yields in more than decade. The average online savings account return is now 4.39%, according to DepositAccounts.com . The average yield on an online, one-year certificate of deposit, or CD , is now 5.10%, while the one-year Treasury bill is yielding 5.46%.

Financial advisers are taking that into consideration as they help manage the portfolios of their retired clients and those closing in on retirement. But while many expressed enthusiasm for the new options that cash investments offer, these advisers also cautioned that stocks still play an integral part in an investor’s retirement portfolio. "While short-term investment products, like money markets and CDs, can play a role in portfolios, it may be difficult to build a longer-term portfolio allocation around them as short-term interest rates can fluctuate as monetary policy changes," said Adam Reinert, chief investment officer and COO at Marshall Financial Group. "Though with higher interest rates on intermediate-term debt, investors may not have to be as dependent on equity allocations to do as much of the heavy lifting for portfolios as they did from 2010-2019."

What are they buying and for whom?

Jordan Benold, a financial planner from Benold Financial Planning, said his firm previously advised clients who were in retirement or near it to invest in "riskier income assets like preferred stock, corporate bonds, and REITs to increase their income. "Now, he is recommending six-month Treasury bills "simply because they pay the most.""There is no reason to take that risk when one of the safest assets in the world is paying 5.5%," he said. "Also, I am having my younger clients invest a small portion into T-bills for their bond allocation. This is not a large percentage, but once again, it will provide the insurance they need if the stock market decreases and will pay a high coupon. "Certificates of deposit, in particular, can benefit near-retirees and current retirees alike. Malcolm Ethridge, executive vice president at CIC Wealth, noted that CDs with six- to 12-month maturities are a strong investment for retirees who have already begun drawing income from their portfolio. Pre-retirees, concerned that they might be retiring into a recession, can "de-risk their portfolio" by moving a couple years' worth of expenses into cash via a brokered CD, he said, allowing them "to weather any potential storm while entering retirement."We have been buying more brokered CDs on behalf of our clients in the last seven or eight months than at any other period in my career," Ethridge said. In the last year and a half, Holzberg Wealth Management has been shifting client portfolios to CD ladders with minimal risk. CD ladders are when financial planners use multiple CDs with different maturity dates. If interest rates continue to rise, the firm plans to reinvest the near-term CD funds into ones with longer maturities, which increases the overall yield, said Marcus Holzberg, a certified financial planner at the firm. "If interest rates fall, the same strategy can continue or be redeployed to other market opportunities," he said. "In other words, it's a win-win."

What about stocks?

Stocks, though, still play an important role in portfolios. For roughly the last 40 years, net growth from cash was reduced to zero after subtracting inflation and taxes, founder and principal at Daniel J. Galli & Associates, said. "In order to have real buying power growth, dollars need to earn more than what they can in cash," he said. "Historically stocks have delivered this ...The price we pay is volatility. But over long periods of time stocks have generally delivered real buying power growth." Jon Ulin, CEO of Ulin & Co. Wealth Management, also pointed out that the Federal Reserve will eventually cut rates — though maybe not for a few years given this week’s Fed meeting — bringing them back to where they began last year. "While it may be sensible to position a couple years of cash reserves in low-risk, high-yield cash instruments and buckets," he said, "investors will better benefit over time by staying diversified, rebalancing, and buying low into stocks and bonds for their long-term retirement accounts and not give up potential gains around the turnover of the next bull market."

Risk-free can still be risky

Cash also offers fewer benefits in the long term. "Time is a crucial factor when considering long-term investing, whether you are in or nearing retirement," Ulin said. "The longer your investment horizon, the more you can benefit from the market's historical tendency to recover from declines and deliver substantial returns over the long haul." Folks can also underestimate the length of their retirement and subsequently the need for the historically bigger returns stocks deliver over cash. "The time horizon for a retiree is still 20-30-plus years. In today’s interest rate environment, if you were to construct a 20/80 portfolio in fear of equity risk, then any gains you’d have in the fixed-income portion would just be eroded by inflation," said Nate Creviston, Manager at Capital Advisors Ltd. "You still need to have a balanced approach to your asset allocation through retirement." Stocks are also up year to date. The S&P 500 index (^GSPC) is up 12.5%, while the Nasdaq (^IXIC) has increased 26.2% since the beginning of the year. Consequently, folks should weigh the risks and benefits of cash, said Constantine Tsantes, a financial planner at Cetera Advisor Networks LLC. "In the long run, you are only going to miss out on the upside, like what we have seen in equities this year," Tsantes said. "If retirement is around the bend, sure we can allocate to more fixed-income investments, but there is really no need to keep more than two to five years of expenses set aside in those investments."

Dylan Croll is a Yahoo Finance reporter.

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Zach Abrams Discusses Proper Asset Allocation With MarketWatch

Fri, 02 Jun 2023 14:00:00 GMT

Pay down your mortgage. Keep a 60/40 stock-bond portfolio. Some money rules are meant to be broken.
Published: May 26, 2023 at 7:25 a.m. ET
Morey Stettner

The world is more complex, and so is money management. More information and more choices can lead to more complications. For financial advisers, the trick is reducing complexity into simple, easy-to-understand steps for clients to follow. Advisers use rules of thumb as starting points to help investors make sound money moves.

But these rules don’t always apply. They can become obsolete or misunderstood as the investment landscape changes. “Most rules of thumb work for a generalized case of the world,” said Jamie Ebersole, a certified financial planner in Wellesley Hills, Mass. “In all cases, their applicability depends upon the specific situation of the individual.”

For Ebersole, one of the most reliably helpful rules is to adopt a disciplined savings regimen. Specifically, he urges clients to save 20% of their earnings to build a nest egg.

“I throw out the 20% number, but you have to tailor it to each client,” he said. “A 23-year-old may not be able to save at the 20% level. It’s more about building that habit on a monthly basis. If you can implement a ‘set it and forget it’ saving program at any level, you’ll train yourself to live below your means.”

Ebersole favors another rule of thumb that’s a bit more controversial: establishing a 60/40 allocation of stocks and bonds in an investment portfolio. There’s debate among advisers about whether this longstanding rule still applies.

“The reason it works is that it’s a risk-balanced portfolio that allows many investors to start the investing habit without excess volatility,” Ebersole said. “Over the long term, its returns will outpace inflation and grow your portfolio.”

60/40 fight

Ebersole acknowledges the downside of the 60/40 rule. The portfolio can underperform during prolonged bond slumps. And when equities soar, investors can miss out.

“This portfolio will never generate returns in line with the S&P 500 since this is not what it is designed to do,” he said. “But a more consistent return profile will make it easier for new savers and those close to retirement to stay invested in times of volatility, reducing the impact of emotion.”

Other advisers raise additional concerns about the traditional 60/40 split of stocks and bonds. It excludes other asset classes that can stabilize a portfolio in turbulent times, such as commodities and Treasury Inflation-Protected Securities (TIPs). And over decades, the bond portion can limit growth compared to a more heavily weighted equity portfolio.

“Typically, investors have a much longer time frame than a 60/40 suggests,” said Zach Abrams, a certified financial planner in Shaker Heights, Ohio. “We’re big proponents of duration matching: the asset allocation should match the duration of when you need those assets.”

Some rules flow from widespread assumptions about prudent money management. Take the popular idea that it’s always a worthy goal to pay off a residential mortgage.

“People think they should get rid of their mortgage debt before or during the early years of retirement,” said Brian Schmehil, a Chicago-based certified financial planner. “For older clients whose parents were in the Great Depression, they were always told to fear debt.”

It’s wiser to weigh the opportunity cost of that money, Schmehil says. If the interest rate on your mortgage is very low, consider your options. “If you’re paying under 2% interest on your mortgage but earning 4% on your cash, you might not want to pay that mortgage down,” Schmehil said.

It also can make sense to spread your cash around and invest in low-risk products such as money-market funds and certificates of deposit, rather than plow your principal into just one asset: your home.

Case in point: It’s often said that the percentage of bonds in your portfolio should equal your age. For example, a 40-year-old would have 40% in bonds while a 70-year-old would have 70% in bonds. “Something that simple can’t work,” Ebersole said. “It’s probably too cautious all along the way.”

Rules of thumb hold appeal because of their simplicity. Sticking to what advisers deem tried-and-true strategies tends to comfort anxious investors. For instance, wealthy investors may expect their adviser to produce market-beating returns via alternative investments. But that assumption can prove faulty.

“There’s this idea that to get better investment returns, you have to seek out complex things,” said Kevin J. Brady, a New York City-based certified financial planner. “Boring is a better driver of successful investing.”

Articles are not written or produced by the named representative and the information has not been verified. There is no guarantee as to the completeness or accuracy of the content. Quotes and remarks have been excerpted from conversations with the interviewer and may have been taken out of context. All remarks are hypothetical in nature and are intended to be informational only. They should not be regarded as investment advice, performance claims or testimonials. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. There is no guarantee that any strategies discussed will result in a positive outcome. You should discuss any legal, tax or financial matters with the appropriate professional. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal.

SEE IMPORTANT DISCLOSURES IN LINK

Nate Creviston Speaks With Thinkadvisor About Building Customized Portfolios For Clients

Wed, 01 Mar 2023 13:26:28 GMT

How Model Portfolios Work in The Real World: Advisors' Advice

Written by: Dinah Wisenberg Brin

Model portfolios continue to gain ground with financial advisors, who can select from a growing number of models to help manage their clients’ investments.

Almost $350 billion in assets sat in model portfolios as of March 2022, a 22% increase over the prior nine months, Morningstar reported in June. The research firm’s database covered more than 2,500 models as of November 2022, more than double the amount two years earlier.

ThinkAdvisor recently asked advisors to tell us how model portfolios fit, or don’t fit, into their businesses. We asked:

How and why do you use model portfolios in your business?
Do you employ one family/one product group/one series with different asset allocations? Or a wide variety of them?
What are the pros and cons of model portfolio use?

Clearly, there’s no one answer or approach that covers all practitioners. Here’s what five advisors told us about their work with (or without) model portfolios.

Erik Nero, founder and president, First Step Wealth Planning LLC:

I use them for pretty much all of the implementation for the investment management for my clients. I say almost all simply because for client portfolios that need a little more customization specifically for non-IRA or retirement type accounts, I’m going to work on that a little more closely with the client to take a little bit more action between the client and myself to get that implemented.

But for portfolios that are typically retirement-based and are for a longer-term time horizon, models work perfectly. They are scalable, they have the opportunity to leverage tremendous resources on behalf of whatever firm is offering them, and then the trading resources are second to none. So for small firms such as mine I’m able to leverage tools and resources that I ordinarily would not be able to gain access to with respect to the trading and implementation of these portfolios, and it gets done seamlessly.

So it saves me time to help my clients on what really matters to them, which is how that money’s going to support their goals, dreams and aspirations, and I use a number of different types of providers. I’ve narrowed it down to three.

There’s so many out there and at the end of the day it really comes down to asset allocation, and that’s going to drive the vast majority of the performance, and I like to have low-cost exchange-traded fund types of portfolios that are put in place. So I believe more passively but strategically indexing to the various aspects of the market so that my clients can participate rather than anticipate the market.

The pros obviously are the scalability, access to the resources and the brain trusts of the firms that are putting them together so I can really leverage my time and resources. The cons are it may come down to one size fits all. I use a number of different types of allocations based upon time horizon and tummy tolerance that each client has, but it’s hard to use half sizes, if you will, with these types of portfolios.

So it takes a little bit of creativity with respect to what types of models are going to be employed in which types of accounts to get to an allocation that’s going to be perfect for that client.

Kyle Simmons, lead financial planner, Simmons Investment Management:

I do use a model portfolio in my business. Many advisors outsource model portfolio creation to a TAMP (turnkey asset management program) or use one from a model marketplace provided by their custodian.

I personally have my own model portfolio that I review monthly and make changes to maybe once or twice a year. Having a model portfolio allows me to actualize my investment philosophy and best investment ideas into a single cohesive portfolio and implement it across my entire client base.

It’s important that advisors don’t get too attached to their model, as clients will come in with legacy holdings and you want to be able to make investment decisions with tax consequences in mind. For every incoming holding, I evaluate the cost basis and assign an equivalent holding in my model. Sometimes that legacy holding will be a highly appreciated individual stock that selling would have serious tax consequences. Other times the holding will be a low-cost ETF that’s equivalent to a position in my model and it could make sense to continue to hold that fund going forward.

Another common deviation from the model is for clients with 401(k)s that have limited investment options. In these cases, advisors need to determine how they can implement their models within that limited subset of options.

My model does tend to use ETFs from a single family (Vanguard), but it also contains funds from other families such as from iShares and SPDR. I think it’s important to be open to the best options for the sectors you want to target, but also understand that certain families tend to provide more value.

The number one pro is the ability to implement your best ideas across an entire client base. For those that outsource, I’m sure they appreciate taking part of the investment management piece off their plate in terms of the amount of research that is needed to do a good job as a fiduciary.

The con is simply the potential to be over-reliant on a model and selling client assets just to move them into it. If this happens, the client’s investments could be jerked around and result in significant taxes and trading costs, which reduce their overall performance.

Jan Pevzner, principal, Gotham Block LLC:

A model portfolio is a good starting point for a "generic" client. If you don't have an in-house investment management team, starting with a model portfolio will save you a lot of time. Once you have a model, you can customize it by adjusting the specific exposures built into the model to the household you are working with.

Suppose your client is in tech and has a significant employer equity grant . It could be options, RSUs (restricted stock units) or other forms of equity. In that case, reducing the portfolio's allocation to technology might make sense to balance off the overall exposure.

I work with several models from the same provider, Vanguard, which offers different series that each can be adjusted for a client's risk tolerance to produce a custom model.

The model's choice depends on the portfolio's size, the degree of customization required, and the location of the assets. A simple model with fewer components is best for clients with simple portfolios. Other clients might need more complex allocations with finer control over the factors they are exposed to. For example, two separate ETFs for value and growth instead of single equity ETF will let you increase your exposure to value stocks.

The pros are that they save time and allow you to deliver quality products to your clients. The cons are that those model portfolios are generic and inflexible and don't consider a specific client's financial situation.

Jon Ulin, CEO of Ulin & Co. Wealth Management:

For the past two decades, our independent advisory firm has provided clients with a fee-based, model-driven approach to asset management with a fiduciary focus.

Our clients pay for and expect us to deliver management of their portfolios in addition to comprehensive planning, both not typically provided by advisors outsourcing management to Robo-advisors, back-office wirehouse offerings or third-party managers.

Do you employ one family or series?

It is prudent to research, screen and utilize investments across different companies as there are over 10,000 different mutual funds, ETFs and index funds across a vast array of asset classes, sectors, styles, countries and factors.

In the active management space, it can be difficult to find companies where every manager in their provided line up meets or exceeds their benchmarks. ... In the passive index and ETF space, different firms may offer variations of various benchmarks, sectors or styles that may include unique strategies such as smart-beta, low-vol, equally weighted and socially responsible funds that may additionally involve a combination of human or quant overlays.

Pros and cons of model portfolio use?

Strategic model portfolios provide a structure for asset allocation and diversification like building a foundation for a house based on each individual clients' specific risk tolerances and financial goals to help minimize volatility and provide a smoother, more consistent ride over time.

It is a more pragmatic, efficient and scalable tactic for advisors to utilize model portfolios with active and passive fund strategies for long-term investors rather than taking the time or having the know-how to research and trade individual securities while attempting to create customized portfolios for each client.

Caveat emptor when investing on your own, or when partnering with an advisor utilizing robo-platforms, “back office” wirehouse model offerings or third-party model portfolio managers. Many of these programs have been incepted just over the past 5-10 years and may not have a long track record or really been tested through major crashes recessions like the dot-com or Great Recession crash. At the same time, many of these new programs may provide a better approach than doing it yourself or in some cases, a less experienced advisor.

Nate Creviston, Manager, Wealth Management and Portfolio Analysis, Capital Advisors Ltd.:

We do not use model portfolios so hopefully this can offer some insight to the other side of the question. We believe that each client deserves a completely customized portfolio that is unique to their needs, goals, risk tolerance and risk capacity.

A limitation to this practice is that this is a much more time-intensive portfolio management style as we can’t complete large block trades, or have the portfolio managed by a robo-advisor, but we believe that the client deserves a unique portfolio.

A downside to the model portfolio is the lack of tax awareness. Over the past couple of years we were able to tactically tax-loss harvest in our accounts without initiating large block trades that might adversely affect a subsection of our client base. For example, if you have two clients who own the same stock, but one bought it at $50 and the other bought it at $100, and the stock is currently trading at $75, then the same tax loss harvesting trade cannot be done in both accounts. In most model portfolios, you would need to decide whether to execute the trade for both clients or for neither client; typically, these choices are mutually exclusive.

It often occurs where you have a client with a large real estate portfolio outside of their investment accounts for example. We believe that needs to be taken into consideration when constructing that client's portfolio. In a model portfolio, you still might allocate 2%-5% into REITs due to their risk tolerance and time horizon without considering the overexposure to real estate both the private and public sector. In that circumstance, we would tactically under allocate their real estate exposure in their investment accounts.

This document is provided for educational purposes only. Articles are not written or produced by the named representative. Although the content is believed to be accurate, it is not guaranteed and the authors’ opinions are subject to change without notice. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. You should discuss any legal, tax or financial matters with the appropriate professional. Past performance is no guarantee of future results. All investing involves risk, including the risk of principal loss.

SEE IMPOR TANT DISCLOSURE S IN LINK

Narrow Market Returns

Wed, 01 Mar 2023 00:44:05 GMT

It seems crazy that the S&P 500 is closing in on an all-time high, given what transpired the first part of the year with the pandemic and the market down about -35%. Yet here we are.

However, when you look under the hood the positive performance is relatively narrow with a few asset classes leading the way. Of note, Large Growth companies are carrying stock market returns.

An easy way to see this is through the performance of the S&P 500, which is a market cap weighted index (i.e. larger companies make up a larger % of the index) versus an Equal Weight S&P 500 (i.e. larger companies make up an equal % of the index as smaller companies). Historically the Equal Weight index has offered higher returns over the Market Cap Index over longer time periods, but not this year.

Additionally, all other major equity asset classes outside of Large Growth have trailed the S&P 500. These include: Large Value, Mid Caps, Small Caps, Developed Markets, Emerging Markets, REITs, and Commodities. While Small Caps and International (and to a lesser extent Large Value) have picked up performance the last few months, the trend is still clear – Large Growth is dominating this market.

There is a Bear and Bull way to look at this. Bear = returns are concentrated so if/when Large Growth retreats it will take the market with it. Bull = plenty of room for the laggards like Large Value, Small Caps, etc. to catch up even if/when Growth retreats. Along the way to the bull or bear case, the market should provide some clues as to which way it’s heading.

For now, I side with the Bull camp. I feel that despite higher broad market valuations, presuming there is no second large-scale shutdown and a vaccine gets to market in the next 6 to 8 months, we could see the more cyclical parts of the market start to rally.

Past performance is not indicative of future results.

S&P 500: The index measures the performance of 500 widely held stocks in the US equity market. Standard and Poor's chooses member companies for the index based on market size, liquidity and industry group representation. It is market capitalization-weighted. Investors cannot invest directly in an index.

Equal weight is a type of weighting that gives the same weight, or importance, to each stock in a portfolio or index fund, and the smallest companies are given equal weight to the largest companies in an equal-weight index fund or portfolio.

Investing involves risk, including the loss of principal. There are some risks associated with investing in the stock markets: 1) Systematic risk - also known as market risk, this is the potential for the entire market to decline; 2) Unsystematic risk - the risk that any one stock may go down in value, independent of the stock market as a whole. This also incorporates business risk and event risk; and 3) Opportunity risk and liquidity risk.

Projections or other information regarding the likelihood of various outcomes are hypothetical in nature, do not reflect actual results and are not guarantees of future results. Additionally, it is important to note that information in this report is based upon financial figures input on the article date; results provided may vary.

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Zach Abrams Speaks With CNBC On Russia/Ukraine Market Volatility

Tue, 14 Feb 2023 13:37:23 GMT

Stocks are falling amid tensions between Russia and Ukraine. Experts say stay the course.

PUBLISHED TUE, FEB 22 202212:17 PM ESTUPDATED TUE, FEB 22 20222:23 PM EST

Carmen Reinicke @CSREINICKE

U.S. stocks are slipping as investors watch tensions between Russia and Ukraine rise.

The Dow Jones Industrial Average fell more than 270 points Tuesday as traders weighed how the situation will impact the global economy. The S&P 500 Index fell about 0.6%, and the tech-heavy Nasdaq Composite traded down nearly 1% around midday.

The Russia-Ukraine conflict has been a source of major market pressure recently, spurring back-to-back losing weeks on the major averages.

While this kind of stock price action can be nerve-wracking for investors, especially those near or in retirement, financial advisors generally recommend staying the course through market volatility.

Volatility is normal

All investors should accept market volatility — which is relatively common — as a normal part of the process of investing and the best way to outrun inflation, said certified financial planner Brad Lineberger, president of Seaside Wealth Management in Carlsbad, California.

“Embrace the volatility, because it’s why investors are getting paid to own stocks,” he said.

This means investors should stay calm even through extreme movements. While stocks always move up and down, long-term market returns are still based on the same things: dividend yields, earnings growth and change in valuation, according to Zach Abrams, a CFP and manager of wealth management at Capital Advisors Ltd. in Shaker Heights, Ohio.

Movements up and down can also be a good time to review your asset allocation. If you’re worried about a big drop, you could rotate part of your portfolio into some less-risky stocks to protect from a potential market correction, which is a drop of more than 10%.

Opportunities arise when stocks fall

When stocks fall, it can also be an opportunity to buy more and set yourself up for future gains.

This is because when stocks decline from recent highs, they’re trading at a discount and will likely recoup losses at some point.

Continuing to put money in the market when it’s down as opposed to selling is a great way to make sure you don’t miss out on a reversal. Data shows that selling when the market falls can take you out of the game for some of the strongest rebounds.

For example, if you missed the best 20 days in the S&P 500 over the last 20 years, your average annual return would shrink to 0.1% from the 6% you’d have earned if you’d stayed the course.

Be prepared for emergencies

Of course, even if you know that stock market volatility can benefit you in the long run, financial advisors still recommend having a cash emergency fund on hand so that you can make it through a market meltdown without selling. This is especially important for retirees.

If the stock market falls, it’s better to spend the money in your emergency fund than sell assets at a loss that can’t be recouped, according to Tony Zabiegala, chief operations officer and senior wealth advisor at Strategic Wealth Partners, an Independence, Ohio-based firm.

This also keeps stock investments in the game for big turnarounds, which generally come shortly after market corrections or even smaller dips.

For example, an investor would have needed only three to six months of living expenses in an emergency fund to avoid taking losses during the March 2020 meltdown, Lineberger said.

This approach would also have kept investments in the market for the record-breaking rally stocks enjoyed after the pandemic slump.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns .

The views and opinions expressed herein are those of the author and may or may not represent the views of Capital Analysts or Lincoln Investment. Articles are not written or produced by the named representative and the information has not been verified. There is no guarantee as to the completeness or accuracy of the content. Quotes and remarks have been excerpted from conversations with the interviewer and may have been taken out of context. All remarks are hypothetical in nature and are intended to be informational only. They should not be regarded as investment advice, performance claims or testimonials. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. There is no guarantee that any strategies discussed will result in a positive outcome or the achievement of financial or retirement goals. A plan of regular investing does not assure a profit or protect against loss in a declining market. You should discuss any legal, tax or financial matters with the appropriate professional. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal.

SEE IMPOR TANT DISCLOSURES IN LINK

Where We Have Been, Where We Are, Where We Are Maybe Going

Tue, 14 Feb 2023 12:52:36 GMT

Over long time periods stocks have delivered around 6%+ REAL returns (accounting for inflation). Additionally, the longer the time horizon the more predictable those returns get – the range between the Max and Min returns narrows and % Positive and over 4% increases.

S&P 500 Real Total Returns

Source: Robert Shiller, Yahoo! Finance, Capital Advisors Ltd: Oct-1946 to Jun-2022

The reason for this is relatively straight forward – over time companies generally make more money (see how the price and earnings line move together and ultimately converge) and increase their dividends.

Source: Robert Shiller, Yahoo! Finance, Capital Advisors Ltd: Oct-1946 to Jun-2022

Source: Robert Shiller, Yahoo! Finance, Capital Advisors Ltd: Oct-1946 to Jun-2022; Dividend Growth = REAL

Thus, despite the recent uncertainty with regard to inflation/interest rates and the subsequent market volatility I believe there is a high degree of confidence holding stocks for a long period of time will reward investors.

Given the long-term viability of stocks has been established, let’s take a look at where we are currently:

The S&P 500 was down from its all-time high about 23% on 06/17/22
At that point, as measured over the last 5 years, the market had only been more oversold about 7 trading days
It then rallied almost 7% through Friday 06/24/22
Then fell ~3% from there through the end of the month and coming up slighly since then
As such we are currently off around 20% from the all-time high (through 07/05/22)
While we bounced off a wildly oversold market, the question becomes is it sustainable?

How did we get here?

Most importantly, the market has been pricing a much more hawkish Federal Reserve (i.e. significantly raising interest rates)

The reason for the market pricing in further Fed hikes is that inflation has been increasing substantially, currently Headline Inflation is around 9%
The market is ultimately assuming the Fed Rate hikes and inflation will hit earnings (though interestingly enough this hasn’t shown up in data) and the economy may potentially go into a recession

What happens next? In the short-term, it’s anyone’s guess but in the long run please see above. That said, here are some things that have been happening.

Inflation pressures have subsided in the TIPS Spreads and Core CPINew Paragraph

Source: Capital Advisors, Ltd., FRED

Commodity prices have also started to ease

Source: Koyfin (SPG = S&P GSCI; CRY = CRB Index)

Bond yields have come down, indicating slower growth or lower inflation or a more dovish Fed or a combination of the 3

Source: Koyfin

It’s important to remember that markets look forward, thus while the Fed will be tightening into the future a lot of that tightening has already taken place today based on the future path of the Fed!

It’s important to remember that markets look forward, thus while the Fed will be tightening into the future a lot of that tightening has already taken place today based on the future path of the Fed!

Source: Kirtland Hills Capital Management

Will we enter a recession? The jury is still out with Wall Street Journal Economist poll putting it at a 44% chance over the next 12 months.

Let’s summarize some of the key points above:

1) The market priced in extreme Fed tightening due to high inflation
2) This led to the market to move down to an extremely oversold condition
3) Inflation however is starting to roll over – commodities, rates, breakeven spreads, Core CPI
4) This provides the conditions for a more dovish Fed, which is likely to be a tailwind for stocks
5) Relative to history, the market overall has priced in a borderline recession based on the 23% drop and thus even if/when earnings get cut anything less than 15% is likely already priced in
6) The 2 main near-term risks to the market: recent Inflation/Commodity declines are NOT sustainable and/or we enter a recession in the next 6 to 12 months
7) The market is likely to maintain a higher level of volatility while it weighs these 2 risks
8) Additionally, there is a possibility the Fed becomes more dovish and the market rallies for the next 6+ plus months and then ultimately a recession happens
9) Forget about 1-8 and focus on buying and holding stocks for the long-run where the probabilities of success are substantially in your favor!

Past performance is not indicative of future results.

SEE IMPORTANT DISCLOSURES IN LINK

Nate Creviston Discusses Moving To Cash Vs. Purchasing Equities During A Recession With InvestmentNews

Tue, 07 Feb 2023 13:51:32 GMT

In the immediate wake of the worst year for balanced portfolios since 2008 and the worst year ever for bonds, and against the backdrop of a looming recession, investors are once again weighing their options regarding allocations to cash.

Despite wide-ranging bullish outlooks for the 2023 that cite slowing inflation and likely just one more interest rate hike, the reality of economic uncertainty combined with money market yields reaching 4% at some online banks has made cash a tempting alternative to risk assets.

“The chaos of the last 12 months has clients asking whether or not they should move to cash or into more conservative investments,” said Eric Amzalag, founder of Peak Financial Planning.

Amzalag said the growing talk of recession has not helped his efforts to keep clients focused on longer-term investment goals.

“In response to the chaos of the last 12 months, I have taken a more active management position within clients’ accounts,” he said, with “more proactive harvesting of gains in clients’ winning positions and redistributing that periodically to opportunities that have gotten cheaper over the past 12 months.”

Amzalag has also embraced a more conservative allocation strategy that is “heavily positioned in cash and short-duration U.S. government bonds.”

“We are very underweight equities and plan to redistribute profits from our longer-duration bond positions into equities as bonds go up in value and equities go down in value,” he said.

For Dennis Nolte, vice president of Seacoast Investment Services, loading up on cash is not new to 2023.

“We’ve been 35% to 50% in cash most of the last two quarters,” he said. “Clients are absolutely not committing new capital to equities or bonds, but certainly are paying attention to what is happening with their cash.”

Nolte cited clients recently asking about getting a 5% yield for a 15-month certificate of deposit or wanting to be invested only in short-term Treasuries.

“People are yield-shopping for their cash and feeling no pressure to add risk right now,” he said. “We agree with them.”

But even as cash finished 2022 as the second-best performing asset class behind commodities, some advisors are pushing back on the temptation to seek shelter.

“It is reasonable for clients to hold cash for expected expenses over the next couple years given how close money market rates are to short-term bonds,” said Seth Mullikin, founder of Lattice Financial. “However, it does not make sense to hold cash with the intention of timing the market.”

Nicole Wirick, founder of Prosperity Wealth Strategies, isn’t buying into the instinct to rush to cash and the philosophy that investors “need to do something to fix the situation.”

“It’s our human nature to want to solve problems, however, this basic human tendency can be destructive when it comes to investing,” she said. “I use this opportunity to pause and remind clients that volatility is a normal and expected part of the investing. I then refocus the conversation on long-term goals and illustrate how short-term, emotion-driven reactions to the market can derail a disciplined long-term plan.”

Nate Creviston, Manager at Capital Advisors Ltd., takes the approach of trying to keep clients looking forward instead of back, but keeps an eye out for cash management opportunities if that’s the only place clients feel comfortable in this market.

“Our clients are not moving to cash; if anything, now could be an advantageous time to buy stocks,” he said, citing the stock market’s history of strong rebounds. “The returns after 25% market corrections average to be up 27% after one year, up 45% after three years, up 93% after five years, and up 238% after 10 years.”

Of course, for those clients who have shorter time horizons or just can’t stomach the current market volatility, Creviston said he would be allocating to Treasury bills.

“If a client is set on moving to cash, we would currently be purchasing Treasury bills that are yielding between 4.3% and 4.5% for a two- and three-month maturity,” he said. “This is far more yield than you’ll find in a traditional bank account or most online high-yield savings accounts.”
https://www.investmentnews.com/with-yields-on-cash-climbing-advisors-struggle-to-keep-some-clients-in-stocks-232968

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Potential Tax Break for Ohioans with Pass Through Entity

Tue, 13 Sep 2022 13:57:00 GMT

In June, Ohio’s legislature passed SB 246 which provides a potential work around for the $10,000 state and local tax (SALT) deduction cap imposed by the Tax Cuts and Jobs Act of 2017. With the signing of this legislation, Ohio joins 22 other states that have enacted a direct pass-through entity (Direct PTE) level tax. This workaround allows qualifying pass-through entities to make an annual election to pay an entity-level state income tax for taxable years beginning on or after January 1, 2022.

In other words, under this new regime, a qualifying PTE may elect to file and pay this Direct PTE level tax and the individual owners will receive a corresponding credit equal for the tax paid at the entity level. Entity-level taxes are fully deductible at the federal level and are not subject to the federal $10,000 SALT cap. Qualifying PTE’s include S corporations, Partnerships, and Limited Liability Companies taxed as partnerships that are not treated as corporations for federal income tax purposes; however, disregarded entities such as single member Limited Liability Companies are NOT eligible.

Ohio PTEs will pay an entity-level tax on their Ohio income at a rate of 5% in the tax year beginning in 2022, which is ~1% higher than the current top individual rate, and 3% beginning in 2023, which is less than the current top rate. For eligible owners of qualifying PTE’s, circumventing the $10,000 cap on state and local income tax deductions could result in very significant reduction in federal income taxes.

Further information is available here on the Ohio Department of Taxation’s website. If you haven’t already done so, as with any such decisions, you should seek the advice of your accountant.

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Neil Waxman Joins The Financial Times Financial Advisor Leadership Council

Tue, 08 Mar 2022 13:56:50 GMT

The job of the advisor is evolving rapidly in the wake of the pandemic. Clients demand more services and deeper relationships; technology and remote meetings have become vital; and investment opportunities are becoming more diverse. This makes it the right time for FA-IQ to create a select community of advisors that aims to help promote growth and knowledge.

We are proud to debut the list of financial advisors who have joined the Financial Advisor IQ Leadership Council. The council is a community of advisors focused on growing their clientele and sharing input that fuels research to help professionals strengthen their practices.

We’re gratified by the initial response to this new initiative, which is backed by FA-IQ’s advisor-focused coverage and the prestige of the FT brand. More than 300 advisors from over 40 states have joined, representing broker-dealers, independent RIAs and DC plan specialists alike.

We plan to grow this community over time, so it reflects the diversity of this dynamic profession. Advisors applied to FA-IQ join the Leadership Council. To qualify, advisors have to meet certain basic qualifications: they must manage or advise on at least $50 million in assets, have three or more years of experience as a financial advisor/broker, maintain an excellent compliance record, and express a desire to engage with industry issues.

(Neither the advisors nor their parent firms pay any fees to the Financial Times or its FT Specialist subsidiary in exchange for inclusion in this community.)

For more information, contact us

at leadership_council@financialadvisoriq.com .

By Loren Fox November 22, 2021

Financial Times Article

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Capital Advisors, Ltd.'s Neil Waxman Honored As A Notable Wealth Manager By Crain's Cleveland

Tue, 16 Nov 2021 14:02:35 GMT

With more than 38 years of experience in managing money, there aren’t many trends, economic cycles or black swans that Neil Waxman hasn’t seen.

“Neil uses this experience to help clients quickly and intelligently take action, which is a reason he is often sought out by the national media for comment and opinion,” noted Capital Advisors senior analyst Mary Kozar, in nominating Waxman for recognition here.

Waxman is known for his clear thinking and ability to cut through the clutter with straightforward advice for his clients, while also making sure those clients always understand why their decisions are made.

That’s not only allowed Waxman to keep and build his client base but has seen him quoted in news outlets like Barron's, Investor's Business Daily and The Financial Times.

It’s also gotten Waxman named a Five Star Wealth Manager by the research firm Five Star Professional six times, most recently just this year, and being named one of Worth Magazine’s top 100 wealth advisers six times as well.

When he’s not going over clients' portfolios or meeting with them, Waxman serves several local organizations, such as the Jewish Federation of Cleveland, or can be found working with local wrestlers he coaches and mentors, including through the Cleveland Chapter of Wrestlers in Business Network that he helped found.
— Dan Shingler

https://www.crainscleveland.com/awards/crains-2021-notable-wealth-managers

Articles are not written or produced by the named representative and the information has not been verified. There is no guarantee as to the completeness or accuracy of the content. Quotes and remarks have been excerpted from conversations with the interviewer and may have been taken out of context. All remarks are hypothetical in nature and are intended to be informational only. They should not be regarded as investment advice, performance claims or testimonials. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. There is no guarantee that any strategies discussed will result in a positive outcome. You should discuss any legal, tax or financial matter with the appropriate professional. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal. Working with a Notable Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment in the future.

METHODOLOGY: The honorees do not pay to be included. Their profiles were drawn from the nomination materials submitted. This list is not comprehensive. It includes only individuals for whom nominations were submitted and accepted after a review by editors. To qualify for the list, nominees must be based in Northeast Ohio. They must be currently employed full-time at a financial institution or company offering wealth management services and showcase professional achievements. They must have a minimum of three years’ experience and oversee at least $10 million in assets under advisement. They must be active in the community and/or philanthropic activities, mentoring programs and/or diversity and inclusion initiatives.

PLEASE SEE IMPORTANT DISCLOSURES R EGARDING RANKINGS

Zach Abrams Discusses Market Volatility With CNBC

Thu, 29 Jul 2021 13:09:02 GMT

Stock market volatility can be an opportunity for investors. Here’s why

Carmen Reinicke @CSREINICKE
July 19, 2021

The U.S. stock market is falling, again.

On Monday, all three major U.S. indexes slid , led by travel stocks, on fears that a Covid-19 rebound would damage the economic recovery . The Dow fell more than 700 points, while the S&P 500 dropped 1.6% and the and tech-heavy Nasdaq slumped 1.1%.

The sharp downturn came after all three indexes snapped weeks-long winning streaks Friday as inflation fears ticked up. Just weeks earlier, stocks were at all-time highs.

While volatility can be troubling for investors, experts caution against any hasty selling when markets fall. In addition, slumping stock prices can be a prime buying opportunity that investors should take advantage of.

Volatility is common

First, accept market volatility — which is relatively common — as a normal part of the process of investing and the best way to outrun inflation, said certified financial planner Brad Lineberger, president of Carlsbad, California-based Seaside Wealth Management, which manages about $165 million in assets.

“Embrace the volatility, because it’s why investors are getting paid to own stocks,” he said.

This means investors should stay calm even through extreme movements. As stocks have gyrated in recent months, long-term market returns are still based on the same things: dividend yields, earnings growth and change in valuation, according to Zach Abrams, a CFP and manager of wealth management at Shaker Heights, Ohio-based Capital Advisors, which manages around $800 million in assets.

For example, now may be a good time to look at consumer staples, according to Morgan Stanley analysts.

Volatility can be your friend

In addition, sharp moves down can also be opportunities to buy more stocks and set yourself up for future gains, according to Abrams.

This is because when stocks fall from recent highs, they’re trading at a discount and will likely rebound at some point, which sets investors up for larger returns.

Continuing to put money in the market when it’s down as opposed to selling is a great way to make sure you don’t miss out on a rebound. Data shows that selling when the market goes down can take you out of the game for some of the strongest rebounds.

For example, if you missed the best 20 days in the S&P 500 over the last 20 years, your average annual return would shrink to 0.1% from the 6% you’d have earned if you’d stayed the course.

And, even with the market’s recent downturn, stocks have had a strong performance this year. Through Friday’s close, the S&P 500 is up over 15% year to date.

Have an emergency fund

Of course, even if you know that stock market volatility can benefit you in the long-run, financial advisors still recommend having a cash emergency fund on hand so that you can make it through a market meltdown without selling.

This also keeps stock investments in the game for big rebounds, which generally come shortly after market corrections or even smaller dips.

For example, an investor would have only needed three months to six months of living expenses in an emergency fund to avoid taking losses during the March 2020 meltdown, said Lineberger at Seaside Wealth Management.

This approach would have also kept investments in the market for the record-breaking rally stocks enjoyed after the pandemic slump.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns .

S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. Investors cannot invest directly in an index. Past performance is no guarantee of future results. Neither asset allocation nor diversification guarantee a profit or protect against a loss.

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High Estate Tax Exemption Amounts are Going Away Should You Consider a Spousal Lifetime Access Trust (SLAT)?

Tue, 01 Jun 2021 13:45:00 GMT

With the lifetime estate tax exemption of $11.7M scheduled to expire December 31, 2025 (or sooner if proposed by legislation) and return to the inflation adjusted 2010 rate of approximately $6.4M, a SLAT can be an effective estate planning tool. Married couples can capture the lifetime exemption before it is reduced, minimize estate taxes and/or protect their assets from creditors.

A SLAT is an irrevocable trust in which one spouse (donor spouse) makes a gift to a trust for the benefit of the other spouse (non-donor spouse) and often children and grandchildren. It is most generally established as a means of utilizing the lifetime exemption with the goal of freezing the value of those assets and excluding the growth from the donor’s estate. In other words, all growth of those assets post transfer is excluded from estate tax exposure while the donor retains limited indirect access to the assets. One spouse may choose to fund a SLAT for the benefit of the other spouse, or each spouse may choose to fund a SLAT for the benefit of the other. As is the case with all gifting which is intended to reduce estate tax, I believe the best assets to transfer are those with the greatest potential for growth.

Why would you do it:

Opportunity to use the lifetime exemption while it is at an all-time high: use it or lose it. The IRS finalized rules last year saying that it would not claw back lifetime gifts if/when the exemption is lowered (referring to it rolling back after 2025 to the 2010 level plus inflation).
It is an effective estate freeze technique in removing growth from the taxable estate as all future growth is removed from the estates of both spouses.
Non-donor spouse has direct access, which gives the donor indirect access. However, conservative practitioners recommend the non-donor spouse not request distributions from the SLAT unless it is necessary to maintain the non-donor spouse’s accustomed standard of living after considering other available resources.
Can be effective intergenerational planning tool. In other words, it can be a dynasty trust passing assets down generations to avoid estate taxes at each generation.
Typically, it is a Grantor Trust, so no additional tax return is required to be filed while the donor is alive.
Provides asset protection from creditors, the degree to which depends on the provisions of the Trust.

What risks and factors should you consider?

Death: At the death of non-donor spouse, the donor spouse loses indirect access.
Divorce: In the event of divorce, the donor spouse loses indirect access.
Tax Basis: No step up in basis. As is the case with all gifts the recipient receives carry-over basis. However, the Trustee can have right to swap assets at a later date in exchange for higher basis property.
Exclusive Ownership: The transferred asset must be exclusively owned by donor, not jointly.
Reciprocal Trust Doctrine: You must make sure the Trusts don’t violate the Reciprocal Trust Doctrine. Two trusts which are considered constructively similar or interrelated violate this doctrine risking the IRS pulling all the assets and growth back into the donor’s estate. Some differences may include creating and funding the trusts on different dates/years, including different classes of beneficiaries, providing different terms for distributions to beneficiaries, giving beneficiaries different rights of withdrawal, or granting beneficiaries the power to change beneficiaries under certain restrictions. I have clients where both spouses have SLAT’s.

Other thoughts:

Non-donor spouse can serve as Trustee with limited powers to distribute. It’s a best practice to have a non-beneficiary serve as co-Trustee to avoid potential estate inclusion.
It should be looked at in the same context as funding an Offshore Asset Protection Trust – which isn’t an estate tax planning tool but has some of the same limitations regarding lifetime distributions. These distributions should be considered assets of last resort, not to mention you defeat the purpose by taking distributions. Additionally, if it appears you have completely unfettered access, you risk the IRS collapsing it.
In summary, SLATs are currently a means to make irrevocable transfers, use lifetime exemption which may be getting reduced even before December 31st, 2025, freeze the value of assets in your estate, and maintain limited access to these assets if need be.

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. None of the information in this document should be considered as legal or tax advice. You should consult your legal and tax advisor for information concerning your individual situation. Legal and tax services are not offered through, or supervised by, The Lincoln Investment Companies.

Trusts involve upfront costs and often have ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional before implementing a trust strategy.

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Neil Waxman Discusses Cybersecurity Risks For Retirees

Mon, 16 Nov 2020 14:16:47 GMT

This risk threatens retirees’ nest eggs. Here’s how advisors are protecting them.

Darla Mercado
November 11, 2020

Seven out of 10 adults aged 65 and over are reluctant to change their habits after facing identity fraud, according to a report from AARP and Javelin Strategy & Research.
Identity fraud losses were estimated to be $16.9 billion in 2019, Javelin found.
A financial advisor might be the last line of defense between a scammer and a retiree’s nest egg.

Forget volatility. The thing that keeps certified financial planner Neil Waxman on edge is clients’ cybersecurity practices and the threat of identity fraud.

“It’s not the markets that keep me up at night,” said Waxman, managing director of Capital Advisors in Shaker Heights, Ohio. “This is the thing that concerns me.

“It’s the thing that keeps me up at night more than anything else: a client getting hacked or something coming into our system, even though we have best practices,” he said.

Waxman is right to be concerned.

Identity fraud — what happens when scammers use your personal information to open phony accounts – resulted in $16.9 billion in consumer losses last year, according to data from Javelin Strategy & Research.

Seniors are an especially tempting target for fraudsters, given the amount of wealth they may have accumulated by the time they’ve retired.

“Older people aren’t necessarily targeted more, but they tend to lose so much more because they’ve saved so much,” said Kathy Stokes, director of AARP Fraud

Prevention Programs.

“These people are at an age where there is no way they will make up those losses,” she said.

Seniors are also hesitant to change their ways — including how they shop, bank or pay others — after a fraud incident.

Seven out of 10 consumers aged 65 and over were reluctant to change familiar habits, according to a report from Javelin Strategy and AARP.

Javelin polled 5,000 adults online from Oct. 22 through Nov. 4, 2019.

Financial advisors can act as a line of defense between their clients and fraudsters’ attempts to siphon off hard-earned savings.

“Advisors have a positive influence,” said Stokes of the AARP. “They can encourage clients to have safe access online to their accounts and talk to them about protecting information.”

Best practices inside and out

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations released a report earlier this year on financial firms’ cybersecurity practices. The issue has been a priority for the regulator.

Best practices in terms of cyber hygiene include having detailed written policies and procedures to ensure devices and data are safeguarded, as well as having tests and monitoring.

For advisors, this means they not only stay on top of their own security, but they also pass those best practices on to their clients.

“Sometimes the biggest benefit we can provide to clients is to distill it into a checklist,” said Melissa Sotudeh, a CFP with Halpern Financial in Rockville, Maryland.

“There’s the basic checklist: Never send account numbers; don’t use unencrypted emails; and change your passwords,” she said. “Are you doing the right things?”

Sharing those tips could help advisors and investors mitigate risk down the line.

One of Waxman’s clients had a business email account hacked and needed to hire an IT team to address the problem.

The fraudsters sent Waxman’s firm requests for money, including a wire authorization with a signature that matched. The firm called the client and denied the scammers’ requests for funds.

“We have a hold on that client’s account permanently – nothing can happen with the custodian until there is authorization from the both of us,” said Waxman.

ID theft prevention as part of review

Make data security a part of your client interactions and discuss those practices during annual meetings. Here are a few basic tips from Waxman, Sotudeh and AARP to help clients get started.

Safeguard your credentials: “Password123” isn’t going to cut it. Use at least eight characters with a mix of upper and lowercase letters and special characters. Avoid using the same credentials for different sites and services. Use a password manager to track and store your passwords.

Use dual-factor authentication: A hacker can crack a password, but dual-factor authentication means they’ll need a code that’s texted to your phone in order to sign into your accounts.

Got a call from a stranger claiming to be the IRS or the Social Security Administration? Hang up: Scammers love to dial up unsuspecting victims in a bid to get their personal data.

Write down the numbers of the companies you do business with: Don’t rely on web searches to obtain the customer service line, since scammers can post fake phone numbers on the internet.

Lock down your credit: Place a security freeze on your accounts with the three main credit companies: Equifax, Experian and TransUnion. Check and monitor your credit. Sign up for limit warnings on your checking and credit card accounts, so that you get a heads up in the event of a charge over a certain limit.

SEE IMPORTANT DI SCLOSURES IN LINK

Zach Abrams Discusses How Investors Can Navigate Volatile Markets To CNBC

Wed, 30 Sep 2020 13:46:02 GMT

How to navigate volatile markets during retirement

Carmen Reinicke
September 24, 2020

Even though the U.S. stock market has been subject to heightened volatility so far in 2020, financial advisors say that retirees with investment portfolios shouldn’t let it spook them – instead, it’s a good time to stick with a previous plan.

The market has been on a roller coaster ride in 2020. The S&P 500 began the year extending its longest-ever bull market, which began after the 2008 financial crisis, and hit an all-time high in February. In March, the index fell more than 20% from that high into a bear market as the coronavirus pandemic sent investors into a tailspin.

After its March low, the S&P 500 rallied about 60% to notch another all-time high in early September. But following the record, the index has slumped, keeping investors on their toes.

For retirees living on a fixed income, or people planning to retire soon, such moves can be harrowing.

“The volatility that’s been experienced this year has been significantly more than in other years and is fueled by a lot of fear and concern around the pandemic,” said certified financial planner Brad Lineberger, president of Seaside Wealth Management in Carlsbad, California, which manages about $165 million in assets.

For those who plan to enter retirement during a choppy period in the stock market, there are a few key things to do to ease the transition from earning a paycheck to living off savings and investments.

Volatility can be your friend

First is to accept market volatility, which is relatively common, as a normal part of the process of investing and the best way to outrun inflation, according to Lineberger.

“Embrace the volatility because it’s why investors are getting paid to own stocks,” he said.

This means investors should stay calm even through extreme movements such as those seen in 2020. Even though stocks have gyrated in recent months, long-term market returns are still based on the same factors: dividend yields, earnings growth and change in valuation, according to Zach Abrams, a CFP and manager of wealth management at Shaker Heights, Ohio-based Capital Advisors Ltd., which manages around $800 million in assets.

In addition, sharp moves down can also be opportunities to buy more stocks and set yourself up for future gains, according to Abrams. “When you’re down 35% like we were in March, you get better entry points,” he said.

Have an emergency fund

Even if you know volatility is your friend in the long run, financial advisors recommend having a cash emergency fund on hand in case you retire during a market meltdown.

If the stock market falls, it’s better to spend that money than sell assets at a loss which can’t be recouped, according to Tony Zabiegala, chief operations officer and senior wealth advisor at Strategic Wealth Partners, an Independence, Ohio-based firm with more than $500 million in assets under management.

“As much as it might pain you to spend that down, it’s for a rainy day and there was a monsoon in March,” said Zabiegala.

This also keeps stock investments in the game for big rebounds, which also happened this year. For example, an investor would have only needed three months to six months of living expenses in an emergency fund this year to avoid taking losses during the March meltdown, said Lineberger at Seaside Wealth Management. This approach would have also kept investments in the market for the record-breaking rebound rally stocks had after March.

Make a plan and stick to it

Financial advisors also recommend that you begin saving for retirement as soon as you can to give yourself the longest runway possible to accumulate wealth. Then, before you leave the workforce to live on your savings, it’s a good idea to rebalance your portfolio to guard against risk.

“We want to minimize the downside as much as possible,” said Zabiegala. “We’re trying to get on the kiddie roller coaster after getting off the big boy roller coaster.”

That means considering your long-term goals for retirement, and rotating assets between stocks, bonds and other investments to strike the right balance.

Advisors also note that the traditional portfolio balance of 60% stocks and 40% bonds may no longer be the best bet for retirees. Instead, investors may want to consider shifting that allocation to include other assets such as private equity, commodities and real estate to further manage risk, said Zabiegala.

It’s also important for retirees to shift their investment thinking to protecting their assets from growing them or aiming for the highest return.

“Managing the risk is a really important part,” said Leyla Morgillo, a CFP with Madison Financial Planning Group in Syracuse, New York, which manages about $200 million in assets. “It’s not about trying to shoot for the highest rate of return you can, it’s about protecting what you have.”

To stay committed to this goal, advisors recommend making a plan or road map for retirement investing long before you leave the workforce. This will act as a safeguard against making bad emotional decisions with your investments during extreme market events.

“Have the discipline to stick to your plan even when it doesn’t feel like the right thing to do,” said Lineberger at Seaside Wealth Management. “Checking your emotions at the door is the hardest aspect of being a successful investor but it’s the most important thing to do.”

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

https://www.cnbc.com/2020/09/24/-how-to-navigate-volatile-markets-during-retirement.html

You should be aware of and carefully consider the following points before determining whether alternative investments are appropriate for you. Alternative investments include, but are not limited to, investments in hedge funds, fund of hedge funds, CTAs, private equity funds, real estate funds and managed account platforms. Alternative investments are very speculative and are highly risky. Alternative investments are not regulated. They may employ speculative and risky investment strategies. They may have limited liquidity and carry high management fees. They may have little or no operating or performance history. Past performance is no guarantee of future results. There are no guarantees of profit.

A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

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Capital Advisors Ltd’s Neil Waxman Discusses Aging Clients In The Journal Of Financial Planning Article, “going The Extra Mile”

Fri, 11 Sep 2020 18:46:13 GMT

The Financial Planning Association® (FPA®) is the principal professional organization for CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals, educators, financial services providers and students who seek advancement in a growing, dynamic profession.

FPA members adhere to the highest standards of professional competence, ethical conduct and clear, complete disclosure to those they serve and take part in FPA’s One Connection™ for professional education, business success, advocacy and community at the national and chapter levels. FPA is truly an indispensable force in the advancement of today’s CFP® professionals. Waxman says: “We’re a firm that’s 20 years old. We began working with many of our clients when they were 50 and now they require a little more in the way of personal service. One of my partners recently went to the home of a client, who is incapacitated, to get his papers in order. Not all of his assets are under our management, and I think we found things he didn’t even know he had."

Nancy Opeila writes: “Last month, Waxman flew to Florida for a series of traditional business meetings with clients, but he also went with the intent of rolling up his sleeves and helping a couple go through six large storage bins of articles recovered from a fire that destroyed their home” Waxman finishes with his philosophy: “If I would do it for my mother, then I would do it for a client. The services we provide are not unlike those of the family office. We are the gatekeeper for our clients—not in the sense that we keep people out, but that we ensure that everything is integrated and working well together. We’re the client’s personal CFO."

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Capital Advisors, Ltd. Named To 2019 Financial Times 300 Top Registered Investment Advisers

Tue, 09 Jul 2019 23:14:49 GMT

July 8, 2019 – Capital Advisors, Ltd. is pleased to announce it has been named to the 2019 edition of the Financial Times 300 Top Registered Investment Advisers. The list recognizes top independent RIA firms from across the U.S. Neil Waxman and Mark Ciulla are Managing Directors of Capital Advisers.

This is the sixth annual FT 300 list, produced independently by the Financial Times in collaboration with Ignites Research, a subsidiary of the FT that provides business intelligence on the investment management industry, and assesses registered investment advisers (RIAs) on traits desirable to investors. To ensure a list of established companies with substantial expertise, a database of RIAs registered with the US Securities and Exchange Commission was examined with those selected that reported $300M or more in assets under management (AUM). The Financial Times invited more than 2,000 qualifying RIA companies to complete a lengthy application that provided detailed information. Some 740 RIA companies applied and 300 made the final list.

The formula FT uses to grade advisers is based on six broad factors and calculates a numeric score for each adviser. Areas of consideration include adviser AUM, asset growth, the company’s age, industry certifications of key employees (CFA, CFP, etc.), SEC compliance record and online accessibility. The reasoning behind FT’s belief that this is the fairest way to identify the industry’s elite advisers while accounting for the companies’ different approaches and different specialization are as follows:

AUM signals experience managing money and client trust.
AUM growth rate can be a proxy for performance, as well as for asset retention and the ability to generate new business.
Companies’ years in existence indicates reliability and experience of managing assets through different market environments.
Compliance record provides evidence of past client disputes — a string of complaints can signal potential problems, for example.
Industry certifications (CFA, CFP, etc) show the company’s staff has industry knowledge and signals a professional commitment to investment skills.
Online accessibility demonstrates a desire to provide easy access and transparent contact information.

AUM accounted for an average of 70 to 75 per cent of each adviser’s score. Also, asset growth accounted for an average of 15 per cent. This year, to emphasize long-term client satisfaction, FT also used a three-year growth rate instead of the one- and two-year growth rates used in the past. Additionally, FT caps the number of advisory companies from any one state, based roughly on the distribution of millionaires across the US. This award does not evaluate the quality of services provided to clients and is not indicative of the practice’s future performance. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300.

https://www.ft.com/content/44d2b2b2-6cef-11e9-9ff9-8c855179f1c4

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Nate Creviston Provides Retirement Tips For Younger Investors In TheStreet

Mon, 18 Mar 2019 23:27:10 GMT

You're Never Too Young to Save for Retirement

Robert Powell's got a very doable list of ways to up your retirement savings, even if you think you're too young -- or that it's too late.

Robert Powell

Mar 11, 2019 6:58 AM EDT

People saving for retirement are told, every year around this time, to increase the amount they contribute to their 401(k) or similar employer-sponsored retirement plan. And each and every year those saving for retirement struggle to find the money in their budget to increase their savings.

But there are ways everyone, younger and older, can bump up their savings rate, and find money in their budget to save more for retirement.

Members of the Financial Planning Association shared their thoughts below.

Reduce the Money You Spend on Experiences

If your budget includes a line item for "experiences," Dennis Nolte, a certified financial planner with Seacoast Investment Services, recommends dialing down such expenses by $50 per month, especially if you're not contributing enough to get your full employer's match to your 401(k).

If you don't have a budget, Nolte suggests putting another $50 per month into your 401(k) and "see how it feels, see what effect it has on your end-of-month cash."

Nate Creviston, a wealth management analyst with Capital Advisors, stresses with his younger clients the importance of "paying yourself first." Start with income, subtract savings, then subtract fixed or essential expenses such as rent, transportation and the like, and then move to the variable expenses such as going out, travel, and the like. "We stress the fact that the variable expenses are the last in the budget which resonates intuitively with our clients because it makes sense that they should save first then spend what's left over when it comes to entertainment," says Creviston.

Another adviser says a different way to free up cash for savings is "to pay cash for all your 'wanna-have' expenses. "I promise you, it will help you spend less and the inconvenience of dealing with cash will give you some old school lessons," says Sarah Carlson, a certified financial planner with Fulcrum Financial Group.

Carlson also suggests reviewing your budget or your bank statements to figure out ways you can be more frugal. "Imagine what your grandparents and great-grandparents would have done in your shoes," she says.

What's the Purpose?

Eric Roberge, a certified financial planner with Beyond Your Hammock, suggests that you do some soul-searching with respect to your money. "If you're struggling to find enough money to contribute to your 401(k), it might help to ask yourself, 'what's the purpose?' of the spending you're currently doing -- which is eating away at the money you could save instead," he says. "What are you trying to get from the experience?"

Roberge's advice: Look at what you spend a lot of money on every single month. "Understand what the value is that you're getting from the experience - or notice if you're not getting the value you want from it anymore," he says. "The concept of, 'what's the value here?' is useful in making financial choices."

Think Before You Act

Roberge also recommends analyzing your urges before acting on them. "When you first get an urge to do something, instead of just doing it, stop and think: 'why do I have this urge?'" he says. "Once you understand the reason, you can then decide whether or not your action aligns with the underlying motivation - or if there's another option to satisfy that want in a way that better aligns with your values, your goals, your budget, etc."

The point of all this, says Roberge, is to help you get better at using your money as a tool to get what you want. "If you want to contribute more to your 401(k), that might mean making changes in other areas and spending less on things that aren't very meaningful to you," he says. "If you can build a habit to pause and think before you act, then you can consider a wider range of options in the moment, so you are better positioned to choose the one that's best for you -- instead of blindly charging ahead with the first thing you thought/felt/wanted." Listen to Roberge's podcast on the topic.

The Power of Compounding

It might not seem so, but it's true. Every little bit helps, says Creviston. "Even if they don't have thousands of dollars to invest, you'll be surprised what just $50 to $100 a month can do over the long term," he says.

In his practice, Creviston says, they often show calculations using time value of money and how putting dollars away now can help them to achieve those goals for retirement. "We often attach a dollar amount to specific retirement goals to show that they are both attainable and realistic if our clients save now," he says.

Others also suggest that those saving for retirement should learn the power of compounding.

"There are tons of illustrations on how eliminating a Starbucks a day can add up," says Ashley Folkes, a certified financial planner with Moors & Cabot.

Consider how much you might accumulate if you invested what you spent per week on lattes. For instance, a 22-year-old who invested $950 per year in an account earning 5% per year over the course of 45 years would accumulate a little more $150,000 just in that account. It would be worth even more if they were saving that money in an account with other savings.

Here are two time value of money calculators:

Vertex42's Savings Calculator

ZenWealth's Time Value of Money Calculator

Creviston also shows his clients the benefits of dollar-cost averaging, an investment strategy in which you invest a set dollar amount on a regular basis, such as every month or every year. "We simple calculations that illustrate what dollar-cost averaging just $100 per month can do to a portfolio when you extrapolate that growth over 40-plus years," he said.

Here is a dollar-cost averaging calculator.

Auto-Escalation Works, Too

Sign up for auto-escalation if your retirement plan offers that feature, says Darin Shebesta, a certified financial planner with Jackson/Roskelley Wealth Advisors.

Other advisers recommend the same. "Small and steady increases work great," says Theodore Haley, a certified financial planner with Advanced Wealth Management. "Have your plan automatically increase your contribution by 1% every year, or manually increase the dollars you are deferring by 3% or more every year. The reality is most people won't really notice these small changes in their monthly budget, but long-term they can lead to significantly higher balances."

Consider, too, saving some if not all of any raises you might get for retirement instead of bumping up your lifestyle, Shebesta says. Others agree with this advice. "The best way to create a plan around increasing 401(k) savings is to increase your contribution 1% each time you receive a pay raise from work," says Byrke Sestok, a certified financial planner at Rightirement Wealth Partners. "Raises typically are 2%-plus so if you bump your 401(k) 1% you still get the difference of the raise in your paycheck to enjoy. A little now and later if you will."

Free Money

You should also try to save at least enough to receive your employer's full match.

Many employers will match an employee's contribution to a 401(k) - typically 50% of every dollar up to 6%. "It's a no-brainer," says Carlson. "If your employer offers retirement fund matching, start with any amount to get the free company match."

By the way, Fidelity Investments says those in the U.S. should aim to save 15% of their salary over the course of their working years to accumulate enough to fund a desired standard of living in retirement.

Don't Have a 401(k)?

If you don't have a 401(k) at work, consider saving for retirement in an IRA, says Paul Tramontozzi, certified financial planner with Lob Planning Group. And don't wait until the end of the year to contribute. "Make contributions no less frequently than every month," he says. And to make things even easier, Tramontozzi recommends setting up automatic contributions from your bank account and set the date it comes out soon after you get your paycheck.

Create a Tip Jar -- For Yourself

Satoru Asato, a certified financial planner McNellis & Asato recommends creating a tip jar for yourself. "Every time you go out for coffee, beer, lunch, etc., decide why you are there," he says. "Is it out of habit, ambiance, companionship, the taste of what's available there, etc.?"

For example, if you're at Starbucks, are you there to meet friends because of convenient location? "In which case, instead of buying a venti Frappuccino out of habit, buy a small Frappuccino, latte, or coffee and 'tip' yourself the difference," he says. "The jar should be a clear jar to be able to see the difference a little behavioral modification can make. At the end of the month, take the contents of the jar and bank it in a separate checking account."

Adjust Your Withholding

If you are filing your taxes using standard deductions this year, odds are you're getting a refund, says Nolte. "If it's $1,000, put another $80 month into your 401(k) and add that $1,000 to your funds needed for discretionary or variable expenses, such as food and entertainment," he says.

Another adviser says one of the easiest ways to increase your savings rate is by adjusting your tax withholding. "If you received a tax refund it means that you lent your money to the IRS at a 0% interest rate over the course of the year," says Samuel Boyd, a certified financial planner with Capital Investment Advisors. "By adjusting your tax withholding at work, you can net a larger take home pay per pay period and have little or no refund at the end of the year."

For example, if you received a refund of $1,200 that represents $100 per month of income that you should have received but did not due to your withholding, he says. "Had you adjusted your withholding you could have made a $100 contribution to a Roth 401(k) or, due to the pre-tax nature of traditional 401k's, an even higher contribution and still net the same pay," says Boyd. "You get to maintain your lifestyle and expenses and accumulate funds for retirement, talk about having your cake and eating it too."

Other Tactics

Saving for retirement, although tedious, is all about mindset, says Carlson. "Consider your retirement deposits as a way you can show respect to yourself and the bright future you have," she says.

And, if all else fails, Nolte says you can always sell your older Apple technology for some cash.

Maybe you have other priorities?

Other experts, meanwhile, say you shouldn't get down on yourself if you can't increase how much you save for retirement. After all, you might have other more pressing short-term goals. "It's OK to sacrifice retirement savings if you have to," says Douglas Boneparth, the president of Bone Fide Wealth. "It's a matter of goal priority. Not everyone can side hustle, sell stuff on eBay and cost-cut like crazy."

Sure, says Boneparth, you can shop on sale and use coupons but it's going to be hard to not change anything and bump up your 401(k) savings. "So, I want to talk about changing the mindset of young people feeling like they're missing out because they can't save for retirement," he says. "If you have loans, want a reserve or buy a home, it's OK."

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Nate Creviston Details Risk-averse Portfolio Construction With Investment News

Wed, 13 Mar 2019 23:35:16 GMT

How to navigate volatile markets during retirement

Carmen Reinicke
September 24, 2020

After its March low, the S&P 500 rallied about 60% to notch another all-time high in early September. But following the record, the index has slumped, keeping investors on their toes.

For retirees living on a fixed income, or people planning to retire soon, such moves can be harrowing.

Volatility can be your friend

First is to accept market volatility, which is relatively common, as a normal part of the process of investing and the best way to outrun inflation, according to Lineberger.

“Embrace the volatility because it’s why investors are getting paid to own stocks,” he said.

Have an emergency fund

Even if you know volatility is your friend in the long run, financial advisors recommend having a cash emergency fund on hand in case you retire during a market meltdown.

“As much as it might pain you to spend that down, it’s for a rainy day and there was a monsoon in March,” said Zabiegala.

Make a plan and stick to it

“We want to minimize the downside as much as possible,” said Zabiegala. “We’re trying to get on the kiddie roller coaster after getting off the big boy roller coaster.”

That means considering your long-term goals for retirement, and rotating assets between stocks, bonds and other investments to strike the right balance.

It’s also important for retirees to shift their investment thinking to protecting their assets from growing them or aiming for the highest return.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

https://www.cnbc.com/2020/09/24/-how-to-navigate-volatile-markets-during-retirement.html

Neither asset allocation nor diversification guarantee a profit or protect against a loss.

S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. Barclays U.S. Aggregate Bond Index i s a composite of four major sub-indexes: US Government Index, US Credit Index, US Mortgage-Backed Securities Index, and US Asset-Based Securities Index, including securities that are of investment grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million.

Investors cannot invest directly in an index.

Inflation is the rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on the market. Moderate inflation is a common result of economic growth. Hyperinflation, with prices rising at 100% a year or more, causes people to lose confidence in the currency and put their assets in hard assets like real estate or gold, which usually retain their value in inflationary times.

There are some risks associated with investing in the stock markets: 1) Systematic risk - also known as market risk, this is the potential for the entire market to decline; 2) Unsystematic risk - the risk that any one stock may go down in value, independent of the stock market as a whole. This also incorporates business risk and event risk; and 3) Opportunity risk and liquidity risk.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities). Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Lower-quality fixed income securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed-income security sold or redeemed prior to maturity may be subject to loss.

A Certificate of Deposit (CD) is a savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.

A variable annuity is an insurance contract which offers three basic features not commonly found in mutual funds: (1) annuity payout options that can provide guaranteed income for life; (2) a death benefit; and (3) tax-deferred treatment of earnings. When applicable, the tax deferred accrual feature is already provided by the tax-qualified retirement plan (e.g. 403(b), IRA, etc.). The U.S. Securities and Exchange Commission (Investor Tips: Variable Annuities) has suggested that for most investors it would be advantageous to make the maximum allowable contribution to a tax-qualified retirement plan before investing in a variable annuity. The separate account of a variable annuity is not a mutual fund. While separate accounts may have a name similar to a mutual fund, it is not the same pool of funds and will experience different performance than the mutual fund of the same or similar name. In addition, the financial ratings of the issuing insurance company do not apply to any non-guaranteed separate accounts. The value of the separate accounts that are not guaranteed will fluctuate in response to market changes and other factors. Variable annuities are designed to be long-term investments and early withdrawals may be subject to tax penalties and charges. Please obtain a prospectus for complete information including charges and expenses. Read it carefully before you invest or send money. None of the information in this document should be considered as tax advice. You should consult your tax advisor for information concerning your individual situation.

The value of the shares of a Real Estate Investment Trust (REIT) fund will fluctuate with the value of the underlying assets (real estate properties.) There are special risk factors associated with REITs, such as interest rate risk and the illiquidity of the real estate market.Master

Limited Partnerships (MLPs) are a form of a publicly traded partnership. Although some units are traded on public exchanges some are nonpublic securities. MLPs generally must distribute to unit holders a majority of their distributable cash flow on an annual basis. MLPs must receive 90% of their income from qualified sources. Most MLPs are in the energy, timber or real estate business. An investment in MLP units involves risks that differ from a similar investment in equity securities, such as common stock, of a corporation. Holders of MLP units have the rights typically afforded to limited partners in a limited partnership. As compared to common shareholders of a corporation, holders of MLP units have more limited control and limited rights to vote on matters affecting the partnership. There are certain tax risks associated with an investment in MLP units. Additionally, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of an MLP; for example a conflict may arise as a result of incentive distribution payments.

A business development company (BDC) is an organization that invests in and helps small- and medium-size companies grow in the initial stages of their development. Many BDCs are set up similarly to closed-end investment funds and are typically public companies whose shares are traded on major stock exchanges.

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Nate Creviston Shares Insights On Wealth Accumulation With Magnify Money

Tue, 05 Mar 2019 01:01:57 GMT

8 Ways to Build Wealth Using Your Investments

Friday, February 15, 2019
Kate Ashford

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

When you’re starting out as a young investor, it can be hard to know where to begin. The good news is that you’re in the best position to maximize your savings — you have time on your side. By sticking with the right strategy, you can build a healthy nest egg and enjoy a comfortable retirement. Here’s how.

How to build wealth by investing

Socking cash into a savings account may feel like a step in the right direction, but even if the account is earning a little bit of interest, it’s likely not outpacing inflation. That means that over the years, your savings could lose value. Smart investing allows your savings to grow over time.

1. Start early

In other words, start right now. No matter how little you can put away at this moment, the sooner you start investing, the better off you’ll be. That’s because compounding returns are more potent over time — as your investments grow, your savings grow, and as your savings grow, you have more money invested. It’s a powerful cycle.

“The most important thing is to start early and consistently invest, consistently save, so that it becomes a habit for you,” says Carol Fabbri, a certified financial planner in Conifer, Colorado. “If you start when you’re 20 or 25, when you get your first job, you’re going to be amazed at how much you accumulate.”

2. Take advantage of your employer’s benefits

If your company offers a retirement plan such as a 401(k), sign up. Having money taken out of your paycheck before you see it (and spend it) is one of the most effective ways to save for retirement. You won’t have to decide to save — it will just happen automatically on pay days. Plus, your contribution comes out of your paycheck pre-tax, lowering your taxable income and allowing you to delay paying taxes on the money until you take distributions in retirement.

And steady contributions win the race, research shows. According to data from the Investment Company Institute, the average 401(k) balance for people who consistently saved from 2010 to the end of 2016 more than doubled, growing at a compound annual average growth rate of 14.2%.

3. Maximize any employer match available

Many companies offer a 401(k) match based on your own contribution, such as 50 cents for every dollar you contribute, up to 6% of your salary. That means if you’re only contributing 4% of your salary annually, you’re missing out on free money since you’re not getting the full match.

It may not seem like much, but that match can add up. Consider a worker who earns $50,000 a year and her employer matches 50 cents to every dollar she saves, up to 6% of her salary. If she saves 10% to her 401(k), or $5,000, that means her employer contributes $1,500 per year for her retirement.

If both the employee and the company continue to contribute the same amount and the employee earns 6% on her investments, she will have more than $90,000 in 10 years. Without the employer match, however, she’d have just under $70,000.

4. Save as much as you can

The more you can invest, the more money you have working for you. In 2019, you can put up to $19,000 into a 401(k) , or up to $25,000 if you’re 50 or older. Additionally, you can put another $6,000 into an IRA, or up to $7,000 if you’re 50 or older. And when it comes to taxable accounts, you can save as much as you want.

“We usually preach that you’re a good saver if you’re saving 10% of your gross income, and you’re a great saver if you’re saving 20%,” says Nate Creviston, a certified financial planner in Cleveland. If you can’t quite meet those goals yet, consider having your 401(k) contribution bumped up a percentage point every six months until you get there, or boost it every time you get a raise.

If you’re saving outside a retirement account, consider setting up automatic transfers from your checking account to your investment account on paydays — then set a calendar reminder to bump up the amount every six to 12 months.

5. Pay attention to fees

If you’re saving regularly but paying high fees on your investments, you’ll see lower returns — and a smaller nest egg in the end.

“Historically, fees are what changes the retirement outcome for people,” Creviston says. “We always suggest our clients find out what those fees are.”

Within employee retirement accounts, employees usually have little control over most of the fees. But you should absolutely check the fees on the investments available to you. Pay attention to the expense ratio, which is how much it costs to run a fund each year; the higher that ratio is, the more that fee will eat into your returns. When you have a choice between two similar funds with differing expense ratios, it may make sense to choose the one that costs less.

Outside of retirement accounts, there are other investment fees to watch for. Some investments may hit you with front-end sales loads, which are fees charged when you purchase assets. You may face surrender fees on some investments if you sell them within a specific period of time. And if you’re working with a financial advisor, there are advisory fees to be aware of — your advisor may charge by the hour, by the project or by a percentage of your portfolio, for example. The more you’re cognizant of what fees are on the table, the better you can make decisions to minimize costs overall.

6. Don’t cash out early

If you take money out of a 401(k) early, you’ll owe income taxes on the balance plus a 10% early withdrawal penalty, both of which could hurt your bottom line.

Even for non-retirement accounts, pulling out cash unnecessarily could have dire effects; you lose the growth potential of that money. If you have $5,000 in an investment account when you’re in your 20s and earn 6% returns, over 35 years that money would grow to roughly $40,000 — without another dollar invested. Withdraw some of that cash and your earning potential dwindles.

For best results, sock money away and leave it there as long as you can, unless it’s earmarked for shorter-term goals such as a down payment on a home or college expenses.

7. Rebalance regularly

Over time, as some investments perform better than others, your balanced portfolio may become somewhat skewed. For instance, if you were originally invested in 85% stocks and 15% bonds at the beginning of the year, you might be in 92% stocks and 8% bonds by the end. While that means your stocks are doing well, it also puts you in a riskier position, because more of your holdings are in equities. If you maintain a riskier balance and the market drops, you could lose more of your nest egg than you’d like.

It’s wise to review your allocation about once a year to keep your investment plan on track and ensure that you’re not taking too much risk. In this case, that would mean selling some stocks and buying some bonds to return your portfolio to the initial ratio. (Bonus: This strategy means you’re essentially selling high and buying low — and isn’t that the point?)

8. Revisit and update your portfolio as needed

Just like the car you drove when you were 18 probably isn’t the car you’ll drive when you’re 50, your investment needs will evolve over time. You will likely need to adjust your portfolio to become more conservative as you get closer to retirement age or to accommodate other priorities that affect what you do with your savings.

Additionally, your investments may change as fund managers leave or as companies tweak a fund’s mix. Examining your portfolio regularly allows you the chance to drop investments that have gotten too expensive or those that are on a trajectory you’re not loving anymore.

You will learn more about investing — and what you want from it — over time, leading you to make decisions that can put you in a better position. If you have questions about the right portfolio for you, a financial advisor can help you assess your current holdings and make the best plan for the future.

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Neil Waxman Describes Communication Style In Getting Both Spouses Talking About Their Finances In TheStreet

Wed, 23 Jan 2019 18:17:26 GMT

Leaving All the Financial Decisions to One Spouse Is Asking for Trouble

While it's common for one partner to handle most money decisions in a marriage, it's important for planners to make sure to listen to both.

It's not uncommon for couples to split up their household duties, with the more money-savvy partner handling the finances.

But financial planners say cases where one spouse completely dominates discussions about money and investments while the other partner checks out can be a cause for concern.

Such an imbalance can create serious problems down the line if the financially dominant spouse becomes ill or dies. It can also point to deeper tensions and problems in the marriage as well.

Faced with this situation, some planners say they attempt, both in subtle and some less subtle ways as well, to connect with the silent spouse and make sure everyone is on the same page.

For financial planners, understanding these dynamics and finding ways to get both partners on the same page is part of the job, requiring at times the skills akin to that of a psychologist or family therapist.

"It's so important for the financial advisor (unbiased third party) to allow both parties the opportunity to be involved," said Marguerita Cheng, chief executive officer and founder of Blue Ocean Global Wealth in Gaithersburg, Md., and a CFP.

Spotting trouble

It may be natural for one spouse to take the lead on financial matters.

But failing to engage the other partner in the discussions can have serious ramifications down the line, planners say.

If only one spouse does all the talking while the other stays silent, it can lead to major misunderstandings later about everything from how much investment risk to take on in trying to meet retirement goals to what age to retire at," said Chris Schiffer, executive vice president and chief operating officer of AEPG Wealth Strategies in New Jersey.

"It can lead to a skewed understanding of goals," said Schiffer, a certified financial planner.

Sean Williams, wealth advisor at Sojourn Wealth Advisory in Baltimore, said the impact can be devastating if the spouse dies who has exclusively handled the couple's finances with little or no input from his or her partner.

He recalled working at a bank in the early 2000s and twice having tearful women come to him after their husbands had died. One said she had seen letters from the bank and was trying to figure out whether her late husband had opened an account there.

"These women were experiencing the great loss of their loved one and felt absolutely abandoned and ignorant," Williams said. "I don't want any of the families I serve to experience anything like that. Sure, one spouse may show more interest in personal finance or the markets than the other, but both have to be informed enough to make decisions together."

Erika Safran, founder of Safran Wealth Advisors in New York said it's OK when one partner is the "primary spokesperson" for a couple's finances.

But when that partner starts to critique or belittle his or her spouse's financial life, it raises alarm bells for Safran.

"When one person dominates the conversation with ongoing concern (diatribes) about the other person's financial life and situation, that's when the problems arrive," she noted. "The dominator demoralizes their partner who eventually disengages and gives up their power to the dominating force."

There can also be other baleful consequences when one spouse completely dominates financial decision making.

Advisors need to have a close eye on this dynamic and "should be adept at mediating involvement of both in any discussion to ensure comprehension, consensus and acknowledgment," said Lili Vasileff, founder and president of Divorcer and Money Matters LLC in Connecticut.

"Without the advisor being attuned to seizing this opportunity, this is [the] most common indicator for couples heading to divorce," said Vasileff, a CFP and president emeritus of the National Association of Divorce Planners.

Part planner, part therapist

When it comes to getting both spouses talking about their finances, financial planners often borrow a page or two from the psychologist's playbook.

Neil Waxman, managing director of Capital Advisors in Shaker Heights, Ohio, said getting out of the trap of simply focusing on the talkative, more financially-confident spouse requires planners to tap into a different skill set.

For the planner, that means active listening "and engaging both parties in discussions with each other via open-ended and directed questions," Waxman.

According to Waxman, it is referred to commonly in the field as "financial social work."

Kristin Sullivan, a CFP at Sullivan Financial Planning in Denver, said she goes out of her way to make eye contact with the quieter spouse. Sullivan will also stop the conversation and ask the less talkative spouse, "Are you comfortable with this?" or "Would you like me to explain more about this idea?"

Patti Black, a partner at Bridgeworth, a wealth management firm in Birmingham, Ala., said it is common in couples for one partner to serve as the "chief financial officer," paying the bills, making investment decisions and buying insurance, among other things.

But while this can be fine, it is important that the couple have regular "money talks" to make sure they are both on the same page with these crucial issues.

When she meets with clients, Black asks the "non-CFO spouse" for his or her thoughts first. Black also makes a point of avoiding financial jargon. And she checks in regularly with the quieter spouse, asking, for example, "what doesn't make sense about what we just discussed?"

"Our health is not guaranteed, so it is critical for couples to have regular "money talks" to make sure financial information is shared," Black said.

by Scott Van Voorhis
Jan 15, 2019 8:30 AM EST

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Neil Waxman Comments On Replying To Clients At All Hours On Investors Business Daily

Mon, 07 Jan 2019 18:51:57 GMT

Advisors Weigh Whether To Reply Promptly To Clients At All Hours

Many advisors love their work. But that doesn't mean they want to do it around the clock.

Depending on their relationship with clients, they may feel an obligation to be accessible 24/7. Whenever clients reach out with questions, concerns or requests, some advisors pride themselves on their readiness to respond.

While clients appreciate such dedication, it can come at a cost. Always-available advisors risk burnout. Their inability to turn off their work life can cause ongoing strain and fray their bonds with friends and family.

In weighing at what extent to remain accessible on evenings and weekends — and even while on vacation — advisors need to consider clients' needs and expectations. Many investors who sign on with a financial planner assume that they will communicate primarily during office hours.
For high-net-worth clients, particularly those facing complex and time-sensitive challenges, responsiveness becomes more important. If they're undergoing a stressful life event, such as a divorce or sale of a business, contacting their advisor at any hour can be a godsend.

To address such expectations, advisors might set the tone from the outset by explaining when and how to reach them at any time. By explicitly addressing their accessibility (and sometimes setting appropriate limits), they remove any mystery and create a comfort level for clients.
"I tell all my clients that I'm available not just Monday through Friday, but 24/7," said Neil Waxman, a certified financial planner in Shaker Heights, Ohio. "The vast majority of clients respect it and don't abuse it. And they apologize when it happens."

A Midnight Reply

An advisor's attitude about responding to client inquiries during off-hours offers a revealing window into their commitment to service. They may not pounce on routine requests on evenings and weekends, but in those rare instances when clients face genuine emergencies and need immediate counsel, advisors may make an exception.

For Waxman, it's simpler and more satisfying to let clients know he's never out of reach. Waxman, who has many high-net-worth clients, says he prefers "to never be off the clock."

"We have a sense of urgency to reply to our clients," he said. "This isn't a 9-to-5 job. Money is emotional and our clients have needs over 24 hours. We're not just investment advisors; we're financial social workers."

This approach impresses most clients, Waxman says. For example, a new client recently faced some critical financial issues that required fast action. After emailing Waxman, she noticed that he replied around midnight with the information she needed.

"She thought it was great," he said. "She said to me, 'Is this something I should get used to?' "

Responding to client emails over the weekend helps Waxman manage his workflow. He'll sift through messages and reply to the highest-priority ones soon after they come in.

"Some can wait and others can't," he said. "But this way, you don't come in on Monday with as many emails" in your inbox.

Teaming Up

Advisors vary in their willingness to stay connected to the office during their vacations. Some clients feel uncomfortable or even embarrassed if they discover that they bothered their advisor during a leisure trip.

"We don't require that (all of our advisors) look at email while on vacation, although some do," Waxman said. "In any case, our auto-reply gives contact info for two other professionals" in the office.

Some advisors emphasize the value of enjoying a balanced life, putting money concerns in perspective while spending time with those dearest to us. This philosophy affects their approach to round-the-clock accessibility.

"We tell clients that family comes first," said Cecile Hult, a certified financial planner in McLean, Va. "They understand that. And that's why they want to work with us, because their values align with ours."

Hult's firm assigns two advisors per client, with one typically serving as a backup. Assembling a team to serve clients makes it easier for each advisor to take time off. That's especially important for Hult because she has two young children.

"I'm a pretty busy mom, so I have to have clear boundaries," she said. "Still, we're never too rigid to not respond to a client emergency."
Advisors undergo different stages as they progress in their career, which can in turn influence how they respond to clients during off-hours. Hult notes that as her life has changed, so has her view about remaining accessible.

"When I started over 10 years ago, I was very young and hungry," she said. "I didn't mind showing clients I was available 24/7. As I got married and had children, my priorities shifted. Now I value my family time as much as my work."

Investor's Business Daily, by MOREY STETTNER, 12/24/2018

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Nate Creviston Provides Investment Tips For Millennials In Kiplinger's Personal Finance

Wed, 12 Dec 2018 18:58:52 GMT

Young & Scrappy -- And Saving for Retirement
No excuses. You don’t need a 401(k) or employer match to save.

Last spring, I packed my bags and headed to Denver for my first reporting job after college. We had everything you might expect at a scrappy media start-up with four reporters, including craft beer in the mini fridge. But like a lot of cash-strapped start-ups, the company couldn’t offer much in the way of employee benefits.

I didn’t care about any of that when I took the job. If I could pay the bills and start chipping away at my student loans, why the heck would I think about saving for retirement?

Here’s why: Our generation is almost certain to live longer than our parents, meaning our money has to last longer and clear more hurdles on the way.

For starters, no one really knows what Social Security is going to look like in 30 or 40 years. No matter how Congress adjusts the system over the next decade, younger workers shouldn’t count on receiving the same benefits as their parents. “I tell younger investors to plan as if Social Security will be nonexistent when they retire,” says Ryan Fuchs, a certified financial planner in Little Rock, Ark. “I don’t believe that will be the case. But if they can create a successful plan without it, then any money they do receive will be icing on the cake.”

The time value of money. After paying rent and maybe student loans, finding the money to save for retirement might seem like an impossible task. In a 2017 survey from GOBankingRates, more than 60% of millennials reported having less than $1,000 in a savings account, and 46% of respondents ages 18 to 24 said they had nothing saved. But time is the most valuable resource you have, and you happen to have a lot of it right now.

“When we meet with younger clients, we’ll use simple calculations to show what saving a few hundred dollars a month can do for a portfolio when you extend that growth over 40 years,” says Nate Creviston, a CFP in Shaker Heights, Ohio. If you set aside $200 a month and earn an average annual return of 7%, you’ll have $480,000 after 40 years. Boost contributions every time you get a raise, and you’ll have much more than that. Eventually, you should aim to save 15% of income.

Putting aside the question of Social Security, the big difference in the retirement outlook between past generations and our own is the shift away from traditional pensions. Most private employers have moved toward defined contribution plans, such as 401(k)s, which allow workers to contribute a certain amount of their paycheck into a pretax account. According to Rui Yao, a personal finance professor at the University of Missouri, that shift began right before Generation X joined the workforce and culminated with millennials.

If your employer offers a 401(k) plan and will match your contributions up to a certain percentage of your pay, take it. It’s the closest you’ll come to getting free money. Even without the match, a 401(k) is a strong starting point as long as it offers a diversified selection of mutual funds that aren’t hobbled by exorbitant fees. (Brightscope.com offers a tool that will rank your 401(k) against its peers.)

If you’re self-employed or your employer doesn’t offer a 401(k), your next best bet may be a Roth IRA. In 2019, you can contribute up to $6,000 to a Roth, as long as your income is less than the IRS’s thresholds. The money isn’t tax-deductible, but as long as you wait until you’re at least 59½, all withdrawals—including earnings—will be tax-free, and you can withdraw contributions at any time without paying taxes or penalties. Many online brokers offer tools to help you create a portfolio and set up automatic monthly contributions, which makes it easier to start saving as a habit (see The Best Online Brokers).

As for me, I’m taking advantage of the Kiplinger 401(k) plan. I’m fortunate to have that option, but retirement isn’t just for the lucky ones. Start saving now, and work toward the future you want. You’ll thank yourself later.

By Brendan Pedersen, Reporter
November 29, 2018, Kiplinger's Personal Finance

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Neil Waxman Explains in the Street.com Why Financial Planning is at the Core of a Client Relationship

Wed, 07 Nov 2018 19:38:42 GMT

Financial Planners See Growing Demand From Younger Prospects

Scott Van Voorhis
Tuesday, November 20, 2018

While technology is changing some parts of the business, demand for a core financial plan appears to be on the rise.

A tech revolution is transforming the way financial advisors do business as planning software gains traction.

But even as things change, the importance of the financial plan has retained its place as the core of the client relationship.

In fact, the financial plan may now be more important than ever before amid rising demand by young professionals and others for financial guidance, financial planners say.

"Our next generation clients seem to have a growing appreciation for financial planning akin to modern wellness (sleep, nutrition, exercise are good for you is now standard!)" writes Paul Fain III, president of ASSETPlanning Corp. in Knoxville, Tenn., and a CFP.

Financial plan comes first

Maybe not all that surprisingly, many financial advisors are passionate about the importance of the financial plan. When dealing with new clients, advisors say one of the first major steps they take is to write one.

Scott Bishop, an executive vice president for financial planning and a partner at STA Wealth Management in Houston, says he will "rarely" manage anyone's portfolio without first doing a financial plan, for which he charges a flat fee.

"How could I determine the overall allocation, tax strategies or needed cash flow without a financial plan - especially if someone is at or close to retirement?" Bishop notes.

Bishop's firm, which manages over $1 billion in assets, has a five-person financial planning department that includes CFPs, certified financial analysts, or CFAs, and JDs.

Neil Waxman, managing director of Capital Advisors in Shaker Heights, Ohio, says "nothing happens until we have addressed a prospective client's qualitative and quantitative goals and objectives."

The first step is laying out what Waxman calls a "roadmap" for the client using a proprietary cash-flow modeling program.

The firm wraps the fee for the financial plan in the fees it charges clients for managing their investments.

"This provides us and the prospective client with the comprehensive, integrated, logical, forward looking perspective, which creates the basis for sound investment, estate, retirement, and tax planning," Waxman notes.

Peggy Gordon, senior vice president and portfolio manager at IBERIABANK, says the process of drafting a financial plan is crucial step in establishing a strong relationship with a client.

The firm takes a goals-based approach to investing, so the process of putting together a plan helps clients formulate and express their goals.

"Planning is a great tool for helping us all get on the same page in terms of understanding our clients' current resources and how we can best maximize those resources to achieve specific short- and long-term goals," Gordon says.

And ASSETPlanning's Fain says his firm has a six-part financial planning process, with an annual review of each client's plan.

"In our financial planning practice, the financial plan IS the relationship," Fain says.

Rising demand for plans

Financial advisers are also seeing an increase in demand for one-off financial plans by young professionals.

These are prospects who may not have enough assets to become investment clients but who need -- and value -- sound financial guidance.

It is a segment of the market that is large and growing and which a growing number of planners are eager to tap.

Jason Lacey, portfolio manager and financial planner at PJS Investment Management in Cedarburg, Wis., notes the financial plan is the "cornerstone of what we do."

Some of the strongest demand for financial plans comes from rising professionals whose careers are taking off and who are beginning to accumulate assets and start families.

"I believe there is a growing demand for financial plans as individuals are looking to develop or improve their financial position and they typically are in need of someone who is competent and trustworthy to guide them," Lacey says.

Richard "Skip" Fleming, founder of Lodestar Financial Planning in Colorado Springs, focuses his practice entirely around creating financial plans for clients, opting not to manage assets.

While most of his clients near retirement and looking for a second opinion on how prepared or not they are for the next phase in their lives, Fleming has also noticed an increase in demand by younger professionals.

These clients are typically just starting out and are "seeking advice to keep them on the right track toward their long-term goals." Some need help over a longer period implementing their plans, for which Fleming charges a flat fee every month or quarter.

"The financial plan is the center of my relationship with my clients," Fleming says. "They come to me for advice not to be sold a product. I charge for my time only."

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Identity Security Best Practices Part 2: Cyber Identity Protection

Wed, 17 Oct 2018 18:52:14 GMT

Cyber Identity Protection

Wednesday, October 17, 2018

Passwords

Must contain at least 8 characters with both upper & lower-case letters, and a special character. Phrases that contain all of these are best. For example (in italics):

Mydogzeke’sbirthdayismay15
“I am happy to be 28!” could be 1am:)2b28!
“To be or not to be,” could be 2borNot-2b
Anything less than the above can be determined by computer algorithms in minutes to days. You could also use your keyboard as a palette to create a shape that is easy to remember: for example, @wsxdcft^ makes the shape of a W on the keyboard.
Never use personal information (such as street names, pet’s names, DOB, mother’s maiden name, etc.) in your passwords. These can all be found easily via internet searches and social media.
Do not use slang terms, dictionary words, words spelled backward, or common misspellings.
Mix up passwords: never use the same one twice, especially for accounts where money can be transferred.
Never share your password.
Apply the same password rules for your home and business Wi-Fi modem.
Consider a password management program that creates different passwords and stores them encrypted in private accounts (e.g., LastPass , TrueKey , Password Boss ). With these you only need to remember one password. They automatically sync your password data, so you can access them from anywhere. They are also extremely secure, and all your data is locally encrypted on your PC: only you have the power to unlock it.
Automatic Updates for Computers: Make sure automatic updates are set up for all operating, antivirus, and firewall software.
Install Spam Software: Junk mail is inadequate to collect spam. Add a separate software program for this.
Never Click on Links or Open Files or Documents from Unknown Sources: This is how most hackers penetrate and plant malware, which collects key strokes and everything on your screen.
Hover Function: Use the hover function by right clicking over the sender’s email name to confirm the actual email address of sender.
Beware Phishing Scams: Phishers can send emails which look completely legitimate from what appears to be Microsoft, Apple, PayPal, Amazon, etc. which asks to update passwords, software, etc. Hover over the address: if you can’t determine if it is legitimate, a Google search will often turn up whether this is a fraud.
Beware of Error Messages: Hackers can send error messages to computers to get you to click on them. With this information, hackers gather all your passwords and much more.
Beware of Public Wi-Fi: A common hacker technique is to create a fake Wi-Fi network and give it the name of the restaurant or coffee shop that customers frequent.
Activate Two-Factor Authentication for Website Access: This requires not just a password but a second element, such as a code texted to your smart phone: banking, savings, credit card, and other financial accounts offer this option.
Activate Two-Factor Authentication for Email Access: Activate two-factor authentication on your email account for anytime your email is accessed from an unfamiliar computer or phone. This sends you a code by text. Better yet, download an authenticator app such as Google Authenticator or Microsoft Authenticator , which generates these codes without the need for texts, which could be intercepted.
HTTPS vs. HTTP: Make sure the web addresses you are browsing begin with HTTPS not HTTP. HTTPS is the secure version of HTTP.
Never Use Facebook or Google to Login to Another Website: Websites will give you the option to log in with Facebook or Google. If even one of these accounts is compromised, and it links to others, then the hacker has access to several accounts with only one hack.
Mobile Devices: Phishing can happen on mobile devices. Phones can be hijacked, too. Password protect access to your phone, as well as your voice message mailbox, and make it complex.
Email is Insecure by Nature. Never send confidential information in an email. Word and Excel have free tools to password protect documents.
Never Forward Chain Emails: Chain emails are often a hoax and can contain phishing viruses and malware.
Be Prudent with Your Social Media Posts: The information you provide on social media creates data for hackers to figure out passwords. Posting pictures while vacationing also tells criminals that you are not home.
Use the FCC Smartphone Security Checker : Follow security tips for your phone's specific operating system using the customizable interactive tool.

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Identity Security Best Practices Part 1: Credit & General Identity Protection

Wed, 10 Oct 2018 18:57:24 GMT

Cyber Identity Protection

Wednesday, October 10, 2018

Credit & General Identity Protection

Place a Security Freeze: Use these links to elect with Equifax , Experian , and TransUnion . For extra security, you can apply a freeze to a fourth, lesser-known consumer reporting agency, Innovis . This is the nuclear option of credit protection. It gives maximum defense. Depending on the state in which you reside, there may be a fee for placing the freeze. If you opt for a freeze, you will need to temporarily allow a company to check your credit each time you apply for credit, insurance, even open a cellular service account. The process can be done online but may take a few days. Unless you already are an identity theft victim, there may be a fee each time you unfreeze and refreeze your credit. Fees commonly range from $5 to $10, and are state dependent: check your state’s fee here . Banks and financial institutions where you already have accounts, as well as collection agencies and certain government agencies can still check your credit report. If you are applying for one of the better rated monitoring services, such as one of LifeLock, Identity Force, Identity Guard, or ID Watchdog , do it before placing the freeze, or you will have to lift it to complete the application.

Place a Fraud Alert: Contact one of the 3 major credit bureaus; the one you report to will report it to the others. Contact Experian here , or TransUnion by phone: 1 800.680.7289. To be absolutely covered, you need to separately place another alert with Innovis . An alert lasts 90 days and warns prospective lenders that you are a victim of identity theft, and they should take extra steps to verify your identity. If you’re an ID-theft victim (e.g., Equifax), you can get a fraud alert that stays in place for seven years. But you may want to consider the 90-day alert, as it can serve as a reminder to get your free report each time you renew your alert. This way if you want, you can get up to 16 free reports per year in addition to the 4 free reports to which you are entitled.
Get Your Free Credit Report 4 Times a Year: Visit AnnualCreditReport.com or call 1-877-322-8228 - Federal law requires each of the four credit reporting agencies to provide you with a free credit report each year. You can monitor your reports over time, getting one free report every 3 months by spreading out your requests.
Request Free Annual Check Verification Report: Request your free annual consumer report from each of the big three check verification companies, ChexSystems , Certegy , and Telecheck .
Set Limit Warnings on Financial Accounts: set limit warnings on all bank, checking, and credit card accounts. For instance, withdrawals or charges over a certain limit would generate an email or text.
Review Monthly Statements: Review credit card, bank, retirement, brokerage, and other accounts every month. Alternatively, log in and check them even more frequently.
Keep an Eye Out for Missing Mail: Fraudsters look for monthly bank or credit card statements or other mail containing your financial information. Consider enrolling in online statements to reduce the likelihood of paper statements being stolen. Also, don't mail bills from your own mailbox with the flag up.
Review Your Healthcare Explanation of Benefits (EOB) Statements: You should be getting these from your health insurance providers in a month you receive service. Look for treatments you never received, and immediately report any suspicious entries.
If You Are Subject to Identity Theft: Visit IdentityTheft.gov
If you believe you have been the victim of identity theft, or if your personal information has been lost or exposed. IdentityTheft.gov is the government’s free, one-stop resource for reporting and recovering from identity theft, and offers free personal recover plans, which:
Walk you through each recovery step.
Generate pre-filled letters, affidavits, and forms for you to send to credit bureaus, businesses, debt collectors, and the IRS.
Provide you with follow-up reminders, and help you track your progress.
Provide advice about what to do if you’re affected by specific data breaches.
IdentityTheft.gov has recovery plans for more than 30 types of identity theft, including tax-related identity theft and identity theft involving a child’s information.

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Capital Advisors, Ltd. Names Nathan Creviston to Join Its Team as Wealth Management Analyst

Wed, 29 Aug 2018 19:09:26 GMT

Capital Advisors, Ltd. Names Nathan Creviston to Join its Team as Wealth Management Analyst
Wednesday, August 29, 2018

August 13, 2018 – Shaker Heights, OH – Capital Advisors, Ltd., a prominent wealth management firm, announced the addition of Nathan Creviston, CFP®, ChFC®, RICP® to its team as Wealth Management Analyst. In his new role, Creviston will focus on comprehensive client case management and communication, analyzing, monitoring, and making portfolio recommendations, providing financial planning analysis and support, as well as serve as a member of the Investment Policy Committee.

Creviston comes to Capital Advisors from Weeks Financial in Cincinnati where he worked as an Associate Wealth Management Advisor, collaborating internally and externally with clients to cohesively construct and deliver their financial plans.

“Whenever we look to hire a new member of our team, our number one priority is a good fit with our culture,” said Managing Director Neil Waxman. “Right from the start, it was clear that Nate not only has the depth, expertise, and required personal proficiency, but that he is deeply committed to continuing to hone these skills. He is extremely knowledgeable in the many facets of wealth management, with a strong ability to analyze and make sense of trends, but also truly collaborates and listens to client needs and concerns. We have no doubt Nate will help to advance our mission of comprehensive, objective, solutions-oriented wealth management and financial planning.”

“In deciding to make this move, I looked at a number of firms,” said Nathan Creviston, “but my primary deciding factor was to find a company that is truly interested in understanding the unique needs of each client and investing their wealth to align with their goals. I’m excited to be joining a team that is committed to developing and implementing comprehensive wealth management strategies to meet clients’ needs. With Capital Advisors, I feel confident that I have found a home in a company that shares my values of forward-thinking planning and serves the interests of individual clients.”

For more information visit: http://www.capitaladvisorsltd.com

About Capital Advisors Ltd.

Since 1991 Capital Advisors, Ltd. has been dedicated to the Financial Planning Process: helping successful, business owners and individuals achieve perspective, vision and discipline while reaching consensus amongst their other advisors. The result is a fully integrated and comprehensive look at a client’s financial affairs, well-defined objectives, and mutually agreed upon plans increasing the probability of successful outcomes. Capital Advisors’ proprietary, customized financial pro forma, CFM Horizon™ - Financial Road Map gives clients a top down view of their financial affairs. Capital Advisors, Ltd. falls into the industry classification of Elite Ensemble Practice, and its firm members have over 230 years of cumulative experience. For more information, visit http://www.capitaladvisorsltd.com .

Advisory Services offered through Capital Advisors, Ltd., LLC, Capital Analysts, or Lincoln Investment, Registered Investment Advisors. Securities offered through Lincoln Investment, Broker Dealer, Member FINRA / SIPC. Capital Advisors, Ltd., LLC and the above named firms are independent and non-affiliated.

Media Contact:
Nikki DiFilippo
Via Vera Group
(216) 780-0472
nikki@viaveragroup.com

https://www.businesswire.com/news/home/20180813005031/en/Capital-Advisors-Ltd.-Names-Nathan-Creviston-Join

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Neil Waxman Shares Insights on Building Trust With Hnw Clients in Financial Planning Magazine

Thu, 21 Jun 2018 19:15:02 GMT

How to build trust with skeptical HNW clients
Thursday, June 21, 2018

One of the few perks of modest resources: You can be pretty sure that your friends like you for yourself. They might also appreciate your cooking or your willingness to lend your truck, but they aren’t hanging out with you to heighten their social status or to tap into your professional network.

That’s not always the case when you have significant assets. Very wealthy people have to worry about gold diggers, swindlers and other insincere types who are after their money above all else. As a result, they can be suspicious and slow to trust even ethical financial advisors who specialize in meeting their needs.

Fortunately, there are ways that those specialists can work to gain the trust of wealthy clients and potential clients. That task takes on particular importance in the light of a CFA Institute survey that found that a majority of investors at all financial levels believe that their advisors fail to fully disclose their fee structure and conflicts of interest. Eighty-four percent of respondents said that these disclosures are a key factor in developing trust with a financial advisor. Just 35% of retail investors said that they believe their advisor puts clients’ interests ahead of their own.

Don’t be surprised if the wealthy aren’t completely open with you right away, says Elizabeth Miller, president and founder of Summit Place Financial in Summit, New Jersey. “It’s not unusual for these clients to start off suspicious and guarded,” she says. “They worry that a financial professional is going to take advantage of them, or that the advisor doesn’t know as much as the advisor says she does.”

Once she does gain a client’s trust, however, Miller says that she often hears an outpouring of information. “I think many successful people feel very isolated. Americans are also very reluctant to talk about money, plus there’s a general idea that, if you are that wealthy, you have no problems.”

But these clients do have real problems, Miller continues. “More success means more complexity, so that drives a desire to talk with someone about them. Every one of our clients has real concerns around family issues, how to best pass on success, how to make the money last. They need to know that their concerns are valid, and they deserve the respect of real solutions and real answers.” When they get those things, she says, the conversational floodgates open.

The importance of referrals: Mary Carter, principal of Mary Carter Financial Services in Jacksonville Beach, Florida, frequently works with very wealthy people and says that she rarely has trouble establishing a trusting rapport with a new client. Her secret? “I’m always referred to that person by someone they trust,” she says.

Sometimes the referrals come from current clients, but Carter also knows a stable of attorneys and accountants who sometimes refer clients to her, as well. “I trust them and they trust me, and the trust they’ve built up with clients spills over to me,” she says.

When someone in her circle abuses that trust, Carter ends the relationship. “I had another attorney turn rogue and start to name herself as a trustee on client documents,” she says. Carter explained the problem to every affected client, who then changed attorneys. “Everyone I work with, I trust and respect. That’s what I have to offer,” Carter says. “That attorney is dead to me.”

Connect on a human level: The rich are different from you and me, as writer F. Scott Fitzgerald famously said. But there are still many shared aims. “Let’s connect around what we have in common. If you’re a Cubs fan, we have a lot to talk about,” says Michael Resnick, senior wealth management advisor at GCG Financial in Deerfield, Illinois. “Politics, climate change, literature, music. The money doesn’t matter. You might agree completely about something or enjoy debating. Sometimes it’s something as mundane as the weather.”

Resnick remembers making a connection with a client after a colleague found her standoffish. A recent widow, the woman felt nervous that someone might take financial advantage of her. Resnick asked her about herself and her late husband, and she volunteered stories about her children and grandchildren as well, as she grew increasingly at ease. “My job was just to listen and get to know her,” Resnick says. “My colleague said that when I first walked in, the client looked suspicious. But within five minutes, there was a comfort between us.”

Demonstrate that you’re familiar with the challenges of wealth: Miller doesn’t talk about the nuts and bolts of building a portfolio during her first meeting with a potential client, and she spends about two-thirds of the appointment listening. But she does tell stories about existing clients who have similar situations and family challenges, and how Miller resolved those issues for her clients. “The solution for one client isn’t necessarily the solution for another, but we hope that they see themselves in the stories we tell,” she says.

Neil Waxman, managing director of Capital Advisors Ltd. in Shaker Heights, Ohio, also finds ways to show clients that he understands how to meet the challenges of substantial wealth.

He recalls a client who had recently sold a business and was interviewing potential wealth managers. “I’d researched where he was engaged philanthropically and on boards, plus I knew what I had gathered from the investment banker, and I could see that this was our kind of client,” he says. “Then we talked about what he’d done and hoped to do next, and about his objectives beyond financial security. This was the biggest and last paycheck he ever got.”

At that point, Waxman showed the client his firm’s proprietary model for assessing their wealthy clients’ risk, asset allocation, charitable giving, estate planning and other concerns. “That was the road map that he needed,” Waxman says. “They want to know that you have experience with their kind of circumstances.” The client signed up with Capital Advisors soon thereafter.

Longer-term trust takes time, of course. But good referrals, good listening and demonstrations that wealthy clients’ problems are familiar ones can get you on your way.

How to build trust with skeptical HNW clients, By Ingrid Case, Published June 14 2018, 2:37pm EDT

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Zach Abrams Writes Guest Influencer Blog for Guggenheim Commercial Real Estate Group

Wed, 21 Mar 2018 19:21:29 GMT

Wednesday, March 21, 2018

The private sector real estate business has inherent complexities unique to other privately-held businesses. Associated with this distinctiveness are problems and opportunities, which magnify as the business develops and grows.

The more the business grows, the more critical it is to pay close attention to the owner’s personal financial affairs. Unfortunately, though understandably, the business is what generally gets all the professional attention, when in fact the owner’s financial affairs have become a business of its own. As this happens, the integration of business and personal financial affairs becomes critical to averting problems and maximizing opportunities. Below are some thoughts on how to gain the understanding of your personal financial affairs necessary accomplish this:

Consolidate Affairs: By their nature, private sector real estate business owners have a variety of complex entity structures with a multitude of investors. Most can describe the provisions of these entities, few understand all the implications, and almost none have the required grasp on how each individual entity interacts as a business, which impacts both their personal financial and estate plan. To get a more complete picture, start by creating wiring diagrams to detail each real estate entity: location of property, legal/voting rights of control, partners and % ownership, buy-sell provisions, whether their ownership interests are held in trust, among other provisions critical to understand how everything comes together for the business owner, spouse and heirs. Creating a sound financial plan and predictable and estate plan is impossible in the absence of this perspective.
Pro-Forma Analysis for the Non-Professional: While private sector real estate business owners have detailed financial models for their investments, those who are strictly investors are oftentimes left analyzing a detailed and at times confusing pro-forma. Working with an advisor to deconstruct the deal assumptions (normalizing optimistic assumptions if necessary) and review the entity ownership agreement (e.g. capital calls or personal liability) can assist the investor in discovering the risks of various deals and subsequently assess the viability of an investment.
Replacement Income: When it comes time to sell a property that will not be or only partially 1031 exchanged, the question becomes how the income from that property will be replaced. It’s often not easy to replicate in the initial years; however, investing in high quality companies that grow their dividend can provide a growing revenue stream and capital appreciation over a long enough time horizon, which could come close to mimicking the yield of the real estate. Complimenting those quality dividend growth stocks with fixed income, MLPs, high yield equites, and the like can help provide higher initial yield as well as portfolio diversification*.
Personal Financial Statement: Taking into consideration the above and all other financial details, a personal financial statement consisting of a balance sheet and cash flow can be put together. This top down look at your financial affairs and the moving pieces should form the basis of your investment decisions – both in real estate and elsewhere. This analysis can provide perspective on (but not limited to): real estate concentration and subsequent asset diversification*, implications of buying or divesting of a property, retirement, personal liability, investment portfolio risk, guidance on other large purchases, and long-term financial goals and objectives.

Please click this link to see the full blog post.

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CNBC Talks With Neil Waxman on What to Ask References

Fri, 23 Feb 2018 20:29:37 GMT

Referred to a Financial Advisor? Here's What You Should Ask

Deborah Nason | @dnason
February 15, 2018

Friends and family may refer you to an advisor they like, even though they have no data on his or her qualifications or other references.
Questions to ask include whether the advisor is a fiduciary, how they get paid and whether they're willing to work as part of a broader team that includes attorneys and accountants.
Some advisors point out it's wiser to Google them than to ask for a set of presumably stacked references.

Investors looking to evaluate potential financial advisors can avail themselves of many lists of sample questions, such as those suggested by the Financial Industry Regulatory Authority , for interviewing practitioners. But just how to interview references, as is frequently suggested, is less clear. What kinds of questions should a reference expect?

"Getting a reference from a friend or peer is a great place to start," said Scott A. Bishop, certified financial planner and partner with STA Wealth Management. "But many [references] have a great 'feel' about the person, but not the qualifications or references."

Bishop said the first thing you should check is their credentials. "Find out whether [the advisor is] in sales, via a broker dealer/insurance company, or will they act like a fiduciary, such as many affiliated with RIAs will be," he said. (RIA is an acronym for registered investment advisor.)

He also suggested asking references about the services they have received in the past, such as investment management, retirement planning, estate planning, tax planning, etc.

For his part, Bruce Colin, CFP and owner of Bruce Colin & Co., offers these questions for references:

Has the advisor been very clear about explaining how he or she gets paid? Can the advisor's client explain it accurately to the prospective client?
Does your advisor have discretionary authority, which allows him or her to invest, transfer or otherwise act on your money without prior consent? Or does the advisor seek your approval and understanding before initiating each and every transaction?
Is your advisor willing to work with or be a part of a team of other professionals, including attorneys, accountants, etc.?

It's important to be provided with references whose circumstances and needs are similar to the prospective client, said Neil R. Waxman, CFP and managing director with Capital Advisors. In addition, the references must feel very well served and should delineate why they are satisfied.

"By providing guidance to clients, you save them from saying they don't know how they're charged."-Mark S. Germain, founder and CEO of Beacon Wealth Management

Some of Waxman's suggested questions for references include:

How long have you been a client?
Are the services of interest to the prospective client being delivered to the reference's expectations?
Who is on your advisory team, how are services delivered, and how would you rate responsiveness?
How would you rate the level of communication? Do you feel you are adequately educated so you can make informed decisions?
Is there anything you would change or wish you could improve in your advisory relationship?

Sallie Mullins Thompson, CPA, offered some additional questions, such as asking whether a complete data-gathering process was conducted; whether a holistic, goal-oriented plan has been implemented to meet client objectives; if there's a monitoring mechanism in place; whether the tax impact of the plan has been evaluated and explained; and whether there is regular follow-up to meetings and reports.

Points of references

"Giving referrals is the heart-blood of the adviser business, and it is often the referral from a person you did not expect who becomes a top client," said Mark S. Germain, CFP, founder and CEO of Beacon Wealth Management.

To proactively increase the effectiveness of potential references, he periodically sends current clients a series of questions and answers reminding them of what his advisors do and how they get paid. Examples include:

"[Name of firm] is a fee-only advisor, and we do not receive commissions on any purchase or sale of securities into your accounts."
"Our advice is continuous as we make changes to client portfolios when we feel the market indicates a change is needed."
"Fees include an annual planning fee and a fee for assets that we supervise. This approach allows us to have a team that is always available to answer your financial questions and address the decision points."

"By providing guidance to clients, you save them from saying they don't know how they're charged," Germain said. "Or, when contacted, they have a clear answer."

Not all advisors see great value in providing references, however. "That is a dumb thing to do," said Jon Ten Haagen, CFP, founder and principal of Ten Haagen Financial Group. "As a broker-advisor, who am I going to suggest they call? A client who loves me or someone who may barely know my name? "Of course, I'm going to stack the deck."

Ten Haagen added that "it would be better to Google me and review my website, especially because by law — SEC, Finra, etc. — it needs to be truthful."

He suggests potential clients look at Facebook, Twitter and LinkedIn to see what he's posting and what others post about him.

"This is a truer test, because it is everyday people who know me or have come across me, speaking their minds," Ten Haagen said. "However, be wary of the people who 'like' me, as some people will 'like' people they don't even know."

— By Deborah Nason, special to CNBC.com
Referred to a Financial Advisor? Here's What You Should Ask February 15, 2018

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Neil Waxman Discusses Bitcoin Insight and Risks in Barron's

Thu, 31 Aug 2017 19:37:32 GMT

Advisors Eye Bitcoin With Curiosity, Caution

Thursday, August 31, 2017

While some advisors are keeping a close eye on the evolution of bitcoin and other virtual currencies, they’re still hesitant to recommend them to clients, reports Financial Advisor IQ .

These cryptocurrencies are being traded without government backing or support of any hard assets,” Neil Waxman, managing director of Capital Advisors, tells the publication. “And it’s important to realize that Bitcoin is almost seven times more volatile than gold – you can easily lose 50 percent of your money at any time.”

At the same time, Waxman says issuance is accelerating and major clearinghouses are advancing the blockchain technologies that underpin digital currencies, according to Financial Advisor IQ.

None of our clients are seriously considering trading in Bitcoin right now,” he is quoted saying. “But a blockchain technologies improve and more stakeholders validate thee types of digital networks, cryptocurrencies may find a place in strategic investment portfolios over time.”

The price of bitcoin recently surged to more than $4,000, generating lots of headlines and interest in the digital currency.

Massachusett-based advisor George Gagliardi tells the publication that in half a decade virtual currencies will be mainstream investments, but he cautions they’re still in a relatively early stage of development. He notes that hackers recently broke into cell phones to steal virtual wallets.

“I tell my clients that although the potential is great, bitcoin is like trying to pick an internet winner in 1996 – this market is purely speculative at this point,” he is quoted saying.

Advisors Eye Bitcoin With Curiosity, Caution, Aug. 29, 2017 4:42 p.m.

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Capital Advisors, Ltd. Named to 2017 Financial Times 300 Top Registered Investment Advisers

Thu, 29 Jun 2017 19:43:38 GMT

Capital Advisors, Ltd. Named to 2017 Financial Times 300 Top Registered Investment Advisers

Carmen Reinicke
Thursday, June 29, 2017

June 22, 2017 – Capital Advisors, Ltd. is pleased to announce it has been named to the 2017 edition of the Financial Times 300 Top Registered Investment Advisers. The list recognizes top independent RIA firms from across the U.S. Neil Waxman and Mark Ciulla are Managing Directors of Capital Advisers.

This is the fourth annual FT 300 list, produced independently by the Financial Times in collaboration with Ignites Research, a subsidiary of the FT that provides business intelligence on the investment management industry.

RIA firms applied for consideration, having met a minimum set of criteria. Applicants were then graded on six factors: assets under management (AUM); AUM growth rate; years in existence; advanced industry credentials of the firm’s advisers; online accessibility; and compliance records. There are no fees or other considerations required of RIAs that apply for the FT 300.

The final FT 300 represents an impressive cohort of elite RIA firms, as the “average” practice in this year’s list has been in existence for 24 years and manages $2.7 billion in assets. The FT 300 Top RIAs hail from 37 states and Washington, D.C.

https://www.ft.com/content/1ad3a626-2c30-11e7-bc4b-5528796fe35c

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Neil Waxman Shares Business Benchmarking Tips With Investor's Business Daily

Thu, 27 Apr 2017 19:52:13 GMT

Benchmark Your Business By Paying Attention To The Right Numbers
Thursday, April 27, 2017

When advisors exceed their goals, they may feel on top of the world. But are they outperforming their peers?

By measuring various aspects of their business — and comparing the results with other advisors' similar types of practices — wealth managers who run their own firms can gauge the effectiveness of their operation. Benchmarking can also expose areas that need improvement.

The challenge for advisors is determining which metrics matter most. While it's tempting to check obvious numbers such as assets under management, they can also track dozens of potentially revealing indicators related to expenses, sales and client service.

"We've been doing benchmarking for years," said Neil Waxman, a certified financial planner in Shaker Heights, Ohio. "It's important to have good comparative metrics."

Since 2000, Waxman and his business partner have participated in benchmarking studies. Their involvement began when they hired consultants from Moss Adams, a Seattle-based research firm, to help them strengthen their strategic planning process.

One of those consultants, Mark Tibergien, introduced a concept that he called the 40/35/25 rule: direct expenses should be no more than 40% of revenue, overhead expenses should be no higher than 35%, and operating profit should be no less than 25%.

Waxman took it to heart.

"The rule has been very helpful to us over the years," he said. "Overhead expenses, in particular, can get away from you. There are years when you have huge technology expenses."

The Right Ratio
With a team of 12, Waxman monitors staffing ratios such as the number of active clients vs. the number of in-house advisors and other professionals. He says that his firm, Capital Advisors, is currently at 29-to-1, while a 2016 industry study showed that firms in the top quartile of performance had a 66-1 ratio.

Tracking that measure helps him answer two key questions: "Are we prepared to provide excellent service to our clients?" and "Are we streamlining our operations enough to make sure we're as efficient as we can be?"

In addition, Waxman scrutinizes a series of financial and business development benchmarks to assess the ongoing health of his practice. Examples of financial metrics include gross profit margin and operating profit margin. To evaluate business development, he looks at indicators such as his firm's prospect-to-client conversion ratio.

Enthusiasts can get carried away with benchmarking wide-ranging aspects of their business. But Waxman puts the numbers in perspective, checking them on a quarterly basis.

"I don't think about them every day," he said. "And I don't want our team to think about them every day. I never want our staff to think, 'Am I spending too much time on a client?' We're very client-centric" and getting too caught up in the numbers can interfere with service delivery.

Many research firms provide benchmarking data for advisors. InvestmentNews released its latest financial performance study in September 2016. And many large financial services companies offer proprietary benchmarking tools that firms can use to compare their results with their peers'.

Learn From Standouts
TD Ameritrade (AMTD), for example, is unveiling Veo One Analytics to help advisors focus on key performance indicators. The Omaha, Neb.-based company is rolling out the platform, what it calls "an on-demand digital dashboard," later this year.
The new benchmarking tool will enable advisors to track four critical areas: revenue growth, revenue per revenue-generating role, overhead expense margin and operating profit margin.

"We narrowed it down to the four most telling data inputs," said Vanessa Oligino, director of business performance solutions at TD Ameritrade Institutional.

At its best, benchmarking involves both internal and external analysis. She says that advisors can examine how they compare with other practitioners "in the outside world" as well as look within and gauge their historical performance based on their internal numbers.

The next step is to learn from the data and take action. This usually centers on the simple question, "Why?"
Oligino cites the example of an advisory firm that analyzes its revenue per revenue-generating role and concludes that its ratio falls below the industry norm. To explain why it's underperforming, it spotlights advisors' daily activities.

"It could be you have advisors who are less business development oriented and more service oriented," Oligino said. By training them to do more business development and devoting, say, 20% of their day to networking and other outreach, they can lift their results.

To maximize the value of benchmarking, make apples-to-apples comparisons. Measuring yourself against an overly broad range of competitors can prove an exercise in futility.

"Many advisors will compare themselves against the overall industry average," Oligino said. "We suggest focusing on your peer group. Compare against your true peers, look at the top quartile of those peers, and learn from those standouts."

Benchmark Your Business By Paying Attention To The Right Numbers, Morey Stettner, 4/21/2017

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Neil Waxman Shares Tips With the Fiscal Times on Best and Worst Ways to Use Your Tax Refund

Thu, 16 Mar 2017 20:01:33 GMT

The Best Ways to Use Your Tax Refund – and the Worst
Thursday, March 16, 2017

If you had an extra three thousand bucks in your pocket, how would you use it? It’s an important question for the three-quarters of Americans who are expecting a tax refund from Uncle Sam this year. Last year, the average tax refund was $2,800, according to TurboTax, a nice chunk of change. But that windfall can quickly disappear if you don’t have plans for it.

“If you keep in mind that your tax refund is your own earned money, and not a lottery gain, then this should help you want to get ahead, ease your financial difficulties, build a safety net, (or) get you closer to your retirement goals,” says Alina Parizianu, a certified financial planner at ACap Asset Management.

Here are six ways you should spend your tax refund to improve your financial security.

Pay down credit card debt . Interest rates on credit cards typically are variable, and right now they are on the rise, increasing your monthly payments, says Bob Gucer, a certified financial planner with Benedetti Gucer & Associates. So it makes sense to shrink these debts as quickly as possible. Put money toward the balances with the highest rates first and work your way down, he says.
Save for an emergency. Consider building your cash reserve or emergency fund. “I'd recommend three months of expenses readily available for dual-income earning families and six months for single-income earning families or single individuals,” says Gucer.
Invest in your retirement. Contribute your refund to your IRA or Roth IRA, but be mindful of annual limits ($5,500 or $6,500 for those 50 and over). Or, increase the amount withheld from each paycheck for 401(k) contributions and use the tax refund to make up for the shortfall, says Neil Waxman of Capital Advisors. Unfortunately, you can’t make lump-sum contributions to 401(k)s.
Invest in your home. There are a few ways to turn that tax refund into home equity. Consider what home improvements you may need and can save you money in the future like a new hot water heater, new windows or extra insulation, says Waxman. Or, consider a home renovation that increases the value of your home (for a list of the top 10 home improvement projects for your money, click here.) Finally, consider paying down your mortgage. Paying one extra mortgage payment a year can shave off years of interest payments on your home.
Invest in your kids. Put the tax refund into a 529 plan for your children’s future college costs.
Save with a purpose. Are you saving for a down-payment on a house or car? Or could this money help pay for that wedding next year? It’s fine if you eventually plan to spend your tax refund, but it’s better if the money is earmarked for a specific goal, rather than spending without thinking.

And that brings us to what you should avoid doing with that tax refund burning a hole in your wallet. “The first thing I've seen clients do with a tax refund is not having anything to show for it,” says Marguerita Cheng, CEO of Blue Ocean Wealth. “You don't want to blow it on something frivolous or just let it fritter away and evaporate in your checking account.”

Refrain from a shopping spree with your windfall, says Ellen R. Siegel, a certified financial planner in Miami. “At the very least, take 10 percent of it for being frivolous or indulgent, and put the rest to work wisely,” she says.

Avoid gambling or drinking your tax refund away, says Parizianu, while Waxman says “don’t make loans” with it. Last, if you’re already struggling with debt, don’t use the refund for a down-payment on something that creates even more debt, creating a downward spiral.

By Janna Harron, March 13, 2017

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Neil Waxman Explains to Investmentnews What Keeps Capital Advisors, Ltd. A Leader in the Wealth Management Industry

Wed, 18 Jan 2017 21:11:16 GMT

How to navigate volatile markets during retirement
Wednesday, January 18, 2017

What are the industry top financial advisory firm doing differently to stand out? Neil Waxman of Capital Advisors explains what keeps his firm a step ahead. Watch the Video.

Capital Advisors, Ltd. has been awarded InvestmentNews’ prestigious “Best Practices Award,” which recognizes the top-performing, most innovative firms in the financial advice industry. To identify the 2016 Best Practice Award winners, InvestmentNews Research created composite scores that examined the rate of growth, profitability, and productivity levels for the four hundred and one Registered Investment Advisory firms (RIA’s) who participated in the 2016 InvestmentNews Financial Performance Study. The firms classified as having “Best Practices” were those who ranked among the top-quartile of all participants; however, a number were selected for extensive qualitative interviews conducted by the InvestmentNews Best Practices Committee, in order to select the 12 winners, who were recognized at The Best Practices Award and Workshop at the New York Athletic Club in New York City.

“The firms that have seen the most growth are those that have been the most strategically managed,” said Mark Bruno, Associate Publisher of InvestmentNews. “Capital Advisors is one of those firms, and its leaders executed on their strategic plans more effectively than most firms in the industry. They are an excellent example of how – and why – professionally run wealth management firms are out-performing and well-positioned for long-term success.”

Capital Advisors is the only firm in Ohio to have received this award.

October 20, 2016
http://www.investmentnews.com/article/20161018/FREE/161019934/press-release-investmentnews-names-the-financial-advice-industrys

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Zach Abrams Talks About Client Risk Tolerance With CNBC

Tue, 03 Jan 2017 21:15:45 GMT

Do advisor clients really understand their risk tolerance?

Tuesday, January 3, 2017

"Risk tolerance is an incredibly difficult thing to define, articulate and then understand for any individual," said Kevin M. Reardon, certified financial planner and president of Shakespeare Wealth Management. "Trying to sync a client's understanding with an advisor's understanding is even more difficult."

Reardon's company requires every client to complete an educational workshop that defines risk and how the firm manages it. Clients must also fill out a new risk-tolerance questionnaire every three years.

"I wish an auditor and an arbitrator could watch clients struggle through the five questions on the questionnaire," Reardon said. "These are longstanding clients who I thought had a good understanding of the capital markets, our investment philosophy and our portfolio management process."

There is no silver bullet in helping clients understand risk, he said, although walking clients through "what if" scenarios of a market decline helps.

Reardon suggests asking clients questions such as: What if your $1 million account drops to $750,000? Can you handle it? Will you be calling us? Do you understand we won't sell equities at that point in time but will actually buy more? Do you? Please sign here so I can remind you when it happens.

The bottom line, he said, is that when the markets drop significantly, there will always be clients who are surprised by downside volatility and motivated by fear.

"Risk tolerance in the context of a questionnaire is very different than risk tolerance when one's money is actually on the line," said Robert Wander, certified financial planner and owner of Wander Financial Services. "It is often a rear-view mirror indicator [because] when markets are rising and less volatile, risk tolerance rises and vice versa when conditions change."

Wander said it is the advisor's job to ultimately choose an approach that he or she feels is right for the client, even if this does not fully correspond with the client's stated risk tolerance.

"It can be a tricky balancing act to choose what one feels is in a client's best interest but not diverge too much from their comfort level, which can lead to emotional and counter-productive responses on their part," Wander said.

Some question the value of assessments altogether. "I think risk-tolerance assessments are useless," said CFP Dana Anspach, CEO of Sensible Money. "Nobody really knows how to answer. Most of them are a legal requirement, designed to protect the company, not the consumer."

Anspach said there are three aspects of risk tolerance:

Emotional capacity: How will you react if your portfolio is down 30 percent in a year?
Financial capacity: What rate of return do you need to earn to make your financial plan and retirement years work?
Probabilities: How likely is it that you will achieve that return based on your time frame and how you invest?

Most risk-tolerance assessments only measure the first aspect, and they don't do it well, she said.

"Portfolios are best built on items 2 and 3," Anspach said. "If you have a 20-year time frame, what your portfolio does this year is irrelevant.

"If you are retiring next year, it is quite relevant," she said.

Anspach believes it is more important to educate clients than assess them. She takes her clients through a series of presentations on historical rates of return and volatility, showing a range of possible outcomes if clients followed their same strategies during different eras of time.

For his part, Zach Abrams, CFP and manager of wealth management and portfolio analysis for Capital Advisors, believes risk assessments are flawed.

"Clients don't understand what standard deviation and volatility mean," Abrams said. "There will be times they will be outside of what they might expect the downside to be."

He believes that showing clients standard deviations of volatility only tells part of the story because market returns are not normally distributed. Furthermore, many portfolio risk/return profiles only go back to the late 1970s — a small sample size that does not include 1929.

"Given how positively skewed the market returns have been — the greatest stock and bond market runs since the '80s — the models will probably overstate returns and understate volatility," Abrams said.

Because people don't know how they'll react in a down market, they should be asked about their risk tolerance after they have a complete understanding of their personal financial situation.

"They need to have a combined understanding of standard deviation and historical maximum loss," Abrams said. "We need to make sure they won't sell at the bottom."

By Deborah Nason, special to CNBC.com on Monday, 12 Dec 2016

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Capital Advisors, Ltd. Awarded 2016 Best Practices Award by Investmentnews

Mon, 05 Dec 2016 21:19:40 GMT

Monday, December 5, 2016

Fourth annual awards program recognizes firms for excellence in practice management, financial performance, & innovation

Cleveland, OH – November 10, 2016 – InvestmentNews named Capital Advisors, Ltd. as 1 of 12 winners of the 2016 Best Practices Awards, an important initiative that recognizes the top-performing and most innovative firms in the financial advice industry. The 12 winners of the InvestmentNews Best Practices Awards were identified through their participation in the 2016 Financial Performance Study of Advisory Firms, and recognized at The Best Practices Award and Workshop at the New York Athletic Club in New York City, on October 18th.

“The firms that have seen the most growth are those that have been the most strategically managed,” said Mark Bruno, Associate Publisher of InvestmentNews. “Capital Advisors is one of those firms, and its leaders executed on their strategic plans more effectively than most firms in the industry. They are an excellent example of how – and why – professionally run wealth management firms are out-performing and well-positioned for long-term success.”

“We are honored to be considered amongst some of the finest wealth management firms in the country,” said Neil Waxman, Managing Director, Capital Advisors, Ltd. “To my mind, recognition of best practice is some of the highest praise we can attain, because it confirms what our team works so diligently to achieve: commitment to excellence, prudence, and consistency in bringing to bear a superior level of service to our clients.”

To identify the 2016 Best Practices Award winners, InvestmentNews Research created composite scores that examined the rate of growth, profitability and productivity levels for all the participants in the 2016 InvestmentNews Financial Performance Study. The firms classified as having “Best Practices” were those who ranked among the top-quartile of all participants; however, a number were selected for extensive qualitative interviews conducted by the InvestmentNews Best Practices Committee, in order to select the 12 winners.

This is the fourth consecutive year that InvestmentNews has recognized the industry’s top-performing firms as part of the Best Practices program. All of the firms honored have participated in InvestmentNews’ primary benchmarking studies: The Advisers Compensation & Staffing Study, The Financial Performance Study of Advisory Firms and The Adviser Technology Study.

About Capital Advisors Ltd.
Since 1991 Capital Advisors, Ltd. has been dedicated to the Financial Planning Process: helping successful, business owners and individuals achieve perspective, vision and discipline while reaching consensus amongst their other advisors. The result is a fully integrated and comprehensive look at a client’s financial affairs, well-defined objectives, and mutually agreed upon plans increasing the probability of successful outcomes. Capital Advisors’ proprietary, customized financial pro forma, CFM Horizon™ - Financial Road Map gives clients a top down view of their financial affairs. Capital Advisors, Ltd. falls into the industry classification of Elite Ensemble Practice, and its firm members have over 230 years of cumulative experience. For more information, visit http://www.capitaladvisorsltd.com .

InvestmentNews, a publication of Crain’s Communications 2016 Financial Performance Study, performed in April – June 2016, included 222 independent advisory firms who supplied financial statements, in addition to providing staffing, growth, & strategy, business development & marketing, services, & fees, and equity management data on their practices. These firms did not pay a fee to be considered for the Best Practices Award.

http://www.investmentnews.com/article/20161018/FREE/161019934/press-release-investmentnews-names-the-financial-advice-industrys

The award is not indicative of the wealth manager’s future performance.

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Zach Abrams Discusses, in U.S. News and World Report, How to Be Prepared for a Layoff.

Mon, 28 Nov 2016 21:33:33 GMT

Prepare Your Finances for a Layoff Suspect that you might lose your job?
Monday, November 28, 2016

Here's how to prep your finances for life without a p aycheck.

By Susannah Snider | Staff Writer Oct. 12, 2016, at 9:43 a.m.

Trouble is a-brewing at your company, and there are signs that your job might be slashed. Maybe there have been layoffs already. Maybe you sense your boss isn't pleased with your performance. Whatever it is, you've got to start hunkering down and prepare for several months – or more – without a paycheck. "You want to triage this thing and not put yourself in too bad of a position," says Ed Vargo, certified financial planner, founder and private wealth manager at Burning River Advisory Group in Cleveland.

Here's how to prepare your finances for a potential layoff. Slash spending. Don't wait until you're handed a pink slip to start cutting back on spending. "If you see the writing on the wall, then that’s when you should immediately act like it’s happened," says Melissa Sotudeh, a wealth advisor at Halpern Financial in Rockville, Maryland.

Examine your budget for categories where you can cut back. You might choose to tamp down on restaurant meals and future vacations. You may be able to extend your auto loan to lower your monthly payments. You might renegotiate your cable – or better yet – cut it entirely.

Once you've cut your spending, funnel the extra cash into a savings account. The key is to keep it liquid, so that you can live off of it when your paycheck ceases, experts say. "If you can reduce those guaranteed fixed expenses, it can make your life so much more manageable," Vargo says.

Reduce savings. It may make sense to scale back on contributions to certain long-term savings accounts in order to carve out room in your tightening budget. "If you don't have an emergency fund, it's a good idea to halt contributions to your 401(k)," says Zach Abrams, a certified financial planner and manager of wealth management at Capital Advisors Ltd., in Shaker Heights, Ohio.

Read the full article ⤏

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Press Release: Investmentnews Names the Financial Advice Industry's 2016 “Best Practices”

Fri, 11 Nov 2016 21:39:22 GMT

Fourth annual awards program recognizes firms for excellence in practice management, financial performance
Friday, November 11, 2016

New York, N.Y. – InvestmentNews today named the winners of the 2016 Best Practices Awards, an important initiative that recognizes the top-performing and most innovative firms in the financial advice industry.

The 12 winners of the InvestmentNews Best Practices Awards were identified through their participation in the 2016 Financial Performance Study of Advisory Firms, and recognized today at The Best Practices Award and Workshop, hosted at the New York Athletic Club.

Read more ⤏

InvestmentNews, 2016 Best Practices Award - InvestmentNews, a publication of Crain’s Communications 2016 Financial Performance Study, performed in April – June 2016, included 222 independent advisory firms who supplied financial statements, in addition to providing staffing, growth, & strategy, business development & marketing, services, & fees, and equity management data on their practices. These firms did not pay a fee to be considered for the Best Practices Award. InvestmentNews named Capital Advisors, Ltd. as 1 of 12 winners of the 2016 Best Practices Awards. The 12 winners of the InvestmentNews Best Practices Awards were identified through their participation in the 2016 Financial Performance Study of Advisory Firms. To identify the 2016 Best Practices Award winners, InvestmentNews Research created composite scores that examined the rate of growth, profitability and productivity levels for all the participants in the 2016 InvestmentNews Financial Performance Study. The firms classified as having “Best Practices” were those who ranked among the top-quartile of all participants; however, a number were selected for extensive qualitative interviews conducted by the InvestmentNews Best Practices Committee, in order to select the 12 winners. The award is not indicative of the wealth manager’s future performance and working with the wealth manager does not guarantee future investment success.

Please Note: Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Capital Advisors is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of Capital Advisors by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers.

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Investment News Asks Neil Waxman's Opinion on Sec Advisory Committee’s Recommendation That Advisory Clients Automatically Be Considered Accredited Investors.

Tue, 19 Jul 2016 20:43:04 GMT

Tuesday, July 19, 2016

Investment News Regulatory Staff Writer Mark Schoeff Jr. reached out to Neil Waxman for his opinion on The SEC's Advisory Committee on Small and Emerging Companies recommendation regarding expansion of the definition of Accredited Investor. If approved an accredited investor would would broaden to include anyone who has passed certain securities exams, or achieved certain financial industry certifications, or clients of investment advisors. Neil agrees with the former, but feels the later would invite the potential for abuse.

Sec_Advisory_Committees_Recommendation.pdf

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In CNBC’s Article on Retirement, Neil Waxman Points Out That the Concept of Traditional Portfolio Allocation is Being Challenged Because People Are Living Longer.

Tue, 07 Jun 2016 20:50:29 GMT

The Truth About Retiring by 70

Tuesday, June 7, 2016

Americans are retiring later, but that's not the whole story.

Susie Poppick | @SusiePoppick
Tuesday, 7 Jun 2016 CNBC.com

The dream of an early, financially fortified retirement is dim in the eyes of many older Americans.

About one in four U.S. workers expects to keep working through age 70, according to a survey conducted by Willis Towers Watson in summer 2015. Even worse, about 25 percent of Americans age 50 and older surveyed in March by The Associated Press-NORC Center for Public Affairs Research said they never plan to retire. Respondents in the latter study named "financial needs" as the top factor behind retirement timing.

That sounds pretty gloomy, but are these fears founded? On one hand, there's plenty of evidence that financial pressures on retirees are growing. The Willis report suggests that more than one in five men age 65 and older are still working today, for example.

"Research suggests average retirement ages are moving in an upward direction," said Steve Nyce, a senior economist at Willis Towers Watson. "How steep that will be depends on policy changes regarding Social Security as well as other factors like global growth." Rising health-care premiums and flat pay increases have also widened the gap between what Americans can save and what they will actually need in retirement, Nyce said.

That said, there are also clues that Americans are growing more prepared for the challenges they'll face in their golden years. Nearly a third of older workers in the NORC study said they have brushed up their skills through job training or school during the last half decade, which could provide an income boost and help in finding late-career work. And recent research suggests that for many people, spending in retirement declines enough to balance out the erosion of savings by inflation.

Certainly, as you can see in the chart below, via Willis Towers Watson, the share of American men working past 65 has risen recently — and is higher than those in other developed Western countries. But the story is not quite so simple or bleak if you look at the historical trend: The ratio of older American men working today is still slightly lower than it was during the mid-to-late 1960s.

One reason the proportion of working seniors fell between the 1970s and 1990s, said Nyce, is that earlier generations enjoyed defined benefit plans loaded with early retirement incentives.

Over the last several decades, however, pensions have rapidly beenreplaced by defined contribution plans like 401(k)s, and those that remain are less generous.

"Defined benefit plans have taken on a new shape, with hybrid and cash balance plans," Nyce said. "They don't have such rich subsidies any longer." Thus Americans today must again work longer to make up for shortfalls in retirement income. And health can complicate matters: If you fall ill, it can be much harder to work — but if you're healthy, a longer lifespan means your savings will need to cover more years of income.

"I know some who are playing tennis into their 90s," said Neil Waxman, a Shaker Heights, Ohio–based financial planner. "This means they can't be so conservative and lean on bonds when they first retire."

For those worried about generating enough income, making smart moves as you approach retirement can head off the need to work beyond your desired age, Waxman explained.

"There's no free lunch," he said. "But you can downsize and streamline, for example, if you have a significant amount of equity in a large house."

Those retirees who are willing and able to work a few more years may also consider part-time jobs that provide freedom and flexibility: Some seniors are working as Uber drivers, for example, to pick up some extra vacation cash. Retirees with impressive professional experience or former business owners should think about working as a part-time consultant or as a board member for a private company, said Waxman.

Certain clients have even been able to pull in six figures from this kind of "post-retirement" work, he said. "Family businesses that want to grow need outside perspectives," Waxman said. "You go to meetings and get to travel a little, which is nice, because it gives you latitude while producing revenue."

Of course, some seniors may get over-committed and end up working more than they did at their own company, he said, so it's important to make sure you leave room to pull back.

Finally, if you don't feel particularly concerned about needing to work longer, you wouldn't be alone. While 43 percent of U.S. workers in a 2013 Willis study said they were planning to push back their planned retirement date, only 32 percent said the same in the newest survey, which could reflect the improving economy, Nyce said.

Read Full Article ⤏

living_longer.pdf

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Market Returns Have Been Flat: Crain’s Cleveland Business Asks Zach Abrams for His Thoughts.

Sat, 28 May 2016 20:58:49 GMT

Stocks Lose Luster Amid Flat Return Cycle

Saturday, May 28, 2016

By JEREMY NOBILE

For the stock market, the future ain’t what it used to be.

Stocks have lost much of their luster in the thick of a flat return cycle. And while most economic forecasters don’t see another recession on the near horizon, the outlook isn’t terribly bright, either.

While stocks are hard to get excited about right now, it could definitely be worse.

Experts generally chalk up the state of the market today to a slew of factors from prolonged low interest rates and a strong dollar to general international market volatility and slow corporate revenue growth putting pressure on margins. Some major investment banks, like Goldman Sachs, have downgraded stocks for the next year as a result.

Local investors are expecting much of the same lukewarm performances.

“Right now, we’ve had four consecutive quarters of negative earnings,” said Anna Rathbun, director of research for CBIZ Financial Solutions. “That is creating uncertainty on the fundamental level for the markets, and it’s making everyone very jittery.”

Much of investor jitteriness is attributable to a global divergence in interest rates, she said. While the Fed hasn’t ruled out a rate hike in the summer, other central banks outside the U.S. are cutting rates. That would make the dollar stronger and contribute to market uncertainty.

“The central banks are making investors nervous,” Rathbun said, “and that nervousness ultimately contributes to the flatness in the market.”

The markets are merely “treading water,” said Bruce McCain, chief investment strategist for Key Private Bank.

“It’s a tough game, and one not very reassuring for investors who haven’t decided whether to give up and go to the sidelines or bid more aggressively in hopes they might move up in the future,” he said. “It’s a waiting game.”

Hope certainly isn’t a sound investing strategy, though. And while some frazzled investors might get the inkling to pull out of equities entirely, advisers are cautioning against that.

“Despair isn’t a great strategy either when you know you could be left standing at the platform when the train rolls out,” McCain said.

Zach Abrams, a portfolio manager at Capital Advisors Ltd., takes a similar perspective. He often finds himself reminding clients today they “can’t squeeze water from a rock.”

In other words, you won’t make anything if you don’t play the game. But when returns are dismal, convincing clients of that can be more difficult.

Abrams is forecasting low, annualized returns around 5% over the next decade in the U.S. stock market. A more average return would be closer to 9%. So while he’s not forecasting negative returns, the outlook for performance is still below average.

Nonetheless, there’s still money to be made.

Advisers say now is the time to remind investors to be patient and stick to their long-term goals — and defining those are usually more difficult than allocating investments.

Yet, a sideways growth environment underscores the importance of being spread out among investments.

“You want to be diversified among asset classes that move in different directions in any environment,” Rathbun said. “Sticking to your plan is really the discipline of investing so you can weather the storm of whatever volatility is in front of us.”

Credit has become much more appealing — valuations are better there compared to stocks — particularly as cash and bonds present rather lackluster returns as well.

Abrams forecasts emerging markets and other/international markets returning around 10% and 8%, respectively.

“If you are diversified across your asset base,” he said, “you can increase returns in your portfolio without taking a large amount of risk, particularly in this environment.”

Similarly, he cautions against betting too big on one class or investment.

“You really need to look at where you’re most vulnerable,” he said. “If you shoot for the home run without taking into consideration the down side, that could get you into big trouble.”

The general uncertainty with the global markets will contribute to volatility moving forward, as will the coming U.S. presidential election.

So don’t expect market forecasts to change drastically anytime soon.

“That rising dollar, even less growth overseas and the presidential election … will continue to hammer at investors’ psyches,” McCain said. “That will give us thrills and chills over the next few months as people focus on choices that a lot of polls suggest a lot of voters just don’t like.”

“It’s not going to be a fun time for voters as they try to work their way through that election and the implications of what that might mean for the economy,” he added. “The uncertainty will tend to keep prices more range bound, at least more restrictive than they would be otherwise.”

Diversification does not guarantee a profit or protect against a loss.

Emerging markets are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems, currency volatility and limited equity opportunities (many large companies may still be "state-run" or private). Also, local stock exchanges may not offer liquid markets for outside investors.

International investing involves special risks, including, but not limited to, the possibility of substantial volatility due to currency fluctuation and political uncertainties.

Read Full Article ⤏

market_returns-flat.pdf

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Zach Abrams Interviewed by Forbes Magazine

Mon, 18 Apr 2016 21:06:30 GMT

Zach Abrams Interviewed by Forbes Magazine

Monday, April 18, 2016

Zachary Abrams explains the opportunity cost of bypassing experiences for saving. “If you have a choice between a once in a lifetime trip to place XYZ or adding more money to your 401(k), you should choose the former if it’s something you really want. Everything has a cost, and the cost of saving at the expense of travel is the experience you won’t ever have or get back.”

forbes_interview.pdf

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Yahoo Finance Inquires Regarding Tax Refund Advice

Tue, 26 Jan 2016 22:10:45 GMT

Yahoo Finance Inquires Regarding Tax Refund Advice

Tuesday, February 16, 2016

In 2014, the IRS issued $77M in tax refunds; consequently, Yahoo Finance asked “financial experts” for some do’s and don’ts. Neil Waxman responded by underscoring the need for a safety net of cash. He also recommended that if you spend, to do so discriminately, and to avoid typical stock tip investing.

the-best-and-worst-ways-to-spend-your-tax-refund.pdf

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Investment News Inquires Regarding Cybersecurity

Tue, 26 Jan 2016 18:34:18 GMT

Investment News Inquires Regarding Cybersecurity

Tuesday, January 26, 2016

Investment News magazine contacted Neil Waxman regarding cybersecurity - in particular password policies. Neil tells Investment News how Capital Advisors, Ltd. deals with two cybersecurity issues to ensure the security of client information.

cybersecurity-solutions-to-weak-passwords.pdf

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The Financial Times Asks Neil Waxman About Lottery Winner Mistakes

Tue, 12 Jan 2016 22:16:39 GMT

The Financial Times Asks Neil Waxman About Lottery Winner Mistakes

Tuesday, January 12, 2016

With the Powerball lottery at $1.5B, The Financial Times asked Neil Waxman about the biggest mistakes to avoid. Of the list that Neil provided, FT zeroed in on lack of a formalized prospective planning, especially the use of cash flow modeling as a roadmap.

the-biggest-mistakes-to-avoid-when-you-win-powerball.pdf

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Neil Waxman is Asked by CNBC for His Thoughts on Market Volatility.

Thu, 07 Jan 2016 18:40:20 GMT

How to take action on New Year's market volatility.

Thursday, January 7, 2016

Kelli B. Grant | @kelligrant
Thursday, 7 Jan 2016 CNBC.com

Amid another market rout, it's time for investors to look for buying opportunities.

Markets plunged yet again Thursday morning after a sharp sell-off in Chinese stocks prompted China to halt trading early for the second time this week. It's the latest wave in a rough first week of 2016, which had the worst opening day in eight years.

Advisors' broad advice to investors remains the same: Hold on.

"China devaluing its currency isn't an excuse to liquidate your stock portfolio," said certified financial planner Neil Waxman, a managing director with Capital Advisors in Shaker Heights, Ohio. "If you have a plan, stick with the plan."

Investors trying to time a return to the market usually miss out on big early gains, a costly mistake. But sticking to an existing investment strategy doesn't mean you should do nothing.

A decline in the market offers the chance to bargain-hunt, said certified financial planner Charles Bennett Sachs, managing partner of Private Wealth Counsel in Miami. "You're buying volatility in the markets by definition," he said. "Embrace it. If you don't want volatility, that's called a CD, and we all know where that goes."

(In a CNBC poll Thursday afternoon, 52 percent of site visitors said they were staying the course, while 27 percent said they were buying and 21 percent selling.)

Simply continuing contributions into retirement and college savings accounts accomplishes that through dollar-cost averaging. Assess your portfolio to see if you might benefit from rebalancing, or buying more of securities you think are undervalued.

"If you have surplus cash, look at what's down," said CFP Reed Fraasa of Highland Financial Advisors in Riverdale, New Jersey. "Whatever's the most undervalued, that's what you put the money in."

Even investors who don't like the look of the market or have a shorter time horizon for a goal may still find it's the right time to use that spare cash to buy something else. In recent years, clients have been more interested in exploring investments like catastrophic bonds and triple net leases, Sachs said. "Things that day in and day out are still paying dollars, irrespective of the market," he said.

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss.

A Certificate of Deposit (CD) is a savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.

A plan of regular investing does not assure a profit or protect against loss in a declining market. You should consider your financial ability to continue your purchases over an extended period of time.

Portfolios are rebalanced by buying and selling securities that have changed values in order to restore their original proportions in a portfolio. Rebalancing may result in a taxable event.

A catastrophe bond (CAT) is a high-yield debt instrument that is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake. It has a special condition that states that if the issuer (insurance or reinsurance company) suffers a loss from a particular pre-defined catastrophe, then the issuer's obligation to pay interest and/or repay the principal is either deferred or completely forgiven.

A triple net lease is a lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.

Read Full Article ⤏

CNBC_market_volatility.pdf

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Neil Waxman Answers CNBC Writer Janna Herron's Questions Regarding Year End Moves

Tue, 22 Dec 2015 18:45:56 GMT

Neil Waxman Answers Cnbc Writer Janna Herron's Questions Regarding Year End Moves

Tuesday, December 22, 2015

CNBC writer Janna Herron, wants to apprise readers of the things they should be considering before year-end. Her inquiry was directed to several financial advisors including Neil Waxman. Amongst the laundry list of items provided was to beware of credit card interest rates rising and to, if possible, take a long view before allocating away from an asset class which has underperformed.

six-money-moves-to-make-before-midnight-on-new-years-eve.pdf

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Reuters Contacts Zach Abrams About the Rate Hike’s Effect on CD’s

Wed, 16 Dec 2015 18:50:28 GMT

Reuters Contacts Zach Abrams About the Rate Hike’s Effect on CD’s

Wednesday, December 16, 2015

Reuters inquired whether the first rate hike in 10 years may lead to an increased appetite by investors to allocate money to CD’s. Zach Abrams tells Reuters that purchasing CD’s by laddering maturities is a practice of the past.

after-rate-hike-cds-could-make-a-comeback.pdf

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CNBC Asks Neil Waxman About the Investment Strategies of the Wealthy

Thu, 19 Nov 2015 18:54:58 GMT

CNBC Asks Neil Waxman About the Investment Strategies of the Wealthy

Thursday, November 19, 2015

CNBC writer, Jennifer Woods sought out Neil Waxman’s insight on investment strategies of the wealthy. Rather than the exotic, the foundation of most high net worth client’s investment plans begins with the fundamentals of financial planning: cash flow modeling, tax planning, managing portfolios for after-tax rates of return, making charitable gifts with appreciated securities and the like.

rich-investors-value-protecting-wealth-over-high-returns.pdf

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Zach Abrams and Neil Waxman Are Asked by CNBC How Millennials Should Invest.

Thu, 05 Nov 2015 18:59:30 GMT

Zach Abrams and Neil Waxman Are Asked by CNBC How Millennials Should Invest

Thursday, November 5, 2015

Landon Dowdy, reporter and host of CNBC’s weekly digital program, Young Money reached out to Neil Waxman and Zach Abrams for a story she was doing about how millennials invest. When asked what stocks millennials should pick, both Zach and Neil agreed that they should first take a comprehensive macro view of investing, before jumping into stock picking, by considering their overall financial assets, liabilities and cash flow, then to the extent possible maximize retirement plans, while… Read more

are-millennials-making-good-choices-with-stocks.pdf

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CNBC Asks Zach Abrams to Comment on Market Timing in Light of Recent Volatility

Tue, 25 Aug 2015 18:03:08 GMT

CNBC Asks Zach Abrams to Comment on Market Timing in Light of Recent Volatility

Tuesday, August 25, 2015

When CNBC wanted to know what market timing really costs investors, they asked Zach Abrams, Manager, Wealth Management and Portfolio Analysis for his thoughts. His comments point to the more systemic nature of the problem. "The reason why I think most people get this wrong is they are focusing on the returns and not the risk," he said. "They haven't planned around a loss, so when it comes they don't know what to do. There is no real exit strategy for them when things go south."

what-market-timing-can-really-cost-you.pdf

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Capital Advisors Ltd’s Zachary Abrams Discusses Robo-advisors in Crain’s Cleveland Business

Sat, 23 May 2015 18:06:02 GMT

Capital Advisors Ltd’s Zachary Abrams Discusses Robo-advisors in Crain’s Cleveland Business
Saturday, May 23, 2015

Crain’s Cleveland Business is Northeast Ohio's leading source of business news, analysis and commentary, and in it, Zachary Abrams discusses Robo-Advisors.; Robo-Advisors, starting in 2008, are a class of financial advisor that provide portfolio management online with minimal human intervention. With minimums as low as $0 or $5000, Robo-Advisors are quickly spreading, with some companies managing over $4 billion.; Abrams believes they can be beneficial to… Read more

taking-the-adviser-out-of-advising-good-or-bad.pdf

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Neil Waxman Presents to Geauga Growth Partners Members on Business Succession Planning

Fri, 15 May 2015 18:11:42 GMT

Neil Waxman Presents to Geauga Growth Partners Members on Business Succession Planning

Friday, May 15, 2015

Neil was one of three members of a distinguished panel of experts who addressed members of the Geauga Growth Partners regarding the important aspects of planning for a successful business future, covering topics of Business Organization, Tax Implications, Valuation, Legal, and Asset & Transfer Funding.

ggp-presents-succession-planning-you-and-the-future-of-your-business.pdf

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Capital Advisors Ltd’s Neil Waxman Discusses Financial Security in CNBC

Wed, 25 Mar 2015 18:14:46 GMT

Capital Advisors Ltd’s Neil Waxman Discusses Financial Security in CNBC

Wednesday, March 25, 2015

In the article titled “States where residents get the biggest tax refunds,” Neil Waxman makes a point about financial security: “First priority: Pay down high-rate debt, like credit cards. Already debt-free? Make sure you have a suitable emergency fund. Then look to setting aside the money for other goals, whether purchasing a home, paying for college or retiring. If you can put the money in a tax-advantaged vehicle like a 529 or IRA, so much the better.”; The combined… Read more

one-reason-to-look-forward-to-tax-time.pdf

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Capital Advisors Ltd's Zachary Abrams Discusses Middle Market Challenges In Crain's Cleveland Business

Mon, 09 Feb 2015 17:29:48 GMT

Crain’s Cleveland Business is Northeast Ohio's leading source of business news, analysis and commentary, and in it, Zachary Abrams provides his expert insight for the problem many businesses across the country are experiencing: “A lot of companies are just having a hard time finding the right employees…Costs keep rising, and people just want to know when it’s going to end.”; Abrams gives in-depth analysis of… Read more

middle-market-challenges.pdf

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Neil Waxman Referenced In The Book, Starting A Hedge Fund: A Students Journey Into The World Of High Finance

Mon, 03 Nov 2014 18:10:17 GMT

Daniel L. Jones started a hedge fund while a college student at Case Western Reserve University. In that process he networked with financial advisors for advice on how to succeed. He wound up in Neil Waxman’s office, and some of the advice he received wound up in a book he published in 2014, which is excerpted here.

starting-a-hedge-fund.pdf

Please Note: Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Capital Advisors is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of Capital Advisors by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers.

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Capital Advisors Ltd’s Neil Waxman Has Achieved The Aep Designation By The National Association Of Estate Planners & Councils

Mon, 18 Aug 2014 17:21:27 GMT

The AEP® designation is awarded by the National Association of Estate Planners & Councils to recognized estate planning professionals who meet special requirements of education, experience, knowledge, professional reputation, and character.

The Accredited Estate Planner® (AEP®) designation is a graduate level specialization in estate planning, obtained in addition to already recognized professional credentials within the various disciplines of estate planning. It is awarded by the National Association of Estate Planners & Councils (NAEPC) to recognize estate planning professionals who meet stringent requirements of experience, knowledge, education, professional reputation, and character.

A minimum of five (5) years of experience engaged in estate planning and estate planning activities is required in one or more of the professional disciplines described above to apply for the designation. To be exempt from the education requirements described below, an applicant must have a minimum of fifteen (15) years of experience engaged in estate planning and estate planning activities in one or more of the professional disciplines described above. Applicants with fifteen (15) years of experience must apply using the application for those qualifying under our experience exception.

To be eligible to be considered for the AEP® designation, the applicant must provide documentation of being currently licensed to practice law as an Attorney (JD) or to practice as a Certified Public Accountant (CPA), or of being currently designated as a Chartered Life Underwriter® (CLU®), Chartered Financial Consultant® (ChFC®), Certified Financial Planner (CFP®), or Certified Trust & Financial Advisor (CTFA), in any jurisdiction of the United States of America.

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Capital Advisors Ltd’s Neil Waxman Discusses Succession Planning In Crain’s Cleveland Business

Sun, 06 Jul 2014 17:27:52 GMT

Crain’s Cleveland Business is Northeast Ohio's leading source of business news, analysis and commentary, and in it, Neil Waxman, CFP, provides his expert insight on one of the most important but little understood responsibilities of a business, succession planning.; Some worry about taxes, but Waxman says: “Other succession plan building blocks involve taxes, though owners shouldn't allow those costs to steer their strategies.” Waxman believes the planning is what is important.

succession-planning-plotting-the-next-step-and-beyond-for-your-business.pdf

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Capital Advisors Ltd’s Neil Waxman Chosen As Associate Editor For Journal Of Financial Service Professionals

Tue, 01 Jul 2014 16:42:33 GMT

Neil Waxman, CFP® has been invited to be a member of the Editorial Board as Associate Editor of The Journal of Financial Service Professionals. The Journal of Financial Service Professionals is one of the oldest and most prestigious journals in the financial planning field. The Journal is a vehicle for groundbreaking applied research on topics of concern to the holistic financial planner. It is a blind peer-reviewed journal with a competitive nature for publishing insightful articles of the highest level that enhance the ability of financial planners to serve their client base.

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Capital Advisors Ltd’s Neil Waxman And Zachary Abrams Write Article For Crain’s Cleveland Business

Wed, 28 May 2014 21:38:25 GMT

Crain’s Cleveland Business is Northeast Ohio's leading source of business news, analysis and commentary, and in it, Waxman and Abrams discuss a difficult topic in the business world, selling your business.; Waxman and Abrams discuss why it is so difficult emotionally to sell a company: “You have passionately nurtured your company, devoting a large portion of your life to build a valuable asset. Because you poured your life into your company, letting go is likely not as simple… Read more

selling-your-business-the-right-price-at-the-right-time.pdf

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Capital Advisors Ltd’s Neil Waxman Featured In The Suit For His Strategies And Accomplishments

Thu, 01 May 2014 21:41:09 GMT

The Suit magazine provides in-depth analyses of successful corporate executives, business owners and professionals, along with topical investigative news reporting, combining a trade approach with a journalistic emphasis.; In The Suit’s article, “Being the Bandwagon,” Neil Waxman discusses the open, transparent, fee-based model Capital Advisors uses: “We wanted to evolve into a fee-based, open architecture firm that was completely transparent. This was in the early 1990’s.… Read more

being-the-bandwagon-pioneers-in-the-open-architecture-transparent-fee-model.pdf

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R.I.S.E FORUM XIII 2013 University Of Dayton

Sat, 13 Apr 2013 22:48:26 GMT

Neil Waxman was invited back for the third consecutive year, as a panelist to participate in R.I.S.E. Forum XIII, an investment conference sponsored by the University of Dayton in association with the United Nations Global Compact. R.I.S.E. offers students, faculty, and financial professionals the chance to hear from portfolio managers and directors representing some of the nation's most successful applied investment and wealth management firms.

Each year, this prestigious student forum extends an invitation to business professionals to share in the first day of a two-and-a-half day event. The featured speakers are the best and the brightest from Wall Street, corporate America, government and the financial media. They hold equal appeal for students, professors and practitioners alike.

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R.I.S.E FORUM XII 2012 University Of Dayton

Sat, 14 Apr 2012 22:59:06 GMT

Rob Holub and Neil Waxman served as panelists at R.I.S.E. Forum XII, an investment conference sponsored by the University of Dayton in association with the United Nations Global Compact. R.I.S.E. offers students, faculty, and financial professionals the chance to hear from portfolio managers and directors representing some of the nation's most successful applied investment and wealth management firms. RISE is the largest and longest running student investment conference in the world. Each year, this prestigious student forum extends an invitation to business professionals to share in the first day of this two-and-a-half day event. The featured speakers are the best and the brightest from Wall Street, corporate America, government and the financial media. They hold equal appeal for students, professors and practitioners alike.

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R.I.S.E FORUM XI 2011 University Of Dayton

Fri, 01 Apr 2011 19:09:04 GMT

Rob Holub moderates, and Neil Waxman is a panelist at R.I.S.E Forum 2011 at University of Dayton. R.I.S.E. provides attendees access to investment professionals from across the nation, who share their insight on a variety of topics such as private equity, fixed income, portfolio construction, and micro and macro economic viewpoints.

RISE is the largest and longest running student investment conference in the world. Each year, this prestigious student forum extends an invitation to business professionals to share in the first day of this two-and-a-half day event. The featured speakers are the best and the brightest from Wall Street, corporate America, government and the financial media. They hold equal appeal for students, professors and practitioners alike.

Dr. Ben Bernanke, chairman of the Federal Reserve Board, joined the global discussion in 2005, and in 2008 it hosted NASDAQ's first remote closing bell ceremony at a university. It's not often that college students get to rub shoulders with Nobel Laureates, Federal Reserve Bank officials and other nationally renowned industry leaders.

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Capital Advisors Ltd’s Neil Waxman Discusses His Relationships With Clients In The Wall Street Journal

Fri, 18 Sep 2009 19:41:06 GMT

The Wall Street Journal is published six days a week by Dow Jones & Company, a division of News Corp, and it is the largest newspaper in the United States by circulation. According to the Alliance for Audited Media, it has a circulation of about 2.4 million copies (including nearly 900,000 digital subscriptions), as of March 2013,[2] compared with USA Today‍ 's 1.7 million. The Journal primarily covers American economic and international business topics, and financial news and issues.… Read more

how-far-do-you-go-to-help-a-client.pdf

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Neil R. Waxman, CFP® Has Contributed A Chapter To The Recently Published Book, "Inside The Minds: Wealth Strategies For Executive.

Wed, 10 Aug 2005 18:35:39 GMT

Capital Advisors, Ltd. announces Neil R. Waxman, CFP® has contributed to the recently published book, "Inside the Minds: Wealth Strategies for Executives.

Waxman is the author of the chapter entitled: "Wealth Management for High Net Worth Clients: What They Want, How They Want It, How They Want To Pay For It".
Waxman is a Managing Director.

Inside the Minds provides readers with proven business intelligence by C-Level executives (CEO, CFO, CTO, Partner) from the world’s most respected companies. Each author has been carefully chosen through an exhaustive selection process by Inside the Minds Editorial Board to write a chapter for this book. Each chapter is comparable to a white paper or essay, which provides a prospective view of each topic.

Inside the Minds: Wealth Strategies for Executives is a insider's perspective on what executives should expect when constructing a comprehensive financial plan to meet their unique professional needs and timeline. Featuring Presidents and CEOs, all representing some of the nation's select financial planning firms, this book provides a broad, yet comprehensive overview of how to customize a plan that fits the needs of various executives. Mapping out the unique career path that executives may embark on and the high levels of training they undergo, authors articulate the finer points around how to design a financial plan that fits this model in a thoroughly satisfying read - from beginning to end. Planners discuss how to establish a realistic grounding for top professionals and offer up their thoughts on the best investment vehicles to implement. The breadth of perspectives presented enable readers to get inside some of the great minds of the financial planning industry, as experts offer a candid and unprecedented glimpse of the entire process, from the very first meeting to the day an executive can retire with ease.

All remarks are hypothetical in nature and are intended to be informational only. They should not be regarded as investment advice, performance claims or testimonials. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. There is no guarantee that any strategies discussed will result in a positive outcome. You should discuss any legal, tax or financial matters with the appropriate professional. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal.

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Knight - Ridder Tribune Sought Neil Waxman's Thoughts On Employee Stock Ownership Plans For Publication In Their Network Of City Newspapers.

Sat, 03 May 1997 18:15:26 GMT

When Mary Vanac, writer for Knight -Ridder wanted to feature an article on Employee Stock Ownership Plans (ESOP's), she sought Neil's expertise in developing and working with ESOP's. Neil's advice to plan with the end in mind covered repurchase obligation and liquidity issues, which can arise if ignored.

stock-answer-plans-let-workers-take-stock-in-jobs.pdf

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