• 401ks

    We’re Getting Old

    In 1965, a Frenchman by the name of Andre-Francois Raffray thought he had made a very good deal; he had purchased an apartment from an elderly widow for about $500 a month. Up until 1975, France had no form of Social Security, and retired individuals had to rely on their savings and a process called En Viager. En Viager allowed a younger person to purchase a home in monthly increments paid until the death of the current resident. Mr. Raffray offered the 90-year-old Jeanne Louise Calment $500 each month in exchange for her apartment, which was worth about $90,000 in ’65. Unfortunately for Mr. Raffray, Ms. Calment lived to be…

  • 401ks,  Current Events

    What’s A Fiduciary?

    Recently, British comedian John Oliver’s show Last Week Tonight put out a flooring (and very entertaining) look at the retirement industry. I spent Monday morning watching it after Sara shared it, and between nodding along with his points and laughing so hard I choked I decided that I needed to share it. You can watch the video included, and I encourage it, but I also wanted to highlight some of the most important points. First, Oliver asks what is a financial advisor? He answers actually, and technically – nothing. That title, along with financial analyst, financial consultant, investment consultant, or wealth manager does not actually indicate credentials. The only valid…

  • 401ks

    Trust

    The most vital role of a financial adviser in regards to working with a retirement plan is minimizing fiduciary liability. Moreover, the financial advisor minimizes the responsibility that a plan sponsor and the plan trustees have when handling the process of plan investments. There are primarily three levels of fiduciary. Non-fiduciary brokers place full weight onto the plan sponsor (organization) for financial advise and all fiduciary responsibility and liability. Fiduciary 3(21) allows for the plan sponsor to share fiduciary responsibility and liability. Fiduciary 3(38) accepts complete fiduciary responsibility and liability. Participant education can be used as a tool to assist plan sponsors to minimize their liability under ERISA 404(c). One…

  • 401ks,  Return on Investment

    The Value of Compounding

    One of my favorite questions is: If you had a job for 30 days and could choose to either be paid $1000 every day or a penny the first day, doubled every day after, which would you choose? Take a second. Think about it. I think this will help you make up your mind. If you calculate a penny a day doubled for 30 days it grows to over $10 million dollars. I know what I’d pick! A penny doubling every day illustrates the principal of compounding. The bigger the beginning number, and the bigger the percentage at which it is compounded, the larger the final outcome. Take for example,…

  • 401ks,  Return on Investment

    Structured Products

    We’ve talked before about chocolate covered hand grenades – the too-good-to-be-true investment. Time and again, the market has expanded rapidly as investors get caught up in opportunities based on stories and ideas rather than facts. Most of us are familiar with the explosion of Sub Prime Mortgages and how they played a major role in the Great Recession. Another seemingly tasty investment blew up as a result of the Great Recession. Structured products cost numerous investors big time. What are structured products? The term “structured product” is financial industry jargon referring to a product which allows you to participate in the stock market while guaranteeing your principal. How do they work? Originally,…

  • 401ks,  Adams Financial Concepts,  Return on Investment

    Strategic Versus Tactical Investing

    When it comes to investing, one of the biggest questions in my mind is strategic versus tactical management. Before we can discuss the merits of one or the other, I think we should clearly define both. Strategic management focuses a financial portfolio on a group of assets. Tactical management changes the asset classes of a portfolio depending on the economy. So, which is better? In theory, tactical management sounds wonderful. You get in when the market is low and out when it is high. Unfortunately, this does not consistently yield the maximum returns to investors. Correctly guessing the exact moment to jump in and out of the market can have…

  • 401ks

    Retirement Budget

    How much savings is needed to secure a comfortable retirement? In a recent survey from Ameriprise Financial Inc., working Americans between the ages of 50-70 with at least $100,000 in investible assets predicted that on average, they needed $980,000 to retire comfortably. What does this ideal “retirement number” really mean? How significant is it? What assumptions are clients making about the amount that they will need to meet expenses during retirement? Financial advisors have the opportunity to discover the right answer. One of the best assumptions we can make of future spending patterns is to look at how clients manage expenses during their pre-retirement years. An old saying that remains…

  • 401ks,  Current Events,  Return on Investment

    Questions For Your Financial Advisor

    Over the next few months, many investors will sit down with their financial advisor to look over their portfolio. Before the meeting, ask yourself what kind of investor you are. Do you simply want lower risk and higher returns that will beat the rate of inflation? Or do you want to succeed? Do you want to outperform the market? I believe my clients want to win. They want their wealth to grow significantly. If this sounds like you, I encourage you to ask your Financial Advisor the big questions. For me, they are the following: Look At The Real Dollar Terms The first question you have to ask is, how…

  • 401ks,  Return on Investment

    Plan for Long-Term Success

    Take care of the customer and everything else will take care of itself. This simple principle has led to decades of success at Albert Lee Appliance. Albert Lee III, President of Albert Lee Appliance, joined me on About Money last Friday. He said he tells his staff, “I’m not your boss. The customer is your boss.” Albert’s grandfather, the company’s founder, taught him this from the beginning. “He always said, you need to listen to your customer. They’ll tell you what you’re doing right and what you’re doing wrong,” Albert said. Despite the Great Recession, Albert Lee Appliance has expanded, opening new locations to serve additional customers. How was this possible? Long-term planning.…

  • 401ks,  Current Events

    Pigs at the Trough

    The Department of Labor has published new 401(k) plan rules and regulations requiring full transparency of fees. Though plan sponsors and participants have not previously been sent itemized bills, the Department of Labor lists 17 fees they have been incurring. These fees include marketing, legal services, record keeping, investments and more. Under the new rules, indirect fees must also be disclosed. For example, when a company sends an employee to a conferences run by a 401(k) vendor, the vendor passes this cost off to their clients through fees. With the new transparency, “People will find there were a lot of pigs at the trough,” said Jeff Acheson, a partner at…