Employment Exhibition (Photo credit: Modern_Language_Center)

There will continue to be more and more interest in retirement plan which allow employees to save without stress and anxiety. Most plan participants realize they need help. The rest don’t know they don’t know.

The report said 44% of all workers expect to rely on 401(k) plans, other DC plans or IRAs as their primary source of retirement income. When analyzed by age group, the report said the highest reliance (55%) on these plans was among workers in their 30s, followed by 46% for workers in their 40s.Participation rates were highest (83%) for people in their 30s and those in their 40s, the report said. Median annual deferral rates were highest (10%) among people in their 60s, followed by 8% for people in their 50s.

The reported said 62% of workers either strongly agreed or somewhat agreed that they would want to receive more information and advice from their employers about how to reach retirement goals. The age group most interested in getting additional information (71%) was workers in their 20s.

via pionline.com

Employees realize that they cannot rely on the government to fund their retirement years. These same employees will seek out employers who offer the best retirement plan solution. Will your company retireemtn plan attract and retain talented employees?

Please comment or call to discuss how your company retirement plan compares to your competitors.

Posted via email from Curated 401k Plan Content

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It seems investors continue to believe that they can find the right answer by relying on the BIG institutions. When will Main Street realize thet the big banks, insurance companies and brokerage firms do not have the investors interest in mind. Investors should seek advisors who add value through sound advice and a fiduciary standard, regardless of the regulations?

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Mr. Dimon was right. JP Morgan is “moving on.” The question is whether investors in this 529 Plan, and other clients whose assets are managed by this bank, are doing the same. The massive loss suffered by the bank is yet another indication of the inability of this huge institution (or anyone else) to predict the direction of the markets. Yet, the entire securities industry is premised on the false assumption that its members can add value by stock picking, market timing, and fund-manager picking.The real skill of these “wealth managers” lies in their ability to convince you they have an expertise that doesn’t exist. This latest debacle is one more example demonstrating the irrefutable fact that these investment gurus are emperors with no clothes, representing a significant, little-understood peril to your financial security.

via huffingtonpost.com

This loss by JP Morgan is another indication that the big banks do not care about the individual investor. I cannot believe that this could happen four short years after the 2008-9 crisis. The large financial institutions are only interested in their own profit, whether you win or lose is of no consequence to them.

Please comment or call to discuss how this affects you and your financial future.

Posted via email from Curated 401k Plan Content

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With the complex equation of most individuals within the sandwich generation being baby boomers, added to the intricate family dynamics, financial advisors are finding themselves advising over three generations.  What is the family dynamic like?  Many boomers work full time jobs while raising a family or supporting children in college, in addition to serving as the primary caregiver to one or both parents.  How do these families cope with the changing dynamic?  Most consider trade-offs, such as significantly cutting back on personal luxuries, making lifestyle sacrifices to support their family’s needs, and even cutting back on their own personal retirement.

So, what kind of help can advisors give to those facing the pending or already existent sandwich generation?  First and foremost, ease the stress of competing demands by identifying core values and priorities to find balance in life.  Always keep open lines of communication – of course it’s difficult to discuss the financial impact of diminishing health and the eventual loss of a loved one, but putting off that conversation can leave you unprepared for the consequences.  Implementing a plan of affairs for aging parents can off-set the negative consequences of a life-changing event.  Be sure to know where your family members keep important financial and medical documents, as well as the contact information of doctors, lawyers and advisors.  Always know the type of long term care, and how much it will cost.

When it comes to financing children’s education, only 12% of the sandwich generation said they were cutting back on contributions.  What’s the biggest tip for parents?  Start saving early.  Teach your children early on the skills necessary to embrace financial independence, budgeting, and the importance of credit and planning for retirement.  You can even bring your kids with you to an advisor meeting to discuss all these great education finance tips.

I’m sure you’re thinking: but what about me?  Get with an advisor and review your investment strategy, as well as home financing, asset allocation, insurance, securities, your portfolio, and your general retirement strategy in general.  This way, advisors can help shift financial securities based on the family’s specific dynamic.  According to the survey, 54% of the members of the sandwich generation work with an adviser, and among them, 32% wish that they had started working with one sooner.  Among the remaining 46% who don’t work with an adviser, 83% think that they would benefit from such a relationship.

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The Wall Street bullies have a vested interest in keeping you guessing. What is the best investment for right now? Who has the answer ? What fund managerswill out perform?The answer is, no one knows what the future will bring. Your best strategy is a prudent one. Once designed and implemented your goal is to rebalance regularly and remain disciplined.

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There is always risk in the stock and bond markets. Risk is the source of returns. The greater the risk, the higher the expected return. Here’s an example:

We all know there is a risk that Greece, Italy and Spain may default on their sovereign debt. As that risk level increases, buyers of that debt demand a higher rate of return to compensate them for that risk.

The current price of publicly traded stocks and bonds represents the collective judgment of tens of millions of buyers and sellers, trading about ten billion shares a day. Their judgment is what places a value (the “price”) on these shares. It takes into account all levels of economic uncertainty.

When you hear financial pundits discuss economic uncertainty and recommend buying or selling certain assets, you should reject their advice. Whatever facts they are relying on have already been priced into the asset they are recommending you buy or sell. That asset is fairly priced. Trying to find a misplaced asset flies in the face of this basic reality.

via huffingtonpost.com

There will continue to be financial ‘experts’ who claim they will earn you greater return for little or no risk. They supply evidence which is unsupported and of no value. There is no substitute for a prudent strategy and discipline.

Please comment or call to discuss how this affects you and your long term financial goals.

Posted via email from Curated 401k Plan Content

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401(k) plans have been sold backwards since the beginning. Orginally they were a supplement to a oension plan, now they are the sole source of retirement for most Americans. Model portfolios should be automatic and then the participant can opt out and choose their own mix of funds.

The plan proposed the most complex highway interchange attempted in Ontario to that point. (Photo credit: Wikipedia)

A separate survey of 401(k) participants finds that relatively few have the desire to manage their own workplace savings plan. Koski Research, on behalf of Schwab, surveyed more than 1,000 workers enrolled in 401(k) plans across the country and found that:– More than half (52%) say they don’t have the time, interest or knowledge to properly manage their 401(k) portfolio.

– Nearly three-quarters (73%) spend less than eight hours per year managing their 401(k) plan account.

– Many (56%) do not review plan-related education materials they receive.

– Nearly one-third don’t know they pay any fees for their 401(k) plan. Of the 70 percent that understand they pay some sort of fees, 95 percent don’t know about investment fund operating expenses, and 67 percent don’t know about plan administration fees.

– A significant majority (83%) say they are interested in receiving professional investment management from their employer. However, this interest does not translate into action based on Schwab data that shows just one in 10 participants actually takes advantage of 401(k) investment management advice when it is offered(2).

via marketwatch.com

There will continue to be attention paid to the retirement crisis in America. We must provide employees with the prudent tools to accomplish their retirement planning needs. If not the government will.

Please comment or call to discuss how this affects you and your company.

Posted via email from Curated 401k Plan Content

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The first-of-its-kind analysis by Fidelity Investments, a financial services provider with a focus on helping Americans save and plan for retirement, found that many working American households could face a 28-percent loss of income during retirement. Perhaps even more frightening is the 38 percent of retiree households already reporting that their monthly income isn’t enough to cover their monthly expenses. In addition to these sobering statistics, however, Fidelity also provided a number of actionable steps individuals could take in order to narrow or entirely close a potentially uncomfortable gap between their retirement income and their monthly living expenses.

Whether you’re a working member of the Baby Boomer generation, Generation X or even Gen Y, these are five steps you can begin exploring with your advisor today, and perhaps even incorporate into your retirement plan. They’re well worth checking out, as many of these strategies can apply regardless of whether you’re just getting started in your career, are at the top of your of your working years, or are already retired.

Bolstering Savings
While respondents indicated that they did save an average of $3,500 last year, most Americans are not taking full advantage of tax-favorable workplace-sponsored retirement savings plans or individual retirement accounts (IRAs). This is perhaps the easiest place to begin plugging the holes in your savings plan, so consider contributing as much as you can to your  employer’s 401(k) plan. If your employer matches your contribution, try to put away as much as your company will match to; doing anything less is akin to turning down free money. Matching contributions are not the only reason why 401(k)s or IRAs are wise investments, however; for example, if your company doesn’t offer to match your 401(k) contribution, you still profit from tax-deferred savings. The same is true of IRAs, so if your employer doesn’t offer a retirement contribution plan, funding an IRA is an effective alternative. If both courses of action are available to you, talk to an advisor about which plan — or combination thereof — is most appropriate to meet your needs and goals. While maintaining a savings strategy is imperative for investors of all ages, it’s particularly crucial for younger workers, as their money will have more time and opportunity to grow.

Reevaluating Retirement Age
It seems as though despite one’s age, the average age at which most Americans plan to retire is the ever-popular 65. However, as the Boomers are discovering (indeed, the Fidelity research found that many Boomers are facing a worrisome drop in income), putting off full retirement by a few years can help shore up assets to ensure you don’t suffer a decline in their income and standard of living. What’s more, Fidelity also cited that even working part time after age 65 can be a powerful way to stretch your retirement assets.

Adjusting Asset Allocation
While it’s certainly understandable that investors of all ages may be a little skittish when it comes to the stock market these days, the Fidelity Assessment found that 21 percent of survey respondents are invested too conservatively in the equities market with what the report describes as “limited exposure to stocks, based on their current age and planned retirement date.” This underscores the importance of working with an advisor to ensure your plan is properly allocated with the right amount of exposure to the long-term earnings opportunities only stocks present.

Annuitizing Retirement Assets
Investors of all ages could benefit from having a guaranteed stream of income for life, yet the study found that only 17 percent of those surveyed have an annuity. Working with an advisor to explore adding an annuity to your retirement plan can ensure you have enough money to cover your expenses throughout your retirement, especially as more and more Americans can expect to live well into their 80s and even beyond.

Tapping into Home Equity
At 72 percent, the tremendous majority of respondents are homeowners, and a full 32 percent own their homes outright and pay no mortgage. The home equity you may have accrued can be used in a number of ways to help stabilize your retirement income, including downsizing your home and pocketing the profits, drawing on that equity to pay off debt or expenses, or using those funds to invest in income generating products.

“Most Americans have the potential to get significantly closer to achieving their retirement goals, but they have to take action and consider implementing a mix of these five steps,” says Kathleen A. Murphy, president of Personal Investing at Fidelity Investments. “Whether you’re a younger investor deciding to save a little more in a 401(k) or an older investor adjusting investment plans, it’s never too early or too late to impact your personal economy and take steps to improve your retirement readiness.”

Indeed, anything you can do to improve your financial position in retirement is worth exploring, so discuss these five strategies with your advisor. Together, you should be able to determine the most appropriate steps you can take in order to ensure a positive retirement lifestyle.

Photo courtesy of: http://www.retirementplanning.net

The financial services industry wants you to believe that there is someone out there who can tell you the best investments for right now. This is how they make the bulk of their money, by convincing you to move your money to the next hot manager. Avoid this and you will succeed in reaching your long term financial goals. There is no evidence that anyone can consistently and predicatbly beat the market.

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Let’s put the daunting task of picking fund “winners” in perspective. How hard do you think it is for the most sophisticated fund managers in the world to beat the S&P 500 index, when that is their designated benchmark? It must be harder than it looks because less than 40 percent of these funds do so in any given year according to a studyby Standard and Poors.Presumably, each of the losing fund managers had every expectation of beating their benchmark at the beginning of the year. How likely is it that a broker could predict in advance that the fund manager would fail to meet this goal? Do brokers know something that has eluded these fund managers and their employers?

Many state pension funds retain brokers with this purported expertise to advise their plans. They are understandably eager to reap the extra returns promised by these “experts”. How has that worked out?

Not well. A comprehensive study compared the long term results of state pension plans with index based portfolios of comparable risk. Almost all of the plans underperformed.

The problem is not lack of data. It’s that plan sponsors are not aware of the data and brokers want to keep them in the dark. Burton Malkiel, in his seminal book, A Random Walk Down Wall Street, reviewed the research and concluded that “It does not appear that one can fashion a dependable strategy of generating excess returns based on a belief that long-run mutual fund returns are persistent.” The problem is not that no actively managed funds outperform. Some do. The issue is whether anyone has the expertise to pick them in advance.

via huffingtonpost.com

Trying to pick the best fund managers which will beat the benchmarks is like trying to draft NFL players. You have no idea if their past performance will repeat and most do not.

Please comment or call to discuss.

Posted via email from Curated 401k Plan Content

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Thank goodness people have emotions, life would be unbearable without them. However, when investing for your financial future emotions can be very costly. We all watch TV, listen to all media sources that are playing on your emotions. You need someone managing your investments and your emotions for you to succeed long term.

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Choice conflict leads to choice avoidance. Translated, this means that having too many choices often leads to inaction. This is all too true in the 401(k) world. Many plans offer too many investment choices, leading participants to do nothing. Plan participantsoften feel overwhelmed by having to direct their own investments. Add a large number of choices and you have a formula for inaction. In today’s world, this often means that many participants are defaulted to a target-date fund or some other default option. This may or may not be the appropriate choice for their situation.Inertia is the norm. According to the professor, most employees have the same asset allocation as the day they started work. As an adviser to a number of plans, this has been my experience as well. Participants rarely change their allocations, even as they age. If fund A is replaced in the lineup by fund B, you rarely see money move into or out of the new fund. An allocation that was appropriate at 35 is likely not appropriate for that participant at age 55.

Taking charge of our own retirement savings and investing is a daunting task. If you see the traits outlined above in yourself, consider some ways to take charge of your 401(k) plan:

–Consider using an advice option if offered by your plan. This might be in the form of online advice, via telephone, or in person.

–Managed accounts, which generally allocate the plan’s existing funds into portfolios that fit various levels of risk, are gaining in popularity.

–Engage the services of a financial adviser. A professional should take a broad view of your overall financial situation and advise you on how to invest your 401(k) account as part of that process.

via finance.yahoo.com

There is a saying about portfolios ‘your portfolio is like a bar of soap the more you touch it the smaller it gets” The opposite is also the case, most employees set it and forget it. 401(k) Plans can become more ‘pension fund like’ and allow investment professionals make the investment decisions for participants and employers.

Please comment or call to discuss how this would affect you and your company sponsored retirement plan.

Posted via email from Curated 401k Plan Content

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The Cause:  With high unemployment rates, a meek economy and a surplus of students graduating from college with a laundry list of student loans to pay off, it’s not surprising that more and more young adults are living or moving back in with their parents.  What better way to save some money, look for a job and improve their financial standing?  Another interesting cause I read the other day was that unlike the past, many young adults find it quite pleasant to live with their parents these days.  With child-rearing strategies changing, more parents and their children are nurturing lasting relationships together.

The Effect:  The Census Bureau is having a tough time in figuring out the actual poverty rate of the United States: “These young adults who lived with their parents had an official poverty rate of only 8.4%, since the income of their entire family is compared with the poverty threshold,” David Johnson chief of the Housing and Household Economic Statistics Division at the U.S. Census Bureau said. “If their poverty status were determined by their own income, 45.3% would have had income falling below the poverty threshold for a single person under age 65.”

Another effect that affects the economy is a smaller number of households.  A reduced number of overall households leads to a reduction of consumers, including those in the housing market, which puts a huge drag on the economy.  Regardless of the misleading statistics, the biggest impact can be felt much closer to home.  While young adults living with their folks may be reaping the benefits, parents supporting adult children have less money to spend on themselves, not to mention less income to save for retirement.
Some experts say that there is a silver lining.  They believe that these young adults “doubling up” will eventually become financially stable and be able to move out, enter the housing market and start consuming again.  This boost in consumption would lead to an improvement in the broader economy.

Unfortunately, there’s no telling when that will happen, and in the meantime it’s not fair to many retirement-saving parents to allow their children to hurt their futures.  If you’re going to provide a home and various necessities for your post-graduates or financially-unstable children, make sure you set parameters that keep them from getting to comfortable in your house.  Don’t feel bad charging them some sort of rental fee and giving them a timeline in which they must move out or find a job.  Without structure the situation could get worse and put too much pressure on your financial future.

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When you are performing your due diligence on a financial advisor the first question should be, do you follow the fiduciary standard? Any other advisor will not put your interest first. Their employer comes first.

WASHINGTON - FEBRUARY 25: Chief Financial Officer, GMAC Financial Services, Robert Hull testifies before a Congressional Oversight Panel during a hearing on GMAC Financial Services and the Troubled Asset Relief Program on Capitol Hill February 25, 2010 in Washington, DC. The Panel heard from the U.S. Department of Treasury, GMAC Financial Services, and industry analysts about their perspectives on GMAC's current and future financial stability, the structure and staging of Treasury's investments in GMAC, the rationale behind that support, and GMAC's strategic initiatives and plans to repay the taxpayers' investment. (Image credit: Getty Images via @daylife)

Financial author William Bernstein said it best: “…there is a third type of investor- the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.”Actually, there is a fourth type of “investment professional.” They definitely know they don’t know. They make a living conning you out of your money by offering you the lure of outsized returns without meaningful risk. Their con is more blatant and despicable than the conduct of your typical retail broker, but both have the same goal: Enriching themselves at your expense.

via huffingtonpost.com

The debate on the fiduciary standard for all recommending investments will continue because many in the financial industry want the conflicts of interest to continue. The investor must come first if we are to regain the trust of the American people.

Please comment or call to discuss.

Posted via email from Curated 401k Plan Content

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