401(k) Workshop Oct. 17 – Open for Flyer

We’re very excited to bring a very high quality 401(k) workshop to North County. Click here for the flyer. A 401(k) plan where a plan sponsor hires a registered investment advisor with specialized 401(k) knowledge is completely different than the typical 401(k) with a broker. Registered investment advisors have loyalty only to the plan and the plan sponsor. They do not accept commissions. Brokers have conflicts of interest  (commissions) with the record-keeper and/or mutual fund company. This makes it impossible for brokers to take on any fiduciary liability. It makes it impractical for them to lead efforts for more transparency and lower fees. Their investment knowledge is often misguided. Please RSVP to roadmap@oreillywa.com or call 760-504-6040. See you at Vista Chamber on Tuesday, Oct. 17, 11:30 for lunch & networking and session starts at 12:00 to 1:30...

401(k): From possible to probable, from reasonable to competitive

  For this article to make sense to the reader, two foundational ideas must be accepted. One is that lower fees lead to better returns in the plan. Two is that investment advice leads to more diversification and better returns. Both are well established in the literature. A number of our blog posts address these important foundational ideas. Not convinced? Click here for a summary of how the Lost Decade hurt those whose investments were concentrated in the S&P 500 Index. This example is perfect for 401(k) plan participants because many participants will place most of their money in large cap US funds because they “understand” these well known companies. 401(k) plans got their largest black eye ever during the Lost Decade. Click here for our blog on the Morningstar report document the relationship between fees and performance. I assure you – this is just the beginning of the proof. Please contact us if you wish to receive more information. The status quo says that if your plan has “reasonable” fees and the fund selection inside the plan “make it possible” for an employee in the plan to have their money in a reasonably diversified portfolio – then you’re meeting basic requirements.. 401(k) plans are based on giving employees freedom to spread their money around the funds as they wish – even if they do it in such a way as to torpedo their returns. Though that seems wrong to us – it is the current situation. We want to make it likely that our beloved employees/co-workers precious retirement assets grow as well as possible – directly impacting the...

Portfolio Performance, Market Behavior as of 6/30/2017 Posted Here

The quarter just ended one business day ago and already we have posted our 6/30/2017 Model Portfolio performance data found here. The quarterly market review is posted here. It quickly informs you what happened in last quarter and first 6 months of year as well as longer term. The last two pages of the quarterly market review reports on the relationship of stock market performance and interest rates. Most assume that the relationship is clear- guess again. In a week or two we’ll have our 401(k) numbers and will add them here. What happened in the last quarter and first 6 months in our portfolios. Well, steady goes the ship – boringly good.  The 100% stock portfolio is up about 8% for the year and just under 3% for quarter. Volatility is low. Some industry pundits are saying, “This is scary that it is not scary”. Their worry is that something will upset the apple cart and the market will get more volatile. My reaction, “”Of course, that will happen – it is NORMAL! And there’s nothing you can do about it – except try not to watch the market that closely!” Ok, ok, I will get off my soapbox! So what’s been happening with various asset classes in recent times? The “rest of the world” stock index that we show as a benchmark in our model data has been on a tear compared to its performance over the last 18 1/2 years. It was up 14.1% last six months and 5.8% last quarter. To enjoy that you have to own it which our clients do in the DFIEX...

What is the Greatest Opportunity to Improve 401k Plans Today?

What is the greatest opportunity to improve 401(k) plans today? We want as many employees as possible to get to higher account balances as soon as possible! Yep. It’s all about the money! Do you and your fellow employees deserve it? Absolutely you deserve it! A majority of participants allocate their money poorly resulting in less return each year versus what they could have had. That results in less compounding. Repeating that lower return year after year – with the all-important compounding effect – and participants are left with ⅓ to ½ of what they could have had! Ouch! Just a 1-3% less return each year on average is devastating to the final balance at retirement. So we need to improve the allocation of as many account owners as possible. How do we do that? Note, that by definition, 401(k) plan account owners have freedom to place or “allocate” their money in the plan options. Plans must offer “fund education” – but they are not required to offer “investment advice” – advice on how much to place in each fund for best results long term. What’s the solution? I’ll give you two: the band-aid (quick) enhancement and the permanent enhancement. Band-aid Enchancement: Hire a registered investment advisor become the ERISA Section 3(21) advisor to your current plan – who is licensed, willing and able to give investment advice. The investment advisor will help employees significantly improve the return versus employees left to their own devices. Most 401(k) plans have “shiny object funds” that at first glance sound good. An example is “Stable Value”. Stability sounds intriguing. What’s not to like? Well...

A Unique Way to Define Good Investing – Challenge the mainstream!

Over the years, the mainstream financial world has completely misinformed us and misguided us on what constitutes great investing. This is conventional thinking – there’s a far better way. They push the idea of active investing, the exciting idea of “placing bets” on when to buy what and when to sell it. The best way to invest is “own everything” as that way you own each big winner. Statistically proven market behaviors like small company stocks outperforming large company stocks can be employed by a slight over-weighting towards small company stocks. We call that “Evidence-Based Investing” since the strategy is backed by statistical proof or evidence. In the conventional view of investing pushed by the financial mainstream, it is expected that every year there will be capital losses. Enough “losers” are sold near the end of the year to offset capital gains with the goal of zero capital gains taxes. (Legally avoiding taxes is wonderful but not because your net gain each year is zero or less!) It has been common in my investment advisory practice to take on new clients with accumulated “capital loss carryover” from the past. In other words, their investing results have been so poor – that their gains have not overcame their losses. My clients have the opposite problem. After they have been on board for a few years – all their asset classes – their DFA funds – have increased in value. So when we re-balance their portfolio –  capital gains are generated with no capital losses available to offset them. That’s OK. In fact, that’s great! That should be your GOAL. If you’re paying capital gains taxes, it...