Post Equifax Data Breach Ideas

We are not claiming to be experts. We think you will find this a handy starting point. Clients: Most of you have all or some of your accounts held at the TD Ameritrade institutional custodian. Know that we get immediate around the clock notifications of money and securities moving in or out of your accounts. We are notified of new accounts, transfers and closed accounts. If you think that your data has been compromised and are concerned, you can call TD or us and ask for your accounts to be placed in “Loss Prevention”. That means that TD will flag your accounts into a heightened mode of scrutiny. This will also add an inconvenient layer of extra bureaucracy when you want to legitimately access your account. Are you suspicious that you data has been compromised and your identity has been stolen? Then you should call the credit bureaus and ask that they “freeze your credit”. This will prevent the person(s) who potentially stole your identity to purchase big ticket items in your name. Here the bureau numbers for your convenience. Equifax (CBI) (800) 685-1111 Experian (TRW) (888) 397-3742 Trans-Union (800) 916-8800 Paid Protection Services: What about paid protection services like LifeLock? We think these services are worthwhile. It’s best to protect yourself with preventative measures and then LifeLock will help if someone takes advantage despite your good practices. Importance of Passwords: There seems to be no shortage of hackers these days. It’s very important that every password is “strong” and is changed at some regular frequency. It’s easy to get lazy. I recommend that you calendar your password changes so...

H.U.D. Reverse Mortgage Policy Change – Short Fuse!

If you wish to consider how your reverse mortgage would help you under current law versus the new law, you had better contact and meet with your reverse mortgage expert before Sept. 14. On August 29, the Federal office of Housing and Urban Development, which oversees the federal backing of reverse mortgages, announced changes in the reverse mortgage policy. I am not going to get into the technical aspects of the change. Many people are told that a reverse mortgage makes sense for them – and they sit on the sidelines waiting, thinking that they have no need to rush. Now is the time to at least have the meeting! If a reverse mortgage might make sense for you and if you or your spouse are age 62 or older – then you should meet with a reverse mortgage specialist ASAP. If you’re not sure – call us. The net result of the change – you may not be able to get as much out of your home after the change is made. So it is imperative to move now just to know your options – how this change impacts you. Timing? Working backwards, you need to be assigned a case number by Sept 29; you need a 7 day cooling off period, therefore you need to have met and have all your numbers run by Sept 21. However, mortgage professionals are likely to be overrun by this change. So meet with you mortgage professional by Sept 5-14. Reverse Mortgages: A great financial planning tool applied in the correct situations – often misunderstood. This blog is not intended to cover...

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...

Baby Boomers in Business…Soon to Exit….

I recently attended a fantastic 2-day conference on wealth management put on by the Southern California Institute (www.scinstitute.org). Here are some statistics – and you’ll soon understand that this is a crisis: Baby Boomers own 63% of the businesses in USA.  80-90% of the wealth is in their business. 76% wish to transition from their businesses in the next 10 years. This represents 4.5 million businesses, and +$10 trillion in wealth. However, only 49% have a transition plan. Of all the businesses that are put on the market to sell, only 30% are sold. Of all the businesses – only 30% of family-owned businesses make it to the 2nd generation and only 12% survive to the 3rd generation. The bottom line is this – very few plan and therefore are at significant risk of accessing the wealth in their business after sacrificing untold hours running their businesses. That’s awful! How can business owners exit their business? There are 4 “inside” options and 3 “external” options. Inside: Intergenerational Transfer, Management Buyout, Sale to Existing Partners or Sale to Employees. External: Sale to 3rd party, Recapitalization, Orderly Liquidation We are ignoring taking the company public (IPO) since that represents such a tiny percentage of companies. We urge all Baby Boomer business owners to strongly consider professional help with transitioning their businesses. Keep in mind that excellence in “exit planning” is simply excellence in business planning. The owner is growing the company, increasing profits, making it easier to run  – so they benefit now but also so they have a much better chance of a good outcome in exiting the business. We have access to the best resources...