Category Archives: Investing and fiduciary requirements

Updating Your Estate Plan

image of last will and testament

When should you review it? What should you review?    

An estate plan has three objectives. The first goal is to preserve your accumulated wealth. The second goal is to express who will receive your assets after your death. The third goal is to state who will make medical and financial decisions on your behalf if you cannot.

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Good Retirement Savings Habits Before Age 40

investing before age 40

 Some early financial behaviors that may promote a comfortable future.  

You know you should start saving for retirement before you turn 40. What can you start doing today to make that effort more productive, to improve your chances of ending up with more retirement money, rather than less?

Structure your budget with the future in mind. Live within your means and assign a portion of what you earn to retirement savings. How much? Well, any percentage is better than nothing – but, ideally, you pour 10% or more of what you earn into your retirement fund. If that seems excessive, consider this: you are at risk of living 25-30% of your lifetime with no paycheck except for Social Security. (That is, assuming Social Security is still around when you retire.)

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What Are Catch-Up Contributions Really Worth?

What degree of difference could they make for you in retirement?

At a certain age, you are allowed to boost your yearly retirement account contributions. For example, you can direct an extra $1,000 per year into a Roth or traditional IRA starting in the year you turn 50.1

Your initial reaction to that may be: “So what? What will an extra $1,000 a year in retirement savings really do for me?”

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Sometimes the Pundits Get It Wrong

In fact, many predictions about Wall Street have misread the market’s direction.

Trying to determine how Wall Street will behave next week, next month, or next year is difficult. Some feel it is impossible. To predict the near-term direction of the market, you may also need to predict upcoming earnings seasons, central bank policy moves, and the direction of both the domestic and global economy. You might as well forecast the future of the world.

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The Fiduciary Rules has been released – how will it affect you?

A fiduciary is generally someone who has to put the best interests of the beneficiaries first, instead of their own.  While most people think that their investment advisor does that, it much less clear in the investment adviser community, which I have to say has always been somewhat concerning to me.

If you are a business owner, and have a retirement plan, as Trustee of that Plan you are in a fiduciary role- you have to put your employees best interests first.  This means applying the “prudent man” rule to selecting and monitoring investments, among many other things.  But shouldn’t your investment advisor be held to the same standard?  of course.

But that hasn’t been the case.  Under the new rules, you should be paying your adviser on a fee-based contract, and not based on commissions;  that is going to mean ALOT of plans have to change in the next year.  Commission-based payments have a alot of room for “issues” and conflict of interest.

As an example, say the adviser chooses the XYZ large cap fund, which has a cost ratio and commission structure higher than the similar ABC fund.  Did they do that because it is a “better fund” or because it pays more?  Are you prepared, as plan trustee, to defend the definition of “better fund” to your employees?

I have been fee-based in almost all my corporate accounts for years, because I believe that we should agree on what I am paid to do, and how much I get paid to provide those services.

In the end, the fiduciary rule changes may mean very little to you – or they may require wholesale changes to your plan.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck