Tag Archives: 401k

Mind Over Money

MIND OVER MONEY

Emotion often drives our financial decisions, even when logic should. 

When we go to the grocery store, we seldom shop on logic alone. We may not even buy on price. We buy one type of yogurt over another because of brand loyalty, or because one brand has more appealing packaging than another. We buy five bananas because they are on sale for 29 cents this week – the bargain is right there; why not seize the opportunity? We pick up that gourmet ice cream that everyone gets – if everyone buys it, it must be a winner. 

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New Rule, Nicer Returns?

image of retirement plan

Could the new fiduciary rule effectively enhance portfolio performance for retirement savers?

A change is coming. The Department of Labor is introducing a new rule regarding retirement accounts – a rule that is profoundly impacting the financial services industry. The rule will require financial services professionals to serve as fiduciaries when they provide advice about IRAs or workplace retirement plans.1,2

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What Expenses Could Change When You Retire?

retirement image

Some costs could rise, fall or even disappear.

Your retirement may seem near at hand or far away, but one thing is certain: your future will differ from your present. Financially, that fact is worth remembering. Some of the costs you have paid regularly all these years may suddenly decrease or fade away. Others may increase.

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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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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.
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