July 12, 2017 by  
Filed under 401k & Business Benefits, Latest Posts, Reports & Updates

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Did you know that the Department Of Labor (DOL) “strongly suggests” that every 2-3 years business have their 401k plan independently review for competitiveness by competitors – and document the results?

If your business has a 401k plan, and you are an executive or have anything to do with it you are personally liable.  You may probably be thinking that your plan provider told you that everything is “within reasonable standards” or  “within compliance standards based on new DOL mandates” or “we are fiduciary advisors, so don’t worry about it”.  

As a prudent fiduciary yourself, you should then to ask them to produce documented proof, in writing.  But what exactly would you ask them for?  Unless you work or are educated in fiduciary services how can you evaluate something for which you have limited experience, basis, criteria, nor a guide book, if you will?

We can easily help.  Start by taking our short 401k Compliance Questionnaire to know what you need to look for and if you have any glaring compliance issues.  If you answered  ‘no’ to more than one question we can tell you what you need to correct it and dramatically mitigate your personal liability, reduce costs and increase services while improving your employees’ retirement plans, as mandated by the DOL. Forward this web page to anyone responsible for your 401k , if need be.

2017 Mid-Year Advice

July 11, 2017 by  
Filed under Financial Tips, Latest Posts

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“Hypocrisy is the universal solvent of social relations”.

We live in an uncertain world.  Economies expand and contract.  Interest rates rise and fall.  Markets gyrate up and down.  And nobody gives anyone a warning.  It can be a bit unsettling, especially when one’s life savings are on the line.  It would be great if you could protect your investments so as to be prepared for whatever the future holds.  In fact, you may be able to do so.  You only need to start with the follow five time-tested principles…..

Don’t try to forecast the economy. The national and global economy is, today, too big, too dynamic, and way too complex for anyone, from corporate executives, to central bank presidents, to accurately predict.  So, if you’re running your portfolio based on someone’s guess about how long an economic expansion will last, or when the next recession will occur, you are already off on the wrong foot.  Twice each year The Wall Street Journal polls 55 of the nation’s leading economists and asks what lies ahead for the economy, interest rates, inflation, and the US dollar. Most are way off, and without consensus.

Save more. To ensure a comfortable retirement, we need to save as much as we can, for as long as we can, starting as soon as we can. Millions of Americans believe that the government will deliver the material happiness they deserve, sparing them the trouble and discomfort of striving for it.  More than a quarter of Americans have put aside less than $1,000 for retirement.  Forty two percent have saved less than $10,000.  And 58% have accumulated less than $25,000.  Unfortunately, the average retired worker receives just $1,341 per month from social security.  Without some big changes to our spending habits, those numbers will likely decline over the next decade.

Asset allocate your portfolio –  Diversify!   Asset allocation is the process of finding an optimal mix of investments for a portfolio.  It means dividing ones assets in the correct proportions of stocks, bonds, and other non-correlated assets to allow the best chance of achieving a financial goals while assuming as little risk as possible.   Asset allocation is the single biggest investment decision, responsible for approximately 90% of a portfolio’s long-term return.

Rebalance the portfolio.  Over time, each of the asset classes should generate returns that exceed inflation.  However, they won’t move in lockstep.  Not necessarily undesirable.  And that result should warrant a rebalance of the portfolio, so as to return the whole to its original percentages, by selling back appreciated asset classes, putting the proceeds to work in classes lagging asset classes.  This process forces the portfolio manager to sell high, and buy low.  Paring back on extended assets in this way, reduces risk and generally adds a point to the portfolio when done annually.  While most of us may be reluctant to liquidate a portion of an asset class that has done well, keep in mind that asset classes move in unpredictable up and down cycles, and rebalancing thereby, works to portfolio advantage.  Ignore the siren call of market timers, financial marketers, and economic forecasters, and save more, allocate properly and rebalance annually.  Cover these bases and stay on track to reach your financial goal.

Last but not least, is one of the most misunderstood pieces of advice given within the financial services industry: Don’t try to time the market (not to be confused with ‘timing the economy’) determining when to invest.  It does seem rather easy, in hind sight, when you look at a chart of past bull and bear markets.  “If only I had gotten in down here, and then out somewhere up there, and then back in around here”.  Trying to switch into the market rallies, and in and out for the corrections, or even just trying to call the major turns every decade, or so, can be a waste of time and money.

Sure, anyone can make a good call (and whoever does so, will likely brag about it).  But to successfully time the market, one must make at least three good calls:  Buy at the right time; get out at the right time; and then, buy back in at the right time.  Otherwise “one” is out of luck, because the long-term direction of the stock market is “up”.

The exception to this rule of market timing is when there are overwhelming data or a proven strategy involved in the investment process.For instance, if you are deciding how to reallocate a large amount of cash it is crucial to determine if market data, based on historical experience seems to discriminate against, or favor, a specific asset class at any point in time.

A simple and traditional solution to a very volatile equity market may be to utilize a dollar-cost-averaging (DCA) strategy. Another, more involved process would be to employ a tactical strategy that takes the emotion out of decisions by using algorithmic, computerized models, which strive to make money and save gains no matter which direction the market goes.

Obviously, we are available to elaborate on this and other topics in more detail.  We want to meet with you to review your financial plan.  Please call to schedule a meeting at a time convenient for you.

(We offer a copy of our firm ADV II, annually, upon request)

Best Regards,

Richard St-Laurent, cwp