“Real financial planners”

Hoping that you agree that my firm qualifies for the term in the article, “Real Financial Planners” as in “the professionals by any title that you would send your mother to see about her money”, I am forwarding the article

As he says, it is hard for the “Secret Society” to get attention. I agree, as my practice is built on refers and no advertising or publicity.

So I ask for comments on the article and my firm

AND if you think of any one that could benefit from, as he says, “REAL professionals giving REAL advice that will make a REAL impact in people’s lives”, please tell me or ask them to call…..

Thank you,

Steven
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Posted: by Carl Richards | Bio

09-11-09 | 2:25pm
Real Financial Advice

Carl Richards: REAL financial planners unite. The people need you.

A few months ago, I started talking about what I call the Secret Society of REAL Financial Planners. These are the professionals by any title that you would send your mother to see about her money.

You know, people you can trust.

It might seem trite or old fashion, but that is what the best in our industry do. They put the interests of their clients first. They care. They are honest. They act as if they are fiduciaries whether they are or not.

The reason that this Society is secret it that we never hear these stories. If all you know of our industry was what you saw on TV, then you would think we are either circus clowns or criminals.

It is time for this to change.

At this point, it will do no good to complain about the “unfair” coverage or argue publicly about terms like “fee-only” or “fiduciary.” What we need is more members of the Secret Society to get out and tell the story, and one by one, let people know that there are indeed REAL professionals giving REAL advice that will make a REAL impact in people’s lives.

Rise up Secret Society: These people need us!

Sticking to your asset allocation strategy works over time

The article below sites examples of how the advice we gave last fall of holding has paid off.

The article also notes that “buy and hold” is short hand for

“a ‘strategic policy with rebalancing.’ As Paul [Kaplan of MorningStar] points out, buy-and-hold benefits greatly from rebalancing. And, of course, while the rebalancing would have been no fun at all during 2008, it would have maintained a healthy allocation in the REITs, small-value stocks, and other such fare that have rebounded so strongly over the past six months.”

So, now in hindsight, we have proof that the recommendations last fall were well founded

Let me know if you have questions on rebalancing now or any other matters.

Thanks,

Steven

Posted: by John Rekenthaler | Bio

09-10-09 | 7:31am

In Praise of Buy-and-Hold

If there was one abiding lesson to come from 2008, it was that buy-and-hold strategies based on long-term strategic allocations had failed. They were the product of a bull-market mindset. Rather than a static policy, investors need a flexible investment approach that recognizes current market and economic conditions, and which responds accordingly.

Or so I have been told, at conferences, and on television, and in Internet articles, and pretty much everywhere, as far as I can tell. Morningstar’s own Investment Conference this past May had not one but two panels that poked at the conventional wisdom.
How does this work in practice, though? It doesn’t, I would submit. Morningstar’s Dan Culloton recently noted the following figures: Vanguard REIT Index Fund, up 82% since March 9; Vanguard Small Cap Value Index, up 75%; and Vanguard Small Cap Index, up 70%.

Wonderful stuff. The sudden surge that occurs only once every several years, at very best–the rare payoff that accrues to those who have the courage to own risky assets.

But let’s say you had followed a flexible investment policy, and cleared your house at some time in 2008 of these illiquid, value-oriented securities, which you correctly surmised would be dragged far, far down during the recession.
I’m saying right here, right now, had you sold those securities in the name of flexibility, you never would have gotten back in them to enjoy their gains.

I remember early March 2009. I was at an institutional investment conference, with stocks dropping daily, the knowledge that bottom-fishing over the previous 18 months had meant nothing but disaster, relentlessly bad economic news, and a series of depressing presentations from Wall Street’s top economists showing absolutely no turnaround in sight. Who was buying?
Well, somebody was, of course, as those stocks stopped falling as of March 9 and started to rise. However, I strongly suspect that the actual buying power was quite modest, that the rally kicked off simply because the sellers were exhausted, and there was a bit of fresh money among those who had never left the market in the first place, to reverse direction. I highly doubt that the truly flexible investment managers decided right then and there, to get back into the market. In fact, I know they didn’t, because as a group the hedge-fund industry missed the March rally entirely.

This is how it always goes. In 1988, in 1991, in 2003, and now in 2009. It seems sound looking back to the previous year to acknowledge the failure of blind, dumb strategic policy, and to embrace common sense. But somehow common sense isn’t all that common when it comes to getting back into the stock market after the decline has occurred. It wasn’t in 1988 and 1989, when the heroes of the 1987 crash lagged dramatically; it wasn’t in the early 1990s; it wasn’t in the middle 2000s, and it won’t be over the next couple of years, either.

There is a time for flexibility. There is a time when we should listen to those who talk about the virtues of not being fully invested. Unfortunately, that time is not now. Not after the losses have been sustained. That time is when the DJIA is at record highs, when people are buzzing about what they saw on CNBC, when Morningstar.com’s boards are buzzing with speculative stock selections.
But who listens then?

To echo Mr. Churchill, buy-and-hold is undoubtedly the worst form of investing–except for the alternatives.*
*Paul Kaplan of Morningstar wishes to inform the audience that Rekenthaler’s term of “buy-and-hold” is a shorthand term for “strategic policy with rebalancing.” As Paul points out, buy-and-hold benefits greatly from rebalancing. And, of course, while the rebalancing would have been no fun at all during 2008, it would have maintained a healthy allocation in the REITs, small-value stocks, and other such fare that have rebounded so strongly over the past six months.

Duly noted.

Analyzing home financing – especially for new home buyers

We have worked with a number of clients recently to refinance first and second home. The rates for a mortgage on a primary residence are still in the lower 5% range …. We did close a few under 5%

For vacation homes and investment properties, the rates are higher

Also, with investment properties, keeping cash flow positive if at all possible is crucial to getting a positive return from the investment.

So, if you have not reviewed your mortgages, and equity lines, now is a good time to do so

We have also helped clients and children of clients buy new homes.

Here, there are questions on gifts, use of trust assets, tax deductions against income that changes so that the rates change so that the deduction value changes.

One client even created a spreadsheet to address all these variables for his daughter, with some input from me. As he observed, the calculus gets very complex.

For example, there are first time home buyer mortgage programs and tax credits, but if the buyer’s income starts at a low level, the tax benefits are not as valuable as …..

My plan is to create a more comprehensive analysis to post on our web site for the first-time home buyers, as we have done for investment property and for purchases with vs. without financing.

If you have questions or comments, please let me know