Tuesday, December 27, 2016

Blog Ideas

Hi Everybody,

I need your help to improve my blog.  

Please call or email topics you’d like to see in 2017 about personal finance, investments and all-things money.  I’ll probably still sneak in some market comments but want to be sure I cover what’s on your mind.

Next year should be fertile ground on taxes, healthcare and interest rates.  I wouldn’t be surprised to see some de/re/un-regulating in investments too.

Don’t be bashful!  Let us know your burning financial questions and I’ll do my best to get you answers.

Thanks and Happy New Year, Skip

Bonus Blog:

The HWM blog morphed out of my original market letter.  I’d write painstaking research comments and ask clients what they thought.¹  Most said they couldn’t care less and to just do what I thought was best.  There has been more interest in recent Wall Street skullduggery but after a while, people either get it or they won’t.

I do this all day long and forget that not everyone knows what I take for granted.  Demand more!  If you can’t get straight answers anywhere else, let’s see what I can do.  Personal questions are answered privately.  sh  

¹ I sent a market comment to my former partner at Merrill Lynch for proofreading.  He wrote back:  “This is brilliant!  It’s too bad nobody will read it.”  I thought about just stepping on a rake a couple times because it would be faster and probably less painful than scrapping the newsletter.  The comment never saw the light of day and the blog was born.  I still have the rake for emergency editing, though.

Tuesday, December 20, 2016


Every working day I switch-on the computer to check my tasks, schedule and what’s happening in the world.  Before I even get to those, I look at my Gratitude List.

Gratitude is a powerful, positive emotion.  Reminding myself of all my blessings is the perfect way to start the day.  In this season of gratitude, I’d like share some of the things for which I’m so grateful:

  • For the courage, kindness and patience of the woman I love,
  • For a job I enjoy and the ability to help people who like me,
  • To live in a country where I can be as much as I can make of myself and
  • To benefit from others who made the most of their opportunities,
  • To live in a time of health where things that would have killed me in previous generations were better in a week (although slightly less grateful for the cost of insuring care lately 😊),
  • For dear friends and family, both here and gone, who lit my way and
  • Parents who taught me to love learning.

There are others.  Thanks so much for the chance to reaffirm just how much I appreciate being right here right now.  

Enjoy all the blessings of the season with the ones you love, sh  

Monday, December 5, 2016

The Best Laid Plans

The Best Laid Plans   December 2016

A solid financial plan can make life easier.  It informs how you spend, save, invest and even imagine your future.  It’s a support system.

That’s what makes them so risky when done poorly or with the wrong intentions.

Wall Street offers financial planning for two reasons.  The first is to learn enough about a client to cross-sell them as many products as possible.  The nobler reason is to learn as much as you can so you can do what’s right for them.

The printed reports look the same.  If clients even notice, it will be through their planner/advisor’s constant commitment.  A plan isn’t a one-time presentation.  It’s a process.

Advisors need to update these plans frequently.  Your life will change.  Your money will change.  If he (or she) doesn’t keep track, you won’t know how you’re doing.

The plans themselves need periodic maintenance.  I reprogram the interest rates in my bond and cash forecasts.  That’s critical because the default interest settings in these software packages are two to three times higher than we can find in the market today.  Even new plans are much too optimistic out of the box.

This year I’ll stress-test everyone’s plans with a bond bear-market scenario.  That’s item one on our next meeting agenda – and every meeting from then on.  It makes for a long day but the most important thing I can ever do for the people I serve is keep them from trying to retire on income they won’t get.

Which brings us to your advisor. 

Interest rates are as low as they have ever been.  If he hasn’t dragged you in the office lately to explain how he recalculated your lifetime income estimate, reread paragraph 3 above.  It’s a conversation focused on the goal of not running out of money.   

You’d remember it. 

I review a lot of plans for folks who suspect their advisor hasn’t kept-up.  They’re almost always right.  I can usually tell them if their plan has any hope of hitting their goals very quickly.  Explaining why doesn’t take very long either.

The hard part is getting them to bring their plan in.

These impressive volumes still have defenses long after they are doomed.

·        It was a reputable firm,
·        He has credentials,
·        I paid four grand!
·        I’d introduce you but she already has a planner,
·        I’m sure my investment firm monitors my plan,
·        Wall Street will take care of me.

Have I mentioned paragraph 3 lately?

If your plan isn’t getting much love, bring it by the office for a quick check-up.  I can probably tell if you are on-track before you finish your coffee.  There will be no charge or obligation.  Spouses are encouraged and welcome.

Thanks for reading and please forward this to someone who has a neglected plan of their own.  sh

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Wednesday, November 23, 2016

The Qualifying Charitable Distribution

Using the Qualifying Charitable Distribution (QCD) for IRA’s

There is a tax provision that allows people over 70 ½ to transfer up to $100,000 a year from their IRA to a qualifying charity as a direct pass-through.  It usually doesn’t affect your other taxes and can be used to satisfy your Required Minimum Distributions.  In other words – the state and federal governments never see a dime.  

I’d like to come at the opportunity from two different angles.  The first is for people who are both generous to charity and to their family.  The second is for leaders (or soon-to-be leaders) in those charities.

For families: think of this more as succession planning than current tax planning.  

Your family inherits your assets in three buckets.  Bucket one has things like real estate, securities and personal possessions.  Your heirs may get a step-up in the cost basis so all capital gains are forgiven.  Assets pass at 100 cents on the dollar.

Bucket two has life insurance.  Structured correctly, your family gets those benefits income tax free.

Bucket three has assets that are always taxable like annuities and retirement accounts.  If you don’t pay the tax, your heirs will.  Your children (the employed ones) could lose up to 40% of the value to the government.

Bucket three is the low-hanging fruit for charitable giving.  If you want to do right by your church or cause, give them assets with limited value to your taxable heirs.  Leave your family the assets they can keep.  The QCD is a good start.

At your annual financial planning review, make a list of what’s in your three buckets.  You may also find things in the first two you can do without now and enjoy the deduction.  Some gifts are best given from a warm hand.

For inspiring charitable leaders:  This isn’t about using the QCD – it’s about selling it.

You know people who could contribute a lot more than they have.  Next time you ask for a donation, DO NOT ask for cash!

Try this instead:
Hello Jeff, It’s campaign time again.  Will you be using the new IRA direct transfer this year?


It’s a loophole that allows folks to transfer money directly from their IRA to charities like us without paying any taxes.  You can use it to avoid taxes on your required distributions too.  It’s limited to a hundred thousand dollars a year – but we can work around that.  Handy estate gift too …
Er, uh ….

Why don’t you and Helen join us for lunch next Thursday?  I can tell you how we’re taking advantage of the opportunity.

See you then.

Let’s break this down:  In a few sentences, you significantly raised the bar, brought new assets into the conversation, broached death and taxes tactfully, let him know he’s not alone and closed for the “ask” appointment.

Does it matter if he isn’t 70 ½ yet?  No.  Taking money from an IRA and deducting it works about the same as the pass-through for most people in their sixties.

Does it matter if he doesn’t even have an IRA?  No. There may be things in buckets one and two that offer nice write-offs.  

What does matter is you just started a peer-to-peer conversation about his serious money.  Cash is a byproduct of assets.  Go for the source!

BTW, big checks like this make nice challenge grants to help other contributors find their wallets.  Leverage them.  Maybe Jeff can make a couple calls.

Your pancake breakfast isn’t going to restore the chapel.  Be inspirational!  

If I can help explain this to friends who serve, just say when and where and I’ll be there.

As always, the opinions expressed here are mine and don’t necessarily reflect the views of LPL Financial or anyone else.  This is generic information so definitely run this by your tax and legal advisors for your specific situation.  They may have even better ways to have your cake and eat it too.  sh