Articles on Wealth Management Topics

Returns in financial markets are often cyclical. That is, multi-year periods during which asset classes or investing styles or mutual fund sectors succeed in generating above-average returns are usually followed by multi-year periods of disappointing returns, and vice versa. Since this market behavior is a key tenet on which our contrarian investment philosophy rests, let's explore the academic research supporting it and the ramifications for successful long-term investing.

After having played political ping-pong with them for almost a decade, Congress finally made qualified charitable distributions (QCD's) a permanent feature of the tax code late in 2015. And that's a good thing: (a) for those who consider their IRA required minimum distributions to be an unneeded and tax-inefficient nuisance, (b) for charitably-minded retirees, and (c) for charities in general.

The Bipartisan Budget Act of 2015 was a mixed blessing for investors and retirees. As in most bipartisan compromises, there was plenty to dislike in that budget agreement. It did away with a couple of coordinated Social Security claiming strategies, "file-and-suspend" and "filing a restricted application", that were deemed by the Administration to be unintended loopholes.

Roth 401(k) contributions are especially advantageous to younger workers still looking forward to their peak earning years. And for higher-paid employees, Roth 401(k)'s may be the only way for them to contribute to Roth-style accounts. Now here's a way - courtesy of some fairly recent clarification from the IRS - to potentially supercharge the pace of your contributions to Roth-style accounts at the workplace, regardless of whether or not your employer offers a Roth 401(k) feature.

One of the major factors to consider when deciding whether to rollover a retirement plan account to an IRA is investment flexibility. An IRA typically allows its owner almost unlimited investment flexibility. In contrast, a 401k, 403b or 457 retirement plan account-holder is constrained to choose from among the menu of investment options made available by the plan's sponsor and service provider.

Target-date mutual funds have been attracting more and more assets during the last decade, primarily as a result of their burgeoning use in 401k and 403b plans. Plan sponsors and participants alike are drawn to the simplicity of TDF's, but as is often the case, the easy solution is not the best one. The weaknesses of target-date funds stem from three words: lack of customization.

The seemingly endless debate about the standards of care with which various types of financial advisors are legally required to treat their clients received some much-needed attention in Congress recently. Given that the SEC and DOL are both working on new rules governing the relationship between advisors and clients, it's critical for current and prospective consumers of financial advisory services to understand the regulatory environment and to be aware of recent developments.

New 401k plan design features (auto-enrollment, auto-escalation, and riskier default investment options) are based on the knowledge that, in general, investors and retirement savers do not make very good financial decisions. Reams of academic research support this conclusion.

If you rely on the media, and particularly the local media, for your coverage of the stock market, you will find that the Dow Jones Industrial Average (DJIA) is the most oft-quoted measure of how the stock market performed on a given day. And yet most stock market professionals - portfolio managers, analysts, strategists and the like - will refer to the S&P 500 Index instead of the DJIA as their preferred yardstick of market performance. Why is this?

The decision as to whether or not to rollover a retirement plan account to an IRA should be based on more factors than just the associated mutual fund management expenses. On its website, the Dept. of Labor provides guidance to retirement plan participants, i.e. employees, on how to evaluate the fees and expenses associated with their plan: "... don’t consider fees in a vacuum. They are only one part of the bigger picture including investment risks and returns and the extent and quality of services provided. Keep in mind the importance of diversifying your investments."