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Fiduciary

Positive Thinking – Fiduciary Rule

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Despite the news that advisers may not be legally required to provide advice that benefits their clients more than themselves (in the form of commissions and kickbacks) we’ve seen a lot of good come from the fiduciary rule already.

These are the four major benefits we’ve seen:

1. Many major investment companies are making changes to their fee structure. Several of them have said they will maintain these changes even if the rule is postponed.

Take a look at the following list of brokers who are changing their practice whether or not the Fiduciary Rule goes through:

A Complete List of Brokers and Their Approach to ‘The Fiduciary Rule’ - WSJ
A Complete List of Brokers and Their Approach to ‘The Fiduciary Rule’ – WSJ
Some brokerages have already rolled out a number of changes to comply with the fiduciary rule and are sticking with plans to improve disclosures to investors—regardless of the rule’s fate.

2. Investors are taking the time to educate themselves rather than blindly trust their advisers.

The following two articles are great examples of how investors are educating and empowering themselves to work with fiduciaries rather than commission based advisers.

How the Benefits of the DOL Fiduciary Rule Have Already Taken Root | IRIS
How the Benefits of the DOL Fiduciary Rule Have Already Taken Root | IRIS
When Linda and Bill came into my office, I could sense their hesitancy right away. And when they told me their story, I could understand why they were so apprehensive about meeting with a financial advisor. They had, quite simply, learned not to trust.

Ask your broker/adviser about the Fiduciary Rule

I thought it might be worthwhile to email my financial services company (Schwab) and ask them if they were planning to adhere to the standard of the proposed fiduciary rule despite Trump’s delay of its implementation. The answer I got back was polite,…
via: dailykos.com

3. Outlets are providing more and more education for investors.

Individuals are encouraged to arms themselves with information rather than trusting their adviser is always putting their best interests first:

The 21 Questions You’re Going to Need to Ask About Investment Fees - The New York Times
The 21 Questions You’re Going to Need to Ask About Investment Fees – The New York Times
Are financial advisers trying to part you from your money in ways you don’t understand? Ask them this set of questions.

4. Hundreds of advisers are coming out of the woodwork to declare themselves “Fee Only” and “Fiduciaries” whether or not the rule goes into place.

Take a look at some of the hashtags on twitter: #FeeOnly#Fiduciary and our personal favorite (our new hashtag) #FiduciaryDefender

As new information pours in daily, we’ll continue to do our part to defend the Fiduciary Rule and fight for applicability.

Don’t forget, there is still hope! This was definitely our favorite headline from last week:

Ask your broker/adviser about the Fiduciary Rule
I thought it might be worthwhile to email my financial services company (Schwab) and ask them if they were planning to adhere to the standard of the proposed fiduciary rule despite Trump’s delay of its implementation. The answer I got back was polite,…
The 21 Questions You’re Going to Need to Ask About Investment Fees - The New York Times
The 21 Questions You’re Going to Need to Ask About Investment Fees – The New York Times
Are financial advisers trying to part you from your money in ways you don’t understand? Ask them this set of questions.
DOL Wins Fiduciary Rule Case in Texas
DOL Wins Fiduciary Rule Case in Texas
Congress “gave the DOL broad discretion” to protect retirement investors, the decision says.
Until we hear differently, we’re going to continue thinking positively and counting down to the April 10th date!

Access Denied? Download DOL Fiduciary Rule FAQs Here

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Hoping to read the Consumer FAQs that the DOL published? Unfortunately, they are no longer available on their website. The page that used to host the FAQs now simply says “Access Denied.” Don’t worry, we have you covered! You can download the FAQs below.

 

Water Cooler Wisdom: Fourth Quarter 2016 The “Trump Bump”

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The U.S. stock market soared after Trump’s electoral victory.  Investors and traders put bets on his pledge to reduce corporate tax rates, pull back regulations and increase infrastructure spending. As seen in the chart on the right, fourth quarter returns for the U.S. stock market were higher for small companies and value-oriented stocks. Looking forward, the common theme among market forecasters is a low to moderate US stock market return (mid-single digit). This may be due to current valuations (see chart below) with price to earnings ratios well above their historical norms and an underlying fear of bubbles resulting from the Great Recession.

During a market update call on January 10th, an adviser asked if the “Trump Bump” could really be paid for by the President-elect.  The market strategist explained it may be possible through reducing corporate tax rates and that every 1% drop in the effective corporate tax rate potentially generates an additional $1.50 of earnings for the S&P 500, currently at $115 per share (see attachment “Corporate profits”).
“If Trump dropped the current effective tax rate from 26% to 18%,” the strategist hypothesized, “earnings per share would increase to $128 and pay for the rally.” Ironically, “in each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability…for tax years 2008 to 2012, profitable large U.S. corporations paid, on average, U.S. federal income taxes amounting to about 14 percent of the pretax net income that they reported in their financial statements (for those entities included in their tax returns).”[1]

So, what do we know?  There is a general concern about a continued decline in Treasury prices that coincides with the expectation of three Federal Reserve rate hikes in 2017. Also, leading economists like Trump’s commitment to infrastructure spending and believe it will boost non-college wages and jobs while, at the same time, they strongly disagree with his isolationist policies and deregulation of the energy industry.[2]

What we don’t know?… the price of populism. I could not find an estimate on the timeframe or projected cost to Americans that economists fear.  By the time you read this, America will have inaugurated Donald Trump as President of the United States and we will be embarking on his “100-day action plan to Make America Great Again” (attached). Whether it’s due to economic insecurity or a cultural backlash, Europeans and Americans have voted for protectionist leaders that have made big promises of change. Perhaps America will be the model for Brexit.

[1] GAO-16-363:  Published:  March 17, 2016 “Most Large Profitable U.S. Corporations Paid Tax but Effective Tax Rates Differed Significantly from the Statutory Rate”

[2] httpss://www.igmchicago.org/surveys/100-day-plan

Here’s to a Successful Financial 2017!

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Are you ready to make 2017 the year you finally get all your finances in order?

 

Do you ever find yourself asking some of the following questions:

  • Should I focus on paying down my credit cards first, or should I start putting aside money for retirement?
  • Should retirement fund planning come before saving for my children’s college?
  • How much should I have in an emergency fund?
  • How do I know how much to allocate towards savings, retirement, and an emergency fund?
  • What type of accounts should I put my retirement money in?

These questions are what makes getting your finances in order so overwhelming.

Announcing Onward!

Onward is our new Individual Financial Planning monthly subscription model that will lead you through all the necessary steps to meet your financial goals.

Here’s how it works:

  • Initial meeting to determine:
    • Current financial situation
    • Financial needs
    • Financial goals
  • Castle Rock Investment Company creates a unique plan to address your most pressing needs. For example:
    • Do you already have savings? If not, we work with you to include it in your budget.
    • Do you have life and disability insurance? If not, we call one of our trusted contacts to reach out to you. We provide our recommendations to them based on your goals.
  • Castle Rock Investment Company develops a highly individual plan to meet all of your future needs to help you meet goals. This may include some of the following:
    • Retiring early
    • College savings
    • Paying off debt
    • Investing more (or less) aggressively
  • You get to be in the driver’s seat! Each of the plans include an estimate of the number of hours that it will take to meet your financial needs. You choose how much you want to spend each month or how quickly you want the tasks completed. We work at your pace!
  • Castle Rock Investment Company provides monthly reports on work completed, so you always know you are receiving value for your money.
  • If at any time you need a service or product we don’t provide (car insurance, for example), we will work with our trusted contacts to find exactly what will help you meet your needs and goals.

Onward subscriptions are $100/hour. (50% off our project based fees!)

If your finances are simple, you may only need to purchase 1-2 hours a month to work through everything you need to have your finances in order.  More complicated finances may need more hours or take longer to complete, you decide!

Take a look at our price list to see how long various tasks take.

At no time do we charge any fees or take commissions on any of our recommendations. You will always pay the same subscription rate, $100 an hour, for as many hours as you’ve chosen each month.

Make 2017 the year you get your finances under control! Call Michele Suriano at 303.725.7086 today to set up an appointment. You can also email at MSuriano@CastleRockInvesting.com, or just stop by and visit at 333 Perry Street, Suite 208 in Castle Rock, CO.

 

Ask Your Financial Adviser: Do You Adhere to the Fiduciary Standard?

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Fiduciary Financial Adviser EthicsGive your Financial Adviser a call this week and ask them this question:

“Do you adhere to the Fiduciary Standard?”

This one question could save you a great deal of money.

If they say yes, this means they are putting your interests first when recommending where to invest your retirement funds.

If they say no, then they are able to make recommendations that benefit them (in the form of a commission, for example) even if it is not the best choice for your money. It’s probably time to walk away.

Consider your retirement money and how hard you’ve worked for it. Do you want your adviser to put your interests first? 

Over the next couple of weeks we’ll discuss more about how working with an adviser that is not a Fiduciary can impact you, and we’ll cover some of the misinformation out there about the Fiduciary Standard which will go into affect April 10th, 2017.

Castle Rock Investment Company has been a Fiduciary since opening 10 years ago. Our project based and monthly retainer pricing model ensures that you always know how much you are paying us. We value transparency and never charge hidden fees or earn a commission on our recommendations.

Call us at 303.725.7086 or email Michele Suriano at MSuriano@CastleRockInvesting.com today to start working with a Financial Adviser who will always put your interests first.

Will Trump Repeal the Fiduciary Rule?

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For those who work for Broker-Dealers and Registered Investment Advisers, no one is certain whether Donald Trump or the Republican Party will attempt to eliminate the Fiduciary Rule or keep it intact. But before we get ahead of ourselves it is important to ask one question, will Donald Trump or the Republican Party be able to dismantle the Fiduciary Rule before it becomes enforceable on April 10th, 2017?

Although we cannot answer this question in confidence just yet, repealing this legislation will be quite a task for a few reasons:

  1. With the Fiduciary Rule being effective since April 2016, the rule cannot just simply be thrown out by an executive order. It is also worthy to note that the legislation took 6 years to be written, so the likelihood of the DOL eliminating it is extremely slim.
  2. Broker-Dealers, Insurance Firms, and Investment Advisers have already spent significant resources in designing compliance friendly products and re-inventing their business platforms. So, if the rule were to be thrown out, the government could have dozens of lawsuits on their hands, especially from those who were for the rule.
  3. Despite the Republican Party holding the majority in Congress, they still do not have enough seats to overthrow a filibuster from the Senate. In addition, repealing legislation can take months or even years, during which the rule could have been enforceable for a notable amount of time.
  4. With Donald Trump already planning to tackle dozens of issues in his first 100 days, repealing the Fiduciary Rule is more than likely not his top priority. The rule will also become enforceable by the 80th day of his presidency.

Although it appears that the Fiduciary Rule is here to stay, we will keep you updated if there is anything that will threaten the rule.

Prepare for the Unexpected!

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Ever wonder what would happen if you were not able to make critical decisions by yourself because you were incapacitated? Is there anything you can do to prepare for the unexpected? Yes, there is! While you are still able to do so, there are three crucial documents that all adults should have to be prepared for one of life’s major curveballs. The documents include:

  1. The Financial Power of Attorney (“FPOA”): This is a document that allows an individual (the “principal”) to appoint someone (an “agent”) to make financial decisions on their behalf. This authority can be in effect immediately or come into force when the principal is incapacitated. This can also be beneficial for those who travel internationally and will not be available to sign financial documents.
  2. The Medical Power of Attorney (“MPOA”): This is a document that appoints an agent to make most medical decisions on someone’s behalf if they are incapacitated. It is crucial to also include something called a HIPAA waiver which will allow the agent to access medical records. Without the HIPAA waiver, the agent might not be able to act in the best interest of the principal due to lack of information. It is also important to know that if the principal is in terminal condition, a MPOA will not suffice. In that instance, there is another document that will.
  3. The Living Will/Advanced Directive: This document will allow an individual to decide how they want to be treated in the instance that they are in terminal condition and cannot communicate verbally. For instance, the individual can elect to refuse to be on life support or to be heavily medicated so they can pass peacefully. But perhaps the reason why this document is so crucial is because it will remove the burden from family members required to make these painful decisions and can even prevent families from falling apart due to disagreements.

So, what if you have children or if you were to pass away earlier than expected? If so, how can you communicate those wishes to your children along with other family members?

Contact Michele at MSuriano@CastleRockInvesting.com or (303) 725.7086 today to get your documents in order.