Retirement

A new decade, seismic shifts and the importance of diversification.

Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.

Note: This commentary has been updated with the latest numbers from Friday's Employment Report. Consider: Today nearly one in three of the 65-69 cohort and one in five of the 70-74 cohort are in the labor force.

The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution).

We've updated this series to include the December release of the Consumer Price Index as the deflator and the December monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $39,848, down 11.4% from 45-plus years ago.

We've updated our monthly workforce analysis to include Friday's Employment Report for December. The unemployment remained at 3.5%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) came in at 145K.

With markets continuing their upward trajectory, it is easy to assume central banks are in control and things are going well. Some insights from how people interact with their environment in traffic reveal a very different perspective, however.

Let’s talk about a few large “surprise” Medicare-related expenses that your clients may not know about.

Awareness has become widespread that incomes before taxes of the bottom half – or more – of the American population have stagnated in the last 40 years, while incomes at the top rungs have soared. A new book shows that the divide is even greater after taxes.

Let's take a closer look at Friday's employment report numbers on Full and Part-Time Employment.

With simmering trade tensions, sputtering growth worldwide and a historically long, but slow, U.S. economic expansion, investors will have to brace themselves for a challenging investment environment in 2020. Change, adaptability and diversification are the key words. Here are steps you can take early in 2020 to position your investment program well for the rest of the year.

Comparison-created unhappiness and insecurity is pervasive, judging from the amount of spam touting everything from weight-loss to plastic surgery. The basic principle seems to be that whatever we have is enough, until we see someone else who has more. Whatever the reason, comparison in financial markets can lead to remarkably bad decisions.

This is the year-end letter I sent to our clients. Feel free to adapt it for your own use.

Will 2020 be more of the same? Our teams are encouraged by differences they see in the new year; but they remain alert for unexpected downturns.

What does the ratio of unemployment claims tell us about where we are in the business cycle and our current recession risk? At present, the ratio for Continued Claims has been trending down.

With this article I am going to present several ways that investors, especially retired investors, can beat the market without fail. However, what I will be presenting may not be what you are expecting, particularly if you have a narrow notion of what beating the market means.

This commentary has been updated to include this morning's release of Nonfarm Employment. December's 145K increase in total nonfarm payrolls had revisions that resulted in 14K fewer jobs than previously reported. Annual revisions going back to 2015 were made. The Investing.com consensus was for 164K new jobs and the unemployment rate to remain at 3.5%.

This morning's employment report for December showed a 145K increase in total nonfarm payrolls, which was below the Investing.com forecast of 164K.

A few months ago, we published a paper called Institutional investor best practice by 2025. In this paper, we addressed how investors will need to fundamentally change how they approach capturing opportunities, mitigating risks and managing costs within their investment portfolios to set themselves up for success in 2025 and beyond.

Expect a steeper yield curve, according to Jeffrey Gundlach. Investors should be “defensive” with respect to long-term bonds. Gold will go up, inflation will be subdued, there is a 30% to 35% chance of recession and – his “highest conviction” idea – the dollar will weaken. His most surprising prediction was who will be the Democratic nominee.

Our designated successor is not at all like his father, who founded our firm. He is arrogant, does not listen, seems disinterested in the investment side of our business and has already alienated one client by asking inappropriate questions.

The Ten Surprises of 2019 worked out plenty well. While we don't go through this process with the objective of getting a high score, knowing that you have been able to anticipate some of the generally unexpected events that are going to influence the financial markets during the coming year is gratifying.

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $15,872 for an annualized real return of 9.28%.

Progress on the trade front lifted the markets in Q4 but now comes the hard part.

Let’s walk through the first 20 years of the new millennium and the lessons for the next 20 years.

DC plan sponsors are increasingly using TDFs that blend active and passive strategies to seek lower fees and enhanced alpha potential.

Seven things to know about the new U.S. retirement legislation.

The 2020 Decade: Valuations & The Destiny Of Low Returns. As we enter into a new decade, investors have become complacency with high rates of return on stocks. However, what is the likelihood the next decade will deliver the same.

Correct these five common advisor marketing mistakes in 2020. Make it your best year ever and stay true to those resolutions.

A sweeping piece of legislation affecting how individuals save and invest for their retirement, known as the “SECURE Act,” has recently been signed into law. Our investment professionals talk about the implications of the Act, and how it can enhance the retirement security of millions of Americans. And, they outline some changes in the legislation that also affect college savings plans.

The Grinch who stole Christmas is alive and well this year – in the U.S. Congress. Our representatives and senators passed a bill that negatively affects the middle and working class by changing the rules of passing an IRA to one’s heirs.

One of the striking things about bull markets is that they often end in confident exuberance, while simultaneously deteriorating from the inside. We’ve certainly observed this sort of selectivity during the past year. The market advance in 2019 fully recovered the market losses of late-2018, fueled by a wholesale reversal of Fed policy, hopes for a “phase one” trade deal, and as noted below, a bit of confusion about what actually constitutes “quantitative easing.”

The economic calendar is normal in another week split by a holiday. Many market participants will not show up until Thursday – and perhaps not even then. The ISM reports, manufacturing and non-manufacturing, are both post-holiday. My guess is that the financial media will continue the attention to 2020 outlook ideas. Some reporters will take a look instead at events from the past decade.

Great articles don’t always get the readership they deserve. We’ve already posted the 10 most-widely read articles for the past year. Below are another 10 that you might have missed, but I believe merit reading…

As the year winds to a close, take a look back with us at our top ten favorite blog posts of the year—the thought leadership pieces that sparked the highest levels of engagement among our readers.

To celebrate another great year of doing the work I do with my firm’s valued clients, this week’s column is devoted to resolutions I hope you are able to make and keep in your businesses.

As is our custom, we conclude the year by reflecting on the 10 most-read articles over the past 12 months. In decreasing order, based on the number of unique readers, those are…

Like many financial planners, I hope for the day when we are accorded the same professional stature as lawyers and accountants. But the CFP Board should not be put at the helm of that future profession. That would harm consumers and erode the public trust we have worked so hard to engender.

This year marked the introduction of our Gaining Perspective podcast. Here are the 10 most listened to episodes of 2019, starting with the most popular podcast of the year.

Here’s my “wish list” for reforms in 2020, acknowledging that some of these actions may take years, or even decades, to accomplish.

What follows is an interview I conducted with an experienced financial advisor at an anonymous, major brokerage firm. It shows how easily someone can transition from a commission-based, stock-picking mindset to acting as a true fiduciary.

It has been my tradition to informally rate the investment-related books I read in the past year. I have also included some novels and books of general interest. Here is my list of winners and losers.

A brainstorming session hosted by the CFP Board on December 13 offered a look at how the planning profession will evolve over the next 10 years. Here’s a view of the landscape in 2030 and what it will take to get there.

Municipal bonds can continue to provide a number of potential benefits for tax-sensitive investors as we move into 2020, according to Shelia Amoroso, director of Franklin Templeton Fixed Income Group’s Municipal Bond Department. However, following the strong results in 2019, she and the team expect total return potential to be muted in 2020, with likely increased volatility.

Despite Central Bank’s best efforts globally to stoke economic growth by pushing asset prices higher, the effect has been entirely consumed by those with actual savings, and discretionary income, available to invest.

With the likely passage of the SECURE Act within the new government appropriations bill, annuities will gain safe harbor protections. This—and presumed cost concerns—has been a sticking point making some plan sponsors hesitate to offer a lifetime income solution in their defined contribution plans.

With the release of this morning's report on November Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.48% month-over-month change in disposable income was reduced to 0.32% when we adjust for inflation. This is up from last month's -0.02% nominal and down from the -0.26% real increase last month. The year-over-year metrics are 4.01% nominal and 2.50% real.

Personal Income (excluding Transfer Receipts) in November rose 0.63% and is up 4.3% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.47%. The real number is up 2.8% year-over-year.

Argentina and Brazil have an opportunity to reverse a long string of underperformance. The challenges are considerable, but we believe signs of progress in either economy could lead to a significant rerating of their markets.

While US-China trade issues still haven’t been resolved, there are reasons to be optimistic about the prospects for emerging markets in the coming year.

Rick Rieder and Russ Brownback argue that contrary to the many year-end outlooks foreseeing either a recession or a rebound in 2020, the most likely path for the economy and markets is more moderate, which can be encapsulated in their theme of “1.8.”

When isn’t an investment provider an investment provider? When they are a retirement-plan investment provider.

I’ve learned my goal-oriented focus had a negative impact on my happiness. It took an artist and a lizard to show me a better way.

Let me tell you about some really powerful tools that will engage clients more deeply and bring your ongoing client service to life.

The economic calendar is especially important. Several housing reports, JOLTs, and the final estimate for Q3 GDP lead the list. Despite this, I suspect a powerful draw from the Gregorian calendar. It is time for those annual forecasts!

How your firm prices its services is about more than just boosting profit margins. The right fee structure is vital to client satisfaction and your long-term success.

Here are a few steps to separate a potential client from an existing advisor.

A brief monthly update on what's happening in the municipal bond market.

The current path we are on is unsustainable. The remedies being applied today is akin to using aspirin to treat cancer. Sure, it may make you feel better for the moment, but it isn’t curing the problem.

Predicting a major economic or financial event—whether that’s a recession, market downturn or even your own retirement—requires that you also take action. Otherwise your prediction was meaningless.

A review of last month’s market-moving events across countries and asset classes.

Did you know that more than $12 trillion in assets under management are engaged in one or more strategies of sustainable investment in the United States? This comprises more than 25 percent of the professional managed assets across the country and is a 38 percent growth from 2016 figures.

MarketCounsel’s Summit, held earlier this week in Miami, lived up to its reputation as the “all-star game” of financial advisor conferences, attracting top-level executives from throughout the investment industry. Here are three highlights from Tuesday’s sessions.

Where can I find the best content to drive engagement? I’m not looking to provide market commentary. It would be great if I could customize it with our brand but not have to rewrite any of the content.

One of the growing trends in the advisory profession is outsourced investment management – specifically using a unified managed account (UMA) platform. Many advisors have found that those solutions optimized their practices and helped deliver better investment outcomes for clients. I am speaking today the leader of one of the most popular solutions in that market, and we will discuss the trends and disruptors that advisors should prepare for over the coming decade.

We have updated our commentary on household income distribution to include the Census Bureau's release of the 2018 annual data. Our focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 50+ year history of this data series. The analysis offered some fascinating insights into U.S. household incomes. But the classification misses the implications of age for income. Households are by no means locked into the same quintile over time.

Over the course of 20+ years, families have been bamboozled into spending trillions on top-end colleges, while overlooking the fact that it's actually the academic major that is far more important.

The purpose of this article is to better acquaint plan sponsors and service providers, like BDs and RIAs, dealing with 401(k) plans with the requirements they must understand and adhere to under ERISA.

As we mark the golden anniversary of the creation the undertaking we know call “financial planning,” the CFP Board took a decisive step to enforce a real fiduciary standard by requiring disclosure and informed customer consent of material conflicts.

The hedge fund firm Renaissance Technologies, founded by James Simons, has been an object of amazement, admiration, and envy for years, because of the incredibly high investment returns of its flagship Medallion fund. In a new book, author Gregory Zuckerman explains how Renaissance did it. He also shows how a key Renaissance employee used his riches to get Donald Trump elected president.

FINRA’s proposed rule 3241 seeks to mitigate conflicts of interest that may arise when an advisor assumes certain types of fiduciary obligations for a client. It places addition scrutiny in cases where an advisor serves as the trustee or beneficiary for a client.

Considering investment outsourcing? Our CFO weighs in on key and peripheral issues to contemplate.

Rate cuts and overnight operations were important developments this year. Where will the Fed go from here?

While the bulls are certainly hoping the “cash hoard” will flow into U.S. equities, the reality may be quite different.

One of the fastest growing and most active acquirers has been CAPTRUST, an RIA based in Raleigh, NC. In October, it acquired the wealth management business of Boston Advisors. In August, South Texas Money Management joined CAPTRUST. In June, it announced the addition of McQueen, Ball & Associates and Cornerstone Capital Advisors to its growing team. In 2018, CAPTRUST saw 21.5 percent revenue growth and $65 billion in new client assets. The firm now has more than 200 advisors across 43 locations and advises on more than $300 billion in client assets across its wealth management, retirement plan, and endowment and foundation lines of business.