Retirement

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.

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).

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.

New regulations, including the SECURE, CARES and CalSavers acts, are opening opportunities for advisors to build 401(k) assets. Technology is now available to support the ways in which 401(k) plans have been revolutionized. Advisors who capitalize on this innovation will add assets that are insulated from competitors. In this webinar, you will learn how advisors are recovering years of overpaid corporate taxes for clients in order to gain new AUM while exploring the SECURE Act and R&D Credit. You will also learn:

• How the SECURE, CARES and CalSavers acts have changed the way advisors can oversee 401(k) plans
• How nascent technology makes teamwork easier for you.
• How to uncover overlooked tax credit dollars for your corporate clients and gain additional AUM.
• How federal incentives and state regulations are developing new markets across the US from California to New York and Massachusetts. These are new markets that didn't previously exist.
• How to use regulations, tax credits, and technology for your clients to deepen your advantage.

At a time when some Americans are being tempted to pour their savings into risky investments, the son of a Wall Street veteran is encouraging them to set aside more money.

How do the ultra-wealthy find financial advisors? What are they looking for, and how can your firm use that knowledge to cater to this hyper-specific audience?

It certainly feels different this time. Acknowledging that difference will enhance relationships with your clients.

Seven reasons Americans are “nowhere near as alienated from their democratic system” as Germans in the 1920s.

A former AQR research head says Biden-Harris propose to tax 401(k) plans at both contribution and distribution.

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

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 $17,220 for an annualized real return of 10.92%.

What does the ratio of unemployment claims tell us about where we are in the business cycle and recession risk?

When government forces businesses to close (even if it is for a pandemic), it's a "taking" in the legal sense. And we can think about $3 trillion in extra federal spending as "just compensation" to businesses and workers for that taking. Basically, we decided to borrow from future generations in an attempt to stop a virus and save the economy.

In a low-yield environment, advisors need to use financial planning tools like no-commission annuities to improve after-tax, after-advisory fee bond returns.

Supply is getting tight. Helium is notoriously difficult and expensive to store, for the very good reason that it escapes every known container over time.

The unintended consequences from recent Fed “policy” changes, not to mention those initiated in prior decades, have been at the very epicenter of some of the national problems we have. The Fed would vigorously deny this course, but the results are plain for all to see.

This commentary has been updated to include this morning's release of Nonfarm Employment. August's 1.37M increase in total nonfarm payrolls had revisions that resulted in 39K fewer jobs than previously reported. The Investing.com consensus was for 1.4M jobs gained and the unemployment rate to decrease to 9.8%.

Major tech-focused shares fell after helping drive the fastest stock market recovery in history.

This morning's employment report for August showed a 1.37M increase in total nonfarm payrolls, which was slightly below the Investing.com forecast of 1.4M.

Why there’s still value in a value allocation.

Bond investors face a challenging environment. The federal funds rate is back near zero, the 10-year Treasury yield remains stuck in a 0.5%-to-0.75% range, and inflation-adjusted (real) yields are deep in negative territory.

The 40 Act has been effectively repealed. But its passing has gone unnoticed. In the long shadow of the market crash and severe depression, the 40 Act was the equivalent of investors’ civil rights legislation.

Your chance of closing business with an existing client is 72%. Most of the income you make from any one client will be ensuing sales, not from the initial solution.

My experience is that 80% of the people who should be making some change will tune out the entire Medicare hoopla that the annual election period (AEP) brings.

Five companies now comprise 26% of the market capitalization of the S&P 500® Index, making for the most concentrated U.S. equity market in the last 40 years. What are the potential dangers of this for investors?

The recent imbalances in the stock market can lead to vulnerability; rebalancing portfolios may be valuable to help balance exposure to U.S. capitalization-weighted benchmarks relative to international stocks.

Asset managers and others are furious over a proposed DOL rule that they say is based on a flawed and unsupported assumption that ESG funds give up financial returns in favor of “non-pecuniary” rewards.

Given the upcoming election, advisors are going to be hijacked into awkward political conversations with clients. Here are five ways to handle those cringey dialogues you just don’t want to have.

Active nontransparent ETFs (ANTS) have been much in the news lately, and many wealth managers have asked, “How does this affect my practice and my clients?”

Tamar Frankel may well be the godmother of fiduciary law. In this interview, she says that the regulators do not understand conflicts of interest.

Earlier this year, Jeremy Siegel said that, “75/25 is the new 60/40,” a recommendation to raise stock allocations to make up for lower bond yields. However, what matters for investors saving for retirement is not the asset class performance, but how those returns translate into retirement consumption.

The Investment Advisers Act of 1940, more commonly known as the 40 Act, is a U.S. federal law that defines the role and responsibilities of an investment advisor. Prompted in part by a 1935 report to Congress on investment trusts and investment companies prepared by the SEC, the act provides the legal groundwork for monitoring those who advise pension funds, individuals and institutions on investing. It specifies what qualifies as investment advice and stipulates who must register with state and federal regulators in order to dispense it.

Personal Income (excluding Transfer Receipts) in July rose 1.03% and is down 1.7% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.71%. The real number is down 2.7% year-over-year.

With the release of this morning's report on July Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.18% month-over-month change in disposable income was at -0.15% when we adjust for inflation. This is an increase from last month's 1.36% nominal and 1.83% real decreases last month. The year-over-year metrics are 8.96% nominal and 7.89% real.

As we have been discussing, this past week, the S&P 500 index set an all-time high. Importantly, the breakout to all-time highs confirms the 35% decline in March was only a correction and not a bear market. The implications are important as the change of definition suggests a bear market still lurks for the full-market cycle to complete.

Latest insights on the disruptive effects of the pandemic and what those mean for credit.

Since the inflation cocktail is closely related to value stock outperformance, we are very excited about our future value investing possibilities.

In a speedy round-trip, the S&P 500 hit an all-time high last week; meaning the rally since March is now an “official” bull market.

One of the biggest differences between live and virtual meetings is the importance of visual illustrations. Virtual interactions are the perfect medium for using pictures to support a sales presentation. In fact, illustrations can make the difference between a successful encounter and a waste of time.

My family office has decided to take Jeffrey Gundlach’s general advice and look at the areas in common stocks that have been damaged but not supported by Fed actions.

The number of Americans filing for initial jobless claims this week spiked above 1 million, while the number of deaths attributed to COVID-19 remains above 1,000 a day. But there was much else to celebrate.

As a result of the Federal Reserve’s efforts to shore up credit markets, the leveraged credit sector has delivered stellar performance since the lows in March.

The Absolute Capital Opportunities Fund (CAPOX) uses a flexible approach to value investing. It is sub-advised by a team at Chicago-based Kovitz, led by Mark C. Rosland and Joel D. Hirsh. As of May 31st, 2020 its cumulative return was 29.49% versus 1.03% for the HFRX equity hedge index.

In 2019, the bull market thinking of fixed income investors argued for a more disciplined approach to risk and return. The markets today are facing very different circumstances, but are suffering from the same lack of risk management.

I realized that it’s been so long since I started my NewsLetter, most of you won’t know its origins. To bring you up to date, here’s the intro to the first one.

Women face a disproportionate risk of losing their jobs as a result of the pandemic.

It’s not rare for a small group of stocks to account for a large percentage of the S&P 500. What is important is the relative performance of that group to the rest.

Election Day is eleven weeks from tomorrow. In political time, this is an eternity. However, with the White House, about one-third of the Senate, and the entire House of Representatives on the ballot, this election is significant. Particularly because the two presidential candidates have such stark differences in policy perspectives, especially with respect to taxes.

Given Biden's current lead in the polls and the possibility of Democrats gaining control of the Senate, his tax plan may eventually be passed by Congress. Regardless of your political views, it's not too soon to consider the possible implications for your financial planning.

The overall economic outlook depends on the virus, efforts to contain it, and the degree of fiscal support. We’ve had a sharp- but-partial rebound in May and June, following a steep decline in March and April. The pace of improvement is expected to moderate. The impact of the pandemic has not been felt evenly.

The price of gold had its first down week since early June, ending a spectacular nine-week rally. The yellow metal briefly fell below $1,900 an ounce on Wednesday as stocks neared their all-time closing high and the 10-year Treasury yield jumped on record supply.

Although certain high-frequency data haven’t improved markedly, the threat of the virus has started to recede.

This year our annual summertime report, “Charts for the Beach”, visually highlights newsworthy issues that aren’t yet in the news.

Eight advisors describe the worst money moves they’ve witnessed clients make in a recession.

Trump has deferred hundreds of billions in payroll tax levies and is contemplating another executive action that would reduce capital gains taxes for investors.

In recent months, investment-grade debt has experienced a ferocious rally. What’s next?

Roth 401(k) plans are becoming more widely available. Fidelity Investments says 70% of company plans now offer a Roth option, up from 59% just three years ago. But only 12% of employees are participating in these plans.

The pandemic has forced many families to make a difficult choice: Should elderly parents stay in retirement communities or nursing homes, or should they be brought to live at home?

How do you develop a plan when you don’t know what to plan for? That is the question faced by every family with a child ready to apply for college. But that plan need not be made in a vacuum.

We have a big economic calendar with reports on inflation, small business optimism, retail sales, consumer confidence, and unemployment claims. I expect the data to continue occupation of the back seat.

Financial advisors should incorporate actuarial financial planning process (or components of it) into their planning toolkits.

There’s a small portion of the bond market that investors may have overlooked in the past, but should now consider—the taxable municipal bond market.

I give these brilliant investment strategies a failing grade.

According to a new study by the left-leaning Roosevelt Institute, a universal basic income could permanently make U.S. economy trillions of dollars larger. While such socialistic policies sound great in theory, history, and data, show it isn’t the economic savior it is touted to be.

By leveraging their networks and calling in favors, VIPs seek ways to circumvent the normal system as they strive to receive the best health care. Yet, paradoxically, VIPs often receive suboptimal – or even dangerous – care.

Record state budget gaps could reignite efforts by officials to reduce pension benefits, raise employee contributions or eliminate traditional pensions altogether.

As an advisor, effectively communicating with your clients is an integral part of maintaining and growing your business. In the current era of working from home and social distancing this task has been even more difficult as many face-to-face interactions have been replaced by phone calls and Zoom meetings.

The reductions are part of sweeping measures -- from staff salary freezes to suspending new hiring -- that U.S. colleges are taking to contend with the financial fallout from the Covid-19 pandemic.

Among the many significant developments in the world that investors should be considering as part of their long-term thinking, one of the issues that concerns me the most is China.

The pandemic creates a good opportunity to make Social Security more sustainable.

Americans are working longer for financial reasons – they can’t afford to retire. But what few realize are the enormous economic and social benefits that accrue to those workers and the companies they serve.

We face an important economic calendar and earnings reports from 192 companies in the S&P 500. We will get important data on sentiment, personal income and spending, housing, employment claims, inflation, manufacturing.

Despite the surging stock market from the March lows, trillions in liquidity support from the Fed, retirement confidence declined.

In mid-June, my partners and I officially announced that Midwest Financial Partners had become a new, independent RIA firm called Octavia Wealth Advisors. Why did we choose to go independent?

Advisors are blissfully unaware of the risk inherent in their jobs.