Blog - Page 33 of 71 - NorthStar Capital Advisors

6 Core Values a [Good] Financial Planner Provides

A good financial planner is client-centric and focused on improving your “Return on Life”. At NorthStar Capital Advisors, we focus on six key value propositions in this dimension:

Organization. We will help bring order to your financial life, by assisting you in getting your financial house in order (at both the “macro” level of investments, insurance, estate, taxes, etc., and also the “micro” level of household cash flow).

Accountability. We will help you follow through on financial commitments, by working with you to prioritize your goals, show you the steps you need to take, and regularly review your progress towards achieving them.

Objectivity. We bring insight from the outside to help you avoid emotionally driven decisions in important money matters, by being available to consult with you at key moments of decision-making, doing the research necessary to ensure you have all the information, and managing and disclosing any of our own potential conflicts of interest.

Proactivity. We work with you to anticipate your life transitions and to be financially prepared for them, by regularly assessing any potential life transitions that might be coming, and creating the action plan necessary to address and manage them ahead of time.

Education. We will explore what specific knowledge will be needed to succeed in your situation, by first thoroughly understanding your situation, then providing the necessary resources to facilitate your decisions, and explaining the options and risks associated with each choice.

Partnership. We attempt to help you achieve the best life possible but will work in concert with you, not just for you, to make this possible, by taking the time to clearly understand your background, philosophy, needs and objectives, work collaboratively with you and on your behalf (with your permission), and offer transparency around our own costs and compensation.

Why the big broker behind your financial adviser might be working against you

A report released last week by the Public Investors Arbitration Bar Association (PIABA) pointed out nine big brokerages for advertising as if they are fiduciaries, but denying that standard and renouncing any requirement to avoid conflicted advice in private arbitration hearings.

Those nine brokerages are: Merrill Lynch, Fidelity Investments, Ameriprise, Wells Fargo, Morgan Stanley, Allstate, UBS, Berthel Fisher, and Charles Schwab.

Fiduciaries have a legal requirement to put client interests ahead of all others.

The report includes samples of misleading advertising from major brokerage firms AND the firms’ legal repudiations when their brokers are sued for losses caused by misconduct.

Allstate
Their advertisements say: “Your’e in good hands.”
Their lawyers say: “Allstate Financial Services owed no fiduciary duty to Claimants, and, therefore, no such duty was breached.”

UBS
Their advertisements say: “Until my client knows she comes first. Until I understand what drives her. And what slows her down. Until I know what makes her leap out of bed in the morning. And what keeps her awake at night. Until she understands that I’m always thinking about her investment. (Even if she isn’t.) Not at the office. But at the opera. At a barbecue. In a traffic jam. Until her ambitions feel like my ambitions. Until then. We will not rest. UBS.”
Their lawyers say: “[A] broker does not owe a fiduciary duty to his customer in a non-discretionary account.”

Merrill Lynch
Their advertisements say: “It’s time for a financial strategy that puts your needs and priorities front and center.”
Their lawyers say: “Respondents did not stand in a fiduciary relationship with Claimants.”

Morgan Stanley
Their advertisements say: “Having an intimate knowledge of blue chips and small caps is important. But even more important is an intimate knowledge of you and your goals. Get connected to a Morgan Stanley Financial Advisor and get a more personalized plan for achieving success.”
Their lawyers say: “Claimant’s claim seeks to impose ‘fiduciary’ obligations and duties on Respondents that only arise in very limited circumstances that do not exist here, i.e. where Respondents are given discretionary trading authority over Claimant’s accounts.”

The report succinctly summarizes this disparity:
“On one hand, the firms boast that they offer unconflicted, trustworthy advice while, on the other hand, those same firms argue they are little more than salesmen with a single duty: to execute trades in customers’ accounts.”

Sources:
MarketWatch
USN

10 Things About Living Longer in Retirement

Click the graphic for a better look…

3-D View of the Yield Curve

Here’s an awesome graphic from the New York Times showing the yield curve in three dimensions (time, duration, yield). The yield curve shows how much its costs the federal government to borrow money for a given amount of time, revealing the relationship between long- and short- term interest rates.

Visit the NYT website to continue the 3D exploration.

4 Weeks Until an Important Deadline

Here’s an important reminder if you have an individual retirement account (IRA) or are considering opening an IRA. 2014 contributions to IRAs can still be made up through April 15, 2015.

Make it a double? If you really want to make the most of the growth potential that retirement accounts offer, you should consider making a double contribution this year: a last-minute one for the 2014 tax year and an additional one for 2015, which you’ll claim on the tax return you file next year. That strategy can add much more to your retirement nest egg than you’d think.

2014/2015 Annual IRA Contribution Limits*

Traditional/IRA Rollover: $5,500 ($6,500 if you are 50 years old or older)
Roth IRA: $5,500 ($6,500 if you are 50 years old or older)
SIMPLE IRA: $12,000 (2014), $12,500 (2015) ($14,500/$15,500 if you are 50 years old or older)
SEP IRA: $52,000 (2014), $53,000 (2015)

*Note: The maximum contribution limit is affected by your taxable compensation for the year. Refer to IRS Publication 590 for full details.

The savings, tax deferral, and earnings opportunities of an IRA make good financial sense. The sooner you make your contributions, the more your money can grow.

If you have any questions or would like to make an IRA contribution give us a call at (704) 350-5028 or email info@nstarcaptical.com.

Smart Questions Clients Ask

How much will your financial advisory services cost me, all-in?
What will the additional trading costs be, if any, to implement your strategy?
What are the internal expenses of the funds you use, if any?
What might the taxes on gains or income look like, on average?
Are there costs associated with our transactions that I may not see but will have an effect on my net returns?

These are the questions we get asked by the savviest people who inquire at our firm. Not everyone knows to ask these but we make sure to answer them anyway. Offering transparency around costs is important. If your financial advisor is not able to give you clear answers to these smart questions, you need to reconsider if your advisor has your best interests in mind.

I Can Teach You How to Time the Market [cartoon]

You Are Your #1 Threat

The chart above from Dimensional Fund Advisors is an excellent demonstration of the resilience of the market. Each event marked on the timeline was accompanied by thousands of articles and TV reports discussing at great length how bad things were going to get and what you supposedly needed to do. Despite all that noise, the market just keeps powering up over the long term.

Individual investors (that’s you!) constitute the number one threat to their own portfolio. How’s that? In the face of market stress and volatility, they usual reaction is some combination of the following :

Fleeing into the arms of a charlatan who purports to having predicted it
Buying into Black Swan funds and protective products that cap all future upside and cost a fortune
Obsessing over hedges after the fact
Selling out with big (permanent) losses and sitting in cash
Freezing 401(k) contributions or having retirement cash allocated to money market funds
Excessive trading
Planting a flag and being unwilling to publicly change our minds in the face of new evidence
Throwing money at bizarre alternatives like coins, bars, bricks and bullion which have no proven ability to fund a retirement
Conflating political views with investment expectations

According to adivsor Josh Brown, “every one of these things is extremely detrimental to our financial health. In some cases, the damage could be irreversible. Nothing kills the long-term returns of a portfolio like throwing away the playbook in the heat of a market crisis.”

Source: TRB

Simple, Bedrock Rules on Personal Finance

Financial columnist Brett Arends’ final piece for the Wall Street Journal is absolutely foundational!

Ignore economic and financial forecasts. Their purpose is to keep forecasters employed. Most professional economists were blindsided in 2008 by the biggest financial collapse in 70 years—and by the stock market’s recovery.

Ignore “expert” stock picks. The stocks that Wall Street experts like most generally fare no better than those they like least—or stocks picked at random.

Keep it simple. Complicated financial strategies and investments are mostly designed to enrich managers and salesmen.

Buy individual stocks only as a gamble. Never buy fashionable investments.

Put most of your long-term portfolio into equities. While equities are volatile, they generally produce the best long-term returns—typically about 4% to 5% a year above inflation. But remember to hang on when they plummet.

Invest globally, not just in the U.S. Foreign stock markets, in the aggregate, are no riskier than U.S. markets and offer terrific diversification.

Buy Treasurys, too: In addition to stocks, own some long-term Treasury bonds and some Treasury inflation-protected securities. These are likely to hold their value, or even go up, when stocks crash.

Save early, save often. Time and patience are the investor’s best friends.

Use those free shelters. Contribute as much as possible to your company’s 401(k) plan or equivalent (such as 403(b) or 457), and at least enough to get the company match. If you can, contribute to individual retirement accounts for yourself, and a nonworking spouse, as well.

Plan for a long life. A third of your adult life could come after you’re 65. Try to pay off your mortgage, and save at least 10 times your annual salary, by the time you retire. Delay taking Social Security for as long as you can up to the age of 70, to maximize each monthly check.

Beware of buying your employer’s stock. Your job there is probably financial exposure enough.

Protect your nest egg. Don’t drain your retirement savings to pay for your child’s college education. Likewise, don’t empty your 401(k) or IRAs to start a business. You will be taxed and penalized on the withdrawals even if you lose the money.

Teach your children about money. Teach them early and often. No one else will, and they will have to make their own way.

Don’t Drop the Ball…on your New Year’s financial resolutions

It’s early February and “crunch time” for those of us trying to keep our New Year’s resolutions.

If you made a financial resolution to ring in 2015 then you’re not alone! 31% of Americans set financial objectives this year. There are powerful reasons to make and keep such resolutions:

For those who made a resolution in 2014, 74% say they succeeded in getting at least halfway to their goal
51% of people who made a financial resolution at the start of 2014 feel that they are now in a better financial situation
42% of those surveyed say sticking to financial resolution is easier than sticking to other popular resolutions
For those who made a resolution for 2014, 29% say there were completely successful in reaching their goal
64% say being encouraged by the progress made is the #1 motivator to stick with financial resolutions

Mandi Woodruff posted the interesting chart below on the leading New Year’s financial resolutions for the past few years. Encouragingly, “develop a plan to reach longer-term goals” is a popular choice, increasing to 14 percent. This is a more than twofold increase since 2011, when it was at a single-digit low of 6 percent.

Need help keeping and tracking your resolutions? Contact us!

Don’t Drop the Ball on Your 2015 Financial Resolutions

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