A few years ago a friend suggested I might enjoy meeting the management team of a newly formed investment firm. A specialty insurer decided to expand their service offering to include wealth management. They believed their insurance niche would provide them easy entree' to the professional community they served.
During the mid-2000s I was a partner in a private trust company that was in the midst of reinventing itself. For years the firm had used a regional large cap investment firm to manage client portfolios, but at my urging the firm adopted a markets-based investment approach using DFA funds in 2003. Our clientele and new business focus were mostly inheritors of wealth with portofolios of $5 million or more. This was during the "heydey" of hedge funds, and we encountered many a prospective client that scoffed at the DFA approach, insisting their investment needs required more sophistication, sophistication that only hedge funds provided.
The "Groundhog Day" stock market correction has lots of investors casting a wary eye on CNBC wondering if this is the beginning of another major market decline. In just two trading days (FEB 2 & 5) the Dow Jones declined roughly 1500 points or about 8%. While we would urge investors to remain disciplined and not sell in a panic, it may be an appropriate time to reassess the value you receive from your financial advisor.
For decades Wall Street has promoted the idea that investment success can only be achieved by entrusting one's money to the smartest, hard-working analysts who consistently pick the "right" stocks, the ones that will do better than the market. I can recall in the late 1990's suggesting to the trust department where I worked that perhaps we should index a portion of our client portfolios. It was not well-received.
The Social Security cost of living adjustment (COLA) increased 2% for 2018. However, some recepients will be surprised to find that this COLA was actually offset by higher Medicare Part B premiums, which are deducted directly from benefit payments. Higher income retirees can see their Part B premiums increase due to a surcharge known as Income Related Monthly Adjustment Amount. Depending on one's income, the Medicare B surcharge may exceed the COLA.
Have you resolved to get your financial house in order in 2018? Here are five financial mistakes to avoid in the new year.