Our Insights on

  • The Futility of Active Management

    First Quarter 2017

    Throughout the life of this firm, we have as a part of our investment policy discussions, cautioned our clients about the futility of attempting to time the market. There are a number of compelling arguments against the idea of market timing including: the lack of evidence that anyone can do it consistently and regularly, the need to make two decisions in a row correctly (when to buy/sell and when to sell/buy), increased tax drag and trading costs, and the fact that being out of the market on the good days will be devastating to long term returns. There are many more, but we tend to emphasize this last one since it is objective and verifiable and gets to the heart of the matter.

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  • DOL Fiduciary Rule - An Update

    Fourth Quarter 2016

    The landscape for personal financial planning will change this year.  It is highly likely we will see changes in the income tax and estate tax areas.  There has grown up, to the extent it did not exist before, a cottage industry in prognostication about where things are headed.  Of course, like almost all prognostications, most of these will turn out to be wrong and as always we recommend you treat prognostications with a good dose of skepticism.  They are guesses.  No more, no less.

    One subject of interest is whether the recently promulgated DOL (fiduciary) rule, which I discussed in our 1st Quarter 2016 letter, will be repealed or otherwise vacated.

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  • Reverse Mortgages

    Third Quarter 2016

    We have begun to reconsider the use of reverse mortgages. This has been an "against the grain" exercise since we have always preferred to leave the home equity in our plans for clients so that even at an advanced age and out of money, the client would still have the equity in their home to fall back on as a last resort. The availability and continued evolution of reverse mortgages, or Home Equity Conversion Mortgages (HECM's), have prompted us to refine our thinking on this issue.

    The conventional wisdom has been that reverse mortgages are for use as a last-resort. Last resort situations can still be a reason to take out a HECM, but other uses may make the HECM attractive as well.

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  • A Powerful Charitable Device

    Second Quarter 2016

    As a part of the year end legislation in 2015, Congress made permanent a special rule on IRA distributions that can be quite useful and beneficial to those IRA holders that are charitably inclined. Called the Qualifying Charitable Distribution (QCD) rule, the provision allows special tax benefits for an IRA owner who makes a distribution of IRA funds to a qualifying charity. The rule had been in place for several years before, but was of quite limited utility since the QCD was always in the "extenders" legislation that only were extended after the end of the year. That left the use of the provision in a state of being quite uncertain from a planning perspective. Again, now the QCD provision is permanent. How can QCDs work for you?

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  • A New Rule

    First Quarter 2016

    You have probably heard that the Federal Department of Labor (DOL) recently issued a new set of rules that prescribe a standard of conduct for those advising retirement account (including IRA account) holders. The rules provide that advisors, (more particularly brokers and annuity salespeople) can no longer earn commissions and other forms of conflict creating compensation from these advisory arrangements unless the advisors agree to do so pursuant to a Best Interests Contract (BIC) which binds the advice provider to a fiduciary standard.

    The new rule does little to clarify or rationalize the already bewildering landscape of rules of conduct for financial advisors. While it is well-known in the financial services industry that trust is at the heart of the relationship between financial advisor and client, it is also well known that most clients have little clarity as to what ethical standards may apply to their advisor. 

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