Insights

Third Quarter 2019 | One of the most pertinent subjects that we address in the practice of financial planning is lifestyle (level of spending, primarily on consumption). It is of central importance to the planning process since the relationship between spending and resources available is the ultimate key to long-term financial security. At a fundamental level, savings is the difference between what we produce and what we consume; assuming the production is greater than the consumption.

Second Quarter 2018 | In considering claiming strategies for Social Security, one can consider many factors, including other resources, age, age of spouse, level of benefit, spouses own benefits, health, estate desires, tax effects, effects on Medicare Premiums, etc. One of the most common processes is to try to predict one's life span in order to maximize the total benefit over that interval. This method boils down to the following general rule: If you live long, it pays to wait; if you live short, it pays to not wait. Problem is, we don't know, for the most part, whether we will live long or short. Also, other considerations may outweigh simple maximization.

First Quarter 2018 | We've been publishing some pieces on behavioral finance and cognitive biases in recent weeks. This is a look at a laundry list of known biases and priors that affect the financial decisions that individuals make. This is an area of inquiry that has become more prominent in recent years. A recent book, The Undoing Project by Michael Lewis tells the story of two of the pioneers in this research. Daniel Kahneman and Amos Tversky, two Israeli psychologists, who started some 40-odd years ago to identify, evaluate, and document behavioral biases that show up in decision-making. Their work was the inception of Behavioral Finance. Another source in this area is Kahneman’s own book Thinking Fast and Slow. In his book, Kahneman describes much of research that forms the basis of his life’s work. Most interesting, I think, is the tour of the two decision-making systems we all operate with as a part of our original equipment.

Fourth Quarter 2017 | Tax reform is now real and as we expected in early November, the changes are fairly consequential.

Third Quarter 2017 | The breach of the Equifax credit reporting database that occurred several months ago exposed the personal information of almost half of the US population. This event has raised the risk level on personal privacy; exposure of personally identifiable information and identity theft. While it may seem that much personal information is already exposed in a number of ways, and that efforts to minimize exposure may be futile, we believe strongly that it is prudent to take all reasonable measures to maintain information security.

Second Quarter 2017 | The Department Of Labor (DOL) Fiduciary rule, which has been addressed here previously has gone into effect, but the ultimate future of the rule remains mired in the political crosswinds. Whether the rule is retained or not is only of minor consequence at this point. The rule is deeply flawed in that it only addresses certain "accounts" and doesn't address other "accounts". Most consumers have no clue as to the subtleties of how the rule may or may not apply. The rule does not really clarify the underlying relationship between client and advisor.