NY Times Special Section – Retirement Sept. 16th, 2011

The New York Times has a Special Section on Retirement today (Friday, Sept 16th, 2011). This is the lead article, but it has a total of 10 articles on various aspects of Retirement from Long-Term Care Insurance, lowering fees on IRAs and 401(k)s, to cautions about annuities.  If you get a chance, buy todays paper; Section F or go to nytimes.com.  Have a Great weekend!

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Posted in Advisor Insights, Financial Planning, Insurance, Investing, Resources, Retirement, Taxes

Vanguard Now the Nations Largest Mutual Fund Provider

I receive many publications every week, both on-line and hard copy, such as newsletters, blogs and magazines.  I scan for interesting and compelling articles and pass them on to you with commentary.

Last week the Kiplinger’s Personal Finance magazine had an in-depth article about Vanguard’s rise to the top.  I couldn’t agree more with their analysis and insights.

There are hundreds of Mutual Fund companies out there.  So how do you know which ones, what specific funds or how many to use?  You can search and search and analyze and analyze, but I have a way to simplify that task significantly.

Start your search with Vanguard first.  Just give me a call and I’ll help you.  I’m a virtual wiz at using their on-line site and research tools.  I have an advisor-exclusive access, which is available to all advisors everywhere, through advisors.vanguard.com and have all the necessary information about funds, at my fingertips.

Last year Vanguard became the largest, and in my opinion the best, mutual fund provider, surpassing Fidelity Investments.  I have used Vanguard accounts and Vanguard funds for many years and encourage all of my clients to at least consider using Vanguard.  As I see it, the reason that Vanguard is succeeding is that they have super-low fees,  expense ratios and no-load/no-fee funds, that are consistently competitively ranked against their peers and they have a toll-free client phone support service, called Vanguard Concierge Services, that is superb; no long waits, it’s here in America and they actually are experts AND actually are people; no recorded phone trees!

Until next time, Watch Your Expenses!

Posted in Advisor Insights, Financial Planning, Industry Statistics, Investing, Resources, Retirement

Interesting Financial Planning Statistics

Fun Statistics to see how you compare to rest of the U.S.

Financial Planning can sometimes be a pretty dry topic for some of us (not me of course), so here are some very interesting statistics about Americans, their savings habits, retirement plans, credit card use and other fascinating pieces of trivia.  What are the percentages of:

  • U.S. wealth owned by women?
  • Workers 45-54 that have less than $25,000 saved for retirement?
  • Workers 45-54 (that same group that has less than $25,000 saved) who plan to retire at 65?
  • Household debt as a percentage of personal disposable income?
  • Homes worth at least $1,000,000?
  • Average credit card balance in dollars?
  • Eligible participants who made use of the age catch-up provision for their employer-sponsored retirement plan?
  • Average amount American personally saved in June 2005?
  • Decline in Long-Term care policies purchased by Americans?
  • Number of companies selling Long-Term Care Insurance in 2005 versus 2001?

Here is the article that gives you the answers to these topics. There are a couple of other pieces of interesting information and fun tidbits about how emotions affect investment decisions and statistics about Registered Investment Advisors.

Posted in Advisor Insights

The Paradox of Long-Term Care Insurance

Those who can afford it, don’t need it; and those who can’t afford it, do!

The decision to purchase Long Term Care Insurance (LTCI) is not a simple one.  Nor is LTCI needed by everyone.  So how do you decide?

This is a decision that my clients and I discuss thoroughly.  This is a very personal decision and depends on every client’s unique needs.  I help my clients with their decision by first obtaining several quotes (illustrations) from a trusted LTCI broker and CFP®.  Once we have the costs and benefits in front of us, these are some of the things we consider before they decide whether to buy.

  1. Low income?
    1.  Might you, at some point, qualify for Medicaid benefits?
  2. Support system
    1. Can your family and friends provide some of your long-term care?
    2. Think about whether you would want this.
  3. Premiums
    1.  Consider seriously whether you can afford to pay the premiums for long-term care insurance not just now but far into the future. Remember that premiums may rise as your income falls.
  4. Out-of-pocket payments
    1. Your assets may cover out-of-pocket expenses for long-term care.
    2. With the right equation, long-term care insurance enables you to protect a good chunk of those assets.
  5. Why Buy Long-Term Care Insurance?
    1. To save resources for heirs
    2. To spare family members from providing your care
    3.  To live longer—and independently
  6. When should you buy it?

  7. How to Shop for Coverage
    1. In California, make sure to check out the California Partnership for Long Term Care.

It is not a quick decision, and needs to be thoroughly discussed.

Here is a good article that takes you through some of the issues:

AARP.com  Long-Term Care Insurance: Do You Need It?

Posted in Insurance, Retirement | Tagged , , , ,

Common Flaws in Estate Planning

Unearthing Problems Can Be as Simple as Asking a Few Questions

Asking these eight questions can prevent anguish and save money and time at a moment when you or your loved ones can least cope with it; after a death

  1. Do you have a will?
  2. How are your assets titled? (Understand the huge tax impact!)
  3. If you have a trust, did you fund it?
  4. Have Your Power of Attorney and Health Care Power of Attorney been updated for HIPAA?
  5. How old is your Estate Plan?
  6. Have You named the right Executor, Trustee, or Agent?
  7. Have You discussed your Estate Plan with your heirs?
  8. Is your Plan Correct from a tax standpoint?

These are very important questions that most likely will NOT get answered if you use a do-it-yourself Will and Trust from the internet. It is critically important to discuss these issues with your Financial Planner and Estate Planning Attorney.

The Financial Planner will ensure that the documents correctly reflect your financial wishes and the Estate Planning Attorney will ensure that legal details are in place for the proper implementation of your wishes. For your benefit it is very important for the two professionals to work together.

Without these documents, your estate will be carried out “by law” in your current state of residence. Your state has prepared an estate plan for you free of charge. This state provided estate plan is referred to as “intestacy.” Under the laws of intestacy, the estate of a person who dies without a will or trust will pass (after lengthy and costly probate proceedings) to biological relatives under the traditional family model. Not what most people want!

The key is to get this done NOW!

Here is the complete article:

Journal of Financial PlanningFinding Common Flaws in Estate Plans” (October 2005)

Posted in Estate Planning | Tagged , , , ,

Active Management Does Not Work 50% of the Time!

Would you bet your retirement on the flip of a coin?

Of course you wouldn’t bet your retirement on the flip of a coin.  So why would you pay someone else to do it?  By definition, half of active managers do not “beat the Market”; that is what the average is!  So how do you pick a manager in the top half; ahead of time?  Flip a coin?

You can’t rely on the manager’s track record.  Think about it.  Do your chances of flipping a “head” increase if you have already had five heads in a row?  Nope; still 50%.  No manager has consistently beaten the market.  Well, Bernie Madoff did, but he finally got caught.

In the July 2011 edition of Financial Advisor Magazine, an article on the “New Look” of active management suggests that finding an active manager, to add “alpha” to your portfolio, isn’t “hopeless after all”.  That it is “possible to identify managers with the skills to beat the market in the future”.  In this same article, touting this new capability to find those special managers, is this quote:

“Adjusted for the effort involved, indexing is still arguably preferable for most investors.”

Now doesn’t that sound like a resounding endorsement?

To read the entire article, go here, Financial Advisor Magazine – “Old Debate, New Look”: July 2011.

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Welcome to the Compass Rose Financial Planning Blog

Compass Rose Financial Planning is an independent, fee-only financial planning firm, providing financial and investing advice on an hourly basis. We specialize in helping you “Chart Your Financial Future”.

Our approach to financial planning focuses on you and understanding your unique set of financial objectives. We then fashion a customized comprehensive financial plan tailored to helping you achieve your specific goals.

As independent fee-only financial planners, we are not committed to any investment product or service, and work exclusively for the benefit of our clients. In fact, as registered investment advisors, we have a legal fiduciary obligation to act in each client’s best interests. We care deeply about helping our clients achieve their goals and objectives, and endeavor to provide them with the highest-quality service and guidance.

We look forward to speaking with you about scheduling a complimentary consultation, and getting acquainted with you to show you the financial benefits that can result from our financial planning services

Posted in Education/College, Estate Planning, Financial Planning, Industry Statistics, Insurance, Investing, Resources, Retirement, Taxes | Tagged , , | 1 Comment