Financial Symmetry News & Views

Posts Tagged ‘consumer education’

In response to the many fears and uncertainties that arose during the recent economic crisis, The National Association of Personal Financial Advisors (NAPFA) Consumer Education Foundation sponsored multiple financial advice events around the country as part of the “Your Money Bus” tour.  On Tuesday January 19^th, the “Your Money Bus” rolled in to downtown Raleigh, in partnership with NC State Treasurer Janet Cowell’s office.

With unemployment hovering around 10% and dramatic swings in the stock market, the need for financial advice was very apparent in the crowd of more than 85 that showed up at the State Government Complex in downtown Raleigh.  The impressive turnout of people came with a wide mix of questions that dealt with everything from how much and in which accounts they should be saving to which debts they should be paying down the quickest.

Partners of Financial Symmetry, Allison Berger and Chad Smith, participated in the event for the second consecutive year.

“We’ve really enjoyed being involved with the ‘Your Money Bus’ tour over the last two years.  It’s a great opportunity to spread financial literacy and make a difference in our community.” -Allison Berger

“Volunteering our advice has been a neat way to provide people with action steps that can help them gain some peace of mind when dealing with their finances.” -Chad Smith

Morgan Stanley Smith Barney is offering as much as 330% of a brokers annual production to join the firm.

Bill Ramsay, CFP®, was recently quoted in the November 2009 Investment Advisor magazine.

In the cover story “Reassessing Risk” by Olivia Mellan, Bill discusses his views on risk tolerance:

“My experience is that many people’s tolerance is directly correlated with recent market performance, so we shy away from questionnaires. I’m also wary of the way people can misjudge odds due to things like familiarity bias or the structure of questions.”

…

“We then discuss with clients how that [performed] under different market conditions, and look for their wince point to gauge whether their tolerance is lower than their capacity. If their tolerance is lower, we’ll lower the max equity exposure.”

Click here to read the entire story on InvestmentAdvisor.com.

Protecting What You Have

1:00 pm – 2:00 pm ET

Instructor Roseann Bove, CFP, CLU

NAPFA-Registered Financial Advisor

Your health, family, and home are important and need to be kept safe. Roseann will provide information on how you can protect the things you have through life, health and medical insurance.

Click here to register for this Webinar.

Click here to view archived Webinar sessions.

Elderly fraud continues to be a major obstacle for today’s senior citizens.  This is why we feel it’s essential to do our best to spread awareness about this topic and provide tips of how to avoid these scams in the future.  One of our partners, Chad Smith, CFP®, recently spoke, for the second time, to seniors at the Cary Senior Center.  He described specific techniques and characteristics of scammers, and gave several examples of actual cases, such as fake checks & “sucker lists” that are being used by scammers to lure senior citizens in.

This issue is actually gaining more momentum in the media and in Congress of late.  We’ve provided some information below on recent progress in the efforts being taken to fight this predatory fraud. The following article, published in the Wall Street Journal, provides a real example of elderly fraud and tips of how best to avoid incidents in the future.

A Family’s Fight to Save an Elder From Scammers

Tips for Avoiding Telemarketing Criminals

Some telemarketing pitches are blatantly fraudulent, and you should know the signs, which include:

• Asking you to pay for a prize you’ve won. It’s illegal for any company to ask you to pay or buy something to win a prize, or to claim that paying will increase your chances of winning.
• Asking for upfront fees. It’s illegal for telemarketers to ask for a fee upfront if they claim it’s likely they’ll get you a credit card, loan, or to “repair” your credit.
• Pressure to act immediately.
• Refusal to send written info. Legitimate agencies, charitable or otherwise, should not be reluctant to send you written information about their program or organization.
• Requests for personal financial information. Requests for your personal bank account numbers, or other private information, is a huge warning sign. Never give out your information to an unknown caller.

Ways to fight Elderly Fraud

NC Attorney General’s Consumer Protection Office 1-877-5-NO-SCAM

Fraud Fighter Line 1-800-646-2283

NC Task Force Chair 919-716-6000

Website that compiles recent scams:

The NC Division of Aging and Adult Services Senior Consumer Fraud Task Force

New legislation has also been introduced recently in Congress that would accomplish the following objectives to fight elderly fraud…

• Charge an additional $50,000 civil fine for each violation that is targeted or is committed against a senior.
• Create a national grant program for states to protect seniors from misleading financial advisors claiming to specialize in seniors
• Direct the FTC to establish a one-stop-shop for consumer education on mail, telemarketing and Internet fraud against seniors.
• Establish a grant program to give states and local organizations the resources they need to initiate local mail, telemarketing and Internet fraud prevention and education programs for seniors.
• Declare a “National Senior Fraud Awareness Week” in May – coordinated with Elder Abuse Awareness Month – to increase public awareness of the enormous impact that mail, telemarketing and Internet fraud have on senior citizens in the U.S.
• Initial workshops to educate seniors on how to recognize risk factors and learn about who can help them if they are exploited.

Remember if something sounds too good to be true, it probably is!

“Seniors should be aware that the issue is not if, but when they will be targeted by sophisticated scam artists. Sharing information about how best to prevent these communications and where to report it when they occur, empowers seniors with the tools to fight back.” Chad Smith, CFP®

To request Chad as a speaker at your event, contact him at csmith@finsym.com.

The American Recovery and Reinvestment Act provides better education cost breaks to more taxpayers for 2009 and 2010. Computers, certain software and internet access can be covered by tax free 529 plan distributions as long as they are used by an eligible student while enrolled at an eligible institution.  The ARRA also replaces the Hope education credit with the American opportunity credit.  Key changes from the Hope include: books are now eligible expenses, an increase in the amount of credit available, and higher income limits for eligible taxpayers.  Click here to view more information on IRS.gov.

Chad Smith, CFP® was recently quoted on wsj.com. In the article, “Financial Advisers Look Local,” Shelly Banjo profiled several ways Financial Symmetry was reaching out to clients in the Triangle. Some of these initiatives included working with charitable organizations, educating younger couples, and providing information on the company’s blog.

Download pdf of article

The next NAPFA Consumer Webinar Series is scheduled for September 4th, 2009 from 1:00pm until 2:00pm.  Here’s a preview of the upcoming series, Kids & Money :

“Kids & Money

1:00 pm – 2:00 pm ET

Instructor Linda Leitz, CDP, CFP, EA,

NAPFA Registered Financial Advisor and

Author of The Ultimate Parenting Map to Money Smart Kids

How can you raise your children to be money smart? Linda wrote the book on raising kids to be smarter about money and will share her thoughts on steps you can take today to get your kids on the right money track.”

Click here to read more and to register:  Kids & Money Webinar.

Click here to view the August 7th webinar video, Money 101: Knowing the Basics.

There are two primary types of client relationships in the world of financial investments.  The sales model represented by brokers versus the fiduciary model represented by Registered Investment Advisors.

The following is a good example of the pitfalls of the sales model:

CIT Debt Sold to Widows Has Fine Print Pimco Resists

Notice that FINRA, the self regulatory authority for brokers says:

“….it’s investigating whether the risks associated with the securities were adequately disclosed.”

Well here is an example of so called disclosure:

CIT Group Inc. Prospectus Supplement

It is our opinion that it is ridiculous to expect most Americans to be able to adequately interpret 72 pages of “disclosure” (and this is only the supplement to the initial disclosure document).

Yet the world of FINRA regulation provides the framework for a Prudential spokesman to proclaim:

“As with all bonds, investors choosing to sell the notes before maturity may sell them at market value to other investors and face certain risks, which are fully disclosed at the time of issue…”

In other words, buyer beware.

The inherent problems and conflicts of interest with the sales model is why we choose to operate as Registered Investment Advisors.  Our regulatory framework is the Investment Advisors Act of 1940, which requires that we act in our client’s best interest.  We believe this is the best framework for client relationships.  The SEC is responsible for supervision under the Act, and they have unfortunately been underfunded for the last several years.  We hope that will be corrected as we feel more of the public should be served by Registered Investment Advisors.

All data is not created equal.  The following chart would seem to indicate
that US stocks are more expensive and overvalued then they’ve ever been.

http://www.chartoftheday.com

The rest of the story is that the last 12 months of earnings are not
representative of what earnings will be going forward.  Our best estimate is
that at current price levels, the PE ratio is actually around 13 to 17.  Most
definitely not the most expensive market in history.

Much of our research effort involves separating good data from bad data,
which is essential to gain and maintain a competitive edge against other investors.