Free Money: Paradigm Shift in a Market Economy

"Every night before I rest my head...See those dollar bills go swirling 'round my bed." — "Free Money" as performed by Patti Smith

First in a two-part series

Free money is an attractive proposition. Whether or not it is a healthy economic policy for our nation is a fascinating question.

One of our Presidential hopefuls has made a $1,000 monthly cash gift to all Americans part of his campaign platform. Others have proposed lesser “Freedom Dividends.” The controversial initiative raises both the question of whether we should pay these supplements and how such payments would be financed.

The idea of a universal basic income (UBI) has long been floated by economists. Essentially, citizens are gifted sums of money, usually monthly, and use the cash at their own discretion.

Partnering with a Fiduciary Advisor

One can have a dream, baby…Two can make a dream so real.” — “It Takes Two” as performed by Marvin Gaye and Kim Weston

Part Three in a Three-Part Series

So you’re seriously considering a relationship with a fiduciary investment advisory firm. Let’s examine your potential financial needs, in addition to portfolio management.

You’ll likely want a retirement plan that estimates the probability of meeting your financial goals based on reasonable investment return expectations. And what about estate planning? Will you be selling a business or expecting some other type of liquidity event? Do you need a business valuation performed to sell that business? Do you want assistance establishing and managing a trust for children or heirs who might need a little extra financial assistance? Will you need tax planning and tax preparation? Tell your advisor and ask how many of those functions they can handle for you. The more services they provide in-house, the more simplified your financial life becomes.

Second Meeting Questions for a Fiduciary Advisor

“If I should call you up…invest a dime…And you say you belong to me…and ease my mind." — “Happy Together” as performed by The Turtles

Part Two in a Three-Part Series

Let's say you've enjoyed an initial consultation with a fiduciary investment advisor. Now let’s talk about one of the most important yet rarely discussed issues in your potential new relationship. Who will actually be investing your assets and managing your portfolio?

The question appears counterintuitive because the average investor assumes that the advisor being interviewed will choose and monitor the investments. And because this is sometimes not the case, oftentimes accountability becomes blurred and more fees can be involved for the investor.

Some advisors are “relationship managers” who recruit new clients but do not actually manage assets. And this is completely ethical. But you should understand that this is the arrangement when you hire him.

Say you hire the advisor, and he places your assets in a mutual fund. Somewhere there is a mutual fund manager, whom you will likely never meet, who’s choosing a basket of securities into which your assets are being placed. Two questions. “How has your advisor vetted this mutual fund manager?” and “What are you paying him in addition to your advisor?”

Fiduciary Pledge and Concierge Financial Services

“Trust in me in all you do…Have the faith I have in you.” — “Trust in Me” as performed by Etta James

First in a Three-Part Series

More people are utilizing the services of investment advisors and financial planners than at any time in our history. If you're seeking a relationship with an investment advisor, or even if you already have one, here's a short list of appropriate discussion topics. 

One single question winnows the field and helps define your relationship: "Do you serve as a fiduciary 100% of the time?" You've worked diligently to build your nest egg. You want someone sitting on the same side of the table as you, in all aspects of your financial affairs. Ask the potential advisor if he will sign a fiduciary pledge.

It can read: “I pledge to act as a fiduciary and in the best interests of my client at all times. I will always disclose any conflicts of interest which could impact the impartiality of my advice, and I will always disclose any and all fees received as a result of my services.”…

Vermont and the Plight of Rural America

"I lived with the decent folks in the hills of old Vermont…” — "Yankee Lady" as performed by Jesse Winchester

Its beauty is unparalleled. To drive across a one-lane covered bridge and gaze down at the Ottauquechee River, rippling white over rounded stones, surrounded by verdant Vermont hillsides, is to behold astounding scenery. 

Strolling main streets in idyllic communities like Quechee and Woodstock, where many churches and other architectural landmarks date from the 1700's, connects one with our proud heritage. Calvin Coolidge was so enamored with his boyhood home of Plymouth Notch that he took the oath of office as our 30th President there.

While my recent Vermont visit was purely recreational, a few local economic trends were difficult to miss…

Investment Menus, Fiduciary Oversight and Bruce Hornsby

"That's just the way it is... Some things will never change." — “The Way It Is” as performed by Bruce Hornsby and The Range

Few of us are shocked that money influences public policy. That private companies are exerting significant pressure on legislation regarding retirement savings, however, is troubling.

Some background. Congress is initiating legislation that encourages Americans to save more for retirement through participation in their work-sponsored 401(k). The actual term “401(k)” comes from the tax code that laid the groundwork for what has become one of the most popular retirement planning vehicles for many American workers. Plans are established by employers, who maintain fiduciary responsibility to the plan, and employee contributions are tax-deferred until money is withdrawn from the account.

While the information above is innocuous in theory, the fiduciary responsibility is extremely important. Employers are charged with providing a “menu” of investment options. These often include low-fee, stable value and target date mutual funds that generally allow employees to choose their investments from a reasonably diversified set of options. 

Contributing to Commerce and Combating Loneliness

"Hard work is a way of life for me..." — "Southern Star" as performed by Alabama

Seniors are blowing the lid off of traditional thinking regarding work, productivity and age. And I'm hopeful that you and I can carry the same spirit into the future.

Recently I read an article penned by Steve Hartman of CBS News about the working career of Benny Ficeto of Perth Amboy, New Jersey. Benny began shining shoes at age seven. As a young man, he served as a gunner on a B-25 Mitchell bomber in World War II. After the war, he worked as the supervisor of a warehouse for a company that distributed cosmetics.

Benny tried retirement in the 1980s and found that he missed the friendships and interactions associated with employment. So he began a series of odd jobs. Today, he bags groceries in four-hour shifts, two days a week. At age 97…

Family Budgets, the Debt Ceiling and the O'Jays

"For a small piece of carries a lot of weight." — "For The Love of Money" as performed by The O'Jays

Most of us budget our personal discretionary spending, spreading out major purchases over several months and paychecks. For a really large expenditure, we may even utilize the time-honored process of saving for several months or, heaven forbid, even a year.

Our Federal Government? Not so much. Theirs is a "spend what we want now, and borrow more if we run out of money" approach. The Treasury Department recently announced that if Congress doesn't raise the federal borrowing limit before their August recess, the government will likely not be able to pay its bills come September. This raise-the-debt-ceiling game has become all too familiar in recent years.

Mustangs, Minivans, SUV's and Wilson Pickett

"I bought you a brand new Mustang... 'bout 1965..." — "Mustang Sally" as performed by Wilson Pickett

The Mark Zuckerberg of our generation has died.

Close your eyes for a moment and picture a group of wild horses, manes flowing in the wind, galloping through an open range. Lee Iacocca didn't create this ad; an agency did. But he invented the car that it promoted.

Another famous commercial showed a Mustang turning an unattractive, drab-looking fellow into a dashing man about town. The tag line? "Something has happened to Henry…A Mustang has happened to Henry."

How Often Should We Check Our Investment Accounts

“They say a watched pot won't ever boil. Well I closed my eyes and nothing changed; Just some water getting hotter in the flames.” — “Neighborhood #4 (7 Kettles)” as performed by Arcade Fire

How often should we check our investment accounts? 

This question resonated with me recently when I read an article which suggested that young investors should only look at their 401(k) balance on their first day of plan participation and then again at retirement. That way they wouldn’t fiddle with their investments too much and would be amazed at the growth in their account over their career.

While that’s wildly unrealistic, especially because most people will likely change jobs and roll over retirement funds many times in their career, the concept has merit. 

Still, most of us are going to take a gander at our balance every once in a while. But how often is too often?