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Qualified Plan to IRA Rollover Analysis

Factors in the decision can be divided into major (almost always important) and minor (rarely important). Major Factors: Investment Fees – qualified plan options are almost always more expensive than the best options available through an IRA. Advantage: IRA Rollover (at worst a tie) Investment Quality – “quality” refers to considerations such as, but not …

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Risk Tolerance

Many firms use “risk tolerance” questionnaires to determine this for their clients, but a client’s risk tolerance isn’t a static measurement like their height; it varies over time. “Risk tolerance” is a terrible term because it encompasses three different factors: Risk capacity – how much risk the client can afford to take. Risk propensity – how much …

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Tax Opportunities

I know you have probably heard far too much about taxes lately and I am not going to review the recent tax bill here. I want to talk about tax strategies more generally. “No man’s life, liberty or property are safe while the Legislature is in session.”– Gideon J. Tucker, 1866 While many people spend …

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Three More Mental Mistakes

Recently (here) I discussed two common mental mistakes. This month I thought I would add three more: a need to save face, improper extrapolation, and conscious weakness. Saving Face. What I have termed “saving face” is an attempt to not feel stupid, or to avoid regret. People can go to elaborate lengths to feel they …

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Two Mental Mistakes

Most of us are prone to systematic errors in our decisions, and I would like to review two of them that seem to come up frequently. (For more, see here and here.) The first issue is sunk costs. A sunk cost is something that is already spent or some action already taken. The logical error …

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Why We Don’t Invest in Alts

“Alternative” investments (aka “Alts”) are probably best defined as investments that are anything other than stocks or bonds (and cash is just a bond with a really short duration). A few years ago, I got the CAIA (Chartered Alternative Investment Analyst) designation, and I also attend alternatives conferences periodically to be well informed. I went to another …

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Life Planning Questions

This month we are going to take a break from our usual technical topics, and discuss a more fundamental issue. What is the point of all this planning and analysis? To amass the largest investment portfolio possible? NO. It is to reach your highest goals and aspirations. The problem is that many people don’t have …

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Important vs. Urgent

Steven Covey, in his excellent book Seven Habits for Highly Effective People, uses a simple graphic to categorize activities. All activities can be categorized as important or unimportant, and urgent or not urgent. Dwight D. Eisenhower (quoting J. Roscoe Miller) once said in a speech, “The urgent are not important, and the important are never …

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P&C Insurance

We do not sell property and casualty insurance (auto, homeowners, etc.) but we review it because inadequate insurance could thwart the best of investment strategies. This month I will focus on an oft-neglected corner of financial planning and give you a few tips on that most boring of topics, your property and casualty insurance. The …

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Who Knows?

I wrote the following to our clients the morning after the election, but thought it was worth sharing more broadly here: All, Last night and this morning as I watched and thought about the election results, I was reminded of a Chinese parable from the second century BCE. Here is the translation of the fable …

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Efficient Markets

As wealth managers, we are frequently asked some variation of the question “So, what do you think the market is going to do?” or “What do you think of XYZ stock?” Those are difficult questions to answer, and this month’s post is an attempt to explain our perspective. The reason that those questions are problematic …

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Letters of Instruction

Many people have prepared for the future and prepared a will, powers of attorney, etc.  A letter of instruction is not a legal document, but simply a letter that tells survivors where to find things, who to contact for various things, and any other information they will need that they may not know.  This may …

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