Retirement Planning: Roth 401k vs Traditional 401k

Contributed by: Kali Hassinger, CFP® Kali Hassinger

With our country’s ever-changing tax policies, we are left to hypothesize what taxation will look like in the coming years. Striking the right balance between taxation now and taxation during retirement is complicated, but a recent study has shown that it may not significantly affect our overall savings behaviors. Since 2006, employers have had the option to offer Roth 401ks to employees, and approximately 49% of employers now include this option as part of their incentive package. 

Roth 401ks effectively remove a large portion of the taxation mystery because all employee contributions are made on an after-tax basis. That means that you pay the tax today at the current and stated rate, but, assuming you wait until 59 ½ and have held the account for five years, all withdrawals are tax-free. All employer matches and contributions, however, are still made on a before-tax basis, so there will still be a tax liability for those future withdrawals.

The Harvard Business School study compared the current and previous savings rates of employees who were given the option to contribute to a Roth 401k and a traditional before-tax 401k. Somewhat surprisingly, there were no significant changes or differences between the before-tax 401k and Roth 401k savings rates. It would be easy to assume that Roth 401ks would have a lower contribution rate because current taxes would eat away at the employee’s ability to save. However, it instead appears that employees continued to use the same savings rates as before-tax 401ks, effectively reducing their current cash flow. Although the participant will pay more tax today, they will have greater purchasing power during retirement. 

The study also touched on the significant participation rate differences between 401k plans that automatically enrolled employees and those that didn’t. With an automatic enrollment plan, unless they choose otherwise, the employee will contribute at least the plan’s default deferral percentage. The lowest participation rate in the studied auto-enroll plans was 90%, while the highest participation rate for a non-enrollment plan (meaning the employees had to manually choose to participate) was 64%.

The study itself didn’t address the question of which type of 401k contribution is more beneficial from a tax or long-term standpoint, but a Roth 401k would inarguably have more purchasing power than a traditional 401k with the same balance. Regardless of what your current retirement plan offers, you can feel confident knowing that both before-tax and Roth 401ks can provide a secure retirement when paired with solid and strategic planning.

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®


This information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Opinions expressed are those of Kali Hassinger and are not necessarily those of Raymond James. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. Every investor's situation is unique, you should consider your investment goals, risk tolerance and time horizon before making any investment decision. Prior to making an investment decision, please consult with a financial professional about your individual situation.

Sources: http://www.hbs.edu/faculty/Publication%20Files/front-loading_taxation_b10a2f45-48ff-45ff-9547-99039cf8e9da.pdf

https://www.wsj.com/articles/roth-vs-traditional-401-k-study-finds-a-clear-winner-1497233040?mod=e2fb&mg=prod/accounts-wsj

Preparing for Retirement: How Much Fixed Income Should I Have?

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

How much guaranteed income (i.e., Social Security, pension and annuity income) should I have in retirement? This is a question I hear quite often from clients who are nearing, or entering, retirement and are seeking our guidance on how to create a tax-efficient and well-diversified retirement paycheck. 

“The 50% Rule”

Although every situation is unique, in most cases, we want to see roughly 50% or more of a retiree’s spending needs satisfied by fixed income. For example, if your goal is to spend $140,000 before-tax (gross) in retirement, ideally, we’d want to see roughly $70,000 or more come from a combination of Social Security, pension, or an annuity income stream. 

Below is an illustration we frequently use with clients to help show where their retirement paycheck will be coming from. The chart also displays the portfolio withdrawal rate to give clients an idea if their desired spending level is realistic or not over the long-term.

Cash Targets

Once we have an idea of what is required to come from your actual portfolio to supplement your spending goal, we’ll typically leave 6 – 12 months (or more depending of course on someone’s risk tolerance) of cash on the “sidelines” to help shield these funds from volatility and ensure money available for your short term cash needs. Believe it or not, since 1980, the average intra-year market decline for the S&P 500 has been 14.1%. Over the course of those 37 years, however, 28 of them have ended the year in positive territory (source:  JP Morgan).  We believe market declines are imminent, and we want to plan ahead to help mitigate their potential impact. By having cash available at all times for your spending needs, it allows you to still receive income from your portfolio while giving it time to “heal” and recover – something that typically occurs within a 12 month time frame. 

As you enter the home stretch of your working career, it’s very important to begin dialing in on what you’re actually spending now compared to what you’d like to spend in retirement. Sometimes the numbers are very close but often times, they are quite different.  As clients approach retirement, we work together to help determine this magic number and provide analysis on whether or not the spending goal is sustainable over the long-term. From there, it’s our job to help re-create a retirement paycheck for you that meets your own unique goals. Don’t hesitate to reach out if we can ever offer a first or second opinion on the best way to create your own retirement paycheck.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.


Opinions expressed are those of Nick Defenthaler, CFP®, and are not necessarily those of Raymond James. There is no assurance the forecasts provided herein will prove to be correct. This information has been obtained from sources deemed to be reliable but we do not guarantee that it is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Please note direct investment in any index is not possible. Annuity guarantees are subject to the issuing company's ability to pay for them.

Angela Palacios Earns Accredited Investment Fiduciary Designation from the Center for Fiduciary Studies

Contributed by: Timothy Wyman, CFP®, JD Tim Wyman

Professionalism is a core value for us at The Center. For our clients’ benefit, our team continues to improve their skills, knowledge, and certifications. In that spirit, we are proud to share that Angela Palacios, CFP® and Director of Investments, has recently been awarded the Accredited Investment Fiduciary® (AIF®) designation from the Center for Fiduciary Studies™, the standards-setting body for fi360. The AIF designation signifies specialized knowledge of fiduciary responsibility and the ability to implement policies and procedures that meet a defined standard of care. The designation is the culmination of a rigorous training program, which includes a comprehensive final examination, and an agreement to abide by the Code of Ethics and Conduct Standards. On an ongoing basis, completion of continuing education and adherence to the Code of Ethics and Conduct Standards are required to maintain the AIF designation.

Fiduciary standards and placing client interests first have been in the mainstream media lately as a result of recent Department of Labor regulations; however, these are not new concepts to us and how we serve clients. At The Center, we strive to truly serve our client’s best interests in planning and investment advice and have always held ourselves to a higher fiduciary standard of care. We understand that your trust in us is grounded in this commitment! Certifications, like the AIF designation, provide third-party confirmation that we are doing just that. Please join us in congratulating Angela on earning this designation!

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc.® and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.


About fi360: Based near Pittsburgh, Pa., is the first full-time training and research facility for fiduciaries, and conducts training programs throughout the United States and abroad. The Center for Fiduciary Studies confers the AIF designation as well as the Accredited Investment Fiduciary Analyst™ (AIFA®) and Professional Plan Consultant™ (PPC™) designations.

Financial Scams Target Social Security and Medicare

According to the Federal Trade Commission, of the 65 and older population, over 33% are victims of financial frauds and scams on an annual basis. It is not surprising, then, that the latest scams to come out are related to Social Security and Medicare – two of the most widely used social support programs by the 65 and older population. Here is what you need to know about the newest scams:

Social Security:

There are two Social Security scams on the current watch list:

  • The first one is where you will receive an official-looking e-mail from the Social Security Administration with an invitation to create a Social Security account so that you can receive your benefits. You land on a webpage where the scammers hope you will fill out your confidential information. DO NOT FALL FOR THIS. Never click on links in any of these e-mails. If you want to sign up for a Social Security Account, go directly to https://ssa.gov/myaccount/ (see our blog with detailed instructions about how to set up your Social Security account here).
  • The second one is where the scammers actually create an account for someone and redirect their payments to a bank account controlled by them, not by the victim. To prevent this from happening, create your own MySSA account with a strong username and password. This is similar to filing your tax return early before the scammers file a fake return and steal your refund. In addition, a recommended and increased security measure is that when you create your MySSA account, go to the settings and choose the option that any changes to the bank account into which your check is electronically deposited can only be done in person at a Social Security brank office and not done using your online account.

Medicare:

This scam is related to Congress’ passage of the Medicare Access and CHIP Reauthorization ACT (MACRA) in 2015 which is requiring the Centers for Medicare and Medicaid Services to remove Social Security numbers from all Medicare cards. Thus, they will begin reissuing Medicare cards in 2018. The current scam has scammers calling Medicare beneficiaries claiming to be Medicare and saying that they must confirm their current Medicare numbers before sending them a new card. Others call saying there is a charge for the new card and are collecting beneficiaries’ personal information. Please note that there is no charge for your new card and Medicare will never call you for your information. They already have it. 

As an additional note, there are still tax scams continuing to occur. We wrote a blog about tax season scams earlier this year -- please take a moment to review this information to protect yourself and your loved ones.

Always Remember:

  • A government agency will not contact you by phone or e-mail to request personal information or to demand money/payment from you.

  • You will always be contacted by mail or registered letter by government agencies and if money is owed, you will be given an opportunity to dispute charges.

If you suspect fraud related to these examples or any other type of financial scams or fraud, please contact the U.S. Senate Special Committee on Aging Fraud Hotline at 1-855-303-9470 or contact your financial planner for assistance.


Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

2nd Quarter Investment Commentary

You may have noticed 2017 has been an easy year to open your statements. Markets around the world have been trending in a positive direction with only short-lived bouts of risk aversion. As a whole, volatility is extremely low and getting lower by the day it seems. U.S. markets have enjoyed positive returns of 10% for the S&P 500 so far this year as of June 30, 2017. The Barclays US Aggregate Bond Index has also been up 2.27%.  Overseas has been the big story of the year with the MSCI EAFE returning 14.1% and the MSCI Emerging Markets Index returning about the same. This strong increase has occurred despite headwinds from Brexit negotiations that are beginning and are expected to be challenging as well as concerns over high and quickly growing debt levels in China.

The Federal Reserve has approved one more rate hike this quarter, during June, which was fully anticipated by markets. One more has been telegraphed by the Fed for this year and would likely come late fall/winter if it does at all. This last potential rate hike of 2017 will depend on the strength of economic data over the coming months.

The Economy

Our domestic economy continues to grow slowly but steadily. Wages are growing, although, at a pace slower than historical averages. Inflation has been more subdued than expected, in large part because wage growth has been muted. Unemployment has continued to fall, and it has become harder to fill open job positions. Low unemployment ultimately should result in wages increasing, but, so far, we have not seen an impact here in a meaningful way.  Energy prices increased over a year ago, and rent and housing costs are on the rise. These last two points serve to take away some of our discretionary spending money which is important to bolster Gross Domestic Product growth that has come in below the Fed’s expectations of 2.2% so far this year. 

Brexit – One year later

A little over one year ago, the British voted to exit the European Union on June 23rd, 2016.  As you may recall, this created quite a bit of volatility in the market leading up to and immediately after the decision. The British government stepped in quickly, vowing to support liquidity at banks and emphasized it would be an orderly divorce. This action assuaged fears resulting in the markets here in the U.S. as well as overseas bouncing back to where they had been prior the decision.  So one year later, what has the impact been?

  1. The British pound is about 15% cheaper than where it was last year. While a cheaper pound helps boost the country’s exports, it, unfortunately, serves to increase the price of imports causing inflation within the country. If you were ever going to take a trip to England, now may be a good time as our dollar is much stronger than it has been in recent years!

  2. Business investment in the U.K. has softened dramatically due to the uncertainty surrounding potential future tariffs. The Gross Domestic Product growth has also slowed as a result.

  3. Immigration is falling into the U.K. meaning many jobs are having a hard time finding workers for farming and construction positions.

Affordable Care Act—Repeal?

ObamaCare is facing a threat of repeal in the Senate. The Senate majority leader, Mitch McConnell, is working to revise the bill to be looked at again in July after it met resistance from some members of the Republican Party. If he can’t create a bill all Republicans can agree on, then they will be forced to seek a more bi-partisan supported bill, further delaying any change. If repealed, volatility would likely increase in the healthcare sector, but the market effects would be very dependent on the terms that pass. This is something we will continue to keep our eyes on.

While it has been a tranquil year thus far, it is important not to let the resilience in stock markets lull you into a false sense of security. It is easy to forget what downside volatility feels like when we haven’t experienced a meaningful pullback in so long. Rebalancing your portfolio and keeping risk in check is important particularly in this stage of a bull market, when it may be tempting to reach for more. Check out our recent Mid-Year Investment Update webinar if you want to hear more information on these topics as well as other headlines this quarter!

On behalf of everyone here at The Center,

Angela Palacios, CFP®, AIF®

Director of Investments
Financial Advisor  

Investment Pulse: Check out Investment Pulse, by Angela Palacios, CFP®, a summary of investment-focused meetings for the quarter.

Investor Basics Series: Nick Boguth, Investment Research Associate, introduces us to bond options.

Of Financial Note:  Jaclyn Jackson, Portfolio Coordinator, continues her series on behavioral investing here.

Angela Palacios, CFP®, AIF® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.


The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Angela Palacios and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 21 developed nations. The MSCI Emerging Markets Index is designed to measure equity market performance in 25 emerging market indexes. The index’s three largest industries are materials, energy, and banks. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability. Please note that international investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.

Source: http://www.independent.co.uk/news/business/news/brexit-latest-news-business-economic-costs-banks-one-year-vote-anniversary-eu-exit-a7802596.html

Investor Ph.D.: Paying a Premium

Co-Contributed by: Angela Palacios, CFP®Angela Palacios and DewRina Lee DewRina Lee

We aren’t talking Healthcare or Prada even, though you pay premiums for both. Rather, we are discussing why investors may pay a premium for bonds. Bonds are frequently purchased at prices below or above par; that is, at a discount or a premium. Bonds trade at a discount when the coupon rate is lower than the market interest rate, and they trade at a premium when its coupon rate is higher than the market interest rate.

For the purpose of this blog, we will be focusing mainly on the reasons behind why someone may choose a premium bond.

Take the following scenario:

Intuition seems to indicate that when deciding between a discount bond at a price of $970 and a premium bond at a price of $1,030, an investor should take the discount option. It’s always more fun to buy that Prada purse when it’s on sale right? But, there are times when you may want to pay the higher price, for example, if you want the latest season’s purse rather than last seasons.

But enough about my purse addiction, let’s get back to bonds. If the bond matures at $1,000, a discount bond holder who bought at $970 will be pocketing $30 while a premium bondholder who paid $1,030 will be losing $30, right? Not exactly. The higher price a premium bondholder has paid is made up for by the higher interest payments they will earn along the way. In many cases, the additional cash flow more than pays for the cost of the premium price paid up-front. Take a look at the following example:

Additionally, due to its larger cash flows, the time it takes to repay the initial investment is shortened. With all else equal, the higher the coupon rate, the shorter the duration. As such, premium bonds can be more defensive in a rising interest rate environment and potentially less volatile. Also, this larger cash flow allows investors to reinvest more in new bonds to capture potential rate increase. By no means does this mean that premium bonds are immune to rising rates; however, they may offer a way to capture the higher yields with some degree of downside protection in a declining market.

So why pay a premium? In essence, there are a few advantages of buying premium bonds:

  • Higher coupon rate
  • Shorter duration to pay off your initial investment
  • Less sensitivity to fluctuations in interest rates
  • Opportunity to reinvest at a potentially higher rate.

Of course, there are additional risks and financial objectives that are personalized to each individual. Contact your financial planner to figure out how bonds may fit into your personalized financial plan!

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.

DewRina Lee is an intern at Center for Financial Planning, Inc.®


This information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete; it is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. Opinions expressed are those of Angela Palacios and DewRina Lee and are not necessarily those of Raymond James. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There are special risks associated with investing with bonds such as interest rate risk, market risk, call risk, prepayment risk, credit risk, reinvestment risk, and unique tax consequences. The example provided is hypothetical and has been included for illustrative purposes only, it does not represent an actual investment.

Investor Basics: Embedded Bond Features

Contributed by: Nicholas Boguth Nicholas Boguth

This time around in our “Investor Basics” series, we’re going to take a look at the most common bond features. For a dive into a more complex bond pricing topic, check out our Director of Investment’s Investor Ph. D blog on why buying premium bonds can make sense.

First off, what is an embedded bond feature?

An embedded bond feature is a provision attached to a bond that changes its maturity, risk, or liquidity. A bond issuer may release a bond with an embedded feature in order to make it more attractive to a bond buyer, or to give itself a more favorable debt structure. The most common types of embedded features that you may have seen in the market, and that I will briefly go over in this blog, are call, put, and conversions.

Call features give the issuer of the bond the right to “call” the bond back from the bondholder at a specific date. This provision benefits the issuer because they are able to buy back debt, and then issue new debt at a lower interest rate. A company will typically issue a callable bond when they believe that interest rates will decrease in the future. Since this feature benefits the issuer, the company will have to make the yield or maturity more attractive to entice a buyer.

Put features give the bondholder the right to “put” the bond back to the issuer at a specific date before it matures. This provision benefits the bondholder because it allows him or her to put the bond back to the issuer (maybe interest rates have risen or the company’s credit is deteriorating). Since this option benefits the bondholder, he or she may have to accept a lower yield or longer maturity on the bond.

Another common embedded bond feature is the conversion option. This actually lets the bondholder convert the bond into shares of the company’s stock at a predetermined price and date. A company may issue convertible bonds as a way to issue cheap debt (they may not have to pay as large of a coupon because they are giving the bondholder the option to convert their bond to stock).

Each of these bond features may have a place in an investor’s portfolio, but knowing when and how to include them can be complex and differs from investor to investor. If you have any questions on these bond topics or any others, feel free to reach out to us at any time!

Nicholas Boguth is an Investment Research Associate at Center for Financial Planning, Inc.® and an Investment Representative with Raymond James Financial Services.


The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Investments mentioned may not be suitable for all investors. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices generally rise.

Asset Flow Watch 2Q 2017

Contributed by: Jaclyn Jackson Jaclyn Jackson

One of the most common ways to monitor consumer confidence and investor sentiment is to watch fund inflows and outflows. Market analysts use fund flows to measure sentiment within asset classes, sectors, or markets. This information (combined with other economic indicators) help identify trends and determine investment opportunities.

A new trend may be emerging as international fund flows are outpacing US fund flows in the second quarter. The move towards taxable bonds that began in January 2017 continued as investors have handled high U.S. stock valuations gingerly.

Asset Flows: What Investors Did This Quarter

An even distribution of flows went towards taxable bonds and international equities in April. The fear of France’s exit from the European Union dissipated as Emmanuel Macron won the French presidential elections. Accordingly, flows moved into foreign large blend funds. To boot, MSCI Emerging Markets Index returns (13.9%) increased inflows to diversified emerging markets. On the other hand, first quarter GDP growth (0.7%) and political unpredictability sucked life from post-election US equity inflows. 

By May, US equity deceleration evolved into outflows. International equity flows remained strong.  Taxable bond flows continued in spite of raised rates. Republican tax cut plans created municipals bond outflows; likely because investors don’t think federal tax exemptions will be as advantageous as they have been in the past. 

Early quarter trends have continued through June. As of June 21, 2017, US equity outflows were -$1.205 billion, international equity inflows were $1.467 billion, emerging markets inflows were $0.300 billion, and taxable bond inflows were $3.016 billion.

Is the US Equity Run Over?

While the debate about the end of the US equity run ensues among industry professionals, the discussion may be mute among investors. It appears that many investors, figuring the US recovery is further along than the rest of the world, have opted to either “play it conservative” with bonds or invest internationally where there is seemly more opportunity for equity values to grow.

Jaclyn Jackson is a Portfolio Administrator and Financial Associate at Center for Financial Planning, Inc.®


This information does not purport to be a complete description of the securities, markets, or developments referred to in this material; it has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Jaclyn Jackson and are not necessarily those of Raymond James. This information is not a complete summary or statement of all available data necessary for making and investment decision and does not constitute a recommendation. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets. Asset allocation does not ensure a profit or guarantee against loss. Past performance is not a guarantee of future results. The MSCI Emerging Markets is designed to measure equity market performance in 25 emerging market indices. The index's three largest industries are materials, energy, and banks. Please note direct investment in any index is not possible.

Investment Pulse: Q2 Edition

Contributed by: Angela Palacios, CFP® Angela Palacios

It has been another busy quarter! Check out some of our meeting highlights!

Andrew Adams, Senior Research Associate to both Raymond James Chief Investment Strategist as well as its Chief Economist

The Center had a chance to hear firsthand from one of Raymond James leading research associates. Andrew Adams paid a visit to our office this month to discuss the global market outlook. Andrew discussed how Raymond James believes that the U.S. equity market is still in the middle innings of a longer-term secular bull market that is more reminiscent of the post-WWII era and the 1982-2000 bull market than that of the 2000s decade. In response to questions about how the market could continue to go up without a major pullback, Andrew discussed that although the market pullback in the winter of 2016 was not technically a bear market (the S&P 500, which is heavily weighted towards large-cap tech stocks, only declined 15.1%), the average stock in the S&P 500 did decline 25% during that period. Andrew explained that Raymond James remains cautiously optimistic about U.S. equity markets going forward.

Scott Davis, Portfolio Manager of Columbia Dividend Income Fund

Scott gave us an update on where he sees markets now. Debt has been steadily expanding which indicates to him it is particularly important not to give up on quality at this stage of the market. Eight straight years of equity market gains make this the second oldest bull market since World War II. The run-up in stock prices also makes stocks expensive relative to corporate earnings growth, a potential risk factor going forward in his eyes. As the margin for safety has narrowed, he believes that any miss on expectations is likely to be punished, which makes careful stock selection even more important. That being said, Scott believes the American consumer is in good shape, and an expanding economy continues to provide a favorable environment for the equity market.

James Cook, Equity Specialist from Hermes Investment Management in London

This was our first conversation with the London-based firm. We were excited to discuss their Emerging Market strategy. This is the only dedicated Emerging Market strategy with an ESG (Environmental, Social, and Governance) mandate available to us. He spoke to us about the importance to remember that Emerging Markets aren’t a homogenous region. The sector is made up of very different countries spread all over the world that are driven by dissimilar factors. Many investors think that it is a space highly correlated to movements in commodities, which is true for some countries and company’s but not all. They apply research held to a developed market standard that they apply to emerging markets giving them a bias for high-quality positions.

That’s what our Investment Department has been up to for the second quarter of 2017. Please stay tuned to other insights throughout our Investment Week!

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.


Raymond James is not affiliated with and does not endorse the opinions of Scott Davis or James Cook. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Expressions of opinion are as of this date and are subject to change without notice. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results. Please note that international investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets. Investing involves risk and investors may incur a profit or a loss. There is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct.

The Center Adds More Team Members!

Contributed by: Clare Lilek Clare Lilek

Jim Brown and Stephen Robinson

Jim Brown and Stephen Robinson

The Center recently welcomed two new team members: Stephen Robinson and Jim Brown. Stephen and Jim come from diverse backgrounds and are taking on very different roles at The Center, but are both excited to join our collaborative and dedicated environment in the world of finance!

Stephen joins us from his previous career as a pediatric nurse at the University of Michigan. He discovered his love for investments and financial planning after trying to navigate his own retirement account. After a lot of self-study, he decided to pursue a Masters in Finance while also working full time at the hospital. We’re thrilled to have him join us and apply his passion for financial markets and the planning field to his new position with us as Client Service Associate.

Jim joins us as our first ever in house IT Manager. Prior to joining The Center, he was a technological consultant working with institutions to troubleshoot problems and implement solutions dealing with various software and hardware systems. He was brought on to help mitigate and manage the fast-growing technology we use to best serve our clients. Jim sought to join the staff because of our diverse technology needs and the culture of our office. As our team continues to expand, we’re excited to have Jim be our go-to-man for technological assistance and expansion.

Next time you’re in the office, stop by and say hi to our growing team! Stephen and Jim are not only excited to join our team, but they’re happy to be on yours as well. Feel free to reach out to them if you have questions. 

Clare Lilek is a Client Service Associate at Center for Financial Planning, Inc.®