What Is Tactical Allocation and Why Would I Use It?

The Center Contributed by: Center Investment Department

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You’re probably familiar with strategic investing, picking the amounts of stocks, bonds, and cash that create the foundation of your portfolio. But you may also want to consider another layer of portfolio management.

Investors who overweight or underweight asset classes as perceived market opportunities arise are implementing a tactical allocation.

Typically, a tactical allocation overlays a strategic allocation to help reduce risk, increase returns, or both.

While we believe that the relationship of valuation between markets over long periods will be efficient and will correspond to fundamentals, we also know that over shorter periods, some markets may become overvalued and other asset classes will become undervalued. It makes sense at those times to use a tactical allocation strategy. When executed correctly, a somewhat modified asset allocation may offer better returns and less risk.[1]

A tactical asset allocation strategy can be either flexible or systematic.

With a flexible approach, an investor modifies his or her portfolio based on valuations of different markets or sectors (i.e. stock vs. bond markets). Systemic strategies are less discretionary and more model-based methods of uncovering market anomalies. Examples include trend following or relative strength models.

With a tactical allocation, keep in mind less can be more. Successful execution of these methods requires knowledge, discipline, and dedication. The Center utilizes tactical asset allocation decisions to supplement our strategic allocation when we identify a compelling opportunity. Our Investment Committee arrives at these decisions based on many factors considered during our monthly meetings.

Want to learn more? Reach out to your financial planner or a member of the Investment Department team to learn how The Center uses tactical allocation to manage your portfolio.


[1] All investing involves risk, and there is no assurance that this or any strategy will be profitable nor protect against loss.

Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. 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. Prior to

International Women’s Day Celebration Challenges Women to Find Their Tribe

Laurie Renchik Contributed by: Laurie Renchik, CFP®, MBA

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The Center team recently commemorated International Women’s Day by hosting a gathering in Southfield to celebrate and support women’s achievements in our community and throughout the world.

In keeping with the theme of building personal and professional networks, over 150 attendees enjoyed networking opportunities before and after the keynote delivered by Joscelyn Davis, Founder and President of Jade Strategies.  Ms. Davis inspired her audience with personal stories and research-based strategies for visionary women who want to advance and lead.  Acknowledging that barriers exist, Ms. Davis provided fresh ideas and easily implemented action steps to help women cultivate a tribe of trusted advisors, mentors, and colleagues.

Aligned with the keynote message, The Center has a long history of supporting women in leadership roles.  In fact, two of our three founding partners are women, as are three of our five current partners.  Statistics bear out that women have very few role models at the top, and we are proud to be an exception to the rule!

Understanding the challenges women face is a worthy endeavor, and we wholeheartedly thank all those who joined us for our International Women’s Day celebration here in Southfield, Mich

Laurie Renchik, CFP®, MBA is a Partner and CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® With 20 years of industry experience, she specializes in proactive retirement planning and helping clients assess risk in their portfolios.


Raymond James is not affiliated with nor endorses Joscelyn Davis and/or JADE Strategies.

Protect Your Credit by Checking and Correcting These Reports

Josh Bitel Contributed by: Josh Bitel

If you’re like most people, you probably don’t think or worry about your credit score unless you’re getting ready to use it. Your credit report provides detailed information about your credit history and may even make or break your applications for loans, mortgages, or credit cards. Errors or false applications bogging down your score could also prevent you from receiving a better interest rate, for example.

protect your credit by checking and correcting these reports

Tips for checking your credit report

  1. Visit annualcreditreport.com to request your free credit report from your choice of three agencies: Equifax, Experian, and TransUnion. Use all three. You are entitled to a free report from each every 12 months.

  2. Set an annual reminder to pull your report with each agency. Stagger these reminders, so you can check your full report once every four months and keep a closer eye on it.

  3. Review all information, including the basics – addresses, phone numbers, employers, etc. – to spot any errors or discrepancies.

  4. Make sure you recognize all accounts, loans, credit cards, etc. listed on your report.

Fixing or disputing errors

When you notice a problem, first directly contact the credit reporting companies and let them know what information you believe is not correct. You may be asked to provide supporting documentation to dispute a claim as fraud. In some instances, that may be hard, if not impossible, to do. It can be difficult to produce proof that you never opened a credit card, for example. Still, putting forth your best effort is well worth your time.

Second, contact the fraud/security department at the company that reported the fraudulent information. They will send dispute paperwork for you to submit with supporting documentation. Inform them, in writing, that the account was opened or charged without your knowledge, explain why you dispute the information and are asking that it be removed or corrected. Keep a paper trail for yourself.

Also, verify whether the debt has been sold to a collections agency. If it has, make sure they will notify the collections agency that the debt is in dispute. And brace yourself! It could take 90 days (or more!) before you see a resolution. Set a reminder to follow up if you have not heard anything within the time promised. Once you have received confirmation that the fraudulent claim has been discharged, make sure they have also closed the account in your name.

Haggling with credit reporting agencies can be a pain, but the work is a necessary evil. Misreported information could lead to your credit score suffering by as much as 100 points, and unless you review and monitor your reports on a consistent basis, you’ll never know.

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®


Repurposed from July 23, 2015 - Previous blog

Event in Review: 2019 Investment Outlook

With market volatility back, we came together to discuss what occurred in 2018 (particularly in the last quarter) and what we are thinking about for 2019.  If you weren’t able to attend, don’t sweat it, we have the cliff notes for you!

2019 Investment Outlook

On February 27th, 2019, Angela Palacios CFP®, AIF®, Director of Investments, CERTIFIED FINANCIAL PLANNER™, Nick Defenthaler CFP®, Senior Financial Planner, CERTIFIED FINANCIAL PLANNER ™, and Nick Boguth, Investment Research Associate teamed up to tackle these pressing questions and more.

Here is a recap of key points from the “2019 Investment Update”:

  • What spooked the markets last year:

    • Decelerating global growth lead by China

    • Declining earnings growth expectations

    • Higher short term interest rates in the U.S. and other parts of the world

    • Valuations started 2018 in elevated territory

    • UK BREXIT

    • Italian debt concerns

    • Trade issues

    • Government shutdown

    • Mueller investigation

  • What worked last year:

    • High quality fixed income rallied in this market

    • Bond duration – the more the better

    • Defensive & Low volatility stocks held up better than broad markets

    • Dividend paying stocks held up better than non-dividend paying stocks

    • Large cap equities held up better than small cap equities

    • In the last quarter of 2018 emerging and international developed markets held up better

  • Is a recession on the horizon: Recessions are mainly caused by four reasons throughout the world (Inflation, Reduction in exports, Financial Imbalance or commodity price crash). Currently inflation is benign here in the U.S., exports are healthy, financial excesses aren’t present (equity valuations and household debt are moderate), and our economy is highly driven by commodities.  So at this point it looks unlikely in the next year.

  • Yield curve: Flattened dramatically last year while the 2 and 5 year treasury bond yields did invert.  A traditional inversion is between the 2 and 10 year and is the signal usually watched for to telegraph a coming recession. We are keeping a close eye on this as this is becoming a potential concern.

  • Tax reform recap: Nick Defenthaler gave us an update on tax reform looking at the changes to income tax brackets, changes in the standard deduction and deductibility of state and local income taxes. If you’d like to hear more on this please listen in on our Year-end tax planning webinar for the details!

  • Client Portal: A Center for Financial Planning, Inc.® app??!!! We hope you are as excited as we are! Nick Boguth gave a quick demo of our new client portal and document vault. If you are interested in learning more or want to sign up for this service just reach out to your planner!

Angela Palacios, CFP®, AIF® is a partner and 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.

3 Signs Your Client Needs a Divorce Financial Advisor

Jacki Roessler Contributed by: Jacki Roessler, CDFA®

Not every client needs financial planning advice during their divorce and certainly, not every client feels they can afford it. We’re often asked if there are any tried and true red flags that should alert an attorney that divorce financial advisors should be consulted. 

Read on to discover the top 3 signs some outside help is typically needed.

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1. Your client is afraid to sign the settlement agreement.

You’ve assured your client Doug that he can afford to pay the agreed upon spousal and child support. His income is high–you believe it’s a good settlement for him. However, he’s worried he won’t be able to afford his own expenses if he agrees to the settlement. The solution? You send Doug to a financial specialist who runs projections that give him a concrete number for his after-tax, post child and spousal support net income. Now, Doug can make decisions from a position of knowledge, not guess-work.

2. Your client is willing to give up everything for the “_______.” Fill in the blank with anything that fits; it could be the marital home, his or her pension, a share of a family business, etc…

Consider this all too familiar scenario:

Mary and Joe were married for 13 years with three children under the age of 10. Mary was a full time mom while Joe was earning a hefty salary. Mary is emotionally attached to the house and was willing to walk away from all the retirement and cash assets to keep it. Mary’s attorney is concerned and sent her to a divorce financial advisor. Together, they prepared a reasonable monthly post-divorce budget and looked at several different cash flow and net worth projections. Mary was sad to discover that if she kept the house and did not return to work, she would run out of money in 3 years. She was sad, but empowered to make decisions from a position of knowledge.

3. One or both parties have pension plans and retirement accounts that will need to be divided equitably.

No two corporations have identical retirement benefits for their employees. Furthermore, even in the most amicable of cases, employees often don’t understand all the quirks of their particular pension and/or retirement savings plan. As a firm that prepares close to 1,000 orders that divide retirement benefits pursuant to divorce, we have in-depth knowledge of what makes Acme Widgets’ 401k different from Beta Widgets’ 401k as well as the federal requirements and restrictions related to post-divorce division. Since no two plans are alike and no two divorce cases have the same circumstances, a specialist should be called in on every case unless the attorney has intimate knowledge of the plans being divided.

This leads to the obvious concern: can my client afford to get financial advice? Often, the client that needs advice the most is the one who feels they can’t afford it. Don’t assume that a divorce financial advisor won’t take a case on a limited basis. It always pays to inquire if they may be willing to offer clients an hour or two of consultation time. 

Divorce can be complex even under the best of circumstances. The financial aspects of divorce not only have the potential to be complex, they may also be emotionally-laden. Helping your clients find the path to financial stability may require the expert advice of a financial advisor.

Jacki Roessler, CDFA® is a Divorce Financial Planner at Center for Financial Planning, Inc.®


The above examples are hypothetical in nature for illustrative purposes only. Views expressed are not necessarily those of Raymond James Financial Services and are subject to change without notice. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.

Restricted Stock Units vs. Employee Stock Options

Kali Hassinger Contributed by: Kali Hassinger, CFP®

Some of you may be familiar with the blanket term "stock options." In the past, this term most likely referred to Employee Stock Options (ESOs), which were frequently offered as an employee benefit and form of compensation. But over time, employers have adapted stock options to better benefit both their employees and themselves.

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ESOs provided the employee the right to buy a certain number of company shares at a predetermined price, for a specific period of time. These options, however, would lose their value if the stock price dropped below the predetermined price, making them essentially worthless to the employee.

Shares promised

As an alternative, many employers now use another type of stock option, known as Restricted Stock Units (RSUs). Referred to as a "full value stock grant,” RSUs are worth the "full value" of the stock shares when the grant vests. So unlike ESOs, the RSU will always have value to the employee upon vesting (assuming the stock price doesn't reach $0). In this sense, the RSU is a greater advantage to the employee than the ESO.

As opposed to some other types of stock options, the employer does not transfer stock ownership or allocate any outstanding stock to the employee until the predetermined RSU vesting date. The shares granted with RSUs essentially become a promise between the employer and employee, but the employee receives no shares until vesting.

RSU tax implications

Since there is no "constructive receipt" (IRS term!) of the shares, the benefit is not taxed until vesting.

For example, if an employer grants 5,000 shares of company stock to an employee as an RSU, the employee won't be sure of how much the grant is worth until vesting. If this stock value is $25 upon vesting, the employee would have $125,000 of income (reported on their W-2) that year.

As you can imagine, vesting dates may cause a large jump in taxable income, so the employee may have to select how to withhold taxes. Usual options include paying cash, selling or holding back shares within the grant to cover taxes, or selling all shares and withholding cash from the proceeds.

In some RSU plan structures, the employee may defer receipt of the shares after vesting, in order to avoid income taxes during high earning years. In most cases, however, the employee will still have to pay Social Security and Medicare taxes in the year the grant vests.

Although there are a few differences between the old-school stock options and more recent Restricted Stock Unit benefit, both can provide the same incentive for employees. If you have any questions about your own stock options, we’re always here to help!

Repurposed from this 2016 blog: Restricted Stock Units vs Employee Stock Options

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


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. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Kali Hassinger, CFP® and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. This is a hypothetical example for illustration purpose only and does not represent an actual investment.

Job Transition and Your Investments

The Center Contributed by: Center Investment Department

We at The Center know that people can be overwhelmed with difficult decisions, especially during stressful life events such as job loss or change.

Job Loss, Job Transition and Your Investments

GM recently announced plant closings and layoffs across the country, which will affect thousands of workers. This hits close to home for those of us in the Motor City and reminds us to look at your investment portfolio, ensure proper allocations, and ask these questions:

Am I close to retirement?

It may be time to scale back your portfolio’s risk. If you are invested within a target date retirement fund, this may already be happening for you.

How long before I have to use this money?

With funds you won't need for more than 5-10 years, you may want to ensure you are taking enough risk to help meet your goals. If you are invested within a target date retirement fund, this may already be happening for you.

What is my ability to take risk?

You may be able to take on more risk if you don't depend entirely on your portfolio. In this case, a target date fund may not be appropriate.

Do I get uneasy or worried when my portfolio drops by a certain percentage and feel the need to take action?

If this affects your decision making, even under normal circumstances, guidance from an advisor during a time of change may help alleviate additional stress.

What Can I do?

Review the investments in your account and your beneficiaries. We often neglect our 401(k) accounts in times of change.

Maintain a diversified portfolio to help stay on track for your retirement goals. Some plans offer an overwhelming number of choices, while other plan offerings seem insufficient to diversify a portfolio. Your advisor can help with your comprehensive investment strategy, especially during challenging times.

When you’ve spread assets among multiple financial institutions, maintaining an effective investment strategy – one that accurately reflects your goals, timing, and risk tolerance – may become difficult. Consolidate, and your financial professional can help ensure these assets are part of an overall allocation strategy that reflects your current financial situation and long-term retirement goals.

For more information on consolidating retirement accounts, read “Simplifying Your Retirement Plans.”


Any opinions are those of the author and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Expressions of opinion are as of this date and are subject to change without notice.

Every type of investment, including mutual funds, involves risk. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment. Changing market conditions can create fluctuations in the value of a mutual fund investment. In addition, there are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.

Why Retirees Should Consider Renting

Nick Defenthaler Contributed by: Nick Defenthaler, CFP®

“Why would you ever rent? It’s a waste of money! You don’t build equity by renting. Home ownership is just what successful people do.”

Sound familiar? I’ve heard various versions of these statements over the years, and every time I do, the frustration makes my face turns red. I guess I don’t have a very good poker face!

why retirees should consider renting

As a country, we have conditioned ourselves to believe that homeownership is always the best route and that renting is only for young folks. If you ask me, this philosophy is just flat out wrong and shortsighted.

Below, I’ve outlined various reasons that retirees who have recently sold or are planning to sell might consider renting:

Higher Mortgage Rates

  • The current rate on a 30-year mortgage is hovering around 4.6%. The days of “cheap money” and rates below 4% have simply come and gone.

Interest Deductibility

  • Roughly 92% of Americans now take the standard deduction ($12,200 for single filers, $24,400 for married filers). It’s likely that you’ll deduct little, if any, mortgage interest on your return.

Maintenance Costs

  • Very few of us move into a new home without making changes. Home improvements aren’t cheap and should be taken into consideration when deciding whether it makes more sense to rent or buy.

Housing Market “Timing”

  • Home prices have increased quite a bit over the past decade. Many experts suggest homes are fully valued, so don’t bank on your new residence to provide stock-market-like returns any time soon.

Tax-Free Equity

  • In most cases, you won’t see tax consequences when you sell your home. The tax-free proceeds from the sale could be a good way to help fund your spending goal in retirement.  

Flexibility

  • You simply can’t put a price tag on some things. Maintaining flexibility with your housing situation is certainly one of them. For many of us, the flexibility of renting is a tremendous value-add when compared to home ownership.

Quick Decisions

  • Rushing into a home purchase in a new area can be a costly mistake. If you think renting is a “waste of money” because you aren’t building equity, just look at moving costs, closing costs (even if you won’t have a mortgage), and the level of interest you pay early in a mortgage. Prior to buying, consider renting for at least two years in the new area to make darn sure it’s somewhere you want to stay.

Every situation is different, but if you’re near or in retirement and thinking about selling your home, I encourage you to consider all housing options. Reach out to your advisor as you think through this large financial decision, to ensure you’re making the best choice for your personal and family goals.

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.


Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of RJFS or Raymond James. 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. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

New Partner to Start Off the New Year

We are excited to announce Angela Palacios, CFP®, AIF®, as the newest Partner at The Center! She follows in the long tradition of strong female leadership that began with Founding Partners Marilyn Gunther and Estelle Wade. Our team looks forward to working with Angie in her new leadership role.

Angela Palacios, CFP®, AIF® Partner at Center for Financial Planning, Inc.®

Let’s take a look back at her time at The Center and how this promotion will affect our operations.

Part-time Associate to Department Head

Angie joined The Center team 10 years ago as a part-time Investment Research Associate, after having her daughter, Lilly. She served as Director of Investments before advancing to partnership.

“I got in on the ground floor of operations, so I got to do a lot of behind the scenes work and focus on investments,” she said. “The Center really allowed me to do what I have a passion to do.”

Laying the Groundwork for Success

Right out of college, Angie earned her CERTIFIED FINANCIAL PLANNER™ certification, awarded in 2003. A Master’s in Business Administration from Nichols College followed in 2007, and she earned the Accredited Investment Fiduciary (AIF®) designation in 2017.

As a CFP®, she has trained to not only understand the analytics side of financial planning, but also the client’s side. The AIF® designation means that Angie complies with fiduciary standards of care and prudent investment practices.

Over the past decade, Angie has become a trusted member of our team. She founded our Social committee, a group that plays a large part in making The Center a wonderful – and award-winning – place to work. We are a family, and Angie makes sure that value is never forgotten!

Angie also created, designed, and implemented the Center for Financial Planning smart phone app, which is currently in the final stages of development.

An Offer of Partnership

Managing Partner, Timothy Wyman, invited Angie to become a Partner because of the work she was already doing. Of course, her new role comes with additional responsibilities, but she will also continue to work on a foundation built over the last decade.

“Angie exemplifies all that we look for in a new partner,” Wyman said. “From day one, Angie has acted like an owner, by being a self-starter and self-manager. Angie shows passion for The Center’s Mission and Vision and most importantly models The Center Values each day. Moreover, Angie is dedicated to helping create a great place to work and shows the utmost respect for all of us. She works tirelessly to bring success to the entire firm (we before me) and has a ‘whatever is needed’ attitude. We are so fortunate that Angie has accepted the partner invitation!”

A Bright Future

Angie will continue to oversee the firm’s Investment Department and Technology department, while adding Compliance function oversight. She looks forward to getting involved with the planning and implementing of The Center’s strategic vision. She will also maintain her role as Chair of the Social committee.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERTM and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification re-quirements.

Important Information for Tax Season 2018

As we prepare for tax season, we want to keep you apprised of when you can expect to receive your tax documentation from Raymond James.

Important Tax Dates for 2018 Tax Season

Form 1099 mailing schedule 

  • January 31 – Mailing of Form 1099-Q and Retirement Tax Packages

  • February 15 – Mailing of original Form 1099s

  • February 28 – Begin mailing delayed and amended Form 1099s

  • March 15 – Final mailing of any remaining delayed original Form 1099s

Additional important information

Delayed Form 1099s

In an effort to capture delayed data on original Form 1099s, the IRS allows us to extend the mailing date until March 15, 2019, for clients who hold particular investments or who have had specific taxable events occur. Examples of delayed information include:

  • Income reallocation related to mutual funds, real estate investment, unit investment, grantor and royalty trusts; as well as holding company depositary receipts

  • Processing of Original Issue Discount and Mortgage Backed bonds

  • Expected cost basis adjustments including, but not limited to, accounts holding certain types of fixed income securities and options.

Amended Form 1099s

Even after delaying your Form 1099, please be aware that adjustments to your Form 1099 are still possible. Raymond James is required by the IRS to produce an amended Form 1099 if notice of such an adjustment is received after the original Form 1099 has been produced. There is no cutoff or deadline for amended Form 1099 statements. The following are some examples of reasons for amended Form 1099s: 

  • Income reallocation

  • Adjustments to cost basis (due to the Economic Stabilization Act of 2008)

  • Changes made by mutual fund companies related to foreign withholding

  • Tax-exempt payments subject to alternative minimum tax

  • Any portion of distributions derived from U.S. Treasury obligations

What can you do?

You should consider talking to your tax professional about whether it makes sense to file an extension with the IRS to give you additional time to file your tax return, particularly if you held any of the aforementioned securities during 2018.

If you receive an amended Form 1099 after you have already filed your tax return, you should consult with your tax professional about the requirements to re-file based on your individual tax circumstances.

You can find additional information at https://raymondjames.com/wealth-management/why-a-raymond-james-advisor/client-resources/tax-reporting.

As you complete your taxes for this year, a copy of your tax return is one of the most powerful financial planning information tools we have. Whenever possible, we request that you send a copy of your return to your financial planner, associate financial planner, or client service manager upon filing. Thank you for your assistance in providing this information, which enhances our services to you.

We hope you find this additional information helpful. Please call us if you have any questions or concerns about the upcoming tax season.

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.