CNBC Ratings as a Leading Indicator?

 This may be the most unique candidate for a leading indicator I’ve run across in a long time.  A leading indicator is defined as a measurable economic factor that changes before the economy starts to follow a particular pattern or trend.  You may have heard of an inverted yield curve predicting recessions or the number of building permits applied for predicting a housing boom or bust.

How about CNBC viewership predicting the next stock market boom or bust?  Below is a chart showing Nielson Ratings for CNBC over the last eight years.  The last time their ratings were this low was 2005 when markets had stablized after the tech bubble burst and we had enjoyed a couple of years of good returns.  Sound familiar?

As you can see in the chart below of the S&P 500 total returns, 2005 was the start of some very nice returns which continued for the next few years.  Could the low viewer ratings be a potential indicator that the returns we have experienced since 2009 are just the beginning?  As returns accelerated toward the market peak in 2007 so did CNBC’s ratings into 2007. 

Data from Morningstar

As individual investors start to jump on the band wagon of a bull market run, they become more interested in what is happening to their money and thus turn on the news.

There are many reasons investors could be choosing not to watch the channel now:

  1. Investors have been lulled into a sense of security about market returns and aren’t concerned about current events
  2. Many are not actually invested in the markets; therefore, they do not care
  3. Investors are finding their information elsewhere
  4. They have grown tired of the sensationalizing the network does to try to get better ratings (which is actually my main reason for not watching)

Assuming investors aren’t watching anymore because of one of the first two reasons, then this could be a very good indicator of what is to come, potential positive returns as more individuals put money back to work in the markets.

It is too bad there isn’t much historical data to determine if this is, indeed, a good stock market indicator but it is definitely something from CNBC that is much more interesting to follow than their overly dramatic, TV personalities!

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well as investment updates at The Center.

Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or 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.  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 may not be indicative of future results.

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Why is 2020 So Significant to Boomers and Their Children?

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 We’re not talking about 20/20 the news program, or about your vision.  We’re talking about the startling statistic released by the Alzheimer’s Association that by the year 2020, there will be 20 million baby boomers with Alzheimer’s disease.  In case you’re counting, that will be nearly 1 out of every 3 baby boomers that have Alzheimer’s or a related dementia.  The cost of care will be a huge concern for these boomers and their families (according to AARP, the current average cost to care for someone with Alzheimer’s is $56,800 annually), among the many issues that will arise.

If you are a boomer, here are the top 3 things you can do to prepare for this risk:

  1. Put Together a Team of Professionals – Start with a Certified Financial Planner™, who can help you plan ahead for the financial risks.  This will involve simplifying accounts, managing your assets, and helping you plan for your financial future with your personal preferences in mind.  Your financial planner will help you to put together a team of the additional professionals you may need and will bring on additional team members, as needed, along the way.
  2. Make Sure Your Legal Documents are Up-To-Date – We are talking here about your wills, possibly a trust, but most importantly Durable Powers of Attorney.  All individuals should have two durable powers of attorney – one for Health Care and the other for General/Financial affairs.  These Powers of Attorney will be invaluable if you ever need someone to make health care or financial decisions when you are unable to make them yourself. 
  3. Get Your Financial Life in Order and Document – Not only is it a good practice to take inventory of what you have and where it is, but it is also (and equally) important to document these items and indicate where and who to contact if there are questions.  Documenting investment accounts, insurance policies, legal documents, former employer benefits, etc., will be invaluable to family members or close friends who may need to assist you with your financial affairs in the future.  Click Here for our Personal Record Keeping document that can serve as a guideline for this purpose.

While an Alzheimer’s diagnosis is not something any of us want to think about, it is better to plan ahead so that your financial life will be handled as you intend, rather than leaving the burden of making those decisions to your family when you might not be able to communicate your wishes. 

Sandra Adams, CFP® is a Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012 and 2013, Sandy was named to the Five Star Wealth Managers list in Detroit Hour magazine. 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.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing information is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  You should discuss any tax or legal matters with the appropriate professional.

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Talking Technology in Texas at the Raymond James Conference

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 With the destination of Grapevine, Texas, eleven team members flew south to attend the Raymond James National Conference April 22-25.  The four-day event welcomed over 3,000 participants from across the nation, fostering both professional and personal development through a variety of learning sessions presented by both peer advisors and specialized industry experts. 

The Center proudly led a conference Top Advisor Session. These sessions are well attended by peers looking to share their experiences and ideas for success.  Tim Wyman, CFP®, JD and Melissa Joy, CFP® led a discussion about investing in your staff to build a great business.   Melissa Joy also presented with a panel of financial advisors during a pre-conference Investment Management module.  The topic was "The Great Rotation" from bonds into stocks.

In addition to attending Top Advisor Sessions, Center team members sat in on multiple sessions covering advanced investment strategies, retirement planning, practice management and marketing.  These educational sessions provided the opportunity to earn continuing education credits and also sparked new ideas to best serve our clients.   

One area of growth highlighted at this year’s national conference was technology.  Raymond James and Center for Financial Planning are making investments in cutting edge technology to the advantage of both Center clients and the advising teams.

Melissa Joy comments, "The National Conference offers the opportunity to share ideas and learn from our peers that just can't be replicated across the miles.  There's alot of idea-sharing, hard work, and just as much socializing and fun.  What's not to love?"

Members of our Center team in attendance included:  Sandy Adams CFP®, Dan Boyce CFP®, Matt Chope CFP®, Melissa Cyrus, Client Service Associate, Marilyn Gunther CFP®, Julie Hall, Melissa Joy CFP®, Angela Palacios CFP®, Laurie Renchik CFP®, and Tim Wyman CFP®, JD. 

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Happy Centerversary

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 While the Center celebrates 28 years serving our clients, our newest Client Service Associate, Melissa Cyrus, is also celebrating a milestone … her first “Centerversary” with us. 

We are proud to take a moment and recognize Melissa. It was a year ago May 14th that she added her enthusiasm to our team.  Melissa said the momentous occasion sort of snuck up on her, telling us, “It’s been a year already?  Hard to believe … it went by so fast!  I feel very fortunate to be working at such a wonderful place surrounded by such awesome people.  It sure makes the time fly.” 

Guess Melissa just proved the old adage Time flies when you’re having fun. And all that wisdom from someone who has only been around for a year. Just wait to see what she has to say on her 10th Centerversary!

Is Your Portfolio Off to the Races?

 We just got to enjoy what has been called “The Greatest Two Minutes in Sports.”  I have always been a fan of the Kentucky Derby, the horses, the outrageous hats, wondering who is wearing the hats, and a blanket of roses.  I’ve had the privilege of actually going down to Louisville to watch but I have never been part of the glamorous, hat-wearing crowd. We’ve always watched from the infield, though “watch” is a loose term. It is more like standing on your tip toes to see a blur of horses run by you for about one-tenth of a second and then return to drinking your mint julep.  But it is fun nonetheless. 

This year the market has felt a lot like we have been off to the races.  It has been one of the strongest starts to the year this decade.  Is it too much too fast?  A new chart put out by Russell Investments says maybe not.

 

For additional disclosure and interpretive guidance on this chart, please click on the following link: http://www.russell.com/Helping-Advisors/Markets/acd.aspx?d=t 

How to interpret the chart:

  1. The gray bar is the full range of 1 year returns the asset class has experienced throughout history
  2. The blue portion of the bar is where returns fall most of the time (68%)
  3. The number highlighted in orange is where returns fell for the 12 months that ended as of March 31st, 2013

Even with the strong returns, as of recently, most indexes are still hovering near “middle of the road” returns for the past 12 months.  So perhaps it hasn’t been too much too quickly.

If you are seeking some advice on an appropriate strategy for your portfolio, put the odds in your favor and contact your Financial Planner today!

Angela Palacios, CFP®is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Links are being provided for information purposes only.  Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

Planning for Marriage May Include a Prenuptial Agreement

 If an “I do” is in your near future, you need to make another commitment … this one to your financial planner. Before all the wedding planning and honeymoon booking are complete, a conversation with your financial planning team is also recommended to take a look at how marriage will impact your financial situation.  Two people coming together with unique financial positions can create a number of financial issues to think about and plan for prior to entering this new chapter in life. 

While prenuptial agreements aren’t for everyone, they are important planning tools especially if you or your future spouse have substantial assets, will receive a future inheritance, or have children from a previous marriage.

A prenuptial agreement typically provides direction in the following areas:

  • Assets and liabilities – who brings what into the union
  • Contributions of each partner – will there be special considerations
  • Estate Planning – who gets what at the death of either spouse
  • Division of property – when a couple decides to dissolve their marriage

More importantly the prenuptial document creates an understanding between partners and a roadmap for conducting financial affairs together. It determines how the assets and debts will be shared. It spells out how children from a previous marriage or relationship will inherit and it addresses the financial needs of the survivor in the case of death.

While talking with an attorney about a prenuptial agreement can be a stressful and touchy topic for many couples, the many beneficial aspects are worthy of consideration. 

Laurie Renchik, CFP®, MBA is a Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

You should discuss any tax or legal matters with the appropriate professional.

Marilyn Gunther, CFP® Receives Recognition

 In the immediate future, women’s wealth will be on the rise.  As reported by wealthmanagement.com, the global wealth owned by women is projected to grow 8 percent per year through 2014, “And just about every wealth management firm wants a piece of that pie.” The same article names the Center and one of our own founding partners Marilyn Gunther, CFP® to the Top 50 Women-Owned RIA’s (Registered Investment Advisor) in 2013. Marilyn is lauded as a trail-blazer in an industry that has long been dominated by men.  In fact, she vividly remembers the first Raymond James meeting she attended because there were five women in a room filled with men.

The welcome recognition underscores what we at the Center have always known:  Helping women manage their personal wealth is not only fundamental to our business, but it comes naturally. That’s because we have key female players at our helm.  In fact, of our 19 team members, 14 of them are women!  We can truly say we understand what women want. And according to wealthmangement.com, statistics say 61 percent of female business owners prefer to work with women advisors. Does that give us a leg up? We think our long list of female investors is all the proof we need.

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 Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. Candidates had to meet the following requirements: they directly own at least 25 percent of their firm, and that their firm has no more than 50 percent institutional clients and have some individuals for whom they do financial planning. Also, none operate a broker/dealer or are affiliated with a bank or investment company. REP.’s Top 50 Women RIAs list was assembled using data from SEC filings and Meridian-IQ (in which Penton Media has a stake). Advisors are ranked by their firm’s total assets under management.

My Meetings with Some of Our Portfolio Managers and Their Teams

 Over the last 22 years I have come to realize on many occasions that we are not in the numbers business but in the people business.  Clients like to know that we understand their investments, and more importantly, the people behind the investments.  While numbers are crucial and we spend a lot of time in the depths of many calculations, I find the most value when I get to understand the people behind the numbers. 

Recently, I met with many of the managers from the PIMCO family of funds.  PIMCO has been a long time resource, providing portfolio management services for the funds of Center clients for over a decade. I alone have made this trip 3 times in the last 10 years while others from the Center have also made the trip. These onsite visits take time, usually a day of travel to their offices and back and many hours of sitting, talking and listening to their strategies, philosophies and themes.  I listen to their logic, really  like to see that passion that drives them to succeed for Center clients.

I joke with our investment department about passion, “The managers we want jump out of bed like a piece of toast in the morning to get to work.”  These managers could retire but they would prefer to manage money rather than golf.  I always find these meetings with our managers as worthy time spent.  I have come back from meetings with conviction in people and their teams we have in place and sometimes found that we need to look elsewhere for a replacement.

Some things can’t be discerned in the numbers alone.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

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Center Named Birmingham Bloomfield Chamber Legacy Sponsor

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 As an honor and sign of our dedication to the community, The Center is proud to announce we are a 2013 Legacy Sponsor of the Birmingham Bloomfield Chamber of Commerce. Every year four companies are selected, each for having committed serious time and money to supporting the Chamber’s mission of connecting with the community. We see this not just as an honor, but a sign that we are achieving an important part of The Center Vision 2020*. The goals we set forth in that visioning process include Partnering with a Passion for the Community. Specifically, here’s what we have committed to do:

We have fostered a natural space to reinforce our firm’s intrapreneurial spirit. If a Center team member feels strongly that the firm might have an opportunity to make a difference for people, they will feel inspired to bring their inspiration to the table, leverage the talents of our team and commitments of our firm, and see the rewards of their vision.

We continue to demonstrate leadership by providing our time and talents to the organization. Center planner, Troy Wyman, CFP® was recently elected Secretary of the Chamber’s Executive Committee and has served on the board for the last six years. The Chamber has provided an excellent extension for reaching our professional, local, and personal communities. Our Legacy Sponsor designation is just one example of the many ways we remain committed to serving our communities. And we at the Center are proud of the results we help to create.  

*Our 2020 vision, originated at an all team member retreat in April 2012, paints a picture of the healthy and vibrant organization that we nurture and sustain. Our collective 2020 vision inspires, rallies, and guides our deci­sions. Day in, day out, The Center is driven by Mission, Firm Values, and Firm Service Values.

Are Extended Warranties Worth the Expense?

 How many times have you been asked about buying an extended warranty on a product purchase?  Probably every time you make a purchase.  Salespeople are trained to push extended warranties to “upsell,” and the extended warranties are huge money-makers for retailers (about 60% is profit according to Businessweek!) because most consumers never use them.

Here are 3 Reasons Why You Should “Just Say No” to an Extend Warranty:

  1. The manufacturer’s warranty is usually enough:  Most products come with a standard no cost warranty that covers the purchase for up to one year.  Most minor problems with a product occur within the first year, with major malfunctions occurring much later (often after even the extended warranty has expired).
  2. Cost is a consideration:  Often, the cost of the extended warranty is up to a third of the cost of the product itself.  Since consumer products generally depreciate in value very quickly, it might make more sense to keep the extra dollars and save for a future repair when or if it is needed, or for your future replacement purchase.
  3. There are other ways to get the same protection:  Many credit cards offer protection on purchases made with the card.  Many also offer to double the length of the manufacturer’s warranty.  Make sure to investigate all of the benefits you might have available through your credit card provider.

Although there are many reasons to “Just Say No,” there are a few instances when it might make sense to say yes to an extended warranty:

  • You are buying an item that is new technology or is prone to problems.
  • You are buying a refurbished product, or one that was a floor model.
  • You are buying a very pricey item that would be expensive to repair or replace; the more expensive the item, the more consideration to give the extended warranty.

And above all else, don’t fee like you need to make an “at the register” decision.  Most retailers allow you to purchase an extended warranty for up to 15 or 30 days after a purchase.  Take your time to make a good financial decision.

Sandra Adams, CFP® is a Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012 and 2013, Sandy was named to the Five Star Wealth Managers list in Detroit Hour magazine. 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.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

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 Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

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