The 8th Annual Fun Run Recap

The 8th Annual Kacy Wyman fun run/walk event took place Sunday May 4th.  Once again, over 350 walkers/runners participated in the event and raised much needed dollars to find a cure for Kacy’s rare disease called Cystinosis. Thanks to about 37 pills a day Kacy leads an active life and is a true inspiration for our family and community.

About Cystinosis

Cystinosis is a rare disease that is typically diagnosed prior to age 2. Cystinosis is a genetic metabolic disease that causes an amino acid, cystine, to accumulate in various organs of the body. Cystine crystals accumulate in the kidneys, eyes, liver, muscles, pancreas, brain, and white blood cells. Without specific treatment, children with cystinosis develop end stage kidney failure at approximately age nine. Cystinosis also causes complications in other organs of the body. The complications include muscle wasting, difficulty swallowing, diabetes, and hypothyroidism. It is estimated that at least 2,000 individuals worldwide have cystinosis, though exact numbers are difficult to obtain because the disease is often undiagnosed and/ or misdiagnosed.

For more information visit www.cystinosis.org

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Tax Update: Borrowing from Retirement to Buy a Home

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There may come a time in your life when you simply need some money. As a general rule, taking money from an IRA, 401k, or other retirement plan for “non-retirement” purposes is ill advised.  However, there can be some exceptions.  Perhaps you bought a home without selling your current one and need funds to bridge the closing dates.  The IRS allows you to withdraw funds from an IRA and avoid income taxes and a 10% penalty (if under age 59.5) by rolling the money back into the IRA within 60 days.  This can be done once every 12 months. The gray area had been whether the 12-month rollover applies to each separate IRA or to all of your IRAs. In February 2014 a court ruling stated that this rule applies on an aggregate basis for all of your IRAs.  Therefore, the strategy can still be used, but proper planning will be even more important in order to make sure the transaction is nontaxable.

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

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 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 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. C14-011297

Elder Care Planning: Difficult Conversations

 

People almost never change without first feeling understood."

Douglas Stone, author of Difficult Conversations, How to Discuss What Matters Most

There will be many times during your lifetime when you must approach difficult subjects with loved ones. It seems that some of the most difficult conversations for adult children are those conversations with older adult parents, especially when the discussions involve potential changes in lifestyle.

Some common difficult topics to discuss with an older adult parent involve:

  • Downsizing and decisions related to moving or bringing help into the home
  • Driving and transportation alternatives
  • Financial issues and financial capacity
  • Family relationships
  • End of life planning

Ideally you are able to have family conversations with your older adult parent before there is an urgent need for action. However, if this isn't the case, it is important not to rush in and demand that changes be made (i.e. need to move from current home, stop driving, change registration on accounts to joint or take over financial affairs by way of conservatorship or guardianship). Attempting to impose your wishes for change on someone who has been in charge of their own life for as long as they can remember will likely be met with negative reactions such as refusal, defensiveness, denial, and possible irreparable damage to your relationship. On top of that, the situation will remain unchanged and your fears for your parent’s safety and well-being will remain.

Even when the need for change may be urgent, attempt to approach your older adult parent with respect and a desire to give them as much control over their situation as possible. Consider using the CARE conversation model developed by Dan Taylor, author of the Parent Care Solution to help you to have meaningful and productive conversations with your older adult parent

CARE Conversation Model

Challenges - What challenges does your parent currently have or see in their future related to living situation, health/care, and finances?

Alternatives -- What options does your parent want to consider to address these challenges?

Resources -- What resources can you identify to address these challenges (family, financial, community, government, etc.)?

Experience -- What is the experience your parent would like to have as they age?

It may be helpful to hold a family meeting with the help of your financial advisor to discuss these very important issues. An impartial party, like your advisor, can help ask the difficult questions and ensure that all concerns are heard. Your advisor can also help to document the conversations and help to develop a formal action plan to address issues of concern.

 

Sandra Adams, CFP® 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 2012-2014 Sandy has been 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.

Any opinions are those of Center for Financial Planning Inc. and not necessarily those of Raymond James C14-012699

Have you had “The Talk” about Health & Housing?

 There are plenty of conversations that can make us feel squeamish, reluctant, or just downright uncomfortable. As a parent of three kids ages 20, 18, and 11 I have gotten comfortable with “The Talk” you have with your children. For me, the first time through was given with a discernable quiver in my speech, but as they say, practice makes perfect.  Lately, “The Talk” I find myself having with a lot of clients is the one about Health and Housing. Frankly, I am not sure which one is easier, but I do know they are both important! 

What is your Housing Plan?

As comprehensive financial planners, we are concerned with helping our clients lead a more fulfilling life.  As you age, health and housing become critical elements that can determine the success of your retirement plan.  Clients used to ask, “Will I have enough for retirement?” Now what I hear is, “Can I afford the type of care and housing I want?” This “Talk” is so much more than a conversation about nursing homes.  Do you want to live in the three-story home where you raised your family?  You know, the one with all those stairs and the lovely yard that seems to need so much attention?  Have you had an expert come into your current home to suggest safety measures such as rails and bars in key areas?  Is a first-floor condo in your future?  Should you consider moving closer to one of the children? Should you buy or rent/lease? Do you want to involve your children or others in the conversation?

If you’ve asked yourself any of these questions, it's a sign that you need to have “The Talk”. Only you can determine the correct answers and, while “The Talk” can be a little intimidating and uncomfortable, the decisions will be much better if you develop a plan before a health or financial crisis. We are here to help.

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

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James C14-012690

Raymond James Alternative Investment Conferences

 Risk seemed to be the word on everyone’s lips at two recent Raymond James conferences. In early April, Portfolio Manager Angela Palacios attended a conference in New York dedicated to alternative investment. She attended sessions where experts spoke on topics including Venture Capital, Real Estate, and Managed Futures. The goal of many of these investment options is to seek to reduce overall portfolio risk over time. Because volatility has been very low over the past few years, investors have ignored some of these risk-mitigating investing options, leaving them behind the flashier equity market returns. Angela’s take-away from the conference:

This is precisely the time to be reminded why these alternatives are an important aspect of all portfolios.”

Center Partner Matthew Chope attended another Raymond James conference in April. The Las Vegas alternative investment conference echoed the theme of risk management. Matt attended sessions that broadened his knowledge about mitigating risk by adding specialized securities to portfolios. Matt said the strategy comes with challenges:

We want to find ways to mitigate risk without impacting long-term returns. I came back looking for ways to implement these ideas for our clients on a case-by-case basis.”

With a vigilant eye on the ever-changing landscape of investing, The Center team is committed to staying at the forefront of the latest strategies and then putting them to work for our clients.

Alternative investments are available only to those who meet specific suitability requirements, including minimum net worth tests. Please review any offering materials carefully, and consult with your tax advisor or accountant prior to investing, There are special risks involved with alternative investments, including investment strategies, and different regulatory and reporting requirements. There can be no assurance that any investment will meet its performance objective. Futures trading is speculative, leveraged, and involves substantial risks. Investing involves risk and there is no assurance that any strategy will ultimately be successful or profitable nor protect against a loss. C14-013296

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Trades in a Flash: The High Frequency Trading Debate

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Imagine making a trade in less than the blink of an eye. That’s called High Frequency Trading (HFT) and it has generated a lot of buzz lately. HFT trades are executed between 2 and 7 milliseconds … we’re talking one thousandth of a second (1/1000).  There are as many milliseconds in one second as there are as many seconds in 16.67 minutes.   

High Frequency Trading Changing the Spreads?

There is a pretty lively debate going on right now between proponents of HFT and some outspoken critics.   Proponents of HFT claim that it’s good for the markets because it creates a lot of liquidity and volume for exchanges so the spreads aren’t as wide for different types of securities. For instance, if you wanted to buy Ford stock back in the 90’s the bid (what someone was willing to buy it for) and the ask (what someone was willing to sell it for) may have been as much as .125 or .25.  However, nowadays, if you look at the bid/ask spread for most heavily traded stocks (such as Ford) it’s usually as little as one penny.  The proponents of HFT claim that these “tight” spreads are because of all the activity and volume their computers bring to the markets.

Is High Frequency Trading Essentially Front Running?

The critics of HFT say that these computers and algorithms are engaging in front running.  That’s an illegal practice involving having prior knowledge that a large trade is going to take place, and just before that trade happens you go in and buy the stock yourself.  When the large trade is placed, it will naturally eat up all of the available shares at that price point, and push price slightly higher allowing the front runner an opportunity to exit with a few pennies profit.   

So why should we care?  If you are a long term investor, the simple answer is that paying a few extra pennies for your Google or Apple stock probably doesn’t matter. However, if you are a day trader, then I hate to break it to you, but the deck may be strongly stacked against you.

Matthew Trujillo is a Registered Support Associate at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

In reality, this practice mostly impacts those who are in the actual business of trading stocks. And more narrowly, the debate concerns a particular segment of traders who leverage speed to gain an advantage. Raymond James has long held that investing in the markets, with the assistance of an advisor, can help clients best meet their long-term goals through strategic, customized financial planning. We encourage our clients to buy and sell in context of those long-term plans, rather than make quick trades. 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 opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. C14-009411

Curtain Call

 The Center's Team enjoys sharing their knowledge with the press to help stories come to life, share facts and bring important topics to the forefront.  We are also honored when we are recognized by media and publications for our work and service to our profession. Here's what's new:

Journal for Financial Planning

Sandra Adams, CFP®: Sandy co-authored an article appearing as the cover of the Journal for Financial Planning April edition. The article was titled “How to Protect and Help Clients with Diminished Capacity” and was co-authored by Peter A. Lichtenberg, Ph.D., ABPP, director of the Wayne State University Institute of Gerontology.

Financial Planning Magazine

Laurie Renchik, CFP®: Laurie was quoted in Financial Planning Magazine on March 19, 2014 in an article titled HSA Strategy: Create a ‘Medical IRA’ by Donald J. Korn.

Nick Defenthaler, Support Associate: Nick was quoted in Financial Planning Magazine on March 19, 2014 in an article titled HSA Strategy: Create a ‘Medical IRA’ by Donald J. Korn.

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Investment Commentary - 1st Quarter 2014

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Dear clients and friends,

We’re four months into 2014 and so far there is not much to show for when it comes to year-to-date investment returns. Markets have treaded water in 2014 so far. Looking further out to the last 12 months, 3 years or 5 years and most investors in stocks or a diversified portfolio of stocks and bonds have been rewarded for their commitment to investing.

I mention this as we have just passed the five year anniversary of market lows in March 2009. I think it’s a healthy exercise to remember today your state of mind five years ago as an investor. Did you feel it was appropriate to put your faith in investment markets at the time? How do you contrast the stress that you may have felt along with most investors to the feelings related to quite positive stock market returns over the last several years?

The past few weeks marked another milestone as you likely filed taxes. High earners saw the bill from new taxes and rates. While tax burdens have become larger for many, the opportunities to manage taxes are coming to the forefront in the wealth management field. Strategies including asset location, cost basis election, and tax-loss harvesting are employed where appropriate.

If you’re a client of The Center, make sure you send a copy of your 2013 tax return. Information from this is used to evaluate your current tax circumstances and helps us to make more informed decisions on your investments and general financial planning strategies both on a before and after-tax basis.

We’ve done some sprucing up on our investment commentary website. Here are some things to look for this quarter:

  • A tactical asset allocation dashboard is available with our investment committee’s latest weightings. Today we have bonds slightly underweight due to the low interest rate environment and stocks slightly overweight. We’re concerned about valuations for small company stocks in the US and have underweighted these positions. We are finding international equities more attractive due to valuations and have increased our allocations from underweight to neutral in the last six months.

  • We have launched a quarterly investment pulse which gives you some insight to research and conversations with other investment professionals. Angie Palacios’ first edition of this update highlights our thoughts on municipal bonds, stock market valuations, and a manager departure at PIMCO.

  • Investment returns as of the end of the first quarter are available along with Raymond James capital markets review summarizing current economic and investment data.

Whether markets are recently up or down, your commitment to a diligent investment process and focus on overall financial goals is to be commended. Please don’t hesitate to let us know if you have any questions regarding general investment strategies as well as your specific portfolio. Thanks as always for your trust and commitment to the financial planning process.

On behalf of everyone at The Center,

Melissa Joy, CFP®
Partner, Director of Investments
CERTIFIED FINANCIAL PLANNER™

Melissa Joy, CFP®is Partner and Director of Investments at Center for Financial Planning, Inc. In 2013, Melissa was honored by Financial Advisor magazine in the Research All Star List for the third consecutive year. In addition to her contributions to Money Centered blogs, she writes investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.

Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.

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. Any opinions are those of Melissa Joy and not necessarily those of RJFS or Raymond James. Past performance may not be indicative of future results. You should discuss any tax or legal matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

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