Raymond James Bank Deposit Program simplifies FDIC coverage

If you’re not familiar with the Raymond James Bank Deposit program, a quick read here could save you a big hassle. The program is designed to help you take advantage of up to $2,500,000 of FDIC coverage without putting any extra work on your plate.

What is FDIC?

The FDIC (Federal Deposit Insurance Corporation) covers cash deposit accounts, dollar for dollar, including principal and accrued interest up to a limit in the event of a bank failure.  It is funded by the premiums paid into the corporation by banks on the deposits they hold.  Historically, in the event of a failure, funds are available to depositors within days after the closing of the bank.

How much does FDIC cover?

Until October 2008 coverage was limited to $100,000 per depositor.  During the financial crisis in the fall of 2008 the government stepped in and increased the insurance limit temporarily to $250,000 to prevent bank runs from occurring as the financial crisis and subsequent bank failures accelerated.  Later in 2010 the increase in the limit was made permanent. 

How do you calculate the coverage you have?

For example, let’s say Joe has $250,000 at a bank between his checking, savings, CDs and money market accounts maximizing his coverage there.  If Joe was married to Sally, and these accounts were titled jointly, then they could have a combined coverage of up to $500,000.  The coverage is per bank meaning if Joe and Sally had $500,000 at 10 different banks they would have $5,000,000 in FDIC coverage.  But, for Joe and Sally, or anyone, having money spread out between multiple banks could be very confusing and time consuming to keep track of everything.

Gone are the days of playing games to maximize your FDIC insurance coverage on bank deposits! 

Insuring more than $250,000 per depositor

One account at Raymond James through the Raymond James Bank Deposit Program (RJBDP) can provide up to $2,500,000 ($5,000,000 for joint accounts) of total FDIC coverage.  The work is done behind the scenes by Raymond James as available cash is deposited into interest-bearing deposit accounts at up to 12 banks automatically for our clients.

Another way to qualify for more coverage is by holding deposits in different ownership categories (account types).  Below is a table of the categories and limits.  The RJBDP can then increase these limits according to the above numbers as well.

Source: Raymond James

As with all insurance, you hope you never need to use it.  Cash can play an important role in an overall financial plan and knowing it is protected can lend confidence.  When it comes to FDIC insurance coverage you likely have much more than you realize!

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 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. Laws, coverage, and program rules are subject to change. Hypothetical example is for informational purposes only, and does not represent and account or investor experience.

Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Bank, a federally chartered savings bank. Unless otherwise specified, products purchased from or held at Raymond James & Associates or Raymond James Financial Services are not insured by the FDIC, are not deposits or other obligations of Raymond James Bank, are not guaranteed by Raymond James Bank and are subject to investment risks, including possible loss of the principal invested. The FDIC insurance limit per depositor is $250,000. Coverage applies to total holdings per bank per depositor. Visit fdic.gov for more information.

Strategy for an Intra-Year Market Drop

 With minutes remaining in the game, my youth hockey team had just scored, sending the nail-biter state championship into overtime. I was 11 then, and I remember the packed stands full of parents waving signs and pom poms. The other teams were even cheering us on. Only a few minutes into overtime, I watched the puck deflect off our own player's skate into the net, ending the game and our season in agony. Through the tears and heartbreak, I'll never forget what coach said to us, "we didn't play our game." Not the most comforting line after such a loss, but it was 110% true.

That year, our team had been undefeated until our final opponent took us down. The reason we were so successful was because we had a game plan that worked for us and we stuck to it. It wasn't anything fancy; we just did the simple things really well and were consistent. If we had our backs against the wall or faced adversity during a game, we stayed true to what we knew about winning. But that's not what we did when it mattered most. We let a very good team get into our heads and it caused us to make bad decisions. We didn't stick to the game plan that had provided us with so much success through the season - something that can also easily happen to investors during a market pullback or a time where there is fear and uncertainty. 

At the Raymond James national conference in Washington D.C. in May, I listened to a JP Morgan presentation about past, present, and projected market conditions. The most intriguing fact I heard was this:

Since 1980, the average intra-year market decline has been 14.4%. However, 27 out of those 34 years, the market has closed the year positive.

So what does that tell us? To me, it highlights the importance of having a game plan and a strategy and sticking to it. The market will not always move in a straight line up like we have seen over the past few years, so being prepared for bumps along the ride is imperative. As my hockey team experienced, when you begin to deviate from a disciplined strategy, bad things can happen.

Making knee jerk decisions during difficult times can cause you to stray off your path to financial independence. This is when we, your financial planners, step in as coach to talk you through the game plan that we have helped you establish. It is a team effort and working together through the good times and bad is what we do best for our clients.

Nick Defenthaler, CFP® is a Associate Financial Planner at Center for Financial Planning, Inc. Nick currently assists Center planners and clients, and is a contributor to Money Centered and Center Connections.

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Past performance may not be indicative of future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. C14-019163

Is 40 the “Magic” Age for Financial Planning?

When is Financial Planning, on your own or with the help of a professional, appropriate? The correct answer is you should probably begin saving the first day that you receive your first paycheck.  However, in my 23 years of experience, folks tend to get “serious” about planning near the age of 40.  I do not by any means want to discourage anyone younger than 40 to put off planning until they hit that “magic” 40 milestone. Just about anyone that has achieved financial success will tell you to start as early as possible.

Some questions and issues that the 40+ crowd might consider: 

• How much should I be saving? I have heard rules of thumb such as 10% or 20% but what does that mean for me and my specific goals?

• I’m busy. What are the options to pay bills other than the standard envelope and stamp method?

• Life insurance: Salespeople have been hounding me for years to buy life insurance. I couldn’t afford it in the past and secretly didn’t see the value, but I’m ready now. What type and amount should I get to protect my family so I am not insurance rich and cash poor?

• College: My kids are getting closer to college age. How do I pay the ever-increasing tuition?

• I am ready to invest my wealth. What are best options for me?  Should I max out my 401k or 403b or is a ROTH a better option?

• Estate planning: I’m all grow’d up now and ready (I think) to consider a Will and perhaps a Living Trust. How do I know which one I need?

• My parents are aging and I am not sure if they have the resources for their care. What should I be doing now to prepare or help them prepare?

• I have heard about the “Boomerang kids” phenomenon. Should I move to a one bedroom condo now?

• Employer retirement plans (401k/403b): Whoa, I have real money now! How should it be invested?

• I give to charities that are making a difference in the world. Is there a way to maximize my donations and perhaps even get a tax break?

• Income taxes: I don’t mind paying … I just don’t want to pay a cent more than my share. How can I limit my income tax exposure?

• If I choose to work with a professional financial planner whom should I contact? I have not have worked with a professional advisor yet so I am a bit leery, and maybe even a bit scared to share my financial picture (not sure how I stack up with others).

If you’ve been asking yourself some of these questions, no matter your age, you are ready to get “serious” about your financial life.  Think about some of the issues and questions that you find yourself facing and feel free to give me an email. If my 23 years of working with similar folks can be of help, I’d love to share my insight because you don’t need to wait for some “magic” age.

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.

C14-019069

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:

Financial Advisor IQ

Melissa Joy, CFP®: Melissa was quoted in Financial Advisor IQ in an article titled, Need to Fire a Fund Manger? Minimize Disruption on June 3, 2014 by Murray Coleman.

Utilizing your Financial Advisor in a Divorce

There are times in life when it’s best to just part ways. Someone once said that the most common reason of divorce was… wait for it… marriage. That’s the lighter side of what can be a very touchy subject. I recently attended a conference that gave me new insight into helping clients through the process.

Divorce Rate Statistics

Over 50% of married Americans have experienced divorce and for couples with a disabled child, the divorce rate jumps to 90%.  Experts say it comes down to stress and growing apart and divorce can provide a time to reflect and start over.

Some of these splits are amicable and, if they can be done with a clear head and fair planning, I believe that the financial costs can be reduced in a material way. But this is also a very emotional time and it’s even more difficult to keep a level head when emotions run their course. It can help to have an intermediary who understands both parties and the finances.

Dividing Assets

Consider a situation where there are multiple pensions, IRAs, retirement plans with old employers, education funding, vehicles and joint accounts … plus a home and other personal property. Well, try to take a deep breath and tackle one item at a time.  Place each item in a category and deal with them one by one (i.e. income from pensions can be handled by a lump sum, income from one spouse to another for some fixed period of time or through a Qualified Domestic Relations Order (QDRO) process). 

• Asset value differences and the tax implications can be aligned to provide for a fair split

• Qualified plans can be combined with IRAs to simplify things in some cases

• Liquidity can be generated from qualified plans without penalty

• Properties and tangible possessions can be appraised and split

• Social security differences are typical and can be managed

My best piece of advice is to talk to each other, come to an understanding of values, and arrange things fairly prior to talking with your attorney. Once you’ve done that, go and ask for their advice on what you might be missing.  If you can, utilize your Certified Financial Planner to best organize the items above because they already understand the money issues and can help to potentially reduce your legal fees considerably.

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.

This materials is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Raymond James does not provide tax or legal advice. C14-017271

Roth vs. Traditional IRA

 If you’re planning to use an IRA to save for retirement, but aren’t sure if Roth or Traditional is best for you, we can help sort it out. First, before we begin breaking down the pros and cons of each type of retirement account, you need to be sure that you are eligible to make contributions to these accounts.

For 2014 Roth IRA contribution rules/limits:

• For single filers the modified adjusted gross income (MAGI) is phased out between $114,000 and $129,000 (unsure what MAGI is? Click here)
• For married filing jointly the MAGI is phased out between $181,000 and $191,000
• Please keep in mind that for making contributions to this type of account it makes no difference if you are covered by a qualified plan at work (such as a 401k or 403b), you simply have to be under the income thresholds.
• Maximum contribution amount is $5,500

For 2014 Traditional IRA contributions:

• For single filers who are covered by a company retirement plan (401k, 403b etc…), in 2014 the deduction is phased out between $60,000 and $70,000 of modified adjusted gross income (MAGI).
• For married filers, if you are covered by a company retirement plan in 2014, the deduction is phased out between $96,000 and $116,000 of MAGI.
• For married filers not covered by a company plan but with a spouse who is, in 2014 the deduction for your IRA contribution is phased out between $181,000 and $191,000 of MAGI.
• Maximum contribution amount is $5,500

If you are eligible, you may be wondering which makes more sense for you?  Well, like many questions in finance the answer is…it depends! 

Roth IRA Advantage

The benefit of a Roth IRA is that the money grows tax deferred and someday, when you are over age 59.5, you can take the money out tax free.  However, in exchange for the ability to take the money out tax free, you don’t get an upfront tax deduction from the IRS.  Essentially you are paying your tax bill today rather than in the future. 

Traditional IRA Advantage

With a Traditional IRA, you get an upfront tax deduction.  For example, if a married couple filing jointly had a MAGI of $180,000, (just below the phaseout threshold), then they would probably be in a 28% marginal tax bracket.   If they made a full $5,500 Traditional IRA contribution they would save $1,540 in taxes.  To make that same $5,500 contribution to a ROTH, they would need to earn $7,040, pay the taxes, and then make the $5,500 contribution.  The drawback of the traditional IRA is that you will be taxed on it someday when you begin making withdrawals in retirement.

Pay Now or Pay Later?

The challenging part about choosing which account is right for you is that nobody has any idea what tax rates will be in the future.  If you choose to pay your tax bill now (Roth IRA), and in retirement you find yourself in a lower tax bracket, then you may have been better off going the Traditional IRA route. However, if you decide to make Traditional IRA contributions for the tax break now, and in retirement you find yourself in a higher tax bracket, then you may have been better off going with a Roth. 

How Do You Decide?

A lot of it depends on your personal situation, such as the career path you’ve chosen and your desired income in retirement. However, we typically recommend that people just starting out in their careers who will probably earn a much higher income in the future make ROTH contributions.  If you’re in the 25-28% marginal bracket, a Traditional IRA may make more sense for the immediate tax break now.  As always, before making any final decisions, it’s always a good idea to work with a qualified financial professional to help you understand what makes the most sense for you.

Matthew Trujillo, CFP®, 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.

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This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the Center for Financial Planning, Inc. and not necessarily those of 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. Roth IRA owners must be 59 ½ or older and have held the IRA for five years before tax-free withdrawals are permitted. You should discuss any tax matters with the appropriate professional.

Links are being provided for informational 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. C14-015057

Center sends team to Raymond James National Conference

If you think conference = boring, then you’re missing out on the way the Center for Financial Planning team does a conference. From our office of 18, we took 15 team members to the National Raymond James Conference in Washington, DC from May 19^th through the 22^nd. Someone had to stay behind and answer the phones! Aside from some intensely fun team bonding activities, the conference offered an eclectic mix of sessions with one overarching focus – making a difference in our clients’ financial lives.

From investment and market trends to client service refreshers, everyone on the team learned something new to bring back to the office.  We also heard about some exciting updates that are in the works from Raymond James (including electronic signatures!) and we are looking forward to their introduction in the near future.  We also used this opportunity to learn from and share with other top financial planning firms.  Bettering ourselves, our team, and our processes are never ending goals for The Center. 

It was great to spend some time outside of the office and we came back reinvigorated and ready to implement what we learned.  We also want to thank our clients for being so patient and supportive while our skeleton crew worked so hard in the office that week!

Rewriting Retirement: 5 Steps to Your Plan

Life, after work, has been completely redefined. Those leaving the 9 to 5 behind, in favor of a more relaxed, enriched or exciting lifestyle, are rewriting the meaning of retirement.  Part of the credit for retirement’s overhaul can be given to longer and healthier lifestyle trends.  Leaving the workforce does not have to be the endgame, but rather your signature version of a rich life after retirement that could last a long time!

Here are five steps to help you get ready for what comes next:

1. Create a retirement budget and track expenses

2. Shore up cash reserves

3. Know how you will deal with unexpected financial needs

4. Identify income sources that contribute to cash flow

5. Take the time to ensure that you are psychologically ready for the change of pace

On the most basic level, we all have goals and aspirations for our life after work.  Some are big, some small, but most importantly, they are unique to each retiree.   If you are stressed thinking about retirement, talk to your financial planner about the five steps above.  Take the time to double-check that you are ready for what comes next.  Today’s retirement holds the promise of being more fulfilling than ever before – but could be longer and more expensive too. 

Laurie Renchik, CFP®, MBA is a Partner and 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.

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. C14-017445

Estate Plan: Making the Mistake of not Writing a Will

 I’m sure you’ve all heard the scary statistic on the number of people who don’t even have a simple will in place, but every time that fact enters my eardrums and hits my brain, I literally squirm in my chair. The  AARP reports that 41 percent of baby boomers and 71 percent of millenials don’t have wills. A simple estate plan that includes wills, durable power of attorney forms, and letters of instructions will typically cost less than $1,000 from a qualified attorney.  I get that it’s “just one of those things” that gets swept aside each year but, to be blunt, it’s simply foolish to not have these documents in place.  By not having these important forms drafted and on file, you are potentially creating an absolute nightmare situation for your family that includes extensive time, energy, stress and cost that could easily be avoided. 

Do I need a Trust?

I recently attended the Raymond James Trust School, an all-day educational seminar dedicated to the exciting world of estate planning!  While it may not be my personal favorite area of financial planning, it is crucial and essential to maintaining a well-rounded, solid financial plan.  Trusts may or may not be necessary in your personal estate plan, but a trust is a great tool to give you more control over assets and to avoid probate.  Clients are often confused as to what a trust actually is or what it truly accomplishes.  For more information, here’s a link to a brief whitepaper on some reasons why a trust may be appropriate for you.

When to review Beneficiaries

Another area that clients often forget about is keeping up with the beneficiaries on their accounts or life insurance policies.  We’ve had clients discover that ex-spouses are still listed on insurance policies and deceased family members are listed as primary beneficiaries on million dollar retirement accounts.  It is something we proactively check to make sure the correct individuals are selected when we initially set-up an account. However, there is a responsibility that falls on the client to keep us informed of life-changing events that would warrant a beneficiary change.  This is why we work together as a team with our clients to do everything we can to avoid such monumental mistakes. 

Designating Charities

One final thought that I found especially interesting were the numbers surrounding charitable giving.  Over $325 BILLION was given to charity last year – 72% of those funds were given by individuals.  This fact made me smile.  Although times are still tough for many, Americans are among the most generous in giving to those in need.  Charitable planning and giving is something very important to many clients and is something we help clients with often.  Please don’t hesitate to bring this topic up with us if you ever have questions or want to talk more about efficient ways to give your favorite charities. 

Nick Defenthaler, CFP® is a Associate Financial Planner at Center for Financial Planning, Inc. Nick currently assists Center planners and clients, and is a contributor to Money Centered and Center Connections.

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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 legal matters with the appropriate professional. C14-013998

We’re Moving to a New Office July 1st!

 If you have not already heard, the Center is moving closer to you! While our address will look significantly different, we are actually only moving two buildings to the east. You will still use the same entrance off of Telegraph Road that you currently do to get to us. Front of the office park, here we come! We’ll be closer to Telegraph Road so, indeed, closer to everyone!

Moving day is scheduled for July 1^st.

Our new address will be 24800 Denso Drive, Suite 300 Southfield, MI 48033

We are really excited and proud of our new office and can’t wait for you to see it for yourself. Melissa Joy, CFP® and Laurie Renchik, CFP®, MBA have taken the lead the last few months on the design of our new space, making sure that it is perfect for both our clients and our team members. We will be increasing our square footage to better serve you, our clients, as well as to provide a productive new environment for our team members. Our new home will have a modern and rejuvenating atmosphere that radiates our Center personality. The conference rooms will be more spacious and include updated furniture, new technologies, and a great third floor view with floor to ceiling windows, giving it loads of natural light. Further into the office, you will find our new Center Café which further promotes our dedication to being a healthy workplace. We envision our team members putting the new break room to good use, both for eating lunch and having quick internal meetings at the large high-top tables or the more private booths. The new office also includes a private quiet area, where our team-members can rejuvenate, read, or brainstorm, providing support for creativity and relaxation. With all our added space, we have more room to hold client meetings as well as future client events. Plan on seeing it for yourself at one of our Open Houses in the coming months.

Other than you needing to remember where we are the next time you come for a visit, our move shouldn’t even be a blip on your service radar. We will be reachable by the office telephone number throughout the moving process. While the movers do the heavy lifting, we will be doing what we do best, serving the needs of our clients without missing a beat. Anyone who has been through a move knows that there is a certain amount of organized chaos, but we are working hard to make the transition absolutely seamless for you. You can keep up with our move progress on our Center Facebook page and Center Website where we’ll be posting the latest updates, announcements, and photos of the new office renovation. See you soon on Denso Drive!