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Economic and Investment Update for 2016

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Contributed by: Angela Palacios, CFP® Angela Palacios

In early February, Melissa Joy, CFP®, Partner and Director of Wealth Management at The Center, was joined by David Lebowitz, Vice President and Global Market Strategist for J.P. Morgan, to discuss timely economic and market updates.

David kicked off the presentation by answering 3 questions:

  1. Where are we in the (current economic) cycle?

  2. What should we watch out for?

  3. Where are the opportunities?

J.P. Morgan built a strong case for the U.S. Economy sitting at positive GDP growth (Gross Domestic Product), the improving job market, as well as, corporate profits, and subdued inflation for the foreseeable future.

David also pointed out items to watch out for, such as low oil having a positive effect on consumer’s wallets, the continued higher volatility we are currently experiencing is more in line with history rather than the low volatility environment we have become accustomed to, and being careful of investment biases sneaking into your portfolio causing undue risk.

Opportunities are still out there for investment growth but David stressed that the ride is as important as the destination. A balanced portfolio is like a sword and a shield for investors. Your sword, or equities, has the potential to give you the long term growth needed to help reach goals but your shield, or fixed income can help give you the defense to make your investment journey more comfortable.

Melissa continued with several history lessons stressing the importance of patience and that it often pays off when investing. She discussed top headlines in the news such as the elections and interest rate hikes and how these items will affect investors over the coming year.

Below is a link to the presentation slides referenced throughout that emphasize the key points Melissa and David discussed. As well, there is the recording of the webinar that Melissa and David held, that has further information and discussion.

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.

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.

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Diversity in Financial Services and The Center – What Does it Mean to You?

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Contributed by: Sandra Adams, CFP® Sandy Adams

February is Black History Month and we, at The Center, have been celebrating by sharing some of our favorite quotes from famous African American leaders. However, we thought it was also the perfect time to address the topic of diversity and the role it plays in our industry. Throughout our 30 years, we have paid special attention to the topic of diversity and what it means to our teams, committees, and ultimately to you – our clients.

Where do we stand on the topic of diversity in our industry? 

Interest in personal financial advice has never been greater and as more Americans assume responsibility for managing their financial futures, there is increasing demand for financial advice. According to recent research conducted by CFP® Board, 40 percent of Americans now work with financial advisors, compared to 28 percent in 2010.  The rising need for financial advice presents an opportunity for the financial planning profession to diversify its workforce to better match the population we serve. For example:

  • African Americans represent only 8.1 percent of financial advisors, yet comprise more than 13 percent of the U.S. population. 

  • Hispanics represent only 7.1 percent of financial advisors, yet comprise more than 17 percent of the U.S. population.

  • Only 23 percent of CFP® professionals are women, even as women control more than a third of wealth in the U.S.  

Why do we think it is important to have people with diverse backgrounds and experience working in teams at The Center on behalf of our clients? 

Working in a committee or team structure is not something that comes natural to us as human beings. Working with a diverse group of people in a committee can be even more difficult, but is of utmost importance when making investment or financial decisions. However, a diverse committee is less likely to have a blind spot, will have a broader set of experiences to draw from and offers checks and balances. We believe building a committee of diverse individuals is one of the first and most important steps to successful outcomes.

At The Center we have recognized this importance when deciding who should sit on the investment committee. These members drive the decisions and diversity helps avoid groupthink. Groupthink happens when group pressures lead to a deterioration of mental efficiency, reality testing, and moral judgement. It’s rewarding to see change coming and equally as rewarding to be part of it.

The Center has also seen the value of diversity as it has developed other teams within the firm to work on behalf of clients, like the financial planning department, or the weekly meeting of the financial planners. Each of these diverse groups is made up of people coming from different backgrounds, possibly having slightly different educations, and various certifications or specialties. Because of this, we have the opportunity to bring different insights and perspectives to client cases that wouldn’t exist if we all came from the same background and had the same frame of thought – what an advantage for our clients!!

As you celebrate Black History Month along with us at The Center, know that diversity is important to how we do things and how we serve you each and every day.

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 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.

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.

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Reinventing Retirement

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Contributed by: Sandra Adams, CFP® Sandy Adams

The definition of reinvention is to bring back or to revive. Retirement to most clients is less about the ending of a past life or career and more about the beginning of a new life. Our planning and conversations center around how we can make the most of the next segment or our clients’ lives – how can they “reinvent” themselves.

Gone are the days of retirement spent in rocking chairs on the porch or in front of the television set. Today’s retirees are younger (at least at heart) and focused on staying healthy, active, and engaged. They are finding opportunities to travel, to volunteer, to take personal development classes, and even to go back to work in a second career.

I recently had the opportunity to watch a wonderfully refreshing movie that illustrated retirement reinvention in a most interesting way. The Intern, starring Robert De Niro and Anne Hathaway, tells the story of Ben Whittaker (Robert De Niro), a 70-year-old retired widower who takes the opportunity to become a senior intern at an online start up fashion site. Ben soon becomes popular with his younger co-workers, including Jules Ostin (Anne Hathaway) who’s the boss and founder of the company. Whittaker's charm, wisdom, and sense of humor help him develop a special bond and growing friendship with Jules. Ben proves to himself and to everyone else that he encounters that work ethic, strength of character, and experience never go out of style. 

Retirement is a time to redefine and reinvent yourself – use the next segment of your life to do things you never had time to do, to learn something new, or to use your years of experience and knowledge to add value in different areas, like Ben Whittaker did in The Intern. As you plan for the financial transition into retirement, work with your financial planner to make sure that you also plan for your retirement reinvention. To have a successful “retirement,” it is important that while you feel financially confident, you also continue to feel emotionally and socially fulfilled and valued. When you retire, your life is not over—Ben Whittaker said it best: “I still have music in me, absolutely positive about that!”

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 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.

Any opinions are those of Sandy Adams and not necessarily those of Raymond James.

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The Center is taking on a 21 Day Challenge

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Contributed by: Gerri Harmer Gerri Harmer

Not all of us have the same goals in health and wellness. So when it comes to putting together a work place program, we try to keep everyone in mind. It’s been said to permanently change a habit, you need to do it for 21 days. So starting on January 19th, The Center staff committed to making at least one new healthy habit for 21 days. Each person’s individual goal had to be a bit of a stretch but ultimately doable, with some effort! If we miss a day, we start again. We found quite a few were similar, a few very unique and some had more than one.

Our goals were gathered and posted in the kitchen. 

  • Drink 64 oz. of water a day

  • At least 15 minutes of exercise /workout at least 3x per week

  • Listen to relaxing music in the car on the way in

  • No bread products

  • No snacking between work and dinner

  • No stress eating

  • No candy/reducing sugar

  • Take vitamins

  • Pack a lunch

  • Eat less than 1,000 calories for lunch

  • Meditate 5 minutes a day

  • Make someone laugh

Maybe you can identify with one of these, or maybe they’ll inspire you to come up with your own challenge. We are having so much fun keeping each other on track or calling each other out; we’d love for you to join in, too. What habit do you want to work on for 21 days?

Gerri Harmer is a Client Service Manager at Center for Financial Planning, Inc.

Insurance Basics: An Introduction to the Importance of Having it

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

When most of us hear the word “insurance,” no matter what kind we’re referring to, facial expressions typically change in a negative way or the voice in our head loudly screams, “Ugh, I hate paying for that stuff!” We all seem to hate it, until we need it. 

Going back to basics, insurance in general is intended to shift risk from the insured (you) to an insurer (insurance company) to cover the possibility of loss from an unknown event that has the potential of occurring in the future. Sometimes we’re required by law to carry insurance, other times we realize that we would not be able to cover the cost of loss on our own if something bad happened, so we pay for insurance to cover the potential damage. 

Behaviorally, we as humans typically don’t enjoy paying for things that have a good chance of never occurring (house burning down, pre-mature death, or disability, etc.). Fair enough, I’m in the same camp.  However, insurance is a part of life and like many things in life, there are things we don’t enjoy doing or paying for. We do them and pay for them because we know it’s responsible and necessary to put ourselves and our family in a good position, no matter what life throws our way.   

As the first of a five part blog series, I’m going to touch on four of the most important types of insurances that can have the largest impact on our road to financial success:  life, disability, long-term care, and property and casualty. I will discuss each type of insurance in greater detail; I’ll review the different forms of coverage, who the coverage makes sense for, why the coverage makes sense and much more. 

Insurance is a crucial part of any financial plan. Although it may not be everyone’s favorite thing in the world, it’s absolutely necessary in most cases to make sure you’re protected when the unknown occurs.  Life happens. We’ve all seen it. When it does, we want to make sure you’re protected and still in a good financial position. 

Stay tuned!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

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 Nick Boguth and not necessarily those of 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. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investments mentioned may not be suitable for all investors.

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Are You a Peyton or a Cam Investor?

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Contributed by: Sandra Adams, CFP® Sandy Adams

As we approach Super Bowl Sunday, considered the greatest American sports day, the farthest thing from our minds might be our investments. And given the volatility of markets thus far in 2016, that might be a welcome break!  However, the quarterbacks in Super Bowl 50 provide us the opportunity to observe two very different personalities in sports that we can relate to our investment personalities.  Which quarterback are you more like?

 Peyton Investors:

  • Value consistency of performance over the long term.  Peyton Manning has been a quarterback in the NFL since 1998 and will be playing in his 4th Super Bowl on Sunday at the age of 39 and 320 days (the oldest quarterback to play in the Super Bowl).  He is a five-time league MVP and is one of the NFL’s ELITE quarterbacks.  He is the epitome of performing at a high level over the long term.

  • Desire to use experience and wisdom built over time to make low risk decisions, even in times of high stress.  Peyton has experience in the playoffs – while it is his 4th trip to the Super Bowl – he has done so under 4 different coaches.  He has worked with different players, different coaches and in different situations over a lot of years, giving him the ability to handle himself and his team in almost any situation. 

  • Aim for balance and an even keel.  Just like when investment markets are stressful, the Big Game can get stressful, but Peyton seems to always have a cool head and not overreact based on emotion.

Cam Investor:

  • Get a rush from a new and exciting investment opportunity.  Cam Newton was drafted into the NFL in 2011 by the Carolina Panthers, so is still very new to the league.  His youth, size and athleticism make him a clear standout amongst current NFL quarterbacks.  In addition, he has a clear affinity for excitement and taking risks – dazzling the crowd with exciting plays and athletic feats not seen before. 

  • Desire change on a more often basis.  Cam changes up his play selection on a more often basis; surprising the defense is his goal.  For an investor, this translates into someone who change his portfolio to the newest investment idea on a regular basis.

  • Wish to celebrate successes.  Of course I had to go there…we’ve all seen Cam celebrate…it’s his thing. Whether it’s the chest pumping or the “Dabbin” – Cam likes to celebrate his successes.  The only problem with too much gusto – what happens when the success ends?

So, as we approach Super Bowl Sunday and you sit down to enjoy the big game, keep an eye on Peyton and Cam and see if you can identify with either of them – as a quarterback or as an investor.  And no matter which team wins, know that we at The Center were watching and cheering along with you. And don’t think of us as the Cam or the Peyton – we’re the coach with the eye on the ball and the experience to help you call the plays.

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 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.

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 Sandy Adams and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Holding investments for the long term does not insure a profitable outcome.

Another One Passes the Test!

Kali Hassinger, now CFP®, passed the test and is officially a CERTIFIED FINANCIAL PLANNER PROFESSIONAL™. After starting in the Client Services department for her first few years here and committing to her role fully, Kali decided to dive deeper into the world of financial planning. She spent the year diligently studying and has now entered the ranks of the planners. The Center is extremely proud of her accomplishments and we are thrilled to add the coveted CFP® to her title.

We asked Kali a few questions to better get a sense of her experience with the exam:

Where were you when you heard the good news? The test gives you feedback automatically now, so I was at the test center!  I called my mom first because I think she was actually more nervous than I was. Got to love moms!

How did you celebrate your accomplishment? I took the test right before Thanksgiving, so I used that long weekend as a chance to relax and have fun (without the guilt of knowing I should be studying).

What part of the test did you feel most confident in? I felt most confident in the Retirement Planning category.  A lot of the tested items are things that we talk about every day at work!

What was your favorite study aid?  I followed the study calendar provided during my review class exactly as recommended, and it worked to my benefit!

Kali will continue working as a Client Service Associate to our lead planners as she begins to take on more associate financial planner duties. Next time you’re in the office, feel free to say “Hi!” to the newest CFP® at CFP!

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How Your Retirement Age Could Affect Your Social Security Benefits

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Contributed by: Melissa Parkins, CFP® Melissa Parkins

When planning for retirement, one of the biggest factors to figure out is how you will recreate your paycheck when you are no longer working to receive one from an employer. A couple of questions to think about:

  • Do you have a pension through your employer and if so, when are you eligible to start receiving income?

  • Will you live off of your portfolio?

  • Is Social Security the only income stream you have access to?

Many people (including myself!) long to retire early, but doing so could reduce your Social Security benefits. Your benefit will depend not only on how much you have earned in the past, but also when you decide to leave the workforce.

If you stop working before you have 35 years of earnings reported, then a zero is used for each year without earnings when your benefit amount is calculated. Any zeros will bring down your earnings average and reduce the benefits you will receive. Even if you have 35 years of earnings reported, if some of those years are low earning years (maybe at the beginning of your career), they will be averaged into your calculation and bring your benefits down lower than if you had continued to work for a few more years while, ideally, earning higher wages during your peak earning years.

One potential point of confusion when planning to retire early comes on your Estimated Benefits statement. When you look at your Social Security statement, your reduced expected benefit at age 62 actually means the amount you are expected to receive if you work until age 62 and begin collecting benefits at that time. Likewise, your increased expected benefit at age 70 means the amount you are expected to receive if you work until age 70 and then begin collecting benefits. So if you do retire early or at different ages than the two listed, the number shown as your estimated benefit could be different.

At my current age of 25, retiring early is something I aspire towards – I picture a long, lavish (read: expensive) life of luxury! Hey, a girl can dream! Many people (maybe more realistically than me) also strive to retire early, and if you don’t have access to a pension, then you may be depending more heavily on your Social Security benefit. If you do retire early, then you may receive a reduced benefit. However, retiring early is not unrealistic; but in order to have enough money to live at your comfort level, it may require working part time for a bit after retirement or even saving more now to make up for a potentially lower Social Security benefit. When making these decisions, talk with your Financial Planner about your retirement goals to see how best to build your plan to financial independence.

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.

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 Melissa Parkins and not necessarily those of 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.

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