Written by Barbara Heller, Associate Financial Planner

There are many companies advertising “free” credit reports and credit scores.  The problem is that most of them aren’t actually free in the long-run; there is typically a hidden agenda. Many of them actually sign you up for a credit monitoring service with a monthly charge.

One of the most well known companies (due to their catchy TV ads) is www.freecreditreport.com.  At this company, when you request your free credit score, you are automatically enrolled in their Triple Advantage ® service which costs $14.95 per month. 

The official website for obtaining your annual free credit report is www.annualcreditreport.com.  Through this website, you are allowed one free report per 12-month period from each of the 3 reporting agencies (Equifax, TransUnion, and Experian).  You can request the credit reports online, or if you prefer, there are instructions on how to request via phone or mail.  You can also order your actual credit score through this website for a small fee.

It is recommended that you review your credit report annually to verify that there are not any errors.  If you do find errors, you can file disputes online to correct them.  A good tactic is to request one credit report from one of the 3 credit reporting agencies every 4 months to keep yourself on the 1-year cycle and keep an eye on all of your accounts.

If you believe that you are a victim of identity theft, you can place a “fraud alert” on your credit report.  This will make it more difficult for someone (as well as yourself) to get credit in your name.  There are instructions on the website on how to place this alert with all 3 reporting agencies.

Those television advertisements are appealing and keeping an eye on your credit standing is good practice. Just make sure you utilize proper and legitimate sources; the reliable resources are not always the most widely publicized and may not have fancy commercials touting their name.

Bookmark It

With summer coming to a close and students headed back to school, we thought it would be a good time to for those of us that are no longer in school but are committed to a lifetime of learning to take a look at a few common terms used in the financial biz that are often confusing and sometimes downright bewildering.  A few of these terms have also been brought to the spotlight recently due to the new Financial Reform Bill. Put on your learning caps!

Fiduciary

A Financial Advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a fiduciary, the Financial Advisor is required to act with undivided loyalty to the client. This includes disclosure of how the Financial Advisor is to be compensated and any corresponding conflicts of interest. A Fiduciary has a legal obligation to put an investor in the best products and/or investments they can.

Suitability

A Financial Advisor held to a Suitability Standard is required to recommend products that are suitable for the client’s objectives, means and age. There is no legal obligation, under the Suitability Standard, for a Financial Advisor to put an investor in the best products and/or investments.

Fee-Based

This compensation model allows a financial advisor to have a financial stake in the course of action that he or she recommends to a client. Some or all of the advisor’s income may be dependent upon their ability to steer their clients to a limited number of financial products.

Fee-Only

This compensation model indicates that an advisor never accepts commissions or compensation of any kind related to the products or investments that he or she recommends. The helps to ensure there are no conflicts of interest and the advisor can be considered objective and unbiased.

Bookmark It

Written by Elizabeth Young, Associate Planner

I don’t usually gamble. But I, along with millions of other Americans, will throw a few bucks in to buy a lottery ticket or two with some coworkers every now and again. When we do it, we have the usual water cooler conversation about what we would do if we won. While there’s usually talk of what everyone’s respective big purchases would be, given the financial nature of our firm, the conversations in our office include a few points that many people tend to forget about. Here are a few tips from our water cooler discussions to remember if you happen to hit the jackpot (please don’t hold your breath):

1. Take your time. Don’t rush to claim the prize; there are things that you should get done before your life turns upside down! You may have the option to collect your winnings without a news conference; this is a good thing if you value your privacy. Take the time to get an unlisted phone number. Your phone will begin ringing off the hook with people reaching out to you for loans, gifts, charitable contributions, etc. Begin lining up financial professionals to help you navigate through everything.

2. Enlist a team. At the very least, you’ll want to recruit the help of an accountant, a lawyer and a financial planner. Beginning your search prior to claiming your prize will help weed out the advisers that are overly interested in your newly found wealth. Plenty of financial professionals from a variety of backgrounds will likely offer to assist you. Keep in mind that referrals from friends and family can be helpful, but you’ll want to make sure you interview advisers that have experience with the wealthy. Resources for finding trustworthy advisers include the Certified Financial Planner Board of Standards, the American Institute of CPAs and the National Association of Personal Financial Advisors. Once the news of your newly found fortune breaks, friends, relatives and complete strangers can be directed to contact one of your advisers; your team will provide a barrier for you.

3. Making the big decision. One of the most important decisions you’ll have to make is how you wish to receive your winnings. Typically, you’ll have to choose between a series of annual payments or a lump sum amount. The annual payments will add up to the total you won and the lump sum will be reduced assuming you could invest what you get and earn what you would have received with the annuity option. The lump-sum-versus-annuity equation is complex and should be discussed thoroughly with your financial team before deciding how to take the money. Here are a few questions to ask yourself to begin assessing which is better for you:

-Do you carry credit card debt, get a big tax refund and occasionally (or always) scramble to pay bills? The annuity option is often a better, safer bet for those who struggle to live within their means and have trouble managing their money.

-Do you have a big emergency fund, sizable retirement accounts, no consumer debt and enjoy learning about finance? The lump sum may work for you, but you’ll want to consult your financial experts about the tax and investing implications.

4. Keep expectations in check. It is possible to spend too much; winning the lottery doesn’t mean you now have unlimited resources. Don’t be too quick to indulge in a new lavish lifestyle. While new cars and houses are common purchases for lotto winners, do the math on how much that new car and/or house will cost you (including higher property taxes, insurance, maintenance, repairs and utilities). Again, your financial team should be able to help you lay out a plan to help ensure your funds will last your lifetime.

While a celebration is certainly in order if you win the lottery, don’t forget that there are a few important steps you’ll want to take to help ensure your journey as a lottery winner is a success!

Note: This is not an endorsement for utilizing the lottery as a means to achieving financial success!

Bookmark It

Written by Terry Milberger, Director of Portfolio Management

Is there a “new normal” for growth in the U.S. economy that will result in several years of subpar activity?

This question is currently being debated by many economists. Those who believe “ normal” economic growth going forward will be much less than in the past sight a number of factors to support their case.

They point out that the recovery taking place since the recession ended last year is the weakest in post WWII history. This is in spite of record low interest rates, substantial quantitative easing by the FED, and fiscal stimulus in the form of a massive increase in government spending. Housing, generally a strong engine of growth coming out of a recession, continues to languish. They believe growth will be further impacted by the ongoing deleveraging by both business and consumers. Also, reduced spending and increased taxes by state and local governments will be further impediments to growth. The massive amount of debt at the federal level seems almost certain to result in higher taxes which would likely further retard economic activity. Lastly, they believe that much of the potential for U.S. economic growth will continue to be siphoned away by Asia and Asian-connected economies.

Economists who believe the US. economy will once again grow at a rate similar to the past mention a number of reasons. They say the latest recession was particularly severe and thus will take more time to return to normal growth. They feel housing will once again provide growth, but simply take more time because the bubble in prices was so inflated. Yes the deleveraging in the economy still has a ways to go, but will result in higher-quality growth once it is winds down. The level of debt at the federal level is indeed a problem, but finally seems like it may be addressed by Congress. Yes, higher taxes could be a drag, but hopefully the unproductive spending will be addressed also. The emerging markets should continue to grow the fastest, but as they grow their domestic economies they should provide a greater opportunity for exports from U.S.-based companies.

At this time, it seems like the U.S. economy is facing a combination of typical cyclical issues relating to a recession and other issues more secular in nature. There is no question that this combination has resulted in growth being below normal for this stage of an economic recovery. Will this pattern continue? Of course only time will tell, but the odds seem to favor growth being somewhat more muted than in the past.

Bookmark It

Written by Terry Milberger, Director of Portfolio Management

The European Union was formed in 1993 and is now an economic and political union of 27 nations located primarily in Europe.  Collectively they form the biggest economy in the world.

16 of the 27 members have formally adopted the euro as their currency.  These countries are:  Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.  These 16 are referred to as the Eurozone.  Most of the other 27 members are expected to adopt the euro as their official currency.

The value of the euro relative to the dollar is important because the European Union represents the largest export market for the United States.  Since it was established, the euro has been worth a low of $.85 in 2000 to a high of $1.60 in 2008.  The current value is around $1.25.  When it is worth more U.S. dollars, it makes our goods cheaper to European buyers.  On the flip side, when it converts to fewer U.S. dollars it makes our goods more expensive in euros.

Investors are questioning what is the right value for the euro relative to the dollar.  The credit problems in many Eurozone countries, such as Greece, Spain, and Portugal, suggest that economic growth there will be retarded.  This suggests that the euro could decrease in value from current levels.  On the other hand, the United States also faces debt problems and is dealing with a sluggish economy.  If confidence does not  increase in our ability to grow, then the dollar could weaken from here.

Predicting the future value of currencies can be a futile exercise as there are many cross currents that must be dealt with.  Generally speaking though, countries that demonstrate the ability to grow while keeping inflation in check and debt levels at a manageable amount, typically  have the stronger currencies.

Bookmark It