Thursday, August 16, 2012
RISK-Y BUSINESS
4:26 PM | 
Posted by
pensionfinancialservices |
“Why not go out on a limb. That’s where the fruit is”—Will Rogers
But when it
comes to investment risk, what kind
of fruit? That uncertainty--the transaction that turns out to be a plum or the
one that turns out to be, well, the pits--underlies another phenomena in the
financial-advisory business. Namely, that it’s not only the actual risk that
worries many potential clients, but the mere use (or overuse) of the word itself
in presentations that, according to a provocative piece by Ellen Uzelac in an August
issue of Research Magazine, may be enough
to scare off some of them.
Consultant
Scott West has much of interest to say in the article, suggesting that the word
“risk” can be “radioactive,” and thus “advisers are making a huge mistake when
they talk excessively about it. It’s like they’re all wearing bell bottoms
[from] a bygone era.” What do they want to hear about instead, he says? Growth.
Clients want a balanced perspective, West says. “They want to know how I can
maximize my earnings while minimizing the downside potential . . .Fear-based
language can be paralyzing when used with investors.”
But when
you get right down to it, as Warren Buffet said, “risk comes from not knowing
what you’re doing.” That’s why investors who have the most prudent kind of
financial advisers stand to have the most confidence, not to mention peace of
mind.
Whatever the financial presentation, investors need to ask questions—including, yes, those about possible perils--tailored to their own goals and expectations and have them satisfactorily answered.
Whatever the financial presentation, investors need to ask questions—including, yes, those about possible perils--tailored to their own goals and expectations and have them satisfactorily answered.
Not doing
so, they’re proceeding at their own risk.
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Thursday, July 26, 2012
MATCH PLAY
Who said size doesn’t count.
We’re talking financial, of
course. Amid choppy economic waters of the past few years, the size of
companies largely dictated whether many of them have managed to continue to contribute
–or not---to their employees’ defined contribution (DC) plans. Generally
speaking, based on compelling analysis in Fidelity Investments’ Building
Futures report, “98% of plans with more than 25,000 participants maintained
their contributions throughout the period, while one-sixth (17%) of companies
with the smallest plans (those with fewer than 500 participants) stopped
contributing at some point [between 2008-11] and had not resumed contributions”
as of the end of last year.
Whether it’s a so-called
“jumbo plan,” or simply a large (5000-25,000 participants) or midsize (500-5000
participants) one, the evidence strongly demonstrates there’s a definite
“strength in numbers” vibe when it comes to surveying companies that, even in
down economic times, maintained their employer matches—or, in some cases, had
them restored after being suspended for a period.
Apart from company size,
whether the industry is, say, retail or construction, health-care or social
services, the numbers can vary dramatically. But large or small, as the
Fidelity report shows, when it comes to the issue of company contributions and
how to satisfy both employees’ retirement goals and employers’ financial
health, plan design and participant communication are vital. The experts at
Pension Parameters Financial Services, Inc. can help design a plan for you or
answer questions on the subject.
Tuesday, July 17, 2012
FRAUD—HAZARDOUS TO YOUR FINANCIAL HEALTH
Bernie
Madoff may be in prison, but a considerable number of less renowned but no less
predatory scam artists who specialize in investment fraud are not. And especially
for seniors, the specter of swindlers out to bilk them is not to be taken
lightly. According to a report earlier this year by the Center for Retirement
Research at Boston College, and later cited in a New York Times piece, “the ability to make effective financial
decisions declines with age as dementia and other types of cognitive impairment
increase.”
Potential risks
abound in this age of the Internet and instant communication with strangers,
and identity theft, in particular, was noted by the Federal Trade Commission in
a breakdown of its reported 1.8 million complaints. Red flags about possible fraud
and misconduct can surface in a variety of areas—such as vague solicitations from
unknown-to-you sources promising sky-high investment yields that require first giving
out bank-account information or Social Security numbers.
Just which
offerings are on the up and up and which may not be is a question that all retirees,
not just older ones, should always discuss first with a trusted
financial adviser along with family members before committing to an investment scheme
that may seem too good to be true because, as we all know (or at least should),
it probably is.
We suggest that our clients contact us should they be concerned about opportunities that are presented to them. Contact: Pension Parameters Financial Services at
We suggest that our clients contact us should they be concerned about opportunities that are presented to them. Contact: Pension Parameters Financial Services at
28 West 44th Street
New York, NY 10036
Phone: (212) 675-9360 Fax: (212) 675-9363
New York, NY 10036
Phone: (212) 675-9360 Fax: (212) 675-9363
675 Line Road
Aberdeen, NJ 07747
Phone: (732) 583 -1313 Fax: (732) 583-6991
Monday, July 9, 2012
WORKING SENIORS—INCREASINGLY A NECESSITY, NOT A CHOICE.
For
millions of Americans, good luck with that idea for retirement, early or
otherwise. Seniors are living longer and healthier today and may dream of saying
adios to the 9-5 grind, but in these recessionary times many are working past
the age of 66—the age for which they can collect full Social Security
benefits—for a number of reasons. Staying active is one impetus, certainly, but
according to a 2011 survey by the Society of Actuaries, more than half of older
Americans say they do so for the simple reason that they can’t afford not to.
All the
while, of course, prices continue to rise in a spectrum of industries including
health and energy--all amid an uncertain housing market—and issues surrounding
the value and growth of financial-retirement plans are of vital importance for
those who have delayed retirement—or perhaps just thinking of it.
The
statistics related to working seniors are fairly dramatic, and are noted in an
informative May 2012 New York Times article by Steven Greenhouse. According to
the piece, “18.5 percent of Americans 65 and older remain in the labor force,
up from 12.1 percent in 1995. Many have stayed in the work force past 60
because older Americans seem to be paying an ever-larger share of their incomes
toward medical expenses and because many corporations have stopped providing
health coverage to retirees, forcing many to work until Medicare is available
at 65.”
During this
remarkable boom of older Americans in the job market, the experts at Pension Parameters Financial Services, Inc., are, as always, available to construct a
financial plan that not only meets clients’ needs, goals and expectations, but
also factors in their desire (along with a possible timeline) to permanently
leave the work force for, say, the golf course.
Thursday, June 21, 2012
VOLATILE MARKETS
“Fear tends to manifest itself much
more quickly than greed, so volatile markets tend to be on the downside. In up
markets, volatility tends to gradually decline”—Philip Roth
Uncertainty,
as much as fear, appears to be driving market volatility that springs, at least
in part, from tumultuous conditions in Europe.
There’s risk and opportunity alike—and also confusion on the part of some
investors about whether, or how, unsettling geopolitical events play into their
own retirement future.
Of course,
as the experts at Pension Parameters Financial Services, Inc. understand, the
issue often comes down to personal risk tolerance. Or, as PPI President Kevin
F. McCormack puts it, “retirement-plan decisions that cause investors to chronically
lose sleep over their portfolios were probably not a great idea in the first
place. What’s required is sound, prudent advice that makes financial sense for
the future, but also provides worry-free confidence and comfort for the
present. Dramatic market fluctuations are one thing, but reacting to them by
experiencing blood-pressure volatility only makes things worse.”
Similarly,
economic swings can provide vehicles to help you reach your retirement goals.
In real estate, it’s location, location, location. In retirement planning, one
possible option is diversity, diversity, diversity. One way to optimize your
portfolio is by “rebalancing” your assets. Pension Parameters can spell out for
you the most sensible strategies; the plusses but also the minuses.
Pension Parameters Financial Services, Inc.
28 West 44th Street
New York, NY 10036
Phone: (212) 675-9360 Fax: (212) 675-9363
New York, NY 10036
Phone: (212) 675-9360 Fax: (212) 675-9363
675 Line Road
Aberdeen, NJ 07747
Phone: (732) 583 -1313 Fax: (732) 583-6991
Thursday, June 14, 2012
KNOW YOUR 401(k) LIMIT! (A Mini Quiz)
Specifically,
what are some of the 401(k) limits in 2012?
The subject
is crucial, of course, in retirement planning, so we’ve had a series of posts
on 401(k) plans, including most recently, one on hidden fees. Now we turn to 401(k)
limits and/or restrictions, and only a general sense of how much you know or
don’t know—either as employer or employee—can be gleaned by answering a few
questions in this mini true-or-false quiz that’s probably considerably shorter
than any you took in school.
Be aware,
though, that when it comes to money and retirement issues, having the right
answers to even a few relatively simple questions is no small matter. In fact,
anything less than a perfect score here—or your uncertainty about any other
aspects of a 401(k) plan (the tax implications, or changing your job, for
example)--might be added reason to bone up on 401(k) rules by contacting the
experts at Pension Parameters Financial Services, Inc. and determine their
possible impact on you or your business.
1. The
maximum amount an employed 45-year-old can contribute to a 401(k) in 2012 is
$17,000. True or false?
2. For an
employed 55-year-old, the amount is $21,500? True or false?
3. For a
retired 65-year-old, the amount is zero. True or false?
4. The
minimum number of employees required to establish a 401(k) plan is 10. True or
false?
5. If you
aren’t a company’s owner, you must begin taking distributions from its 401(k)
plan at age 59 1/2. True or false?
6. A
rollover from a 401(k) plan to an IRA is subject to a 20% withholding tax
unless you arrange a trustee-trustee transfer. True or false?
[Answers:
1-true. 2-d, the correct amount is$22,500. 3-true; 4-false, 1 is sufficient.
5-false, the correct answer is at age 70 1/2 or your retirement date, whichever
comes first. 6-true.]
Monday, June 11, 2012
ABOUT THOSE 401(k) FEES . . .
According to
a New York Times blog by Ann Carrns,
citing recent findings by a Government Accountability Office study, “many
employers are clueless about the fees they and their employees pay for
operation of their 401(k) plans.”
The G.A.O.
report, Carrns writes, was prepared for the House Committee on Education and
the Workforce and “is based, in part, on a survey of 365 administrators of
different 401(k) plans.”
So, whether
you’re an employer or employee, this immediately begs the question as to how
plan fees—whether the company itself has a clear or cloudy understanding of
them—impacts on retirement savings. One good piece of advice in the column is
for employees to bring the question of 401(k) fees up with their employer,
asking, for example, whether the retirement plan has revenue-sharing arrangements,
or investment-management fees, with an outside firm and how that might affect an
individual account.
This
“widespread misunderstanding” among many companies about a variety of 401(k)
fees—and whether it remains the same or can increase under certain conditions--
is a subject you can also take up with the experts at Pension Parameters Financial Services, Inc.
“In terms
of dollars, for employer and employee alike, fees aren’t chicken feed,” says its
president Kevin F. McCormack. “We value nothing greater than knowledge and
information, and we pride ourselves on letting our customers fully and clearly know
how fees work, how they apply, if at all, to various retirement plans and,
mostly, how they impact the bottom line.”
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