Baron Financial Group strives to stay up-to-date on the current information and newest advancements available in the financial industry regarding financial planning and investment management, practice management, and security. The Baron Team members attended the following fall educational conferences.
Victor Cannillo, NAPFA-Registered Financial Advisor, and Nicholas Scheibner, CFP®, of Baron Financial Group, recently attended the Disrupt|Advice 2017 two-day conference in New York City, “Navigating the Present & Future of Financial Advice.” The conference focused on the notion that “wealth management is changing rapidly, and those advisers that will succeed in the long run are those who embrace, prepare for and readily adapt to change.” Topics discussed at the conference included “the myriad forces that are disrupting the world of financial advice, from digital platforms and tools, pricing pressures, regulatory pressures, innovations in practice management…”, among other topics.
Victor attended the NAPFA (National Association of Personal Financial Advisors) Fall Conference via livestreaming. NAPFA is the country’s leading professional association of Fee-Only financial advisors. The educational conference held in Orlando, Florida, livestreamed programs on income tax and retirement planning, diversification in investments, healthcare reform, estate planning, and data security, among others.
James Suazo, an Associate Financial Planner with Baron Financial Group, attended a cybersecurity workshop presented by Charles Schwab. The workshop provided insights as to what steps we should be taking to strengthen our cybersecurity program, based on the National Institute of Standards and Technology (NIST) cybersecurity framework for improving critical infrastructure. Essential topics included:
Establishing governance and roles
Cybersecurity assessment and action plan
Actions to be implemented
James also attended the FPANJ (Financial Planning Association of NJ) Fall Conference on November 1, 2017. The FPANJ discussed various topics including retirement planning, tax planning, investments, and client communication.
Economic and governmental policies are dynamic; attending industry conferences help us to remain current so that we may continue to provide a valuable service to our clients.
We recognize that the financial planning challenges faced by families with special needs members are significant. When it comes to planning for the special needs community, the need for financial professionals who have comprehensive knowledge and experience is essential to meet the specific challenges of these families. We take great pride in helping families address today’s needs and plan for those that are likely to follow.
Nicholas Scheibner, CFP®, of Baron Financial Group, attended Autism New Jersey’s 35th Annual Conference on October 19th and 20th in Atlantic City. Sessions included government benefits, transitioning period for children out of school, and Special Needs trusts.
Autism New Jersey is the state’s leading autism advocacy organization, supporting families and professionals through their four service pillars:
Education & Training
“Autism New Jersey advocates, with a strong and unified voice, for appropriate and effective policies and services that will benefit children and adults with autism living in New Jersey. Autism New Jersey is a nonprofit agency committed to ensuring safe and fulfilling lives for individuals with autism, their families, and the professionals who support them.” -Autism New Jersey
A 60-second read by Nicholas Scheibner: The main difference between a Traditional Individual Retirement Account (IRA) and a Roth IRA is that with a Roth IRA, you pay taxes upfront, so that when you are in retirement, you can make withdrawals tax-free.
If you are considering converting your IRA to a Roth, here are a few things to consider:
Taxes: If you convert money from a traditional IRA to a Roth, your tax rate for the year you convert could go up. If you decide to explore the conversion, please review with your accountant when to convert, as ideally, you would want to convert in a year that you expect your taxes to be lower.
RMDs: If you do decide to convert, this does provide a greater tax diversification to your overall portfolio, since you will potentially be reducing the required minimum distribution (RMD) amount from your IRA by converting IRA assets to Roth IRA assets.
The financial breakeven: The financial breakeven for a Roth is different for everyone, however, there are some general principles for the calculation – If tax rates increase in the future, this conversion may be worth more. If tax rates stay the same, or go lower, there may be less of a benefit. You may want to consider the opportunity cost of investing all monies today as opposed to using a portion for taxes. The longer you live the more you may benefit from having the Roth assets grow tax-free.
Please review this information with your accountant and consult with your financial planner prior to converting.
For any further questions, please reach out to your Baron team.
Medicare is health insurance for individuals who are 65 and older, under 65 with certain disabilities, or those who have End-Stage Renal Disease (ESRD).
The 2018 Medicare annual open enrollment period will begin on Oct. 15, 2017 and run through December 7, 2017. Baron Financial Group’s informative webinar, presented by independent Medicare Consultant Mary Jean Cullen (MedicareAssist, LLC), discusses how Medicare works and what you need to know prior and during your Medicare years. This presentation was first held at the September 13, 2016 Wine & Wealth event for Baron Financial Group clients.
You can learn more at Medicare.gov, the official U.S. Government site for Medicare.
A 45-second read by Anthony Benante: There are many factors to consider when comparing an exchange-traded fund (ETF) and an index mutual fund. An ETF is a marketable security that tracks an index, like an index fund. A Mutual Fund is an investment company that pools money from shareholders and invests in a variety of securities, including stocks, bonds and money market funds. A main difference between an ETF and an index mutual fund is an ETF trades continuously while the market is open, while the index mutual fund trades one time a day at market close.
For ETFs, investors should be aware of the spread between the bid and the ask price. The larger the spread, the higher the implied cost is for investing in the ETF. Also, investors need to understand the strength and depth of the ETF to make sure there is ample liquidity during volatile markets. Investors can research the daily volume traded, the overall size of the ETF and other factors to better understand the strength of the ETF. All these factors can lead to the ETF performing differently than its benchmark.
Index mutual fund performance will not perfectly match its benchmark either. The costs to run the fund, which are paid by the investor and identified as an expense ratio (ETFs have similar costs) negatively impact performance compared to a benchmark index. Also, index mutual funds may be required to hold a portion of the fund in cash to meet investor redemptions, which could contribute to lower relative performance when the benchmark’s performance is positive.
Investors may experience different costs for the same product, meaning you have to do your homework. Some ETFs can have transaction costs, however, some brokerages allow for free trading for certain ETFs. For index mutual funds, you may be able to go direct to a mutual fund company and invest with no transaction cost, but you could pay transaction charges in a brokerage account for that same fund, depending on where the account is held.
In general, active investors may prefer the trading flexibility offered from ETFs, while long-term buy and hold investors may prefer using a straight index mutual fund to gain exposure to a specific benchmark. We encourage investors to do their research and seek help in areas outside of their expertise.
If you have any further questions on the subject, please reach out to your Baron team.
Disclosure: Past performance is no guarantee of future results. Every investment strategy has the potential for profit or loss. This material is not intended to be relied upon as a forecast, research or investment advice.
An Advisor who is compensated by only YOU, the client:
Working with a Fee-Only advisor means that the advisor is only compensated by the fee that they charge, not by any commissions. The fee could be charged hourly, or it could be calculated as a percentage of a client’s assets under management (AUM), or even a retainer model. The National Association of Personal Financial Advisors (NAFPA) is the country’s leading professional association of Fee-Only financial advisors and they define a Fee-Only financial advisor as “one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product.”
Working with a Fee-Only advisor means that the advice you receive is not motivated by the need to sell any products or influence from outside interests. The advice is objective and tailored to meet your specific needs.
You may have read that hackers broke into the Equifax database and stole personal information tied to 143 million people. Ongoing updates from Equifax about this incident are available at equifaxsecurity2017.com
Baron Financial does not use Equifax for any services, but we are sharing this information for educational purposes.
Equifax is one of the three main credit reporting agencies. They collect and maintain individual credit information and sell it to lenders, creditors, and consumers in the form of a credit report.
Freeze Your Credit Reports (after ordering a copy). A freeze stops thieves from opening new credit cards or loans in your name, but it also prevents you from opening new accounts. So each time you apply for a credit card, mortgage or loan, you need to lift the freeze a few days beforehand. Equifax said it will waive all fees until Nov. 21 for people who want to freeze their Equifax credit files.
Regularly Monitor Your Financial Accounts, Credit Cards and Loan Accounts for any suspicious activity
Something else to consider: Sign up by November 21 for the free Credit Monitoring offer from Equifax (equifaxsecurity2017.com). Some experts have offered differing opinions on taking advantage of this service. However, we did want to make you aware of the offer.
A 60-second read by Anthony Benante: Comparing the Dow Jones Industrial Average (DJIA) to a specific investor’s globally-diversified portfolio is like comparing apples and oranges. Though there may be many more differences, we highlight a few here to consider. The DJIA consists of 30 large U.S.-based companies representing all industries except transportation and utilities. A globally-diversified portfolio should be tailored to a specific investor’s profile, and may have exposure to well over 500 different companies (through Exchange Traded Funds and mutual funds) in all industries, as well as possible exposure to fixed income and other financial instruments. The DJIA is a price-weighted index, not market-cap weighted. This means that the index is constructed with companies with higher stock prices, such as those in August of 2017, like Boeing (BA), Goldman Sachs (GS) and 3M Co. (MMM). These companies carry more weight than those with lower stock prices, like Pfizer (PFE), Cisco (CSCO) and General Electric (GE), regardless of the total market value of each company. So, if a few of the high-priced stocks are doing well, the index can do well compared to a diversified strategy. A good globally-diversified strategy is typically constructed for a specific investor with a unique profile. The strategy should identify a risk profile and attempt to maximize return within that risk profile, while helping the investor achieve their financial goals. Finally, the DJIA typically only makes changes based on corporate actions and market developments while a globally-diversified strategy should make changes specific to the investor – when investments move outside of targets (rebalance), underperform (choose a better performing peer investment) or if there is a change in the investors specific profile (change the risk profile).
So when you hear about the performance of the DJIA, know that you are hearing about the performance of a few “popular” U.S. equities. For a more personal understanding of your investments, you should understand the risk profile of your strategy and understand how your investments are helping you to achieve your long-term financial goals.
Please reach out to your Baron Team if you have any questions.