When a Broker is Your Retirement Nightmare

We at Align Wealth Management have long preached the importance of choosing to work with a "fiduciary" advisor—one who is legally bound to act in your best interests.

Now, it doesn't take a genius to understand that taking financial advice from someone with a conflict of interest is a bad idea. But a recent Bloomberg report made clear just how great the damage can be when conflicted advisors "help" clients invest their retirement savings.


The Latest Reasons To Think, Act and Invest Like Warren Buffett

Written by Brian Puckett, CFP®, CPA/PFS, Attorney at Law.

In 2012, author Larry Swedroe wrote a handy little pocket book entitled “Playing the Winner’s Game: Think, Act and Invest Like Warren Buffet.” In it, Swedroe shares some of Buffett’s most successful strategies, and how every investor can use them to build sound investment habits. It’s a helpful little guide and recommended reading for any investor.

Buffett, of course, has not been sitting idly by since Swedroe’s book was published. As Chairman and CEO of Berkshire Hathaway, he achieves each spring what nearly every other publicly traded business owner can only dream of: He publishes an annual shareholder letter that people actually read. Buffett’s 2014 letter does not disappoint. Jam-packed with “Buffettisms,” it inspires us and reminds us yet again why much of Buffett’s advice about investing—and life—is worthy advice indeed.


“Sell in May and Go Away”: It Rhymes, But It’s Wrong

Mark Twain believed there were three kinds of lies: Lies, damned lies and statistics.

The author would have had a field day with the way statistics are used to “prove” dubious investment theories. A perfect case in point is “Sell in May and go away.”

The idea behind this persistent old idea is that stocks have traditionally had higher returns from November through April, and weaker returns from May through October. At first glance this makes sense: Since 1926, stocks have returned an average of 1.16% each month from November through April, and just .72% the rest of the year. The course of action is obvious: Earn your higher returns during the traditionally “strong” half of the year, and then get out so that the “weak” half of the year doesn’t dilute those returns.

But sometimes a great idea just doesn’t survive the trip from the paper it’s written on into the real world. “Sell in May and go away” is a case in point. The first problem that this legendary piece of advice runs into is a practical one: Once you’ve pulled your money out of the market in May, where do you put it?


Separating “Flash” from Substance

"Flash Boys"—Michael Lewis' new bestseller about how the investment markets are supposedly rigged—has garnered an avalanche of media coverage, including a feature on "60 Minutes."

There's no doubt that Lewis' expose of how certain high-frequency traders enrich themselves at other investors' expense is fascinating. But it's also worth noting an event that was overshadowed by the release of the book: The five-year anniversary of the U.S. bull market that began in March of 2009, lifting the S&P 500 more than 170%

As investors, it's important to decide for ourselves which news is likely to have the largest impact on our ability to reach our goals. While there's definitely more sizzle to a story of wrongdoing on Wall Street, we believe it's more instructive for long-term investors to look at longer-term trends such as the stock market's remarkable run.


For What It's Worth: Assessing Advisory Fees

Dear Friends & Clients:

You’ve probably heard us whistle this tune so often that you can sing along yourself: Among the best ways to maximize expected returns is to minimize the costs involved in achieving them.  This begs the question: What about those fees you pay us, your advisor? Are we earning our keep?

It’s a fair and reasonable question. We divide the benefits of working with us in our role as your fiduciary wealth advisor into three, “good, better and best” categories.


Tangible Savings (Good)

As we’ve stated time and again, minimizing the costs of investing in our wild, wooly markets is integral to successful investing. In helping you achieve that goal more effectively than you could on your own, the cumulative cost savings can easily total more than our advisor fees. Following are three of the most hard-hitting examples.

We help you stay the course. A body of solid evidence substantiates that do-it-yourself investors (or those working with brokers whose recommendations are secondary to their commission-based trading role) face an enormous challenge knowing when to buy, sell or hold on tight. When the world is screaming, “DO SOMETHING!” it’s gut-wrenching to ignore the call, even when reacting threatens to derail your carefully laid plans. By providing a bastion of discipline to your investment experience, we help you avoid costly and nerve-wracking trades that are unnecessary, poorly timed or both.

We use low-cost funds to build your portfolio. Especially if you were trading individual securities or investing in actively managed funds, the savings derived from shifting to low-cost institutional funds can be profound. How profound? We would be happy to provide you with a cost analysis comparing the expenses in your Align managed portfolio compared to other possibilities you may be considering.  Typically, the results are striking and eye-opening.

We help you minimize taxes. We are vigilant in minimizing the impact of taxes on your net worth by applying a variety of year-round tax-sensitive investment strategies, as well as by ensuring that taxes are carefully considered across the spectrum of your financial plans, such as retirement spending, college funding, charitable giving, estate planning and more.