A Broader Perspective

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Our blog is updated regularly with timely news and commentary, as well as highlights of the latest in-depth investing and financial planning articles featured in the www.MoneyAZ.com library.  It's a great way to keep in touch and stay abreast of the latest topics that affect your bottom line. 

New Radio Program: Reaching Your Financial Goals

Perspective Financial Services investment advisor Bob Burger joined the "Breakthrough Thinking" radio program, which airs the second Tuesday each month at 2:30 p.m. (PDT) on KXXT AM 1010. Burger's segment is called “Reaching Your Financial Goals.” He will address a variety of personal financial planning strategies, topics and issues.

 

Burger writes articles and is often tapped by various media organizations as a resource. He has been a guest expert on NBC TV’s “Arizona Midday” program and has been quoted in articles in the Wall Street Journal Online, Arizona Republic and Investment News. Burger also has been published in the Ahwatukee Foothills News and  AzCPA, the magazine of the Arizona Society of Certified Public Accountants.

 

He started his career in 1995 and has a degree in economics from the State University of New York at Buffalo. Burger is a Certified Financial Planner (CFP) practitioner, as well as a Certified Divorce Financial Analyst (CDFA).

Talk About Money, Win Money

Charles Schwab recently launched the first in a series of contests with $100 cash prizes to encourage young people to share their money experiences and spark a dialogue on the high-avoidance topic of personal finance. The contests will pose a different question on each alternating Monday throughout the year on the unique challenges facing young adults.

 

Contest questions will be posted on Schwab’s educational website, SchwabMoneyWise.com, and tweeted via @schwabmoneywise on Twitter. You must be 18 or older to participate. To enter, submit on the website a story of no more than 100 words. Winners will be selected on the basis of originality and creativity.

Estate Plan Needs Extra Attention in 2010

Estate planning is an essential part of anyone’s personal finances. Even for those who have been diligent about planning for their spouses and heirs, this is a year when it may make particular sense to re-examine your strategy.

 

With the nonstop flurry of legislative activity in Washington, Congress still has not acted on the phase-out this year of the estate tax. If nothing is done this year, the heirs of any person who dies in 2010 won’t be liable for any federal estate taxes, no matter how big the estate. Yet the potential bad news will come next year when the estate tax is scheduled to return with a vengeance on all estates over $1 million in size (the threshold was $3.5 million for individuals in 2009) with a potential return to a 55 percent top tax rate.

 

Family trusts – also called bypass or credit shelter trusts – are of particular concern. In a family trust, individuals add a formula clause to their will or revocable trust which distributes up to the maximum amount of assets that can pass free of estate tax to the trust if the individual dies before their spouse. This helps ensure that once your spouse dies, neither these assets nor any appreciation on them will be subject to estate tax. But if you die this year, a failure to address the formula clause could potentially cause you to unintentionally disinherit your spouse.

 

The bottom line: It’s worth a review with your estate planner and/or financial planner to help ensure your paperwork is in order and the previous plans you’ve made won’t cause problems.

6 Reasons to Review Beneficiary Forms

By Mike Larriva, CFP

 

Many assets today are transferred at death through a beneficiary designation for assets such as IRAs, 401(k)s or 403(b)s, life insurance policies, annuities, or other pension or non-typical retirement plans.  If you do not designate a beneficiary and make updates when needed, you may unintentionally disinherit loved ones.

 

Here are six key points to remember:

1. Your will alone is not sufficient to clarify your intended beneficiaries; beneficiary designations will typically supersede what is in a will.

2. Update beneficiaries when life changes occur, such as marriage, birth of a child, divorce, or a death in the family.

3. Have a "plan B" or contingent beneficiary in case your primary beneficiary predeceases you. If you don’t, it usually falls to the court to decide who should receive your assets.

4. Don’t take it on faith that your beneficiary form with your IRA’s investment company, your employer’s 401(k), or the life insurance company is still on file after 20 years. I like the old axiom: Trust, but verify. Get copies or simply submit updated forms.

5. Failing to name a beneficiary on an IRA, or naming your estate, may subject your heirs to an otherwise avoidable tax burden and hassle. It could deprive them of the ability to maintain the assets in a tax-deferred vehicle, and let it grow over their lifetime (sometimes called a stretch IRA).

6. For life insurance, be sure to name an individual or trust rather than your estate as beneficiary to help avoid costly, complicated probate.

Beware of Oil Spill Investment Scams

"The oil spill in the Gulf of Mexico poses more than an environmental and economic threat to the region. It also poses a financial threat to investors in the form of scams promising financial gains from investments in companies that claim to be involved in cleanup operations."

 

The Securities and Exchange Commission (SEC) and FINRA have issued an alert to warn investors about potential scams that exploit the Gulf oil spill and related cleanup efforts.

 

"While some of the companies touting their role in the cleanup may be legitimate, others could be bogus operations that are only looking to clean out unsuspecting investors," the alert said.

 

The SEC already has suspended trading in shares of Green Energy Resources, Inc. (New York) and ACT Clean Technologies Inc. (Huntington Beach, Calif.) because of questions regarding the accuracy of statements made by the companies and their involvement in the Gulf of Mexico oil spill cleanup efforts.

 

Be an informed investor. Click here to learn more about how to avoid oil spill investment scams.

How Personality Affects Financial Planning

By Mike McCann, CFP, AIF

 

The ancient Greek expression “know thyself” carries a lot of weight when it comes to investing. An investor’s personality can speak volumes to his or her ability to spot opportunities and avoid risk. If more people truly “knew themselves” when it came to money during the last decade, we may not have seen many of the individual excesses and mistakes that marked the recent economic slowdown.

 

Many companies and experts have attempted to label various money personalities. While there is no definitive set of definitions, taking a look at these efforts can at least get you thinking about where you are on the spectrum and how that affects your decision-making. One of the most recent high-profile efforts came from financial services firm TransAmerica in 2008 with its study revealing four basic investing personalities. They include:

• Venturers take a “nothing ventured, nothing gained” attitude with their money, but their potential pitfall is that they’re overconfident in their level of preparedness.
• Anchored individuals always “stay on the safe side,” but extreme risk aversion might leave them unprepared.
• Pursuers will “try anything once,” but their continual efforts to grab at new directions might leave them without a clear plan.
• Adapters take investment situations “as they come,” but may not be realizing their full potential as investors.

Now, even if you have a handle on your money personality, what do you do with that information? It might make sense to seek advice from a trained financial professional to review the plans you’ve made and help you plot a course that suits your comfort level and goals.

 

One of the toughest aspects of creating a financial plan is recognizing how your personal style, mindset, and life situation might affect your investment decisions. A financial professional will understand this challenge and can help you think through your choices.

 

This article was adapted from a piece by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Mike McCann, a local member of FPA.

Mike McCann Appointed to Arizona Connections Academy School Board

Mike McCann, president and founder of Perspective Financial Services, LLC, was appointed to the board of directors for Arizona Connections Academy (ACA), a tuition-free, public, online school. He also was elected to serve as board vice president and treasurer.

 

"It's an exciting opportunity and an honor to contribute my time and expertise to this innovative Arizona  public school," said McCann, who is a Certified Financial Planner (CFP) and Accredited Investment Fiduciary (AIF).

 

Connections Academy, a school without walls, is a virtual educational program serving K-12 students in a non-classroom-based environment. A learning team -- consisting of parent/learning coach, certified teachers and educational specialists -- work collaboratively with students using a standards-based hybrid curriculum that includes both online and offline options. ACA is rated a Highly Performing school under Arizona's school rating system.

 

McCann has worked in the financial services industry since 1991, interacting directly with individuals as an investment advisor and also behind-the-scenes in high-level trading and managerial positions. Perspective Financial Services is an independent, fee-only Registered Investment Advisory (RIA) firm that provides clients with broad-based financial planning and investment management services. The firm has been recognized in Financial Advisor magazine’s national “Top RIA Survey” ranking and also has been listed by the Phoenix Business Journal among the top 25 independent investment advisory firms.

 

For additional information, go online at:

 

www.connectionsacademy.com/arizona-school

 

 

Money Management Tips for College Students

by Mike McCann, AIF, CFP

 

The National Endowment for Financial Education (NEFE) has put together the perfect gift for the college bound person in your life.  By providing these 40 money-management tips, you are offering a path toward independence that most of their peers will not have. Whether your student is already in college, or soon to be, this a gift in which they will reap benefits for years to come.  Best of all, it’s free!

 

From the NEFE website:

 

Graduation 2010: Cover the Basics Before Your Child Leaves the Nest

 

Parents provide the most influence on their children’s financial knowledge, attitude and behaviors. Our four-part graduation series provides information and topics weekly to help your start a conversation with your kids.

 

For more information and to download NEFE’s 40 Money Management Tips Every College Student Should Know, visit: www.nefe.org/helpforconsumers/graduation2010.

10 Questions to Ask Before Buying Life Insurance

1. How much income would your spouse and your children need to replace your income over a period of years based on your current age?
2. Will your spouse or guardian need to provide childcare support?
3. Is there a mortgage to pay off?
4. Are there substantial short-term debts, like credit cards or auto loans, to pay off?
5. What are estimated college expenses for children and spouses, and when will those expenses start?
6. How much will burial expenses be?
7. Do you have any other life insurance?
8. Are there anticipated caregiving expenses for elderly relatives, children or family members with special needs?
9. Do you anticipate substantial estate taxes when you die?
10. Do you have any other assets that can be liquidated sensibly or will bring in income?

Most online life insurance calculators can help you address questions 1-8. The last two questions require a bit more strategic thinking in terms of what you or your spouse have done with overall estate planning. Keep in mind that youth and health will also be factors in how much insurance you can afford to buy. A financial planner can help you determine the right insurance products to buy based on your needs and other assets.

One more thing. Don’t buy insurance and forget about it. Make sure that every few years you are reviewing your insurance purchases as part of your overall financial plan. Life circumstances change – incomes rise and fall and family size changes. Your insurance holdings always need to reflect current needs and conditions.

New Federal Rules: No More Gift Card Surprises

Gift cards have become a popular and convenient gift alternative. New rules from the Federal Reserve Board will help to ensure that consumers who give or receive gift cards are not surprised by expired cards and are protected from certain fees that reduce their value.

 

The new rules take effect in August 2010 and apply to store gift cards, as well as gift cards with a MasterCard, Visa, American Express or Discover brand logo. The Federal Reserve Board recently unveiled a new online publication to help consumers better understand how to protect themselves against harmful gift card practices.

 

Among other things, the law puts new limits on expiration dates and certain fees, such as usage fees and inactivity fees. It also requires that all fees must be clearly disclosed on the gift card or its packaging.

 

More information can be found at  www.federalreserve.gov