Category Archives: Uncategorized

Which is Better: Traditional Financial Advisors vs. Automated “Robo” Financial Advisors

I’ve come across several articles lately about the emergence of online sites (sometimes referred to as “Robo-Advisors”) which customize and automate the investment process for individuals.   These sites are totally separate from discount online brokerage firms which allow you to buy and sell stocks at low rates.  Robo-Advisors create investment portfolios, most often by utilizing securities which replicate broad market indexes.  They collect fees for this service, generally is the form of annual fees  taken as a percentage of invested assets (approx .15% – .50% per year).*  The asset mixes are generally created after analyzing personal data including age and risk tolerance.  While people in the financial services industry have fairly strong opinions about these websites – some think they will fail over time while others fear they may capture a serious portion of the traditional business – I think it’s clear that the investment advice industry has plenty of room for both traditional wealth managers and the many online solutions which are popping up.  Let’s look at both sides of the debate:    Continue reading

Building a Standard for Financial Advice

There was a good article in Research magazine last month about the business of financial advice and how it needs improvement.  Research is an industry publication so it’s not the sort of article which would be distributed to the general public.  That said, I’ve read articles in consumer publications which comment on many of the same points.  Part of the problem is that the financial advice industry doesn’t really have an official designation, perhaps one that is state-issued, required for  inclusion in the industry, and that has a rigorous set of practice standards.  Accountants have the CPA, financial analysts have the CFA, lawyers have the JD, etc.  Some might say that people in the business of giving financial advice have the CFP (Certified Financial Planner) designation, which they do, but that isn’t a requirement for inclusion in the industry.   In fact, many people don’t know about or distinguish between the various financial planning designations which exist.

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Is Sustainable Investing Catching On?

Well, according to an article in the most recent issue of Financial Advisor Magazine, it isn’t. The article indicates that sustainable investing (when one considers environmental, social and corporate governance criteria to generate long-term financial returns and positive societal impact) isn’t something which clients prioritize. It’s more something the advisor will ask about and sometimes learn that it’s on a client’s spectrum of importance but not a front burner issue. I’ve got to say, in my office we have many clients who have indicated at the very first meeting how important sustainable and socially responsible investing issues are to them. More below:

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Estate Planning Strategies & Mistakes

At some point during your life, you may start thinking about issues including transferring money to your heirs and protecting your assets from becoming subject to unnecessarily high taxes when you die. In my experience, people with up to 2M generally are satisfied with having a Will along with annual reviews of their beneficiary elections and checking the registration and titling of investment accounts and real estate. Most of that can be done with a financial advisor with add-on services from an estate planning attorney – usually the “Will package” which includes a Will, Living Will, Health Proxy and Durable Power of Attorney. What happens when your net worth balloons to 5M, 10M, or 100M? Estate planning gets a bit more complicated and you need to be extra cautious, as we will discuss below:

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Retirement and Systematic Portfolio Withdrawals

Retirement planning is certainly one of the most debated and important areas of financial planning. Each advisor and firm has a different approach when it comes to how they plan for retirement and how they help clients in retirement ensure that they have adequate income to last the rest of their lives. At its core, the components needed to plan for retirement are fairly clear: what are your guaranteed income sources during retirement and what are your variable sources? Similarly, what will your fixed expenses be and what will vary? Most retirees have social security, some have pension income, and most have financial portfolios from which they can take withdrawals over the course of several decades to complement those other income sources. That last point is our focus for today’s blog article: How much does one need to save and at what rate can one safely withdraw? Also, what is the ideal asset mix during those retirement years?

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Baffled by College Costs? Me Too

It’s a conversation many of us have over the dinner table or with our colleagues at work: “I can’t believe the cost of college.” It is a very reasonable statement when you consider that many private colleges cost $40,000+ per year. My alma mater, New York University, is now over $50,000 per year. The question I keep coming back to is whether or not it’s worth it. I think the answer was a resounding yes up to the point when I graduated college (2004) but since then, a college education seems to be doing more harm than good for many, many people that I speak with. That’s not to say it’s wrong for everyone, but perhaps the decision to attend college, especially a private college, deserves a lot more contemplation than it has in the past. A recent article in Money Magazine ponders some similar questions and covers some specifics that I think my readers may find interesting.

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A Discussion about Independent vs. Wire House Brokers

As you may have imagined, the past few months have been stressful not just for individual investors but for financial advisors as well. Many advisors get paid a percentage of the assets they manage so when asset prices cheapen, as they have recently, it indicates pay cuts for advisors, portfolio managers, insurance professionals, etc. One change which has been widely commented on in industry publications lately is the movement of assets away from large wire house firms such as Merrill Lynch and Smith Barney into smaller, independently owned advisory firms.* This move is not strictly the result of clients seeking a better relationship with their advisors. It’s also the result of advisors working at firms which have been plagued by the credit crisis looking for a change of scenery.

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Famous Financial Advisors: Who’s the Best?

There are at least a dozen financial personalities which are extremely well-known. Some aren’t so much “advisors” as they are motivational speakers, authors, consultants, etc. Even so, they are commonly found in public, and on CNBC shows such as “The Millionaire Inside,” talking about how they got rich and what other people can do to follow in their footsteps. I’ve been meaning to get this post up for a while, giving my overview of the most prominent financial advisors and their varying opinions. What we’ll ultimately find is that many of these people are giving different, often contradictory advice. Perhaps they are trying to carve out a niche for themselves or separate their identity from everybody else. Regardless, the bottom line is that each of these people has earned a living through self-promotion and entrepreneurship. Perhaps this is the most important lesson we should learn from.

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My New Book — Hits Stores Today

After months of anticipation, Navigating the Financial Blogosphere: How to Benefit from Free Information on the Internet hits stores today. And now, my era of shameless self-promotion shall begin! You can find the book online at or in Barnes & Noble and Borders bookstores. Please do pick up a copy and explore this project which I’ve worked so hard on! Inside I will point you towards various informational outlets on the web which can help you tackle personal finance and better understand a variety of issues regarding money. The chapters, which are based on questions I received from actual readers, include:

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