Russell Bailyn -

This post really hits home for me right now. My wife is due any day with our first child and we're currently balancing our New York City apartment with a new home which we bought and are renovating in the suburbs. At the same time, my wife has left work for a few months, cutting out a chunk of our income. We find ourselves at a point where we have lots to buy but we need to be more cautious than ever not to fall into the trap of getting everything we want now and leaving ourselves financially vulnerable later on. This inspires today's post about how to get through life's major financial events including weddings, home buying, children, etc, without letting your emotion force you into decisions which you may regret down the road.

Continue reading " Financial Milestones: Keeping Your Emotions in Check " »

Posted by Russell Bailyn at 02:27 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Recent studies show that life insurance ownership is at a 35-year low with only 44% of US households owning some form of life insurance.* That statistic likely reflects the fact that families feel the need to drop their insurance coverage ahead of other items when times get tough. People need to understand that life insurance isn't strictly a luxurious method used by wealthy people to pass funds along to the next generation. Rather, it's a strategy employed to avoid potentially awful scenarios in which the loss of a loved one results in financial hardship for others. Even a basic, inexpensive term policy can help avoid such a situation from ever taking place. As a comprehensive wealth manager, I plan to go over my clients life insurance coverage in more detail during 2013. Most people are primarily concerned with the management of their investments but not with potential risk exposures in the form of lost income/wages and what coverage should be in place to minimize that risk. More on this below...

Continue reading " Do you own Life Insurance? " »

Posted by Russell Bailyn at 03:29 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

This post includes a list of recent articles which are suggested reading from First Allied Asset Management, my broker/dealer firm. You will find a link to each article followed by a brief synposis of what the article is about. If these headlines and others don't look all that optimistic, that would certainly be a reflection of the current economy and investor sentiment.

Continue reading " Between the Lines: Suggested Reading from First Allied Asset Management " »

Posted by Russell Bailyn at 03:00 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

There was another great article in Financial Advisor magazine this month which highlights the sort of fears and concerns that plague many generations of today's investors, specifically those nearing retirement who are trying to better preserve capital. It's no longer just about the magic number one needs to retire comfortably or which financial product you can buy to protect your future income against long life spans. Today's concerns are often about the potential of current events to cause another market retreat along the lines of the tech bubble or housing crash, the sort of thing which can further jeopardize a comfortable retirement. The article suggests that some of the top concerns that clients/investors have at the moment include: 1) the debt issue and whether that may ultimately cause the US to lose its status as the world's reserve currency; 2) the likelihood that we'll experience severe inflation in the coming years which could dramatically impact purchasing power; 3) what are the potential ramifications of Obama's large and complex health care plan? So let's briefly touch on each of those and then see if we can back those concerns into some sort of investment opportunity.

Continue reading " Advisors: A Conversation to Have with your Clients " »

Posted by Russell Bailyn at 12:46 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

There was an article in Financial Advisor magazine this month which talked about how much money people ought to save if they wish to retire comfortably. I've found people enjoy these simplified, rule-of- thumb type systems as they allow people to break down complex, hard-to-reach goals into smaller, more manageable pieces. The article suggests that saving 8x your final salary should, along with social security, prevent a situation in which one outlives their assets. Obviously this isn't an exact science as the retirement picture looks a little different for everybody, but based on standard spending ratios (typically 85% of pre-retirement income will be needed) these numbers should work. The ways in which one may reach such a large lump sum goal will vary but below are the suggested guidelines for doing so.*

Continue reading " Saving for Retirement: The Numbers " »

Posted by Russell Bailyn at 10:01 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Clients and advisors alike are wondering what will happen to the favorable tax rates that are set to expire at the end of this year. One consideration within this broader discussion involves the expected changes to wealth transfer rules. If Congress doesn't act in the next few months, transfer tax rates will revert back to 55% and the lifetime exclusion for an individual will move from $5.12M down to $1M for individuals and $10.24 down to $2M for couples. That poses a big potential estate planning blunder just down the road, one which can be avoided with some basic planning.

Continue reading " Wealth Transfer Rules Expiring December 31st " »

Posted by Russell Bailyn at 04:55 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

On January 31st, FINRA put out a publication intending to highlight new and continuing areas of significance to their regulatory program. As an advisor, I can see why some of these areas may be of concern to regulators as opportunities to either overuse or misuse these products does exist. I also found it interesting that this list includes many of the most popular investment products currently being offered by advisors. The reason for their popularity, at least how I see it, is that these products offer non-correlation to the markets, income protection, speculative potential, or some combination of those elements offered in some kind of complex shell. I applaud FINRA for putting out this kind of publication. In my experience, many investors haven't taken the proper time to read up on regulatory warnings about financial products so that they understand where the risks of misuse may be. Advisors, broker-dealers, etc, should read these sorts of notes and hopefully will think twice about suitability and appropriateness before recommending something which may be misunderstood by a client, causing a problem down the road.

Continue reading " FINRA’s 2012 Product ‘Watch List’ " »

Posted by Russell Bailyn at 11:32 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

It seems like every time I turn around another variable annuity (VA) provider is closing its doors. Sun Life, John Hancock, AXA, Genworth, and ING are among the companies which have either limited new contributions to one of their VA products, taken some other step to minimize exposure to the VA market, or completely exited the market. Meanwhile, that has translated into more premium dollars for big players like Prudential and Jackson National which have increased market share over the past year, according to Bloomberg Financial. The irony here is that VA sales in Q3 of 2011 hit $8.8B which was the highest level since Q3 of 2007.* One would think companies would want to enter this arena and compete for new dollars, not run the other way.

Continue reading " The Variable Annuity Market is Shrinking " »

Posted by Russell Bailyn at 03:11 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

There is a tremendous amount of money invested in mutual funds in the United States. In some cases people own mutual funds for their personal investments. In other cases people own mutual funds in their employer retirement plan, whether it be a 401k, 403b, Simple or Sep IRA, etc. I’ve found that the majority of people whom I meet, whether clients or otherwise, don’t know the difference between A, B, C, and other less common share classes. I find that odd considering the investor is often the person who must choose which share class they own and therefore should have at least a basic knowledge of each. However, many people leave that decision to their advisor and don’t learn the differences until after their account has been open a while or worse, when they need money and find out they are subject to some sort of deferred sales charge. Let me elaborate below so that, in the future, you know exactly what you are buying and why:

Continue reading " A Mutual Fund Share Class Discussion " »

Posted by Russell Bailyn at 01:32 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

In my opinion, no, that’s ridiculous. As I wrote in my book back in 2007, I believe ETFs are one of the best financial innovations to hit the market in decades, perhaps since the mutual fund made its debut. ETFs allow investors to own broad, diversified portfolios at low annual costs. That’s what mutual funds offered back in the day but people ultimately realized that some fund expenses weren’t so low and the performance wasn’t so hot. I believe ETFs offer a solid way to own a passive portfolio which covers a broad cross-section of the market. Couple that with the fact that they are transparent, trade on exchanges like stocks, and are tax-efficient. Now to clarify, when I refer to ETFs, I am referring to large, popular indexes such as the S&P 500* which do not employ leverage. Please read on to hear some professional opinions about how ETFs may have contributed to market volatility:

Continue reading " Are Exchange-Traded Funds Really Ruining the Market? " »

Posted by Russell Bailyn at 02:39 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

In the world of small business retirement plans, there are many options. Some plans give the employer sole authority to make contributions, others are contributed to by employees only, and some are a hybrid of the two in which employees make contributions and employers can make matching payments or make random contributions to the plan. The SIMPLE IRA is an interesting option for small and mid-sized businesses (up to 100 employees) which allows a mix of employer and employee contributions. Some would say IRA plans like the SIMPLE are becoming obsolete as the 401k vehicle has become more flexible but that’s not entirely true. 401k plans still have more onerous rules on business owners in terms of tax reporting requirements and the fairness surrounding contribution levels. For that reason many people stick with plans like the SIMPLE IRA which have lower contributions limits but are easy to administer and achieve the goal of socking away tax-deferred funds for retirement.

Continue reading " Understanding the SIMPLE IRA Plan " »

Posted by Russell Bailyn at 04:28 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

I don't usually blog about my press mentions, but this month I had a pretty cool feature in one of my industry's most prominent publications. Financial Advisor Magazine interviewed me for a story on social media and how advisors are dealing with the opportunities and challenges it presents. As a blogger, I've always been an advocate of using the Internet as a tool for helping advisors grow their business. However, the social media movement takes web marketing opportunities well beyond that of a traditional website or blog. Advisors who follow the new and very specific rules about how to use social media may have a leg up on those who rely strictly on more traditional methods of client acquisition and retention. The only problem is that it can be time-consuming to sort through all the information about becoming more Internet-savvy. You still have a business to run, after all. One effective option is to consult a social media expert for help growing your business. He can show you the tricks of the trade and help you attract more clients.

Continue reading " Featured in Financial Advisor Magazine! " »

Posted by Russell Bailyn at 02:41 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

I’ve been in the business for a while at this point. I’ve heard many stories from financial advisors about how they lead initial consultations and what the different methods are which they use to extract vital information from clients. The problem we often face as advisors is that clients offer us a decent amount of ‘hard’ information such as income and expenses but we have a more difficult time getting through to the ‘soft’ information such as a true tolerance for risk, attitudes about money and spending, attitudes about charity and legacy planning, etc. At the end of the day, it’s a relationship that involves trust; the more an advisor understands about the client’s truest feelings, the more they can think through ideas and come up with the best possible solutions for handling one’s financial life. So what’s the solution?

Continue reading " Financial Planning: What’s Your Process? " »

Posted by Russell Bailyn at 01:15 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Part of what is allowing the Federal Reserve to continue promising an endless period of low interest rates is the fact that – or at least they claim – we aren’t yet experiencing any inflation here in the US. I get the logic: the big pitfall of keeping rates so low for so long is inflation but with an economy that is barely growing, we can ignore inflation for now (or even cry deflation) and continue the path to devaluing the dollar for greater short-term economic benefits. Perhaps the reason why Bernanke isn’t so concerned is that if banks actually start deploying capital at some point the Fed should be able to drain liquidity fast enough to cut inflation before it became a serious problem. However, whether or not the Fed can actually do that is a much bigger question mark than some people realize.

Continue reading " What's the Real Story with Inflation Lately? " »

Posted by Russell Bailyn at 03:45 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

This post from The Wall Street Journal’s The Source blog provides a brief overview of the current natural gas production boom in the U.S. and why Europe is unlikely to benefit from it any time soon. In short, the infrastructure necessary to export the gas will take several years at a minimum to build out and environmental concerns are likely to keep a similar production boom from occurring in Europe. The inability to export is likely to keep domestic natural gas prices depressed for the foreseeable future. “In the U.K. last week, politicians hailed the good news as utilities cut a meager 5 percent from their customers’ sky-high gas bills. Meanwhile, in the U.S., natural gas has become so abundant and the price so low that a company in Texas was burning the stuff off as a waste product.”

Continue reading " Between the Lines: Interesting Reading from First Allied Asset Management " »

Posted by Russell Bailyn at 01:55 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

The U.S. Labor Department reported on Friday that the U.S. economy added 120,000 jobs in November, roughly in line with expectations. The economy has now produced 100,000 or more jobs five months in a row – the first time that has happened since April 2006. But to make sense of jobs data, it’s important to understand the differences between the two main data sets, both of which can be “noisy” and subject to some pretty substantial revisions and adjustment factors. The number of jobs created or lost is revealed by the nonfarm payroll report, which is a survey of employers.

Continue reading " Special Commentary: The Jobs Report " »

Posted by Russell Bailyn at 02:06 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Blowout Black Friday retail sales sent stocks higher on Monday by nearly 3 percent on light volume, reversing a seven-day stock losing streak. Bond markets in Italy and Spain were the key negative culprits as yields on both countries’ debt breached the dangerous 7 percent level – crippling funding costs that previously pushed both Ireland and Greece into seeking bailout packages. The markets clearly sense that the size of Europe’s revised rescue fund is still inadequate to address the region’s dual sovereign debt and banking crises. Contagion has now reached the core of Europe. Optimistic policy statements out of Europe have been able to consistently generate rallies for 18 months, but I sense that this time we really are at the end game and painful specifics will finally be required.

Continue reading " The European Sovereign Debt Crisis - Market Commentary from First Allied Asset Management " »

Posted by Russell Bailyn at 01:46 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Below is this week's market commentary from Craig Columbus, our chief economist. This week's selected articles mostly pertain to Europe as that has dominated US trading/markets over the past few weeks.

Where Is the ECB Printing Press?
In my opinion, John Mauldin has done some of the best writing on the European debt crisis because he focuses on the deep, underlying structural issues rather than on the pronouncements of Europe’s leaders. Take, for example, the fact that few have reported that the “voluntary” haircut on Greek bonds only applies to private reditors: “Greece has been told that they can write off 50 percent of their debt held by private entities, but not that owed to the IMF, ECB, or other public entities. This means something more like a 20-30 percent haircut on total debt. Sean Egan suggests that eventually Greece will write off closer to 90 percent.”

Continue reading " Between the lines: Market Commentary from Craig Columbus " »

Posted by Russell Bailyn at 03:14 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

The latest trend in retirement is, well, not retiring at all. Retirement itself is no longer the goal. The goal seems to be adapting to a lower key phase of life and making sure each individual or family is prepared to deal with the personal and financial issues which apply to them. Despite the dozens of articles I’ve read which aim to teach advisors about what the ‘new retirement’ looks like, the more telling sign for me is listening to what my clients are saying. Frankly, they don’t even like saying the word retirement because it makes them feel old, unable, disconnected, etc.

Continue reading " Retirement 2.0 " »

Posted by Russell Bailyn at 04:35 PM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

At this point most people in sales and relationship-oriented businesses realize that social media IS the future when it comes to improving brand image and marketing products and services. If not already as important as print and e-mail advertising, your social media profiles are quickly gaining traction. Plus, I feel they’re a much stickier medium for communicating since most people engage their social media outlets daily. Unfortunately for us in the financial advising community, social media within our industry is a grey area and has remained so for years. Advisors are genuinely getting fed up at this point and it seems financial regulators are gradually starting to cave in.

Continue reading " Advisors & Social Media " »

Posted by Russell Bailyn at 05:20 PM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

There was a good piece in this month’s edition of Financial Advisor magazine written by Roy Diliberto about couples and how they deal with money. It’s no secret that an inability to discuss and understand attitudes about money causes many relationships to ultimately fall apart. The reason has nothing to do with the inherent property of money which is simply an object which helps us obtain things and acts as an exchange agent for goods and services. The more important focus is on one’s personal relationship with money, often dating back to their childhoods. Think about yourself for a minute—how was money introduced to you as a child and how have those attitudes and feelings shaped your relationship with money today? The classic example would be depression era parents who watched much of their savings disappear in the 1930’s. That sort of experience lasts a lifetime and more than likely impacts the way future generations are raised. If you grew up watching your Dad stash cash under the mattress and perhaps make you feel guilty about spending, you may pass some of those qualities down to your kids. However, if you grew up in a financially comfortable surrounding you may have been taught not to focus or discuss money, rather to focus on personal enrichment and building strong relationships with your peers. Perhaps money then becomes more of an afterthought for you and not on the forefront of your mind. Neither attitude is right or wrong: just different. The problems arise when these childhood experiences aren’t properly disclosed or discussed with those who matter.

Continue reading " Couples & Money: Reconciling Differences " »

Posted by Russell Bailyn at 01:27 PM | Permalink | Comments ( 4 ) | TrackBacks ( 0 )

Have you ever pondered how many financial professionals you need? I ask because I know that about 1/3rd of my clients work with me and at least one other advisor. Naturally I feel a little competitive and want to know that I’m the ‘lead’ advisor or primary advisory in terms of giving investment advice and financial planning recommendations. More importantly, I want to make sure my clients aren’t doing themselves a disservice by having multiple advisors who don’t communicate with each other. This has me wondering how necessary it is to have multiple advisors. If you do, in what ways are you adding value, and are you perhaps decreasing the likelihood of reaching your longer-term financial goals?

Continue reading " How Many Financial Advisors does one Need? " »

Posted by Russell Bailyn at 11:09 AM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

Bond investors have reason to be frustrated. As it is, they are willing to accept a lower total return than stock market investors by choosing safety and security over risk and return. The Fed has basically punished fixed income investors by keeping interest rates extremely low for a long time. The result is that you can’t simply pull a list of AAA government bonds, go out a few years, and expect a 5% yield to maturity. No sir, not anymore. What you can expect is something closer to 2%, or perhaps less. The more safety you require (think: treasury bonds) the less yield you can expect. I’m finding a great deal of difficulty building a bond portfolio these days which satisfies my bond investors in terms of risk, duration, and yield. The problem is that when I finally create a portfolio with a yield averaging 4%, I find my client is either taking on too much risk, or going out so far that they are locking in rates which they are soon to regret. So what are bond investors to do?

Continue reading " Advice for my Bond Market Investors " »

Posted by Russell Bailyn at 03:15 PM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )