Russell Bailyn -

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 )

I've given some thought lately to lowering the average age of my clients. It’s an issue most financial advisors deal with when they look through their book of business and realize that most of their largest accounts are people in their 60’s, 70’s and older. In my experience, the reason for that is two-fold: first, older people really do have more money. It’s a combination of demographics (there are currently tons of baby boomers out there controlling trillions of dollars in assets) and the fact that people both come into more money at later ages and, concurrently, become more interested in the management of their assets as they near the distribution phase. The other reason why advisors have a hard time attracting young, wealthy clients is that younger people simply don't focus as much on saving and investing as older folks. Regardless of all the statistics about the time value of money and how much of an advantage a young person would be at later on if they saved more now, it’s simply not how the world works. I have plenty of clients who are in their 20's and 30's, earning well over $100,000 per year who save very little each year, despite my ranting. Granted I work and live in New York City where earning $100,000 makes you, well, poor. The handful of young clients who do max out their 401k and save beyond that will clearly be less stressed later on when life becomes more expensive (think: college tuition) and saving becomes more difficult.

Continue reading " The Wealth Transfer: Getting Younger Clients " »

Posted by Russell Bailyn at 03:58 PM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

I’ve written at length about the unfortunate ‘trifecta’ which many families face when in their 50’s. This decade is typically when people really start to focus on the reality of retiring one day and having enough money to do so. It’s also a time when kids (if you have them) are in college or are nearing that expense. It’s also a time when elderly parents often need help. Offering help to aging parents isn’t always financial in nature—it can also be an increased need for time and attention which takes mental and financial tolls on you. No matter how you look at it, your 50’s are a time of financial demands, perhaps more so than any other decade. So below I’ve outlined a few financial tips regarding dealing with aging parents which can potentially save you loads of money (and stress) down the road.

Continue reading " Making Wise Financial Decisions for Aging Parents " »

Posted by Russell Bailyn at 11:43 AM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

The topic of this blog entry may initially seem pertinent only to those within the financial services profession. The reality is quite the opposite. Efforts to create a uniform fiduciary standard are perhaps most significant to the clients, the people who entrust financial professionals to oversee their nest eggs and help make decisions which put people on a forward path to progress in their personal financial lives. The concept of a fiduciary standard basically requires all of those ambiguous financial professionals (most of whom hold themselves out as ‘planners’ and ‘advisors’ to act in the best interests of their clients, a standard which is currently only required for investment advisor representatives, typically abbreviated as IARs. The way the law currently stands stockbrokers (aka registered representatives) are only required to act within a standard of ‘suitability’ when it comes to recommending products and strategies to clients. I don’t think I need to elaborate on the potential for abuses which exist within the ambiguous definition of ‘suitable.’

Continue reading " Uniform Fiduciary Standard: Good or Bad? And for Whom? " »

Posted by Russell Bailyn at 11:36 AM | Permalink | Comments ( 2 ) | TrackBacks ( 0 )

In the financial planning profession, many advisors focus on investment management. The focus is often so strongly on managing investments that all the other components of financial planning which people want and need are ignored. In today’s post I’d like to discuss MoneyCapsules, a process-oriented strategy devised by an advisor in my office which focuses on careful management of one’s entire financial life. It’s a service many people want but don’t explain clearly enough to their financial advisor to get it right. I’ve seen it first hand: once people get a handle on their full financial picture, anxiety levels decrease and decision making becomes much easier. Find the right payday lender by reviewing the easy payday loan comparison chart.

Continue reading " Organize Your Financial Life Using MoneyCapsules " »

Posted by Russell Bailyn at 03:41 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

We’ve been saying in my office for months that Obama would extend the Bush tax cuts. It seemed a given with the unemployment rate stuck near 10% and horror stories circulating about how higher taxes contributed to the lost decade of the 1930’s. Obama, especially now that he has entered the third year of his presidency, seems willing to compromise and unwilling to watch our economy deteriorate further. Perhaps there’s some political motive to his recent mindset but either way I’m relieved to keep those tax rates where they have been for another two years. Below is a recap of the tax relief extension. I figured this would be a good topic for a blog post because tax rules are often dense, and change pretty frequently.

Continue reading " Tax Relief Gives Investors a Break for 2011 & 2012 " »

Posted by Russell Bailyn at 10:51 AM | Permalink | Comments ( 2 ) | TrackBacks ( 0 )

I’ve noticed an increasing number of people contacting me about variable annuities lately. I think this can be explained by a fear increase among investors. In the past investors may have been willing to forego a guaranteed income stream for the chance at having substantially more assets during retirement. That mentality made sense at a time when the stock market averaged 10-12% growth per year and government entitlement programs were well funded. But during this ‘lost decade’ investors find themselves clinging to cash and prioritizing guaranteed income over growth. Variable annuities actually offer both which is probably why investors are asking questions.

Continue reading " Why Variable Annuity Popularity May be Increasing " »

Posted by Russell Bailyn at 11:55 AM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

As most of my readers know, my blog is designed to inform clients about issues related to financial planning, investment products, and the economy. Lately I’ve been fielding more questions than usual about the various annuity products out there and which ones are best, the worst and potentially the most interesting. It’s also no surprise that variable annuity features and riders change frequently to correspond to changing market conditions and current client needs. It would be nearly impossible for the average investor to be fully informed about the differences between variable annuities offered by Prudential, Jackson National, Nationwide, AXA, Sun Life and Transamerica. Well, this post should provide some answers and also give you insight into how the insurance companies think about and price these products.

Continue reading " Comparing & Contrasting Variable Annuity Riders " »

Posted by Russell Bailyn at 03:59 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )