Pension Funding Gets Worse

by Mary Suplee on Jul 3, 2017

Wilshire Consulting calculates the funding ratio for State sponsored retirement plans every year. For the year ending June 30, 2016 (the most recent) the average funding ratio, or the amount of pensions that have the money to pay, dropped to 69%.  What this means is that either taxes will need to be raised dramatically to make this up or future pension benefits dramatically curtailed.

Management by Crisis

by Mary Suplee on Jun 30, 2017

Underfunded state pensions are a threat to taxpayers everywhere in terms of probable higher future tax burdens and lower future services. In California, they talk about a "service bankruptcy". That is where all the tax dollars at some future point go to paying benefits for retirees with no money left over to spend on any of the services government provides. All of the future taxes will have to go to pay for promised pensions if nothing changes.

Department of Labor (DOL) fiduciary rule

by Mary Suplee on Jun 26, 2017

best interests of client, fees, fiduciary rule

The new rule going into effect with the Department of Labor (DOL) fiduciary rule gives brokers and insurance agents till January 1, 2018 to come into compliance with the rules we have been following for decades.

This is huge news for 401(k) plan participants. Now advisors will have to consider the fees, the benefits and the services provided before they recommend a rollover from a corporate plan to an IRA. Imagine that, a rule that makes these people have to actually work in someone's best interests. I wonder why they fought so hard against it?

Good News for 401(K) Plans

by Mary Suplee on Jun 22, 2017

best interests of client, fees, fiduciary rule, retirement, readiness, social security, Medicare, planning for retirement

Good news for 401(K) plan sponsors and participants! Under the new Fiduciary Standard of Care rule, all advisors that give investment advice to 401(k) sponsors and their employees (participants) now have to comply with the ERISA standard for fiduciary care.

Before this happened, only advisors who, like us, were subject to the Investment Advisors Act of 1940 were held to the fiduciary standard. Others had what's called the suitability standard. Brokers and insurance agents had a lower standard and could earn big payouts from investments with very high fees, but not anymore.

Know the Difference between Fee-only and Fee-based Advisors

by Mary Suplee on Jun 20, 2017

best interests of client, fees, fiduciary rule

There’s a lot of lingo in the financial planning and investment areas that may be clear to the professional but isn’t always truly understood by most individuals. Take, for example, compensation models for financial advisors that are categorized as fee-based or fee-only. Yes, they both charge fees but fee-based advisors may also receive commissions for products that they sell you. This can lead to a conflict of interest when their compensation influences the type of product they recommend.

Short Term Rate Hike Good for Savers

by Mary Suplee on Jun 15, 2017

inflation, retirement, readiness, social security, Medicare, planning for retirement

On Wednesday, the Federal Reserve raised its short term interest rate for the third time in the last six months, even in the face of tame inflation numbers. For the last five years, inflation has stayed at low levels averaging under two percent. Low inflation is good for savers and retirees as high inflation is a serious threat to most people’s long term retirement plans. Low interest rates are not good for savers, however.

Retirement Savings Readiness

by Mary Suplee on Jun 13, 2017

retirement, readiness, social security, Medicare, planning for retirement

The recent 27th annual Employee Benefits Research Institute Retirement Confidence Survey reports that the share of American workers who are very confident that they will have a comfortable retirement remains low. I believe this is a growing national problem that will take strong measures of education and leadership to fix. Some of the more interesting findings include:

Conflict of Interest Rule

by Mary Suplee on Jun 8, 2017

I am reading with great interest all the comments about the new "Fiduciary Rule" that starts tomorrow affecting firms and advisors that transact a lot of business from rollovers of existing 401(K) and other qualified plans.While the Department of labor is calling it the "Conflict of Interest" rule the press is calling it the Fiduciary Rule.

Department of Labor and the Fiduciary Rule

by Mary Suplee on Jun 7, 2017

On June 9th, 2017 the Department of Labor will require people who advise on retirement plans to start to act in your "best interests" when they provide investment advice for a fee or some other compensation.

They call this the Fiduciary Rule. While this rule is mired in controversy and has many flaws in it, it is a big leap forward for small investors. The biggest change is that advisors will now have to make sure that they fully disclose how they are charging and what services their clients can expect for their money.

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