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It’s National Save for Retirement Week – Let’s Party!

October 24, 2012 By Roger Wohlner 10 Comments

Until I saw something about this on Twitter I had no idea that National Save for Retirement Week even existed. Congress

in a rare act of wisdom has designated October 21-27 for Americans to focus on saving for our retirements.

Now I’m not one for what I deem contrived holidays. Just ask the lovely Mrs. The Chicago Financial Planner. This past Saturday I dropped $3.99 (plus tax) on a Happy Sweetest Day helium filled balloon, the first time in our 28 year marriage that I have even acknowledged the existence of this florist contrived day. I will say her reaction was well worth the money spent.

However, any event that highlights the need to for Americans to address the impending retirement savings shortfall that many of us are facing is a good idea in my book.

A recent study by the Employee Benefit Research Institute found that even working until age 70 will not solve that lack of retirement savings for many workers. They found that even an additional five years of work will leave about 80% of current pre-retirees short of their retirement income needs.

What can you do help ensure that you are on track to a successful retirement? While there are no guarantees here are some tips:

Save early and often. Starting with your first job, try to save at least 10 percent of your gross income before you get used to spending your entire paycheck. A good place to start is with your 401(k) plan at work. Make sure at a minimum to save enough to take full advantage of any employer match.

Take appropriate investment risks. I’ve read several articles discussing how some younger workers are quite risk averse in the wake of the 2008-09 market decline and are investing their retirement plan accounts accordingly. This is a huge mistake. I have a 24 year old daughter. When she asked me how to invest her 403(b) plan account at work, I suggested that she allocate 50% to a total stock market index fund; 40% to a total international index fund; and 10% to a total bond market index fund. I further suggested that she do this through thick and thin, set her account to auto rebalance semi-annually, and that we’d revisit her allocation in ten years.

Younger workers have the gift of time on their side and should take appropriate investment risks. Workers who are nearer to retirement should also take age-appropriate risks. This will vary, but in my experience most investors need a growth component in their portfolios.

Make retirement savings easy and automatic. While some might bash 401(k) plans (in some cases deservedly so) a workplace retirement plan is an easy, painless way to save for retirement. Unless your organization’s plan is just terrible, participate and contribute as much as you can. The convenience of having the money come out of your paycheck automatically trumps a lot of ills in my opinion.

Start a retirement plan if you are self-employed. Self-employment has many pluses. A minus, however, is the need to fend for yourself in terms of employee benefits and in saving for your retirement. There are several options here, make sure to start your retirement plan as soon as possible. You work too hard not to.

Get a financial plan. Whether you do it yourself or you hire a professional, get a plan in place, review the plan annually, and adjust as needed.

What steps are you taking to ensure that you are financially prepared for retirement?

Please feel free to contact me with your retirement planning and investment questions.

Photo credit: 401(K) 2012

Filed Under: Retirement Tagged With: 401(k), Financial plan, Investment, retirement, Twitter

Is Betterment Really a Better Idea?

May 12, 2012 By Roger Wohlner 8 Comments

Betterment is an online investing service. Betterment touts its service as “Simple to Use. Sophisticated Investing.” They also say you can “Invest like an expert without the hassle.” Low fees ranging from 0.15% to 0.35% of net assets certainly seem attractive.

Here’s where it gets a little “less better.” For whatever reason, Betterment has seen fit to declare war on financial advisors. For the record I don’t view Betterment as my competition, but rather I resent what I see as misleading attacks that confuse the investing public.

Betterment also saw fit to quote a flawed study of brokers (mislabeled as financial advisors) by NBER as proof that Financial Advisors are Bad for

Wealth. This post from their blog is in my opinion so full of holes that it could double as a piece of Swiss Cheese.

Don’t take my word for it, check out Mike Alfred’s post in Forbes Why Betterment, Wealthfront, and Other Online Investment Firms are Wrong about Financial Advisors. Or check out this post by Josh Brown who blogs as the reformed Broker Taking Betterment to School. Lastly this excellent post from Scott Bell at I heart Wall Street Et Tu, Betterment? says it all.

Sour grapes. Not at all. From my perspective say what you want about me or about financial advisors. Just be accurate. The folks at Betterment were anything but accurate in their broad brush approach to lumping financial advisors and brokers together.

They claim they were trying to call out bad advisors and toxic practices. In reality their approach was in my opinion a toxic practice. I suggested to them via Twitter that they consider a post discussing the differences between advisors and financial sales people. Perhaps they could educate people on how to determine if working with a financial advisor is right for them and if so how to choose one that fits their needs.

Online services like Betterment are clearly part of the changing landscape that will shape the future of the delivery of financial advice. I really want to like Betterment so that I can suggest it as an alternative to younger investors and to others for whom this type of service might be a good fit.

What troubles me though is that Betterment went ahead and published a post that was so full of inaccuracies. Was this a cheap attempt to bash advisors in order to drive business their way? Did they truly not understand why their post was inaccurate? Were they unaware of the flaws in the NBER study?

If the answer is yes to any of these questions it raises doubts in my mind as to the business maturity of the Betterment management team. Maybe their model is wonderful and they are a “better mousetrap.” At the end of the day, however, this episode will forever make them suspect in my mind.

Check out Personal Capital which in my opinion offers a much better option in this space.

Filed Under: Investing Tagged With: Betterment, Finance, Financial Advisor, Investment, Josh Brown, Twitter

Vanguard and the Power of Twitter

December 8, 2010 By Roger Wohlner 13 Comments

Two upfront disclaimers:

1. Nothing in this post or on this blog should be construed as financial advice or a recommendation to take any action of any kind. Financial decisions should be made only after a careful review of your personal situation and in consultation with your tax and financial advisor.

2. I have a great deal of respect and admiration for the Vanguard organization. Across my base of individual and institutional clients I use a number of Vanguard mutual funds and ETFs.

That said Vanguard recently made a decision to lower the investment minimums on its Admiral Share class of funds for investors in these funds who hold their shares at Vanguard. The Admiral shares offer an even lower expense ratio than Vanguard’s Investor Share class which already has very low expenses. This is a great gesture on Vanguard’s part because they are essentially earning less by doing this. Other than the expense ratios, the fund portfolios are the same across all Vanguard share classes.

However, Vanguard did not initially extend this opportunity to Vanguard fund shareholders at other custodians such as Schwab or Fidelity. Though this did not impact a large number of my clients, I viewed this as unfair to clients of many financial advisors. Like many advisors, I use Schwab as my primary custodian for most of my individual clients and one of my larger retirement plan clients. There we hold mutual funds and ETFs from a variety of fund companies, including Vanguard.

The idea of Vanguard treating the clients of financial advisors holding their funds elsewhere differently (and worse) than shareholders who dealt directly with Vanguard really bothered me. This seemed very “un-Vanguard-like.” Most of my institutional clients are already in lower cost share classes; additionally I have tended to use Vanguard’s ETFs for most of my individual clients which carry a very low expense ratio that is generally comparable to Vanguard’s lowest expense mutual fund share class.

None-the-less I sent several Twitter messages to Vanguard saying in effect that it was wrong to treat our clients as second class shareholders and also asking them why they were anti-advisor. Evidently so did a number of my fellow advisors and consultants because a short time later I received an email saying that a similar opportunity would be made available to advisor clients at other custodians. The social media activity was mentioned to me in a conversation with a Vanguard rep.

The point is that Twitter and social media can be a powerful communications tool for financial advisors. In this case it proved to be an excellent vehicle for us to pressure Vanguard to do the right thing for our clients. Many mutual fund companies are using social media as a vehicle to engage advisors and shareholders. That’s great, the more we know the better able we are to make intelligent investment choices for our clients. The flip side is that the fund companies should expect to be called out when they do something as short-sighted as what Vanguard did recently.

Filed Under: Financial Advisors, Social Media Tagged With: Exchange-traded fund, Mutual fund, Mutual fund fees and expenses, Twitter, Vanguard

Financial Advisors and Twitter

December 10, 2009 By Roger Wohlner 12 Comments

Recently an article entitled The Top 10 Twitter Feeds for Career Minded Advisors was published in the FINS section of the online Wall Street Journal. The article listed the top 10 Twitter feeds for financial advisors to follow. I was fortunate enough to be included in this list. I heartily recommend that anyone even remotely interested in personal finance follow the other nine folks listed.

Beyond the good natured ribbing that I am taking from some of my fellow advisors on Twitter about my new “celebrity” status, this article has made me stop and think about why financial advisors in general and me in particular are on Twitter.

I suppose the initial thought was that I would get on Twitter and clients would flock to me. That hasn’t happened and I think most other advisors on Twitter have had the same experience. However I think Twitter is a very worthwhile tool for several reasons:

I have met (in person and online) a number of fellow financial advisors from whose Tweets (posts for you non-Twitter users) I learn something new every day. Whether from their blogs or article links Twitter is a great source of information. Additionally I feel that I have greatly expanded my network of experts to whom I can turn with questions in areas where I may not have the direct expertise.

I do think Twitter is an excellent PR tool and I feel that my name is out there much more than it was when I first signed onto Twitter this past April.

Twitter allows you to follow and participate in the “conversation” about any number of topics. I am particularly interested in the Fiduciary movement; 401(k) plans, investing, and financial planning. Twitter is filled with information about thousands of topics and companies, plus politics, entertainment, culture, and sports to name a few.

As a financial advisor I am always careful not to recommend specific investment vehicles or courses of action. Twitter to me is just not a medium to provide specific advice. Financial advice is best given in a one-on-one situation, each client and their situation is different.

Lastly let me share some of the folks that I follow in addition to those listed in the article above. Some are fellow financial types, some not. This is a Twitter idea inspired by Gini Dietrich ginidietrich a Twitter superstar and a bright young Chicago CEO. If you follow Gini you will move up the social media learning curve very quickly. Below is a great “Follow Friday” list:

My “Core Favorites” List

davegalanis Dave is one of the sharpest financial and business consultants I know. Dave is the one who turned me on to Twitter in the first place. We were cubicle neighbors back in the day at our first jobs out of school. Dave is a connoisseur of most foods served on a bun.
gtiadvisors Greg is into due diligence, corporate security, espionage, and also maintains a cooking recipe blog. When my daughter was traveling to Russia he indicated that he had contacts that could be of help if she found herself in a bad situation, Greg is a great guy to know.
IKE_DEVJI Ike is an attorney and advisor focusing on asset protection. Really knows his stuff.
venturepopulist Jeff is a private equity and hedge fund guy with some interesting opinions on investing.
dgvelaw Danielle is the mother of three, a really sharp estate planning attorney, plus she is a Packer fan by marriage.

Other folks I suggest following listed by Twitter name

Brightscope
CurtisASmithCFP
feeonlyplanner
TeriTornroos
williger
RussellDunkin
susanweiner
KristenLuke
TheMoneyGeek
mlimbacher
smart401k
Vantage401k
BeManaged
onlymoney
RockTheBoatMktg
FiduciaryNews
nevinesq
obliviousinvest
JonChevreau
wisebread
DianeKennedyCPA
FernCFP
RussThornton

If you are new to Twitter or have been on for awhile, this list plus the folks listed in the article are a great group to follow.

There are many other people and organizations that I enjoy following on Twitter as well. One tip that helped me early on was to look at the followers and those followed by the people I was following. I still do this to this day. The new Twitter list function is another way to do this as well.

Check out Twitter and join the conversation. You’ll meet some interesting people and you might learn something in the process.