Most people don’t even know what a Fiduciary is, let alone what their responsibilities are.
In the case of a 401k this is someone managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.
According to the US department of Labor “Fiduciaries who do not follow the basic standards of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions”
Working with a consultant allows your advisor to be part of team, even signing on as a Fiduciary with respect to the investments of the plan as defined under Section 3(21)(A)(ii) of ERISA.
If you don’t feel like you are getting the most out of your 401k, or you have more questions about your responsibility as a Fiduciary, please come in for a free consultation to find out what Romero & Levin Wealth Management has to offer you.
AB 52 – Will Capping Healthcare Rates Limit Escalating Costs?
Is capping health care costs the answer to escalating costs?Some consumer groups and patient advocates are asking the California Legislature to regulate the price of coverage. Many claim this will not work including insurers, doctor’s & hospitals.
California passed AB 52 which gives the two state agencies the power to approve or reject rate increases.
Opponents of the bill claim that the bill would prevent doctors and hospitals from recouping proper fees, thereby reducing access to care. The California Medical Association says rate regulation would have a chilling effect on doctors already overburdened by cost control, and reduce the number of primary physicians.
Please read the attached link for more information on this very interesting and important topic
AB 52 – Will Capping Healthcare Rates Limit Escalating Costs? – As health insurance premiums continue to escalate, consumer groups and patient advocates are asking the California Legislature to regulate the price of coverage. Yet outspoken opponents — including health insurers, doctors and hospitals — claim that rate regulation may not lower rates and could instead harm the quality of care Californians receive.
Earlier this month the California Assembly passed AB 52, which would give two state agencies the power to approve or reject rate increases. As the contentious bill proceeds to the Senate and a legislative maelstrom, medical interests and consumer groups continue to spar over whether capping healthcare rates will limit escalating costs, and if health insurance rates can be regulated like those for automobiles.
Sometimes parents pass on to their children poor advice about handling money. Here are some messages that won’t be helpful when those offspring strike out on their own.
“Lots of people complain to me that their parents didn’t teach them about money. Maybe they’re the lucky ones.
Sometimes the lessons parents teach about finance are just plain wrong. It can take years for their kids to recover, if they ever do.
Kelvin Leeds of Seal Beach, Calif., said his parents had told him that rich people were lucky. “Fortunately,” he wrote on my Facebook page, “I learned that it mostly involves hard work.” – Liz Weston
Third party posts found on this article do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness. LPL Tracking #602008
January 19, 2012 – Sometimes as one year passes to the next, we reflect fondly on the events of the year before. Unfortunately, for so many of us, 2011 was not that kind of year.
Market-moving events throughout 2011 resulted in extreme volatility. Performance across stocks, bonds, and commodities—and the ups and downs of the headlines—were often concerning.
Looking back, 2011 was very difficult for investors, and many upsetting events caused intense pessimism that negatively impacted the markets. We had some of the worst weather conditions on record in the U.S.; tornadoes, hurricanes, blizzards, and wildfires all took a toll on the communities, the agriculture industry, and the economy. Japan suffered an insurmountable loss of life, as families and communities were devastated by the earthquake and tsunami. Spreading Arab unrest and the collapse of North African governments caused great concern. Our own policymakers in Congress could not agree on a debt limit deal, and once they did, a major rating agency downgraded its rating on the U.S. Overseas, confidence in European policymakers eroded as Greece appeared to be on the brink of bankruptcy and the eurozone sovereign debt crisis escalated. (continue reading…)
Q&A – “I am the CFO of my company and we offer a 401k plan, how do I know if I am a fiduciary?”
The answer is: MAYBE
In general terms it’s going to come down to the involvement of the CFO in the plan. If one has discretionary authority or control with regard to the management of the plan or its assets, or any discretionary authority or responsibility with regard to the administration of the plan the answer is almost assuredly yes. The Foundation for Fiduciary Studies states, “In the case of a 401k this is someone managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.” The Department of Labor expands thru the Employee Retirement Income Security Act (ERISA) under section Section 3(21), ”The employer and its officers and directors may be considered plan fiduciaries to the extent they act or serve in a capacity by performing functions that are covered in ERISA’s definition of a plan fiduciary. Plan fiduciaries generally include plan trustees, plan administrators, investment managers, and members of a plan’s investment committee.”
Taking the ambiguity out of your situation can generally be mediated by working with an expert in defined contribution area. It’s important to seek out an advisory that will put in writing their fiduciary responsibilities with the plan. You’ll find many advisors will outsource the Fiduciary responsibility to a third party… While it can be prudent in certain situations, outsourcing can be a sign that your not working with a specialist in the arena. Once you establish you are working with an expert, with certainty, they will advise and assist with regards to putting an investment policy statement (IPS) in place. A well written IPS provides a company with a blueprint for its investment goals, outlines responsibilities, specifies who is a fiduciary and details prudent standards for selecting, monitoring and replacing managers.
Please see ERISA Act Section 3(21), which contains the definition and additional information.
- Daniel S. Romero, CFP®, AIF®, RF™, CFS
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. LPL Tracking #1-035421
We all know we’re supposed to contribute to our retirement plan at work but do you ever wonder if you’re investing in the right things? If some of your mutual funds lost money, does that mean you should dump them? What changes should you make as you age? Do you sometimes feel overwhelmed just looking at all your investment options? These are common questions we get on our Financial Helpline. With a growing number of options to choose from and all the volatility in the market over the past few years, it’s no wonder that people are more confused than ever.
Making sure your parent’s Estate Plan is in place is a very important part of the planning process. After all, aren’t we as children going to be the one’s to take care of them and help them make decisions if they are incapacited? Take a look at the following article to see what you can do to help your parents and how you can approach them on this private matter. – Melissa Levin CFP®, CFS
“Getting your parents to create or update their estate plan is a sensitive issue. As we watch our parents age, remarry, and/or become infirm, the need to plan becomes more urgent, but it is often put off for another day. Here is what you, your parents, and your clients with living parents may be able to do to start the discussions.
Why Should Your Parents Plan?
Planning in advance will enable your parents to: (1) ensure appropriate people step in to handle their financial and health-care decisions upon their incapacity and death without court intervention, such as guardianship or probate proceedings, (2) minimize unnecessary administrative burdens and costs after the death of a spouse, (3) minimize taxes, (4) preserve their assets, and, ultimately (5) distribute assets to their loved ones in a manner that minimizes disputes and protects the inheritance from creditors, predators, and divorce. ” – Julie Welch
Seniors Face Medicare Cost Barrier for Cancer Meds
Are you currently suffering from cancer and/or are in recovery? If you are in recovery, are you sure it might now pop up again? What if it does or you are currently suffering from cancer and you go to the pharmacy (with medicare coverage) and you find out the cost of your prescription for chemotheraphy pills is more than you make? Please take a look at the following article.
Chemotherapy is now available in a pill, but if you have Medicare, you may not be able to afford it.
That’s what happened to Rita Moore when she took her prescription for a medication to treat kidney cancer to her local drugstore. She was stunned when the pharmacist told her a month’s supply of the pills would cost $2,400, more than she makes.
In 1986, Gary Brinson, L. Randolph Hood and Gilbert Beebower conducted a study that showed asset allocation can account for as much as 90% of a portfolio’s total return. Roger Ibbotson and Paul Kaplan followed up this study in 2001 and confirmed a similar number. This article touches on an area of your 401k you may want to spend a little time with… – Daniel S. Romero, CFP®, AIF®, CFS
If you’re already contributing as much as you can to your 401(k), the next step toward maximizing your retirement savings is to get the right asset allocation.
Having a mix of investments from various asset classes such as stocks, bonds and cash spreads the risks around, reducing the volatility of your portfolio. But the exact mix depends on how many years you have left before you retire to grow your portfolio and how much volatility you can stomach in the meantime.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All indicies are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in mutual funds involves risk, including possible loss of principal. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. LPL Tracking #602008
Cost-Basis Reporting Changes Portend ‘Messy’ Tax Season Ahead
Be prepared! If you’re a serial “tax procrastinator”, this might be a good year to change gears and tackle things early. New reporting criteria for cost-basis could throw a wrench in the mix for your tax preparer. This article touches on the reporting changes that are coming… – Dan Romero, CFP®, AIF®, CFS
“With new cost-basis reporting requirements in effect for the 2011 tax year, Charles Schwab is warning investment advisors to brace for a hectic tax season and prepare for a flood of questions from clients who for the first time will receive a revised 1099-B form packed with new transaction information.”
There has been a lot of negative press about Long Term Care Insurance Carriers hiking up the price of their insurance plans or even removing themselves from this market. Many people are afraid to purchase these types of plans due to the above (OR they may flat out be insurable). However, the need for Long Term Care Insurance is NOT going away and it’s still as important as ever to maintain your retirement goals and plans. Take a look at the following article to find alternatives to the typical long term care plan.
“In the aftermath of well-publicized premium hikes for long-term-care insurance and the departure of some key insurers from the market, many consumers are skittish about buying coverage. But the need for protection isn’t going away. The median cost of one year in a private room at a nursing home topped $77,000 in 2011, according to a recent survey by Genworth, and the cost is increasing at a rate of about 5% per year. Round-the-clock home care runs even more. ” – Kimberly Lankford
CLICK HERE to read complete article from Kiplingers.
Benefits are guaranteed by the claims paying ability and financial stability of the issuing insurance company. Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments taxable as oridnary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing compnay. Withdrawals made prior to age 59 1/2 are subject to a 10% IRS penalty tax and surrender charges may apply. LPL Tracking #602008
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