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Financial planner Archives -

A Confession from a Successful Investment Advisor

By | 2017, Executive Message, Money Moxie, Newsletter | No Comments

Dear Friends and Financial Partners!

That’s quite a headline, “A Confession from a Successful Investment Advisor.” Here’s the confession:

The truth is astonishingly simple, “If we’ve been at all successful, it’s because you, our clients, have been successful. Our success only comes through your success.” Since June 4, 1982, when we became a Registered Investment Advisor, we have always strived to put your best financial interest first.

Over the years, many clients have shared with us how we helped them send their children through college or on missions, retire early, or live comfortably during their declining years. They have told us how our financial planning and investment management have allowed them to maintain lifestyle, travel, and handle life’s major medical expenses.

As a fiduciary, we strive to put ourselves in your shoes, endeavoring to give you the best advice based on our professional financial knowledge. So thank you, thank you for trusting us with your financial concerns and assets.

We are grateful to be your financial and investment advisor. By far the most gratifying—not just satisfying—part of our job is seeing you reach your financial goals throughout your lifetime.

Bullish Best Wishes,

Roger M. Smedley, CFP®

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Why You Should Care About The Fiduciary Standard

By | 2016, Money Moxie, Newsletter | No Comments

There has been a great deal of media attention surrounding the Department of Labor’s (DOL) recent ruling regarding the “Fiduciary Standard,” and with good reason. Tony Robbins, self-help author and motivational speaker, recently asked random people walking down Wall Street, “What is a fiduciary?” With the exception of one individual, the answer was, “I don’t know.”

This made me wonder – Do our clients understand the benefits of working with a fiduciary?

When Smedley Financial Services, Inc.® began back in 1982 as a registered investment advisor, we became a fiduciary. We have always believed that putting our clients’ interests before our own is the best way to create a lasting partnership with the people we serve.

fiduciary standard

What is the Fiduciary Standard?
The Fiduciary Standard requires that we avoid conflicts of interest. Our recommendations must meet your needs and be in your best interest.

In contrast, financial professionals such as brokers, insurance salespersons, and other advisors operating under the “suitability standard” are merely required to ensure an investment is suitable for a client when purchased. There is little obligation to offer a better investment nor a requirement to monitor those investments in the future.

Why the big concern?
As company pension plans have diminished, Americans now must set aside more of their income to help supplement their own retirement income. This can be a daunting, time consuming task.

At the same time, the retirement investment landscape has only grown more complicated. Lack of investor savvy and awareness regarding retirement account types, not to mention the emerging number of investments available within those accounts, has led investors to rely on the counsel of professionals.

Unfortunately, not all professionals are alike. The new DOL rule seeks to level the playing field, requiring all financial professionals to follow the new Fiduciary Standard. Isn’t it sad that a law must be put in place forcing financial professionals to do the right thing?

Will the rule protect investors?
The new DOL rule will require more work for financial professionals, but hopefully it will also protect investors saving for retirement.

The DOL also states that cheaper is not always better. Price cannot be the only determining factor when making a decision, especially one as important as your financial future.

Consider what you are getting for the fee you are paying. Does your fee include an advisor that will help you determine your financial goals, prioritize those goals, and design a plan to help reach your goals? Will you get ongoing monitoring of your goals and the investments you are making? What if something changes? Who will be there to help address the changes in your life that may impact your financial destiny? What will happen during periods of increased market volatility and who will help you determine if your investments are too aggressive or too conservative?

These are just a few of the concerns that must be considered, but are often overlooked when the primary focus is having lower fees.

You are our primary concern. We invite you to call or come in and sit down with us anytime you have questions. We welcome your call.

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You Need a Wealth Manager—Now More Than Ever

By | 2015, Executive Message, Money Moxie | No Comments

Dear Valued Financial Partners and Friends,

Now more than ever, most people need a Wealth Manager. While financial conditions are constantly changing, your own financial goals do not. Remember our two guiding principles: “Protect what you have. Then seek to acquire more.” As your Wealth Manager, here are some of the roles Smedley Financial can play for you.

Financial Bodyguard: As your financial bodyguard, we can help protect what you have acquired. Our goal is to prevent clients from making serious and costly financial mistakes. We can serve as a devil’s advocate and sounding board, thus helping you through the process of making wise financial choices.

Financial GPS: With respect to your personal financial goals, you always need to know where you are. As an integral part of your financial GPS system, we can let you know whether or not you are on track.

Financial Lighthouse: You need to know you are headed in the right direction, particularly at difficult times. We can help you maintain a proper course through good times and bad. Naturally, this includes not only bull and bear stock markets, but through your sunny days and, more importantly, through your rainy days and dark nights.

Experienced Guide: With respect to the thousands of financial decisions made during your lifetime, you need an experienced team of certified investment professionals to serve as your guide. While some financial decisions may be changed as circumstances and opportunities present themselves, some financial decisions may be made only once. We can help guide you through the jungle of important financial decisions in your life.

Risk Barometer: With respect to risk management, you need to know when to take risk and how much risk to take. Both of these points are equally important. As your risk barometer or gauge, we help you determine the type and amount of risk you need and want to take. Investment management is all about minimizing your risk taking.

At Smedley Financial, we can play multiple roles for you in our role as your Wealth Manager. Remember, your financial success is our passion!

Bullish Best Wishes,

Roger M. Smedley, CFP®

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Comfortable Versus Competent

By | 2015, Executive Message, Money Moxie, Newsletter | No Comments

Dear Valued Financial Partners and Friends,

It’s one thing to feel comfortable making financial decisions before and during retirement. It’s quite another to be financially competent during those same time periods.

Working with retirement dollars just before and during retirement may be successfully compared to hypothermia. In the final stages of hypothermia people often feel calm and comfortable. Quoting from the Mayo Clinic’s official website, “Someone with hypothermia usually isn’t aware of his or her condition because the symptoms often begin gradually. Also, the confused thinking associated with hypothermia prevents self-awareness. The confused thinking can also lead to risk-taking behavior.” People making it to retirement may share a similar state of mind.

Spending-down assets may seem easy, but financial decisions made before withdrawing even $1 from retirement accounts or signing employer or Social Security forms may well determine how long your money will last. (Neither Social Security’s nor your employer’s representatives will have all the facts about your total financial picture.)

We could share dozens of stories about costly financial mistakes and risks that didn’t need to be taken. In retrospect, many of those financial decisions affected both the husband and the wife. Ultimately, most of those uninformed decisions had the greatest impact on the quality of life of the surviving spouse. Here are other areas of concern.

Overconfidence: Just like entitlement is the first step in theft or fraud, overconfidence usually leads to unwise financial decisions. Retirement decisions are often a one-time-only proposition, without a chance for a do-over. Retirement planning can be complex and many things can go wrong. Our experience may help eliminate or reduce these costly decisions.

Enamorment: You have worked hard to build your retirement nest egg, but may have never worked with the size of the dollars in your nest egg. Enamorment with those very dollars could lead to your financial downfall. Even if your dollars have reached a critical mass that will sustain your lifestyle, beware! We all know of lottery winners, professional athletes, and others who have earned or inherited millions of dollars only to have that money gone in just a few years.

Too many people make financial decisions based on their coworker’s or neighbor’s situation. We help you make financial decisions based on your unique financial situation. Our competence can help you feel comfortable and confident. Let us help you. Remember, your financial success is our passion!

Bullish Best Wishes,

Roger M. Smedley, CFP®

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Financial Four-Letter Words

By | 2015, Newsletter | No Comments

There are some four-letter words that cause parents and financial advisors to cringe. Unfortunately, you may have been exposed to these words and had to cover your ears so you did not have to hear the profane language.

At the risk of damaging your sensitive ears or eyes, I will share with you some sentences and/or scenarios where those words might be used and how you can combat them with positive four-letter words.

Picture this: A young couple just moved into a brand new home in your neighborhood that seems to put all of the other homes to shame. Not only that, but there is a new boat parked behind a new truck on the RV pad. You wonder how in the world these young people can afford to live like this. This four-letter word is called “debt” and often goes along with “shop.” The truth is that many of these people can’t afford to live like that for long.


Many in the young generation believe they can have everything now and they don’t have to work for years to accumulate wealth like their parents did. Unfortunately, there are many established adults that have fallen into the same debt trap. As they near retirement, they still have a large mortgage, car payments, and worst of all, credit card debt.

To combat this, we need to introduce two positive four-letter words, “work” and “save.” Many young people believe that “work” is a bad four-letter word, but they are wrong. As Colin Powell said, “A dream doesn’t become reality through magic; it takes sweat, determination, and hard work.”1 Both young and established can learn to “save” rather than spend. It isn’t always easy to set money aside, especially when others around you may seem to have so much. Just remember that you should “live like no one else, so later you can live like no one else.”2

A four-letter word often muttered in frustration by parents is “kids!” This word often makes financial planners frustrated as well, especially when parents put their own retirement at risk in order to help “kids” out.

In the early years, parents may fail to put contributions into their retirement plans because they are taking care of their “kids.” In later years, parents may take out too much money from their savings to help their “kids” out.

To save parents from their kids, the parents must create a “plan” and learn to stick to it. In the early years, stay dedicated to saving your money in your “401k” or “Roth” IRA. Use the opportunity to teach your kids about saving and planning.

In the later years, learn to “give” responsibly. Allowing your kids to struggle can be highly beneficial. You don’t need to help them out of every tight jam or it might teach them learned helplessness.3

One big four-letter word that people seem to ignore during good times is “risk.” Most people want to get a good return, but “only when the tide goes out do you discover who’s been swimming naked.”4 We have seen too many people get caught by a “scam” and “lose” their shirt because they ignored the warning signs.

Be sure to take a balanced approach with your investments based on a solid “plan.” Some of your investments can be on the riskier side, but you should always have some money with less “risk.”
Now, wash your mouth out with soap and stop saying the bad four-letter words. To feel financially prepared, focus on the good four-letter words: work, save, 401k, Roth, give, and plan.

  1. http://inspirationfeed.com/inspiration/quotes-inspiration/100-inspirational-quotes-about-hard-work
  2. http://www.debtfreeadventure.com/live-like-no-one-else
  3. http://www.empoweringparents.com/Learned-Helplessness-Are-You-Doing-Too-Much-for-Your-Child.php
  4. http://www.brainyquote.com/quotes/quotes/w/warrenbuff383933.html
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Don’t Self-sabotage Your Investments

By | 2015, Executive Message | No Comments

Dear Valued Financial Partners and Friends,

In the January-February 2015 issue of Money Moxie®, I addressed how Black Swan Events will—at some unpredictable point—affect your investments. The bottom line was, while Black Swan Events are unpredictable, you must control your reactions to these non-controllable events. Now, I would like to talk to you frankly about common ways we have seen some very smart people self-sabotage their own investments.

“I got out of the stock market during the drop, but I never got back in.” Or, alternatively, “I simply didn’t know when to get back in the market. No one rang a bell.”

“I repeatedly told my advisor to keep me in cash throughout the year because of market uncertainty.” (The reality: This individual missed out when the market went higher.)

“The stock market’s going to drop to such and such a point, then I’ll get back in.” (The reality: The stock market never fell to the point predicted and kept going up.)

Defensive reasoning or self-justification are other names for committing financial self-sabotage. Often people, some very smart people, are their own worst financial enemies because of egos, i.e. trying to be smarter than the market.

We have had prospective clients bring their investment statements to us to compare and what is surprising to these people is how staying invested trumps their own trading decisions. (Of course, there are no guarantees or promises of past performance being repeated.)

When worried about Black Swan Events, don’t let your emotions get in the way of making money. Don’t let fear ruin your retirement. Instead, talk to one of our wealth advisors. We have the time, financial talent, and financial training to help you prepare for and navigate through difficult times.

Bullish Best Wishes,

Roger M. Smedley, CFP®

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Black Swan Events & Your Investments

By | 2015, Executive Message, Money Moxie, Newsletter | No Comments

Dear Valued Financial Partners and Friends,

Black Swan Events are events that are unexpected and unprecedented. They are rare and have an extreme impact when they occur. The concept of a Black Swan Event was popularized in Nassim Nicholas Taleb’s book, “The Black Swan: The Impact of the Highly Improbable” (Penguin, 2008).

Some modern day Black Swan Events include the sudden outbreak of World War I, the surprise attack on Pearl Harbor in December 1941, and the sudden terrorist attacks in the United States in September 2001.

Shortly after September 11, 2001, I attended a financial presentation where the instructor had prepared two charts and adjusted them to the same scale. The first chart was the S&P 500 Stock Index in the days just before and immediately following the surprise military strike at Pearl Harbor on Saturday, December 7, 1941. In my mind the instructor’s graph documented and encapsulated the general public’s human, sell-off reaction to this Black Swan Event as evidenced by the size of the stock market drop.

The second chart was the S&P 500 Stock Index in the days immediately surrounding the surprise terrorist attacks on Tuesday, September 11, 2001. Again, this second chart depicted our human, sell-off reaction to another rare, but major Black Swan Event by the size of the stock-market drop.

Now the magic! Remembering both charts were adjusted to the same scale, when superimposed, the two charts became indistinguishable! In 2001, our sell-off reaction, our human behavior was, for all practical purposes, identical to that of our predecessors—some 60 years earlier—by dropping approximately the same percentage.

The bottom line: No one knows when the next Black Swan Event will occur. Whether man-made or not, Black Swan Events will continue. Earl Nightingale stated in his book, The Essence of Success,“Only eight percent of your worries are worth concerning yourself about. Ninety-two percent are pure fog with no substance at all.”

Black Swan Events will inevitably happen in the future. The challenge is to stay invested so that you don’t miss out on market opportunities. Don’t allow your personal emotions to keep you from reaching your long-term goals.

Bullish Best Wishes,

Roger M. Smedley, CFP®

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Need Help Allocating Your 401(k)?

By | 2014, Money Moxie, Newsletter | No Comments

One of the most common questions we get at SFS is “How should I invest my 401(k)?” This is a critical question, especially considering that 18% of retirement assets are tied up in these accounts (source: Investment Company Institute). Managing your 401(k) may be the most important place to place your financial focus after managing your spending.

First things first—start saving now. Starting early is the best way to get compounding rates of return to work in your favor. Remember, Albert Einstein called compounding rates of return the “8th wonder of the world.”

Next, take advantage of free money by getting the full match your employer offers. Not all 401(k) plans include a match, but if yours does, then make sure you get the full benefit. The rate at which you save is far more important than the rate of return you get. So, keep saving for the future.

Now let’s get into the investing nitty-gritty. Every person must decide how much risk to take in his or her savings. Your risk tolerance should be based on your ability, willingness, and possibly your need to take risk. It will be different than that of your friends and coworkers. It may even be different than that of your spouse.

Your ability to take risk includes factors like your overall financial situation and your time horizon. The more savings you have, the more risk you can take. The longer you plan to invest, the more risk you can take. Why? Your chances of positive returns in stocks go up the longer you invest.

Willingness to take risk is more difficult to determine. The essential question is how well will you be able to handle a drop in the value of your investments? If you view a fall in the stock market as an opportunity to buy more then you may have a high tolerance for risk.

When it comes to picking investments, the easiest route is to find an investment that approximates your retirement date. These all-in-one solutions provide some diversification. While diversification is far from a guarantee, it is still a good way to help manage risk. The pitfall of the retirement date choices is that these don’t take into account your personal situation (health, income, assets, debt, etc.) and they may not even disclose exactly how they are invested.

If you choose to select your own mix, be careful. Selecting the hottest performer last year can get you in a lot of trouble. Distributing your account balance evenly into each option is certainly not the way to go either.

This is where a little research and help from a professional can help. Give us a call. We can help you navigate the 401(k) maze.

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9 Ways to Reduce Taxable Income This Year

By | 2014, Money Moxie | No Comments

It is hard to believe 2014 is swiftly drawing to a close. At this point, what can you do to better manage your taxes? Here are several ideas you can consider:

9 Ways to Reduce Taxable Income

Maximize retirement contributions.
All contributions to your traditional 401(k) or other tax deferred retirement accounts are made before taxes are calculated. This means that if you make a maximum $17,500 contribution to a 401(k) your taxable income is reduced by $17,500. So, why not pay yourself rather than Uncle Sam? Generally speaking, you can modify your contributions at any time during the year, but check with your benefits office to be sure of your plan’s rules.

Harvest tax losses.
After several years of market growth you may want to lock in some of your investment gains. The downside is you will also trigger a tax on any growth over your initial investment. Consider dumping some of your portfolio losers. This will allow you to offset your taxable gains with losses resulting in a zero tax bill if the numbers are the same. Keep in mind you can only offset long-term gains with long-term losses. The same applies to short-term gains and losses. We can help you identify any tax harvesting opportunities in your portfolio.

Defer income.
If you have control over when you will receive income, consider deferring some of your income until next year. This generally applies to those earning commissions, bonuses, consulting fees, or self-employment income. A quick exercise to determine where you are tax-wise and how much income should be deferred to prevent you from hitting the next marginal tax bracket is recommended. This can be done by consulting with your tax professional. Some programs such as Turbo Tax allow you to run a pro-forma tax filing to get an idea of where you stand.

Make up tax shortfalls.
If you have not paid enough withholding or estimated tax throughout the year, there is still time make up the difference before the year ends. Increasing your tax withholding or making an estimated tax payment will help avoid any underpayment penalties.

Bunch itemized deductions.
Retirement brings with it some unexpected tax situations. For many there are not enough deductions each year to itemize on Schedule A of the tax return, in effect minimizing any tax advantages. By bunching deductions every other year, you can itemize one year and take the standard deduction the next year. This could be applied by prepaying state taxes every other year, making charitable donations every other year, moving up or pushing back a non-urgent medical procedure, and much more. Your tax professional can share ideas that fit your specific situation.

Make stock donations.
If you have held taxable investments for more than a year and they have increased in value, you can donate the stock directly to a qualifying charity. This avoids any capital gains you may owe on the growth of your investment. Nevertheless, you can still itemize the full value of the donation. Even better, the receiving charity pays no tax on the gift. You are then free to invest the cash you would have donated, creating the opportunity for future stock donations.

Be generous to charities.
Gifting cash to a qualified charitable organization also has tax perks. You can deduct the cash donation on Schedule A when you file your return. (Be sure to keep receipts for all cash donations.) You also get the benefit of helping others, while this may be a completely intangible outcome; the good feeling of making a difference in the world goes well beyond any tax advantages.

Maximize gift tax exclusions.
If your estate is growing considerably, you may want to gift something to your children and grandchildren while you can watch them enjoy the gift. You can give $14,000 annually to as many people as you wish. Neither you nor the happy recipients will pay gift taxes or estate taxes. If you are married your spouse can gift the same amount. Get double tax benefits by gifting appreciated stock and avoiding the capital gains taxes. The capital gains basis will transfer to the recipient, who is most likely in a lower tax bracket.

Schedule a financial checkup.
Throughout the year there may have been changes to your personal situation. This is a good time to review beneficiary designations, retirement plan contributions, estate planning options, and investment strategies. Your advisor can make you aware of and help you take full advantage of a wide range of planning opportunities.

For more information and ideas on how to maximize year-end planning opportunities, contact one of our wealth management consultants or your tax professional. Don’t wait too long; there is a deadline for getting everything finalized and some of our suggestions take time.

*Securities America and its representatives do not provide tax advice; therefore it is important to coordinate with your tax advisor regarding your specific situation.
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Fraud Alert: Email Scam

By | 2014, Money Moxie, Newsletter | No Comments

Hopefully everyone knows not to reply to an email sent by a “Nigerian prince.” However, criminals are becoming more sophisticated in their tactics. We recently learned of a new email scam during a national conference we attended. The reality of this scam was driven home when one of our own clients was hacked.

One day as I was sitting at my desk, I received an email from a client with whom I had spoken recently. The email said, “Are you in office?” As I was on the phone at the time, I replied I would call as soon as I was done with a call.

The response came, “We are currently out of town, we are here in Mexico and our cell phone is not working here , kindly email available accounts balances as of today.” (Hopefully, you noticed some of the grammar and punctuation mistakes as I did.)

What we had learned in our conference is that the new scam starts by hacking into an email by figuring out the password. Then the crook patiently finds out as much personal information as he can, including names, dates of birth, financial information, etc. Next, the crook will pose as the individual and try to make connections with the individual’s contacts (in this case, me). With so much information about the individual sometimes access is gained to a bank, credit card, or other financial account.

Dollar Sinking In The Sea

Our policy is to never send personal information via email, which inherently is unsecure. For that same reason we won’t accept trade requests via email.

When the email seemed to be fishy, I left a message for the client and waited until she contacted me. The client was indeed on vacation . . . , but not in Mexico. It is likely that the criminal knew she would be on vacation and waited for that moment to make a move.

Thankfully, none of the client’s financial accounts were compromised. However, the episode cost the clients an enormous amount of time and worry.

What lessons can be learned from this?

1. Use strong passwords and change them frequently.

2. Protect your computer. Make sure you have antivirus protection and that you have updated it recently.

3. Encrypt your wireless router by using a WPA key, or password, that will impede hackers using network sniffers.

4. Don’t give your passwords to others. (No one should ever ask.) If you aren’t sure you can trust the emailer/caller, don’t give them any personal information. Find the contact information through an independent source and contact the company that way.

5. Don’t be fooled by emails. Many scammers will send you an email that looks legitimate, but when you click on the link it will download a virus to your computer. Don’t click on any links if you haven’t subscribed to a service from that provider.

6. Limit online purchases and remember that even brick and mortar retailers can have their customer information breached.

If you do make purchases online use credit cards, which typically have fraud protection. If you are compromised the credit card company will usually write-off all of those charges. Debit cards allow thieves to take your money.

In this digital age, cybersecurity is increasingly important. Take a step towards protecting your personal and financial information by first protecting your email.

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