Warren Buffet Playing The Derivatives Game!

Famed financial investor Warren Buffet who operates Berkshire Hathaway Inc. has struggled to comply with SEC financial disclosure requirements.

The SEC has demanded more information about recent write-downs.  Currently, Berkshire Hathaway Inc. operates over 80 companies collectively holding more than $136 billion in stocks, bonds and cash.  Berkshire ended June with $8.23 billion of unrealized losses and $37.48 billion of potential liabilities on equity index contracts.

Is your current financial advisor conducting similar practices?  It may be time to ask for the disclosure you have neglected to ask for in the past.

Warren Buffet expects these contracts to rebound and says these contracts are unlike the derivatives that helped create the recent global financial meltdown.  Is the world’s most famous financial straight-shooter – who is uniquely positioned to lobby for better public policy — spending his substantial political capital defending his own holdings?  Time will tell…

 
NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

A chance to take control of the employer sponsored retirement account you left behind!

With Americans changing jobs every 2-4 years it presents an opportunity to revisit and consolidate retirement account assets i.e. 401K, 403B, Simple IRA and Defined Benefit plans. Without formal instruction given to the previous employer, retirement accounts are often left in the pre-existing status with no proactive advice from the employer or financial advisor.  This can make account maintenance and investing cumbersome.  Once a change of employment occurs the opportunity to Take It, Roll It or Leave It comes alive!  This is your chance to take full authority of retirement account assets.

Take It:
By taking it a request is made by account owners to the previous employer for full liquidation and distribution of assets held in the retirement account.

Formal documentation, called distribution paperwork, will require the owner’s consent (signature) to pay the appropriate federal and state income taxes. Additionally, if the assets are distributed prior to the age of 59 ½ a 10% pre-mature withdrawal penalty is assessed. The bottom line: taxes combined with penalties significantly reduce the net amount received!  Use this option as a last resort for accessing money.  If forced to use this option try to make the distribution during a year in which you will be in a lower tax bracket softening the blow.

Roll It:
For those who want to maintain the tax advantages of the existing retirement account, roll the old retirement plan assets into a Self-Directed IRA with the help of a qualified financial advisor or into a retirement plan sponsored by your new employer.

Formal documentation, called distribution paperwork is required to make this transaction possible. However, some plan administrators recently have allowed telephone and/or internet directed rollovers. If it matters, check to see if there is an option to roll assets “like-kind” or in cash. “Like-Kind” allows previously held investments to transfer without change into the new investment firm (“The Custodian”).  Usually, like-kind transfers are available when rolling into a Self-Directed IRA account. Double check with the outgoing and receiving custodians prior to this type of transaction to make sure it is possible. Cash rollovers are the most common, especially, for those rolling into a new retirement plan. For the most efficient rollover, first open the new Self-Directed IRA or Retirement Plan account and then request the rollover from the old plan. Rollovers to Self-Directed IRAs allow investors the widest range of investments and an opportunity to work with their financial advisor. 

Leave It:
Let the existing plan assets stay where they are and do nothing — if the old plan had everything you needed; including a wide array of investments, good service and acceptable performance. In some cases, smaller account balances (<$5,000) can be forced out of the plan.  Considering that employers change plan administrators and investment menus often – ”doing nothing” can become a real challenge if you need to track down the account sometime in the future.  Don’t expect the firm who previously handled the plan to still be there.

Find a knowledgeable investment advisor or financial advisor to help consolidate retirement accounts into one concise account. This will streamline investment activity, help reduce expenses, reduce account maintenance and ease the ability to monitor investment performance.

Remember to keep primary and contingent beneficiary designations (who the $ goes to if you pass away) updated no matter what you decide!

Find 401K to IRA Rollover Advisors

What Is Full Disclosure?

Bernard Madoff, yet another reason to know more about your financial advisor. 

Mr. Madoff’s previous experience as Chairman of the NASDAQ combined with posting unusually high investment returns helped his investment firm garner unwavering faith by many investors. In fact, it became “bragging rights” to say, “My money is with Madoff” a club-like experience. The Madoff portfolio was treated as a “sacred cow” by many investors who neglected to investigate the investment strategy because they were making money and were told he can be trusted.

As the world’s largest Ponzi scheme began to unravel it became evident his investors neglected to ask pertinent questions of Mr. Madoff and his firm. Several simple questions can be asked of your advisor and the firm he/she represents to prevent getting blindsided by a Madoff like event.

When signing the necessary paperwork to open your account, ask if your advisor if he/she has authority to make withdrawals from your account for anything other than fees. Make sure you see it in writing!

Ask the advisor who has custody of your money? Is the custodian the investment firm you are personally working with or a larger third party financial institution. A large third party institution helps create an arms length distance between your money and the advisory firm. Should anything seem weird with the advisory firm you can call the third party financial institution to inquire.

Transparency, Reporting and Liquidity are three other vital factors.

You need to be aware of what exactly is being held in your account, when statements are scheduled to be sent to you and how long does it take to sell-off the entire account in the event of an emergency.

An honest advisor should be happy to review all of this information with you upon your request. It is very easy to focus on other things and get distracted from the basics. Armed with answers to these questions you should be able to make an informed decision that will let you sleep at night.

We hope you find the best financial advisor or financial planning firm for your needs.

What Makes A Quality Financial Advisor:

Financial Advisors have varied experiences, education, and specializations.  Finding the right financial planning firm and/or financial advisor takes the right research.  It takes trust in the source.

We have selected only the top financial planning professionals in the U.S. with which to work.  The Financial Advisors in our directory are all independent, Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

Our financial advisors take fiduciary oaths and pledge to uphold the highest standard of ethics.  Many of the financial planners within our directory explain how their financial planning process works within their profiles.  After reviewing their profile pages, you can request a fee schedule, more detailed information and/or a meeting. 

Many of our advisors are members of the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning) and the Financial Planning Association (FPA).

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