First off, we are revamping our website and these updates along with other posts are going on our blog going forward. We also have an online booking tool if you want to schedule time with either Jason or Chris. We plan to continue adding more features that are helpful for clients and potential clients.
We are very excited to announce that both Jason and Chris have made significant progress in terms of obtaining our financial planning credentials. In July, Jason passed the CFP® Exam and as of September 1st became a fully credentialed CFP® professional. Chris has finished the coursework requirements necessary to take the exam and is scheduled to do so in November. We are always interested in applying our knowledge in this area for our clients, so please let us know if you would like some guidance or advice about any financial decisions you are considering. Here’s a short excerpt from the CFP Board website that describes what the CFP® designation is all about.
The CFP® marks identify those individuals who have met the rigorous experience and ethical requirements of the CFP Board, have successfully completed financial planning coursework and have passed the CFP® Certification Examination covering the following areas: the financial planning process, risk management, investments, tax planning and management, retirement and employee benefits, and estate planning. CFP® professionals also agree to meet ongoing continuing education requirements and to uphold CFP Board’s Code of Ethics and Professional Responsibility, Rules of Conduct and Financial Planning Practice Standards.
This year has been quite good for the stock market. Since the election last year, the U.S. stock market (S&P 500) is up 25%. International markets have had similar returns since last November with most of that coming in 2017 (year-to-date returns of 23%). The market euphoria has been due to a mix of earnings growth and expectations of future tax cuts.
Aggregate earnings for the S&P 500 are up 20% for the 12 months ending in June (most recent data) versus the prior year which is pushing the stock market up. Of course, earnings were down a similar amount in 2015, so earnings growth is close to zero since 2014. The other piece of the puzzle is an expectation that the Republicans will get tax cuts enacted for 2018.
Lower corporate taxes would increase earnings even more and would justify the increase in stock prices. Whether a lower tax rate will drive markets higher due to future expectations or cause a short-term drop due to pent up selling pressure is uncertain, but either way, in the long term corporate tax cuts are good for stocks. A failure to enact corporate tax cuts or watered-down tax reform will very likely cause the markets to drop, although how far they drop or for how long is again uncertain.
We are integrating this information and making the appropriate adjustments as necessary for our client portfolios. If you would like to talk about the market and how it may impact your portfolio we would love to hear from you.
The Department of Labor has a new ruling that expands the “investment advice fiduciary” definition in the Employee Retirement Income Security Act of 1974 (ERISA). If fully implemented, the basic outcome of the ruling is to elevate all financial professionals who provide retirement planning advice or manage retirement accounts for clients to the level of a fiduciary, bound legally and ethically to act in the client’s best interests. The purpose of the ruling is to get the rest of the industry to meet the standards RIAs and CFP® professionals like us have always held.
We consider this to be an crucial development for our industry. HarborLight Investments was legally established in a way that ensured we would always put the client's interests first. There are a shocking number of brokerage firms out there who still choose to operate with built-in conflicts of interest. Unfortunately, a common situation occurs where what is most profitable for the broker is not the best outcome for the client. For example, the firm gives the broker incentives to sell products that have higher fees and may or may not be what the client needs, simply because these products maximize profits for the firm. The fiduciary rule has faced headwinds from such firms and industry experts expect continued push back from the current administration. Here's the good news: there are firms like HarborLight who are already holding themselves to a fiduciary standard.
The ruling is being partially implemented in January and does come with some new hurdles in terms of compliance even for firms that are already holding themselves to a fiduciary standard. We are working on these things and don’t expect they will impact our client interaction in any noticeable way. You can find more information on the TD Ameritrade resource center.
Finally, our practical tips link for this update is a retirement planning checklist for married couples. If this brings up more questions than answers, well, that’s why we are here!
Five Retirement Questions For Couples
In December, we wrote about the yield curve and tariffs, and today the same topics are still in the financial headlines. At that time, we showed a chart of the yield curve and how it was ever so slightly inverted. Since then it has changed significantly, and we now have more evidence that the global economy could be on the verge of a recession.
Read This Article >Today we are writing about a personal finance topic that comes up regularly in various forms. Should we continue to rent or should we buy? When will the housing market come down? It’s so expensive!
Read This Article >There are many similarities between maintaining financial health and physical fitness. Both take work and consistency to maintain and it’s important to follow a plan. Some people are quite good at keeping physically fit and just include going to the gym or exercising as part of their daily routine.
Read This Article >
