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Financial Counsel Blog

im Eccleston is proud to present his new blog, including downloadable podcasts that you can listen to anytime! Make sure to drop a line to Jim in the comments section and keep the discussion going.
(Click here for more....)

The Million-Dollar Estate & LLCs, Bankruptcy, Trusts

he million-dollar estate is under attack. A divorce, a mishap, a period of unemployment, bad health, high mortgage payments, debts, a lawsuit-any number of scenarios can trigger a downward spiral. Tragically, a nice $1-million estate is at risk of never reaching the next generation of beneficiaries. (Click here for more....)

SIFMA Research Report

e are pleased to present the latest Securities Industry and Financial Markets Association (SIFMA) Research Report. In this month's issue you will find interesting and useful information on:

Research Quarterly

(Click here to read this month's issue)

(Reprinted by permission of the publisher, Securities Industry and Financial Markets Association, www.sifma.org, Copyright© 2009 Securities Industry and Financial Markets Association, ISSN 1532-6667.)

Delegation for Plan Sponsors (Part 3)

his month I'll describe in some detail how it's possible to insulate the sponsor of a qualified retirement plan such as a 401(k) plan--the "sponsor" actually being represented collectively by real flesh and blood humans who serve as trustees and other named and functional fiduciaries of the plan--from virtually all day-to-day fiduciary investment risk as well as operational/administrative risk to which they would otherwise be subject in the act of sponsoring the plan. (Click here for more....)

Delegation for Plan Sponsors (Part 2)

n last month's column, I noted that sponsors of qualified retirement plans such as 401(k) plans can delegate their day-to-day administrative and investment fiduciary responsibilities (and associated liabilities) to others. This has been allowed by the Employee Retirement Income Security Act since its inception in 1974. (Click here for more....)

SEC Chairman Mary Schapiro Outlines Improvements to Investor Protection and Market Integrity

hairman Mary Schapiro recently testified before the Senate Subcommittee on Financial Services and General Government on the ways in which the Securities and Exchange Commission (SEC) is seeking to restore investor confidence. Her remarks come at a time when both investor protection and market integrity need substantial improvement. Let's highlight the key areas that the SEC is focusing upon. (Click here for more....)

Choosing a Target Date Fund Index

nlike the dozens of U.S. stock indexes, there are only four target date fund indexes. Dow Jones introduced their indexes first, in April 2005. Then our firm, Target Date Analytics (TDA), introduced its indexes in October 2007. Plan Sponsor magazine adopted the TDA indexes in August of 2008 and re-branded them as the PLANSPONSOR On Target Indexes (OTI). Then Standard & Poor’s launched their indexes in late 2008 followed in early 2009 by Morningstar with their Lifetime Allocation Indexes. (Click here for more....)

Discounts for Lack of Marketability

VR's Guide to Discounts for Lack of Marketability ("DLOM" or "marketability discounts") (updated through the first quarter 2008), provides an assemblage of multiple views of DLOM, and how they apply to the business valuation profession. The contents are updated annually, providing new court cases and analytical tools for the valuation of both public and private companies. (Click here for more....)

SEC's Sanction Against Royal Alliance For Failure to Detect Adviser's Ponzi Scheme Provides Valuable Lessons to Investors and Advisers

he SEC (Securities and Exchange Commission) has censured Royal Alliance Associates, Inc. and fined it $500,000 due to its failure to supervise one of its former advisers, David McMillan. From at least January, 1999 until December, 2004, McMillan was able to operate a Ponzi scheme and defraud no less than 28 investors "by lying about purchases and sales of securities, by misappropriating funds for his personal use, and by sending certain investors falsified statements relating to their investment accounts." Let's review how McMillan perpetrated this fraud and why the SEC severely has sanctioned Royal Alliance for failing to prevent and/or detect it. (Click here for more....)

A Handicap of the Investment Performance Horserace

he first quarter of 2009 performance results are in, and growth beat value on an absolute basis but value managers clobbered growth managers on a relative basis according to Morningstar and the like. Something is wrong with this picture, but not to worry: it will certainly change. The last time I told this story the situation was reversed, with value outperforming growth, but value managers underperforming their indexes. See “In the Land Where Value Investing is King, Value Managers Masquerade as Court Jesters” in the September 2007 issue of the Journal of Financial Service Professionals. (Click here for more....)

Delegation for Plan Sponsors

here is a widespread misconception even among many otherwise well-informed employee benefits attorneys that sponsors of qualified retirement plans such as 401(k) plans cannot delegate their day-to-day administrative and investment fiduciary responsibilities and liabilities to others. (Click here for more....)

Investment Advisers Put On Notice Of Current SEC Compliance Concerns

ecently, Lori Richards of the Securities Exchange Commission notified investment advisers of the SEC's current compliance concerns. In a speech entitled, "Compliance in Today's Environment: Step Up to the Challenge", the director of the SEC's Office of Compliance Inspections and Examinations urged investment advisers to "take a fresh look" at four compliance risks. Let's examine those four compliance risks. (Click here for more....)

Seeing Risk Ahead: Have Investors Accurately Modeled the Risks They Take? Is that Even Possible?

iversification is supposed to help manage total portfolio risk. If you have a diversified portfolio and one asset takes a huge loss, odds are the other assets will not follow in lockstep. Thus, the total portfolio will see muted losses compared with any single asset. (Click here for more....)

Life Insurance Options for Tough Times

ow can one reduce insurance premiums when cash flow is tight in these tough times? Our columnist examines four common types of coverage — term, universal, life, whole life, and variable universal life — and suggests ways to ways to minimize their economic impact. (Click here for more....)

Freeze, Squeeze & Burn Trusts

nd now for something completely different. A super-charged multi-tasking trust that utilizes readily available techniques and turns them into a totally innovative and effective arrangement. Estate-planning iconoclast Richard Oshins, key founder of the Inheritor's TrustTM concept, has taken this concept to another level and estate planning may never be the same. His new approach: A beneficiary defective inheritor's trust. (Click here for more....)

Reallocation Versus Rebalancing

he allocation of many portfolios has changed as a result of significant movements in financial markets, especially over the last six months. Given this broad disarray in financial markets, advisors might find a brief discussion about the difference between (1) rebalancing a portfolio's current asset allocation and (2) outright changing a portfolio's target asset allocation to be of interest. (Click here for more....)

Financial Advisers in Employment Transition; A Primer on the Protocol

n 2004, three financial services firms devised a way to ease the transition of financial advisers from one firm to another. The three firms - Citigroup Global Markets (Smith Barney), Merrill Lynch, and UBS Financial Services - signed an agreement called the Protocol for Broker Recruiting (the "Protocol"). Since then, at least 75 financial services firms have signed the Protocol. The result has been a profound increase in the number of transitions and an equally profound decrease in the number of T.R.O. litigation filings! (Click here for more....)

Transfer Time - When Decoding B/D Transfer Options, Don’t Focus on the Money

or advisors pondering a move from a wirehouse to an independent broker/dealer with visions of large, forgivable transition loans dancing in their heads, it's time for a reality check. That's because, as an esteemed economist famously said, there's no such thing as a free lunch! With reps at independent B/D reps earning 90% payouts, independent firms have much smaller margins to work with than do their wirehouse counterparts. (Click here for more....)

Prudent 72(t) Retirement Planning Requires More Than Just Wishful Thinking

dvisers, and their clients, have been warned about "early retirement investment pitches that promise too much." A FINRA Investor Alert has cautioned employees to "look before you leave", and two well-publicized regulatory actions have highlighted problems with misleading sales practices and ineffective supervision. Let's review the warnings, and provide guidance to advisers on how best to stay clear of trouble. (Click here for more....)