Does Your Company Offer a Retirement Plan?

Marcos- cropped

Marcos A. Segrera, CFP® Senior Financial Advisor

One of the most discussed topics in the United States is retirement security. Few Americans have set aside sufficient savings to live comfortably throughout retirement. In fact, the most recent National Retirement Risk Index (NRRI) found

  • The retirement landscape is shifting dramatically, making the outlook for retiring Baby Boomers and Generation Xers far less sanguine than for current retirees;
  • 50 percent of households are at risk of not having enough to maintain their living standards in retirement;
  • Explicitly including health care in the Index further drives up the share of households at risk;
  • Saving more and working longer may substantially improve the outlook.

One of the easiest ways to save for retirement is through an employer’s plan. However, not everyone has the opportunity to do so.

You may not have realized it, but less than 10 percent of private sector companies offer pension plans, and just under 50 percent offer 401(k), or similar, retirement plans. As a result, a significant number of working Americans don’t have the opportunity to save for retirement through a workplace plan.

If you’re not sure whether your employer offers a plan, ask. If it does, gather as much information about the plan as possible. Here are a few questions to ask:

  1. What type of retirement plan is available? Some companies offer more than one type of retirement plan. If you work for a large company, you may have access to a pension plan or 401(k) plan. If you work for a smaller firm, you may have access to a SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account), SEP IRA (Simplified Employee Pension Individual Retirement Arrangement), or payroll-deduction IRA (Individual Retirement Account).

Make sure you know what plans are available and when you are eligible to participate. Your Human Resources (HR) team should have the information you need.

  1. Will your retirement income be taxable or tax-free? Your company’s 401(k) plan may allow different types of contributions. For instance, you may be able to make
  • Traditional contributions. These contributions are made before taxes, so they may help reduce taxes today. Taxes will not be owed on the money contributed and any earnings until money is distributed from the plan.
  • Roth contributions. These contributions are made with after-tax dollars, so there is no tax break today. However, contributions and any earnings are tax-free when you withdraw them, as long as the distributions are qualified. Withdrawals of contributions and earnings from a designated Roth 401(k) account are tax-free and penalty-free as long as the account is held for at least five (5) years and distributions are made at age 59.5 years or later, or because of disability or death.
  • Catch-up contributions. These contributions give all older Americans the opportunity to save more for retirement. For 2020, plan participants aged 50 years or older can contribute an additional $6,500 to a 401(k) plan each year.

It has been recommended Americans save 10–20 percent of their gross income for retirement. Though not everyone can save that much, it’s important to get started now, especially if your employer makes matching contributions.

  1. Does the company make a matching contribution? Some employers make matching contributions. The amount of the matching contribution varies from plan to plan. Regardless, it’s free money you receive simply for participating in the plan.

For instance, a company might contribute 50 cents for every dollar you contribute—up to 5 percent of pay. If a match is offered, try to contribute enough to receive the full match. Even if you can only save a small amount, receiving the employer match can increase that amount significantly.

Once you have gathered information about your plan, there are other questions you’ll need to answer, too:

  1. How much should I save? The answer is likely to be: as much as you can afford to save. Let’s face it. The future is unknown. There are a lot of variables to consider when planning for retirement. For example, no one can be certain
  • How long they will be able to work,
  • How long they will live,
  • How investment markets will perform,
  • What may happen between now and then.

As a result, it’s wise to save more rather than less. If you save more than you spend, that’s wonderful. The assets you leave behind can help your spouse/partner, children, grandchildren, or favorite charity.

Another way to approach the question of how much to save is to determine a replacement ratio. How much of your current income will you need to live comfortably each year in retirement? Once you have a figure in mind, you can determine how much to save today.

  1. How should I invest my savings? Once you’ve decided how much to save, you’ll need to determine how to invest your savings. Many workplace retirement plans offer diverse options such as stocks, bonds, and other investments. Each investment offers distinct risks and rewards.

Before you choose investments, decide how much risk you are comfortable taking. It may be wise to speak with your trusted advisor for help in determining what makes sense for you and your family.

If your employer offers a workplace retirement plan, count yourself fortunate and sign up. Don’t let uncertainty about how much to save or where to invest prevent you from participating.

Happy Investing,



For more blogs by Marcos visit 


Sources: (pages 1–2, 7)

My first big paycheck is finally in the bank – now what?

Roxanne Alexander

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Senior Financial Advisor

Recently I have been talking to clients’ kids or grandkids who have just graduated from college and are starting their first jobs as professionals. Some starting salaries can easily be in the low six figures depending on the profession, so a road map that covers how and where to start saving can be beneficial in the long run.

The two main issues at this point are usually budgeting and saving. Saving early has a huge impact on long term retirement planning, since you have many more years for compounding to work for you. The earlier you start, the better off you will be in the long term. The chart below shows that other than during the Great Depression, the U.S. stock market, despite pullbacks along the way, has gone in one direction.

JP Morgan Chart

Before you can start saving, you should create a budget. Make a list of the expenses you cannot avoid, such as rent, transportation expenses, food, clothes, student loan repayments, etc. Then create a second list of things you want or would like to have. Once you have those numbers, do a rough calculation to see how much you have left, to determine the amount you are able to save. Using an online program such as can be very helpful in tracking expenses and creating a budget. If you find you are unable to save anything, you may want to revisit the second list and re-prioritize any non-essential expenses. Don’t forget to account for taxes!

When you are starting from scratch you should look at saving like layers on a cake.

  1. Create an emergency fund. Make sure you save enough money to cover a job loss or transition—about six months of living expenses makes sense. Hold these funds in a safe investment such as a liquid savings or money market account. You can go to for a list of the highest yielding online savings accounts available in your area. Since there is no guarantee that your first employer will be your last, you may want to have a plan B.
  2. Once you have an emergency fund, you should start thinking about and saving for short to medium-term goals (goals that you hope to achieve in one to five years), such as buying a house. Usually, you will need about a 20 percent deposit, plus any other closing costs, such as transfer taxes, document stamps, and mortgage closing fees. Fees vary by state and purchase price, but budgeting around one to two percent of the value of the property is a close benchmark. Don’t forget about possible repairs and moving costs. It may be best to keep these funds in a shorter-term investment, such as a higher-yielding money market, CD, or short term bond fund, since you don’t want to find that your investment is down 10 percent when you need to close on the house.
  3. If your employer offers a 401K, you want to save enough to qualify for any employer match, since the match is effectively free money. For example, if you earn $100,000 and your employer matches 100 percent up to five percent of your salary, then you would want to contribute at least $5,000 per year. If you don’t contribute anything, you lose the $5,000 match. If your employer does not offer a 401K, you may be eligible to save up to $6,000 in a regular IRA depending on your income.
  4. Depending on your income, you may also be able to contribute to a Roth IRA. This is another type of tax-advantaged account that allows you to put away another $6,000 (for 2020). Contributions are made with after-tax dollars, so you will not get an upfront tax deduction as you would with a regular IRA contribution, but if you hold the Roth account for at least five years, any earnings on these funds can be withdrawn tax-free.
  5. If you have a high deductible health plan, you may qualify for a health savings account or HSA. You can contribute $3,550 as a single taxpayer for 2020 and get a tax deduction. When you have qualified health expenses, you can pay yourself back tax-free. This means you never paid taxes on these funds. Keep in mind that there are restrictions and penalties if these funds are not used for medical expenses, but the qualified expense list is very wide in scope and includes many day-to-day items you buy in a pharmacy. You are also able to save for health expenses and pay yourself back in the future.
  6. Lastly, if you have exhausted all the previous saving possibilities, any excess can be saved in regular individual or trust accounts as after-tax savings and invested for retirement.

It is very important to have a budget and savings plan and revisit it often to make sure you are on track with your goals. Saving early can allow you to achieve financial freedom much earlier, due to the magic of compounding over a longer time horizon. You can see from the chart below that if you start saving at age 20, you would need to save $306 per month to be a millionaire by age 65, compared to having to save over $6,000 per month if you waited until age 55 to start saving. Also, if you want to retire on $100,000, you need to have $2.5M saved at retirement. Although these charts don’t factor in all the possible variables, they give you a general idea of the impact of starting to plan at an early age.

How Much You Need to Save at Every Age to Become a Millionaire by 65 Chart

How Much You Need to Save to Retire Chart

Chart Sources:



Check out our new blog at  same great content, just now at our website 

NewsLetter, Vol. 13, No. 1 – February 2020

HRE Headshot_01-2019

Harold Evensky CFP® , AIF® Chairman




I’m not sure how comfortable this would make me feel if I were a client; however, as Barbara Roper notes at the end, it is an impressive effort to meet the new CFP Board standards.

“Northwestern’s CFP disclosures put industry’s fraught questions in focus”      – Financial Planning

“More than 1,000 CFPs affiliated with Northwestern Mutual now have to make their conflicts of interest abundantly clear and explain how they manage them in clients’ best interests.

“The insurer and broker-dealer has created a disclosure document intended to comply with the CFP Board’s new code of ethics and standards of conduct. In the document, advisors tell planning clients outright that they’re incentivized to ‘sell Northwestern Mutual insurance products to a client often’ – and for the highest possible commissions.

“The CFPs at Northwestern also have a financial interest in selling permanent life insurance with higher initial premiums than term products. They’re encouraged ‘to sell more expensive products and services to you which will have the effect of increasing my compensation,’ the document states. They can be paid on an ongoing basis for selling a Northwestern variable annuity in a brokerage account with less than $50,000, but not for selling a mutual fund, the brochure says.

“‘I know that in the long run, I will benefit most by serving you well,’ it says later. ‘Your interests and my interests align in this respect because I rely heavily on the referrals I receive from satisfied clients. This in itself helps to mitigate the material conflicts of interest described above.’”

Financial Planning obtained the remarkable 8-page template, which is entitled “My commitment to you as a CFP professional.” The traditional brokerage and insurance incentives don’t stand out as much as the firm’s “sincere effort to explain those conflicts clearly,” according to Barbara Roper, director of investor protection for the Consumer Federation of America.

“I’ve read a lot of these types of documents over the years, and this is clearer than most, Roper said in an email.”



And my friend Freddie said they left out the last two words: “Play ball!”

He also added some background…



From the Wall Street Journal:

“Some common myths include: checking credit scores can hurt the credit score (a ‘hard inquiry’ where a financial firm is evaluating a potential loan so you can have an impact, but a ‘soft inquiry’ like an employer conducting a background check does not, nor does a soft inquiry of checking your own credit score); paying bills on time is all you need to worry about (it’s not, as ‘credit utilization’ also matters, because paying on time but always being maxed out is a negative compared to ‘just’ using 30% of your available credit each month, which can be remedied by spending less or simply asking for a credit limit increase); carrying a balance helps boost the credit score (it doesn’t; it just racks up interest charges!); closing an old card with a high interest rate will help (it doesn’t, and closing a long-standing card can actually reduce the score by reducing the average age of your credit accounts); opening a new retail card at a 0% rate is good for your score (it’s not; it’s a hard inquiry that’s more likely to reduce the score); shopping for a mortgage/auto/student loan hurts the credit score (hard inquiries matter, but if multiple hard inquiries come together, they’re bundled together as a single query and recognized as a single transaction that reflects the borrower is likely just shopping around); and assuming credit reports are accurate in the first place (the FTC found in 2012 that 21% of consumers had errors, with 5% of the cases so serious it impaired their credit… which means it really is important to monitor your credit score to ensure credit events are being reported properly!)”



From my friend Bill



From my friend Judy



Excerpts from Chief Investment Officer

Better late than never?

In a major investment move, the California Public Employees’ Retirement System (CalPERS) has terminated most of its external equity managers, slashing their allocation to $5.5 billion from $33.6 billion. Only three of 17 external equity managers have been spared in the reduction …

The memo, which has not been publicly discussed, says the moves are necessary because of long-term underperformance. The memo obtained by CIO says that Meng is putting a “renewed focus on performance and our ability to achieve our 7% assumed rate.”

Meng, who took over as CalPERS’s CIO in January, has repeatedly expressed concerns, not only about CalPERS achieving the 7% assumed rate of return …

“Over the last five years, traditional managers have underperformed their benchmarks by 48 bps and emerging mangers by 126 [bps],” the memo says…

Over the last decade, CalPERS has moved to managing most of its $187 billion in equities in-house, the majority of the strategies index-based [my emphasis]…

Good luck on the 7% assumed rate of return!



If you or a family member is facing health issues threatening their ability to remain in their home, you might check CAPABLE. The Community Aging in Place—Advancing Better Living for Elders (CAPABLE) project addresses both function and cost. CAPABLE is a program developed at the Johns Hopkins School of Nursing for low-income seniors to safely age in place. The approach teams a nurse, an occupational therapist, and a handyman to address the home environment and uses the strengths of the older adults themselves to improve safety and independence.



From my longtime friend David:

THE RISK OF JUST ONE STOCK: 56 individual stocks within the S&P 500 are up at least +50% YTD through the close of trading last Friday, 11/29/19, including 11 stocks that are up at least +75% YTD. There are also 13 stocks that are down at least 30% YTD, including 4 stocks down at least 50% (source: BTN Research).   

NEVER BEFORE: The USA exported more barrels of crude oil and petroleum products in both September and October this year than it imported, the first time that our nation’s oil exports have exceeded its imports based upon monthly records maintained since 1949; i.e., the last 70 years (source: Energy Information Administration).

THE KIDS INHERIT AND THEN THEY SELL: There are 79.5 million owner-occupied homes in the United States as of 9/30/19. By the year 2037, 21 million of the 79.5 million homes (26% of all current homes) are projected to have a change of ownership as the “Baby Boomer” generation dies. (source: Zillow).

 HEALTH INSURANCE: In 2018, the average American employee paid $453 per month for his/her family’s health insurance coverage through an employer-sponsored plan. That $453 amount represented 28% of the total cost of the insurance coverage; i.e., the employer paid $1,164 per month (source: Commonwealth Fund).

 LONG-TERM GUESS: When President Franklin D. Roosevelt proposed the Social Security retirement program in 1935, FDR’s financial people projected that total Social Security expenditure would reach $1.3 billion in 1980, or 45 years into the future. The actual Social Security outlays in 1980 were $149 billion. Thus, the analysts’ 1935 estimate represented less than 1% of actual 1980 Social Security expenditures (source: Social Security).



From the S&P Persistence Scorecard

For funds categorized as top performers in September 2017, 47% maintained their top-quartile performance the subsequent year. However, there was a dramatic fall in persistence afterward—just 8% of domestic equity funds remained in the top quartile in the three-year period ending September 2019. This result (8%) is consistent with the notion that historical performance is only randomly associated with future performance.

An inverse relationship exists between the time horizon length and the ability of top-performing funds to maintain their success. Less than 3% of equity funds in all categories maintained their top-quartile status at the end of the five-year measurement period. In fact, no large-cap fund was able to consistently deliver top-quartile performance by the end of the fifth year.



From the S&P Persistence Scorecard – Latin America

Brazil…regardless of size focus, by the fourth year, no fund remained in the top quartile. Fixed income painted a slightly different picture than equities.

Chile…just 27% of top-performing funds in the first 12-month period repeated their outperformance in the subsequent period. This rate dropped to 9% in the third period and to 0% in the fourth and fifth periods.

Mexico … After one year, just 18% of managers remained in the top quartile, and by year two, the percentage dropped to zero… Top-quartile managers in the first five-year period were more likely to move to the bottom quartile (38% of managers) in the second five-year period than to any other quartile.



Financial Times



From my friend Peter:

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From Dimensional Fund Advisor’s “Hindsight is 20/20. Foresight Isn’t.”



The moral? Stop chasing “winners”; it’s a losing strategy.



From my friend Monty:

Who are the top one percent by income?

The cutoff for a top 1% household income in the United States in 2019 is $475,116.


Percentage Threshold                                    10%                             1%                               0.10%

Individual Income                                           $116,250                     $328,551

Household Income                                         $184,200                     $475,116


Net Worth                                                        $1,182,390                  $10,374,039                $43,090,281

Full story at



From Parade

80% – That’s the percentage of New Year’s resolutions that fail by February.


Excerpts from Christine Benz, one of my favorite commentators. Christine is director of personal finance at Morningstar.

Investing is Overrated …

I’m not saying you shouldn’t invest. You absolutely should. It’s essential. End of story. What I am saying, however, is that investing is the attention hog in many discussions about how to reach financial goals. It’s sexy, there’s often a current-events hook to explain why the market is behaving as it is, and hitting it big with an investment doesn’t usually require any sort of sacrifice. But, ultimately, your boring pre-investing choices – like your savings rate and how you balance debt paydown with investing in the market – will have a bigger impact than your investment selections on whether you amass enough money to pay for retirement or college. (I call these types of pre-investment decisions your “primordial asset allocation.”) If your savings rate is high enough and you start early enough, that can make up for some lackluster asset-allocation and investment-selection choices. The flip side is also true: If you haven’t saved enough, great investment picks probably won’t be enough to save you.

Beware the Latest Fad …

In a related vein, I’ve seen enough to conclude that many new products that come to market don’t actually help improve investor outcomes. Rather, they’re an effort to help investment firms capitalize on what’s hot and generate fees on new assets.

Get Some Help in Retirement …

Most people approaching or already in retirement could benefit from another set of eyes on their plans, to help ensure that their withdrawal rate system is sustainable, that they’re being tax-efficient with their withdrawals, and so on. Having a financial adviser who knows what’s going on in your financial life and portfolio is also the gold standard for helping ensure that nothing falls through the cracks if you become incapacitated or die.

While the traditional investment advice model requires investors to pay a percentage of their assets year in, year out, soon-to-retire and retired investors who are confident in their abilities can pay for advice on an hourly or per-engagement basis. That will be more economical than paying for ongoing advice or oversight; the downside is that the hourly or per-engagement advisor won’t be looking over your portfolio unless you ask for help. So, it’s a trade-off.



  • In sharp contrast to last year, US equities triumphed in 2019, with the S&P 500® up 31%, its biggest annual gain since 2013. Easing trade tensions and Fed accommodation renewed optimism about the economic outlook. Mega-caps dominated as gains for the S&P MidCap 400® and the S&P SmallCap 600®, 26% and 23% respectively, lagged the S&P 500.
  • International markets also gained, with the S&P Developed Ex-US BMI up 23% and the S&P Emerging BMI up 20%.

High Beta was the best performing factor, followed by Quality; not unrelatedly, Information Technology was the best performing sector, up a remarkable 50%. Meanwhile, Value outperformed Growth for the first time in three years.





Why markets can be far more volatile than simple statistics might suggest.

  • From S&P DOW Jones Indices: The Landscape of Risk



More from my friend Peter

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“It’s 2020, and the chase for big commissions is back”   – Investment News

“As 2020 opens a new year and decade, the broad financial advice industry is working to make it easier for brokers and financial advisers to sell high-priced, high-commission, complex products to clients, with the focus on tapping retirement accounts that hold trillions of dollars in investor savings.”





An update of a classic study from DFA.



From a study by Wayne Thorpe, senior financial analyst at the American Association of Individual Investors Journal, via my friend Clark Blackman’s most excellent client letter.

How painful is it if you don’t market time and have to live through a market downturn?

Since 1871, market downturns have recovered as follows:

  • 33% of market downturns recover within a month
  • 50% of market downturns recover within 2 months
  • 80% of market downturns recover within 1 year
  • 95% of the time those big “once or twice in a lifetime drops” return to even in 3 to 4 years.
  • Collectively, since 1871, the time it takes for the market to recover (top to trough to top again) is a mere 7.9 months!



Some interesting charts from Berlinda Liu’s (Director, Global Research & Design, S&P Dow Jones Indices) blog, Are Active Funds Better at Managing Risk? Not Really.


And S&P’s conclusion:


Hope you enjoyed this issue, and I look forward to “seeing you” again.



Harold Evensky


Evensky & Katz / Foldes Financial Wealth Management


Previous NewsLetters

NewsLetter, Vol. 12, No. 6 – November 2019

NewsLetter, Vol. 12, No. 5 – September 2019

Important Disclosure
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Evensky & Katz / Foldes Financial Wealth Management (“EK-FF”), or any non-investment-related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from EK-FF. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. EK-FF is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of EK-FF’s current written disclosure Brochure discussing our advisory services and fees is available upon request. Please Note: If you are an EK-FF client, please remember to contact EK-FF, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. EK-FF shall continue to rely on the accuracy of information that you have provided.

Should I convert IRA money to a Roth?

Roxanne Alexander

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Senior Financial Advisor

The tax laws changed for taxable years after 2017 regarding allowing recharacterization — or, in simple terms, being able to undo a Roth conversion. Since you are no longer able to undo a conversion there are some important considerations to make before taking this route since it can impact your tax situation and potentially push you into a higher income tax bracket for Medicare.

What is a Roth Conversion?

A Roth conversion is taking funds from a regular IRA account, paying taxes on the income since the funds are pretax, then moving them to a Roth account. The funds grow tax-free in the IRA account, and since the taxes were already paid, you owe no taxes when you withdraw the funds. This is best executed while you are in a lower tax bracket (usually after retirement but prior to taking social security and required distributions from any traditional IRAs). Keep in mind you cannot convert funds from an inherited IRA.

The main advantage of a Roth is the funds are not taxable when you take them out later on which may possibly lead to lower taxes in future. You then have the flexibility to use Roth funds to subsidize higher expense years vs. taking excess from an IRA assuming the bulk of your funds are in a retirement account. This is a great strategy for people with larger IRAs since they can convert funds when they are in a lower tax bracket, usually after retirement and before age 72 (previously age 70.5 before the new tax law changes which extended the required distribution age to 72), and create an account which grows tax-free but is no longer taxed when withdrawals are made.

How much is the Roth conversion going to cost?

The question is whether you think you will be in a higher tax bracket now vs. later. If your tax bracket will be lower later in life, then you would lose some of the benefits. If you plan to move from a lower-tax state such as Florida to a higher-tax state such as California, converting funds before moving may make sense since you would avoid state taxes. Hedging against future higher taxes can be a crapshoot since nobody really knows what rates will be in the future.

Pension income, social security income, and IRA distributions may push you into a higher bracket for Medicare (IRMAA). Since Roth accounts have no required minimum distributions, this can automatically lower your taxes in the future and can be beneficial when it comes to staying in a lower Medicare bracket.

Do you have other after-tax funds?

If you plan to spend more than your retirement income and minimum IRA distribution but have other after-tax funds, a Roth account may be less beneficial since you can still avoid having to take excess funds from your IRA. However, if you have high unrealized gains in the after-tax account, you may be forced into a higher tax bracket anyway by taking the gains when funds are needed.

Do you plan to leave funds to heirs tax-free?

Leaving Roth money to heirs can be very helpful to them in future, especially if you have high-income children. Having to take mandatory distributions out of an inherited IRA will incur additional income. This is especially important to note now that the SECURE Act has changed the distribution rules from inherited IRAs to having to liquidate the account within 10 years vs. using life expectancy.

If you have named a trust as the beneficiary of your IRA, a trust has higher tax rates and required distributions to the trust are tax-free with an inherited Roth in comparison to a regular inherited IRA owned by the trust.

Will you have future tax deductions?

If you already have a large Roth, it may make sense to keep some funds in a regular IRA so you have flexibility to take advantage of future tax situations. For example, if you foresee any possible ability to offset losses or deductible expenses, you may be able to pay no taxes on a conversion. One possible situation is a large medical expense deduction when purchasing into an assisted living facility. This would cause a large up-front medical deduction, which can offset the excess income in that year.

Feel free to reach out to Roxanne Alexander with any questions by email: or phone 305.448.8882 ext. 236.

9 birthdays to remember for retirement readiness

Marcos- cropped

Marcos A. Segrera, CFP® Financial Advisor

Even if it seems a long way off, it’s never too early to begin thinking about retirement. The decisions you make now will have a profound impact on where you find yourself decades from now. Odds are your retirement will be the largest “cost” you’ll have to cover in your lifetime—depending on your retirement date and life expectancy, it isn’t a stretch to say you could live in retirement for 30 years. As you plan for your future, it’s important to have guidelines for each age in life. Today we want to touch on 9 of these important stages of your financial life.

Under 49

It’s time to be aggressive in funding your retirement accounts. Leverage the power of compound interest! The max 401k contribution for 2020 is $19,500 and for IRAs it is $6,000.

Age 50

Once you hit 50, you can add $6,500 to your 401k per year and boost your IRA funding by $1,000. It can be incredibly helpful to take advantage of these increased contribution limits during your prime earnings years, beefing up your total contribution to retirement accounts to $33,000: $19,500 to your 401k + $6,500 catch-up + $6,000 to your IRA + $1,000 catch-up.

Age 55

You’re now able to start withdrawing from past-employer retirement funds without penalties, though you need to maintain funds in your employer 401k plan and the feature isn’t allowed if you’ve rolled your 401k over to an IRA. Drawing an allowance can be beneficial if you’re cutting back hours or retiring early from an employer and you can’t wait until the standard age of 59.5 for penalty-free withdrawals from an IRA.

Age 59.5

This is the magic age at which you can begin taking money out of your IRA and other retirement accounts without incurring the standard 10% early withdrawal penalty. Taxes still apply.

Age 62

You become eligible to receive Social Security payments, although it’s important to proceed with caution as your monthly payments will be roughly 30% less for the remainder of your life if you begin this early. The longer you wait, the lower the penalty you’ll incur.

Age 65

Now you’re eligible for Medicare. Even if you’re not in full retirement mode, it’s important to sign up for this service 3 months before you turn 65 so you don’t incur additional cost to your monthly premium.

Age 66

This is full retirement age to receive 100% of your Social Security benefit if you were born between 1943 and 1954…

Age 67

…and this is full retirement age to receive 100% of your Social Security benefit if you were born after 1960.

Age 70

Once you hit 70, it’s no longer beneficial to delay receiving Social Security benefits. If you aren’t already receiving these benefits, now’s the time to start.

Age 70.5

If you’re over the age of 70.5, you’re no longer eligible to receive a tax deduction for IRA contributions. You’re also mandated to begin withdrawing funds from your IRA and other retirement accounts and pay income tax on these withdrawals. There are two exceptions to this rule: 1) if you’re still working and have a 401k with that company (unless you own that company) and 2) if you have ROTH IRA accounts, in which case you don’t need to withdraw from those.

Please note, amounts shown are for 2020. The IRS publishes guidelines each year that can cause these amounts and ages to change. For example, there is currently legislation in Congress that, if passed, will change the required minimum distributions age to 72 from 70.5. You can read more on that topic here. I hope you found this helpful!

Happy investing,



Feel free to contact Marcos with any questions by phone 305.448.8882 x.212 or email:


For more articles by Marcos see below:

The retirement opportunity that you may be missing: The SEP IRA

Just inherited an IRA? Take a moment to consider your options



For more details on Evensky & Katz/ Foldes Financial Wealth Management visit:

Do you really need that individual stock?

Roxanne Alexander

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Senior Financial Advisor

Individual stocks end up in portfolios for various reasons—possibly some speculation along the way, maybe inherited from a family member and kept for sentimental reasons, purchased many years ago and now with a cost basis so low that selling the stock would incur high taxes, or through acquisition of company stock options.

We don’t recommend buying individual stocks due to company-specific risk, and if you decide to buy a stock, you would not want to risk more than you can afford to lose. If you buy $10K worth of a stock, you are unlikely to lose your lifestyle if the $10K goes to zero; at the same time, that $10K going up to $50K would be great, but it isn’t going to change your lifestyle either. If you decide to take a chance, you should ask yourself the following questions:

  1. Do you want the added stress and effort of watching and picking individual stocks?
  2. Do you think it is worth it to take on additional risk?
  3. Is buying and watching a stock something you enjoy doing regardless of the outcome?

We have all seen company-specific risk in the news on many occasions, especially the latest involving Boeing and the 737 MAX disaster. It only takes one problem to tank a stock when everyone panics. We have also seen the negative effects of the news in the past with Target and its 2013 credit card data breach (profit fell nearly 50% in its fourth fiscal quarter and the stock fell 9%) as well as with all the financial stocks that took a huge hit in 2008, such as Lehman Brothers, which ended up filing for bankruptcy. An interesting statistic—25% of stocks lost at least 75% in 2008 but only four of 6,600 mutual funds lost more than 75%. Even when it comes to IPOs, there is no guarantee that the price of the stock accurately reflects its true value. For example, the recent Peloton IPO price was $29, but it is currently trading below the IPS price.

One of the main academic theories we believe in is diversification, because it protects you from company-specific or business risk. While we know that the world markets trend up over time, the same cannot be said about a specific stock. None of the companies on the original Dow Jones Index is still part of the Dow, and most have ceased to exist. The world is full of great companies that have had poor performance due to issues both in and out of their control. You should know the company’s revenues, expenses, P/E ratio, competitors, and a lot of other valuable ratios in order to decide if the stock is worth buying at the current price. Just because it’s a good company or a good idea does not mean it is a good stock!

Trying to pick stocks leads to an extremely high probability that you will underperform the market over the next 10 years. Over 90% of active stock pickers (these are highly trained specialists backed up by large research departments who get paid a lot of money and spend all their life trying to beat their index—yes, this is their day job) have failed to beat their respective benchmark over the past 10 years.

S&P Dow Jones Indices found that 89.4% of U.S. mid-cap stock funds, 85.5% of small-cap funds, and 66% of large-cap actively managed funds trailed their benchmarks in 2016. That came in a year in which stock markets performed well. If a fund manager can’t beat the benchmark and that is what they do all day, the odds are against you.

The average retail investor who may spend a few hours a month researching stocks has no chance. They underperform the market and their own investments. You may get lucky, but the likelihood of underperforming index funds is quite high.

The following chart shows the lifetime total return for individual stocks relative to the corresponding return for the Russell 3000 Index. (The Russell 3000 Index is a market-capitalization-weighted equity index that provides exposure to the entire U.S. stock market.)

total returns of individual stocks vs russell 3000 index_image for RA blog

Source: The Capitalism Distribution – The Realities of Individual Common Stock Returns by Eric Crittenden and Cole Wilcox, BlackStar Funds


Feel free to reach out to Roxanne Alexander with any questions by phone 305.448.8882 ext. 236 or email:


For more articles by Roxanne click below:

The Dilemma of Two Homes

Thoughts on Transferring Wealth to the Next Generation


For more information about Evensky & Katz/ Foldes Financial Wealth Management visit

UPDATE: Congress moves to make changes to US retirement system

David Garcia

David L. Garcia, CPA, CFP®, ADPA® Principal, Wealth Manager

This is an update to our June 5th, 2019 blog post on the major changes to the US retirement system if the Setting Every Community Up for Retirement Enhancement Act, commonly known as the SECURE act, is passed. Since our last post the likelihood of passage this year has gone down somewhat. Since May the bill has been sitting in the Senate, with supporters hoping for passage by unanimous consent versus the Senate writing its own version that would take much longer. The general consensus seems to be that the leadership in both houses want the bill to pass this year. The bill is being held up by mainly logistical issues. Priorities like confirming judges and a few senators who want additional amendments to the bill are holding things up. Given the short number of legislative days left in the year, the more likely scenario for passage would be attaching the current bill to an omnibus package of must-pass legislation at year end. What happens if passage is pushed into 2020? Even though both parties support the bill, 2020 is a presidential election year, which adds an element of uncertainty to passing anything. We’ll continue to keep our clients updated on any developments between now and the end of the year. In the meantime, here is a summary of notable changes proposed in the bill from our original post.

  • Currently individuals are barred from contributing to their IRAs after age 70 1/2. The house bill would remove this limitation while also increasing the age taxpayers are required to start taking taxable distributions from their IRAs from 70 ½ to 72.
  • The bill would make it easier for 401(k) plans to offer annuities by providing more liability protection to employers. This provision has been somewhat controversial, with some consumer advocates suggesting more protections for participants when negotiating annuity prices.
  • The bill would allow parents to withdraw up to $10,000 from 529 education savings plans for repayment of student loans.
  • One of the biggest changes would affect people who inherit retirement accounts. The bill would require heirs to withdraw the money within a decade and pay any taxes due. Currently, beneficiaries can take much smaller taxable distributions over their own life spans.
  • The bill allows unrelated employers to create groups to offer a retirement plan. This is meant to encourage smaller firms to offer retirement plans.



Feel free to reach out to David Garcia by

phone 305.448.8882 ext. 224 or email:

For more blogs by David Garcia see below:

Congress moves to make changes to US retirement system

IRS Increases 2019 Retirement Plan Contribution Limits



Visit for more information on

Evensky & Katz / Foldes Financial Wealth Management

The Dilemma of Two Homes

Roxanne Alexander

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Senior Financial Advisor

Downsizing your home is a big decision. What if you find your ideal home but haven’t sold your current one? This can be quite stressful, since you don’t want to lose out on the new property but may not be able to sell your existing property fast enough. The first place you may want to turn to for help is your investment portfolio, but that can create tax consequences.

If your money is in an IRA, you have the option of choosing a 60-day rollover – if you think you will be able to close on your existing property within 60 days and put the money back in your account, this would be a non-taxable loan to yourself. The risk is that if the 60-day window closes on you, you will not be able to return the money to the IRA and will have to pay the taxes, which can be significant and may include a hefty penalty. Another issue to consider is the opportunity cost of being out of the market for 60 days and losing out on market returns.

Liquidating an investment account is quick and easy and can usually be done with minimal transaction costs. However, if you have large unrealized gains in the account, the tax consequences can be meaningful, so looking at less costly options may be on the table. If your account is very large in comparison to the funds needed, it may be possible to pick out tax lots or securities with lower gains and leave the investments with the high gains alone. The downside of this is your portfolio may be out of balance for the duration of the “loan”/rollover, which could lead to increased overall portfolio risk.

So what are your other options?

Go on margin. You can usually borrow around 50% of the value of your individual, trust, or joint account. This is very quick to set up and you may be able to get special margin interest rates depending upon whether you work with an adviser. Usually it is recommended to borrow less than 50% to avoid margin calls that may accompany a decline in markets. All margin loans must maintain a certain amount of equity as a requirement of the loan.

Apply for a pledged asset line (PAL). This option would allow you to borrow closer to 70% of the account value. Basically, your assets in the account are held as collateral for the loan. The PAL process is similar to applying for a mortgage, since it is more involved and takes longer to perform thorough credit checks and other verifications, but it allows you to borrow more. There are no closing costs or prepayment penalties. The main risk is that the lender can demand the loan at any time and or close your line, but if you plan to pay it off in a couple of months, this may not be a concern.

Keep in mind that you cannot margin or add a PAL on retirement accounts.

Get a traditional mortgage/home equity. Obtaining a mortgage has a high up-front cost if you plan to pay it off immediately after your existing home is sold. The closing costs are high for a short-term loan, but may end up being less than liquidating a taxable account or taking the risk of a 60-day rollover. That said, if you have no income other than social security and portfolio income, this may not work since the lenders want to see that you can make the payments on top of paying for your living expenses.

Borrow from a friend or family member. This option is more complicated that it appears since you would want to draft a legal document as proof that this is a loan and not a gift for tax and estate planning purposes. For example, you do not want the IRS to think this is a gift and have both of you end up with tax ramifications. Also, if something happens to the lender or borrower, there is proof of an outstanding debt. If you decide to go this route, you will want to contact an attorney, which will incur a cost. Although borrowing from a friend seems like the cheaper and easier alternative, you both need to protect yourselves legally. There is an interest rate called the AFR (Applicable Federal Rate), which is the minimum interest rate a friend or family member needs to charge you so that the loan is not considered a gift. The minimum rate is usually lower than other loan rates.

You can also do a combination of all of the above. For example, if the new property is going to be more expensive, you could borrow on margin or PAL and also get a mortgage for the balance; then, when the home sells, you can pay off the margin or PAL and just keep the mortgage indefinitely, which provides some flexibility. You may be able to get a home equity loan on your current home — it will unlikely be enough on its own to buy a new place, but may be an option if combined with one of the options above.


Feel free to reach out to Roxanne Alexander by email: or by phone: 305.448.8882 extension 236


Previous Blogs by Roxanne Alexander:

Thought on Transferring Wealth to the Next Generation

Protecting Elderly Family Members – What Can You Do?

Turning Age 70.5 with an IRA Account – What You Need to Know


Visit for more.

NewsLetter, Vol. 12, No. 6 – November 2019

HRE Headshot_01-2019

Harold Evensky CFP® , AIF® Chairman



From Michael Batnick, of Ritholtz Wealth Management, via my friend Bob Veres.

Recently, the DOW fell 3% in one day. That was the 307th time the Dow has fallen 3% in a day over the last one hundred years.




Almost Half of All Americans Fear They’ll Outlive Their Savings

 “This is actually a pretty big worry for many of us, with respondents to a recent survey by the financial services company Northwestern Mutual indicating that, on average, there’s a 45% chance they’ll outlive their savings. Yet despite fears about ending up a broke senior, 41% of respondents said they haven’t taken any steps to address this concern.

“There’s a very real chance many people won’t have enough money to support them through their later years—especially as the same survey found 22% of Americans have under $5,000 saved for retirement and 15% have nothing saved at all.”

Don’t let this be YOU!



According to a recent Gallup poll, some 63% of American adults drink alcohol—and their favored beverage is beer. Some 42% of American drinkers prefer beer, compared to 34% who choose wine, and just 19% who enjoy spirits the most.



…states to retire in, according to WealthManagement who considered affordability, crime ranking, culture ranking, weather ranking, and wellness ranking:


  1. Nebraska
  2. Iowa
  3. Missouri
  4. South Dakota
  5. Florida
  6. Kentucky
  7. Kansas
  8. North Carolina
  9. Montana
  10. Hawaii


  1. Oregon
  2. Nevada
  3. Illinois
  4. Washington
  5. Maryland
  6. New York
  7. Alaska
  8. California
  9. New Jersey
  10. South Carolina



Cost Of Employer-Provided Health Coverage Passes $20,000 Per Year 

“According to a new survey from the Kaiser Family Foundation, the average cost for an employer-provided family health insurance plan in 2019 has surpassed $20,000 per year, clocking in at $20,576 (a 5% increase from 2018), with employers bearing on average 71% of the cost … The real concern and question, though, is why costs continue to rise, especially since a recent Health Care Cost Institute study found that health care utilization declined by 0.2% from 2013 to 2017, even as average prices increased by 17.1%.”



Notes from a cannabis investment fund manager:

  • Investable universe. As of the end of the second quarter, approximately 350 to 400 small-, mid-, and large-cap companies around the world were engaged in the cannabis industry.
  • Promising legislative developments. Canada is in the process of implementing “Cannabis 2.0,” which will provide guidance on recreational consumption of edibles, concentrates and topicals that contain cannabis. Cannabis 2.0 may be significant to companies that grow, distribute or sell these products.
  • A growth trend in CBD. Biosynthesis of the cannabinoid (CBD) compounds in the cannabis plant has the potential to be crucial to long-term growth. Many companies are looking to produce cultured cannabinoids as they are seeking to perfect the consistency and purity of the CBD.



From my friend Saby:

  • A little girl was talking to her teacher about whales.

The teacher said it was physically impossible for a whale to swallow a human because even though it was a very large mammal its throat was very small.

The little girl stated that Jonah was swallowed by a whale.

Irritated, the teacher reiterated that a whale could not swallow a human; it was physically impossible.

The little girl said, “When I get to heaven, I will ask Jonah.”

The teacher asked, “What if Jonah went to hell?”

The little girl replied, “Then you ask him.”

  • A kindergarten teacher was observing her classroom of children while they were drawing. She would occasionally walk around to see each child’s work.

As she got to one little girl who was working diligently, she asked what the drawing was.

The girl replied, “I’m drawing God.”

The teacher paused and then said, “But no one knows what God looks like.”

Without missing a beat, or looking up from her drawing, the girl replied, “They will in a minute.”

  • A Sunday school teacher was discussing the Ten Commandments with her five and six year olds.

After explaining the commandment to “honor” thy Father and thy Mother, she asked, “Is there a commandment that teaches us how to treat our brothers and sisters?”

From the back, one little boy (the oldest of a family) answered, “Thou shall not kill.”

  • The children were lined up in the cafeteria of a Catholic elementary school for lunch. At the head of the table was a large pile of apples. The nun wrote a note, and posted it on the apple tray:

“Take only ONE … God is watching.”

Moving further along the lunch line, at the other end of the table was a large pile of chocolate chip cookies.

A child had written a note, “Take all you want. God is watching the apples.”



However, for those of you that like these alternatives….

Gold’s price has risen 19% so far this year to around $1,520 per ounce, as investors have reportedly been shunning risky assets and moving to safer assets such as gold.

Interestingly, bitcoin enthusiasts insist on calling the cryptocurrency a “safe haven” asset. But according to analysis from The Block’s research analyst Ryan Todd, it is not. Bitcoin has seen an average 12.4% annualized 30-day volatility over the last five years, as compared to gold’s 2.5%.



Forbes September 15: Gold Correction Underway

Here is a summary of the bearish influences on the metal price:

  • Sentiment is too bullish.
  • The weekly graph shows a hook sell signal, a sign of coming weakness.
  • The monthly cycle topped on the 11th and the weekly cycle does likewise on the 17th.
  • The combination of the bullish sentiment and the cycle tops point to a volatile week to the downside for gold. There is an irregular cycle that bottoms on the 20th, which has set off short-term rallies in the past. This is likely to touch off a short-term rally in the last week of the month.
  • Both cycles bottom in the second week of October.

I expect gold to fall to at least $1440, the 38.2% retracement of the prior uptrend, before the uptrend resumes.



I believe kiplinger is an excellent magazine and that John Waggoner is one of the best financial writers around, but “Two Ways to Beat the S&P” was a bit disturbing.

“The Kiplinger Dividend 15, our favorite stocks for dividend income, have been riding the bull since we last checked on them in the April issue of Kiplinger’s.” It’s nice to know that it’s done well for 3 months but that seems more like dangerous noise then useful investment guidance.

Besides, focusing on dividend return and not total return can be dangerously myopic. As Jason notes in his closing, “Ideally, the companies would boost their dividend to get over our 4% threshold, but the price decline could also do the trick. Let’s hope for the former, but be prepared for the latter.” Hope doesn’t sound like a good plan, and I have no idea what “prepare for the latter” means.



More financial pornography:

Gone to Pot: 20 ETFs That Have Had a Rough Three Months

Agriculture and international funds, including ETFMG’s Alternative Harvest ETF (MJ), posted the worst returns over the past three months.

I guess that’s better than “a rough time in the last 10 minutes.”






Harold & Deena Evensky





End of Era: Passive Equity Funds Surpass Active in Epic Shift

It’s official: inexpensive index funds and ETFs have finally eclipsed old-fashioned stock pickers.

Passive investing styles have been gaining ground on actively managed funds for decades. But in August, the investment industry reached one of the biggest milestones in its modern history, as assets in US index-based equity mutual funds and ETFs topped those in active stock funds for the first time.



My passport is about to expire (or it’s lost) and I travel in a few days.


If you’re desperate and are prepared to pay $500–600, there is a reasonably convenient solution. You can visit one of FedEx Office’s 2,000 locations, or solve your problems online…

Taking care of things in person is a better option if you need to get your passport photograph taken. Any FedEx Office location offers photo services. After the photo, customers are guided to a computer area of the store and shown how to complete the transaction online.

You’ll have to pay a government fee of $170, but then rates skyrocket from there based on how quickly you need the goods. The price will depend on your timetable. Same-day service will cost you $449, while the cheapest and slowest option, 8–10 days, costs $119. Then there are shipping costs. FedEx standard overnight is $29.95, FedEx priority overnight is $39.95, and FedEx priority overnight including a Saturday is $54.95.

Note that just because you are processing it in one business day doesn’t mean you’re getting your passport back in one business day. In most cases, your passport still has to be shipped to you.

“For example, by choosing the 24-hour service option on Monday, FedEx will receive your application and begin processing Tuesday morning,” the FedEx website reads. “By Tuesday afternoon, your passport will be shipped to you for Wednesday delivery. You may be eligible to pick up your passport Tuesday afternoon or have it delivered the same day in select cities.”



Excerpt from an excellent Kiplinger article:

“Ask the advisor to sign a fiduciary oath.”

Needless to say, I agree and recommend the Committee for the Fiduciary Standard “mom and pop” oath.



More good advice from Kiplinger:


“One of the more popular prospecting strategies for financial advisers over the last couple of decades has been the dinner seminar. While its popularity has waned recently, with new marketing strategies taking hold, there are still plenty of seminar dinners still taking place…

“In order to make these expensive presentations work from a profitable business model standpoint, these dinners can often be sales tools to sell high-commissioned products. Many presenters push products that maximize the YTB. That stands for Yield to Broker, which may not end with a good result for the client.”

So, be cautious of a “Free Steak Dinner” offer. It could end up being one of the more expensive meals of your life!

Caveat emptor.



Looks like I’m not the only hedge fund skeptic.

From Institutional Investor:

“Investor relations professionals are finding it challenging to secure clients as investors continue to pull billions of dollars out of hedge funds … Regardless of firm size or assets under management, luring investors was seen as a top challenge by survey respondents. In the hedge fund industry, these challenges are further evidenced by five consecutive quarters of outflows, amounting to $62 billion redeemed by investors on a net basis between April 2018 and June 2019, according to HFR.”



North Pole Igloos — $105,000/per night


Located in the North Pole and claiming the title of “northernmost hotel in the world,” these igloos will cost you $105,000. Thankfully, that price tag includes more than just a night in a glass dome. You will also be given two nights in Svalbard, Norway, flights between Svalbard and the North Pole, one night in the igloo itself, chef-prepared meals, security and an Arctic wilderness guide. However, you’ll still have to coordinate your flight to the isolated island of Svalbard in Norway.

If that’s a bit pricey, you might consider…

The Muraka at the Conrad Maldives — a bargain at $50,000/per night


The Muraka suite is the world’s first underwater hotel suite—and comes with a pretty price of $50,000 a night. However, there’s a four-night minimum stay required, so you’re looking at $200,000 to sleep with the fish. This suite is two stories tall, with the underwater portion being 16 feet below the Indian Ocean. What can you expect for $50k a night? You’ll enjoy a private chef, butler, boat, bar, gym, and infinity pool. In addition to all of that, you’ll automatically be upgraded to Hilton Diamond status.



From my friend Mark:




From S&P Dow Jones Indices research — A REALLY IMPORTANT LESSON.

One key measure of successful active management lies in the ability of a manager or a strategy to outperform their peers repeatedly. Consistent success is the one way to differentiate a manager’s luck from skill. The S&P Persistence Scorecard shows that few funds consistently outperformed their peers:

  • 4% of domestic equity funds remained a top-quartile fund over the three-year period ending March 2019.
  • The ability of top-performing funds to maintain their status typically fell over longer horizons. For example, zero large-, mid-, or multi-cap funds maintained their top-quartile status at the end of the five-year measurement period.
  • Top-performing funds were more likely to become the worst-performing funds than vice versa over the five-year horizon. While 15.3% of bottom-quartile domestic equity funds moved to the top quartile, a greater percentage (31.5%) of top-quartile funds moved to the bottom quartile during the same period.




From the 2019 SIFMA Capital Markets Fact Book:




“Advisors” Score Highest in Intelligence While “Brokers” Score Lowest in Trustworthiness in Survey Showing Titles Matter

“Portland, Maine-based Tharp authored the “Consumer Perceptions of Financial Advisory Titles and Implications for Title Regulation” paper for the Mercatus Center at George Mason University. He is an assistant professor of finance at the University of Southern Maine.

Among the financial professional titles, ‘financial planner’ scored the highest in trustworthiness, helpfulness, depth, work ethic and success. ‘Financial advisor’ scored the highest in intelligence. ‘Financial counselor’ was on top in honesty, serving the interest of others and caring.

In contrast, ‘broker’ scored the lowest in honesty, serving the interest of others, trustworthiness, helpfulness, depth and caring. ‘Life insurance agent’ scored the lowest in intelligence, work ethic and success.”






From my #1 son:







Seems like there are a bunch.

At Family Office Exchange (FOX), one of the questions we hear most frequently is: How many single family offices (SFOs) are there?”

Recently, Family Wealth Report estimated that there were about 6,000. Campden Wealth puts the figure at 7,300

According to the Wall Street Journal, the threshold for SFOs is generally considered to be $100 million due to the costs and challenges of running such an entity. In the United States alone, there are approximately 20,407 individuals with more than $100 million in assets, as reported in the Credit Suisse 2018 Global Wealth Report.



The Senate confirmed Mr. Scalia to head the agency [the Securities and Exchange Commission – SEC]. He now takes over a department whose fiduciary rule to raise investment advice standards in retirement accounts he was instrumental in killing.

Mr. Scalia, formerly a partner at Gibson Dunn & Crutcher, was the lead counsel in a lawsuit against the DOL rule. Representing financial industry opponents of the regulation, Mr. Scalia argued that the regulation was too costly and that the DOL had overstepped its authority in promulgating it.



From planadvisor, July–August 2019:

What advisors predict will be clients’ three greatest worries for the next 12 months, and what clients say those actually are:

Advisors                      Investors

Increased market volatility                   56%                             66%

Cost of health care                                  27%                             33%

Taxes                                                       26%                             31%

Safety of their assets                               26%                             27%

Inadequate savings for retirement          26%                             23%

Inflation/Rising interest rates                   24%                             16%

Who knew there were so many things to worry about?



Also from planadvisor:

Participants who remained in their 401(k) in the decade following the Great Recession of 2008 saw their average balances soar 466%, from $52,600 in the first quarter of 2009 to $297,700 in the first quarter of 2019.



From my friend Alex:





I remember them all.



Inventions by women from my friend Judy:







In questioning the wisdom of opening up investing in unregistered securities to unsophisticated investors:

State securities regulators are skeptical of the idea of loosening rules surrounding unregistered securities to allow ordinary investors to buy them.

“Earlier this year, the Securities and Exchange Commission issued a concept release focused on simplifying and harmonizing regulations on the sale of nonpublic investments, or private placements. Under current rules, individuals need to meet certain income and wealth thresholds to make such purchases.”



Woman uses hair dryer to stop speeders


The Montana Highway Patrol awarded a grandmother with the unofficial title of “honorary state trooper” after she has attempted to slow down speeders in her neighborhood using a hair dryer.



Journal of Accountancy:

Total returns received             $141.6 million

F-filings, by tax professionals $71.7 million

E-filings, self-prepared            $56.2 million

Total refunds                           $101.6 million

Average refund                       $2,729



Journal of Accountancy survey of 785 CPA decision-makers, August 2019:

Portion of financial leaders who felt positive about the U.S. economic outlook in the second quarter : 57%

Portion who were positive about the global economy: 35%

Portion who cited inflation concerns: 29%

Portion who had inflation concerns at the end of 2018: 49%



From my friend Taft:

The bad news from a NAPFA Survey (but the good news is financial planning can help):




Google Claims “Quantum Supremacy,” Marking a Major Milestone in Computing

In what may be a huge milestone in computing, Google says it has achieved “quantum supremacy,” an experimental demonstration of the superiority of a quantum computer over a traditional one.

The claim, made in a new scientific paper, is the most serious indication yet that the promise of quantum computers—an emerging but unproven type of machine—is becoming reality, including their potential to solve formerly ungraspable mathematical problems…

“While our processor takes about 200 seconds to sample one instance of the quantum circuit 1 million times, a state-of-the-art supercomputer would require approximately 10,000 years to perform the equivalent task,” the researchers said.

The researchers estimate that performing the same experiment on a Google Cloud server would take 50 trillion hours—too long to be feasible. On the quantum processor, it took only 30 seconds, they said.



Some investors believe investing is a game easily won and the best opportunities are in exotic investments. A few tidbits from a recent story about Harvard’s Endowment might help frame that unreality.

Harvard Was “Freaking Out”: How A $270 Million Bet Tanked

“Colin Butterfield was frantic. The Harvard University endowment executive wanted to unload a disastrous $270 million investment in Brazilian farmland. But the school had no takers, and it was burning through millions of dollars…Harvard’s fear manifests itself in 2,000 pages of Brazilian court records…

“The documents, many in Portuguese, offer a window into a debacle that has contributed to the lackluster performance of the world’s largest college endowment. Part of the reason: Harvard’s backfired bet on the most exotic of investments, direct holdings of agriculture in the developing world.

“Auditors wrote down the value of the Brazil farm project by about $200 million after the endowment decided to exit the development in 2017, according to the lawsuit. Even for Harvard, which has a $39 billion endowment, that’s a steep sum, about as much as the Ivy League school spends annually on undergraduate financial aid.”–freaking-out—how-a–270-million-brazil-bet-tanked-51859.html






  • Bonanza premiered 60 years ago
  • The Beatles split 50 years ago
  • Lafon Premier nearly 52 years ago
  • The Wizard of Oz is 80 years old
  • Jimi Hendrix and Janis Joplin have been dead 49 years
  • Back to the Future is 35 years old
  • Saturday Night Fever is 42 years old
  • The Corvette turned 66 this year
  • The Mustang is 55. 



Before you decide to do a bit of individual stock picking, consider the following:

Larry Swedroe, one of the most thoughtful, academically practitioners I know, wrote an interesting review in Advisor Perspectives, a publication sharing ideas of experienced practitioners. Here are a few items from Larry’s contribution.

“A study in the Journal of Financial Economics, looking at overall returns from 1926 through 2015, and including all common stocks listed on the NYSE, Amex and NASDAQ exchanges.  Returns are inclusive of dividends and thus assume investors reinvest dividends in the stocks that paid them. The study found that only 47.7% of all annual returns were larger than the one-month Treasury rate…

“The conclusion here is that owning stocks is not unlike playing the lottery; you need to hold a majority of the tickets in order to justify playing at all. Of course, you have a better-than-even chance of winning a stock market investment, but you need to be diversified to have a break-even chance.  Most stocks have negative risk premiums…

“Yet another study covering the period 1983 through 2006 focused on the Russell 3000 index.  The index produced an annualized return of 12.8% and a cumulative return over that time period of 1,694%. But the mean annualized return of the 3,000 stocks was -1.1%.  39% of stocks lost money during the period and 19% lost at least 75% of their value, before considering inflation. Just 25% of the stocks were responsible for all the market’s gains.”



“Passive proliferation slows, with 770,000 indexes scrapped in 2019. But the  number of fixed-income indexes expanded, as did ESG indexes.”

The seemingly inexorable march of passive investing looks to have hit a roadblock.

The number of indexes around the world fell more than 20%, to 2.96 million, in 2019 as benchmark providers scrapped some of their gauges, according to a new report from the Index Industry Association.

If I’d been asked, I would have guessed a few hundred—certainly far fewer than a thousand.



“Investors have long been told that the ideal portfolio should carry 60% of its holdings in equities and 40% in bonds, a mix that provides greater exposure to historically superior stock returns, while also granting the diversification benefits and lower risk of fixed-income investments.

But in a research note published by Bank of America Securities titled ‘The End of 60/40,’ portfolio strategists Derek Harris and Jared Woodard argue that ‘there are good reasons to reconsider the role of bonds in your portfolio,’ and to allocate a greater share toward equities…

“The future of asset allocation may look radically different from the recent past.” they wrote, “and it is time to start planning for what comes after the end of 60/40.”

The idea that any specific allocation is “ideal” for all investors is nonsense. I also hope that no one has a fixed asset allocation that is not frequently reviewed. The concept is not “buy and forget” but “buy and manage.” Although our allocations are strategic, they are constantly reviewed and do change over time.



Same song, second verse….

Some earlier headlines from my associate Marcos.

  • “Why the 60/40 Asset Allocation Rule is Dead”—April 25,2013
  • “Death of the 60/40 portfolio”—February 20, 2015
  • “60-40 Is Dead”—October 29,2015 



Also from my associate Marcos:

The 60/40 portfolio passed away on October 16, 2019, from complications of low interest rates and a bad case of Fed manipulation. This is the twenty-seventh time 60/40 has died in the past decade but enemies market timing, day traders, and alternative investments are hopeful it will stick this time around.

60/40 was 91 years old and lived a long and prosperous life, returning more than 8.1% a year. This nearly matched the return of 60/40’s best friend, the S&P 500 (9.5%), but it did so with 40% less volatility.

60/40 was such a bright light in a world often full of darkness. It was down in just 20 of its 91 years on this planet. And it was just four years old when it had its worst year in 1931 (down 27%). 60/40 finished out its life strong, returning an astonishing 10.2% per year from 1980–2018 with just five down years over the past 39 years. That was much better than the 6.9% annual return from the day the portfolio was born in 1928 through 1979.

There were some lean years when 60/40 was learning how to walk early on. After rising 27% by the time it turned one, 60/40 fell 40% over the next four years during the Great Depression.

60/40 set a good example, as it was the most popular benchmark against which other investment portfolios often compared themselves. Many were envious of the performance of the 60/40 portfolio because it was so simple. They could never wrap their heads around the fact that a mix of stocks and bonds, rebalanced periodically, could outperform so much of the professional investment universe.

I’ve shared many a conversation with 60/40 over beers about how complex so many professional investors try to make their portfolio. 60/40 would often shake its head and laugh when thinking about it. I’ll miss those conversations.

Two of 60/40’s most redeeming qualities were balance and risk mitigation. There were just four times in the portfolio’s 91-year history that both stocks and bonds fell during the same year: 1931, 1941, 1969, and most recently in 2018.

60/40 was always there for its investor friends when they needed it, but it did have a wild side that would rear its ugly head from time to time. The stock portion of its personality was down 25 years of its 91-year lifetime. The average loss for stocks during those 25 years was more than 13%. But 60/40 had a more stable, rational side of its personality that balanced out these wild times. During those 25 down years in the stock market, bonds averaged a gain of more than 5%, dampening some of the losses and allowing 60/40 to live to fight another day when things got bad.

60/40 was remarkably stable and someone you could count on over the long haul. It never had a 10-year period where it lost money. Many of you will remember that 10-year stretch from ’82 to ’91 where 60/40 went on a ridiculous run, returning nearly 350%. In five out of those 10 years, it saw returns of more than 20% and four of those years were over 30%! We all had a blast despite that wicked hangover from the Black Monday party in 1987.

But even when things were the bleakest, from 1929–1938, 60/40 still earned a respectable 20% total return, even in the face of mounting adversity.

Investors will now have to grapple with the fact that with the passing of the 60/40 portfolio, diversification is also dead. One of 60/40’s early mentors, Peter Bernstein, once said, “Diversification is the only rational deployment of our ignorance.” It’s a shame we will now have to figure out other ways to deploy our ignorance if stocks and bonds no longer offset one another.

It’s sad because 60/40 didn’t have to end this way. Investors could have simply diversified more widely across different geographies, asset classes and strategies, saved more money or adjusted their expectations.

60/40 is survived by its immediate family—wife, asset allocation, and children Vanguard, rebalancing and comprehensive investment planning. Distant relatives include crypto, pot stocks, and technology IPOs, but they were all left out of the will.

Donations can be made to your own IRA, 401k, or brokerage account on a regular basis in 60/40’s honor.

RIP, 60/40 portfolio. You will be missed. I hope to see you again someday in the big retirement portfolio in the sky, where interest rates are always 6% and stock market valuations never go above 15 times the previous 10 years’ worth of average earnings. 



I placed this at the end in case you’re in the mood for some serious stuff.

The debate over Congressional, regulatory and court activities regarding the issues related to protecting investors interest in the financial world has been going on for decades, but it has reached a fever pitch in the last year or so. The latest manifestation is the SEC’s release of what has become known as the “Best Interest Rule.”

Let me preface this with the observation that, as readers of my past NewsLetters know, I’m extremely biased on this subject.

Below are excerpts from the SECs new Rule and my thoughts noted in brackets and indented.

“SEC adopts rules and interpretations to enhance protections and preserve choice for retail investors in their relationships with financial professionals.

“With the adoption of this package, regardless of whether a retail investor chooses a broker-dealer or an investment advisor (or both), the retail investor will be entitled to a recommendation (from a broker-dealer) or advice (from an investment advisor) that is in the best interest of the retail investor and that does not place the interests of the firm or the financial professional ahead of the interest of the retail investor…”

[From the dictionary:

Recommendation – a suggestion or proposal as to the best course of action, especially one put forward by an authoritative body. Synonym : advice

Advice – guidance or recommendations offered with regard to prudent future action

Begs the question: if there is no fundamental difference between suitability (brokers) and fiduciary (registered investment advisors) as reflected below, why not just hold everyone to the fiduciary standard?]

“This rulemaking package will bring the legal requirements and mandated disclosures for broker-dealers and investment advisors in line with reasonable investor expectations…”

[As you read this, you decide if it’s in line with reasonable expectations. I’ve been practicing for over 30 years and don’t find it remotely reasonable.]

Solely Incidental Interpretation

The broker-dealer exclusion under the advisor act excludes from the definition of investment advisor – and thus from the application of the Advisers Act – a broker or dealer whose performance of advisory services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation for those services. The interpretation confirms and clarifies the Commission’s interpretation of the “solely incidental” prong of the broker-dealer exclusion of the Advisers Act. Specifically, the final interpretation states that a broker-dealer’s advice as to the value and characteristics of securities or as to the advisability of transacting and securities falls within the “solely incidental” prong of this exclusion if the advice is provided in connection with, and is reasonably related to, the broker-dealer’s primary business of effecting securities transactions.

[This is the opening big enough to drive not just a truck through but a battleship. When you look at the ads of the major wirehouses, ask yourself if they sound like something “solely incidental” to the “business of effecting securities transactions” or comprehensive planning advice:

Merrill Lynch: It all starts with you. Your life. Your priorities. Our advice and guidance.

Morgan Stanley: Wealth Management. We help individuals reach their long-term financial goals.

Prudential: Whether you’re a DIYer or prefer a professional’s approach, our mutual funds, ETFs and personalized portfolios – delivered the way you want – can help you live the financial life you dream about. Your personalized investing solutions await.

Edward Jones: Before we can develop an investment strategy for you, we get to know you. Why are you investing? What do you want to do? This is your financial future. It shouldn’t be left to chance or some off-the-shelf plan.

Please understand, I believe these are all commendable services; however, they are not brokerage services, they are investment advisory services and should be subject to a fiduciary duty.]

“An investment advisor owes a fiduciary duty to its clients under the Advisers Act a duty that is established by an enforceable through the Advisers Act. This duty is principles-based and applies to the entire relationship between an investment advisor and its client.”

[Yep, I agree, and it should apply to ALL firms who provide investment advice.]

Reg B ban on sales contest

“… Would not prevent a BD from offering only proprietary products, placing material limitations on the menu of products or incentivizing the sale of such products through its compensation practices, so long as the incentive is not based on the sale of specific securities or types of securities within a limited period of time.”

[Wow, that really is going to protect the public.]

Standard of Conduct

If you are a broker-dealer that provides recommendations subject to regulation best interest, include [emphasis required]: “When we provide you with a recommendation, we have to act in your best interest and not put our interests ahead of yours. At the same time, the way we make money creates some conflicts with your interest.

“If you are an investment advisor, include [emphasis required]: “When we act as your investment advisor, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interest.

[Okay, can anyone really argue that this distinction is “reasonable”? Can you figure out the difference between a broker-dealer and an investment advisor? To me, they sound like two peas in a pod, both swimming in a sea of similar conflicts. Horsepucky!]

Don’t forget to ask whoever you’re getting advice from to sign the Oath. [the full report, all 564 pages]


Hope you enjoyed this issue, and I look forward to “seeing you” again.



Harold Evensky


Evensky & Katz / Foldes Financial Wealth Management



For previous NewsLetters:

NewsLetter, Volume 12, No. 5 – September 2019

NewsLetter, Volume 12, No. 4 – July 2019



Important Disclosure
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Evensky & Katz / Foldes Financial Wealth Management (“EK-FF”), or any non-investment-related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from EK-FF. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. EK-FF is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of EK-FF’s current written disclosure Brochure discussing our advisory services and fees is available upon request. Please Note: If you are an EK-FF client, please remember to contact EK-FF, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. EK-FF shall continue to rely on the accuracy of information that you have provided.