8 Common Investor Biases That Impact Investment Decisions

This article was originally published on investopedia.com

One of the biggest challenges to our own success can be our own instinctive behavioral biases. In previously discussing behavioral finance, we focused on four common personality types of investors.

Now let’s focus on the common behavioral biases that affect our investment decisions.

The concept of behavioral finance helps us recognize our natural biases that lead us to making illogical and often irrational decisions when it comes to investments and finances. A prime example of this is the concept of prospect theory, which is the idea that as humans, our emotional response to perceived losses is different than to that of perceived gains. According to prospect theory, losses for an investor feel twice as painful as gains feel good. Some investors worry more about the marginal percentage change in their wealth than they do about the amount of their wealth. This thought process is backwards and can cause investors to fixate on the wrong issues.

The chart below is a great example of this emotional rollercoaster and how it impacts our investment decisions.

 

The Psychology of Investing Biases

Behavioral biases hit us all as investors and can vary depending upon our investor personality type. These biases can be cognitive, illustrated by a tendency to think and act in a certain way or follow a rule of thumb. Biases can also be emotional: a tendency to take action based on feeling rather than fact.

Pulled from a study by H. Kent Baker and Victor Ricciardi that looks at how biases impact investor behavior, here are eight biases that can affect investment decisions:

  • Anchoring or Confirmation Bias: First impressions can be hard to shake because we tend to selectively filter, paying more attention to information that supports our opinions while ignoring the rest. Likewise, we often resort to preconceived opinions when encountering something — or someone — new. An investor whose thinking is subject to confirmation bias would be more likely to look for information that supports his or her original idea about an investment rather than seek out information that contradicts it.
  • Regret Aversion Bias: Also known as loss aversion, regret aversion describes wanting to avoid the feeling of regret experienced after making a choice with a negative outcome. Investors who are influenced by anticipated regret take less risk because it lessens the potential for poor outcomes. Regret aversion can explain an investor’s reluctance to sell losing investments to avoid confronting the fact that they have made poor decisions.
  • Disposition Effect Bias: This refers to a tendency to label investments as winners or losers. Disposition effect bias can lead an investor to hang onto an investment that no longer has any upside or sell a winning investment too early to make up for previous losses. This is harmful because it can increase capital gains taxes and can reduce returns even before taxes.
  • Hindsight Bias: Another common perception bias is hindsight bias, which leads an investor to believe after the fact that the onset of a past event was predictable and completely obvious whereas, in fact, the event could not have been reasonably predicted.
  • Familiarity Bias: This occurs when investors have a preference for familiar or well-known investments despite the seemingly obvious gains from diversification. The investor may feel anxiety when diversifying investments between well known domestic securities and lesser known international securities, as well as between both familiar and unfamiliar stocks and bonds that are outside of his or her comfort zone. This can lead to suboptimal portfolios with a greater a risk of losses.
  • Self-attribution Bias: Investors who suffer from self-attribution bias tend to attribute successful outcomes to their own actions and bad outcomes to external factors. They often exhibit this bias as a means of self-protection or self-enhancement. Investors affected by self-attribution bias may become overconfident.
  • Trend-chasing Bias: Investors often chase past performance in the mistaken belief that historical returns predict future investment performance. This tendency is complicated by the fact that some product issuers may increase advertising when past performance is high to attract new investors. Research demonstrates, however, that investors do not benefit because performance usually fails to persist in the future.
  • Worry: The act of worrying is a natural — and common — human emotion. Worry evokes memories and creates visions of possible future scenarios that alter an investor’s judgment about personal finances. Anxiety about an investment increases its perceived risk and lowers the level of risk tolerance. To avoid this bias, investors should match their level of risk tolerance with an appropriate asset allocation strategy.

Avoiding Behavioral Mistakes

By understanding the common behavioral mistakes investors make, a quality financial planner will aim to help clients take the emotion out of investing by creating a tactical, strategic investment plan customized to the individual. Some examples of strategies that help with this include:

  • Systematic Asset Allocation: We utilize investment strategies such as dollar cost averaging to create a systematic plan of attack that takes advantage of market fluctuations, even in a down market period.
  • Risk Mitigation: The starting point of any investment plan starts with understanding an individual’s risk tolerance.

The most important aspect of behavioral finance is peace of mind. By having a thorough understanding of your risk appetite, the purpose of each investment in your portfolio and the implementation plan of your strategy, it allows you to feel much more confident about your investment plan and be less likely to make common behavioral mistakes.

Working with a financial planner can help investors recognize and understand their own individual behavioral biases and predispositions, and thus be able to avoid making investment decisions based entirely on those biases.

***

The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

When Should You Give Inheritance Money to Your Kids?

When it comes to gifting and giving money, especially to family members, people are oftentimes confused on when is the right time to pass over their inheritance. Should an inheritance be strictly given after one’s death? Should it be used while one is still alive?  Let’s take a look at some of these questions.

Of course, every family is different, in terms of how they want to be remembered, but there are some things that every family should think about when passing on wealth. Many articles recently have been stating that individuals believe they will need an inheritance to maintain their level of wealth and living when they grow older. A Merrill Edge survey revealed that “a third of “mass affluent” Americans from Gen Z to baby boomers with investible assets of at most $250,000 are waiting on inheritances to achieve financial stability.” It’s interesting to see that so many individuals are relying on such wealth as part of their financial future. With our ever changing economy and sky-rocketing inflation, It will be interesting to see how the current market conditions impact the ability for individuals to continue to pass down wealth. Next, let’s take a look at when family members should think about passing down their inheritance to their heirs. 

Give Now or Later?

Giving now rather than later is the preferred approach for many financially comfortable people these days. According to a 2019 Merrill study, Leaving a Legacy: A Lasting Gift to Loved Ones, 65% of Americans 55 and older say it’s better to pass on at least part of their estate while they are still alive.

While every family person has a different financial situation and circumstance, if deciding whether to gift your money earlier or later, here are some questions to ask yourself. 

Are You Over-Giving?

Before you give to your children or family members, make sure you are not sacrificing your own personal financial situation. Oftentimes, family members give too much to their children and don’t save enough for their own lifetime. 

Some of your children may prefer to wait for their inheritance, while others could benefit greatly from having the assets today. Before making that decision, make sure to communicate with your family members to make sure everyone is comfortable with the situation at hand. Check out our podcast episode with David Pearl discussing money and financial traditions, explaining how to pass down money values and concepts. 

Where the U.S Tax Code Comes In

For those who are interested in contributing to the education of heir children or grandchildren, 529 plans may be a great place to start. 529 plans allows you to slowly contribute and save for your children’s education that they can use later in life. For the 2023 tax year, remember you can give up to $17,000 as a single filer and $34,000 as a married couple tax-free without it going against your gift exemption, 

While this situation varies from person to person, it’s important to plan out your inheritance and set a will in place so that your hard-earned money is shared amongst your loved ones. Planning early and asking yourself these questions is a great strategy to help you make the right decisions when it comes to your inheritance. If you have any questions about your personal financial situation and what makes the most sense for you and your family, please email us at info@shermanwealth.com. 

Avoid These Common Costly Financial Mistakes

We know that it can be difficult or overwhelming to stay on top of your finances. At Sherman Wealth, we focus on helping young professionals and families get their finances on the right track, and curate strategies to help simplify their life as it becomes more complicated. So whether you are working with a financial advisor or not, let’s take a look at some costly financial mistakes we see young professionals and millennials oftentimes make. 

One of the first commonly made mistakes we see with our clients is purchasing the wrong insurance products or not having the proper insurances in place. We see tons of people in their 20’s purchasing whole life and non-level term policies from large insurance companies that are truly not right for them and that they truly do not understand. Oftentimes, it is not until these individuals are starting their families and progressing their careers that they realize they have been losing money with the wrong policy for them. It is very important to discuss with a professional or research what policies are best for you and your family before blindly purchasing the wrong insurance. 

Budgeting and saving is always a priority when it comes to building your financial portfolio and especially starting a family. In previous blogs, we have talked about the importance of starting and saving from an early age and the power that compounding interest and  “time” in the market has on your money. Whether you are starting your first job or graduating college, it is never too early to start saving, even if it’s only a few dollars per month. On the topic of spending, many young professionals inflate their lifestyle way too quickly and are subject to lifestyle creep. Make sure you are aware of your cash inflows and outflows, and are not spending more than you make. Creating a budget and using the “bucket strategy” can allow you to effectively keep track of your spending. 

Another commonly made mistake we see among this demographic is not signing up for your company 401(k) and taking advantage of the match. We have seen tons of cases where individuals are not signing up for their company’s retirement plan and matches until five to ten years later, which is giving away a large chunk of your salary benefits and essentially, “free money”. It is always the right move to sign up for your company 401(k) and contribute the full match if your situation allows you too in order to build a strong retirement account.

Lastly, another mistake we see individuals making is not contributing to their health savings accounts (HSAs). A health savings account (HSA) can help you lower your taxes as they are triple tax free. Our advice is to always take advantage of these types of accounts if you are eligible, that can help you make the most of your current situation and future. 

By avoiding these four commonly made financial mistakes in your early years, you and your family will be in a much better situation as you embark on the next chapter in your life. If you made financial resolutions earlier this year, make sure you are checking them off as you make way through the year and let us know if you need any help. As always, speak with your financial professional to ensure you are making the right decision for your particular situation. If you have any questions, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here

Why Investors Can Be Their Own Worst Enemy

Investors often think they are doing better than they actually are. But the reality is that most investors are actually underperforming their benchmark. Two recent articles regarding behavioral finance — Which Investor Personality Best Describes You? and 8 Common Investor Biases That Impact Investment Decisions — detail a concept which is the thought that our own instinctive behaviors are the biggest challenge to us as investors. Another topic that we have written on is the issue with trying to “time” the market. What people often don’t realize is that these two concepts have more in common than you might think.

For over two decades, financial research firm Dalbar has been analyzing investor returns. It recently published its 22nd annual Quantitative Analysis of Investor Behavior study that compared these investor equity fund returns versus the market benchmark. The results showed significant underperformance from investors. Dalbar points out that “for the 30 years ended Dec. 31, 2015, the S&P 500 index produced an annual return of 10.35%, while the average equity mutual fund investor earned only 3.66%. The gap of 6.69 percentage points represents the diminished returns.”

So why is this the case?

As advisors, we have long preached the importance of cost and the large effects it can have on returns. While cost is a factor in investor underperformance, there are other factors that play even a larger role. The study showed that the biggest contributing factor to equity investors’ underperformance over the past 20 years is voluntary investor behavior. What does that mean? Let’s look at a couple of examples of investor behavior that contributes to underperformance.

1. Panic selling: The No. 1 rule in a market collapse is not to panic. Markets can be erratic with times of larger-than-normal volatility. Responding emotionally is never a good idea. Start by understanding what your risk tolerance is. At that point, make sure you understand your investments and what their purpose is in your portfolio. Finally, look at your portfolio as a whole and make sure it is aligned properly with your risk tolerance and goals.

2. Trend chasing/herd mentality/FOMO (Fear of Missing Out): As the phrase goes: what you see is what you believe. When investors see a stock continue to go up, or everyone around them is talking about buying that stock, it is easy to follow the crowd and jump in without thinking. History has shown us that past performance is no guarantee of future returns.

3. Overconfidence: Many investors feel they perform better than what is actually happening or real. This can cause investors to believe they can accurately time the markets.

Source: BlackRock; Informa Investment Solutions

Telling investors about these issues is one thing. Actually seeing the fixes put into practice is another challenge. The key point to remember is that we are often our own worst enemies when it comes to managing our own investments. Having a great financial and investment plan is irrelevant if you don’t have the mindset to follow through and stick to it. Becoming self-aware of these issues is a great first step.

This article was originally published on investopedia.com

***

The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

2022 MCPS Business Pitch Challenge

On Thursday, March 24th, Brad Sherman was asked to judge the MCPS Business Pitch Challenge, which is an annual local challenge inspired by the show “Shark Tank”. Students from seven high schools participated in this year’s event, including Blake, Churchill, Gaithersburg, Northwest, Kennedy, Northwood, and Paint Branch. Students pitched their business ideas for a solution to an existing problem, improvement of an existing product, or they created a need for a product/service to a panel of local entrepreneur judges.

As an entrepreneur and small business owner, Brad Sherman was thrilled to support such a wonderful event for a second year in a row, promoting leadership, financial literacy, and creativity. With the lack of financial literacy around the world, this event was a great opportunity for students to start thinking financially and as an entrepreneur from a young age.

Congratulations to the first place winner this year from Blake High School and to all the teams who participated in this year’s event and presented their well-thought ideas.

For those who missed it, you can watch the youtube replay here. It was a great opportunity to support small businesses and entrepreneurs, as well as giving back to the community.  If you have any questions about the event, email ASKMCPS@mcpsmd.org or let us know at info@shermanwealth.com and we are happy to connect you with the right contacts.  Additionally, if you are a small business owner and are seeking consulting assistance, email us and we are happy to help.

How The Fed & Rising Interest Rates Will Affect Your Wallet

We know many of you have been anticipating the Fed Meeting that occurred earlier this week. What you may be wondering now is how the hike in interest rates will affect your wallet and your future financial situation. Check out the transcription from our Fed Meeting episode of Launch Financial below or listen here

Brad: Good afternoon and welcome to a Federal Reserve Meeting special episode of Launch Financial, joined, as always, by Ashley. Ashley, how’s it going? 

Ashley: Not much everything’s going well, we’ve got some big news to talk about.

Brad: Big news. First Federal Reserve rate hike since 2018, way before you were following economic policy, I’m sure, but hard to believe it was that long ago. Folks are not used to a rising interest rate environment, as the American consumer and markets have been kind of conditioned to a falling interest rate economy since 2018, as we mentioned. 

Brad: Obviously, we know we had emergency said cuts during COVID. We want to talk about what it means for the markets, the economy and of course, your wallet, how it impacts you, the consumer and investor. Fed Chair Jerome Powell, speaking now with the 10-year treasury yield at 2.2%, which is the highest since about 2019. 

Brad: We just want to unpack what that means. So those of you with credit card debt, you should see an even greater interest rate increase, we’ve talked about this for quite some time. So if there’s a zero percent offer on your credit card and you have a balance or if you’re thinking about making a big purchase, grab those zero percent interest rate credit cards while they’re still out there. 

Brad: Now Auto loans. A lot of folks are having an issue buying a car, as we’ve talked about for some time. We do think that this will impact your auto loan, so we don’t know what the direct impact to the consumer will be, but figure about a quarter of a percent as the Federal Reserve continues to raise rates. In fact, they are talking about doing seven rate hikes throughout the course of the year. So this is more of a preparation now. If you haven’t been preparing since we talked about this a couple of months ago, the Federal Reserve has telegraphed this move and it shouldn’t be that much of a surprise. I think it’s more of a surprise that they want to do seven more this year to get it to about 1.8 percent. 

Brad: So for mortgages, we saw the average 30 year fixed mortgage rate move a full percent since November. That’s a dramatic move. The market’s been digesting this news for quite some time, so that’s something that if you haven’t refinanced or you’re still in the market for a home, make sure you’re double checking with your lender to see what impact this will have on your purchasing ability and your monthly payments. 

Brad: Next up we have student loans that might be tied to LIBOR or T-bills. Of course, most student loans are at a fixed rate, so anything with a fixed rate, of course, won’t be impacted. And then, of course, we have home equity lines of credit. A lot of people have been tapping into their homes to do projects and other things. Remember that those are directly tied to the prime rate. So, at your next statement, you will see an impact there of your prime plus a certain adjustment. That means that your interest rate just went up by 0.25 percent or 25 basis points, as it’s been indicated in the news, so lots to unpack here. We will continue to follow all these moves for you, as we always do. Ash, anything you want to add in this emergency press conference? 

Ashley: Yeah, I think it’s just important to keep an eye out for these different things you mentioned above. We also saw that jobs and wages might be impacted as well as we have been in a fast wage growth environment with a lot of job openings. So people are saying that might change as well. Also, it is important to note that savings accounts will be impacted as well with higher interest rates, so keep an eye out for all of this and let us know if you have any questions or thoughts. 

Brad: Great. And we’re also watching the yield curve, an indicator of future recessions, which is flattening out. We will be following all these things and more, let us know as Ashley said, if you have any questions that may directly impact you and your money. 

If you have any further questions about the impacts of the Fed raising interest rates, email us at info@shermanwealth.com or schedule a complimentary 30-minute meeting here

 

Why Choose A Financial Advisor With A Big Tech Stack

In the times of the coronavirus pandemic and with working-from-home becoming our new norm, we are all learning how to conduct our daily lives from the confines of our laptops and smartphones. Furthermore, while adjusting to this new way of life, it is crucial that the platforms and technology we use to connect with other professionals is as high-tech as possible. This is why having a financial advisor with the most current and state-of-the-art technology is crucial. 

In an article written by the Financial Advisor Magazine, they said that advisors with inadequate technology  weren’t able to conduct all aspects of their business during the pandemic. The article further states that more than three quarters of U.S. and Canadian advisors in a recent survey reported losing business due to inadequate technology as the coronavirus pandemic took hold. 

As mentioned previously, the ability to meet with your clients virtually and interact with them as if you were face to face is the only way to make these unprecedented times feel somewhat normal and keep your clients happy. According to the survey, eighty-nine percent of the respondents said their desktop software and firm-provided technology had become more essential during stay-at-home mandates; and 74% wished their firm had access to better technology tools.

Sherman Wealth has always utilized the most high-tech and innovative technology to serve our clients with. From staying in touch virtually via zoom meetings, texting, digital forms, screen sharing, or conference calls, to allowing our clients to constantly check their portfolio with the simple click of a button that takes them to our client app, this technology keeps our clients on top of their portfolio at all times. It also allows them to add in held away accounts that are not managed here or any bank accounts and debts to get a full financial picture. Our online scheduler allows our clients to book appointments at the tip of their fingers in order to stay connected at their leisure. Furthermore, our firm offers a risk tolerance questionnaire, where our clients can check their risk number at any time, to see how much risk you are actually taking within your portfolio. When choosing your financial advisor, make sure to think about choosing a firm that can reach you and give you the best service, especially during times like these when face-to-face communication is not possible. If you would like to inquire more about any of the technological services we offer to our clients, please reach out and we would be happy to share more information with you.

How to Recognize Behavioral Finance Biases

Over the last few months, we’ve faced a great deal of economic turmoil and uncertainty, which has a great impact on the finances and mindsets of many all across the world.  Through these hardships, we’ve seen individuals face and struggle with a great deal of biases in respect to their portfolios and investments. We want to bring light to these behavioral finance biases that are only natural in human behavior and stress the importance of maintaining long term goals.

This past week has been stuffed with an overwhelming amount of news – the drawn out 2020 presidential election, the Pfizer vaccine announcing 90% accuracy and the coronavirus pandemic making a second wave with over 10 million cases.  As Americans are grappling with all this news, so is the market.

 Prior to the presidential election, we saw people selling out of their 401(k)’s or loading it up depending on which side of the political aisle they stood. Additionally, we spoke with individuals who were waiting to buy back in the market when the coronavirus cases diminished, even though the cases are the highest they’ve been since March and we are seeing the strongest market in a long time. Those who said “we won’t invest until the news settles down” back in April are still waiting as we still see a great abundance of news and a raving market. These biases prove the importance of sticking with a long-term goal and not being persuaded by beliefs and expectations.

 As we proceed into what seems like could be another coronavirus pandemic lockdown alongside a strong market, it’s interesting to look back at the data and hindsight biases and see how individuals may alter their investment approach a second time around.  These last nine months have been a wild ride and crazy for the market to digest. However, the market has proven many wrong these last few months, showing the power of its resilience and strength. If you have any questions specific to your portfolio and investment decisions, please reach out to us at info@shermanwealth.com and schedule a free 30-minute consultation here.   

 

What Happens If You Try To Spend More Than Your Credit Limit?

When you sign up for a credit card, you are often assigned a credit limit when that account is opened.  These limits typically start at $200 and go up to tens of thousands of dollars.  With so many people out of jobs and finding it hard to make ends meet these days, credit cards have become a necessary resource to pay for things that we might not have the money for right now. However, the more you charge on your cards, the closer you may come to hitting that max limit.  If you do hit that amount, you are likely to get hit with over-the-limit fees. Before you decide to use your credit card to pay for necessities, there are alternatives to going over your max before risking having your credit limit cut or incurring unnecessary fees.  

Can You Go Over Your Credit Limit?

Yes, you can go over your credit limit, but there’s no surefire way to know how much you can spend in excess of your limit. Card issuers may consider a variety of factors, such as your past payment history, when deciding the risk of approving an over-the-limit transaction. Any approved transactions above your credit limit are subject to over-the-limit (or over-limit) fees. This credit card fee is typically up to $35, but it can’t be greater than the amount you spend over your limit. So if you spend $20 over your limit, the fee can’t exceed $20.

Due to the CARD Act of 2009, over-limit fees can’t be charged without your consent. As a result of these regulations, most card issuers have done away with over-limit fees and the default for any transactions over your credit limit may be that the transaction is simply denied.

If you do consent to a one-time over-limit fee, you can change your mind and opt-out at any time. However, in doing so, your card issuer will likely decline any purchases you attempt to make over your limit. Even if you opt-in to over-limit fees, transactions exceeding your credit limit may still be denied.

Should You Go Over Your Credit Limit?

While spending over your credit limit might relieve some short-term problems, it can also cause long-term financial issues, including fees, debt and damage to your credit score. The best practice is to try to maintain a low credit utilization rate – avoid maxing out your card and spending anywhere near your credit limit.  If you do go over your limit, you should sit down and consider why it happened in the first place and review your budget. You should figure out what purchases caused you to spend more and whether you can make any changes to your spending habits.

Alternatives If Your Credit Limit Is Low

For those that may have a low credit limit or if your credit limit recently got cut, there are some options to ensure you don’t max out your spending. If you’ve had a low credit limit for a while and currently have a stable job, you may want to request a credit limit increase. This can be a good idea if you have good credit (scores 670 to 739) or excellent credit (scores 740 and greater) or if you haven’t updated your income in a while and make more money than what’s listed. Your card issuer may pull your credit report for this request, which may cause a small, temporary ding to your credit score.

However, if your credit limit was reduced, you may want to consider other options. Cardholders with good payment history and a stable job should call their card issuer and ask for reconsideration.  You should ask why your credit limit was cut, explain that your account is in good standing and that you have a stable source of income to pay off your bill. This may shed light on why your limit was lowered and potentially result in your credit limit increasing — though there is no guarantee. Rather than asking for a credit limit increase on the card that had a reduction, you may want to consider any other cards you have instead. If you have three credit cards and one got the limit cut, see if you can get an increase on one or both of the other two,

If you have a history of missed payments or maxing out your cards, you are likely not a good candidate for reconsideration and don’t want to draw attention to yourself. Therefore, if you fall into one of these categories, it’s best to not try to request a higher limit.

When To Apply For A New Credit Card

Cardholders with only one credit card and a low credit limit may want to consider opening a new credit card, but should be aware of any potential risks. For starters, if you were recently laid off or faced a reduction in income, you may not be in the best position to be approved for a new card, and there’s no sense in adding a new credit inquiry to your credit report if your chances are low. Also, if you have a history of maxing out your card, you should be aware that more credit can lead to more debt. An additional credit limit can be helpful for affording your expenses, but it can also be harmful if you overspend.

Before opening a new card, give yourself clear guidelines on how you’ll use the card and stick to keeping a low credit utilization rate. When it comes time to pay your bill, make on-time payments of at least the minimum every month for all of your cards.  If you are able to do so, pay in full so that your credit score will  improve and your debt will be minimized. When applying for a new card, check your credit score first to narrow down your options. Then consider cards based on your credit score. 

In these tough times, we need to be responsible when it comes to spending and not see going over your credit limit as a choice. If you do need to use your credit cards to pay for utilities, groceries and other necessities right now, make sure you are aware of your max and other options you might be able to work out with the credit card companies before going over your limit. When you do receive those credit card statements, make sure to pay at least the minimum amount each month to maintain a positive credit score. And, make sure you are paying the bills on time to ensure you won’t incur any late fees either.  If you have any questions about credit, credit cards or other issues concerning your finances, please contact us.  We are all in this together and we’re here to help! 

The Financial Services Industry Is Evolving

As our world is evolving and industries are becoming more complex, we have found that consumers too are heightening their expectations in terms of products and services received. A recent survey by Spectrem Group found that there is quite a gap between what consumers expect and what they receive in actuality, especially in regards to the financial services industry. 

As you can see from the chart below, financial planning and wealth management were two areas in which consumers found that services expected and services received had the least discrepancy. As a financial advisor, we recognize that the financial services industry is evolving, relationships continue to grow and adapt, and advisors must strive to deliver a holistic service to their clients. 

The chart above shows the client demand for an all-encompassing approach to the financial services industry and the importance of finding an advisor who truly understands the value of a financial plan. At Sherman Wealth, our focus is on helping the whole client, whether it involves setting up a 529 for those with young children, making sure retirement goals can be attained, knowing how to best maximize your 401(k) or creating a monthly budget and thorough financial plan for those just starting out. We are constantly adapting our technology solutions to keep up with the ever changing advancements as well as refining our relationships with clients. If your needs align with our values, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.