Investopedia 100 Top Financial Advisors of 2021

One of the core reasons I started the company was because financial literacy and empowerment was lacking in the US education system and big firms made you believe unless you had a lot of investable assets, finding conflict-free financial advice was impossible. Investopedia is a fantastic website full of educational resources and is doing such great work to bridge the financial literacy gap across the country. We are honored to be included in their 2021 top 100 list of financial advisors who are breaking barriers and pushing the ball forward in terms of financial literacy and empowerment of financial education.

The Investopedia 100 celebrates financial advisors who are making significant contributions to critical conversations about financial literacy, investing strategies, life-stage planning and wealth management. With more than 100,000 independent financial advisors in the U.S., the Investopedia 100 spotlights the country’s most engaged, influential, and educational advisors. Brad Sherman has been named to this list for the third year in a row.

About Investopedia

Investopedia is the world’s leading source of financial content on the web. They help investors understand financial concepts, improve investing skills, and learn how to manage their money.

Disclaimers

Investopedia’s proprietary methodology focuses on awarding financial advisors who have demonstrated a top-of-the-industry ability to reach the largest and most diverse financial and investing audience. That reach is measured by the impact and quality of the advisor’s published work, public appearances, online following, and commitment to financial literacy across diverse communities. The 2021 Investopedia 100 also heavily weighed peer-to-peer nominations, highlighting the most influential advisors who were recommended by their peers. We receive no compensation from placing advisors on our list, nor does an advisor’s appearance on our list constitute an individual endorsement by Investopedia of such advisor.

Awards, third-party rankings and other recognitions are not indicative of future performance. Awards and other recognitions should not be interpreted as a guarantee or suggestion that a client or prospective client will experience a certain level of results if our firm is engaged, or continues to be engaged, to provide investment advisory services, or as an endorsement of our firm by any past or present client. Neither Investopedia nor any of its associates are affiliated with Plancorp, none of the awards or other recognitions are based on client evaluations of our firm, and we have not made any payments for or in anticipation of any award or other recognition.

Brad Sherman Named to Investopedia Most Influential Advisors

One of the core reasons I started the company was because financial literacy and empowerment was lacking in the US education system and big firms made you believe unless you had a lot of investable assets, finding conflict-free financial advice was impossible. Investopedia is a fantastic website full of educational resources and we are honored to be included in their top 100 list of financial advisors who are breaking barriers and pushing the ball forward in terms of financial literacy and empowerment of financial education. Honored to be on the list among other great advisors, peers, and friends.

The Investopedia 100 celebrates financial advisors who are making significant contributions to critical conversations about financial literacy, investing strategies, life-stage planning and wealth management. With more than 100,000 independent financial advisors in the U.S., the Investopedia 100 spotlights the country’s most engaged, influential, and educational advisors. Brad Sherman has been named to this list for the third year in a row.

About Investopedia

Investopedia is the world’s leading source of financial content on the web. They help investors understand financial concepts, improve investing skills, and learn how to manage their money.

Disclaimers

Investopedia’s proprietary methodology focuses on awarding financial advisors who have demonstrated a top-of-the-industry ability to reach the largest and most diverse financial and investing audience. That reach is measured by the impact and quality of the advisor’s published work, public appearances, online following, and commitment to financial literacy across diverse communities. The 2020 Investopedia 100 also heavily weighed peer-to-peer nominations, highlighting the most influential advisors who were recommended by their peers. We receive no compensation from placing advisors on our list, nor does an advisor’s appearance on our list constitute an individual endorsement by Investopedia of such advisor. 

Awards, third-party rankings and other recognitions are not indicative of future performance. Awards and other recognitions should not be interpreted as a guarantee or suggestion that a client or prospective client will experience a certain level of results if our firm is engaged, or continues to be engaged, to provide investment advisory services, or as an endorsement of our firm by any past or present client. Neither Investopedia nor any of its associates are affiliated with Plancorp, none of the awards or other recognitions are based on client evaluations of our firm, and we have not made any payments for or in anticipation of any award or other recognition. 

Has Your Employer Suspended Its 401(k) Matching During COVID-19?

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According to a recent survey, 16.1 percent of organizations have suspended matching employer contributions due to financial hardships caused by COVID-19. Worse yet, 1.3 percent of businesses have terminated their 401(k) plans altogether.1 401(k) plans and their matching employer contributions are relied on by millions of Americans to bolster their savings for retirement. If your employer has recently made an adjustment to its 401(k) offerings, you may want to consider how this could impact your future retirement and the next steps you should be taking.

Why Are Employers Changing Their 401(k) Plans?

COVID-19 has had a tremendous impact on businesses throughout the globe. With most states implementing stay-at-home orders, businesses have been forced to reduce hours or cease operation altogether. As Americans were encouraged to stay home throughout March, April and May, foot traffic all but vanished across America for months.

Even though some states have begun relaxing measures and stores are starting to open back up, America remains suspended in a fairly volatile market. People are worried about what the future will look like.  Many of them are strapped for cash and not willing to spend like they used to. In return, businesses are suffering and searching for ways to save. Unfortunately, one of the first things to go is often employer-sponsored benefits such as 401(k) plans or their matching contributions.

Is it Legal for an Employer to Suspend Matching Contributions?

In most cases, it is legal for an employer to suspend matching 401(k) contributions. While it may have been an enticing addition to your benefits package upon your hiring, employers do have the power to simply stop offering this benefit. The most important thing an employer can do in this instance is to effectively communicate with employees who will be affected by the change. For example, explaining that cutting these benefits is their solution to avoiding layoffs will likely make employees more understanding and receptive to the change.

If your employer doesn’t provide you with an explanation or any idea of if/when contributions will start up again, speak to your manager or HR department. If your employer offers contribution matches to a safe harbor 401(k) plan, they must offer notice to employees 30 to 90 days in advance of suspending contributions.  

What Should You Do if Your Matching Contributions Are Suspended?

In the case that your employer does suspend matching contributions, there are a few next steps you can take to help maintain and grow your retirement savings.

Having an employer suspend matching contributions, even if it’s only temporary, is a sign of the times. We’re facing a global pandemic, the stock market’s unpredictable and people are worried about money. If you have been personally impacted by the coronavirus, you can even withdraw up to $100,000 penalty-free as part of the recently passed CARES Act,3 although this should only be done if you are in dire need of financial assistance.  Withdrawing any amount from your 401(k) now will only rob your future retirement. 

If you have questions regarding your company 401(k), please reach out to your financial advisor.  Your advisor’s sole responsibility is to help you make unbiased, educated and objective decisions about your money. Use him or her as a sounding board to voice your concerns and discuss potential paths forward. How will you make up for the missing contributions? What financial impact will this change have on your future retirement? The market is volatile and economic confidence is low amongst investors. If you haven’t already, use this as an opportunity to reevaluate your current asset allocations and investment strategies. You likely have plenty of questions regarding any changes to your 401(k) and other investments and your advisor may be able to help you identify potential areas for improvement based on your current tolerance for risk.

Even if your employer has slashed matching contributions, that doesn’t mean you still can’t contribute to your 401(k). If you have the means to do so, consider upping your contributions, for now at least, to help offset the loss of any missing contribution matches. The contribution limit for a 401(k) increased in 2020 to $19,500. If you’re over 50, you’re allowed to contribute an additional $6,500 in catch-up contributions.4

In these challenging times, you are not alone if you find yourself working for a company that has suspended its 401(k) matching contributions.  Hopefully, these changes are just temporary, but it is necessary to plan accordingly for what is happening in the present.  Every penny counts when it comes to preparing for retirement and it is important to know how these 401(k) changes will affect your future savings.  If you have any questions about the impact this may have on your future retirement earnings and what you should be doing right now to make up for any lost funds, please contact us.  We are here to help!

  1. https://www.psca.org/sites/psca.org/files/uploads/Research/snapshot_surveys/CARES%20Act%20Snapshot%20Summary.pdf
  2. https://www.irs.gov/retirement-plans/mid-year-changes-to-safe-harbor-401k-plans-and-notices
  3. https://www.congress.gov/bill/116th-congress/house-bill/748/
  4. https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500

Introducing Beers with Brad

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We have hosted two very successful Beers with Brad financial literacy seminars in Gaithersburg, Maryland at Launch Workplaces.  We’ve had terrific beer from great local breweries around Maryland. I think when you’re able to relax and have a beer, hear what everyone else is thinking about financially and truly see that you are not alone and other people have the same fears around money it enables the conversation to expand and for questions to surface that you may not have asked before.

I created the idea of Beers with Brad because people are so hesitant to speak up about their financial anxieties and worries about how to save for retirement.  Many questions surround saving for kids college education and how to valuate the interest rate on your student loan debt versus what you could be potentially making in the diversified portfolio of stocks, bonds, cash, real estate, and other asset classes.  There is so much information available that it can be overwhelming and many people I’ve talked to are searching for clear answers.

As Morgan explains:

That’s because investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves. –Morgan Housel

Young families have so much going on in their lives that they don’t have the time to discuss personal finances and one of the greatest stresses in a marriage is finance.  We created this video to show exactly what Beers with Brad is, how relaxed it is and how engaging the conversations are.

Plus, who doesn’t like a good local craft beer?

https://youtu.be/msM_rkQYkpc

 

If you have any questions about the event contact us at info@shermanwealth.com we hope to see you there!

If you are unable to join this month, please let us know if you want to be added to the email list for the future events below:

[contact-form-7 id=”4411″ title=”Beers With Brad Updates”]

 

Robo Advisors vs Traditional Advisors: Beyond the Red Pill and the Blue Pill

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When you hear the words Robo Advisors, what do you think of…? The Matrix?

And does Financial Advisor conjure up a swaggering DiCaprio in The Wolf of Wall Street? Or maybe someone in a Brooks Brothers suit, describing products you barely understand?

If you said yes to either, you’re not alone.

One common fear about the new wave of robo advisors is that, once you take the “red pill” and dive in, you’re no longer in control. You’ve turned your money over to a mysterious series of algorithms with no human in sight to help you guide it.

Many investors – particularly younger ones – are also put off by the idea of bespoke-suited advisors from traditional firms who are trying to up-sell them investments and insurance products with hefty fees and commissions. And even if they were to opt for the more conservative “blue pill,” traditional advisories are often not interested in speaking with them because they can’t make the hefty minimum investment.

While there is some truth to both stereotypes, there are also big shifts going on in the financial industry that make this a great time to take advantage of both a new breed of independent financial advisor and the efficiencies that targeted robo-platforms can provide.

Here are the differences – as well as drawbacks and benefits – in a nutshell:

Robo Advisors:

Pros:

  • Inexpensive compared to full-service portfolio management
  • Lower barrier to entry: lower initial investment requirements
  • Democratic: all clients benefit equally from algorithmic decisions, not just the big investors
  • Data-driven: driven by numbers, trends, and deep data – not emotions

Cons:

  • Limited scope: robo advisor only handle investment management, not comprehensive financial planning
  • Generic: they categorize you using broad-stroke demographic – not individualized- goal and risk-tolerance profiling to build your portfolio
  • Automatic: selling or “rebalancing” can be triggered by pre-set formulas at times that you might be wiser to stay put
  • Limited opportunities: many robo-firms currently have a limited or “preferred” set of funds and options you can invest in
  • Impersonal: no human interaction for questions regarding your individual investment portfolio

Traditional Financial Advisory Firms

Pros:

  • Someone who picks up the phone when you call or will see you when you make an appointment.
  • Flexible: can make real-time decisions about what’s right for you or when to buy or sell not rather than being locked into formulas.
  • Multi-layers of expertise to call on

Cons:

  • Barrier to entry: many traditional advisories have high minimums and confusing requirements and may only offer enhanced services to “premium” clients
  • Conflict of interest: many advisories have a “corporate agenda” to promote certain products, or they follow a [Suitability Standard] that doesn’t necessarily put the clients’ interests above their own
  • Change resistant: larger organizations can be “too big for their own good,” and slow to incorporate new tech or new processes that add value for their clients or address clients’ individual needs.
  • Limited customization: established firms frequently use old-school models of demographics, risk allocation, and target dates without factoring in what makes each client unique
  • Impersonal: while customer service is available, traditional firms often don’t truly “meet you where you are” and customize services and portfolios for you unless you have a large portfolio

Enter the New Breed

A growing number of independent financial advisors are disrupting the traditional model and starting to create a “third way,” hybrid advisories that strive to offer all the pros and – hopefully – none of the cons. They offer clients customized fee-only services – unhindered by corporate agendas – and with a lower minimum investment. At the same time they are able to incorporate the newest tech tools that not only make it easy for new clients to get started, but also offer fast, best-in-class investment management modeling to make faster decisions about managing investments.

Or, as Josh Brown so eloquently put it in a recent blog post, “…innovation and creative spirit is fleeing from the Old World to the new one.”

So why haven’t all advisors embraced the new technology to offer enhanced services to their clients? The three biggest reasons are inertia, inertia, and inertia. It’s not easy to change entrenched business models, culture, and processes. Remember how Netflix caught the video rental business napping?

Why Not Just Go with a Robo Advisor?

Robo advisors generally only offer investment management, not comprehensive, goal-oriented financial planning. While both investment advisors and robo advisors can recommend investment direction, strategy, and allocation, a good financial advisor can help you identify goals, customize budgets and cash flow planning, and help you with insurance, credit, and debt management, things a robo-platform can’t do.

The most important thing about the integration of new tech with personal attention and a customized plan is that a user-friendly tech interface can allow clients to manage all the pieces of their financial plans, from cash flow to 401Ks, while allowing an experienced advisor to monitor it and give clients a call when that advisor sees an opportunity, a red flag, or wants to check in about goals and direction.

These days, clients can see through the bespoke suits; what they’re looking for is bespoke service. By embracing selected and appropriate technology, this new breed of independent financial advisors are able to offer all the “pros,” while creating a new model of more transparent, conflict-free financial management that’s available to everyone who wants to set – an achieve – financial goals.

 

Wishing you a Happy Birthday

Happy Birthday Sherman Wealth

We are excited to be celebrating our one-year anniversary this week, and even more excited to share these custom-designed birthday cards we made for our clients. Coming to a mailbox near you…