In Times of Uncertainty, Feeling Certain about Your Plan

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As I was listening to Fed chair Janet Yellen’s testimony in front of Congress last week, I was intrigued by a tweet from Morgan Housel: “Go back to 2008 and tell people that in 2016 our biggest headwind would be low oil prices and a strong dollar. Economics is hard. Not in a “things are actually good today” way. But in mid-2008 surging oil prices and a falling dollar were a big headwind.”

As a Financial Advisor, I read every piece of economic data available to me and follow the thought processes of the top thinkers at virtually all the key financial institutions so I can carefully invest money on behalf of our clients.

Here’s what I’ve discovered: none of them, and none of us, have been given a roadmap to what the future holds. They can watch and study the relevant economic indicators, but they cannot predict the financial future with absolute certainty. We all live with uncertainty while trying to make the best decisions we can with the information available.

Given the certainty of uncertainty, what can individuals do to best prepare for their financial future?

With all of the speculation about the upcoming elections, questions about possible negative interest rates, and concerns about international instability, it’s easy to feel anxious about the potential effects on the economy and on your savings and investments. Particularly because the airwaves and the Internet are full of news reports, commentary, blogposts and Tweets about how volatile and risky the markets are.

One thing that is certain: there will always be volatility and risk in the markets. That’s what makes the stock market the stock market. Even if we are currently experiencing a bit more than just normal market volatility, remember that the markets have historically rebounded extremely well after corrections (which are considered a drop of at least 10%). Don’t take my word for it, take a look at the chart below:

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These charts show 27 corrections of at least 10% or more since 1987. All of those corrections had one thing in common: they all rebounded with a bullish rally. What history has shown is that, over the long run, markets continue to move higher.

What does this mean for individual savers and investors? No matter your age or experience with financial planning and investments, there is one universal “must” that applies to everyone. You need a financial plan:  a carefully thought-out, customized financial plan, not just something you downloaded from Google. Once you have that plan in place, the next steps are to implement it, then put your head down and trust in that plan.

This current market in particular highlights the importance of having a financial plan that is both age-appropriate and risk-adjusted to your specific financial situation, goals, and needs. If you’re in your 20s or 30s, for instance, the correction we’re experiencing is a great opportunity. Why? Because you have the luxury of time on your side. With the market currently down significantly from where it was a year ago, this is a great time to implement a dollar cost averaging strategy and start saving and investing on a consistent basis.

One of the things that differentiates us at Sherman Wealth, however, is that we believe that no two people are alike and that everyone’s investment strategy and portfolio should be customized to suit his or her individual situation, needs, and goals. We get to know each client – or potential client – so we can analyze their actual risk tolerance in a holistic way, rather than just plugging their age and one or two other factors into a simple, one-size-fits all algorithm the way some of the Robo-Advisor platforms do. Then we create a plan that is designed to work for our clients.

I can’t tell you what the market is going to do tomorrow or six months from now – no one can. But with a well-thought-out financial plan – one that takes into consideration who you are now, where you want to be, and how much risk you can tolerate – you will feel much more confident about your own strategy and less likely to panic about what the next crazy pundit to pop up on the internet has to say.

Photo Source: AP

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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.

9 End of Year Tips to Finish 2015 with a Bang – not a Blow-Out

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Even the best financial plans can be tough to stick to during the holiday season. No matter how careful you’ve been all year, it’s tempting to splurge on some of the things that make us happiest: good times with friends and family, travel, entertaining, and generous gift-giving to friends, loved ones, and favorite charities.

Here are 9 end of year tips to help make sure you’re still on target with budget and strategy and help keep important goals in mind if you’re tempted to go over budget during the holidays.

  • Review your budget: See where you can scrimp a little so you have more to spend on holiday fun. Bring lunch to work, skip bottled water or sodas, or take public transportation, for instance and use the money for holiday treats, travel, or gifting. Seeing where you can cut spending may give you some ideas about how to live more frugally in 2016 so you can pay down debt faster or increase your savings significantly.
  • Max out your 401K: Before the end of the year, take full advantage of your company’s matching program. Those matching funds are the gift that keeps giving through the power of compound interest.
  • Use your Flexible Spending Account: If you have a flex account for healthcare, transportation, or dependent care, try to use your yearly allowance before the end of the year. Cash in on that new pair of glasses you’ve been wanting. If you didn’t use it all – or if you’d already spent it all by May – rethink what you should set aside next year.
  • Take a look at this year’s tax refund: Decide if it makes sense to reduce how much is withheld from each paycheck. By reducing your withholding you’ll have more money in 2016 for investments, savings, and next year’s holiday spending, instead of lending it, interest-free, to Uncle Sam.
  • Talk to your financial advisor: Whether having a conversation about converting from a traditional IRA to a Roth IRA or what to declare next year on your taxes, the end of the year is the right time to make new financial decisions. Your financial advisor can also help you determine if you have assets that are either above or below your target allocation. If you’re selling at a loss, you can take advantage of a tax write-off!
  • Review your insurance policies: Review any changes in your circumstance or property to make sure you have the right amount of coverage for all contingencies. At the same time, make sure you’re not over-paying for coverage you no longer need.
  • Give to your family: You can give up to $14,000 each to family members with no gift tax or reporting requirements, and the recipient doesn’t pay any tax either.
  • Give to charity: Before the end of the year, charitable donations are not only a great way to express your values, they are also a good way to increase your itemized deductions.
  • Save for the kids: Consider giving children or grandchildren an investment in their future and a first lesson in investing by contributing money to a 529 College Saving Plan! They can use the extra dollars tax-free for college tuition, room and board, and you get a state income tax deduction for your contribution.

While it’s better to give than receive, don’t leave any free money or tax advantages on the table! Review your budget and see if you can add a line item for next year’s holidays so that December 2016 will be the happiest and most stress-free holiday season ever.

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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.

Financial Strategies for Individuals with Brain Injury

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By Brad Sherman, President of Sherman Wealth Management.

Individuals who have sustained a traumatic brain injury (TBI) often have difficulties that can affect all aspects of their lives and, more specifically, can impair their ability to manage financial affairs. Navigating your finances after a TBI can be overwhelming and intimidating when there are different directions to take and so much information to digest.

Finding the right financial professional to assist you and guide you on a path unique to your specific needs is important. The right partner will help individuals with TBI create a strategy to cope with the anxiety that often comes with managing one’s finances. With access to the right assistance, information, and tools, one can address financial concerns and develop a path to achieving financial stability. The assistance that is required depends on the distinct needs of the individual and can range from providing management of day-today financial affairs to creating and addressing goals to obtain present and future financial security and well-being.

When looking for a money management professional, it is important to seek a collaborative partnership with someone who specializes in a fully customizable, personalized approach to managing finances, not a one-size-fits-all approach. Together, you can establish a tailored plan that is right for your financial situation.

A money manager can provide you with the most relevant resources and tools to fit your unique goals, whether you need guidance to make your own financial decisions or a trusted partner to do so on your behalf. In doing so, a money manager can help you understand the information given to you so you can make the most informed decisions regarding your personal finances.

The right money management professional can provide assistance with the following:

What to expect when awarded a financial settlement:
How to manage a lump sum of money while protecting and maintaining your lifestyle;
How to communicate with family and friends after you’ve received a settlement while keeping the monetary value confidential.

The options available to support yourself if you are unable to work due to TBI:
Budget planning
Income-producing security investments

Day-to-day assistance:
Opening and closing accounts
Making large or small purchases and transactions including household needs, property, and automotive

Financial planning including:
Low-fee and tax-efficient investments
Life insurance
Retirement planning

A network of trusted professionals:
Legal professionals who specialize in estate and trust planning, guardianship, power of attorney, and beneficiary rights
Accounting professionals

An inviting, objective, and trusted environment where you can express your financial concerns:
If you are living with TBI, it is important to have an advocate you trust to help you avoid being exploited

Availability:
Face-to-face, personalized attention, unique to your specific needs
A collaborative partnership

There are enough difficulties and roadblocks if you or a family member are living with TBI. Managing your finances does not have to be one of them. A money manager can help address the concerns you feel surrounding your finances. With the right professional assistance, your goals and wishes will be the top priority. You will have access to expertise and experience as well as a network of financial professionals and resources to assist you in managing your finances efficiently. With a collaborative partnership, you can create a present and future that you are comfortable with and can enjoy.

Transparency on Both Sides

Financial Advisor Transparency on Both Sides

According to a recent survey, only 40 percent of investors indicated that their financial advisor(s) clearly explained how they are compensated. In this same survey – the Envestnet Fiduciary Standards Study – 52 percent of investors did not believe that all financial advisors were bound to a standard requiring them to act in the client’s best interest. In the post-Great Recession era, these findings are exceedingly troublesome.

Brad Sherman, president of Sherman Wealth Management, serving clients in the greater Washington, D.C. metro area, has built his practice around improving those statistics.

Sherman is a big believer in full disclosure and complete transparency for his clients regarding his fees and how he works with their accounts. He’s also a big believer in total transparency from the client. “For the relationship to fully benefit the client, there has to be transparency on both sides of it,” Sherman said. “I have to provide a completely transparent structure so everyone knows what they are paying for what they are receiving – so that there are not any surprises to the client. On the other hand, the client has to fully disclose to me what their financial situation and goals are so I can make appropriate recommendations for them.”

He doesn’t have a firm minimum for his clients and in reality, most of his clients wouldn’t fit into the advisor marketplace niche requiring a quarter of a million to start. The bulk of his clients are his peers – people ranging in age from 25 to 40ish – who are starting careers, marriages and families. They are at the beginning of the accumulation phase of savings plans and many are buying their first homes.

“They are comfortable with me and with taking my advice, because I either have been just recently in the same situation or am still doing the same things they are,” Sherman said.

He started Sherman Wealth Management in January 2013 after spending 12 years working in financial services for other firms. He also had just completed his master’s degree in quantitative finance from American University, and it seemed like the appropriate time to hang out his own shingle. Since then, Sherman has taken on 50 clients and and wishes to develop relationships with additional clients seeking affordable, tax-efficient and customized advice.

Sherman said that his decision to become a registered representative with Lincoln Financial Securities Corporation Member SIPC gives him the flexibility to craft portfolios specifically matching the individual needs and goals of each client.

“Not all clients are the same,” he said. “That is why we customize every solution. Some of the bigger companies get into trouble by putting people into cookie cutter molds that may not be right for them. By representing Lincoln Financial in a fee-based model, there is no pressure on me to sell something that is not suitable for any of my clients.”

Learn more about our Financial Advisor services.

Related Reading:

Having the Money Conversation
Top 10 Questions to Ask a Financial Advisor

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