Need for a Will

A will is important because if you do not designate who will inherit your property, a state statute will. The statutory distribution scheme (known as “intestate distribution”) will often provide for results differing from your wishes. If you have property in several states, the rules in each state may be different concerning who will be entitled to your properties.

Typically, intestate law divides the decedent's estate between the surviving spouse and living children; however, many people are surprised by the actual division made by state law. Even if the decedent does not have children, the spouse may not inherit the entire estate.

Perhaps most importantly for those of you with minor children, a will gives you the opportunity to designate a guardian for your children if your spouse does not survive you. You have better understanding than a court as to who of your relatives or friends will best be able to care for your children, both emotionally and financially. Your will can put this designation in place, identifying the best person for each type of function.

Moreover, because your children are minors, the court will require a fiduciary (e.g., a guardian or trustee) to be appointed to receive and manage that property the children inherit. This can be a cumbersome and expensive process, requiring court supervision throughout the time the children are minors.

A will can also simplify the probate process for your survivors. For example, you can designate a personal representative (also known as an executor) to handle the transfer of properties in your estate. You can direct how taxes and debts should be paid. You can waive state limitations on funeral expenses payable from your estate and enable your estate to take maximum advantage of estate tax savings.

We do hope that this explanation is a sufficient beginning to enable you to understand the practical necessity of having a Last Will.

Please contact one of our Wealth Advocates at Wade Financial Group to arrange an appointment to discuss this matter in more detail.

Four 401-K Tips

We recently spoke on WCCO explaining four tips everyone should consider when looking at their 401-K.  As the stock market continues new highs breaking two records today, Monday November 18th 2013, with the Dow Jones hitting a record 16,000 and the S & P 500 hitting 1,800 it is worth checking in on your current 401-K.  Click here, WCCO Interview, to check out the four tips and listen to the interview.

Film Festival Reviews

Wade Financial Group founder Jerry Wade has been attending the Savannah film festival for over 5 years and is an avid film enthusiast.  Because of Jerry's passion for film it was only natural that Wade Financial Group recently helped sponsor the Twin Cities Film Festival.  Below we have an inside look of the top movies from each of these recent festivals.  Jatin Setia’s, the founder of the Twin Cities Film Festival, and Jerry Wade each give their top five movies from this year’s festivals.

Jerry’s Savannah Film Festival Top Five

1.      The Pretty One

When a woman's identical prettier twin sister dies, the woman assumes her sister's identity, moving into her apartment and the big city.

2.      About Tim

At the age of 21, Tim discovers he can travel in time and change what happens and has happened in his own life. His decision to make his world a better place by getting a girlfriend turns out not to be as easy as you might think.

3.      The Book Thief

While subjected to the horrors of World War II Germany, young Liesel finds solace by stealing books and sharing them with others. Under the stairs in her home, a Jewish refugee is being sheltered by her adoptive parents.

4.      Philomena

A world-weary political journalist picks up the story of a woman's search for her son, who was taken away from her decades ago after she became pregnant and was forced to live in a convent.

5.      Nebraska

An aging, booze-addled father makes the trip from Montana to Nebraska with his estranged son in order to claim a million dollar Mega Sweepstakes Marketing prize.

Jatin’s Twin Cities Film Festival Top Five

1.     We Are What We Are

As an unrelenting downpour continues to flood a small town, the local authorities begin to uncover clues that bring them closer to the secret that the Parkers, a seemingly wholesome and benevolent family, have held closely for so many years.

2.     Winter in the Blood

Virgil wakes in a ditch on the hardscrabble plains of Montana, hungover and badly beaten. He returns home to his ranch on the reservation, only to find that his wife, Agnes, has left him. Worse, she's taken his beloved rifle. Virgil sets out of town find her - or perhaps just the gun - beginning a hi-line odyssey of inebriated and possibly imagined intrigues in town with the mysterious "Airplane Man", a beautiful barmaid, and two dangerous Men in Suits. Are they real? Or spirits guiding him away from his true path?

3.     The Armstrong Lie

Four years ago, Oscar-winning documentarian Alex Gibney was commissioned to film Lance Armstrong's second comeback, for the 2009 Tour de France. Years later, following Armstrong's cheating confessions, Gibney returned to his original source material, discovering in the process an electrifying, red-handed portrait of a liar in action.

4.     August: Osage County

A dark, hilarious and deeply touching story of the strong-willed women of the Weston family, whose lives have diverged until a family crisis brings them back to the Midwestern house they grew up in, and to the dysfunctional woman who raised them.

5.     Mandela: Long Walk to Freedom

Based on South African President Nelson Mandela's autobiography of the same name, which chronicles his early life, coming of age, education and 27 years in prison before becoming President and working to rebuild the country's once segregated society.

Who’s impacted by the Fed’s announcement yesterday?

Yesterday, the Federal Reserve announced that it would continue its current policies: buying $85 billion in Treasury and mortgage-backed securities each month, and keeping short-term interest low.

This has the most direct impact on the bond market. Investors of all stripes hold bonds, but particularly retirees who are typically looking for income and relative safety. The irony is, this year the bond market has been anything but safe. It’s been highly volatile as the market contemplates a change in Fed policy. Many bond portfolios have generated negative returns as bond prices have fallen.

What can an investor do? There are some strategies that a professional financial advisor can put in place to help. As we’ve discussed in previous blog posts, our strategy has been to focus on bonds with shorter maturities in order to avoid price volatility.
 
For investors looking for income, we’ve implemented different strategies—beyond bond portfolios—to try to meet that goal. While interest rates are beginning to rise, they’re still extremely low by historical standards, so alternatives such as our Paid in Advance® strategy may offer a more suitable answer for income-seeking investors.

--Nick Asmus, Wade Financial Group Investment Department

Earnings calls—a chance to look under the hood

Yesterday, Apple disclosed its third-quarter earnings…and opinions are all over the map! (Disclosure: Wade Financial Group owns stock in Apple.)

This often happens. Earnings calls give a snapshot of the company, and there’s a lot of different data, that can be interpreted in a number of different ways. It’s a science…and an art.
 
Apple is a case in point—you could look at different aspects of the earnings call and take away completely different stories. 

• Sales of iPhones and iPads are up over last year—great! 
• Guidance on future profit margins did not meet analyst expectations—not so good. 
• What are the possible new products? 
• What are the expectations for holiday sales? 
• What else is the company saying?

Earnings calls like this give investors a chance to “open up the hood and examine the engine” on a company. Individual investors can take the time to investigate fully and form their own opinion, independent of the market. For instance, bad news could send the stock sliding…which could be a buying opportunity, if you’re able to recognize it.
But, it takes a lot of time and energy—not to mention objectivity—to do that thorough work. And not just on one company, of course—on a full investment portfolio.  Just reading the headlines and trying to jump on market bandwagons is not going to cut it.
 
That’s why it’s so important to engage a professional, who is looking at these stocks and companies day in and day out…so you don’t have to.

--Nick Asmus, Wade Financial Group Investment Department

What can an individual investor learn from Icahn’s $800 million Netflix profit?

Earlier this week, the news spread like wildfire: Carl Icahn had sold part of his stake in Netflix—making $800 million in the process. How did he do it?

Icahn follows a contrarian, value investing philosophy—similar to Wade Financial Group’s ConVal^® process. The main idea is simple—buy quality companies when their price is low, and then sell when the price recovers.
 
This much easier said than done. It’s easy for individual investors to get caught up in the emotions, and not want to sell their stock. They’re proud that they “made” so much money (because the stock price has risen) and maybe a little greedy…thinking that if they just stay in a little longer, they can make even more.
 
Trouble is, no one can tell exactly when a stock has hit its peak…so the investors are liable to get caught holding too much of a stock when its price starts to slide.
 
As an investor, you have to spread your risk. Remember, it’s not what you make, it’s what you keep that counts. An independent financial advisor can help take the emotion out of investing, and help you make those difficult decisions.
 
That’s how Icahn made this money—he not only got in when the stock price was low, he got out when the stock price was high. Where is the Netflix price going to go from here? Who knows. Maybe he could have made a bit more by staying in. Maybe he got out at just the right time.
 
Regardless, I think his $800 million profit will help him feel good about his decision.
 
One final thought—a common theme I see with many investors is that they hold too much stock in the company where they work. They’re proud to be employees. They love the company, its products, and their friends working at the company. They think the company is on the right path. This opens them up to a lot of risk:

• That they’re over-invested in a single company, which by itself is extremely risky
• Not only their investments, but their day-to-day income is tied up in that same company!! What happens if something goes wrong!

Overinvesting in one company—even a company you love—is a bad financial idea, but a trap that many fall into.

--Jerry Wade, CFP^®, CFS
Chief Investment Officer
Chief Wealth Advocate

How is your advisor making money?

If there’s one common denominator that links many Wade Financial Group clients, it’s that they came to us as a result of another person—sometimes a financial advisor, sometimes not—who gave them bad advice...and occasionally that person profited from the deal.

Recently we met with a person who had had just that experience. He and his wife had been working with a family friend as an advisor, who had sold them an annuity for his IRA.
 
Now, that just doesn’t make sense on the face of it. The advantage of an annuity is that it’s tax-deferred…but the IRA is already tax-deferred. So, the couple was paying extra in fees for zero added advantage.  Meanwhile, the “family friend” made a nice fat commission on the sale of that annuity.
 
Another example: in the news, we’re seeing reports of some doctors and dentists who are suggesting financing arrangements to their patients. The patients, who trust their care providers and need the money for health procedures, accept it. Only later do they find out that they’re in the hands of a predatory lender. In the example quoted in The New York Times, the patient was paying 23 percent in annual interest, with a 33 percent penalty rate kicking in if she missed a payment!
 
While many doctors and dentists have rightly refused to participate in these financing arrangements, you can understand their motivation to work with these lenders: they get paid 100% upfront for their work. That’s a powerful motivation.
 
All of these point to a larger story that we see repeated all the time at Wade Financial Group: people get hurt financially by someone they trusted—maybe without understanding the incentives behind that person’s actions.
 
How can you avoid this?
 
At a basic level, you have to understand how the person who is advising you is making money. That’s why I strongly recommend that people work with a fee-only, fiduciary financial advisor, such as Wade Financial Group. Being “fee only” (not “fees plus commissions” or some other arrangement) means that the advisor is not making commissions based on what they recommend. Their compensation is tied to the overall wealth of the client—so they’re incentivized to act in the best interest of the client.
 
And as a fiduciary, the advisor is legally bound to act in the best interest of the client.
 
As a consumer, you should insist on transparency surrounding how the person you’re working with is being compensated. If they can’t tell you—or won’t—that should be an immediate red flag.