Social Security and Divorce: 5 “Non-Negotiables” You Need to Know

She stood in the storm, and when the wind did not blow her away, she adjusted her sails.

-- Elizabeth Edwards

Like a treacherous sea, life is unpredictable. Even in the most thoughtfully run and financially independent of lives, there will be heart-wrenching twists and turns. Some of these life transitions are expected and planned accordingly, while others are abrupt and uncertain. It’s no secret that a significant number of marriages end in divorce, raising many emotional and financial uncertainties. However, understanding the benefits entitled to you will help build a secure framework for the next chapter of your life.

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How to Conduct Basic Advisor Due Diligence in 15 Minutes (or Less)

How to Research a Financial Advisor Using BrokerCheck - Tutorial Video

For nearly a century, the financial service industry as been waging an epic battle between two competing factions. On one side are the armies aligned under the banner of “Caveat Emptor!” (Buyer Beware). On the other side are the opposing forces who rally to the cry of “Fiduciary!” But the fastest growing faction by far is the group who (for sometimes very good reasons), moves between one side and the other. Unfortunately, figuring out who's who is a nearly impossible task because all the players seem to be wearing the same tailored uniform issued by Armani or Brooks Brothers.

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2019: Typically Atypical

This is not normal. With the capital markets, it almost never is.

Over the long haul, looking backward, stocks have returned a bit over 10% per year and bonds have returned a bit over 5% per year. That said, past performance does not predict future results, as the investing cliché goes. Economists and soothsayers will give their guesstimates for next year's stock market return. For a long-term forecast for financial planning purposes, though, it is fairly common to reduce the backward-looking numbers by a conservative margin. If you have a financial plan where you will have more than enough for the rest of your life, even if future markets are significantly worse than past markets, then perhaps you will be able to see past the noise and focus on your time with your grandchildren.

But, let's talk about the noise for a few minutes.

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Take It or Leave It?

Whether changing jobs, retiring, or simply taking a break from the working world, there are dozens of questions to be answered. Will I be happy with this change? How should I prioritize my goals or hobbies? How will this change impact cash flow? One of the last items on anyone’s mind is what to do with an old employer retirement plan. This seemingly small consideration could potentially lead to unnecessary taxes and penalties if not carefully reviewed.

Millennial's are twice as likely to change jobs than the generation before them. While this can lead to improved salary, benefits, or simply a more appropriate position, it also means more retirement accounts to manage. The days of widespread pension plans are over, leaving individuals accountable for their retirement plans. Regardless of your generation, each of us has four options with our old employer sponsored retirement plan.

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The Learning Never Stops

The word education often brings to mind memories of high school and college, or perhaps a professional degree, such as medical or law school. For me, my time in graduate school at Boston College studying finance from 2008 to 2009 comes to mind. This is a bit of an understatement, but that was an interesting time to study capital markets!

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The Difference Between Privacy and Secrecy


Have you ever visited a doctor and neglected to share symptoms or recent issues? If so, how would you expect your doctor to give a reliable diagnosis? The same hypothetical can be applied to a financial review. It is often overwhelming to reveal one's deepest darkest financial secrets. At times it's easier to ignore poor investment decisions, bad debt, and questionable purchases. Unfortunately, ignoring some financial mistakes can lead to massive fees, penalties, and could even delay a dream retirement. In most instances, time is your ally, and getting a head start on rectifying a problem will not only save money, but possibly your sanity. Providing your advisor with the good, the bad, and the ugly of your financial situation helps to diagnose a problem, discuss a solution, and implement a plan for improvement.

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Dining at the Cafe 401(k)

As with all jobs, being an investment manager comes with some unofficial duties, including free guidance for family members regarding retirement savings. In fact, Olivia was recently helping a family member with investment choices in their employer sponsored 401(k) when she was provided a glaring reminder as to why people choose to hire professionals like us to manage it for them. Her beloved family member had chosen funds that made no sense for their goals, had high management fees, and were redundant at times. When probed about why they’d chosen these funds, Olivia was told that they had performed best in recent years, to which she firmly responded, “let me stop you there, dearest kin.”

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Get Out of (401k) Jail Free


Listen up jailbirds, it's time to face the cold hard facts. Many of your cherished defined contribution retirement plans (e.g. 401(k), 403(b), 457) are little more than gilded holding cells leaving you and your retirement nest egg exposed to some unpleasant truths: the investment choices are constricted and the fees (assuming you can ever figure them out) unconscionably high.

Despite the obvious handicaps that all-too-often accompanies closed architecture plan design, most participants over the age of 59 1/2 are completely unaware of special in-service distribution rules that allow tax-free rollovers to an IRA...even while you remain on the job and continue to make tax-deferred contributions. It's like the IRS baked a carbon-tipped hacksaw blade in the cake, walked it past the guards in plain sight, and then neglected to inform you the keys to freedom and choice were within your grasp. Though not widely advertised by 401(k) plan providers (who are keenly motivated to retain as many dollars in the plan for as long as possible), it's estimated more than 70% of 401(k) plans now allow in-service distributions. More importantly, that number seems to be growing.

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Don't Pay for Investment Advice!


Fiduciary: An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another’s benefit. thefreedictionary

I am a fiduciary. As are my colleagues at Exchange Capital Management. What does that mean? It means a lot of things, but mostly it requires that I place the needs of clients ahead of myself. Shocking isn’t it? That in a business designed to serve the financial planning needs of others we somehow need to be reminded that our clients come first. While proud to say that the fiduciary commitment at Exchange Capital Management is imbedded in the DNA of our firm, this isn’t always the case elsewhere. But I’ll save that conversation for another day. Today I’d like to show you how you can save money by not hiring an investment advisor…an exercise that’s clearly not in my best interest.

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What Are You Saving For?

One of the many things I enjoy about being a financial advisor is how every client and interaction is different. Each issue must be uniquely reviewed and analyzed. While the overall financial planning process may differ for each individual, our team at Exchange Capital Management strives to understand our individual client’s goals. While the question, “what are your goals” seems simple, it is vital to consider the specific steps that must be implemented.

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