How to Protect Yourself Against Identity Theft

Massive computer hacks and data breaches are now common occurrences. Now, more than ever, it is important to safeguard yourself against identity theft. Here are some steps you can take to protect your personal and financial information.

Maintain strong passwords
Use strong passwords and keep separate and unique passwords for each account or website you use.

Check yourself out
It’s important to review your credit report at least once a year and make sure that all the information in it is correct.

Consider a fraud alert and/or security freeze if necessary
If you discover that your personal and/or financial information has been exposed to identity theft, you should consider placing a fraud alert and/or security freeze on your credit report.

Stay one step ahead
The best way to avoid becoming the victim of identity theft is to stay one step ahead of the identity thieves. Here are some extra precautions you can take to help protect your sensitive data:

  • Consider using two-step authentication.
  • Beware of emails containing links or asking for personal information.
  • Be careful when you shop. When shopping online, look for the secure lock symbol in the address bar and the letters https: (as opposed to http:) in the URL.
  • Beware of robocalls. Criminals often use robocalls to collect consumers’ personal information and/or conduct various scams.

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Changes to Your Situation

You may recall when you receive a Meeting Summary Memo (MSM), the phrase “contact us with any changes.” When should I contact Rowland Carmichael to let them know of a change in my situation?

Some events that might trigger a review of your financial plan include:

  • Your goals or time horizons change
  • You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss
  • You have a specific or immediate financial planning need (e.g. drafting a will, managing a distribution from a retirement account, paying long-term care expenses)
  • Your income or expenses substantially increase or decrease
  • Your portfolio hasn’t performed as expected
  • You’re affected by changes to the economy or tax laws

Don’t wait until you’re in the midst of a financial crisis before reaching out to us. If you have any questions or require additional information, please do not hesitate to contact your wealth manager.

IRA and Retirement Plan Limits for 2018

Tax deferred retirement accounts like IRAs and 401(k) plans are a great way to save money for the future while enjoying tax benefits!

In October, the IRS announced the inflation-adjusted numbers for 2018.

IRA and Roth IRA contribution limits

The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2018 is $5,500 or $6,500 for those age 50 or older. You can contribute to both a traditional IRA and a Roth IRA in 2018, but your total contributions cannot exceed these annual limits.

Your ability to deduct IRA contributions may be phased out based on your income.

Employer retirement plans

Retirement plan participants can contribute up to $18,500 in 2018 – an increase of $500. Those 50 and older can contribute an additional $6,000 for a total of $24,500. SIMPLE plan participants can contribute up to $12,500 or up to $15,500 if age 50 or older.

Please contact us for specific guidance or advice for investing in your IRA, Roth IRA and company retirement plans. We are happy to help.

Education Topics: Reaching Your Goals

By Lacee FloydFamily with spyglass looking toward ocean

“Wealth” is not the end-goal, but rather a helpful tool in reaching your goals. Our main objective as your wealth manager is to help you articulate your financial goals and educate you on possible solutions that will guide you toward achieving those goals.

Think about it this way: if you are going on a road trip and you have a few places along the way that you want to make sure you see, it is important to map out your route. Without understanding the reasoning behind your route, it would be easy to convince yourself in the moment to stay on the highway (passing by sights you wanted to see), or to detour in the spur of the moment (at the expense of the sights you wanted to see). However, when your route is mapped out ahead of time and you understand why you have chosen that route, it makes it easier to stick to it along the way.

As you begin to define your financial goals, we encourage you to take some time to consider the following education topics and notify your wealth manager of any that catch your interest.

  • Financial Independence
  • Cash Flow Planning
  • Estate Planning
  • Charitable Giving
  • Gifting Strategies
  • Insurance Planning
  • Investment Planning
  • Tax Planning
  • Education Planning
  • Business Planning
  • Behavioral Finance
  • Social Security and Medicare
  • Survivor Income Planning
  • Planning for Decline of Memory

Goal Setting: How Important?

The feedback received from clients participating in our “Financial Vision” process confirms that goal-setting is very important.

By Tim Rowland

The company which publishes our financial planning software, MoneyGuidePro, recently shared an interesting and, I believe, profound observation: When a financial advisor sets goals for a client, the average number of goals established is 2.5. In contrast, when clients enter goals for themselves, the average number jumps to 7.5.

Why the big difference? MoneyGuidePro didn’t offer an explanation, but my experience suggests that planners tend to focus heavily on the big picture and on funding retirement, while clients are more attuned to their specific needs, wants and wishes.

Consistent with Rowland Carmichael’s core value of “putting the client first,” I appreciate the enormous benefits of looking at goal setting from our clients’ unique point of view. So to the question “How important are goals?” I would suggest this answer: “Very important!”

The goal-setting challenge is to spend time in conversation with our clients about their dreams and their concerns. To that end, we have been coaching some clients through a Financial Vision process, and the feedback has been very encouraging.

The process involves three steps:

  1. Telling us your story. A common question from clients is, “Where do we begin?” Our answer: “Wherever you would like.” It has been amazing for us to learn so much more about our clients, even those who have been with us for more than twenty years. Why is this helpful to you and to us? Frankly, we are products of our history – particularly what is often called our money history. This history helps our clients understand why they act the way they do when facing money issues.
  2. Telling us what you want. The next question we ask is, “What would you like to accomplish that requires planning, money and time?” The conversation helps bring focus to financial priorities, often encompassing travel, volunteering, health, part-time work, spiritual growth, career, friends, family, and many other aspects of your life.
  3. Creating your Financial Vision. Through the Financial Vision process, together we identify your goals, prioritize them, and develop written plans to accomplish your goals within a reasonable time frame. The most effective vision documents, which we can help you draft and track, link the emotions associated with an accomplished goal – such as how proud and happy you will be when, after helping to fund a grandchild’s college education, you are able to attend and celebrate his or her graduation.

As Rowland Carmichael continues to implement our “goals-based” client experience, we invite you to explore the possibilities and benefits that a goal-setting discussion with your wealth manager could offer to you and your family.

Behavioral Finance: What Really Drives Your Money Decisions?

Wise investing involves an alignment between who you are and the traits you exhibit in building and conveying wealth.

By Corey Bird

No two investors are the same, but their financial decisions – both good and bad – are often guided by certain principles and based on a unifying investor profile. Understanding why people make irrational or imprudent investment decisions is a major challenge, particularly when those decisions appear to be inconsistent with the personal values that have served the investor well.

The concept of behavioral finance takes on real importance when emotion and psychology start influencing individual money decisions. As Albert Phung, a writer and analyst for, explains, behavioral finance “seeks to combine behavioral and cognitive psychological theory with conventional economics and finance to provide explanations for why people make irrational financial decisions.” Too often, ill-conceived or destructive ways push the investor down a conflicted path that threatens to undermine every objective they seek to achieve through structured investing.

At Rowland Carmichael, we help our clients develop and maintain a structured framework for themselves and their families which takes into account their unique personal and financial profile. We recommend that investors work with a team of independent advisors for legal, accounting and financial management to gain an understanding of their investor profile, as well as the education platforms necessary to make them the best investor they can be.

If there is substantial wealth passing to multiple generations, we highly recommend that the grantors engage the younger generations to teach them not only about the governance and stewardship of wealth, but also about the character and values of the people who created the wealth and how they chose to pass it down. We also believe that grantors should weigh the consequences of passing wealth to individuals or institutions that don’t share their values, and to attach appropriate “strings” to the wealth to help ensure that it not only benefits the recipients, but perpetuates the grantor’s values.

If you have questions regarding building and conveying wealth, we invite you to contact your Wealth Manager to discuss your particular situation.

Saudi Arabia: Changing the Global Economy

vision 2030A financially successful Saudi Arabia means big changes for the global economy. The nation has accumulated two-trillion dollars in a Sovereign Wealth Fund (SWF), a state-owned investment fund. The fund was created because oil currently represents 70% of the country’s total revenue (known as Gross Domestic Product or GDP) and like savvy investors, Saudi Arabia wants to diversify.

To put the power of a two-trillion dollar fund into perspective, it is enough money to buy the world’s four largest publicly traded companies. This initiative is called Vision 2030 and is managed by Deputy Crown Prince Mohammed bin Salman (age 30).

We cannot be sure about where the SWF will invest, but a large portion will likely be put into opportunities outside Saudi Arabia. The financial and defense industries have often been mentioned. In May 2016, the SWF invested $3.5 billion in Uber.

Prosperity doesn’t come without challenges. In recent years, Saudi Arabia has been raising cash to fund budget deficits due to low oil prices.

Saudi Arabia is also struggling to create job opportunities. Two-thirds of the nation’s 29 million residents are under the age of 30, with some accounts stating the younger population lacks the education and skills needed to succeed in the private sector. Improving the skills of such a large part of the population will mean reworking the country’s social system, which will be difficult.

Can they be successful? Frankly, they don’t have much choice. The ruling family, the House of Saud, is estimated to have more than 15,000 members. To remain in power, the ruling family will have to start paying taxes and begin supporting cultural changes such as allowing women to work and drive. They will also need to address the lack of jobs and ensure their citizens have the necessary skills to compete in the global workforce.

Why does it matter? The SWF will be a significant investor and when there are more buyers than sellers, prices tend to soar. Much of what they buy will be United States-based and should result in jobs for Americans. A growing world economy helps all nations, especially the United States. It’s a changing world and let’s hope capitalism will show the way.

Financial Planning: Helping You Reach Your Goals

An academic study of 36 retirement planning tools, widely available online, concluded “in most cases, the available offerings are extremely misleading.” The study was done by researchers at Texas Tech University and Utah Valley University. The researchers looked at online guidance tools from free to low-cost calculators. The hypothetical situation was a couple in their late 50s earning $50,000 each who wanted to retire at ages 65 and 63.

For the purpose of comparison, the team used MoneyGuidePro, the most popular professional financial planning software (note: this is the software most often used by Rowland Carmichael for pre-retirement/retirement planning), and the probability of having enough money through retirement was 53%. However, two-thirds of the retirement tools indicated the couple could retire with a 70% confidence or greater. In other words, an optimistic conclusion might encourage the couple in the above example to retire with too much confidence and end up running out of money more quickly.

All modeling tools require some assumptions to complete the calculations. Based upon our more than 30 years of experience, we know the software helps clients understand the tradeoffs they face. Among those tradeoffs include when you retire, how much you spend, and how many years the plan covers in retirement. Other important factors are tax rates, inflation rates, and expected rates of return.

In our opinion, professional assistance using more sophisticated software should be consulted. All retirement planning is a combination of a road map and an anticipated journey with many twists and turns. The markets, both stock and bond, will challenge even the most seasoned investor. We are here to help.

Source: “New Study Questions Retirement Planning Calculators’ Accuracy” Wall Street Journal, February 22, 2016 by Karen Damato and Anne Tergesen

It’s Fall – Harvest Time for Tax Losses

by Carma BasingerCarma Basinger

Tax-loss harvesting is selling investments that have lost value to help reduce capital gains tax liability for winning investments.

Every one of us loves to sell a car for more than we paid for it! The same is true for selling stocks or mutual funds when they are sold for more than we paid for them. Unfortunately, the IRS dampens our excitement because they are going to want a piece of the action.

When an asset owned by you for more than a year is sold for a gain, that gain will be taxed at the long-term “capital gains rate” which currently is 15% if you are in the 25% to 35% income tax brackets. A 20% rate applies to capital gains if you are subject to the 39.6% tax rate. (If you are in the 10% or 15% tax bracket, you have a capital gains rate of 0% – lucky you!!) If the asset sold has been owned for less than a year, capital gains rates don’t apply and your tax rate on the gain will be your personal income tax rate.

It’s fall and now is the time to consider the tax consequences of any capital gains or losses realized during this tax year. Harvesting losses in your portfolio can reduce your taxes when used to offset all or part of the realized capital gains. Here’s how it works:

1)  The rules require netting short-term losses against short-term gains and long-term losses against long-term gains. If there are “extra” short-term losses, they can be used against long-term gains.

2)  If you sell an investment for a tax loss and wish to rebuy the same investment, you must wait at least 30 days before rebuying or you will not be able to claim the tax loss. This “wash sale rule” applies if a security is sold at a loss, and if within 30 days before or after this sale a “substantially identical” security is purchased.

3)  If you have realized more losses than gains during the year, you can deduct up to $3,000 of losses from ordinary income. Any additional capital losses will carry forward to future years during your lifetime until all losses are used up.

Please check with your Wealth Manager if you have questions about harvesting tax losses in your portfolio.

A Proposed Client Bill of Rights

As our thoughts turn to gratitude and thankfulness this season, one of the things that we are very grateful for is that we live in a free country with protection of our rights as citizens enshrined in our country’s founding documents. The Bill of Rights protects our personal freedoms and defines aspects of our relationship with our Government, describing rights, freedoms, obligations, expectations, and boundaries.

We have had some very valuable discussions in our office recently about the idea of a Client Bill of Rights, as prompted by an article in Investment News. In this article, the author makes some important observations on the evolving nature of client and advisor relationships over the last couple of decades, and about the changing expectations of clients. He proposes a Client Bill of Rights that would help define expectations and obligations of the client/advisor relationship.

A Client Bill of RightsCertain values like honesty, trustworthiness and transparency will always endure in client/advisor relationships, of course. But there has been an interesting shift in focus in our industry over the last decade or so. For example, in the intense markets running up to the crash of 2008, many clients primarily expected their advisors to outperform the market. Today, investors’ expectations for returns from their investments have been tempered by individual context, and a more reasonable expectation is that advisors will help their clients make smart choices and avoid making mistakes.

Just Investment Advisors?

At Rowland Carmichael we are financial advisors, focusing on your whole financial life, not just your investments. Our main mission is to help you live your best financial life so you can focus on your lives and loved ones. This focus goes back to why we founded this firm in the first place. We did not want to just be stock pickers – we wanted to help clients set a plan for their financial goals and help them with the big picture of their financial life.

As we have discussed this Client Bill of Rights, we have been encouraged as this list is already represented in the values we choose to define our client relationships. But we would really like to hear from you. What are your expectations from a financial advisor? What is most important to you about your relationship with your advisor? Does this Client Bill of Rights accurately reflect how you feel about your financial advisors? Please give us a call or send us an email with your feedback.

One thing we know for sure – it is a privilege, not a right, to be your advisor. This is a privilege we take very seriously and we strive to continually earn your trust and confidence.  At this time of year as we are grateful for family and friends and freedoms, we are also grateful for you, our clients and colleagues, and for the honor of working with you. We wish you a wonderful Thanksgiving.