Retirement Plans: Former Employees Can Be Current ProblemsSeptember 27, 2010I recently read a great article at http://www.shrm.org contributed by 401khelpcenter. Please see below. There comes a time when employees leave the company for greener pastures or retirement. If they've been loyal and dedicated, they'll likely get cake and a card—maybe even a luncheon. Then they will continue along their life's journey. Unfortunately, many companies don't understand the full impact former employees can have on their retirement plan. For example, most plan sponsors adopt procedures for locating former employees or beneficiaries who have not cashed out of the 401(k) or other defined contribution plan. What happens, however, when a plan sponsor is not able to track down a missing participant? While plans can cash out some participants automatically, such as those with small account balances, participants with higher balances might choose to stay in the plan. And when they do, administrators run the risk of losing track of them. ... To read the rest of the article, please go to this shrm.org article link. Integrity Financial Corporation's flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state's premier advocate for the business community and is recognized as The State's Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k. Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan. |
Fund Insights - What’s in a name?July 23rd, 2010Blog Category: InvestingThe popularity in Exchange Trade Funds (ETF) over the past decade has surged. ETF’s typically have lower expense ratios, better transparency, and higher liquidity than their similarly matched Mutual Fund (MF) brethren. With titles such as, “Ultrashort Euro,” “Internet Infrastructure,” and “Environmental Services,” you can see why so many investors have been attracted to them. The added benefit to a tactical portfolio can pay off to the affluent that know how to incorporate them, however; the unfortunate truth about some of these ETFs and MFs is that the name does not always tell the whole story. June unemployment rates released today show a decline from 9.7 to 9.5, but may not reflect realistic employment conditions considering the new workforce that will be graduating and the current unemployed who have given up on their job searches. As the stimulus well begins to dry up, Fiscal Policy (government spending) and Monetary Policy (interest rate) changes will be in the spotlight and crucial for a complete U.S. recovery, and thus, a global recovery. Example: Environmental trends have lead to increased popularity in “green” investments. A fund can then be assembled with a portfolio that incorporates stocks and bonds that pass an environmental standards filter, to which an affluent investor may ask: If not already a daily topic of discussion, Financial Sector Reform will also play a crucial role in a complete recovery. Any major changes, or at least the benefits resulting from financial reform, are needed in the near term, but unlikely with midterm elections in November. As always, time is the most valuable asset to which we should utilize first. Change is inevitable; it’s just a matter of how long we can afford to wait. • What are the environmental standards? • Are the underlying investments just those that do not harm the environment, or does the fund incorporate companies that proactively improve environmental conditions? • What is the method used to weight each investment within the portfolio? Sector and region specific ETFs can also be incorporated into a tactical portfolio to enhance potential returns. Again, how these are structured can vary within sectors and regions, even if the funds have a similar title. Example: Healthcare funds can incorporate the whole healthcare sector, or be narrowed down into specific areas such as medical devices. The implications surrounding the recent healthcare reform are still relatively unknown. Medical device manufacturers will likely avoid the potential detrimental outcomes of this bill that other companies in the healthcare sector, like insurance companies, may face in the future. If you forecast this to be true, then why not use an ETF that is focused on medical supplies rather than the sector as a whole?
You would never judge a book by its cover; heed the same words of wisdom the next time you select your ETFs and MFs. References: none |
The Group of TwentyJuly 2nd, 2010Blog Category: Global EconomicsLast Sunday (June 27) marked the conclusion of the G20 Summit in Toronto, Canada. While media focus catered to the rioting going on outside, an equally newsworthy event ensued inside. The topic for discussion that seemed to make the media’s 2nd most popular list: Financial Policy, or as many of us have began to call it, bailouts. June unemployment rates released today show a decline from 9.7 to 9.5, but may not reflect realistic employment conditions considering the new workforce that will be graduating and the current unemployed who have given up on their job searches. As the stimulus well begins to dry up, Fiscal Policy (government spending) and Monetary Policy (interest rate) changes will be in the spotlight and crucial for a complete U.S. recovery, and thus, a global recovery. Economic globalization has never appeared more evident than it is today and will be for the years ahead. China’s recent announcement to increase the flexibility of the exchange rate illustrated two very important changes in my opinion. First, global competition in exports will adhere to a more fair global market. Second, China has taken a crucial step forward from their current status as an emerging market to a developed economic powerhouse. Developed nations in the eurozone struggling to pay off their upcoming debts, at least in full, remain a burden on the World’s balance sheet. If not already a daily topic of discussion, Financial Sector Reform will also play a crucial role in a complete recovery. Any major changes, or at least the benefits resulting from financial reform, are needed in the near term, but unlikely with midterm elections in November. As always, time is the most valuable asset to which we should utilize first. Change is inevitable; it’s just a matter of how long we can afford to wait. [For the list of topics discussed, you can visit the G20 website at http://g20.gc.ca/home/.] References: http://g20.gc.ca/home/ |
Quarter I - Recap
June 20th, 2010
Written April 15, 2010
Blog Category: Stock MarketsAs company earnings reports are released for Q1, expected earnings growth across most sectors may help answer what we all wish to know: “Is the recession over yet?” Many will insist that we are and, in fact, have been for quite some time now. Others are not as easily convinced by the recent stock market rally. Ah yes, the Bulls and the Bears. For illustrative purposes, general examples are used and do not imply investment advice. The following is brief recap of the first quarter in 2010:
January 2010 – Greek Debt Crisis
Worries that Greece would default on debt continued to loom over investors worldwide. A likely bailout by the European Union may not only depreciate the Euro, but spark a domino effect across European nations needing similar help, thus depreciating the Euro even further. Why do we care? Well, one major U.S. repercussion is that of currency, which could have a drastic effect on exports, and thus Gross Domestic Product (GDP). For example, the Euro depreciates and the $US Dollar now buys more Euros, which is great if we want to buy a Fiat, but bad if we want to sell a Ford. Now Fords are becoming a bit too expensive for Europeans, so they decide to buy European cars, or other foreign cars: Japanese, Korean, etc. But the currencies in these countries will be affected just as much as the U.S.? This may be true and will bring us to the next economic/political piece of news to recap.
February 2010 – The Chinese Yuan
Chinese authorities are being accused of devaluing their currency, making their exports more affordable than competing countries. The core issue with currency manipulation is similar to a concept that is relevant to large corporations and fair business practices, which is establishing a monopoly via price wars. For most of us, the decision to purchase is dependent on price and quality. If quality is equal, then we will tend to choose the more affordable option. From a European view, if US Dollar based products are becoming more expensive compared to Chinese Yuan based products, consumers will flock to the latter if they consider the quality to meet their standards. To add to our automotive industry example, in late March 2010, a large Chinese carmaker announced the purchase of Volvo (Swedish brand), a practical strategy to say the least.
March 2010 - Health Care Reform Act
The estimated $940 billion to be spent over 10 years will be tacked on to the already outstanding U.S. Debt Balance (See Chart A). It may be time to think about tax strategies and tuning up your investments objectives.
Summary
The US Stock Market has been on a roll. GDP is up for the second consecutive quarter. The Federal Reserve kept interest rates low, which helps with efforts to refinance current debt and finance future spending. Inflationary measures will be watched closely and may be an indicator for rising interest rates. Unemployment has slowed too and seems to be steady at 9.7%, while job creation has begun to improve. Many economists believe employment data has a standard 6-month lagging period behind actual economic conditions. If this simple measure is accurate, then it appears that we have made it out of the recession. The U.S. will continue to keep a close eye on the European Union as the decisions made therein will affect the global economy, not just Europe. International economic policy, especially relating to China, will surely make headlines for the year to come.
White House vs. BP
June 11th, 2010
Blog Category: Stock Markets
The local environmental and economic devastation resulting from the April 20th oil spill in the Gulf of Mexico have implications far beyond any monetary measure, however; for the purposes of this blog, we will focus on the current effects of this event relating to the stock market. The energy sector has played a part in keeping US market indices from a steady growth in the past month. While this can be tied to an economic slowdown, thus a reduction in demand for energy, recent news from BP may have played a significant role. Indirectly, suggested legislative changes in monitoring the oil industry are probably in the making. How this will affect the energy sector is unknown, but no doubt a necessary step in assuring that another disaster like this is not made again.
BP officers will meet with the Obama administration next week to discuss possible solutions, specifically, compensation for those most affected. One particular point of discussion will be the usual quarterly dividend payout to shareholders that would otherwise be expected to supplement the stock’s recent freefall. The result may have heavy implications on the future of BP. For example: dividends are cut or delayed, shareholder uncertainty rises, shares are sold, and ownership (stock) in BP falls to relatively affordable prices. This is where acquisitions come into play. Competitors such as United States’ giant Exxon-Mobil (XOM), The Netherlands’ Royal Dutch Shell (RDS), and China’s PetroChina (PTR) may have an interesting stake lined up.
BP provides its products and services to over 100 countries across six continents. In the United States, BP is the largest oil and gas producer and one of the largest gasoline retailers. There is no doubt that BP has played a major role in the US economy. How has the stock price of a non US energy company correlate to US indices (S&P500, DOW) and the US energy sector (IXC, IYE)? (See graph below). BP’s stock has been clobbered in the past month. Speculators in the market will need to determine whether or not the current price has taken this possible dividend cut into account, additionally, the future implications on shareholder sentiment. High trading volume illustrates a natural component of the stock market; where there is potential loss in the form of market pricing, there is an equal potential gain in the form of discounted ownership.
References: http://www.businessinsider.com/as-tony-hayward-prepares-for-white-house-showdown-bp-weighs-dividend-cut-2010-6
Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com
Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.
Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.
