3 Steps to a Sound Investment Process

formulafoliosAs I mentioned in a previous post, we are excited to be now working with one of the premier Registered Investment Advisory firms in the country.  FormulaFolios provides are clients with first class portfolio management, a historical record that is envious, and a process that is just plain smart.

Each decision our portfolios make is based on proven, academic research.  We’ve structured three specific processes to enhance your experience:

1.  Customized Asset Allocation

We start with a smart process for determining the unique portfolio each client should use to best achieve his or her unique goals.  We listen, take notes and follow a structured process to establish this fully customized asset-allocation plan.

Asset Allocation is driven by:

  • Your current and future portfolio income needs
  • Your comfort with taking short, intermediate and long-term risk
  • The unique tax situation and nature of managed accounts

2.  Money Manager Selection

When choosing money managers for each component of a Custom Asset Allocation, we are very careful in only using proven, top-ranked, and institutional asset managers.

We only use money managers who exclusively utilize a formula-based approach to a asset management, similar to our formula-based approach to building a custom portfolio.  This is different than hiring money managers based on past returns; as they are impossible to quantify and could be entirely based on luck.  By focusing only on managers who utilize mechanical investment models, we are confident their future decisions will be based on the same factors as those made to produce their outstanding track records.

Large institutional investors , such as University Endowments, Pension Plans, and Charitable Funds, have utilized this approach for years.  We believe allowing individual investors this same access to world-class managers in a Custom Asset Allocation, driven by proven formula-based and emotion-free processes, is the smart approach many have been missing (but wished for) for years.

3.  Tactical, Ongoing Asset Management

While we believe in the merits of active asset management, there are many who abuse this philosophy, turning into hyperactive and costly mistakes.  Our formula-based process is designed to only create transactions when appropriate.

By adhering to these principles, we seek to hold investments for prolonged time periods when markets are healthy and gains most likely.  However, when market cycles change and it is most prudent to move to safe-haven assets, our models do not hesitate to proactively reallocate funds away from harm.

The end result is a portfolio that is consistent and capable of producing long-term results in line with client expectations, while also avoiding large-scale losses that often take many year to recover from.

We believe with FormulaFolios, you now have a smarter way to invest, and with AssetLock, you now have help protecting what you worked so hard to accumulate.  You owe it to yourself to learn more about this sound investment process.

Don’t delay… to learn more about FormualFolios and Chief Investment Officer, Jason Wenk, call our office today!  Call the office or email me directly.

9 Regrets Baby Boomers Have in Retirement


The last of the baby boomer generation will be turning 50 this year, and it’s time for them to get a fix on how they are going to prepare for retirement.  Fortunately, there are valuable lessons to be learned from those who have already reached their later years.  It is upon each American to avoid retirement pitfalls that cause regrets.

According to a leading accounting firm and Lisa Barron at Retirement Advisor Magazine, these are the biggest boomer retirement regrets they see.

1.   Lack of savings and an unrealistic understanding of how much will be needed in retirement

2.   Failure to have a tax plan, an income plan and an investment plan

3.   Failure to use a tax-forward plan, such as deferring Social Security

4.   Withdrawing money from tax-deferred IRAs too early

5.   Not spreading Roth IRA conversions over a period of time

6.   Failure to hedge against inflation and use a tax co-efficient

7.  Excessive borrowing

8.  Retiring too early and underestimation life expectancy

9.  Not planning for long-term healthcare expenses

I’m sure other regrets could be added.  So, how about you, is it time to get professional guidance to help you prevent these same regrets?

Look… the stock market crash of 2008 was a game-changer for the psyche of many boomers.  Many of our the clients and potential clients we see have had to shift from focusing on how much they make to how much they keep.   Many folks spend their time looking at how they can get the maximum rate of return, whereas, what they should be focused on is a strategy that gives them guaranteed income month over month without having to worry about the risk that’s associated keeping a large portion of their portfolio in the markets.  Let me be clear, there are many ways to accomplish your best retirement.  Stop being closed minded and open your potential.


How Does Obama Want to Change Your Retirement Accounts?

President Obama’s 2015 budget includes a number of proposed changes aimed at retirement accounts. Six out of the seven provisions (or similar versions of them) are detailed below and unveiled Monday of this week.

It’s important to know the key retirement account provisions included in the President’s budget this year, because they certainly could happen and, at the very least, they are an indication as to where the administration wants to head. Here are the key changes you should know about:


This is major deal and when people catch on to it, it’s bound to make some major waves. Under the premise of simplifying the tax rules for retirement accounts, President Obama’s 2015 budget calls for a provision that would require Roth IRAs to follow the same required minimum distribution (RMD) rules as other retirement accounts.

In other words, you would have to begin taking RMDs from your Roth IRA when you turn 70 1Ž2, the same way you do with your traditional IRA and other retirement accounts. If this were to come to pass, it would be a major game-changer when it comes to retirement planning.

The fact that Roth IRAs have no RMDs is one of the key reasons many people decide to contribute or convert to Roth IRAs in the first place. The distribution would be a tax-fee withdrawal, however, once the money is out of the tax-free haven, where would it go. Either, the money would be spent or re-invested in a less tax advantaged location.

If this proposal were to become law, conversions would make sense for far fewer people. Not only that, this proposal gives all those who haven’t made Roth conversions over the years because they “don’t trust the government to keep their word” more ammunition.


The maximum tax benefit (deduction) for making contributions to defined contribution retirement plans, such as IRAs and 401(k)s, would be limited to 28%. As a result, certain high-income taxpayers making contributions to retirement accounts would not receive a full tax deduction for amounts contributed or deferred.

Example: Currently, if an individual with $500,000 of taxable income defers $10,000 into a 401(k), they will not pay any federal income tax on that $10,000. Without that salary deferral, that income would be taxed at 39.6% (currently the highest federal income tax rate).

However, if this proposal were to become effective, that $10,000 would effectively be taxed at 11.6% (39.6%-28% = 11.6%), since the maximum tax benefit that a client could receive would be limited to 28%. That equates to an additional tax bill of more than $1,000.


Most IRA (and other retirement plan) non-spouse beneficiaries would be required to empty inherited retirement accounts by the end of the fifth year after the year of the IRA owner’s death (known as the 5-year-rule). The proposal does call for certain exceptions to this rule, such as for disabled beneficiaries and a child who has not yet reached the age of majority.

While this proposal might simplify the required minimum distribution (RMD) rules for most beneficiaries, it would mark the death of the “stretch IRA.” Most non-spouse beneficiaries would face more severe tax consequences upon inheriting retirement accounts and as such, the value of these accounts as potential estate planning vehicles would be diminished.


New contributions to tax-favored retirement accounts, such as IRAs and 401(k)s, would be prohibited once you’ve exceeded an established “cap.” This cap would be determined by calculating the lump-sum payment that would be required to produce a joint and 100% survivor annuity of $210,000 starting when your turn 62.

At the present time, this formula produces a cap of $3.2 million. If you ended up with more than this total in cumulative retirement accounts at the end of a year, you would be prohibited from contributing new dollars to any retirement accounts in the following year. The cap would be increased for inflation.


This one’s simple. If you have $100,000 or less – across all of your retirement plans combined – you would be exempt from required minimum distributions. Currently, if you fail to take the proper RMD amount comes with one of the stiffest retirement account penalties there is, a 50% penalty on any shortfall.

This proposal would eliminate that possibility if you have $100,000 or less in retirement accounts and would allow you to take as much, or as little, as you want without a penalty.


Non-spouse beneficiaries would be allowed to move inherited retirement savings from one inherited retirement account to another inherited retirement account via a 60-day rollover (in a manner similar to which they can currently move their own retirement savings).

Unifying the rollover rules for retirement account owners and beneficiaries would greatly simplify this aspect of retirement accounts and reduce the number of irrevocable and costly mistakes that are often made by beneficiaries under the current rules.


Employers in business for at least two years that have more than 10 employees and don’t offer another retirement plan already would be required to offer auto-enrollment IRAs to their employees. Contributions to employees’ IRAs would be made on a payroll-deduction basis.

Employees would be able to elect how much of their salary they wish to contribute to their IRA (up to the annual IRA contribution limit), including opting out entirely. In the absence of any election, 3% of an employee’s salary would be contributed to their IRA. Employees would be able to choose whether to contribute to an IRA or Roth IRA, with the Roth being the default option.

The provision would also enhance incentives, in the form of a tax credit for small businesses, to adopt a company-sponsored retirement plan.

If you have questions on how this may affect your specific situation, give our office a call. If you are not our client and feel like it is time to get a second opinion or professional guidance give our office a call.

This originally appeared on www.theslottreport.com. Information and examples by Jeffrey Levine, CPA.

Required Homework Before Visiting One Of The Social Security Locations

Do not drive to your local Social Security office until you have educated yourself. That is the best advice I can give to all you baby boomers heading towards retirement. There is a large crater between what most Americans think they know about Social Security and the real rules governing this entitlement program. Multiple surveys and an untold number of stores reveals this fact.

As a result of this lack of knowledge and people not getting professional guidance, the typical retiree will walk right past up to $100,000 in lifetime retirement benefits.

For a married couple, the difference between a smart Social Security claiming strategy and the urge to “take the money and run” could be $250,000 or more over their combined lifetimes. Social Security is the cornerstone of retirement income for most Americans. So why are so many people not doing their homework before going to the social security office?

Last year Financial Engines conducted a survey of more than 1,000 people who are retired or close to retirement . The repsondents were asked eight basic questions about claiming Social Security benefits. Of those people who had not yet claimed their benefits, 74% scored a grade of C or lower. Only 5% were able to answer all eight questions correctly. This survey shows that this retirement decision is more complex than most Americans think. As a financial professional, I can assure you that this decision will have a dramatic impact on the standard of living most people enjoy in this new chapter of life.

The Financial Engines survey found that 70% of people who hadn’t yet claimed Social Security said they would be at least somewhat interested in a professional service to help hem develop a claiming strategy. And, 39% said they would be extremely or very interested in this type of Social Security-claiming help. Who is going to provide that assistance, the Social Security Administration? A financial advisor is best suited to help you understand how to put the pieces of a retirement income plan together. Those pieces should include Social Security, retirement savings, pensions (if you are one of the fortunate few) and for some people continued work in retirement. In the current economic environment, some may be better off by tapping their retirement accounts in order to delay Social Security as long as possible. That is probably not what most Wall Street brokers would like to see happen to that IRA.

A financial advisor may be able to improve a client’s investment return by 1-2% with good asset allocation and diversification, but guiding clients to a better claiming decision as it relates to Social Security could increase their lifetime income by 25% or more. Although we can claim benefits as early as 62, your payment will be reduced forever and you will be subject to earnings caps if you continue to work and you will forfeit the ability to engage in creative claiming strategies that could boost your lifetime income.

Many retirees do not understand what a file and suspend, or restricted application could do for them. Nor do they understand the spousal benefit strategies and how they work.

Here’s my irresistible offer to America…send to my email:

Your Date of Birth, Spouses Date of Birth, Your age 66 Social Security payment, Your Spouses age 66 Social Security Payment.

And I will run an optimized SS Report for you at NO COST and NO OBLIGATION.

Email me @: phil@calandrafinancialgroup.com


What Is Your Bear Market Plan?

If you have been invested in the market, you know strong bull markets are inevitably followed by principal-destroying bear markets. When the market is going straight up, as it has since the financial crisis, you become complacent and overconfident . “Hey…look at my portfolio, I am making money, I’m rich.” How quickly one forgets the wealth destruction that inevitably happens. The reality is some investors will be prepared, some will not.

At our firm, we tend to be on the more conservative side. Our client’s don’t want huge losses, so we take a different approach. Some will utilize Fixed Index Annuities to give them a floor under their assets, others will not. The stock market can be a very rewarding place to invest. But beware of Wall Street! The markets will giveth… and the markets will taketh away.

Do You Want To Give Back Three Years Of Gains?

When the dot-com bubble finally burst in 2000, three years of gains were wiped out. The final damage to principal was on the order of 51%, which is how far the S&P 500 dropped from the bull market peak to the bear market trough.


Eleven Years…Gone In A Flash

Similarly, after the property and mortgage bubble began losing air, the S&P gave back eleven years worth of gains. The final damage to principal was on the order of 58%, which is how far the S&P 500 dropped from the bull market peak to the bear market trough.


If We Know A Bear Is Coming

If it is inevitable a bear market is coming at some point in the future, is it not logical to start putting your protect-my-principal plans in place now? Obviously, the answer is yes.

Then why is it that when I ask potential new clients, what is the floor under your feet when the market collapses, the answer is usually a blank stare and the sound of crickets chirping.

Most likely, it is because people tend to work with ”accumulation” advisors, those buy and hold type stockbrokers that have little sense of planning or strategic investment management. Consequently, they expect you the investor to “hang in there” and “ride it out” as you watch your life’s hard work go to money heaven.

Once the declines begin in the early stages of the next bear market, stress levels will begin to rise dramatically. We all make better decisions under low stress conditions. Therefore, now is the time to begin formulating your “inevitable bear market plan”.

So, what will be your strategy to protect your portfolio when the inevitable bear market roars again?

Introducing Asset Lock

You may be familiar with a leading Identity Theft program called Life Lock; a very worthwhile credit protection program.

Beginning in May, we will be rolling out a proprietary portfolio protection program called Asset Lock to our preferred clients.

Asset Lock is a portfolio monitoring software that watches your account everyday 24/7. This allows us to be fully invested without worry.

Click here for Asset Lock!

Asset Lock will ensure that we never get caught off guard by the destruction of the next market crash.

Learn more about Asset Lock by clicking here. And contact our office today to discuss your “inevitable bear market plan”.