Social Consciousness ... On Wall Street?

Monday, November 17 at 09:30 AM
Category: Personal Finance

You may want to be socially conscious and do the right thing, both in your own community and in the larger global community. Perhaps you are concerned about environmental issues or about opportunities for fair trade and human rights, or maybe you are passionate about protecting wildlife or promoting healthy diet and exercise for young people.

Whatever your area of interest and moral or ethical position, you may want to act in a way that is in accordance with your personal beliefs and convictions. But at the same time, you may be interested in making money in the stock market. Many see this as an irreconcilable conflict, but it doesn't have to be, thanks to many stock funds that have been created to specifically cater to the needs of people who want to play the market without compromising their own personal values.

Mutual funds are a great way to delve into the socially conscious side of Wall Street. These are not single stocks, but groups of stocks that are managed by trained professionals. When you buy a share in a mutual fund, you are essentially contributing funds to a mutual fund, and then the fund's manager will use that money to buy stocks that he or she thinks will do well and meet the goals of the mutual fund's investors. Because these funds value diversity of assets, they are somewhat protected from the risk of only owning shares of an isolated company. And these days there are many mutual fund companies that specialize in socially conscious investing.

When you buy into their funds, they promise to use your money only for investment in companies that promote the things you believe in, so you get two benefits. First, you get the peace of mind of knowing that your stock market investments are for good causes. Secondly, you get to promote your causes and support the companies that share your values, by putting your hard-earned money behind your commitment to those values. You get to own shares in companies that are trying to succeed by doing the kinds of things you want to see done in the world, so you have a chance to reap both financial rewards and personal satisfaction.

You can also buy stocks in individual companies, by doing some background research to find out which ones meet your standards. For example, if you want to help protect the environment from companies that pollute, you could buy stock in companies that make "green" products like alternative fuels that don't contaminate the atmosphere. Or you can buy stock in companies that clean up oil spills, plant trees, or manufacture biodegradable consumer products.

The idea is that you can have your cake and eat it too. It is possible to make money in the stock market and at the same time remain committed to socially conscious values, by putting your money into the right stocks. To learn more, you can talk to a client advisor with Arvest Asset Management.

Tags: Financial Education, Investing

Economic Review and Tactical Investing Seminar in Leawood, Kan.

Tuesday, September 02 at 08:05 AM
Category: Arvest Community News

You are cordially invited to join us for hors d’oeuvres, drinks and helpful investment information on Thursday, Sept. 18, 6-7:30 p.m. Meet us in business casual at the Bristol Seafood Grill located at 5400 W 119th St., Leawood, Kan. Please R.S.V.P. by Sept. 12 to Beau Crowder at (913) 279-3348 or R.S.V.P. required due to limited seating.

The presentation will include an economic review and information about tactical investing presented by Clay Nickel (CPM®, Investment Management Group, Portfolio Manager) and Jeff Wilson (Portfolio Advisor, Hays Advisory).

Clay serves as a Fixed Income Portfolio Manager for private and institutional clients of Arvest Asset Management. Additionally, Clay is co-lead manager of the Investment Management Group’s Strategic Model Portfolios and has served as the lead manager for the Investment Management Group Adaptive Portfolio Strategy. Prior to joining Arvest in 2010, Clay was a portfolio manager for a large community bank and managed a $300 million investment portfolio for high net worth individuals and institutions. Clay is a graduate of Wichita State University. Additionally, he has completed Columbia University’s Academy of Certified Portfolio Management. Clay is also a member of the Chartered Financial Analyst Institute and the Kansas City Society of Chartered Financial Analysts. Kansas Insurance License # 6124188.

Jeff joined Hays Advisory in 2004, and has an extensive background in the financial industry. Prior to joining Hays Advisory he was employed by UBS Financial Services in Nashville, Tenn., where he worked as a financial advisor. During his time at UBS, he also facilitated stock transactions for corporate insiders as regulated under SEC rule 10b5-1. At Hays Advisory, Jeff works with financial advisors across the country educating them on the Hays investment process.

Investment products and services are provided by Arvest Investments, Inc., doing business as Arvest Asset Management, member FINRA/SIPC, an SEC registered investment adviser and a subsidiary of Arvest Bank.

Investments and Insurance Products: Not a Deposit | Not Guaranteed by the Bank or its Affiliates
Not FDIC Insured | Not Insured by Any Federal Government Agency | May Go Down in Value

Tags: Financial Education, Investing, Kansas, Kansas City

Advantages of a Trust Advisor

Thursday, July 10 at 10:05 AM
Category: Personal Finance

Previously, we explored some of the misconceptions about trusts in an effort to better understand them.

Now we’re ready to look at some of the potential advantages a trust can offer. First, we’ll explain how, with an institution like ours as trustee, you benefit from objective, personalized investment management.

The trust advisor stands in the unique position of being a central clearinghouse for his or her clients. The advisor knows the client’s current financial position, the client’s business, the client’s family dynamics, and has helped plan the future for the client. In many cases the trust advisor stands in the place of the client, making decisions on life changes for the client, executing plans created by the client related to family and business and investing to meet the client’s financial objectives.

Thus, the trust advisor has come a long way from the time when the client saw the trust department as the final stopping point to gather assets, pay taxes and distribute assets to the client’s family. Today, the trust advisor is in the middle of planning for the client. The trust advisor works with the client on an individualized financial planning process, and also helps assemble a financial team – attorneys, accountants, etc. – that can assess and address the client’s specific needs and desires.

All of this allows the advisor to look at questions and opportunities through the eyes of the client. The advisor provides an independent but kindred viewpoint. The advisor also stands in for the client if that person is incapacitated, unavailable or deceased.

The trust advisor also serves as a gatekeeper for other banking services, including business loans, insurance loans, mortgages, home equity loans and a host of deposit and other bank products. That’s why it’s important for the advisor to meet with the client as often as necessary, to better understand the client’s goals and objectives, and learn of past decisions and events in the client’s life.

This is noticeably true when it comes to managing your various assets. Doing so wisely is a means to a very important goal: financial security for yourself and your family.

There are many issues associated with meeting that goal, and they aren’t all couched in financial terms such as “rates of return,” “risk/reward ratios” and “after-tax cash flows.” Family financial security is best achieved with a dynamic, flexible plan, one that provides for the continuity of sound investment management for the present and the future – a plan that will function successfully even in the event of unexpected disability or death.

A revocable living trust can provide just about everything you need to structure a complete financial plan. Establishing a living trust is an approach to investment management that provides uninterrupted financial protection for yourself and your designated beneficiaries, as well as a host of other benefits. Here is a short list of what a trust advisor can accomplish for you and your family:

  • Professional investment management for your portfolio. The investment strategy for your trust’s assets will be tailored specifically to your age, as well as your needs and circumstances. By naming a professional trustee, you gain the security of knowing your investments are in capable, experienced hands.
  • Freedom from the “busywork” of managing your investments. When you transfer assets to a living trust, you also are transferring the details and chores associated with their management to the trustee. Not only do you free up valuable time, but you also gain the peace of mind of knowing that even during an extended absence, there is someone at the helm, decreasing the chances of incurring costs associated with errors or lapses in tending to your investments.
  • Continued investment management during any period of disability. Should you become disabled, the trustee of your living trust can be directed to carry out a wide variety of practical tasks, including the filing of tax returns and payment of your taxes and household and medical bills. This kind of provision in a trust agreement may eliminate the need to name a court-appointed guardian to control and manage your assets.
  • Estate organization. Your living trust can be coordinated with your will to allow for the unification of your assets in order to provide for more efficient estate management. You can arrange for the distribution of your property to your heirs and create a strategy that can minimize the impact of estate taxes. With such an approach, you may be able to avoid the potential costs and frustrating delays of probate proceedings.
  • Privacy. Unlike a will, in most instances, the terms of a living trust are not available to the public, shielding your family finances from unwanted scrutiny.

Additionally, the terms of the revocable living trust never are set in stone. You are free to amend or cancel the trust at any time. By establishing a living trust during your lifetime, you can put your trustee to a “performance” test, while retaining the option to make other arrangements in the future if you are not satisfied.

We invite you to call us to find out more about how a living trust can serve the financial planning needs of you and your family. And we welcome the chance to serve as the trustee of your living trust. Put us to the test. We believe you will be pleased with both our performance and our service.

Check out our article which clarifies misunderstandings about trusts.

Note: Any developments occurring after January 1, 2014, are not reflected in this article.

Tags: Financial Education, Investing, Retirement

Putting Financial Risks into Perspective

Thursday, March 27 at 02:35 PM
Category: Personal Finance

It seems changes in the financial markets happen more often, and market swings are larger than they were a few years ago. Risk is the term often associated with changes in values of stock prices and interest rates. But, there are also other types of risk. Understanding various risks can help you determine the saving and investment strategies that are right for you.

Three Types of Risk

Risk of loss. When you buy something and sell it at a lower value you have incurred a loss.

Fluctuation risk. Change in the values of investments while held is another common risk. Handling daily changes in stock and bond values can be stressful.

Inflation risk. The rate of inflation, which hit double digits in 1979 and 1980, has declined since then and has recently been about 3 percent. While not large, at a 3 percent inflation rate an item that cost $100 in 2013 will cost almost $116 in 2018 and $134 in 2023.

The Consumer Price Index (CPI) is the most widely watched measure of inflation. The government computes this index monthly by measuring changes in the prices of over 90,000 items. The CPI is reported each month. The annual change is used for determining adjustments in Social Security payments, income tax brackets and many other payments and charges.

Dealing With Risk

There are as many different perspectives on risk tolerance as there are types of investment strategies. Here are some things to keep in mind as you deal with risk.

Use common sense. "When something appears too good to be true, it probably is." Don't believe everything you hear and read. Others have opinions of how you should handle your finances, but remember, you have to live with the consequences of whatever you choose. Have a healthy dose of skepticism when people offer suggestions, especially if they don’t practice their own suggestions. Do your research and find a qualified financial advisor you can trust.

Diversification. "Don't put all your eggs in one basket." Spreading your assets into the appropriate categories of equity, fixed income and liquid investments can reduce your overall risk and provide a logical guide based on your time-horizons and risk tolerance.

Long-term perspective. "Most people don't plan to fail, they fail to plan." Establish your lifelong objectives and follow a strategy to reach them. With the big picture in mind you’re less likely to make a rash decision to change your asset allocation when you face your first market decline.

As you map your overall financial strategy, make sure the combination of risks in your business, your job and your personal finances are appropriately balanced with the potential for overall return.

Tags: Financial Education, Investing, Savings

Have a Financial Strategy

Wednesday, January 15 at 10:35 AM
Category: Personal Finance

A financial strategy is simply a plan on how you are going to handle your finances. It does not have to be overly complicated, but it should cover the basics, help you avoid major financial mistakes and put you on your way to a secure financial future.

Your strategy and your financial situation will change over time. You will probably earn more money, your expenses will probably increase and your short-term and long-term goals will change as you experience various life events. Here are some ideas to start with to help you take control of your financial future.

Develop a financial reserve. Being prepared (with three to six months' living expenses) can help relieve some of the financial anxiety often felt. Consider an automatic savings plan with some amount being deposited into a savings account from each paycheck. The fund will grow and you may end up not even missing what you save each month.

Get rid of high interest rate credit card debt. Interest rates on some credit cards are high. If you are carrying over balances and paying interest, cut down on your card use, pay more than the required monthly minimum and eliminate this expense. You may also want to consider a different credit card that offers a lower rate.

Develop a household budget. This is often one of the most dreaded parts to being financially responsible. To make the process less dreaded, call it a “household spending analysis.” Determining how you spend your money will probably lead to identifying how to reduce some expenses. You may want to use some common financial management software (Quicken or Microsoft Money) to help. These relatively inexpensive programs will also help organize your finances and may save you time.

Save for retirement. Even as you are starting your financial life, it is important to begin considering retirement. Your financial lifestyle during retirement is largely dependent on the financial decisions you make now and financial habits you form before retiring. As Social Security and the traditional company defined benefit plans have become less important, the responsibility for preparing for a financially secure retirement has shifted to the individual.

Start with your employer’s retirement plan. Many plans, especially 401(k) plans make it easy to save, offer investment flexibility and enable you to reduce your taxes. Many plans also have provisions for the employer to make contributions on your behalf. Review your plan details, contribute as much as you can and at least contribute enough to get the full employer “match.”

If you have taken full advantage of company sponsored plans, and can still afford it, consider contributions to an IRA or Roth IRA. The tax deferred compounding aspects of these plans enable your funds to grow faster.

Be sensitive to taxes. No one likes to pay more income taxes than absolutely necessary. Be aware of the opportunity of deducting certain items like mortgage interest, state and local taxes, charitable contributions and certain medical expenses. Also, consider the preferential tax treatment from capital gains on your investments. However, you should be careful to put taxes into perspective – do not let tax considerations prevent you from making sound financial decisions.

Have a sensible investment strategy. Regardless of the size of your investment portfolio, having a logical strategy is important. Understanding the risks of investing, having a realistic expectation of potential returns and practicing diversification should be part of your thinking.

Start with an asset allocation goal that divides your investments into equity, fixed income and cash investment categories. Your initial asset allocation should be based on your time horizon (your age) and how you feel about taking risks. The younger you are and the more comfortable you feel with risk, allocating a larger portion of your funds to equities may help you earn the higher returns of stocks that have historically been available. However, remember all investments involve risk and past performance is no guarantee of future results.

Be adequately protected. Insurance provides protection against the unknown. Make sure your possessions, life and health are adequately insured. Examine the level of deductibles and the coverage amounts to get the protection you need at the lowest cost.

Take care of estate planning. Thinking about estate planning is important at any age and regardless of your wealth. A will can ensure your assets are distributed as you desire on your death and can help reduce any estate taxes that may be due. 

But estate planning is more than reducing taxes. Your estate plan should designate custodians for any children and include documents that designate someone to make financial decisions if you are incapable of making them (durable power of attorney for finances) and that designate someone to make medical decisions if you are incapacitated (durable power of attorney for health care).

Finally, organize your records. Having a system for handling monthly expenses can reduce the stress and time needed to handle your everyday finances. Using a system to keep track of investment and tax records will make every tax season less “taxing.” Keep other important information organized too. Having to hunt for the name of your insurance agent, an account number, a frequent flyer number or any other bit of information can be a waste of time.

The views of this article are for general information use only. Please contact a subject expert when specific advice is needed.

Tags: Budgeting, Credit Cards, Debt, Financial Education, Investing, Retirement

New Year, New Savings Approach

Friday, January 03 at 01:05 PM
Category: Personal Finance

Strike up a conversation about retirement with someone in their early working years and their thoughts often can be read plainly on their faces. It’s as if they’re standing at one end of the solar system and being asked to spot a galaxy 100,000 light years away and being asked to plan for how they’re going to get there. It seems unreachable, unknowable for now. They’ll figure it out later.

Unfortunately, later doesn’t work too well. The longer we put off saving for retirement, the more risk we take in not having enough assets as that once-obscure galaxy comes into view. Starting a disciplined saving routine is less painful than it sounds, and a new year is as good a time as any to begin.

The most practical way for most people to start saving is through an employer retirement plan. It might be a 401(k). It could be a 403(b) or a SIMPLE IRA. There are other employer retirement vehicles, but these are the most common ones that allow the employee to contribute his or her own money.

Employers want workers to participate in these plans because they know it promotes worker satisfaction and, hopefully, more productivity and less turnover. So most companies match part of the employee’s contribution. For instance, several Fortune 500 companies kick in an amount equal to as much as 6 percent of pay as long as the associate contributes that much. The account owner has doubled his money before it’s ever invested.

The government also encourages retirement saving by allowing contributions to be made from earnings without being taxed. Then all growth and income generated inside the account go untaxed until withdrawals start in retirement. Ideally, those funds will be coming out at a time in life when a person’s tax bracket is lower than when he was working full time.

How much money will be needed in retirement depends on each retiree’s spending and big-picture goals. A financial advisor can help with that kind of planning. The advisor’s advice when it comes to saving typically is going to be to take advantage of the employer’s match at a minimum and to do more over time.

As nice as the IRS is in allowing pre-tax contributions, that generosity is limited. The most that can be deferred into a 401(k) in 2014 is $17,500 for anyone under age 50. At 50 and older, an additional $5,500 catch-up contribution is allowed for a total of $23,000 a year.

People whose employers don’t offer a retirement plan can use either a traditional IRA or Roth IRA. Which one is more appropriate depends on several factors that a financial advisor or tax advisor can help you determine.

A few generations ago, the retirement-funding recipe usually consisted of an employer pension, Social Security and personal savings. Now, pensions are rare and Social Security isn’t enough by itself to make ends meet for most. The importance of personal saving is greater than ever.

And delaying can be expensive. Assuming 6 percent annual compounded growth, an investor who saves $6,000 a year starting at age 25 will accumulate $754,741 by age 60. Waiting to start until age 35, that figure drops to $374,689. Waiting to start until 45, the total is $162,414.

So start now. Start with something. Even if it’s a token contribution, do it so it becomes a habit as you move into your higher-earning years ahead.

Tags: Cash Management, Financial Education, Investing

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