Friday, January 24, 2020

STATs and MARI-CRUTs and TEA POTs – Oh My!

Your obedient blogger retired just in time – never had to learn about various trust arrangements devised to take advantage of the late, lamented stretch IRA rules. Judging from this Forbes column, that was lucky.

How do you suppose a Flip NIMCRUT works? On second thought, never mind.

Tuesday, January 21, 2020

Scam Alert for Wealth Managers

Users of financial services are obvious targets for scammers. So are the providers of those services. “It’s almost as if many of the fraudsters have worked in financial services in the past,” says a Finra official.

Wealth managers, keep your guard up!

Sunday, January 19, 2020

Did Stretch IRAs Deserve to Die?

Individual Retirement Accounts began as simple way to put aside a few bucks. With the passing years, limits on annual IRA contributions increased and top income earners started moving megabucks into rollover IRAs.  Estate planners took notice.

Assets remaining in IRAs and 401(k)s at the owner’s death could be passed to a named beneficiary, and not necessarily in a lump sum. Distributions could be stretched over the beneficiary’s lifetime. Planners saw the potential for “inheritances" that offered many years of tax-deferred investment growth. Potentially, owners of seven-figure rollover IRAs could leave the grandkids a growing income for life.

Just one problem: Bright, imaginative grandchildren weren’t going to let a stretch IRA dribble out payments decade after decade. They would empty the account and use the after-tax proceeds to buy a beach house, start a business, back a Broadway musical. or who knows what.

The challenge for estate planners: Create trust provisions that deterred or prevented such impulsiveness, while also complying with IRA regulations. They rose to the challenge. Now the SECURE act has made their ingenuity almost useless. Except for spouses and with certain other limited exceptions, the SECURE act eliminates stretch IRAs. Most beneficiaries are now required to empty their IRAs within ten years.

The Editorial Board of The Wall Street Journal was not amused by the stretch IRA's demise, accusing Congress of playing a dirty trick on “the 90-year-old banking on this strategy." But the WSJ conceded, "there’s a reasonable case that IRAs weren’t meant to outlive their owners by decades.”

Michelle Singletary in The Washington Post agrees. IRAs weren’t intended to be estate planning vehicles.
There is nothing wrong with trying to minimize your taxes or the tax bill for your heirs. That’s a smart money move. However, IRAs and 401(k)s weren’t meant to be used as a way to transfer wealth. They were designed to encourage people to save by giving plan participants and/or account holders — not their children or children’s children — a tax break. The loophole created by the law that has allowed beneficiaries to stretch out their tax burden was a bonus, not an entitlement that should never be touched.
I’m with Singletary. The death of the stretch IRA is timely.

Friday, January 10, 2020

Tax Wealth by Taxing the “Squatters”?

When it comes to taxing wealth, Eugene Steuerle believes we should pay more attention to three issues.

1. A stockholder’s investment income is already taxed twice, at the corporate and personal levels. Current proposals for an annual wealth tax would result in what amounts to triple taxation.

2. If most returns on investment wealth receive a stepped-up basis at the owner’s death, why are inherited investment gains taxed when the heir withdraws them from an IRA?

3. The best time to tax the returns from wealth is at the owner’s death, as productive New Money passes to heirs and becomes less productive Old Money.

To bolster his last point, Steuerle quotes Winston Churchill:
 “The process of creation of new wealth is beneficial to the whole community. The process of squatting on old wealth though valuable is a far less lively agent.

Thursday, January 02, 2020

The most remarkable decade

I'm not talking about the stock market, though that was good also.  This article by Matt Ridley in The Spectator has been noticed by several bloggers and a NYTimes columnist, and I'm doing my own version for Wealth Management.

Sunday, December 29, 2019

Dave Barry’s Light Take on a Heavy Year

Jim Gust and I share an annual enjoyment of Dave Barry’s Year in Review. For a while, Barry writes, president Trump’s trade war with China made the Dow Jones industrial average flit up and down “like a butterfly on meth.”

The market recovered, and you may feel better about 2019 after reading Barry’s recap.

Wednesday, December 11, 2019

Inheritance: Many Hope, Few are Chosen

"The Boomers…are expected to inherit trillions of dollars.” Merrill Anderson’s newsletter clients received that alert back in 2004. As 2020 approaches we hear of another great wave of inheritance. By one estimate, boomers could pass $68 trillion to millennials and others over the next decade.

But these deluges of wealth from generation to generation aren’t orderly. Some boomers are still waiting for their bequests. Many members of the silent generation are still around, including presidential hopefuls Biden, Bloomberg, Sanders and Weld. As of last year, almost 22 million Americans were 75 or older.

Over half of millennials say they expect an inheritance. Most won’t get anything beyond trinkets. According to a United Income study, only about one out of five households receives an inheritance, and that ratio has held steady over 30 years. Only about one in ten receives more than $55,000.

Hoping for a million or more? The chances are maybe one in three hundred.

Even millennials lucky enough to make the inheritance cut may have to wait longer than they expect. From 1989 to 2016, the average age of inheritance rose from 41 to 51, and it seems certain to keep climbing.

The few millennials who inherit millions will become Old Money. Meanwhile, some of their peers are building new wealth. Over 600,000 millennials, mostly in their 30s, are already millionaires.

Saturday, December 07, 2019

Requiem for the Levitating Comma

Youre probably not alarmed to  learn that, after almost two decades, the founder of The Apostrophe Protection Society has decided to give up the fight. You may continue to use the apostrophe not at all when texting. But to avoid the complete loss of the once useful punctuation mark, do observe the post-industrial custom of putting an apostrophe before “s” when creating a plural.

Some us will miss the properly deployed apostrophe, a second-rate comma that tried to rise in the world.

Wednesday, November 06, 2019

Dirigiste Plan Features Pigovian Tax

Learned two new words the other day.

Steven Rattner's op-ed, critiquing Senator Warren's plan for funding universal Medicare by "taxing the  rich," introduced me to dirigiste. The noun form is dirigisme, borrowed from the French, and it means state control of economic and social matters. Dirigisme is the opposite of laissez-faire.

Neil Irwin's column describes Warren's proposed 6% annual tax on billionaires' wealth as Pigovian. A Pigovian tax is "intended to reduce the prevalence of whatever it targets." Taxing cigarettes helped to reduce the number of smokers. Taxing billionaires could help to turn them into an endangered species.

Almost nobody (probably including Senator Warren) expects the wealth tax to become a reality in 2021. What might a Democrat controlled Congress do instead to raise revenue from the rich? Here's what Rattner suggests:
Raise the top federal income tax rate, imposed on incomes over half a million or so, from 37% to at least 42%.
Tax capital gains at regular income tax rates and do away with stepped-up basis for calculating gains on inherited assets.
Close egregious loopholes, like treating fund managers' "carried interest" income as tax-favored capital gain.
How many proposals to tax carried interest as regular income have you heard over the years?

Some tax breaks seem indestructible.

Wednesday, October 30, 2019

Sunspot update

Back in 2009 I did two posts on the unexpected decline in the number of sunspots, and wondered whether that might lead to a period of global cooling.  The sunspots eventually returned, and there is no general cooling trend as yet.

Here we are ten years later, and the blankness of the sun is even more pronounced.  The record for spotlessness is 269 days, set in 2008.  We are at 225 spotless days this year, with two months to go, so the record is in jeopardy.

Electroverse provides more data on this, with some analysis and graphs.  The next solar cycle is projected to be weakest in 200 years.  200 years ago we had the Dalton minimum, when global temperatures fell by 2 degrees centigrade over 20 years, leading to crop failures and food riots.  Some believe that a grand solar minimum operates on a 400-year cycle, and we are at the beginning of just such a cycle. 

Perhaps we can put the Green New Deal on hold until we have more data?

Sunday, October 27, 2019

"Taxing the Rich"

Funding the government by taxing the wealthy has always had political appeal. In 1913 the ancestor of today's federal income tax was introduced to chastise the rich by imposing a tax ranging from 2 percent to 6 percent.

The 2 percent bracket started at an income level, in today's dollars, of over $500,000.

The top rate of 6 percent only hit incomes, again in todays' dollars, of $13 million or more.

Times have changed, haven't they? 

Taxes on wealth may trickle down even before they are enacted. Elizabeth Warren's proposed 2 percent tax on wealth over $50 million, for instance. One of her advisers has already suggested a lower tax bracket starting at $l million. 

Thursday, October 24, 2019

Dubious Decanting of Grandchildren's Trusts

A potential advantage of decanting, where authorized by state law, is that it may permit a trustee to modify a trust without the consent of the grantor and the beneficiaries or the time, expense, uncertainty, and publicity associated with obtaining court approval of the modification.
          – Michael J. Skeary, "The Power of Trust Decanting"
A wealthy grandmother celebrated the birth of her grandchildren by funding a generation-skipping trust for each new arrival. She served as trustee, with Merrill Lynch as custodian.

When grandmother resigned as trustee because of age, the children's father took over. Decades later, when the grandchildren learned they were old enough to draw upon their trust funds, they found their mother had been named co-trustee. And, according to the childrens' lawsuit, she had moved trust assets into a new trust that entitled her “to all net income and as much principal from the trust property as the trustee determines is necessary.”

For other wealthy grandparents the moral is obvious: Naming a reputable bank or trust company is  worth the trustee fees.

Thursday, October 17, 2019

As Candidates Talk Taxes, Remember Hauser's Law

Jim Gust once called attention to David Ranson's column on Hauser's Law.

We should keep the "law" in mind for the next year or so, as political candidates shout their promises to cut taxes or hint at plans to raise them.

Despite ups and downs in tax rates, Hauser's Law states, federal tax revenues hold more or less steady. The tax take persistently hovers at slightly below 20% of GDP.

All those tax billions the Democrats will be hoping to raise? All those billions Republicans will be hoping to shield from the IRS?  Hauser's Law indicates we shouldn't pay them much heed.

Saturday, October 12, 2019

Is the Estate Tax a Good Wealth Redistributer?

The concentration of wealth among the very few is a problem. In a WSJ op-ed ten years ago, Art Laffer argued that estate taxation is not the solution:
Advocates of the estate tax argue that such a tax will reduce the concentrations of wealth in a few families, but there is little evidence to suggest that the estate tax has much, if any, impact on the distribution of wealth. To see the silliness of using the estate tax as a tool to redistribute wealth, realize that those who die and leave estates would be taxed just as much if they bequeathed their money to poor people as they would if they left their money to rich people. If the objective were to redistribute, surely, an inheritance tax (a tax on the recipients) would make far more sense than an estate tax.

Tuesday, October 08, 2019

Brown Beats Harvard, Trounces Yale

We refer, of course, to investment results, not football.

For fiscal 2019, Brown's endowment recorded an investment return of 12.4%

Harvard reported 6.5%.

Yale, a meager 5.7%

Over the same period, a plain vanilla portfolio of 60% stocks, 40% bonds returned 9.4% and the S&P 500 delivered 10.4%.

So take heart! Even the Ivy League elite aren't invincible.

Saturday, October 05, 2019

Whisky – a “Robust" Investment?

Would you pay $20,000 or more for a 50-year-old Glenfiddich? How about this high-design bottle of Glenlivet, with contents that date back to the Battle of Britain?


Welcome to the world of collectible whisky. Sotheby's offers this aspirational guide.

To those of us who go into shock at the price of a decent 12-year-old single malt, the notion of collecting rare bottlings seems daft. On the other hand, the everyday bottles on your liquor store's shelves might not be a bad investment. On October 18th, whisky and other European luxuries are due to be hit with a  25% tariff.

Sunday, September 29, 2019

Elder Abuse for Art and Profit

Elder abuse is usually either physical (neglect and mistreatment) or financial (emptied bank accounts, purloined securities).

In the case of creative artists, there's a third possibility. Reports regarding two celebrated names in the art world, both of whom gained celebrity in the age of Make Love Not War, suggest that abuse may consist of seeking to profit from an artist's name and reputation – his brand.


Robert Indiana's "Love" first appeared on a 1962 Museum of Modern Art holiday card. Recreated  in paintings and sculpture, it became an immensely popular icon of the 1960's. Indiana, however, found celebrity uncomfortable. Eventually the artist fled from the pressures to commercialize his work by retreating to Vinelhaven, an island off the coast of Maine. There he died in May of last year, frail and isolated at the age of 89.  

In his final years Indiana appeared to lose his distaste for commercialism. A new work
resembling his Love sculpture appeared on the cover of a wine magazine. A giant sculpture of the letters BRAT showed up in front of sausage factory.

Last winter the NY Times reported that a company owning rights to sell designs based on "Love" has gone to court, accusing the artist's caregiver and an associate of "taking advantage of Mr. Indiana’s advanced age and isolation on a remote island off the coast of Maine to produce a bunch of inauthentic works that they sold under Mr. Indiana’s name."

In August, the executor of Indiana's estate, his former lawyer, charged the caretaker had stolen many artworks and more than $l million from Indiana while allowing the wealthy artist to live in squalor and filth.


Peter Max created trendy psychedelic posters for the Make Love Not War generation.
His works seemed to be everywhere, partly because his style was widely imitated. Although Max is now an octogenarian suffering from Alzheimer's, his artistic output appears undiminished. His studio, run by his estranged son and associates, produces Peter Max works that sell briskly on cruise ships – so briskly that one cruise ship is itself adorned with a Peter Max design.

But cruise passengers may be buying works that are Peter Max in name only, according to the Times:
The scene played out for years. Twice a week, in the late afternoon, above the Shun Lee Chinese restaurant on the Upper West Side of Manhattan, a creaky elevator would open, and out would step an elderly man. Thin as a rail, with a sparse mustache, he would sometimes have little idea about where or who he was. A pair of security doors would buzz unlocked once surveillance cameras identified him as the artist Peter Max.
Inside, he would see painters — some of them recruited off the street and paid minimum wage — churning out art in the Max aesthetic: cheery, polychrome, wide-brushstroke kaleidoscopes on canvas. Mr. Max would be instructed to hold out his hand, and for hours, he would sign the art as if it were his own, grasping a brush and scrawling Max.
Nevertheless, sales of works signed Max continue, aboard ship and on land.
Putting an ailing artist's name on works made by others and sold for profit certainly seems abusive. Yet in today's art world, who knows? 

Artist Damian Hirst (remember his shark in a tank?) happily admits that only a couple of dozen versions of his "Dot" paintings were created by him. To meet perceived demand, he had his assistants turn out more than a thousand more.

Sunday, September 22, 2019

This Tax Deduction Does Matter

Tax deductions don't matter after the Trump tax cuts? Well, that depends on the deduction.

Although far fewer taxpayers were able to claim deductions for mortgage interest or charitable contributions on their income tax returns for 2018, home sales and charitable donations seemed to survive unscathed.

Because of the expanded standard deduction, use of the SALT deduction for state and local taxes also declined. What's more, upper-income taxpayers who did claim the deduction couldn't claim much – the deduction was capped at $10,000 per couple.

As a result of the cap, income-rich residents of New York, California and other high-tax states now have an added incentive to pull up stakes. According to estimates cited by The Wall Street Journal, a Manhattanite couple with income of $500,000 could save $50,000 in state and city income taxes by moving to a no-tax state such as Florida. Californians with $500,000 incomes could save more than $46,000 by establishing residency in no-tax Nevada.

Connecticut, Merrill Anderson's home state, is feeling the pain. (A hypothetical $500,000 Connecticut couple might save over $32,000 in taxes by becoming Floridian). High income Wall Streeters flocked to Connecticut in recent decades, a migration encouraged by the destruction of the World Trade Center. Banks built huge trading floors in Stamford. Hedge funds flocked to Greenwich.

Then came the great recession. Connecticut's role as Wall Street East began to fade. High-income financial types have been leaving – a few involuntarily. Most have departed in search of friendlier tax climates.

 Like Florida. Especially the Palm Beach area.
Kelly Smallridge, president and CEO of Palm Beach County’s Business Development Board, told FOX Business that more than 70 financial services companies have moved into Palm Beach County within the last three years. Currently, the organization is working with another 15.

“I cannot keep up with the number of companies coming in,” Smallridge said. “Some are headquarters, some of them are regional operations. Many of them, once they get here, within short order establish [Palm Beach] as their home base."
 
Firms are primarily coming from three main areas – New York, Boston and Connecticut (specifically Greenwich).
As Greenwich and Connecticut have discovered, extremely-high-income-people aren't willing to remain sitting targets for state and local taxes. They and their advisers are adept at sheltering wealth from taxation. That's something for Elizabeth Warren to keep in mind if she's able to pursue her idea for an annual wealth tax.

Monday, September 16, 2019

A Corporate Executor and Trustee is Worth Fighting For

Real estate bigwig and philanthropist George Kaufman changed his will shortly before his death, removing his longtime lawyer as executor and trustee. Now the lawyer has gone to court, claiming the changes are the result of elder abuse by Kaufman's wife.

Kaufman's will divides his estate among various individuals and creates a charitable foundation. The final amendment designates Bessemer Trust as executor and trustee.

The choice of a trust company, The Wall Street Journal reports, has drawn the approval of New York State officials:
The office of New York’s attorney general, which supervises charities in the state, has supported Bessemer, calling it a “disinterested, neutral corporate fiduciary.” The attorney general’s office accused [the lawyer] of being motivated by his own financial interest and holding up the creation of the charity.

Saturday, September 07, 2019

Income Tax Deductions Don't Matter

The Trump income tax cuts abolished personal exemptions but greatly expanded the standard deduction. That meant most taxpayers could gain nothing by itemizing their mortgage interest payments or their charitable contributions. Without these tax breaks, some predicted, home prices would plunge and charitable contributions would shrivel.

Sure enough, far fewer taxpayers claimed itemized deductions on their 2018 returns.

But so far, Felix Salmon points out, the economic impact of those lost deductions has been nil:
Only 8% of taxpayers now deduct mortgage interest, yet home prices continue to rise,  with no indication that the new law changed anything at all. 
Similarly, the charitable contribution deduction has had no visible effect on charitable contributions. Total giving rose by 0.7% to a new record high in 2018, despite a late-year stock market plunge.

Sunday, August 18, 2019

“The Biggest Blunder in Recent Auction History”

"Anything that can go wrong, will go wrong." It's Murphy's Law.  He may have been in the audience at this weekend's RM Sotheby's auction of "the first Porsche."

To begin with, this little 1939 race car wasn't really a Porsche. That brand wasn't launched until after WWII. Ferdinand Porsche, who designed the vehicle, called it his"ancestor" Porsche.


Produced to represent Nazi Germany in a Berlin to Rome race that was cancelled when war broke out, the so-called Porsche Type 64 is more like a Volkswagen, built on the chassis of what would become the VW Beetle and powered by a souped-up VW engine. Over the years the vehicle has been significantly restored and modified. Still, it's one supercool-looking pre-war race car.

On Saturday, August 17, the almost-Porsche was put up for sale, at an expected price of $20 million or more, at RM Sotheby's auction.

And so began "the biggest auction blunder."
This is the only surviving example personally driven by Ferdinand Porsche,” the evening’s emcee said, then announced that bidding would open at “$30 million,” a figure that was written on the front media screen of the auction theatre. Half of the crowd laughed; the other half cheered. After rapid bidding up to “$70 million,” with the crowd on its feet, iPhones raised, and cheering, the auctioneer announced that he had meant to say “$13 million,” and then “$17 million,” rather than 30 and 70. The media screen was quickly changed to reflect the $17 million sum.

Boos and shocked yelps and shouts ensued. People walked out.
At $70 million, the pre-Porsche would have been by far the most expensive vehicle ever sold at auction. At the actual final bid, $17 million, the reserve price was not met. So, no sale.

Monday, August 12, 2019

Phone Scamming: “This is Your Government Calling”

Since 2014, Michelle Singletary writes in The Washington Post, the FTC has received almost 1.3 million reports of scam phone calls from government imposters. Many, many more calls have gone unreported.

Popular current scam, judging from how often I receive the message: "Due to suspicious activity, your Social Security account has been suspended." Correcting the "problem" of course involves cleaning out the individual's bank account.

Singletary's column includes precautionary tips that wealth managers should pass along to their elderly clients.

Wednesday, August 07, 2019

Private Equity: for Better or for Worse?

At best,  private equity firms acquire so-so-companies and make them better businesses. At worst, they loot and scoot, stripping companies of assets and leaving them buried in debt.

Presidential hopeful Senator Elizabeth Warren sees the worst. She proposes to make private equity firms responsible for the debts and pension liabilities of companies they control.

The SEC chairman sees the best, advocating changes that would allow everyone access to deals now limited to well-heeled investors.

When your obedient blogger was a lad, private equity was truly private – a deal your lawyer or financial adviser put together. Now that private equity is big business, regulatory proposals are inevitable.

Bigness, however, does not necessarily result in superior returns for investors. For the fiscal year ending in June, the median public pension fund earned a return of less than 7%. A plain vanilla portfolio of 60% stocks, 40% bonds would have earned better than 9%.

Apparent reason for the pension funds shortfall? Significant investments in alternative assets, notably private equity.

Livestreaming funerals

This is not brand new news, but it is the first I've heard of it.  According to Wired, more and more funerals are being livestreamed, to allow the more distant to participate.  A recording of the stream may be posted for later viewing.  Reportedly many families find this very comforting.

One more thing for the estate planner to mention!

Saturday, July 27, 2019

Earth, Fire, Air, Water . . . and Money?

The four elements are global. Money is national, or, in the case of the euro, multinational. But why? Shouldn't something as basic as a medium of exchange be worldwide?

That heretical thought is prompted by the sputtering of a French official mentioned in this WSJ column. How dare Facebook propose to create a cryptocurrency, the Libra, that could ignore national controls and become as commonplace as air or water?

Realistically, I can't imagine national governments allowing anything like Libra. Still, it's likely that future generations will be highly amused by our provincialism.

Friday, July 26, 2019

Investors, Beware of Financial Weaklings

Back in the Mad Men era, ads offering the trust and investment services of banks stressed "financial strength" and "financial responsibility." The banks wanted to remind readers that while their competitors went bust in the 1930s, they didn't. And they wanted to reassure potential clients: "We'll do our best not to goof up, but if we do, or if our trust officer loots your trust and runs off to Tahiti, we have the financial resources to make good."

Financial strength remains a desirable attribute in an investment adviser. Unfortunately, The Wall Street Journal warns, it's one that many of today's small advisory firms lack.
Many individual investors are using advisers instead of brokers these days, drawn by regulatory and structural changes that favor the advisory-business model of charging steady fees instead of trading commissions. The number of people working as investment advisers has grown 33% since 2008, according to the Financial Industry Regulatory Authority.
*** 
 Smaller investment advisers often are thinly capitalized and, in many cases, don’t carry enough insurance to cover a significant legal judgment against them.
Banks and trust companies aren't the sexiest source of investment services, but their capital should enhance their clients' peace of mind. 

Monday, July 15, 2019

Is the Smart Money Dumb?

"Professional investors are prone to the same mistakes as mom-and-pop types," writes Jason Zweig in the WSJ.

For example, they hold stocks too long, past their peak prices. (But that merely shows they aren't clairvoyant.)

The smart money's math skills seem shaky, research suggests. And even the pros may accidentally confuse one stock with another of similar name or stock symbol.

If the smart money suffers from the dumbs, can mom and pop investors do better? Yes, according to Warren Buffet in one of his Berkshire-Hathaway shareholder letters:
By periodically investing in an index fund, the know-nothing investor can actually out-perform investment professionals. Paradoxically, when `dumb' money acknowledges its limitations, it ceases to be dumb.
The smart money doesn't make better decisions, Zweig asserts."They just get paid to make them."

Monday, June 24, 2019

State taxation of trusts curtailed

The U.S. Supreme Court has affirmed that a state cannot impose an income tax on the worldwide income of a trust based only upon the fact that a contingent beneficiary resides in the state.

Good news for trust administrators everywhere.  The notion that beneficiary residency alone creates enough nexus for income taxation was a minority rule, and now it has been laid to rest.  However, given the unquenchable thirst for tax revenue, issues of the income taxation of trusts will rise again.


The "Robin Hood Tax"

That's the name Bernie Sanders has for a new tax required to pay for free college for everyone, plus cancel all existing student loan debt.  The key element is "a Wall Street speculation fee on investment houses, hedge funds, and other speculators of 0.5% on stock trades (50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005% fee on derivatives."

By its terms, the new tax would also apply to 401(k) plans and IRAs, unless they limit their investments to certificates of deposit. So the impact would go far beyond the wolves of Wall Street, reaching the retirement savings of ordinary Americans.

This is a terrible idea.

Saturday, June 22, 2019

Can You Tell the Broker From the RIA?

Meet Tom and Jerry. One's a broker; the other's a Registered Investment Adviser. Both of them have studied the SEC's new Customer Relationship Summary and will describe their proposed relationship with you, the investor, exactly as the SEC prescribes:

Can you tell which is which?

Tom: "When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours."

Jerry:  "When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours.”

Yup, Tom's the RIA. Obvious, wasn't it? Can't imagine the slightest risk of investor confusion.

Whatever happened to the fiduciary standard?

Wednesday, June 19, 2019

When a Frequent Flier Dies . . .

...do all those frequent-flier miles die as well?  Or can that mileage be converted, formally or otherwise, into tickets for heirs?

Rules vary from one airline to another, The Wall Street Journal warns.  And rules change. (Delta used to be heir friendly but now isn't.)

Some tips for increasing the odds of getting heirs into the air:

Premortem
The frequent flier's will should include explicit instructions.

Heirs should know how to access account info and passwords.

The FF should sign up for family pooling if the airline (JetBlue, for instance) offers it.

Postmortem
Act quickly! "The best move is to use the miles before an airline figures out the member has died."

Act promptly even if the airline knows it has lost a faithful passenger. The airline may require formal estate procedures to claim the miles, and there may be time limits.

 Be aggressive. Airline rules aren't always ironclad. Yelling or sobbing has been known to work.

Monday, June 17, 2019

Social investing?

Calpers is have second thoughts, per The Wall Street Journal.

Individuals can inject politics into their investment strategy freely, but those responsible for public pensions need to put rate of return first. 

Friday, June 14, 2019

Thousands and Thousands of Apps for Investors

Number of Android and Apple apps in 2018 that mentioned investing in their descriptions.
Millennials are reputed to shun person-to-person phone conversations – too intense and stressful. Imagine how glad they must be to discover investing apps, the relatively simple, low-stress alternative to going face to face with a financial adviser.

Helping fuel the proliferation of investing apps, the WSJ observes, is the rise of socially-conscious investing.

Does the investment business really need thousands and thousands of apps? Maybe not. But as Mae West once said, "Too much of a good thing can be wonderful."
Bankrate's recent list of 5 best investing apps contains one oddity: an app intended not for actual investing but for game playing. Millennials may not take  phone calls, but they're ever ready to socialize online.

Thursday, May 30, 2019

Johnny Hallyday’s Domicile? See Instagram!

Hallyday in 1965
photo©ErlingMandelmann.ch
Johnny Hallyday, France's answer to Elvis, was little appreciated by U.S. audiences. In France he was a
national icon, right up there with Edith Piaf.

Hallyday died in 2017, leaving two wills, one of which was probated in Los Angeles, where he and his fourth wife had taken up residence in 2007. The will leaves everything to his widow, who has their two adopted children in her care. The will leaves nothing to Hallyday's two older children from previous marriages.

In France, where a form of forced heirship still rules, the older children would not be disinherited. So they went to court in France, seeking to show that Hallyday had still been domiciled in France, not LA.

The French court has now agreed to take up the case, convinced in part by photos Hallyday had posted on his Instagram account from 2012 to 2017.  They indicate that he spent more than 150 days in France during both 2015 and 2016. In 2017 he was in France for eight months before his death.

In the age of not only Photoshop but AI, the use of digital photographs as evidence seems destined to become increasingly iffy. No other type of fake news is easier to create.

Wednesday, May 29, 2019

Climate Change: Europe Flooded with Tourists

Photo: Rick Steves Blog

Travel agents (remember them?) used to tell us to visit Europe in spring or fall, to avoid the crowds of summer. This spring you would have arrived in London, Paris or Rome only to find your access to tourist attractions already blocked by long lines.

Got clients preparing to join the crowds? Do them a favor by sharing the tips offered by travel writer Cameron Hewitt.

More Americans than ever seem to be getting passports and venturing abroad. Newly affluent tourists from China, India and Russia add to the crush. If the world economy is headed downhill as many investors fear, it appears to be starting from an impressive high.