While the recent market headlines have focused on Britain’s decision to leave the European Union, or “Brexit” as it has been dubbed, I came across an interesting news article last weekend. The article from the Wall Street Journal described how a certain robo-advisor froze all trading activity on their platform for two and a half hours after the market opened on June 24^th (the first day of trading after the Brexit results were known). Even worse, they did not even communicate this in a simple email to their users. What would you do in this situation?

We live in an age of amazing technological promise. One where machines and software programs are developing at an astonishing rate, and where the possibility of encountering real-life robots - like the fantasy versions from 1970’s TV shows and film, such as B-9 from “Lost in Space” or C3PO from “Star Wars” - doesn’t seem so other-worldly anymore.  Today companies as different as Google, General Motors and Tesla are vying to develop self-driving cars, and Virtually Reality, or “VR” for short, is for Real.   With self-driving cars literally just around the corner, perhaps it is time to consider the question: are you ready to hand over the keys to your car and trust your life to an Uber machine? 

As a follow up to our previous post "Fiduciary Rules? Or April Fools...", The Department of Labor’s regulations, aimed at curbing abusive fee practices in regards to the management of IRA, 401(k) and HSA accounts, was finally released on April 5^th.  The draft regulations released for comment earlier in the year were tough, substantive and had teeth.

However, the final regulations, just released, are virtually meaningless as a consumer protection and may even be softened. 

This coming Wednesday:  “Hump Day” or “Wacky Wednesday”?

The U.S. Department of Labor has an opportunity to make an historic ruling that will benefit everyone saving for retirement. The final version of the highly anticipated “Fiduciary Rule” is to be announced on Wednesday, April 6.

Why is this important? The fiduciary standard that Registered Investment Advisers (like Carnegie) live by will be forced upon any adviser providing investment guidance to retirement plan accounts. In other words, advisers that are currently permitted to recommend only products that earn them the most commissions will finally be forced to come clean.

Since 1907, "Be Prepared” has been the motto for millions of Boy and Girl Scouts around  the world. The expression represents the constant readiness and willingness in both mind and body to do the right thing at the right moment. You don’t have to be a scout to understand the motto applies to all of us. Here are five components of a strong financial plan:

As the calendar turns, we look towards the New Year with optimism on what can be accomplished over the next twelve months.  Not in terms of performance, as 2015 reminded us, much of that is out of our control.  We can construct solid portfolios, but the market will deliver what it will.  What is in your control is the action you take this year that you didn’t take last year to improve yourself.  This is often called your New Year’s resolutions, typically a list hastily compiled and often dismissed by Martin Luther King Day.  This year we’d like to suggest making one resolution in 2016 that will improve either your life or the life of someone else you love.

Congress once again waited until the final hours to provide tax clarity by passing the Protecting Americans from Tax Hikes Act of 2015 (PATH). The Act does considerably more than the typical tax extenders legislation seen in prior years. It makes permanent over 20 key tax provisions. Here are some of the more popular provisions. 

For Individuals:

Charitable Distributions from IRAs

The Act permanently extends the provision for individuals age 70 1/2and older to be allowed to make tax-free distributions from individual retirement accounts (IRAs) to a qualified charitable organization. The treatment continues to be capped at a maximum of $100,000 per taxpayer each year. Therefore, amounts in excess of $100,000 must be included in income, but may be taken as an itemized charitable deduction, subject to the usual adjusted gross income (AGI) annual caps for contributions.

Points to note about the IRA charitable rollover:

• Married individuals filing a joint return may jointly exclude up$200,000.
• You can use an inherited IRA to donate but you have to be at least 70 ½
• The charity receiving donated IRA funds may not be a donor advised fund, supporting organization, or most private foundations.

IRA assets are particularly favorable when donating to charity, rather than leaving to heirs, because

Have you had the talk yet?  No, not “that talk”.  To mix a metaphor, the birds and the bees are already out of the barn at this point!  No, this talk is about your financial plan. With the holidays approaching, you may want to consider using this time to enter this conversation. Below are some practical tips you can use to get the conversation started.

1. Don’t Make It Awkward

Appropriate communication of your financial picture is very much a part of a successful financial plan.  After all, it is likely that family members will be the recipients of your estate someday.  They may even be called upon to help manage your finances should the need arise.  It can be a little intimidating for someone thrust into that position without any prior knowledge. Remember to keep calm and have patience.  After all this involves money, family, and the future.  All the makings of a soap opera!  If it helps, have an outline or topic list prepared.

Thanksgiving is a time when families traditionally get together and celebrate the holiday.  While spending time with family often involves eating/drinking, and watching football (and the occasional nap if you’re lucky), it also may be a great time to discuss family finances at some point over the extended weekend together.  After all, how many times can you rave about those sweet potatoes? 

The markets moved dramatically up and down in the third quarter, ending down.  The volatility and decline seems out of sync with the U.S. economy which has continued to show growth, albeit without much in the way of animal spirits.  The U.S. has a historically low unemployment rate, exhibits decent growth in consumer spending and shows improved housing prices and low inflation.  

But, investors do not like uncertainty.  A combination of factors and fears of the unknown appear to be at play.  It is noted that the most dangerous times for financial markets is when “stories” become broken.  A whole crop of stories broke down in the third quarter from “Invincible China” to “Energy Demand Always Growing Faster than Supplies.”   This in turn has resulted in multiple levels of uncertainty:

When we think about investing in equities here at Carnegie, we think of the companies we invest in as businesses. If I polled 5 random people off the street and asked them to list 5 good companies, depending upon their age, sex and race, I would probably hear names like Apple, Facebook, Google, Tesla and Netflix. While these companies have performed admirably in the last few years, we never lose sight of our pursuit in finding great businesses with sustainable business models or what Warren Buffet likes to call a “moat”. What if I told you that one of the best sectors to invest in over time is a collection of boring, slow growing businesses?