FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
Lessons on estate planning from Game of Thrones (Wealth Management)
With Game of Thrones season 5 premiering on Sunday, Wealth Management shares some lessons on estate planning that can be learned from the show. One lesson is to make sure you have more than just a will. Wealth Management says if Ned Stark had followed this rule, “Sansa and Arya would have been at least financially secure. Instead, Sansa is left at the mercy of the Lannisters for years and Arya has to travel through the war-ravaged countryside on her own.” Also, make sure your trust has more than one trustee. According to Wealth Management, “Following Ned Stark’s death, his wife Catelyn was in charge of the children, scattered as they were. But her death, along with the heir Robb Stark’s death at the “Red Wedding,” means no one is watching out for the remaining Stark children and their assets.”
The Feds are cracking down on excess IRA contributions (Financial Planning)
A growing number of taxpayers are exceeding the maximum allowance for annual contributions to individual retirement accounts. The Government Accountability Office warns, “Individual noncompliance with excess IRA contribution rules results in revenue loss to the federal government.” How is the Internal Revenue Service working to address the excess contributions? The Treasury Inspector General for Tax Administration says the IRS should make educational materials to better inform IRA custodians of the rules, and develop a way to determine a more accurate list of excess contributors.
Alternatives if you make too much to contribute to a Roth IRA (Charles Schwab)
A Roth IRA is a great way to save for retirement, but many investors have incomes which exceed the limit. Charles Schwab discusses alternatives for people who make too much money. A Roth 401(k) is a good place to start, if your employer offers one. If not, investors should take advantage of their company’s 401(k) plan. Individuals can contribute up to $US18,000 per year between the two, and as much as $US24,000 per year if they are 50 or older. Another option is the ‘backdoor IRA,’ which means making the maximum contribution to a Traditional IRA and then using a loophole to roll it into a Roth.
2015’s best full service investment firms (Think Advisor)
JD Power’s 2015 survey of investors shows investor satisfaction with their financial advisors was unchanged from last year, registering a score of 807 our of a maximum 1,000. Edward Jones (812), Fidelity Investments (812), Charles Schwab (810), Raymond James (809) and Ameriprise Financial (807) were the only firms to meet or exceed the industry average (807). Citigroup (738) received the lowest score.
Corporate bonds are expensive (Bloomberg)
Corporate bond yields are sitting near their lowest levels on record, making the space unattractive to many investors. Bonnie Baha, the director of global developed credit at Jeffrey Gundlach’s DoubleLine Capital, noted, “In my 30-year career, it’s one of the most unattractive risk-return propositions that I’ve seen.” BlackRock’s Chief Investment Officer for Fixed-Income, Rick Rieder, chimed in, “We have a higher level of interest-rate risk than we’ve ever had before and people have to be sensitive to it.” However, investors are still flocking to the space due to a lack of better alternatives.
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