HOW IMPATIENCE HURTS RETIREMENT SAVINGS

Keep calm & carry on - it may be good for your portfolio.

Why do so many retirement savers underperform the market? From 1993-2012, the S&P 500 achieved a (compound) annual return of 8.2%. Across the same period, the average investor in U.S. stock funds got only a 4.3% return. What accounts for the difference?1,2

One big factor is impatience. It is expressed in emotional investment decisions. Too many people trade themselves into mediocrity - they react to the headlines of the moment, buy high and sell low. Dalbar, the noted investing research firm, estimates this accounts for 2.0% of the above-mentioned 3.9% difference. (It attributes another 1.3% of the gap to mutual fund operating costs and the remaining 0.6% to portfolio turnover within funds.)2

Impatience encourages market timing. Some investors consider "buy and hold" passé, but it has certainly worked well since 2009. How did market timing work in comparison? Citing Investment Company Institute calculations of equity fund asset inflows and outflows from January 2007 to August 2012, U.S. News & World Report notes that it didn't work very well. During that stretch, mutual fund investors either sold market declines or bought after market ascents 57.4% of the time. In addition, while the total return of the S&P 500 (i.e., including dividends) was -0.13% in this time frame, equity mutual fund investors lost 35.8% (adjusted for dividends). 3

Most of us don't "buy and hold" for very long. Dalbar's latest report notes that the average equity fund investor owned his or her shares for 3.3 years during 1993-2012. Investors in balanced funds (a mix of stocks and bonds), held on a bit longer, an average of about 4.5 years. They didn't come out any better - the report notes that while the Barclays Aggregate Bond Index notched a 6.3% annual return over the 20-year period studied, the average balanced fund investor's annual return was only 2.3% .2

What's the takeaway here for retirement savers? This amounts to a decent argument for dollar cost averaging - the slow and steady investment method by which you buy shares over time, a little at a time. When the market sinks, you are buying more shares as they have become cheaper - meaning you will own more (quality) shares when they regain value.

It also shows you the value of thinking long-term. When you save for retirement, you are saving with a time horizon in mind. A distant horizon. Consistent saving from a (relatively) early age and the power of compounding can potentially have much greater effect on the outcome of your retirement savings effort than investment selection.

Keep your eyes on your long-term retirement planning objectives, not the short-term volatility highlighted in the headlines of the moment.

Citations.
1 - finance.yahoo.com/news/p-fund-tops-p-500-142700129.html [5/3/13]
2 - marketwatch.com/story/7-reasons-why-retirement-savers-fail-2013-06-26 [6/26/13]
3 - money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2012/11/05/herd-behavior-hurts-fund-investors [11/5/12]

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO PETER MONTOYA.

THE ROLLERCOASTER EFFECT

There are two kinds of investors in this world. One type pays close attention to the daily (and sometimes hourly) flood of information, looking for a reason (any reason) to jump in or out of the markets. The other kind of investor is in for the long haul, and recognizes that the markets are going to experience dips and turns. If these people are particularly wise, they know that the dips and turns are the best friend of the steady, long-term investor, because as you put money into the markets, as you rebalance your portfolio, you gain a little extra return from the occasional opportunities to buy at bargain prices.


Last week, the investment markets made an unusually sharp turn on the roller coaster, and showed us once again the sometimes comical fallacy of quick trading. See if you can follow the logic of the events that led to last week's selloff. Federal Reserve Board Chairman Ben Bernanke and the Federal Open Market Committee issued a statement saying that the U.S. economy is improving faster than the Fed's economists expected. Therefore (the statement went on to say) if there was continued improvement, the Fed would scale back its QE3 program of buying Treasury and mortgage-backed securities on the open market, and ease back on stimulating the economy and keeping interest rates low.

Everybody knows that the Fed will eventually have to phase out its QE3 market interventions, and that this would be based on the strength of the economy, so this announcement should not have stunned the investing public. Nothing in the statement suggested that the Fed had any immediate plans to stop buying altogether; only ease it back as it became less necessary. The statement said that this hypothetical easing might possibly take place as early as this Fall, and only if the unemployment rate falls faster than expected. At the same time, the Fed's economists issued an economic forecast that was more optimistic than the previous one.

The result? There was panic in the streets--or, at least, on Wall Street, where this bullish economic report seems to have caused the S&P 500 to lose 1.4% of its value on Thursday and another 2.5% on Friday.

In addition--and here's where it gets a little weird--stocks also fell sharply in Shanghai and across Europe, and oil futures fell dramatically. How, exactly, are these investments impacted by QE3?

The only explanation for last week's panic selloff is that thousands of media junkie investors must have listened to "we plan to ease back on QE3 when we believe the economy is back on its feet again," and heard: "the Fed is about to end its QE3 stimulus!"

It's possible that the investors who sold everything they owned on Thursday and Friday will pile back in this week, but it's just as likely that the panic will feed on itself for awhile until sanity is restored. If stocks were valued daily based on pure logic, on the real underlying value of the enterprises they represent, then the trajectory of the markets would be a long smooth upward slope for decades, as businesses, in aggregate, expanded, moved into new markets, and slowly, over time, boosted sales and profits. The rollercoaster effect that we actually experience is created by the emotions of the market participants, who value their stocks at one price on Wednesday, and very different prices on Thursday and Friday.

The long-term investor has to ask: did any individual company in my investment portfolio become suddenly less valuable in two days? Did ALL of their enterprise values in aggregate become less valuable within 48 hours--and at the same time, did Chinese and European stocks and oil also suddenly become less valuable? Phrased this way, the only possible answer is: no. And if that's your answer, then you have to assume that eventually, people will eventually be willing to pay the real underlying value of the stocks in the market, and the last couple of days will be just one more exciting example of meaningless white noise.

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO BOB VERES.

WHY HOLD BONDS?

Bond prices go up when rates go down, and rates have been doing just that since the Reagan Administration. Back in 1982, 10-year Treasuries were paying 15%, and after 30 years of steady decline, they dropped below 2% last year and trended down slightly for the first part of 2013. This remarkable three-decade drop in interest rates has been described as the ultimate bull market in bonds, perhaps the most rewarding period for bond investors in all of investment history.

But it's hard to see how bonds can continue much further on the same trajectory, unless you're predicting that people are going to be willing to pay for the privilege of owning Treasuries. Market prognosticators--whose profession is slightly less reputable than pickpockets or members of Congress--have been predicting for years that rates will go back up, perhaps dramatically, creating losses in the fixed-income part of your portfolio. We saw signs that the bull market in bonds might be ending this past month, when Treasury bonds maturing in 10 years or more declined 4% in value in three weeks, as the yield on 10-year Treasuries rose from 1.63% to just over 2.23% before dropping back to 2.12%.

U.S. equities are up, in aggregate, more than 15% this year. So the obvious question is: why should we have a portion of each investment portfolio in bonds?

The purpose of bonds in an investment portfolio is not to generate high returns--the past 30 years notwithstanding. Bonds protect against the worst kind of market risk--the times when stocks suddenly, unexpectedly plunge. The last time stocks took a nosedive, in 2008, U.S. equity markets seemed to be sailing toward another year of gains and bond prices were experiencing 30 year lows. Why own bonds in an environment like that? Yet by the end of the year, a mixed portfolio of bonds had achieved a 5.24% positive return, while stocks were losing 37%--meaning bonds outperformed stocks by more than 42 percentage points. In 2000, 2001 and 2002 when stocks dropped 9.11%, 11.89% and 22.10% respectively, bonds rallied to give investors returns of 11.63%, 8.43% and 10.26%. Over time, investors holding bonds enjoy a smoother market ride, and experience fewer losses during market downturns.

More importantly, having bonds (and cash) in your investment portfolio gives you options if and when stocks fall. If you need income, you can liquidate the bonds, rather than having to sell stocks at a loss. If the prices of stocks drop to the point where stocks become a screaming buy, you have some money set aside to buy at bargain prices and make up some of the losses.

If and when interest rates reverse themselves, and yields move up, you will experience losses in the bond portion of your portfolio. There are ways for professional investors and bond portfolio managers to reduce this risk--reducing the maturity or duration of the bonds from 10 years to 5 years or less, or holding more cash. But bonds are still your best protection against the unpredictability of stock market returns. We don't know what the markets are going to do next, and so the most prudent course is to keep protecting you against the possibility that another 2002 or 2008 is lurking somewhere around the corner.

Sources:
http://www.rickferri.com/blog/investments/a-reason-to-own-bonds http://bonds.about.com/od/bondinvestingstrategies/a/Stocks-And-Bonds-Year-By-Year-Total-Return-Performance.htm
http://www.bloomberg.com/news/2013-06-03/treasuries-erase-gains-as-fed-s-lockhart-raises-tapering-concern.html

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO BOB VERES.

COULD THE BULLS STILL RUN WITHOUT THE FED?

If the central bank ceased easing, could stocks continue their ascent?

Could this bull market last with less help from the Federal Reserve? Is it propped up by the Fed's stimulus, or strong enough to sustain itself if the central bank reduces its efforts? Some factors hint that the economy and the market may have a bit more strength than assumed, even with Q2 GDP projections being tempered.

The real estate comeback is real. Housing is a catalyst in the recovery and demand for new and existing homes is not waning. According to the National Association of Realtors, listings remained on the market for an average of only 46 days in April; the norm is between 90-120 days. New home sales were up 2.3% in April, which also brought a 0.6% improvement in residential resales. The year-over-year numbers speak loudly: new home sales, +29.0%; existing home sales, +9.7%. Another nice note: the market share of foreclosures fell from 25% to 18% between April 2012 and April 2013.1,2,3

Many S&P 500 firms met EPS expectations. Q1 earnings season showed two-thirds of companies surpassing earnings per share forecasts; slightly better than the historical average of 63%. The downside, as cited by Thomson Reuters, is that less than 50% of these firms met revenue forecasts. So belt-tightening turned out to be a bigger factor than growth. Still, increased profits generate interest in and confidence in stocks.4

Hiring, buying & spending are holding up. In the past year, the economy has generated an average of 169,000 new jobs per month. (The jobless rate did fall from 8.1% to 7.5% in that 12-month interval.) We know that consumer spending increased by 0.7% in February and 0.2% in March - some of that was attributable to higher fuel and energy costs, but the increases still topped economists' expectations. Overall retail sales ticked up 0.1% in April (and core retail sales 0.6%) following a 0.5% March setback, but the usual spring buying patterns don't seem to have been hampered - April saw a 1.0% jump in auto sales, a 1.2% rise in clothing and accessory sales, and a 1.5% sales gain for home and garden products. Gasoline sales dropped 4.7% last month, and further price descents could free up disposable income for other consumer wants.5,6,7

Wall Street withstood a global hiccup last week. On May 23, the Nikkei 225 dropped 7.3% and the key flash purchasing manager indices for China and the Eurozone came in under 50 (announcing factory activity contraction). What did the S&P 500 do on this unnerving day for global markets? It only retreated 0.29%, with good news on new home sales and initial jobless claims reversing losses. Stocks have proven resilient again and again, and here was another example; it would seem to take something really momentous to shake Wall Street's core confidence.8,9

Regardless of what happens, the Fed should remain accommodative. That factor alone might reassure bulls in case of a pullback, and encourage the belief that we will see further gains for the U.S. benchmarks as the rest of 2013 proceeds.

Citations.
1 - cnbc.com/id/100758136 [5/22/13]
2 - csmonitor.com/Business/new-economy/2013/0523/New-home-sales-rise-but-market-still-a-long-way-from-normal [5/23/13]
3 - mortgagenewsdaily.com/05222013_existing_home_sales.asp [5/22/13]
4 - fool.ca/2013/05/time-to-buy-mining-stocks/ [5/21/13]
5 - ncsl.org/issues-research/labor/national-employment-monthly-update.aspx [5/3/13]
6 - takingnote.blogs.nytimes.com/2013/04/30/consumer-spending-without-consumer-confidence/ [4/30/13]
7 - latimes.com/business/money/la-fi-mo-april-retail-sales-20130513,0,3299874.story [4/30/13]
8 - forbes.com/sites/steveschaefer/2013/05/23/feds-tapering-talk-chinese-factory-slowdown-smack-stocks/ [4/30/13]
9 - cnbc.com/id/100761216 [5/23/13]

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO PETER MONTOYA.

REAL BANKING REFORM

Banks seem to be hogging the lion's share of the profits in the American economy--the banking sector rakes in almost a third of the total profits earned by all corporations, and the four biggest banks have nearly 40% of all deposits. The total assets of the six largest U.S. banks have grown from about 16% of U.S. GDP to 65% today.

These largest lending institutions have grown so large using an unfair advantage in the marketplace. Because it is widely perceived that the government will bail them out no matter what incredibly stupid thing their leaders might do, lenders are willing to let them borrow at lower rates than you or I could. (What are the chances that the government will bail either of us out if we encounter financial hardship?)

The Bloomberg organization has calculated that the "too big to fail" doctrine effectively gives $83 billion a year of taxpayer subsidies to the ten largest U.S. banks; $64 billion to the five largest.

Even politicians seem to agree that this is unfair. In a rare display of bipartisanship in Congress, Ohio Democratic Senator Sherrod Brown and David Vitter, a Republican Senator from Louisiana, have introduced a bill that would eliminate these government subsidies that put taxpayers at risk for large bank defaults. What are its chances for passage? When the duo crafted a resolution calling for essentially the same provisions that are written into the bill, it passed 99-0 in the Senate.

The bill calls for measures that are so simple, you wonder why nobody has proposed them before. First, every lending institution with more than $500 billion in assets would have to hold at least 15% of its assets in liquid capital. This would end the highly-leveraged bets that institutions made leading up to 2008, that were orders of magnitude more than the money they actually had on hand. Banks would still be able to create tricky off-balance-sheet assets and liabilities, but under the new proposal, those would be treated as if they were on the balance sheet for purposes of the capital requirements.

Finally, and perhaps most importantly, derivative positions--complex bets on everything from the solvency of individual investments to directions in interest rates--would be treated as if they are on the balance sheet, and would have to be disclosed and counted toward that net capital requirement.

Of course, the largest U.S. banks--JPMorgan, Chase, Citigroup, Goldman Sachs, Morgan Stanley, Bank of America and Wells Fargo--are all vehemently opposed to these new provisions, and are denouncing the bipartisan bill through their hired lobbyists and legal firms. One pundit has cynically suggested that the volume of their lamentations will most likely be in direct proportion to the hourly rate they bill their clients. But these will be lonely voices in a debate whose conclusion seems kind of obvious. Vitter has remarked on the Senate floor that "Just about the only people who will not benefit from reining in the megabanks are a few Wall Street executives."

Sources:
http://www.washingtonpost.com/business/can-two-senators-end-too-big-to-fail/2013/05/09/aa01cc70-b5dc-11e2-b94c-b684dda07add_story.html
http://www.huffingtonpost.com/2013/02/28/sherrod-brown-banks-david-vitter_n_2782665.html
http://dealbook.nytimes.com/2013/05/01/in-brown-vitter-bill-a-banking-overhaul-with-possible-teeth/
http://statspotting.com/banking-statistics-banks-make-one-third-of total-corporate-profits/

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO BOB VERES.

FRONTLIFE FOR FIDUCIARY

Millions of Americans--and a lot of professional advisors--are talking about the hard-hitting Frontline exposé on retirement plans. The PBS special, entitled "Retirement Gamble," tells you a lot of things you already know: that corporations have offloaded the decision-making for retirement portfolios on their (not always financially sophisticated) employees, but provided virtually no guidance. The 2008 market crash wiped out investors who had naively put their entire retirement savings in stocks and then sold out at the bottom in a panic. Just 14% of Americans are confident that they have saved enough to live comfortably in retirement.


The special report includes a few details that are likely to be shocking to many non-experts, including the fact that 401(k) plans are not provided for free, as many participants believe, and some plans were set up by the mutual fund and brokerage companies who (no surprise here) populate it with their own funds and triple-dip, charging fees for managing the account, and more fees for managing the funds, plus commissions for selling the funds to those naive plan participants. We learn what many professionals already know: that some people pay ten times more in fees drained out of their retirement plan than others. Vanguard founder Jack Bogle, who is charming, telegenic, and a big believer in index funds, is interviewed extensively.

Interestingly, the PBS report doesn't mention that help may be on the way. The U.S. Department of Labor, which sets the regulations for corporate retirement plans, has mandated that all retirement plans disclose, in writing, the various costs and fees that are being charged to plan participants. These disclosures are now starting to show up in performance statements, and some believe that these rays of sunlight will eventually eliminate the self-dealing and high fees that were exposed in prime time.

The DOL is working on proposals that would require those who give investment advice to plan participants to act in the best interests of the future retirees, and the proposal is expected to ban sales commissions. The requirement--known as a fiduciary standard, or putting the client's interest first--would extend to the IRA accounts that receive the rollover funds from 401(k) and other retirement plans.

Nobody should be surprised that the brokerage industry is lobbying furiously against these proposals, which has caused several delays and at least one incident where the Department of Labor shelved a proposal for "further study" to explore the economic impact on brokerage firms and consumers.

Will the new rules ever be enacted? Sales agents failed to stop the disclosure rules from passage, so their lobbying power is not unlimited. And few unbiased parties would argue with the idea that people receiving advice should be given unconflicted advice, and that sales people should openly disclose the fact that they're selling rather than advising. The Frontline special, showing millions of people how much money has been siphoned out of their retirement accounts into the pockets of larger financial services firms, should help the Department of Labor resist the big moneyed opposition to its efforts to do the right thing for retirees.

Sources:
http://www.lifehealthpro.com/2013/01/29/industry-girds-for-dol-fiduciary-rule
http://www.thefiduciarystandard.org

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO BOB VERES.

GETTING THINGS DONE IN WASHINGTON

If you're among those who believe that nothing can get done within the partisan bickering on Capitol Hill, you should know that both parties came together with remarkable speed recently to pass bipartisan legislation. There was virtually no bickering, posturing or visible hostility as a new modification of the STOCK Act (Stop Trading on Congressional Knowledge) sailed through both houses of Congress.

The original STOCK Act, which became law just a year ago, was designed to discourage top government officials and members of Congress from enriching themselves by buying and selling stocks based on non-public information that they--but not the rest of us--had access to. The law required that Congressional staffers and 28,000 employees of the executive branch of government disclose their portfolios and trades. These financial disclosures were to be posted in an online database open to the public, so researchers could look over the shoulders of our elected officials and their key staffers, and notice any suspicious trades that resulted in mysterious financial windfalls.

The new law eliminated the disclosure laws for Congressional staffers and government employees, leaving them in place only for members of Congress, Congressional candidates and the President and Vice President. Insider trading instantly became much easier in Washington--which appears to be about the only thing Congressional Democrats and Republicans can agree on these days.

Source:
http://finance.yahoo.com/news/insider-trading-nations-capital-just-123453723.html

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

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