Friday, September 29, 2006

Don't throw out bond funds just yet

With ultra-safe money funds yielding 5%, who needs bond fund? Well, you do, for starters
A great article on why bond funds still make sense even when money market accounts are "outyielding" them and when interest rates are rising.
Scott Dauenhauer, CFP, MSFP

Thursday, September 28, 2006

Amaranth and Hedge Funds’ Hidden Risks

Jeremy Siegel provides good perspective on the recent hedge fund blowup. I am NOT a fan of hedge funds or those who sell them. I recently did a podcast about this very subject, you can goto iTunes and type in "Meridian" and subscribe and download my podcasts. They will soon be available on my new website (coming soon!).

Scott Dauenhauer, CFP, MSFP

Friday, September 22, 2006

CFP Board Letter on Fiduciary Standards

What follows is a copy of my recent letter to the CFP Board (Certified Financial Planner Board) on Fiduciary Responsibility. The board has proposed a watered down version of Fiduciary responsibility that effectively biforcates CFP's into two classes - Fiduciaries and non-fiduciaries, but it will be nearly impossible to tell one from the other in terms of what they say and how they market themselves, what a joke.

My letter:

Dear CFP Board,

I am writing to let you know that I am fervently opposed to the new standard regarding Fiduciary Responsibility.

I believe that if financial planners want to improve the profession we need to be held to a higher standard and that standard should be a Fiduciary one. The new standards create a situation where one CFP is held to one standard and another a different standard - this effectively makes the CFP designation worthless. It won't be long before the media figures this out and all the positive press will turn negative.

All CFP's should be held to a Fiduciary Standard and the term Fiduciary should be in the standards. How can you call yourself a financial planner and not ALWAYS put your clients' best interest first? If you can't practice financial planning and do it in a fiduciary manner, you should not be allowed to practice.

Implementing this new standard will prove a massive mistake and confuse people even more. I wonder what is happening to a board that is supposed to be looking out for the public.

Your mission states "The mission of Certified Financial Planner Board of Standards, Inc. (CFP Board) is to help people benefit from competent, professional and ethical financial planning." You are not accomplishing your mission with the standards change, you can only accomplish this by REQUIRING CFP holders to act as Fiduciaries in all engagements.

There is a good possibility I will give up my CFP designation out of protest if this standard goes through, and while you may think that one guy giving up his mark will not be worthy of a mention in the press you would be very wrong. The brokerage firms and insurance companies may control a lot of things, but the one thing they don't control is the media and I guarantee you that implementing your standards will represent the beginning of the end of the CFP - the decline of the CFP will begin if you pass these standards, how could it not - you are lowering the standards.

It's amazing that congress added a Fiduciary provision in the PPA, but the CFP board can't seem to the same thing, this is very sad and I beg of you to reconsider.

Warm regards,

Scott Dauenhauer, CFP, MSFP

Thursday, September 21, 2006

'Frankly appalled'at CSA classes

A recent letter to the editor at Investment News caught my eye, I have reproduced it below. I've been against the CSA designation (Certified Senior Advisor) for years, ever since it came out because I believe it is a fraud. I believe it is an attempt by unscrupulous insurance agents to sell annuities to seniors. It is a way to help them OUT of their money, not help them WITH their money. The following is the letter, I think it is quite telling:

Frankly Appalled at CSA Classes

I was glad to hear about firms' dropping the CSA designation.

I agree that this designation is not all it is cracked up to be.

About four years ago, my previous firm sent me to what supposedly was an industry trade show.

It turned out to be some folks trying to teach me how to peddle equity index annuities to the elderly.

At this same trade show, I attended the Society of Certified Senior Advisors certification classes, as did my colleagues. I was frankly appalled at the classes. At one point, one of the Denver-based group's instructors actually read us a children's book and, at another point, had us meditate.

Although I have read that same book to my own children, I could not find the value in helping my clients.

The only thing I remember about Mr. Pittock is one day coming to the class for brief time and telling a crude and inappropriate joke.

At the end of the class, we took a test over the "material" that my 5-year-old could have passed.

I felt so uneasy about the designation that I have never used it and never will.

Since that time, I have seen many advisors misrepresent their knowledge and abilities as senior advisers by using the CSA designation to sell equity index annuities to the elderly. It is time someone questioned this designation's use in our industry.

Stacy B. Bush

Interesting stuff........

Scott Dauenhauer, CFP, MSFP

Predictions of the Future....Usually Wrong...

Conventional Wisdom and Predictions of the future are typically wrong, need proof, just read the following:

March 1999: Harry S. Dent, author of The Roaring 2000s

"There has been a paradigm shift." (Translation: "This time it's different, a New Economy!")

October 1999: James Glassman, author Dow 36,000

"What is dangerous is for Americans not to be in the market. We're going to reach a point where stocks are correctly priced, and we think that's 36,000 ... It's not a bubble. Far from it. The stock market is undervalued." (Warning, don't choke on your popcorn!)

December 1999: Joseph Battipaglia, market analyst

"Some fear a burst Internet bubble, but our analysis shows that Internet companies account for only 7% of the overall Nasdaq market cap but carry expected long-term growth rates twice those of other rapidly growing segments within tech." (The Internet Index lost two-thirds in the next six months.)

December 1999: Larry Wachtel, Prudential

"Most of these stocks are reasonably priced. There's not reason for them to correct violently in the year 2000." (Fact: The Nasdaq lost 50% in 2000.)

December 1999: Ralph Acampora, Prudential Securities

"I'm not saying this is a straight line up. I'm not saying you can't have pauses. I'm saying any kind of declines, buy them!" (He also predicted a 14,000 Dow by the end of 2000 and an 11-year bull.)

February 2000: Larry Kudlow, CNBC commentator

"This correction will run its course until the middle of the year. Then things will pick up again, because not even Greenspan can stop the Internet economy." (He's still an economist, hosting his own show.)

April 2000: Myron Kandel, CNN

"The bottom line is, before the end of the year, the Nasdaq and Dow will be at new record highs." (Later in September he predicted a rally to 12,000 by election day.)

September 2000: Jim Cramer, CNBC commentator

"SUNW probably has the best near-term outlook of any company I know." (Within four months Sun Microsystems went from $60 to $30, down to $10 in a year, below $3 in two years.)

November 2000: Louis Rukeyser on CNN

"Over the next year or two [the stock market] will be higher, and I know over the next five to 10 years it will be higher." (We crashed, fell into a recession, and in two years tech lost 70%.)

December 2000: Jeffrey Applegate, Lehman strategist

"The bulk of the correction is behind us, so now is the time to be offensive, not defensive." (That's a sucker's rally.)

December 2000: Fed Chairman Alan Greenspan

"The three- to five-year earnings projections of more than a thousand analysts, though exhibiting some signs of flattening in recent months, have generally held firm. Such expectations, should they persist, bode well for continued capital deepening and sustained growth." (And the curtain opened revealing the Wonderful Wizard of Oz.!)

January 2001: Suze Orman, financial guru

"In the low 60s here, I think the QQQ, they're a buy. They may go down, but if you dollar-cost average, where you put money every single month into them, I think, in the long run, it's the way to play the Nasdaq." (The QQQ fell 60% further.)

March 2001: Maria Bartiromo, CNBC anchor

"The individual out there is actually not throwing money at things that they do not understand, and is actually using the news and using the information out there to make smart decisions." (Yes, she's serious.)

April 2001: Abby Joseph Cohen, Goldman Sachs

"The time to be nervous was a year ago. The S&P then was overvalued, it's now undervalued." (Unfortunately, the markets continued down for another 18 months).

August 2001: Lou Dobbs, CNN

"Let me make it very clear. I'm a bull, on the market, on the economy. And let me repeat, I am a bull." (Within a year the Dow and Nasdaq lost a third more).

June 2002: Larry Kudlow, CNBC

"The shock therapy of decisive war will elevate the stock market by a couple thousand points." (He also predicted the Dow would hit 35,000 by 2010.

Now, I actually happened to have been right during this time period, I advised several of my clients who had large positions in tech stocks (through their employer) to sell and take their gains. I also advised them to stay diversified. Not exactly rocket science and no real predictions, but it served them well and I think is a good, long term strategy.

Scott Dauenhauer, CFP, MSFP

Wednesday, September 20, 2006

Pension Fund Tallies Losses and Rethinks Its Strategy

This stuff scares the heck out of me. A Hedge fund loses $5 billion of the $9 billion it had invested - IN ONE WEEK. Hedge funds are not inherently good or bad, however there is little transparency and more gambling than investing. San Diego County is not having a good couple years when it comes to pensions.

I don't recommend the use of hedge funds because they are for the most part very expensive, not transparent, and they tend to gamble more than invest.

Scott Dauenhauer, CFP, MSFP

Monday, September 18, 2006

Certified Annuity Consultant....This is Funny!!

O.k., I couldn't resist adding this picture to my blog.....this has to be the funniest, most ridiculous pitch for annuities I've ever seen! The people who created this little poster have also created a "designation" to go with it. They are an annuity marketing company and will issue you a "CAC" designation after completing their "seminar". What a joke - these guys will not look out for your best interest, but at least they can provide a little humor!

Scott Dauenhauer, CFP, MSFP

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Why Stocks May Climb “Wall of Worry”

I think I'll start calling Jeremy Siegel "Mr. Optimism" as he is always so positive on stocks. This professor from Wharton has long been a bull, though a realistic bull in my opinion. We differ on how best to index, but other than that he does a pretty good job! This article is quite interesting and I encourage you to spend a few minutes reading it.

Scott Dauenhauer, CFP, MSFP

Seven Reasons to Love Pension Reform

If you want a short and concise report on how the recently passed Pension Protection Act affects you, read this article.

Scott Dauenhauer, CFP, MSFP

Death to Itemized Deductions!

A very good primer on Itemized it or not we are getting closer and closer to tax season.....heck Christmas is almost here again. I'll admit, this isn't the most exciting article, but if you have a high income it is extremely important that you understand this stuff, or that you hire an advisor who does.


Touchy-Feely Finances

I've always liked Jonathan Clements of the Wall Street Journal, this is a pretty good article about the "touchy feely" side of planning....a side that I admit I don't go as deep in as others. He goes into two exercises that may provide value for you, even if one is usually used simply as a way to capture assets (usually by slimy brokers). I encourage you too read this article and go through the exercises (even if they feel a little wierd). Send me your results, don't worry I won't tell anybody!!

Scott Dauenhauer, CFP, MSFP

Friday, September 08, 2006

RIP: A Great One Has Been Lost

A great author, communicator, and estate planning expert has lost his battle with cancer. Scott Fithian, author of Values Based Estate Planning has passed away from cancer at the youthful age of 45. I never knew Scott personally, though I've read his materials (and ironically ordered his book just two weeks ago), but he will be sorely missed in the financial planner community. What follows are a couple pieces about Scott Fithian.

“A Tribute to Scott”
by Jim Stovall

This week, I lost a great friend and colleague. If you consider his age, Scott died about
40 years too soon. If you consider his impact on the world, he filled several lifetimes.
Cancer eventually took his life, but it never took his courage, his dignity, or his concern
for people everywhere. I only knew Scott a few years, but I can truly say of him the best
thing that could be said of anyone: Scott made me a better person. We were in business
together, and each day, through the way he conducted himself, he challenged everyone to
reach for and perform on a higher level.

There are very few things in life that are incontrovertibly true, but without fail and
without exception, we will all leave this world, and there will be friends, colleagues, and
loved ones still behind. The only question before each of us every day is: What is the
legacy we leave behind?

Scott was involved in the financial planning industry. He helped professionals and their
clients manage their assets and their estates. He felt this work was important and pursued
his business with passion; but as important as these financial matters were, Scott often
said, “When we’re gone, money will be the least significant thing we leave behind.”

I know everyone reading this column in a newspaper, a magazine, or online somewhere
around the world, has lost special people in their lives. The only thing we can do as a
lasting tribute to these special people is to take the best characteristics of their essence
and adopt them into our lives as we move ahead. We are the spark that is left behind
from their days here on this earth. Always remember, someday the people you care about
most will be looking back on your life and thinking these same thoughts. Remember, we
are writing our own obituaries, one day at a time.

Scott and I had many great conversations during the last days of his life. I view these
times as priceless treasures that will forever change who I am. Scott and I had a
tremendous advantage in that we knew his days were short. Think of all the people in
your life who mean so much to you. Contact them today. If they live another 50 years,
you’ve planted a great seed. If they pass on today, you’ve generated a priceless memory.
As you go through your day today, live each day as if it were your last. Some day it will

Today’s the day!
Jim Stovall is the president of Narrative Television Network, as well as a
published author of many books including The Ultimate Gift. He is also a
columnist and motivational speaker. He may be reached at 5840 South Memorial
Drive, Suite 312, Tulsa, OK 74145-9082, or by e-mail at
Let's all say a little prayer for Scott's Family.
Scott Dauenhauer, CFP, MSFP

Oil prices extend losses, Brent drops below 66 dollars

I thought we were headed for $100 oil?

Thursday, September 07, 2006

Roth 401(k)s often beat conventional 401(k) plans

"It's time to stir things up at the office. Thanks to the new pension law, Roth 401(k) plans are no longer slated to disappear in 2011 -- and that means a lot more companies will consider offering these plans. Want a shot at tax-free investment growth? Here's why you should phone up human resources and put in a request for the Roth 401(k)."

A very good arguement by Jonathan Clements on why a Roth 401(k) is a good idea - it basically forces you to save more than you normally would, and on a tax free basis. I think this will be a rising trend. I do like a Roth IRA better than the Roth 401(k), however some people don't qualify for the Roth IRA, or simply will never start one - while they might with their employer.

Scott Dauenhauer, CFP, MSFP

Wednesday, September 06, 2006

Some firms drop CSA designation

I've been saying this for years. The CSA Designation (Certified Senior Advisor) is just a ploy for insurance agents to sell more Equity Indexed Annuities - it does not provide a deep education into the issues of financial planning for the elderly.