Buffett wary of real estate, commodities speculation - May. 8, 2006
Warren Buffet has a way of making the complex easy. He is not big on residential real estate and sees some slowing, possibly even a drop. He says the same for Gold and Oil. My favorite quote from this article is "As the old saying goes, what the wise man does in the beginning, fools do in the end."
In other words - don't get caught up in the mania. Stay diversified and hold on through the good and bad times.
Scott Dauenhauer, CFP, MSFP
Tuesday, May 09, 2006
Will The CFP Designation Step It Up?
Will The CFP Designation Step It Up?
What follows is the text of a letter sent from The National Association of Personal Financial Advisors (NAPFA) to the Certified Financial Planner Board. It details what I have been pushing for with the CFP designation for a long time – a required Fiduciary Responsibility. I have come across too many CFP Practitioners who abuse their clients and put their own interest first, it’s about time the board acted.
May 5, 2006
Sarah Ball Teslik, CEO
Certified Financial Planner Board of Standards, Inc.
1670 Broadway, Suite 600
Denver, CO 80202-4809
Dear Sarah:
On behalf of the NAPFA Board of Directors, we are writing you and the CFP Board to express our concerns regarding the CFP Code of Ethics. We understand that the Code of Ethics is currently being revised and that these revisions are due to be published soon.
We encourage the CFP Board of Standards to strengthen its Code of Ethics to require, without any qualifications or exceptions, that any financial advisor giving financial planning advice adhere to a fiduciary standard to place the client's interest first. As you surely know, this is the same standard that is required of an advisor giving investment advice under the 1940 Investment Advisors Act. And it is the standard that the SEC has chosen not to impose on broker-dealers who claim to provide something less than "financial planning."
Leading professions that are held in high regard by the public inevitably reach their level of credibility by developing and adhering to high standards. In numerous professions in which practitioners work with clients' money, a strong fiduciary standard is part of the commitment to the public. NAPFA and the CFP Board of Standards stand side-to-side in attempting to bring financial planning to the status of a true profession. If financial planning is to be considered a profession, we must make certain that our members put their clients' interests first. We urge the CFP Board of Standards to maintain the CFP as a mark of the profession, not the mark of a professional salesperson.
Consumers need clarity if they are to be confident about where they turn for financial advice. Not only do they need to know that their advisor is a fiduciary, but they also need full and complete disclosure of all possible conflicts of interest. The CFP Board should set the mark with a requirement of a fiduciary relationship and full disclosure - both conditions are necessary, but neither is sufficient by itself.
At the moment, the only guarantee that an individual client has that his or her advisor is adhering to a fiduciary standard is if the advisor is an RIA or a member of NAPFA. Our Fiduciary Oath has been effective for more than 20 years as helping our members define what they stand for, and how they will conduct themselves. Our Fiduciary Oath has contributed to the success of our members and our organization, as it has built credibility with consumer advocates, regulators, and others. It has not resulted in professional hardships or difficulties for our members; to the contrary, it is a strong argument in their favor, as they offer their services.
By contrast, a holder of a CFP might be a fiduciary, and might not be a fiduciary. The public is confused, and the CFP certificant must go through an additional layer of explanation about where his loyalties lie. It would be simpler for all CFP holders to be able to say they are fiduciaries, and to explain why a consumer should value that type of relationship.
We encourage the CFP Board of Standards to adopt a Code of Ethics that will give consumers the guarantee that when they work with an advisor who provides financial planning advice under the CFP mark, that advisor will hold to a fiduciary standard.
Sincerely,
Peggy S. Cabaniss
Chair, NAPFA Board of Directors
Ellen Turf
CEO, NAPFA
What follows is the text of a letter sent from The National Association of Personal Financial Advisors (NAPFA) to the Certified Financial Planner Board. It details what I have been pushing for with the CFP designation for a long time – a required Fiduciary Responsibility. I have come across too many CFP Practitioners who abuse their clients and put their own interest first, it’s about time the board acted.
May 5, 2006
Sarah Ball Teslik, CEO
Certified Financial Planner Board of Standards, Inc.
1670 Broadway, Suite 600
Denver, CO 80202-4809
Dear Sarah:
On behalf of the NAPFA Board of Directors, we are writing you and the CFP Board to express our concerns regarding the CFP Code of Ethics. We understand that the Code of Ethics is currently being revised and that these revisions are due to be published soon.
We encourage the CFP Board of Standards to strengthen its Code of Ethics to require, without any qualifications or exceptions, that any financial advisor giving financial planning advice adhere to a fiduciary standard to place the client's interest first. As you surely know, this is the same standard that is required of an advisor giving investment advice under the 1940 Investment Advisors Act. And it is the standard that the SEC has chosen not to impose on broker-dealers who claim to provide something less than "financial planning."
Leading professions that are held in high regard by the public inevitably reach their level of credibility by developing and adhering to high standards. In numerous professions in which practitioners work with clients' money, a strong fiduciary standard is part of the commitment to the public. NAPFA and the CFP Board of Standards stand side-to-side in attempting to bring financial planning to the status of a true profession. If financial planning is to be considered a profession, we must make certain that our members put their clients' interests first. We urge the CFP Board of Standards to maintain the CFP as a mark of the profession, not the mark of a professional salesperson.
Consumers need clarity if they are to be confident about where they turn for financial advice. Not only do they need to know that their advisor is a fiduciary, but they also need full and complete disclosure of all possible conflicts of interest. The CFP Board should set the mark with a requirement of a fiduciary relationship and full disclosure - both conditions are necessary, but neither is sufficient by itself.
At the moment, the only guarantee that an individual client has that his or her advisor is adhering to a fiduciary standard is if the advisor is an RIA or a member of NAPFA. Our Fiduciary Oath has been effective for more than 20 years as helping our members define what they stand for, and how they will conduct themselves. Our Fiduciary Oath has contributed to the success of our members and our organization, as it has built credibility with consumer advocates, regulators, and others. It has not resulted in professional hardships or difficulties for our members; to the contrary, it is a strong argument in their favor, as they offer their services.
By contrast, a holder of a CFP might be a fiduciary, and might not be a fiduciary. The public is confused, and the CFP certificant must go through an additional layer of explanation about where his loyalties lie. It would be simpler for all CFP holders to be able to say they are fiduciaries, and to explain why a consumer should value that type of relationship.
We encourage the CFP Board of Standards to adopt a Code of Ethics that will give consumers the guarantee that when they work with an advisor who provides financial planning advice under the CFP mark, that advisor will hold to a fiduciary standard.
Sincerely,
Peggy S. Cabaniss
Chair, NAPFA Board of Directors
Ellen Turf
CEO, NAPFA
Monday, April 17, 2006
The Dividend Quagmire
The Dividend Quagmire (Microsoft) SmartMoney.com
Despite the utter depravity of our congress when it comes to "Fiscal Awareness" they have done some good things, and one of them is set to expire in just a few years. The tax on dividend income was lowered to 15% (I prefer zero) and thus increased the amount of your dividends that you keep as well as the number of companies paying dividends.
Previous to this lowering of the dividend rate companies would avoid paying dividends because investors preferred to recieve their gains from their stocks in the form of capital gains which were taxed more favorably (this is accomplished through share buybacks for the most part, but could also be in the form of reinvestment). Once dividends and capital gains taxes became the same there was no reason for a company to not pay dividends. The linked article gives a bit of a history of dividends and then details why keeping the rate low is important to you and to the economy.
My preferred capital gains rate and dividend rate is zero percent as I don't believe in double taxation, but that is unlikely to happen, so lets at least attempt to persuade our congressmen and women to do the right thing and not raise the tax on dividends.
Scott Dauenhauer, CFP, MSFP
Despite the utter depravity of our congress when it comes to "Fiscal Awareness" they have done some good things, and one of them is set to expire in just a few years. The tax on dividend income was lowered to 15% (I prefer zero) and thus increased the amount of your dividends that you keep as well as the number of companies paying dividends.
Previous to this lowering of the dividend rate companies would avoid paying dividends because investors preferred to recieve their gains from their stocks in the form of capital gains which were taxed more favorably (this is accomplished through share buybacks for the most part, but could also be in the form of reinvestment). Once dividends and capital gains taxes became the same there was no reason for a company to not pay dividends. The linked article gives a bit of a history of dividends and then details why keeping the rate low is important to you and to the economy.
My preferred capital gains rate and dividend rate is zero percent as I don't believe in double taxation, but that is unlikely to happen, so lets at least attempt to persuade our congressmen and women to do the right thing and not raise the tax on dividends.
Scott Dauenhauer, CFP, MSFP
Friday, April 14, 2006
10 year Treasury Breaks 5%
Bloomberg.com: Top Worldwide
The ten year treasury finally moved above 5% yesterday for the first time since 2002. Many have wondered how long the long term Treasuries could keep from rising along with short term rates. At the beginning of 2005 the 10 year stood at 4.23% and began 2006 at only 4.37%, yesterday it ended at 5.05%. The ten year treasury is commonly used to set mortgage rates and Real Estate is typically inversely correlated with interest rates - in other words - higher rates lead to lower real estate prices (all things being equal). The 10 year has risen by 68 basis points (.68%) in just three and a half months, that is a 15.5% increase, quite a jump. The yield curve is no longer inverted, though it is quite flat from 6 months to ten years. Interest rates are impossible to predict, though some believe that this rise in long term rates was inevitable. It will be interesting to see how this affects real estate.
The link I provided is to an article from Bloomberg which also has links to several video files that talk about this latest move.
The ten year treasury finally moved above 5% yesterday for the first time since 2002. Many have wondered how long the long term Treasuries could keep from rising along with short term rates. At the beginning of 2005 the 10 year stood at 4.23% and began 2006 at only 4.37%, yesterday it ended at 5.05%. The ten year treasury is commonly used to set mortgage rates and Real Estate is typically inversely correlated with interest rates - in other words - higher rates lead to lower real estate prices (all things being equal). The 10 year has risen by 68 basis points (.68%) in just three and a half months, that is a 15.5% increase, quite a jump. The yield curve is no longer inverted, though it is quite flat from 6 months to ten years. Interest rates are impossible to predict, though some believe that this rise in long term rates was inevitable. It will be interesting to see how this affects real estate.
The link I provided is to an article from Bloomberg which also has links to several video files that talk about this latest move.
Monday, March 20, 2006
WSJ.com - Don't Let Income Obsession Cheat You
WSJ.com - Don't Let Income Obsession Cheat You
If the above link doesn't work, let me know, I'll forward a copy of this article.
I was quoted in this article, the excerpt as follows:
"Equally important, what retirees often don't understand is the importance of having their portfolios continue to grow and not just generate a set amount of income, says Scott Dauenhauer, a financial planner in Laguna Hills, Calif. "Even though your income looks good...you may be losing purchasing power" to inflation, he says.
To make the point with clients, Mr. Dauenhauer boils it down to a simple example: postage stamps. A retiree in 1975 whose "needs" were to buy two postage stamps required a "portfolio" that produced income of 20 cents. Six years later that same amount of income would only buy one stamp. Today that income buys half a stamp.
For that portfolio to keep up with the "cost of living" it would have needed to grow about 4.5% a year. "Inflation happens and it matters," Mr. Dauenhauer says."
The Wall Street Journal is the top finance paper in the U.S. and argueably around the world, it's pretty cool to see my name in their again!
Scott Dauenhauer, CFP, MSFP
If the above link doesn't work, let me know, I'll forward a copy of this article.
I was quoted in this article, the excerpt as follows:
"Equally important, what retirees often don't understand is the importance of having their portfolios continue to grow and not just generate a set amount of income, says Scott Dauenhauer, a financial planner in Laguna Hills, Calif. "Even though your income looks good...you may be losing purchasing power" to inflation, he says.
To make the point with clients, Mr. Dauenhauer boils it down to a simple example: postage stamps. A retiree in 1975 whose "needs" were to buy two postage stamps required a "portfolio" that produced income of 20 cents. Six years later that same amount of income would only buy one stamp. Today that income buys half a stamp.
For that portfolio to keep up with the "cost of living" it would have needed to grow about 4.5% a year. "Inflation happens and it matters," Mr. Dauenhauer says."
The Wall Street Journal is the top finance paper in the U.S. and argueably around the world, it's pretty cool to see my name in their again!
Scott Dauenhauer, CFP, MSFP
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