Friday, December 20, 2019
So how does your advisor broker survive on $0 commissions?
So how does your advisor broker survive on $0 commissions?
There is no FREE lunch especially in financial services. Schwab paid its chief executive, Walt Bettinger, an 8.9% compensation hike in 2018 to $15.6 million (down from 2016 of $19.54 million), about 150 times the firm’s median employee pay of $104,281. Charles gave himself $6.05 million, up 9.6% from 2017. Like others, Schwab had a profit margin of 45%. So how do we give them so much money if not in commissions? Firms execute others’ trades: Selling order flow. Firms earn interest on your cash. Earn from loans: margin trading and options trading. Earn from money management accounts: quarterly fee for ‘holding’ your money. Securities lending: covers shorts. Remember, most firms have such huge economies of scale that trading millions of shares a day at only 10 cents each is worth $ millions for senior management. Some firms are market makers and so have a virtual monopoly on certain markets. For instance, two former Deutsche Bank traders were found guilty of trying to rig a key lending benchmark (LIBOR) that was considered one of the most important barometers of the world’s financial health. Some brokerage firms are also capital creators selling IPOs: the stocks of new companies for big fees. There is no need to pay for advisors. Amateur traders usually lose money. Most smaller active stock managers may become history since beating an index is too hard.
Avoid making Wall Street richer: https://www.amazon.com/Pimps-Wall-Street-money-middlemen/dp/151525254X
Congress just gave insurers and salespeople a big bonus
They passed the SECURE Act, "The SECURE Act will make it easier for employers to offer as part of their retirement plans annuities that provide a guaranteed stream of lifetime income," says an insurance lobbyist. Employers and their retirement plan person can entice us into high-cost plans that lock up our retirement dollars into an insurer’s vaults. Using industry trick-phrases like “guaranteed income you can’t outlive” and misleading charts with best possible outcomes, employers can wash their hands of any future responsibility for the inevitable low payouts down the line. For instance, when we chose an annuity of $1000 a month in 2020, we will have no recourse when it buys only $500 a month benefits later on. Currently, a retiree can shop and buy the best annuity deal out there with their money. Under SECURE, employers will be able to escape any future lawsuit when an annuity ‘guarantee’ goes wrong. We are NOT secure with SECURE.
Learn the annuity facts: https://www.amazon.com/Annuity-Decision-Tree-questions-answers/dp/1546454497
How much IRA money should you convert to Roth IRA?
If you have a good idea how much income and thus tax you will pay for 2019, you can calculate how much IRA money to convert. If you file jointly, your $100,000 earned income puts you in the 22% bracket. With the standard deduction of $24,400, you can estimate the amount of IRA income to be taxed on for the year. You can convert to a Roth IRA as much as you can afford since the $7,000 limit on contributions does not apply. Example: $100,000 - $24,400 = $75,600. With $5,000 added income (SS, pension, interest, dividends, gains, etc) you can convert up to $88,000 without hitting the 24% bracket. Of course you will owe an extra $19,360 tax on top of the $17,600 AGI income tax. Pace it out over time. Use the FREE efile software to calculate: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free: now open: https://www.freetaxusa.com/ .
Pay no tax in retirement: https://www.amazon.com/Pay-No-Taxes-Retirement-legally/dp/1507527977
How much will you be required to withdrawal from your IRA 2020?
IRS expects those over 70 ½ years old with a traditional IRA to take a certain amount out and pay tax on the taxable amount. Your IRA trustee or custodian reports your year end IRA account balances to the IRS and if you allow, calculates your RMD for the year. IRS tables tell us the divisor based on your assumed longevity. RMD is the ‘minimum’ you need to acknowledge and pay tax on. You can take more and pay more tax now. The IRS leaves it up to you to report how much of the RMD is taxable each year. Some people added already taxed money to their IRA (before the Roth IRA) so no need to be taxed again. You can adjust that RMD by removing money from your IRA and paying more tax before year-end. You might do that if you have no income other than SS benefits or you had to meet an emergency. Reducing the IRA balance by year-end will lower the RMD for the rest of your life. Thus if you have a $100,000 in your IRA your RMD is $3,773.58 because you are expected to live 26.5 years more when you are 71. If you took out $20,000 the year before the calculation, your RMD would be $3,018.87 the following year.
Know your options: https://www.amazon.com/What-your-RMD-much-spend/dp/1718946716
How to fight health care overcharges by your providers
Recently I got a bill from my colonoscopy provider. I thought all screening procedures are FREE since my expensive health care plan is usually excellent. My employer told me on my W-2 box 12a that my shared cost was $26,920.68. I did some research and printed out the FREE screening protocols for ACA ObamaCare compliant health plans. The ACA Preventive health initiative by Obama is meant to reduce long-term costs by catching problems early. I assumed my provider knew this when I confirmed that all the costs of my procedure would be covered. So I sent a copy of the ACA regs to the provider’s billing address with a note that I was covered. They just sent more bills and emails for months. The doctor’s office ignored me. Like in the movie Rainmaker, we pay premiums and the insurer-doctor complex assumes we will give up fighting. Since I knew they were wrong, I wrote a letter to the CEO of my insurance company asking him to pay the bill and set the provider’s billing clerk straight. They called the provider group HD and told me I would not get another bill. Most people would just give up and be sued and perhaps be thrown into bankruptcy. It happens a lot since we have no power against the insurer-doctor complex.
Know what you are buying: https://www.amazon.com/Health-Insurance-ONLY-right-policy/dp/1480125083
Vanguard cut fees AGAIN
Vanguard has cut some fees 20% for funds and ETFs. Why is that important? Over time you will earn and KEEP substantially more of your hard-earned money. If you are investing for the long term, you could give up $143,000 on $10,000 deposit with that 20% extra fee. Compounding the extra fees works for your advisor just as well as it can work for you. This fact never comes to mind for most of us because our employer’s HR person never tells us exactly and completely what our 401k or 403b investments cost. Some of them don’t know. Most of us have no idea which options are best for us when we start our plan. Some employers don’t even look at fees when giving the plan advisor the annual check up. Even if they know what the fees are, they don’t care because WE are ones paying them. It comes out of our earnings even before our earnings are credited to our accounts. We don’t see them. Our employer has the fiduciary responsibility for choosing the best options for US not the advisor. However, most employers don’t take their duty seriously and this has led to many lawsuits. Over time, this can cost you over $100,00 in lost earnings on your invested money.
Check your options: https://www.amazon.com/Robbing-You-Blind-401k-fees/dp/1493588966
Trump personal attacks on dead Congress member’s family: “look up” from hell
How Govt wastes our money: Congress spends another 1.7 Trillion we don’t have!
Trump fights for his useless WALL instead of lower drug prices from drug companies
Can Congress do something worthwhile? 54.6 billion spam phone calls placed.
Why can’t Trump negotiate lower drug prices or buy from foreign countries?
Trump will reduce SS benefits for the disabled: cuts to pay for tax break for wealthy
Medical fraud is easy: scammers have taken gov (us) for $ millions.
Supremes help Trump hide his Russia money-laundering till 2020 and beyond.
Truth is the greatest victim of this fight to the death for GOP view of ‘democracy’
Voting machine makers can’t account for security of our voting tabulations
WI removes 234,000 DEM voters from rolls to assure WI goes to Trump again.
GA takes aim at eliminating 309,000 DEM voters: voter suppression for 2020
KY went Dem and removed Medicaid work restrictions placed by GOP recently
Jeffrey Friedland promoted weed investment w/o disclosing he got paid fined $4.2million
Windhaven Insurance FL insolvent taken over by the state for lack of surplus funds
MetLife caught cheating annuity beneficiaries out of $ millions: Fine, no jail time.
Robinhood broker order flow failed to guarantee receive best prices: cheap but not best
Samuel Lek caught manipulative trading for foreign traders using master-sub account
BEWARE: Advisor sells annuity promising LTC benefits: pay extra 1% for no coverage.
Harvey Weinstein accused sex criminal has his insurance pay 30 victims $47 million
Hype of 5G: different types may not match your phone, coverage areas, speeds-too early.
Who owns your account?
Don’t take your phone to do your crime: Govt will find you using Google data.
Fiat Chrysler and Peugeot merge: Fiat family run with French twist
Retirement isn’t for everyone: some people just have to work—it’s their joy.
Employers tricked by health insurance brokers so we pay more
Pope finally turning over criminal child abuser files to the police only IF requested.
41 Watchung Plaza, B242
Alerts available at http://dankeppel.blogspot.com/