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When Robos Aren’t Enough – Betterment Brings in the Humans

How will history judge this period in the financial services industry? Will it be looked at like the end of an era or the beginning of one? Will we laugh at the foibles of robots or at those of us humans trying to match them? Only time will tell, but recently the most prestigious and fame seeking of the Robo-Advisor platforms, Betterment, surrendered the AI high-ground and rolled out a program for its investors to connect with real, flesh and blood financial advisors.   According to a nicely spun press release, it appears this model is being offered by Betterment for additional fees and specific account minimums. Do we detect a bit of hypocrisy and an unflattering unraveling of the strong posture of the world’s foremost robo-platform?   For years us advisors of the human variety have been told that emotional investing and hidden fees have undermined our ability to serve well. We’ve been told that in order to be effective, we should strive to be less human, less prone to the frailties of emotion, market enthusiasm, or fear. Indeed, we’ve been told now for over a decade, that if we’d done our jobs better, the financial crisis would have been avoided. We’ve been instructed to sit back and let the cool, sophistication of algorithms do the work.   And then what happened?   It turns out they brought in the pros to attract and retain a more sophisticated investor. Why? Well, there’s a real motive here: Their model is collapsing. According to Morningstar senior equity analyst Michael Wong, Betterment’s average account size of $27,000 generates less than $100 per customer. And with a customer acquisition cost of over $1000 it will take them over a decade just to break even on each account. And while some investors may not care what or who manages their small investments; when it comes to discriminating investors seeking real value – they want to talk with someone who can listen, who can interpret emotion as well as fact. They want someone who can advise.   At Midwest Wealth Management, we’re proud to say this is the business we’ve been in all along and will be doing for a long time to come. Turns out humans still turn to one another when it comes to the important things, like financial advice.   About Midwest Wealth Management, Inc. Midwest Wealth Management, Inc. was formed by Greg Shields, a 30-year financial services veteran committed to offering sophisticated investors an alternative when looking for a more strategic path for long-term investing. As a private investment group, Midwest Wealth Management, Inc. offers a proprietary trading platform, alternative investment offerings and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com or call 877-243-4132 to speak to a representative.   Skinner, Liz. Betterment now offering human advice with its robo, Investment News, January 31, 2017.   Securities and Advisory Services offered through Commonwealth Financial Network®. Member FINRA/SIPC a Registered Investment Adviser.
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Retirement spending: strategies for success.

A retirement strategy is something that people know that they need, and most take some types of steps to accomplish this goal. But when thinking about a retirement strategy, it is important to consider all the changes that happen in life that could affect your retirement savings. Because if you want to continue the lifestyle you are currently living, you need to make sure that the hopes and plans you have for retirement are matching up with reality.   One of the biggest challenges and concerns all retirees face is whether or not they are going to outlive the money that they have saved for retirement. There are a number of factors to consider, but right off the top is the topic of a safe withdrawal rate (considered the amount/percentage of the money you can withdraw each year from your retirement savings without running out). It is generally considered that for a typical 30-year retirement, it is usually possible to withdraw about 4% per year from a diversified portfolio consisting of stocks and bonds.   But there are also other factors to consider regarding spending that can take away from the bottom line. For example, don’t expect that just because you are retired, your living expenses are going to drop significantly — if at all. A March 2013 study by the Employee Benefit Research Institute found that nearly 52% of retirees experienced the same or higher costs in retirement as before they retired.   Healthcare costs can also be an issue in retirement as more money is spent on health-related costs as you get older. And depending on your level of health, this could limit your opportunities if you decided to go back to work to earn a little more money.   The key to retirement is having a good financial advisor who can educate and inform you of your situation as life challenges keep coming. As always, it’s about minimizing risk so you can have a level of satisfaction that you deserve as you head into retirement years.   For more information about strategies for retirement, visit us at www.midwest-wealth.com, or call 877-243-4132 to speak to a Midwest Wealth Management representative.   About Midwest Wealth Management, Inc. Midwest Wealth Management, Inc. was formed by Greg Shields, a 30-year financial services veteran committed to offering sophisticated investors an alternative when looking for a more strategic path for long-term investing. As a private investment group, Midwest Wealth Management, Inc. offers a proprietary trading platform, alternative investment offerings and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com.   Securities and Advisory Services offered through Commonwealth Financial Network®. Member FINRA/SIPC a Registered Investment Adviser.

 

Fontinelle, Eric. Outliving Your Retirement Savings. Forbes. 24, May. 2010 Boerner, Heather. Social Security: Take it Now or Later? Thrivent. 3, Nov. 2014.
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Retirement income and the significance of a wealth management strategy.

A good wealth management firm offers financial planning, investment portfolio management and a number of financial services to help clients create a wealth accumulation strategy that reduces risk and aligns with a client’s particular goals. Building and protecting an investment portfolio is key. At Midwest Wealth Management, our process is to quickly determine and identify sources of risks for our clients and then develop a plan for avoiding or minimizing undue exposure. Tax liability is another area we pay particular attention to, and part of any long-term strategy is to come up with a plan to minimize the negative effects of taxes on investments.

 

Allocating assets across various investments is another way we minimize risk and help ensure a successful wealth accumulation strategy, as a well-diversified portfolio means a poor performance from any one asset won’t jeopardize the overall strategy because its effects are balanced by other better-performing assets.

 

We also use our extensive knowledge with alternative investments as another way to diminish volatility and increase a portfolio’s durability due to an alternatives ability to offer performance that isn’t correlated to what you experience with typical stocks and bonds. So, a traditional drop in the market has little to no effect on an alternative investment. There are also some other simple strategies that can make a positive difference in the long run. For example, if your company has a matching contribution program, you should always put as high as a percentage as you can to maximize your company’s contribution and leverage that extra money toward your wealth accumulation goals.

 

Whatever the wealth accumulation strategy, the main point to remember is that a wealth advisor has a fiduciary responsibility to their clients, meaning they are legally bound to act in their client’s best interest. This is always the case at Midwest Wealth Management, where your voice carries the most weight in helping you achieve your vision of a well-invested future. We invite you to learn more at www.midwest-wealth.com. You can also call us if you have any questions or if you would like to schedule a private interview at 317.288.4989.

 

Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

 

Investing in alternative investments may not be suitable for all investors and involves special risks, such as risk associated with leveraging the investment, adverse market forces, regulatory changes, and illiquidity. There is no assurance that the investment objective will be attained.   About Midwest Wealth Management, Inc. Midwest Wealth Management, Inc. was formed by Greg Shields, a 30-year financial services veteran committed to offering sophisticated investors an alternative when looking for a more strategic path for long-term investing. As a private investment group, Midwest Wealth Management, Inc. offers a proprietary trading platform, alternative investment offerings and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com.
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Should the option to buy or sell be up to your Robo-advisor?

On Friday, June 24th the morning after Britain voted to leave the European Union (EU) – the markets were preparing to open up to with big losses and investors were gearing in for high volatility. The real outcome of the events was unknown in regards to the long-term effects it would have on any one market, sector or specific company. The only thing that was certain was the number of opinions for investors on what they should be doing: Buy right away? Sell while you can? Ride it out? With news stations and investment commentaries calling for the next big market crash or short-term volatility, what was an investor’s best game plan?

 

For investors using the robo-advisor Betterment platform, the option was simple – do nothing. And although it was completely within Betterment’s rights to use its own discretion in coming to this decision, (given the type of arrangement they have with their clients who aren’t looking to buy or sell instantaneously), it still caught many of their clients completely off guard —especially the ones that wanted to buy on Friday. It sends a bad message when your clients are desperate to adjust their positions and the system refuses to cooperate. Being told they could not do something with their own money was not well received.

 

To make matters worse, there were other digital advisers who thought it best not to touch their platforms at all. SigFig, among others, left their platform untouched. "Just because markets may be up or down doesn't mean we should suspend trading," said Mike Sha, chief executive of SigFig. He said trading halts should be made when trades are not being executed properly, which was not the case on Friday, despite prices being down.

 

These types of events are learning experiences because they help educate investors on how to determine what they really want out of any type of adviser, robo or not. It also brings clarity to what actions advisors can take, or in this case, prevent investors from taking, especially if they advisor determines that it is in the investors’ best interest. It has also brought up the question of why a company — who prides itself on not trying to time the market — is telling clients this is not a good day to buy or sell.

 

It is important to understand how your adviser is able to act under what kind of conditions. And in times of extreme uncertainty, what kinds of actions they are going to take on your behalf.

 

For more information on investing and other financial tips, visit Midwest Wealth Management at www.midwest-wealth.com, or call us at 877-243-4132.

 

Shilder, Lisa. Betterment explains why its Brexit-sparked trading halt on Friday wasn't 'suspended' trading. RAIBiz. 28, June 2016. http://www.riabiz.com/a/5062198653091840/betterment-explains-why-its-brexit-sparked-trading-halt-on-friday-wasnt-suspended-trading

 

Malito, Alessandra. Betterment's move to halt trading following Brexit vote sparks controversy. Investment News.28, June 2016. http://www.investmentnews.com/article/20160628/FREE/160629905/betterments-move-to-halt-trading-following-brexit-vote-sparks

 

http://thetrustadvisor.com/news/did-brexit-trading-glitches-doom-betterments-robo-ipo-hopes
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Adult Children and Money. How to help them without financially hurting you.

Cutting the financial cord with adult children can be a very hard thing to do, and most people put in this situation don’t have a good answer on how to make the situation better. Even though they are helping their adult children by offering loans, giving cash or paying bills, this generosity can blows a big hole in their finances, even jeopardizing their retirement. A July 2014 survey by the Boston nonprofit American Consumer Credit Counseling found that a higher proportion of U.S. households (1 in 3) provide financial assistance to adult children than support for elderly parents (1 in 5). “

 

This is putting a huge wrench into retirement savings,” says Pamela Villarreal, a senior fellow with the National Center for Policy Analysis in Dallas. “The more boomers put out for adult kids, the less they can put aside for themselves.” As a result, some older adults are going back to work, reducing their own living expenses or even declaring bankruptcy.

 

What can help for parents who want to help out their adult children is to determine if the money that they are giving is going to fix the problem or merely delaying the inevitable. “Loaning money works well,’ says Kathleen Gurney, who runs the Financial Psychology Corporation, “If the process is objective and well planned.”

 

Here's a look at three ways parents can financially assist their children in the area of home ownership:

 

  • Gifting a down payment. This allows a borrower to use money that has been gifted as a down payment. A married couple can each give $14,000 to a child and the child’s spouse, for a maximum of $56,000 in four separate gift checks.
  •  

  • Offering a family loan. Giving a loan to a family member is a winning combination, as the parents would get more interest from the loan then they would from a typical Certificate of Deposit, and the child would be able to get a lower interest rate then they would from a bank. Also a borrower whose offer is not contingent on obtaining financing could realistically offer the seller a quicker closing, which could be a huge advantage in such a competitive sellers’ market.

     

    .
  • Cosigning the mortgage. If an adult child's income is too low to qualify for a mortgage on the home they want, a parent can cosign on the mortgage. One thing to remember however, is that this will show up on your credit as an outstanding obligation, which could complicate matters if the cosigner wanted to refinance or buy another home.
  Helping grown children with financial obstacles can be a very positive thing in the right circumstances. Take to your financial advisor before you commit to any major or long term financial lending situation to make sure you can comfortably afford to help without jeopardizing your financial security. If you don’t have a financial advisor and would like more information, Midwest Wealth Management can help. Visit us at www.midwest-wealth.com, or call 317-288-4989.

 

  Hymowitz, Carol. Parents are risking their retirement to subsidize their kids. Bloomberg Businessweek. 5, Mar. 2015. http://www.bloomberg.com/news/articles/2015-03-05/parents-risk-retirement-to-support-millennial-kids

 

Gustke, Constance. Reopening the Bank of Mom and Dad, to Help Adult Children. The New York Times. 9, Oct. 2015. http://www.nytimes.com/2015/10/10/your-money/financial-assistance-to-adult-children.html?_r=0  
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Financial Wealth Strategies in Zionsville

With the complexity and volatility of a fluctuating market, conventional wisdom regarding investment management is becoming unexceptional at best. So where does exceptional wisdom exist? Would it surprise you to learn that a very successful private wealth management group with unconventional strategies to maximize assets while minimizing risk is situated in the state of Indiana?

 

Located in the heart of Indianapolis, just miles away from Zionsville, Midwest Wealth Management offers sophisticated investors an alternative when looking for a more strategic path for long-term investing. Through a private investor platform featuring a 5-stage investment process called The Wealth Guide ™, Midwest Wealth Management provides an alternative route to wealth creation and the protection that appeals to a more sophisticated investor. Through our private investor platform, we offer a proprietary trading platform, alternative investment offerings, and dedicated advisory support. We believe that not every investor is created equal. For the discriminating few, the path less traveled to Midwest Wealth Management, Inc. is the path they prefer.

 

As a private Indiana investment group specializing in wealth management, Midwest Wealth Management, Inc. offers a proprietary trading platform, alternative investment offerings and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com. Midwest Wealth Management
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Finance and Wealth Management with a Midwest Heart and Wall Street Brain.

It may come as a surprise, but not all successful finance and wealth management firms are located in New York's Financial District. Those Wall Street firms may offer quality investment products however, it is likely they are chosen by advisors who don’t know you. They may not even have the heart to get to know you, your story or your vision for the future.   Further east in the Midwest, sits a firm that has abolished the high fees, pretentious attitudes and cookie-cutter investment advice. We have chosen to support busy, successful people who want and need personalized guidance.   Based in Indianapolis, Midwest Wealth Management is a private investment group. We have a specialized 5-stage process called THE WEALTH GUIDE™. It starts with listening to you and finding out where you want to go. The process provides the advice, resources, and active investment management to help you get there.   If you think you don’t have enough to need a financial plan or an advisor, you might be surprised. We work best with successful professionals who know something is keeping them from saving enough and who feel they aren’t maximizing what they’ve already saved. We want to hear your story, and help you create and achieve your vision of a well-invested future. To learn more, visit us at www.midwest-wealth.com   As a private investment group specializing in finance and wealth management, Midwest Wealth Management, Inc. offers a proprietary trading platform and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com. Midwest Wealth Management  
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CAN YOU AFFORD TO LIVE LONGER? LIFE EXPECTANCY

Americans are living longer than ever before. Not just those who are born today, but for those who are able to make it to benchmark ages like 50, 65 and 70. Much of this is attributed to the medical advancements in cardiovascular disease and cancer treatments, but also to our ability as a society to stay active and healthy later into life. Just since the year 2000, life expectancy has increased 2 years.1   We illustrated a scenario to help see what effect living even 3 or 5 years longer than expectancy would have on a retirement plan. For simplicity’s sake, this couple is starting with $2 million in investable assets, with plans for moderate investment objects and Social Security income. We assumed annual spending, after tax, of $120,000 for all expenses.   What does an extra 3 or 5 years mean to you? Age: 65   Screen Shot 2015-06-05 at 11.48.59 AM   There are numerous studies that detail how unprepared most Americans are for retirement. The studies site the lack of savings or having a financial plan in place. Our client base has not typically exhibited these same symptoms, as their career successes has led them to worry about issues such as succession and estate planning. Regardless of their intuition about their ability to comfortably retire, we always maintained the stance that as wealth managers it was important to quantify their intuition- often times the client was right.   Within the last 5 years we started to see a swing in that mindset, as more clients realized they were coming across unanticipated expenses:   • Educational costs for their children and grandchildren inflated at historic rates • Care for adult parents started to eat away at savings • Children temporarily returned to live at home after college because of a soft job market • Personal medical expenses have become very steep with insurance reform   Our firm prides itself on the importance of knowing where you stand at all times, regardless of your intuitive confidence level. At Midwest Wealth Management, Inc., we developed a unique program to provide an alternative route to wealth creation and protection. The Investors Access Program™ begins with the Interview step to lay the foundation for a successful collaboration. After client objectives are identified and assessed, a focused strategy is engineered and launched to address their unique opportunities and challenges. Advanced training and industry knowledge —coupled with a superior service model for optimal performance—enhance the process and provide unparalleled support to each client throughout the 5-stage program.   Periodic updates with your financial professional should be mandated in your relationship to help ensure all updates and changes are properly represented. Your life is a non-static and ever-changing story, so you should have a plan that reflects that. Do not be afraid to ask your advisors the tough questions, especially when it comes to the life expectancy of you or your spouse and how longevity impacts your plan.   1 Health Statistics 2014
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INDIANA WEALTH MANAGEMENT … SERIOUSLY? SERIOUSLY.

Indiana wealth management? Not all successful wealth management firms are located on Wall Street. And the ones that are there may offer quality investment products — usually chosen by advisors who don’t know you. Or that don’t care to.   Located in the heart of Indianapolis, Midwest Wealth Management is a private investment group specializing in an alternative route to wealth creation designed for the sophisticated and independent-minded investor. It’s a place where your voice carries the most weight in helping you achieve your vision of a well-invested future. And it’s accomplished through a proprietary trading platform, alternative investment offerings, and dedicated advisory support for a select audience. It’s the heart of the Midwest with the brains of a seasoned Wall Street advisor. To learn more, visit us at www.midwest-wealth.com   As a private investment group specializing in wealth management, Midwest Wealth Management, Inc. offers a proprietary trading platform, alternative investment offerings and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com.   Indiana Wealth Management
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Indiana wealth management firm supports new fiduciary standard ruling.

As an Indiana wealth management firm with proven credentials and a fee-based system, we believe it is important for clients to know that there are new rules mandating a fiduciary standard for retirement plan assets. And advisers who are using commission based accounts and buying mutual funds in their (not client’s) best interest are going to feel the sting.   This rule can be a positive for the industry. Advisers will be accountable to act in ways that are legally best for their client when offering advice pertaining to a client’s retirement plan, or the investment of assets that need to be rolled over or distributed from a previous workplace IRA.   If this ruling were to follow some precedent, it can be found in a ruling sourced from a Pinsent Masons Legal guide, based on the Law of England and Wales (updated 2010). It reads: As agent, the broker has a legal duty to act in good faith in what he believes to be the interests of his client. This means he must account for any secret profit that he makes, and he is not allowed to put himself in a position in which his interest and duty conflict.1   The truth is, conflicts have arisen, and the people who are paying the price are middle class Americans. The Labor Department’s review of academic literature provided by the White House Council of Economic Advisors suggests that advice from professionals who have a financial incentive to put investors in a specific product takes a $17 billion bite out of the retirement savings from working- and middle-class families each year.2   Yet there still are opponents of this ruling. One of their main concerns is that under the new Best Interest Contract Exemption (the BIC), advisors would only receive commissions and other revenue under very stringent conditions. They worry about a lack of clear communication which could result from a mistake on the advisors part due to misleading statements, or could cause a conflict of interest.   And while making a mistake about fees or commissions is indeed a concern, so is the practice of trying to limit fiduciary responsibilities: In 2013, 44 percent of regulatory exams uncovered deficiencies in advisory agreements, according to the North American Security Administrators Association. In some cases, regulators called out “hedge clauses” that attempted to limit advisors’ roles and their fiduciary responsibilities.3   Is your investment advisor living up to your expectations? Do you know how they are being compensated? A reputable advisor will not only explain their investment strategy, but detail how they are compensated and the type of responsibility the have to you as a client.   If you need any questions about the complexities of wealth management answered now, or would like to know more about the best way to accumulate wealth for your particular situation, we invite you visit: www.midwest-wealth.com.   As a private investment group specializing in wealth management, Midwest Wealth Management, Inc. offers a proprietary trading platform, alternative investment offerings and dedicated advisory support for a select audience. For more information, please visit www.midwest-wealth.com.   1. Roberts, Alex. Insurance broker remuneration: law and regulation. Out-Law.com. Legal news and guidance from Pinsent Masons. 2015 http://www.out-law.com/page-8927 2. Maxey, Daisy. Battle Continues Over Fiduciary Rule for Retirement Investments. The Wall Street Journal. 14 June. 2015 http://www.wsj.com/articles/battle-continues-over-fiduciary-rule-for-retirement-investments-1434054916?alg=y&mg=id-wsj 3. Thornton, Nick. Navigating the minefield of fiduciary liability. What advisors are doing to safeguard themselves in a litigious world. Benefitspro Jan 14, 2015 http://www.benefitspro.com/2015/01/14/navigating-the-minefield-of-fiduciary-liability indianapolis alternative investments
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