Using Asset Management Advisors to Help With Your Retirement

Investing for retirement has become more and more important over the years. The economy is not always stable and it has become extremely important to secure finances after retirement. With people retiring at the same age, but living much longer now than ever before, some people are spending a third of their life in retirement. During this time, they may rely on some of their retirement investments to pay for medical needs or helping with the expenses of their children or grandchildren. Others want to invest in retirement plans to help their heirs avoid complications when they pass away. However, retirement planning can be a difficult process to understand and an even more difficult process to work out without assistance.

Because of this, using asset management advisors has become a very popular strategy. When planning something such as a 401k, there is usually no need for investment advice or professional assistance. Typically, these plans are easy enough to understand. A person is often allowed to choose their own investment policies for their 401k. They may be given options with higher returns or options which are safer. All 401k plans vary slightly based on individual circumstances. However, they are fairly basic, most involving a matching plan wherein the company matches all or a portion of what the employee pays. When considering investment outside of work-related plans, it is important to know exactly what you are getting into.

IRA plans and Roth IRA plans are fairly similar, with only a few twists between them. They are a fairly safe option for retirement investing. An asset management advisor will help you better understand the differences in the two plans. A Roth IRA plan allows the investor to pay the tax money up front, rather than after the payments have been made. Since it is typically easier to make tax payments while still receiving a paycheck, this can help some people out. An asset management advisor will help you choose which one, if either, is right for you. This will cut out a lot of the confusion.

One of the biggest reasons to hire an asset management advisor to help with personal finances is because of potential financial traps such as annuity. While annuity may work for some, many people will jump into something that sounds promising immediately. Without knowing exactly what they are entering into, these programs can be financial death traps for people. They may not realize that there are numerous small fees associated with the plan that can negate the positive aspects.

Only a financial advisor with experience in the area can really provide personal assistance that is pertinent on an individual level. It is important that a person put in the extra effort into retirement planning. Not only is your future financial security at stake, but potentially the future of the people who deal with your estate after you are gone. For their sake, if for no other reason, hiring an asset management advisor is a wise decision when it comes to retirement planning.

Responsibilities of the Investment Manager For Pension Boards, Custody Issues, and Rebalancing

A person is an “Investment Manager” with respect to a retirement system or pension fund under the Illinois Pension Code if such person:

1. is a fiduciary appointed by the board of trustees of a retirement system or pension fund in accordance with Section 1-109.1;
2. has the power to manage, acquire or dispose of any asset of the retirement system or pension fund;
3. is either –
a. registered as an Investment Advisor under the Investment Advisors Act of 1940;
b. a bank, as defined by that Act, or
c. an insurance company; and
4. has acknowledged in writing that he is a fiduciary with respect to the retirement system or pension fund.
5. the terms “Investment Manager” and “Investment Advisor” are used interchangeably.

The Investment Manager/Advisor/Broker with discretion over buying or selling securities for the fund may not be the custodian of the investment instruments.

Pension boards should review percentages quarterly for compliance with the Investment Policy. Funds with assets under $2.5 million are allowed 10% in separate accounts and/or mutual funds, which may not grow in excess of 10% provided that the contract has not been changed.

If market values do not exceed the allowable percentage then no rebalancing is required. Investment Policies of each fund should stipulate the percentage allowable in the various types of authorized investments.

Pension funds invested in separate accounts, mutual funds and/or individual stocks should calculate the market value of those funds to determine the percentage held vs. the allowable percentage under the law. Use the expertise of the Investment Manager to assist with this task. If the percentage exceeds the allowable amount, the fund must reduce the allowable percentage and document the reduction. The reduction as to which investments are sold is at the discretion of the pension board and applies only to the aggregate percentage. Documentation of the percentage calculations should be maintained at the pension fund.

Is a Lack of Financial Education the Reason for Poor Financial Management Decisions in America?

Americans study all of the essential things in school, algebra, science, history, languages and the arts. However, many people wonder why there may be a lack of financial management classes to learn basic financial planning strategies. Many students don’t know the first thing about retirement, savings, credit cards, debt or even basic budgeting strategies. Although some might say this is something that should be taught by parents, today’s parents are the byproduct of the credit card generation; therefore many parents only learned the cause and effect of their financial matters by trial and error.

It is not only the parents that are financially challenged. Even teachers lack the training because of an education system that lacks the teaching of fundamental skills needed to achieve fiscal responsibility. Some of those more savvy in the diligence of their finances may seek the services of a financial management advisor, however given today’s economic turbulence, the very root of the problem has become apparent in our society’s apparent financial illiteracy.

According to a recent survey, over 60% of all high school students failed certain questions about basic household financial management and were not given the proper role models for financial independence. Across the gamut, the media has highlighted examples of adults who have mismanaged their money, losing homes or severely damaging their credit by defaulting on their loan and credit card payments, as well as college students who default on student loans and many other examples. Even big businesses on Wall Street have gone bankrupt and the entire financial system of banking seems to be crumbling right before our very eyes. We expect our youth to learn about proper financial planning and financial management amid a society that has accepted financial failure as the norm?

Today’s Financial Buzz attributes many of these economic problems not entirely to the fault of any one entity, enterprise, or government but instead to the theory that the need for financial management practices should be taught early on to our youth. By teaching everyone how to become financially literate, we could create a society of fiscal responsibility. Instead, it is becoming rare to see a young person who doesn’t abuse credit by either racking up high debt, paying late or even bouncing their checking accounts time and time again by relying on unsafe measures, such as online banking. Some do learn these best practices in college through economics or financial courses, but those students are becoming far and few between.

Some critics say that in order to add any more mandatory courses to the education system would require dropping some other important classes. Other say that the public school system is not supposed to be a lesson in life training manual and that those types of learning exercises should be enforced by parents. However, there are two sides to every coin and with many parents now in deep financial troubles themselves, they may not be the best role models for kids to follow. Foreclosures have reached an all-time high while stocks and securities have reached an all-time low, indicating a big problem with the entire system of financial management and not just a few sprinkled examples here and there.