News

By CHAS P. SMITH, CPA/PFS

Excerpts Published Thursday, October 23, 2014 by Lakeland Ledger

Most investors don’t realize that certain advisors, including bank associates, insurance agents, and brokers are not required to give objective investment recommendations.  In fact, a large insurance company is in the process of having all of their Certified Financial Planner professionals remove themselves from the CFP Board of Standards as their obligation to the insurance company is, by Florida law, more important, than their obligation to clients.  Which means that some products sold, such as annuities, were not in the best interest of clients.  The lesson here is not that insurance company advisors are bad by any means, but rather some advisors have other goals to meet.

WHY ADVISORS SELL ANNUITIES

At most brokerage firms, advisors are compensated to bring in new money and their firms pay those brokers anywhere from 40-60% of the fees and commissions they generate.  Not only that, if they meet other goals, extra benefits to the top performers are given for things like vacations, prime parking, private club memberships, and other fringe benefits designed to keep the sales competitive. (more…)

By CHAS P. SMITH, CPA/PFS

Excerpts Published Thursday, October 9, 2014 by Lakeland Ledger

A recent academic study done by Morningstar reviewed the 2,846 mutual funds tradable in the U.S. from 1996-2008.  It showed that less than a quarter of the funds outperformed the overall market after the first five years.  Only 195 funds (7% of the total) outperformed the market after 10 years.  What are the chances that the average investor is smarter, or knows more information than that of a multi-fund manager overseeing billions in investor assets?

AN EFFICIENT MARKET

The efficient market theory tells us that all information is known and that no one person can predict short-term rises or falls based on fundamental or technical analysis.  Furthermore, fund managers find out about public information at the same time as individual investors, which proves that a security’s news has already been built into the price by the time an investor decides to buy or sell the position.  This makes it very difficult to outperform the benchmark on information or analysis alone.  Luck, as it seems, is the one true determinant of the market timer.  What is an investor to do given these dismal odds of beating the index? (more…)

Excerpts Published Thursday, September 12, 2014 by Lakeland Ledger

Everyone loves first-class treatment from a service oriented business.  Don’t just look for a smiling face, perfectly pressed suits and shiny shoes, but gravitate to the advisor with a great reputation, years of experience and an investment philosophy most similar to yours and one that understands your entire financial picture.

WHAT DO I NEED FROM AN ADVISOR?

Investors should look for an advisor with investment credentials such as the Personal Financial Specialist (PFS), Certified Financial Planner (CFP), Certified Public Accountant (CPA), and one that is associated with an independent Registered Investment Advisory firm.  Financial advisors are paid a few ways: (more…)

Excerpts Published Thursday, September 25, 2014 by Lakeland Ledger

Academic studies have proven that investors in mutual funds generally underperform the market for a few reasons: high fees and market timing.  Today’s discussion is about high fees.  A more disastrous discovery about high fees is that some companies in the mutual fund industry are very adept at hiding most of the added costs to investors through layers of complex formulas which are built into the security’s net asset value (NAV). So what is the average investor to do?

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CPS Investment Advisors is proud to announce its top 100 ranking in CNBC’s 2013 Top Fee-Only Wealth Management Firms.

We would like to thank all of our clients for their wonderful referrals.  It is because of you that we have been honored with this ranking.

We will continue to strive to provide you with the highest quality investment and financial planning services so that you too can reach your financial goals.

click here for the full article

Below is an excerpt of an article by Anne Tergesen concerning 401(k) plans which I wanted to share with you:

When it comes to building retirement wealth, growing numbers of 401(k) participants are seeking help from online advice programs and professional money managers. But is that advice worth paying for? According to a study released May 19, 2014, the answer is an emphatic yes. Between 2006 and 2012, participants in 401(k) plans who paid extra for advice earned an average of 3.32 percentage points more per year, after fees, than those taking do-it-yourself approach. To find out more, read June’s Tax Newsletter.

Read June’s tax Newsletter

With pension plans becoming as rare as the gold watch at retirement, most of us need to face up to this stark reality: We will likely need to fund much of our retirement on our own. And that means saving early and often, taking full advantage of tax incentives, and investing wisely. To find out how, read September’s Government/Public Sector newsletter.

read September’s Government/Public Sector newsletter

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