You’ve saved in your retirement accounts for decades. Retirement is now just around the corner. After you complete a rollover of your retirement accounts into an IRA,  you will reverse the process and begin withdrawing money to live well in retirement.

How much income can you safely withdraw during retirement?

This quickly turns into the question, “how do you invest your lump sum at retirement so you can live well, but not run out of money?” Ultimately, this is an investment question. Different approaches will produce very different results. Our answer to the investment question produces a great answer.

Your Greatest Danger in Retirement

As a retiree, one of your greatest dangers is outliving your retirement investments – too little money and too much lifespan. To guard against this danger, the overriding principle is to not take more from your rollover IRA each year than it makes during that year. It is one of the fundamental issues you must consider as you retire. Additional issues are examined at How to Retire Successfully in the New Economy.

For example, if your investments return 10%, then you should withdraw no more than 10%. Theoretically, this will prevent you from tapping into your funds, ensuring that you will not outlive your available assets.

Is 10% a realistic number for withdrawals? Probably not. Though there will be years where your account grows by more than 10%, there will also be years is grows less than 10%. If you take out 10% every year as retirement income, you would quickly use all your money and deplete your IRA.

If 10% is too high, what is the right number?

To prevent this from happening, most investment advisers point to 3% of your total IRA balance as an amount you can safely withdraw each year. This takes into account that there will be years where your account grows far more and years it grows less – or has a loss. Limiting your withdrawals is crucial to funding your retirement during years where the investment markets don’t grow, or even decline.

How do they get the 3% number?

The 3% number typically comes from asset allocation portfolios, which are always fully invested during market declines. For this reason, asset allocation portfolios have large losses to work through. As you know, it takes time just get back to even after a large loss. Since you will continue to need a retirement paycheck to fund your living expenses, it must be a small enough amount to store up surplus for these regular declines. This is yet one more thing that is wrong with asset allocation that has no defensive strategy.

If I take just 3%, that really limits my income, doesn’t it?

Yes. For example, if you have a $1 million portfolio, a 3% withdrawal is $30,000 annually to live on in retirement.

Can I take more than 3%?

The only way to do this is to earn more on a regular basis, have smaller losses, or have consistent returns. Asset allocation doesn’t do either of those things. It does one thing right (including different asset classes in the portfolio) and three things wrong (limiting your earnings in good years, exposing you to large losses in bad years, and producing inconsistent returns across the years).

We believe  Great Investment Management should capture all three of those opportunities and allow you to have a higher standard of living in retirement. This always involves actual management and not passive asset allocation.

Active management strategies can increase your odds of capturing your best retirement opportunities

• Consistency of your returns – which can mean a more stable growth year by year
• Reducing large losses to manageable losses – which means you may be able to take more without depleting your retirement investments
• Opportunity for larger returns, while still maintaining a defensive strategy for protection

How much difference can this make in your standard of living?

Instead of 3% withdraws, it is possible to take 4-5%. This doesn’t sound like much of a difference until you look at it in dollar terms. If you take that same $1 million portfolio that generates $30,000 at 3%, now you may generate $40,000 to $50,000. This allows you the opportunity to increase your retirement income over time, as your account value grows.

If you are preparing to retire, you may be interested in reading more about our approach to Successful Retirement Investing at this link.

Maximizing Your Retirement Income is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

Choosing a financial Adviser (or choosing a financial advisor, financial planner, financial consultant, financial manager, wealth manager, money manager, investment advisor or investment adviser!) has become a confusing process. Meaningless titles, confusing credentials and similar sounding words have created a tangle of undergrowth that is hard to fight your way through as you seek professional help.

Whether you are replacing your current source of advice, or preparing to retire and choose a professional investment adviser for the first time, it can seem overwhelming to sort through the options and find one that will work best for you.

We are writing this article to give you some sharp cutting tools – key questions – that will get to the heart of choosing someone who represents only you and can do it in a competent way. After reading these 10 questions, you will know the issues that are the most important in making your decision. If you have additional questions to ask after reading this, please contact us and we’ll walk you through the process.

1. Fiduciary

“Are you willing to accept fiduciary responsibility to manage my investment account?”

If the answer is “no”, head for the door. They just told you that their own interests are equal or more important than your interests. You do want an advisor that places your interests first, right?

fi•du•ci•ary - fiduciary investment advisors who accept the responsibility of a Fiduciary Standard occupy a special trust and confidence when working with their clients. As a fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest. In short, a fiduciary is simply someone who represents your interests, even above their own interests.
You may be amazed that anyone providing professional advice to investors would not put that investor’s interests ahead of his own. Then you will also be surprised that brokers (registered representatives) do not have to act as your fiduciary. They substitute a much lesser standard of accountability – suitability. They only have to determine that the investment they recommend is “suitable” for an investor in your situation. Those who do not accept acting as your fiduciary include more than 80% of the financial services industry and every brokerage account.

This actually makes your job of choosing an objective advisor much easier! The financial services industry has hundreds of thousands of people selling products. There are only about 20,000 Registered Investment Advisors and Investment Advisor Representatives. This is the group that accepts Fiduciary Duty.

If the person you are interviewing will not accept a fiduciary standard, eliminate them from your list of possible advisors.

2. Compensation

“How do you get paid?” and “Do you disclose all the compensation you receive?”

If you follow the money, you will learn why the advisor is recommending you take specific actions. If they only have an insurance license, you will end up owning insurance products. If they have an insurance license and a series 6 securities license (allowed to sell packaged products), you will end up owning an annuity. The old saying, “if the only tool you have is a hammer, everything starts looking like a nail” is appropriate here.

Obviously, if they are paid by commission, they are working for a third party and not exclusively for you. If they are not willing to disclose 100% of the compensation they receive, you will never know whether they are objective. They should not be considered as an advisor for you.

3. Conflicts

“What potential conflicts of interest do you have in this relationship?”

It is impossible to eliminate every single potential conflict of interest. In that case, every single potential conflict of interest should be disclosed to you in writing, before you enter into a formal  relationship.

Do they earn commissions from a third party, or are they paid fees only by the you alone? If they are paid fees by a third party, they are being paid a commission to place your money somewhere.
What potential conflicts of interest does this person have in their relationship with you?

4. Protection

“Who holds my money?” and “Is it possible for you have access to withdraw my money from my account?”

Are your funds held by a third party custodian, like Charles Schwab, Fidelity, a trust company, etc.? Your regular investment statements should come directly from that third party custodian. The investment advisor may also issue you statements, but someone at arms length should also be sending statements directly to you.

Almost every instance of financial fraud happens when the money is not held by a third party custodian. In that case, statements can be falsified without accountability. Money can be withdrawn from client accounts and stolen.

This is an important protection that every reputable professional uses to be above reproach.

5. Insurance

“Do you sell insurance?”

We have nothing against insurance or insurance agents, but they are not investment advisors. They are simply licensed to sell insurance and earn (large) commissions. They represent the insurance company.

If someone is acting as an investment advisor and selling insurance, they have huge conflicts of interest. If you need insurance products, find a reputable insurance agent. If you are seeking investment advice, find a qualified financial advisor.

6. Real Track Record

“Please show me a real-time rack record of the performance of your client accounts?”

Not a track record produced by an mutual fund company. A track record their clients actually experienced as a result of their investment management. This could be the track record of the exact model their clients are following in their accounts or a composite of all client accounts.

If they cannot show such a track record, eliminate this advisor.
If the track record doesn’t span at least 10 years, eliminate this advisor.

We are living through dramatic times in the investment markets. The best evidence that your account will fair well and survive the years ahead is how well this approach faired during the bear market years in the past.

You are looking for a long history of solid performance, through bull and bear markets, with limited losses.

Rhoads Lucca Capital Management uses proprietary and objective investment models that coordinate an offensive and defensive strategy to continually adjust your investments as the investment markets change. This has resulted in solid, long-term performance.

7. Defense

“Do you have a defensive strategy to protect my money?”

Very few financial advisors actively manage money. Active management involves decision-making and not passively rebalancing your account annually. If that is all you want, you can get that inexpensively at places like www.financialengines.com (of course, there is no need to pay someone to rebalance your money – nor is it investment management.

True investment management includes both an offensive and defensive strategy. Most advisors and web-based systems cannot deliver that. They don’t know how.

They should be able to describe their defensive strategy in detail. If they cannot do this, they should be eliminated from your list.

8. Experience

“How long have you been in business?”

Anyone who has not been involved in the investment markets for a minimum of 10 years and preferably 15 years, should be crossed off your list. This is your life savings we are planning for. Less than 10 years of money management experience does not even cover the entire bear market that began in March 2000. You will want someone who has lived through the worst the market can produce and has done well for their clients.

Rhoads Lucca Capital Management, for example, began more than 30 years ago and has worked with clients through every kind of market condition, limiting losses and capturing gains.

9. Surrender

“Are there any costs to move my money if I am dissatisfied?”

If there are any costs to move your money (other than fees imposed by the Custodian for closing the actual account), the broker is planning to use commission-based products. These could include life insurance products (like annuities), mutual funds that pay the broker commissions on the front end and other products.

A true fiduciary advisor will not be using those products.

10. References

“May I speak to a couple of your clients who have been with you for more than 5 years?”

It goes without saying that clients who stay are satisfied clients. You should expect the advisor to speak with the clients first and get permission for you to call them. You should also feel free to ask any question you have, but understand that it will be up to the client as to how comfortable they are sharing their private information. Be realistic and considerate in what you ask. You are really looking for whether the advisor does what he says he will do and the client’s judgment of how the investment strategy has worked in real time.

If you ask the firm to speak with a couple clients, you should be willing to be a reference yourself, if you become a client.

Conclusion to Choosing a Financial Advisor

You can learn a lot by asking questions. These 10 questions will cut through the clutter and get to the root of who you want to hire to provide professional investment guidance. We also have an FAQ that goes into more detail about Choosing a Financial Advisor that is well worth reading.

Choosing a Financial Adviser: 10 Questions to Ask First is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

We’ve fielded quite a few questions lately about converting a regular IRA to a ROTH IRA. The financial media is portraying Roth IRA conversions as a “no-brainer.” It isn’t quite that clear and depends on events that you may not be able to foresee or control.

Roth IRA Conversions are being pushed forcefully by the brokerage community (read salespeople who do not get paid until you act). This tax law is a golden goose to them, but only if you move your investments.

Before you take action on converting any IRA to a ROTH IRA, please read the article at the following link: ROTH Conversions: The Gamble of a Lifetime, at Investment News.
The value of the article is that it provides an examination of the other side of the argument as to why you should not consider converting your IRA to a Roth IRA. Are the author’s arguments correct for all investors? Of course not. Neither is conversion. You will be better positioned to make a good decision, if you know both the positives and negatives of making a conversion.

There is only one point I disagree with in the whole article. The author says there is no guarantee income tax rates won’t go up. No chance of that. The government has $70 TRILLION of unfunded liabilities. Not only will the Federal, State and local governments raise your taxes, it won’t be pretty… Will we have higher taxes for more than 10 years? 20 years? 30 years?

So, here’s my take on each argument in the article:

• Taxes: higher taxes seem a certainty, but not necessarily. Taxes were lowered  under President Reagan and it could happen again.
• Future changes in the Roth Tax Law: Again, never say never. If things are so bad that you want to pay your taxes in advance, are they not so bad that lawmakers could change the law to raise more tax revenue? It’s what they do. Is it likely? Who knows at this point?
• The argument that a converted Roth IRA is better than a traditional IRA: you are giving up investing the portion of your IRA that will some day belong to Uncle Sam. If you do this, you will be investing less and have less opportunity to use “his” money to make money.
• Future tax planning: “Therefore, all future income from a Roth used by your clients to make charitable contributions, pay medical bills, long-term-care expenses, mortgage interest or property tax does not receive the same marginal tax deduction as does income received from an IRA. Nor does the client receive income from tax credits. Basically, future tax savings with an IRA are negated once the Roth IRA conversion takes place, because the client paid all taxes upfront.” I couldn’t have said it better, so I am quoting the author.
• Estate-planning objectives: get good estate planning advice and realize that once you make the conversion, you are giving up the option to do other things with your IRA.
• The impact of future medical and long-term care needs on tax rates: Andrew Rice writes, “…the major reason to have an IRA versus a Roth IRA is a client’s future need for medical expenses, long-term- care or assisted-living coverage. He gives an excellent example of how converting to a Roth IRA could impact future effective tax rates.

Having said all that, the author of the article makes a compelling case about why you DON’T want to make the conversion – or at least why you should think carefully before you act. After reading the article and giving it a lot of thought, I think he raises a series of valid concerns. I am bringing it to your attention for your consideration. At the very least, you may want to hedge your bets by not converting the whole thing.

Here is the link again: Roth Conversions: The Gamble of a Lifetime.

It is also worth noting that what you do to invest that IRA – whether a Roth IRA or a regular IRA or a Rollover IRA – will decide whether it grows steadily or shrinks in the bear market. In fact, if you do the Roth IRA conversion, how you invest your IRA will even be more important. You will no longer have the “government’s share” of your IRA to invest.

If you found this page through a search engine, you are probably considering a Roth Conversion of your standard IRA. Don’t miss that there is a much, much larger issue at stake with your IRA – Roth or otherwise: the investment strategy of your IRA. If you do not yet know how we invest money, the depth of research that goes into all Great Portfolio Management, and the multi-dimensional strategy involved, I suggest you make sure to visit this link while you are here: Great Portfolio Management.

Roth IRA Conversions: Read this first is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

RLC Market Comments – The Big Picture June 6, 2010

The graph below is a weekly basis graph of the S&P 500 showing the BIG PICTURE covering the period from 2005 to date.

Shown along with the S&P 500 are three of our long term bull market/bear market indicators we use in our professional money management.

This past week the S&P declined down toward the support level S1 and the up trend line UT1. From a big picture point of view the market remains in an uptrend, validated by the fact that the S&P 500 is above support shown in the yellow shaded box in the graph.

The three big picture indicators are all in bullish configurations as well:

The S&P is above its 86 week moving average which is moving up.
The MACD trend indicator is above its Zero Line and
The 39 Week Rate of Change indicator is above its Zero Line.

This means all three of these long term indicators are suggesting the bull market is intact and as long as that is the case, then declines like the one we have recently experienced should be considered buying opportunities.

Given that we are in the doldrums of the summer, we should probably not expect to see new rally highs above the April high or new lows below the May low in the next 2 months.

This is an excerpt from RLC’s Market Comments email. If you would like to receive this free, analysis of the investment markets each week, click here to sign up.

Stock Market Comments is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

Choosing a Financial Advisor
Frequently Asked Questions

1. Why choosing a financial advisor may be the most important decision I make?
2. Why should my financial advisor be a fiduciary?
3. How hard is it to find a financial advisor that is a fiduciary?
4. Does Rhoads Lucca accept Fiduciary Duty to its clients?
5. How much experience should a financial advisor have before I consider hiring him?
6. How long has Rhoads Lucca Capital been in business?
7. How experienced are John, Dave & Peter?
8. What is the minimum size portfolio you accept?
9. Do you work with clients located outside of Texas?
10. How do you work with clients that are not local?
11. How does Rhoads Lucca Capital Management make money?
12. Who holds my money when I hire you to manage it?
13. Will I be able to see my investments online whenever I want?
14. If I am retired, how will I receive regular "paychecks" from my account to live on during my retirement?
15. Do you guarantee any rate of return for my investments?
16. How will I know you have made changes to my account and how will I keep up with the progress of my investments?
17. How do I know when trades are made in my portfolio?
18. How often do you review my personal account?
19. What services do you provide for your clients?
20. Am I locked-in? Are there termination penalties, if I decide to do something different with my money in the future?
21. My question isn't in the list above. How can I get an answer?

1. Why choosing a financial advisor may be the most important decision I make?

   The financial services area continues to become more complex in every way. More investment choices, more players, faster speed of markets, more volatility. When you make a decision to put a professional advisor on your side, start by making sure he is really on your side. Whether you are preparing to retire and your retirement rollover represents everything you have, or if you have accumulated resources you want to invest into the stock markets, your decision as to who to trust must be made with wisdom. It will determine most of your success or failure.

2. Why should my financial advisor be a fiduciary?

   fi•du•ci•ary - a financial advisor held to a Fiduciary Standard occupies a special trust and confidence when working with a client. As a fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.

   A fiduciary is simply someone who represents your interests, even above their own interests. You can see why this is important when you must grant an advisor limited discretion to act on your behalf. You want to be certain that investment decisions made for you are not only suitable for you, but are truly in your first and best interest.

   Not every kind of financial advisor accepts fiduciary duty. Some (brokers, for example) are held only to the standard of suitability of the investment for someone in your circumstances. The introduction of compensation by commission also introduces a conflict with acting in your best interest first and foremost. As such, brokers are not fiduciaries. Rhoads Lucca Capital gladly accepts and holds to the highest standard of ethics in the financial services industry - Fiduciary Duty to act in the interest of our clients, even above our self-interests.

   If you wonder whether fiduciary duty is a higher standard than the suitability standard that brokers are under, simply as a broker whether his company will sign a letter stating they accept fiduciary duty. It won't happen, sadly.

3. How hard is it to find a financial advisor that is a fiduciary?

   Unfortunately, harder than you might think. Fiduciary advisors make up less than 10% of the financial services industry! This means that 90% of financial advisors do not have a legal duty to put your interests first, even above their own interests. Most investors are shocked to learn this.

   Cerulli Associates, a Boston firm that studies the financial industry, recently calculated that approximately 250,000 people throughout the U.S. call themselves financial advisors (there is no legal standard for calling yourself a "financial advisor"). Of those, 232,000 are sales people who work for their firm, not you. Only 23,000 are registered investment advisors (also known as fiduciary advisors).

   Sales reps selling insurance, mutual funds or other financial products are most likely not fiduciaries. Registered Investment Advisors and Investment Advisor Representatives are fiduciaries.

4. Does Rhoads Lucca accept Fiduciary Duty to its clients?

   Absolutely.

   Just what does it mean to be a fiduciary and deal fairly with clients?

   This has been discussed since 1940, when the Investment Advisors Act became law and placed Registered Investment Advisors under fiduciary responsibility. The definition of this term has been used in a variety of ways over the decades. Further, most investors do not understand the differences between the "suitability standard" brokers are under and true "fiduciary duty" that Registered Investment Advisors are held to.

   Recently, the Committee for the Fiduciary Standard developed a five point statement of principles delineating what it means to deal fairly with a client. Here they are:

   1. Put the client's best interest first;
   2. Act with prudence - that is, with the skill, care, diligence and good judgment of a professional;
   3. Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts;
   4. Avoid conflicts of interest; and
   5. Fully disclose and fairly manage unavoidable conflicts of interest in the client's favor.

   We accept these as a minimum standard of what it means to put your interests first.

5. How much experience should a financial advisor have before I consider hiring him?

   Experience matters more than most people know. Here's why...

   The future may not mirror the past, but it is certainly an echo of the past. When you wrestle with choosing someone to advise you, think about the depth of experience they have accumulated. No one puts an untested person in a position of leadership - certainly not over your life savings.

   During the darkest hours of the correction of 2009, we received phone calls from other financial advisors who turned to us for insight as to what was happening and what they should do with their client's investments. In fact, the Market Comments piece we put out weekly is read by other financial advisors throughout the country.

   How much experience should you use as a guide? More is better. We suggest 10 years minimum. Ideally, you will find someone who has worked through a full market cycle and through a severe bear market. Please note that hiring an inexperienced advisor who works for a firm that has been around for decades is not the same as hiring experience. The wisdom earned through experience is what will see you through future trouble spots in the markets. And you will pass through trouble spots over the years.

   In the final analysis, you are paying an advisor for their experience or you are paying an inexperienced advisor to learn with your money. Credentials do not give you experience or wisdom. Only living through dramatic market conditions over many years can give you the depth of experience to be prepared for the future. There is no shortcut to preparation.

6. How long has Rhoads Lucca Capital been in business?

   For more than 30 years, Rhoads Lucca Capital has been serving clients. This goes back to the end of the deep recession, spans the roaring bull market years of the 1980's, includes the dramatic events of the 1987 stock market crash, the tragedy of 9/11, the Great Bear Market of 2000-2009, wars, currency crisis', etc. Through it all, day by day, we've stood by our clients and safely guided them toward their future.

7. How experienced are John, Dave & Peter?

   Together, John, Dave and Peter bring 80+ years of investment management experience to the table to guide our clients.

8. What is the minimum size portfolio you accept?

   $250,000 is the minimum portfolio size that will receive value from working together with us. Less than this and we will suggest you consider becoming an investor in the mutual fund we advise.

   From here, we have the resources to work with account sizes into the tens of millions. Beyond that, we work with an alliance of like-minded financial advisors to ensure that the large client's interests are very well represented across a spectrum of strategies. The depth of relationships with the best independent financial advisory firms in the industry is also an asset we bring to the table.

9. Do you work with clients located outside of Texas?

   Yes, the majority of our clients live outside of Texas. At last count, we have clients of RLCM in 45 states and several other countries.

10. How do you work with clients that are not local?

    Through the effective use of phone conferences, fax and email, we are able to address your concerns and questions. Many clients from outside Texas travel to our annual client appreciation meeting. Interestingly, even though we live in a time of developing technology, just picking up the phone to talk together is the most satisfying to us all.

11. How does Rhoads Lucca Capital Management make money?

    RLC is paid only by fees - and these come only from our clients. The fee schedule is based on a percentage of our clients' assets under management. We prefer to be paid only by our clients so that we share the same interest in growing your account. Many investment advisers are paid by commissions, paid by a third party, which creates a conflict of interest. We've found our fee schedule to be more cost effective than many of the alternatives available to individuals, including a portfolio built using just individual stocks. Please contact Rhoads Lucca Capital Management and we will be happy to discuss your specific situation.

12. Who holds my money when I hire you to manage it?

    Rhoads Lucca Capital Management never physically has possession of your money.

    Your funds will be held at Schwab Institutional, in an account that is registered in your name and Social Security number or tax ID, in the case of trust accounts.

    Schwab Institutional is one of the nations leading providers of custodial, operational and trading services for Registered Investment Advisory firms, with assets of more than $525 billion. All cash accounts at Schwab Institutional are guaranteed by FDIC insurance, up to Federal limits.

    When you give us limited discretionary authority as investment advisors, it allows us only to move your funds from one investment to another inside your account - never to move it from the account. In the case of airline pilots, your 401k account does not change in any way. Again, you are simply authorizing us to manage your funds within your 401k account.

    Additionally, you will have around the clock access to your current account status via www.schwaballiance.com, a service of Schwab Institutional.

13. Will I be able to see my investments online whenever I want?

    Absolutely. You will be able to view your account online whenever you wish. In fact, we would like you to check your account regularly. But don’t change your investments yourself once you’ve hired us. That would work against your long-term goals. Relax! You’ve hired a professional team.

14. If I am retired, how will I receive regular "paychecks" from my account to live on during my retirement?

    We will work with you to determine the amount of your monthly "paycheck" and it will be deposited directly into your bank account. For most people, this is the same procedure their employer used to deposit their paychecks.

    The amount of your "paycheck" can be changed by you. Just call and we'll help make the change for you.

15. Do you guarantee any rate of return for my investments?

    No. It is illegal for a Registered Investment Advisory firm to guarantee returns. Instead, we devote a full-time effort in creating and executing investment strategies that we believe will help our clients reach their goals.

16. How will I know you have made changes to my account and how will I keep up with the progress of my investments?

    You will receive an easy to read investment statement directly from us every month. In addition to this, you will also receive regular account statements from Charles Schwab or from your 401k Plan Provider. We also welcome your phone calls whenever you have questions or concerns.

17. How do I know when trades are made in my portfolio?

    All of your funds are held in your name at Charles Schwab or at the custodian of your 401k Plan. When we make a trade in your portfolio, a confirmation will be sent to you directly by the custodian. Rhoads Lucca Capital Mangement also prepares and sends monthly statements to you summarizing all activity in your account - including the deduction of our fee. In the case of 401k account management, quarterly statements are prepared by Rhoads Lucca Capital Mangement.

18. How often do you review my personal account?

    We formally monitor every portfolio model every week. We see the results of every model every market day of the year.

19. What services do you provide for your clients?

    RLCM's core service is our investment management service.

    In addition to superior money management, we include the following services for every client:

    1. Helping you identify your investment goals and needs.
    2. Helping you choose a RLCM portfolio model that has the appropriate level of risk and return for you.
    3. Researching, selecting, buying, selling and monitoring the investments in your account.
    4. Handling administrative and paperwork services for your account(s).
    5. Delivering easy-to-understand account statements every month that clearly show where your money is invested right now, and the market value of your account as of the day the statement was produced.
    6. Sharing communications with you about our current view of what is happening in the market and where it it headed.
    7. Answering your questions and concerns about your total financial life.
    8. Producing end of the year tax reports and schedules for you to use in filing your income taxes.
    9. Meeting with you in person or by phone to review your account.
    10. Working with your tax preparer or attorney (with your permission) to answer questions and provide information as needed.

20. Am I locked-in? Are there termination penalties, if I decide to do something different with my money in the future?

    No. There are no barriers to exit a relationship with Rhoads Lucca Capital Management. The relationship can be ended at any time by written notice. There are no forced liquidations, termination fees, back-end loads, redemption fees or other charges associated with the termination of an advisory relationship with our firm. The custodian, Schwab Institutional may have normal transfer charges, if you are moving your funds to another custodian.

    We charge a simple annual fee that is pro-rated by month or quarter (in the case of 401k account management). You will only ever pay for the advice and management you have already received - never in advance, like commission based salespeople. This also gives you complete flexibility when planning your future.

21. My question isn't in the list above. How can I get an answer?

    Please email your question to us at information@rhoadslucca.com, including all relevant information. If you need immediate assistance, you can always call us at 888.895.212 or 214.373.9771

Choosing a Financial Advisor FAQ is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

You may have missed this while the country was undergoing a financial crisis. We’ll file this under “Retirement” since every retirement account must have a named beneficiary.

The Supreme Court of the United States ruled UNANIMOUSLY that Liv Kennedy,  ex-spouse of William Kennedy, was entitled to receive payment of his retirement account money – despite their divorce. You can Google the case name, “Kennedy v. Plan Administrator for DuPont Savings” to learn more.

You can also read the actual Supreme Court decision here – this isn’t long, but it isn’t an easy read either. The legal language will discourage most people from reading all of the decision. The case was decided on a simple basis. Liv’s name was recorded as the beneficiary of William’s retirement account. This should be a big wake-up call to everyone who has a retirement plan of any kind.

Here are the basic facts of this case:

• The couple, William and Liv Kennedy were married for a time
• During the marriage, William Kennedy named Liv Kennedy as sole beneficiary of his retirement plan at Dupont, where he was employed
• Later, the couple was divorced and in the divorce proceedings, Liv waived any interest she had in his retirement Savings and Investment Plan (SIP) at Dupont
• Unfortunately, William never changed his beneficiary designation on his retirement account after the divorce was final – so Liv’s name remained recorded until he died
• Later, William died
• William’s daughter served as executrix of the estate asked and Dupont to release the retirement money to the estate
• Instead, the Plan Administrator for Dupont distributed the money to the named beneficiary, ex-spouse Liv Kennedy!
• Lawsuit!
• The case worked its way to the Supreme Court before being decided unanimously in favor of the ex-spouse, who was named on William Kennedy’s retirement plan documents. Don’t miss the unanimously part. All the Justices sided with Liv
• Daughter Kari Kennedy lost $402,000 as an inheritance because her dad never updated the form after the divorce – even though that was his intent
• Intent doesn’t count, until it is expressed in ink

Moral of the story: Don’t assume anything. Make sure you have consulted with an attorney about your estate plans. UPDATE THE BENEFICIARY of every retirement plan to match who you want to receive the money when you die.

Investment Management and Beneficiaries?

You may wonder why a firm focused on great investment management is posting an article about beneficiary designations. Here’s why -

Isn’t investment management about growing and protecting your money? Absolutely. To grow and protect your money means you have to control your money. Naming a beneficiary is an important part of growing and protecting your money – perhaps the ultimate way to protect your money.

Clients of RLC can update their beneficiary designation at any time by filling out a  Charles Schwab beneficiary form and sending it to our Dallas, TX office. You can find the forms here: Charles Schwab Account Forms.

Almost all of our clients across the United States of America have retirement plans – either pension plans, 401k plans, SEP plans, IRAs, etc. Each of these retirement plans has a named beneficiary. It is just too easy to fill out that form one time and never look at it again and update it as your life changes. Please make sure you specifically name the person or persons you want to receive the money when you die. Better to now so there are not  any surprises when your family is already under stress.

Supreme Court says, “Ex-Spouse gets the money!” is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

Imagine the scenario: You’re planning to retire in 5 years, 1 year, 6 months. You’ve been saving and/or investing over the years, using one or more of the standard retirement planning vehicles: IRA accounts, 401(k) accounts, stock options, securities you bought because your broker or brother-in-law or best friend recommended them, a CD or two, life insurance, and maybe an annuity.

But you’re not sure what’s the best way to ensure your financial well-being once that regular paycheck is gone. Heck, you’re not even sure how long your accumulated savings will last. Should you be worried? How worried? About what?

So, you read articles in Forbes, Wall Street Journal, AARP’s magazine, Reader’s Digest. You watch CNBC and CNN Financial. You buy “How-to-retire-without-worry” books. You attend seminars. You talk with friends and family who have already retired. Does it help? Somewhat. You know more than you used to. But probably you know too much.

Terms like rollover, ESOP, 401k and Roth IRA buzz through your mind, and possibly into your dreams at night. And you’re confused, because little of the information agrees. One source touts the stock market as the answer; others say it is the worst possible choice. It’s the same for annuities, CDs and all the other options. Maybe you’re ready to just flip a coin and let fate decide.

If this describes you, you’re suffering from one of the most common hazards of retirement planning: Information Overload.

You’ve heard too much contradictory information from various reputable sources and, as a result, you’ve become immobilized with indecision. You’re concerned. This is your life’s savings. You can’t relive all those years and save your nest egg all over again. A poor decision now could cause serious financial difficulty later.

When the facts are confusing, people often act on emotions instead, and that makes mistakes more likely. Retirement can be scary for many people because it’s the first time that they have had responsibility for investing a large sum of money. Before retirement, their 401k and pension funds were invested by their employer, or by them within limited options. Now they have a considerable lump sum to deal with and seemingly limitless choices for how to do it.

As investment managers, we’ve counseled many clients and prospective clients facing the retirement planning hurdle. Helping them overcome information overload is one of the greatest, and most satisfying, challenges we face.

Here are some simple guidelines to help make sense of the retirement process:

1. Recognize that you are right to be concerned.
2. Recognize that every potential decision is right for someone. You just have to find the decision that is right for you.
3. Decide what your main concerns about retirement are. We suggest you start by reading this.
4. Determine how much money you need to live on, and how much money you have now in your various investments and savings.
5. Recognize that everyone has a reason for recommending the decisions they tout, and that those reasons may not be in your best interest. Learn to decide for yourself.
6. Trust your instincts about the integrity of the people you’re dealing with. Don’t trust your instincts about their ability and knowledge: Get hard facts to confirm (or deny) what they tell you about themselves.
7. If you are working with a financial advisor (financial adviser, investment advisor, investment adviser, wealth manager, independent investment advisor, financial planner, insurance agent, or anyone of 100 phrases investors search for on the internet), understand how your advisor gets paid and what potential conflicts of interest that could create.
8. Make one decision at a time. If you can, spread the decisions out over a two-year span. Set personal deadlines for time-sensitive decisions that are a month or two ahead of the actual deadline so that you never feel pressured to act without thinking first.
9. Dip into your taxable investments first. Withdraw money from  your tax-deferred investments (like your IRAs) until last so they can keep growing while you draw down the other accounts.
10. Set aside an emergency fund in savings or another readily accessed account. The purpose of this is to help you feel comfortable with investing because not all of your money is “tied up.”

Retirement will change the way you think about investing. Take the time to understand what must happen with your money over the whole course of your remaining life span and set goals that are appropriate for each new stage. This will give you the guidance to tell if you are “on track” or need to refine your investments for the future.

Avoiding Retirement Decision Burnout is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

Blog is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

Dallas Area Investment Groups Resource Page

There are a number of Dallas area investors groups. Many members of these groups are clients of ours. We also serve as guest experts and speakers for a number of these groups.

Over the decades, we’ve observed that many passionate individual investors are married to a partner who has much less interest in investing. It often makes sense to divide your money into more than one account. This allows you to establish a relationship with a trusted investment advisor now, in case something happens to you later, for the well being of your partner. More information  about this is at the bottom of this page.

Here are the main groups in the Dallas area, as well as some resources for members to use:

Dallas Area Investment Groups

Times, dates and places may change over time. Please check before trying to attend. If you are aware of any needed changes in the following information, please contact us at information@rhoadslucca.com.

Dallas Investors Forum:

Investors of all skill levels meet on the 1^st, 3^rd, and 5^th Saturdays to discuss advanced stock market concepts.  Variety of experts &  VIP guest speakers.  No reservation required.  Contact: DFWCANSLIM group in YahooGroups.com.

Breakfast at 8:00am $17  (if you have breakfast or not).  Meetings begin at 8:30am to 11:00am at the Studio Movie Grill, 5405 Beltline Road (972-991-6684), in Addison, TX.

Dallas Managed Risk Investors/Dallas FastTrack User Group:

The Dallas FastTrack User Group is a non-professional group of individual investors who share investment information and use the Investors FastTrack software for mutual funds and ETF investing.  http://www.dallasmris.com/ – All meeting announcements and other calendar events will be posted to this site

AFTA – Association of Technical Analysts:

Investors of advanced analytical skills meet monthly to discuss using technical analysis in stock market investing.  Check website for list of exceptional speakers for the year.  www.afta-dfw.com.

Crown Plaza, 14315 Midway Rd., north of 635, 6:30 pm registration & mingle, presentation at 7pm-9pm  $25/meeting or $100 for the year.

Mutual Fund & ETF SIG (Special Interest Group):

All experience levels, discuss mutual funds and ETFs.

4^th Saturdays beginning at 9:30am -  LaMadeline Restaurant, NE corner of Preston & Forest.

Dallas IBD MeetUp:

Investors of all skills come together to discuss using IBD for investing.

$2 to cover cost of hand-out.  http://IBD.meetup.com/265/ Contact: Charlotte Hudgin, 214-995-6702, charlottedh@yahoo.com.  Borders Bookstore, SE corner of Preston & Royal.

Day Traders Special Interest Group:

A special interest group (SIG) from AFTA.

Call for directions and parking/entrance information.  3^rd Saturdays beginning at 10:30am.  Jim Harrison, 214-878-8221, Baylor College of Dentistry, 3302 Gaston Ave., Room 310

Establishing a Relationship with a Trusted Investment Advisor Now

As mentioned above, many passionate individual investors are married to a partner who has little interest in investing. It often makes sense to divide your money into more than one account. This allows you to establish a relationship with an investment advisor now, in case something happens to you later. Over the decades we have seen this work very well for families.

If this sounds interesting to you, please read more about how we work with our clients. The Great Investment Management page is a good place to start. While you are at this website, please explore the other pages. There is a wealth of information, philosophy, etc. that will be helpful to you as an investor.

Dallas Area Investment Groups is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved

RLC Market Comments

Thank you for your interest in receiving RLC Market Comments, written by Peter Mauthe, President and Chief Operating Officer of Rhoads Lucca Capital. This is a free email newsletter, delivering our analysis of stock market investment strategy.

RLC Market Comments is a post from: Investment Management | Retirement | Rhoads Lucca Capital - © Copyright 2010, all rights reserved