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Articles on Wealth Management Topics

How Equity-Indexed Annuities (EIA's) Actually Work: A Case Study

Buyers often seem unaware of the shortcomings of annuities until well after their purchase. Equity-indexed annuities are no exception to this statement. While the downside protection they offer is not at issue here (but is subject to the claims-paying ability of the insurance company involved), the upside potential of these products is often vastly exaggerated (or misunderstood) by salespeople motivated by nothing more than the prospect of sales commissions averaging about 6% of the amount invested.

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Check Up on a Financial Advisor by Checking BrokerCheck

"Advisor Background Checks a Must, Warn Regulators." "SEC Urges Consumers to Run Background Checks on Advisors." These were recent headlines in Financial Advisor magazine and the by-product of a campaign by the SEC and by other regulators of financial advisors to raise public awareness of the BrokerCheck tool. The Financial Industry Regulatory Authority (FINRA) manages the BrokerCheck website, and this online database allows consumers to investigate their current or prospective advisors, and the firms that employ them.

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Financial Advice from Utah's Credit Unions May Not be What it Seems

Credit unions are a big part of the financial services landscape here in Utah, much more so than in other states. I use a credit union for both my personal and Five Seasons Financial Planning bank accounts, something I never even considered when living in the Northeast. And many clients also use them for banking and loans. But apparently the investment services and financial advice being offered by credit unions here in Utah are not necessarily what they seem.

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Financial Markets Update for Wealth Management Clients 3

“You make most of your money in a bear market, you just don’t realize it at the time.” This statement must seem like a paradox when your portfolio balance is declining at an alarming rate on a weekly basis. But "money is indeed made" in a variety of ways during financial market upheavals like this one. And doing so doesn't require any particular market-timing skills or short-selling prowess, but it does require a disciplined and consistent approach to portfolio management, a focus on the longer term, and a certain amount of courage and conviction.

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Financial Markets Update for Wealth Management Clients 2

At the risk of overdoing it with client communications, I'm feeling that developments in the financial markets in the past week warrant another outreach to all of you, and in particular to those of you who weren't Five Seasons clients during the October 2007 - March 2009 bear market. In the interest of brevity, this missive will take the form of a list of talking points that have occurred to me, or that have cropped up in one-on-one correspondence with clients, this week. Here's hoping the following will calm nerves, provide perspective, satisfy curiosity, or simply help you to pass time while "social distancing":

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Financial Markets Update for Wealth Management Clients 1

Despite the confidence exuded by the talking heads on financial news networks like CNBC and Bloomberg TV, it's always a tenuous business to try to assign big stock market moves (down or up) to one specific root cause. And frankly it's not a particularly productive exercise to try to do so, other than for the benefit of TV ratings. That being said, in my humble opinion, while the coronavirus was certainly the catalyst for, and is still an ongoing contributing factor to, this stock market correction or bear market, there are several other factors at work:

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How a Financial Advisor's Business Model Affects the Advice They Provide

Financial advisors vary widely in the business models in which they operate and in the standards of care that they owe to clients. These factors determine the quality of advice provided, and of products recommended, by any given financial advisor as much as his/her education, experience, and professional designations.

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Consumers of Financial Advice Beware: Not All CFP® Practitioners Are Created Equal

The Certified Financial Planner (CFP®) designation is the most widely recognized certification for financial advisors. However, CFP® certificants vary enormously in the regulatory environments and business models in which they operate. These differences have tremendous implications for the quality of financial advice that a consumer should expect to receive from a given CFP® practitioner.

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Mean Reversion in Financial Markets: The Case for a Contrarian Approach to Investing

Returns in financial markets are often cyclical. That is, multi-year periods during which asset classes or investing styles or mutual fund sectors succeed in generating above-average returns are usually followed by multi-year periods of disappointing returns, and vice versa. Since this market behavior is a key tenet on which our contrarian investment philosophy rests, let's explore the academic research supporting it and the ramifications for successful long-term investing.

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