February 5, 2012

Minority Workers Remain Confident About Retirement, Despite Lagging Preparations and False Expectations

Being an African American financial advisor over the past 13 years has brought me some disturbing findings. African Americans and people of color have been a very small part of my wealth management business. So small that it spurred me to take an in-depth look beyond my personal experiences to discover if what I have experienced held true across the country. I have come into contact with very educated and successful African American business people but the one consistent factor is that many of them lag behind in their saving and investing experiences.

What is more disturbing is that African American and Hispanic workers are just as likely as American workers to feel confident about their retirement security even though their savings and preparations lag behind, according to findings of the Minority Retirement Confidence Survey (MRCS). While some differences in retirement preparation can be attributed to differences in income distribution, other findings show that minorities are less prepared even when comparisons are made among workers with similar levels of household income.

A study conducted in 2007 by the Employee Benefit Research Institute (EBRI) shared some educational information that cannot be overlooked. It also cleared the muddy waters that I have become so comfortable swimming in. Here are some factors that have led to the lack of investing and saving amongst people of color.

• Less than half of African American (48 percent, down from 62 percent in 2003) and Hispanic (41 percent, down from 60 percent in 2003) workers have saved money for retirement, making them less likely than workers overall (66 percent) to have saved.
• More than half of African Americans (54 percent) and Hispanics (55 percent) report having less than $10,000 in savings and investments, compared with approximately one-third of all workers (35 percent).
• Roughly one-quarter of African Americans (27 percent, down from 46 percent in 1999 and 36 percent in 2003) and Hispanics (23 percent, down from 34 percent in 1999 and 31 percent in 2003) have tried to calculate how much they need to save for a comfortable retirement. In contrast, 43 percent of workers overall say they have tried to do a calculation.
• Regardless of income, African Americans (39 percent) are more likely than workers overall (30 percent) and Hispanics (22 percent) to say a defined benefit pension plan will be a major source of funding for their retirement. Both African Americans (41 percent) and Hispanics (38 percent) are also more likely than workers in general (25 percent) to think Social Security will be a major source of income.
• Many African Americans and Hispanics may be counting on money from a defined benefit pension plan that they may not receive. Up to 37 percent of African Americans and 36 percent of Hispanics appear to be expecting to receive this benefit from a future employer, compared with 21 percent of all workers.
• More than half of African Americans (53 percent), compared with 4 in 10 of all workers (41 percent) expect to have access to retiree health insurance through an employer. A larger share of African Americans (34 percent) than workers overall (24 percent) and Hispanics (18 percent) also think they have private coverage for long-term care expenses.
• Seven in 10 workers overall (70 percent), African Americans (72 percent), and Hispanics (69 percent) say they will have enough money to live comfortably throughout their retirement years. However, among those with household income of $25,000 or less, minority workers are considerably more likely than workers overall to feel confident.
• Minority workers express higher levels of confidence about the future of Social Security and Medicare. Half of Hispanics are very or somewhat confident about Social Security (51 percent) and Medicare (52 percent), while 4 in 10 African- Americans are confident about these programs (40 percent confident about Social Security, 43 percent confident about Medicare). In contrast, 3 in 10 workers overall (30 percent) report they are very or somewhat confident about Social Security and fewer than 4 in 10 (37 percent) are confident about Medicare.

My goal is to open the eyes of African American’s along with other ethnicities to start focusing on their retirements, become more educated around investing / saving, and to seek financial advice. The financial markets are complex and can be intimidating if you are not familiar with their intricacies. Retirement saving can be a gradual climb if the proper steps are taken and if not you will find yourself at the bottom of the mountain looking up. Don’t simply retire from something; have something to retire to.

Louis Taylor (President, Senior Financial Advisor)
Email: [email protected]
Website: www.twmwealthmanagement.com

Securities and advisory services offered through Crown Capital Securities. L.P. A Registered Investment Advisor. Member FINRA and SIPC. OSJ Address: 8383 NE Sandy Blvd, Ste. 420 Portland, OR 97220

October 17, 2011

Megan Reink Joins Taylor Wealth Management

Megan has been in the financial services industry for 13 years. She received her Bachelor’s degree from University of San Diego where she studied Psychology and Business Administration. Shortly after graduation, she began her career with Merrill Lynch where her focus was directed and focused on institutional clients.

In 2008, she moved to Morgan Stanley Smith Barney where she played a pivotal role in her team’s operational excellence.

Megan now joins TWM Wealth Management, Corp where her expertise will be used to assist in the growth and operational excellence, as well as to provide our clients with a higher level of service. She is Series 7, 63 and 66 licensed.

Megan, along with her husband Trevor, have two children. She enjoys traveling, running, and spending time as a family.

September 12, 2011

Want Jobs? Have Faith!

Employment data are notoriously volatile, are often revised and have a large margin of error.

Unemployment has been a hot button for going on a half decade and I thought it would be timely to shed some light on today’s unemployment environment. As I mentioned before I closely follow Brian Wesbury, Chief Economists of First Trust and he had some interesting thoughts on the job outlook. The reality is that the private sector created 17,000 new payroll jobs in August and the government lost 17,000. The net was “zero.” Some would say that this is a perfect metaphor for the economy…a big fat zero. The stock market is getting drilled, politicians are frothing at the mouth, the Fed is having longer meetings, and investors are scared. So, what’s going on?

First, let us say that we have been overly optimistic. We expected better growth in jobs and the economy. We have been wrong, but we still don’t expect another recession.

Employment data are notoriously volatile, are often revised and have a large margin of error. Verizon had 46,000 workers on strike in August who were counted as unemployed. The strike is over, and they will add to employment in September. The other jobs survey (the Household survey) showed 331,000 new jobs in August.

But, don’t stop reading there. We did not just say that “the economy is perfectly fine.” It is clearly underperforming. The question is: Why? And what should be done about it?

Some say that economies always perform poorly after a financial crisis. Others say that the US government must spend even more, but deficits are already so high that this seems spectacularly foolish. The answer can be found in one of our favorite parables about economic growth. We borrow it from Paul Zane Pilzer.

Imagine 10 people live on an island. Each person catches two fish every day, which is subsistence living. There are no savings. Children, or immigrants who do not know how to fish, would be hard to absorb. The people would be desperate to increase production. But then, a miracle happens. Two of these people figure out how to make a boat and a net. They fish 200 yards offshore. The two of them catch 20 fish each day with this new technology, which replicates the daily GDP created by all 10 using the old technology.

At this point, eight people no longer need to fish and the island has a choice. The eight could grow corn, pick coconuts, fix the boat and the net, or trade some other good or service to their more productive neighbors. Living standards would rise. Abundance and plenty would be created. Children and immigrants could be absorbed. Or…the eight without a boat could become envious and complain that a 10 fish-to-2 fish income ratio is unfair and that the rich fishermen should pay taxes. So, the island votes to institute an 80% tax on anyone that uses a net.

Let’s assume that the fishermen with a boat continue to catch 20 fish a day. If so, the other eight would stop fishing and divide up the 16-fish tax between them. Everyone would still get two fish a day. Living standards would not rise. Kids and immigrants who did not know how to fish would be a burden. The benefits of the new technology would go to waste.

This is the problem with attempts by the government to be fair and socially just. This is also the problem with trying to spend our way out of economic pain. It doesn’t work.

And even if we decide not to tax the fishermen, but instead borrow the fish and give them away, the same thing happens. Borrowing the fish, and then consuming them, does not create new wealth. It only puts a burden on the less productive that they will never be able to repay.

This is what has happened in Greece and many other European countries. Government spending, whether paid for with debt or with taxes, undermines job growth and wealth creation. Excluding defense, the US federal government is spending more today as a share of GDP than it ever has in history. It is also re-distributing more income than it ever has in history. We understand the impetus for this…we care about people too. But, the desire to help people does not always mean that what we are doing is really helping. In fact, the massive increase in government spending the US has instituted in the past few years is backfiring. It is undermining growth.

We don’t expect an immediate recession. We don’t think the US economy will collapse. Technology is so amazingly strong that it is off-setting a great deal of the damage done by spending. But, if the US really wants growth and jobs it needs to reverse course, spend less and let technology lift living standards. We need more faith…Faith in markets and everyday people; not faith in government.

Louis Taylor (President, Senior Financial Advisor)
Email: [email protected]
Website: www.twmwealthmanagement.com

Securities and advisory services offered through Crown Capital Securities. L.P. A Registered Investment Advisor. Member FINRA and SIPC. OSJ Address: 8383 NE Sandy Blvd, Ste. 420 Portland, OR 97220

July 29, 2011

Bullish On America

From time to time I read great books, articles published by respected economists, research analysts, and financial periodicals. In my opinion the “everyday investor” is really being forgotten. My rationale for this conclusion stems from the fact that finance is an achilles heel for eighty five percent of the people in our country. The jargon alone is enough to make a sane person go crazy. Couple that with wide spread bad news, irresponsible reporting and media scare tactics. Who would ever invest in this market? With that in mind, I will start to bring to you educational and relevant information that will allow the everyday investor to start to think, challenge themselves to gain a better understanding of investing along with learning about the pitfalls and rewards associated with it. If you are not currently an investor, you should be. If you are currently investing and feel like you lack direction pay attention and hopefully I will be able to provide you with confidence to find your way.

One of my favorite economists is Brian Westbury, Author of It’s Not as Bad as You Think: Why Capitalism Trumps Fear and the Economy Will Thrive. The author tightly makes the case that the current financial crisis was totally unnecessary. He states that its prime cause was the imposition of mark-to-market accounting rules. “History shows that the government has made some pretty big bloopers, but perhaps none have been larger than allowing the Financial Accounting Standards Board to start enforcing a very strict mark-to-market accounting rule in late 2007. The rule forced banks to book losses that had not yet occurred even for securities that the banks were willing to hold. Then many of those losses were forced to run through the balance sheet, which reduced regulatory capital. This pushed banks into insolvency or capital violation, despite the fact that cash flow was still sound. Within a year, the U.S. was in the middle of the worst pure financial panic in 100 years. Coincidence? Absolutely not. Every government program put in place during the crisis was an attempt to work around mark-to-market accounting. [It] chased private capital away.” When this crazy rule, thanks to congressional pressure, was amended in early 2009 the panic ended, and the stock market roared back, led by banks and insurance companies.

In 2007 it was fancy accounting and now we are at another crossroads with the nations debt ceiling. Should we raise it or not? How will we reduce the nations deficit and more importantly how and where will we collect the revenue to remedy our countries lack of financial responsibility. Our government is once again faced with key decisions that need to be made around the structure of our financial system. I hope they get it right this time. Here are some key items to note:

• The U.S. manufactures more today than ever before (46% more than China), we have traded t-shirts for BMW X3’s made in S.C.
• The U.S. is a major player in world energy with the largest natural gas reserves and there’s more oil in North Dakota fields than Saudi Arabia.
• U.S. companies are cash rich and hoarding cash. Although they are not paying dividends this means future potential investments in equipment and technology.
• Foreclosures are a non-issue with 5 states dominating them and they are showing improvement.
• Personal consumption is the highest ever in this country (Every $1 earned is spent by you, the bank if you save it or the government through tax collection).
• In the 1800’s nothing changed, in the last 200 years everything did! (Farming used to be done with horse and plow vs. tractor. AC, TV shall I go on?).

Can the budget be balanced? The U.S. produces $15 trillion in revenue, has $14 trillion in debt and $1.5 trillion in assets. The U.S. makes a 10% return on investment (ROI). If your father / mother passed you down a business with a 10% ROI, would you take it? Yes, and you would be filthy rich! We are in good shape and hopefully our politics can keep us that way because I’m Bullish on America.

Louis Taylor (President, Senior Financial Advisor)
Email: [email protected]
Website: www.twmwealthmanagement.com

Securities and advisory services offered through Crown Capital Securities. L.P. A Registered Investment Advisor. Member FINRA and SIPC. OSJ Address: 8383 NE Sandy Blvd, Ste. 420 Portland, OR 97220