Investment Team Expands with the Addition of Kenneth Robinson, CFP®

McLean, VA (April 9, 2012) – Bernhardt Wealth Management announced today that Kenneth (Ken) Robinson, CFP® has joined the firm’s investment advisory team as Senior Financial Advisor. In his new position, Ken will be working with clients in all aspects of wealth management, including investment management, retirement planning, tax planning, philanthropic giving, estate planning and other complex financial issues.

“I am pleased to welcome Ken Robinson to the Bernhardt Wealth Management team,” said president and founder Gordon J. Bernhardt CPA, PFS, CFP®, AIF®. “Ken will immediately be contributing his knowledge and extensive experience to positively impact what we are trying to accomplish on behalf of our clients. He has excellent technical skills, works well with clientele and is a respected member of the financial planning industry,” Bernhardt continued.

Robinson joins Bernhardt Wealth Management from The Monitor Group, Inc. where he served as senior planner and previously, director of operations.

“I am truly excited for the opportunity to work with a team of such dedicated and consummate professionals,” said Robinson. “While many firms today are shifting their priorities away from personalized advice and customer service, Bernhardt Wealth Management maintains an unwavering focus on providing great unbiased advice that serves only the best interest of their clients.”

Robinson has more than 15 years of experience in the financial services industry. He graduated with a bachelor's degree in Economics from the Virginia Military Institute and earned his Masters of Science in Finance from Georgia State University. He is a member of the national Financial Planning Association, and serves on the Board of the Financial Planning Association of the National Capital Area (FPANCA) as Pro Bono Director, having previously served as the Director of Public Relations.

Sought out for his insights into financial and practice management matters, Robinson has been quoted in the Washington Post, Investment News, and various industry publications, as well as appearing on CNN Newsource. He is active in pro bono financial planning efforts and is a volunteer for Junior Achievement of the National Capital Area in the financial literacy programs for local schools. He is a former adjunct professor for Virginia Commonwealth University’s CFP® certificate program.


Left-to-Right: Ken Robinson, MS, CFP®, Senior Advisor;

Gordon Bernhardt, CPA, PFS, CFP®, AIF®, President & CEO;

Tim Koehl, AAMS®, CFP®, Senior Advisor



 



 

More Support for a Universal Fiduciary Standard

An early version of the 2010 Dodd-Frank Act would have eliminated the “broker-dealer exception” from the definition of investment advisor under the Advisers Act and required brokers to abide by the common-law fiduciary standard that investment advisors uphold. Unfortunately, that change was put on hold in order to study just how the reform might impact the consumer. Among the suggested consequences of this policy change has been the strange notion that requiring brokers to serve as fiduciaries would somehow limit middle America’s access to advisors by limiting a broker’s ability to sell commission products or offer a range of investments.

In their newly published paper, The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice, professors Michael Finke and Thomas Langdon analyze states that have a uniform fiduciary standard of care versus those that do not to determine what impact the regulation has on the availability and cost of a broker’s services. Interestingly, they find that the number of registered representatives doing business within a state as a percentage of total households does not vary significantly in states with stricter fiduciary standards.

More importantly, when comparing states with strict fiduciary standards and those with no fiduciary standard, they find no statistical differences between those groups of brokers in terms of percentage of lower-income and higher-income clients; the ability to provide a broad range of products, including commission products; the ability to provide tailored advice; and the cost of compliance.

I hope studies like this will motivate regulators to stop dragging their feet and require a uniform fiduciary standard. Only then can we ensure equal access to advisors who will always operate in their clients’ best interests.

Protect Yourself from Identity Theft

Do you know the meaning of “dumpster diving,” “skimming,” or “phishing?” According to the Federal Trade Commission (FTC), these are just a few of the methods thieves use to steal your personal information. Dumpster diving involves rummaging through trash looking for bills or other paper with your personal information on it. Skimming lifts your credit card numbers during processing. And phishing involves emails from thieves who pretend to be financial institutions to get you to reveal your personal information.

The FTC suggests you take the following steps to safeguard your personal information:

• Shred financial documents and paperwork with personal information before you discard them.
• Don’t keep Personal Identification Numbers (PINs) near your checkbook or debit card.
• Don’t carry your Social Security card and limit the number of credit cards in your wallet.
• Unless you initiated the contact with a business, do not share confidential information such as credit card numbers, Social Security number, your birth date, or your mother’s maiden name.
• Be wary of e-mails asking you to enter personal information at a linked web site.
• Don’t use an obvious password like "Password1," your birth date, your mother's maiden name, or the last four digits of your Social Security number.

Amazingly, identity theft often goes undetected for months because the thieves often change your address on an account so that you won’t receive the bills with the fraudulent charges. That’s why it’s wise to check your credit report regularly at one of the three major credit agencies: Equifax, (800) 685-1111; Experian, (888) 397-3742; or TransUnion, (800) 888-4213. And, if you are a victim of identity theft, the quicker you discover the crime and report it to the police and these credit agencies, the better your chances of limiting the financial damage.

CrisisLink Gala and Auction

LinkUp and Listen Spring 2012

CrisisLink Gala and Auction

April 25, 2012

7:15 PM

The Carnegie Institution for Science

Washington, DC

Join us for an evening of inspiration as we celebrate the

uniqueness of every voice because......every voice matters.

LinkUp and Live is CrisisLink’s premier special event to raise awareness and funds for crisis and suicide prevention, intervention, and response services for the National Capital Region. Supporting our gala is a wonderful way to show your support for our community while receiving generous benefits. These benefits include: VIP tickets, logo placement or name recognition on website, gala program, event signage, and more depending on level. Please review the attached materials and commit to supporting your community today by ensuring CrisisLink can continue to provide free 24/7/365 hotline coverage for our neighbors during times of need.

How can you support LinkUp and Live?

• Purchase tickets to attend
• Become an event sponsor
• Donate an auction item
• Make a donation to CrisisLink

For further information:
Visit www.linkupandlive.org

Email development@crisislink.org

Call 703-516-6768

Mr. Smith Quits Goldman Sachs

With all we read about wirehouse brokers moving to the more consumer-centric independent registered investment advisor (RIA) business model, it is rare that these brokers publically share their rationale for doing so. While they certainly must address the issue with clients, a strict code of silence generally protects the wirehouse from any bad press. That’s why a recent opinion article for The New York Times from Greg Smith explaining his resignation from Goldman Sachs was such major news.

Smith, who was head of Goldman’s United States equity derivatives business in Europe, the Middle East and Africa, wrote, “Today is my last day at Goldman Sachs. After almost 12 years at the firm--first as a summer intern while at Stanford, then in New York for 10 years, and now in London--I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”

Smith placed the blame for Goldman’s “toxic” environment on top management, including Goldman’s chief executive, Lloyd C. Blankfein, and its president, Gary D. Cohn. And that ignited an industry firestorm and public relations nightmare. In fact, Goldman’s stock dropped 3% in afternoon trading. Asked about Smith’s future on Wall Street, William Cohan, the author of Money and Power: How Goldman Sachs Came to Rule the World, responded, “He’s toast. He is in the witness protection program right now.”

So, if you tell the truth, you’ll never work on Wall Street. That observation certainly illustrates that Wall Street firms and brokers face conflicts of interest that independent registered investment advisory firms do not. In order to get justice for all consumers, our industry must adopt a universal fiduciary standard.

In thinking of how Smith might respond to the industry’s backlash, I’m reminded of Al Pacino’s memorable line when he played a lone honest lawyer in the 1979 film And Justice for All: “I’m out of order? You're out of order! This whole court is out of order.”

Client Survey Results

Our goal is to help our clients make informed decisions with their money so they can make work optional and can focus on creating a quality of life that reflects their deepest values. Critical to that process is providing a consistently high level of service that meets the needs of individual clients. This year we contracted an independent consultant to conduct an audit of our client base to ensure that the service we provide is appropriate. We are very pleased to say that the results were overwhelmingly positive.

Summary of Results
(All scores are out of five.)

4.9  -  Overall satisfaction with Bernhardt Wealth Management
5.0  -  Bernhardt Wealth Management (BWM) is trustworthy
4.8  -  BWM is helping me create a better financial future
4.7  -  BWM gives me peace of mind
4.8  -  BWM is proactive in managing our relationship
4.7  -  BWM understands my goals for the future
4.7  -  BWM regularly reviews my goals and objectives
4.8  -  BWM puts my needs first when making recommendations
4.9  -  BWM demonstrates leadership during turbulent markets
4.8  -  The frequency with which BWM contacts me is appropriate
4.9  -  I am confident in the skills of BWM's team
4.8  -  I would recommend the services of BWM to others

You might also be interested to know that our clients say that the four things that are most important to them in any relationship with a financial advisor are as follows:

• Working with an advisor who is trustworthy
• Receiving advice to help create a better financial future
• Working with someone who places my needs first when making recommendations
• Having confidence in the advisor's team

We were, therefore, pleased to receive such high ratings on these dimensions and want to extend a heartfelt thank you to each of our clients for the opportunity to serve them.  Thank you!

In Defense of Buy and Hold

Seventy-five percent of financial advisors believe they can beat the market using tactical asset allocation strategies that shift money among different investments in an attempt to time the market according to a recent Jefferson National survey. The goal, of course, is to move out of an asset class before the decline and to invest in another asset class before returns begin to skyrocket. Yet, study after study proves that attempting to time the market is a loser’s game. For instance, the Investment Company Institute reported that bond funds had net inflows of $130 billion in 2011 and that stock funds had net outflows of $100 billion. Yet, the S&P 500 Index closed at 1099.23 on October 3, 2011, and was up 27.7% as of March 16, 2012.  Unfortunately, those who fled equities will find it difficult to ever catch-up.

So often, these ultimately harmful tactical portfolio moves are fueled by emotions -- fear and greed -- whereas an asset allocation plan is rationally based upon an investor’s goals and risk tolerance. I continue to believe that, in all markets, an advisor’s biggest value is not to attempt to predict the markets, but to help clients establish a solid investment plan based upon their long-term goals and to counsel them to stay the course while the market zigs and zags.

Long Term Care Insurance

As many of our clients know, I have retained Allen Hamm of Superior LTC Planning Services, Inc. to assist our clients with planning for long term care. Our clients who have utilized this service have given us high marks about the service, its benefits and the experiece of working with Allen. (If you haven’t seen the recording of the short webinar that Allen did for our clients that explains the services available to our clients, you can view it by clicking on this link:  Long-Term Care Webinar. There’s no charge to you for these services because we pay his fee as a way of adding value to our relationship with you.)

Recently, I went through a long-term care planning analysis with Allen.  I wanted to have the same discussion he has had with many of our clients and I wanted to go through this analysis because I wanted clarity on my best option for paying for a potential long-term care need.

Allen explained, there’s 4 ways to pay for long term care: Rely on Medicaid, the welfare program; rely on family members; rely on your assets; or rely on LTC insurance. Obviously, the first two options (welfare and family) are not viable for me--I wouldn’t choose one of those even if I could. So the analysis came down to choosing between relying on my assets or relying on LTC insurance.

During the process, Allen asked several questions designed to help me get clarity on my personal odds of needing long-term care. Even though the government and the insurance industry offer lots of “general statistics” related to the odds of needing care, what’s more relevant are my personal odds. We talked about my genetic history and whether or not the need for care is prevalent in my family. The answers to those questions were mixed. But longevity appears to be something I’ll face, for better or for worse: I take reasonably good care of myself, and my father is healthy as a horse and he’s in his mid-80s.

By the end of the analysis, we concluded that my personal odds of needing care are at least reasonable. So how would I pay for it?

Like all small business owners, my focus is on serving my clients well and so my major asset is Bernhardt Wealth Management. That’s likely to remain the case over the coming decades. So one option for paying for care could be to use the assets I’ve accumulated from my business or to take income from the business to pay for my care. After thinking about it, I’m not completely comfortable with that option, at least for now. I’ve decided that I can better protect myself and my firm by relying on LTC insurance. But I’ll be talking with Allen at least once a year about this decision, reviewing the insurance coverage and discussing whether or not changes have taken place in my life that warrant making a change. In other words, having the insurance puts me in the driver’s seat: the insurance company can’t cancel the coverage but I certainly can if my circumstances change.

If any of you have not yet gone through an LTC planning process with Allen, I encourage you to do so and believe you’ll find it valuable.  He can conduct a policy audit of an existing policy, explain what you have, and/or look at options you should consider.  Let me know if I need to coordinate a conference between Allen and you.

Time for a Financial Spring Cleaning

Although you may currently be focused on the looming deadline for filing taxes for 2011, we’ll soon find ourselves at the mid-point of 2012. Accordingly, spring’s a great time to get your financial house in order with a mid-year checkup.

• Construct your balance sheet. Take inventory of your assets held in brokerage and savings accounts, college savings and 401(k) plans, insurance policies, and real estate. How have your stocks, bonds, and mutual funds performed relative to their benchmarks? Has there been a change in your home’s value? Next, list your liabilities including your mortgage, auto loans, and credit cards. This exercise always generates a to-do list: Shop for a higher rate on a soon-to-renew CD, increase your 401(k) contributions, or attack consumer debt.
• Check your emergency fund. Today’s uncertain economy underscores the wisdom of keeping at least six months of your current income in a liquid, conservative investment so you can manage an illness, unemployment, or the unexpected car repair without tapping into investments or retirement savings. If you dipped into your emergency stash last year, replenish it to reflect your current income.
• Evaluate retirement savings. Have you increased your 401(k) contributions to keep pace with your salary? Minimally, you need to be contributing enough to maximize your company’s matching dollars. Many companies that stopped matching funds during the peak of the financial crisis have re-instituted the program, so make sure you’re not leaving money on the table.
• Evaluate your health benefits & insurance. Fall’s often the time for open enrollments for health plans. Get a head start on assessing your needs. Is your current plan still the best choice? Additionally, review your life, homeowners/renters, and auto insurance to ensure you have adequate protection.
• Consider consolidating investment accounts. If you have multiple 401(k) plans from old jobs, rolling those funds into one Rollover IRA could be advantageous. Consolidating your accounts not only cuts down on maintenance fees and paperwork, but you can take advantage of more investment options.

What's to Become of the Fiduciary Standard?

I’m disappointed to report that the Securities and Exchange Commission (SEC) recently decided to put off implementing a key part of the Dodd-Frank Act: creating a fiduciary standard to govern all investment advisors who give financial advice. As an SEC-registered Registered Investment Advisor, I already operate under the fiduciary standard that the Dodd-Frank Act sought to apply equally to brokers who make investment recommendations.

For all the industry’s feet dragging and debate, the fiduciary standard is not a new or complicated concept. In fact, in a recent column, Bob Veres notes that the fiduciary standard can be found in the very first written legal code, the Code of Hammurabi (roughly 1770 BC) and in Cicero's orations during the Roman Republic around 50 BC. Write Veres, “In the ancient world, a trader would take his caravan (or sailing ship) to some distant land to trade Mesopotamian clay pots or bronze artifacts for furs, tin or copper. Since the trader would be gone for months or sometimes years, somebody had to make basic business and financial decisions on that person's behalf while he was on the road. And it was important that this person make decisions that were in the trader's interest, not his own.”

Veres then goes on to quote Cicero’s Oration for Sextus Roscius of America:

“…in cases where we ourselves cannot be present, the vicarious faith of friends is substituted; and he who impairs that confidence, attacks the common bulwark of all men, and as far as another depends on him, disturbs the bonds of society.”

For all the legal wrangling, working as a fiduciary involves a simple standard of behavior. As a fiduciary, you protect the interests of someone who trusts you. In my line of work, that means making recommendations and investment decisions that are 100% in my clients’ best interest. It astounds me, especially in the wake of the credit crisis and Bernie Madoff’s Ponzi scheme, that industry regulators can’t agree on the importance of supporting and enforcing the fiduciary standard.