Giving Women What They Want

I recently read an article in the Wall Street Journal that discussed the ways in which women feel they are ignored by financial advisors at private banks.

According to a study from Boston Consulting Group the ladies’ complaints are as follows:

1. “When dealing with a wealthy couple, [wealth managers] ignore the woman and communicate only with the man;”
2. “[Wealth managers] assume women have a low-risk tolerance, and therefore give them less choice;” and
3. “Women feel that wealth advisors focus too much on short-term results rather than life milestones.”

The study found that women want to be treated equal; to be given the same options and opportunities as men. In addition, they want to have advice and services specifically tailored to their needs as women. Perhaps this, then, is an argument in favor of women seeking financial advice from an independent wealth manager, such as Mandalay Financial, rather than a private bank.

From the beginning Mandalay Financial has considered each client’s specific situation, needs and goals – be they male or female – and is an advocate for the financial independence of women. We designed our Ladies First program to inform women that we are aware of their distinct needs, especially regarding what we term “life transitions” (i.e. marriage, divorce, widowhood, etc), and that we are here to educate and help them find solutions that are right for them.

*Information taken from the Wall Street Journal article “What Wealthy Women Want”

Retirement: A Goal Worth Planning

A recent Houston Chronicle article “Early retirement as a low-cost adventure,” seemed to imply that the assistance of financial planners with retirement planning is unnecessary because the advisor views retiring solely as a goal, and not a life to be lived.

Retirement is both a lifestyle and a goal. In my experience, generally retirement means having the ability and option to do what you want – travel, relax, visit friends and family – when you want, without having to work or worry about whether or not you can afford it. While a completely worry-free life may not be possible, it would be preferable to have one with minimal worries. Until one is living the retired life they want, it is a goal to be reached.

Part of being able to have this lifestyle is having the funds to do so, and financial planners can help with that. Admittedly, some people are able to handle everything to their satisfaction on their own. However, it has been my experience that most people are often too busy to be able to keep up with the latest news, products, training, and laws regarding investments. Why not have a professional that can at least take a second look? What if something was overlooked? What if you missed something that could adversely affect your retirement lifestyle?

As a financial advisor, helping clients achieve the lifestyle of their choosing is my goal. I work with them to find ways of helping to secure the funding for retirement, as well as ways of maintaining it. In addition, I try to increase awareness of and create solutions for roadblocks that could hinder clients in attaining the lifestyle that they want.

How Women Are Affected By A Life Crisis

When financial security is interrupted by a life crisis, women are generally impacted to a greater degree than men. A life crisis can take many forms ranging from long-term unemployment to a divorce, or the death of a spouse. Along with the emotional rollercoaster that a life crisis often produces, comes a financial minefield as well – particularly if the crisis is sudden.

While no one is completely immune to the financial effects of a life crisis, these unexpected events can be particularly difficult for women. On average, women live about seven years longer than men; therefore, they are likely to experience more crises than men, as well as having to live with the effects longer. In recent studies American Association of Retired Professionals found that, while various crises have different levels of impact, women seem to bear the brunt.

The following chart illustrates the gender comparison related to adverse effects of different crises.

Not only are women affected more severely, but they also tend to have less money saved for the future than men. Some 52% of women have less than $50,000 saved versus 28% of men with such low savings. With that in mind, Mandalay Financial consultants believe that it is particularly important, for professional women to have a plan of action in place to handle such events to mitigate the resulting impact on their finances. Mandalay provides consulting services designed to empower women to reach their financial goals.

College Board Releases New College Cost Numbers

The cost of college is often a subject of interest for many of my clients. Not only are they concerned with the expense of the colleges their children want to attend (or are already attending) and how the cost will affect their finances, but what options they have in paying for it.

Every October, the College Board releases its Trends in College Pricing report that highlights college cost increases and trends. While costs can vary significantly by region and individual college, the College Board publishes average cost figures, which are based on its survey of 3,500 colleges across the country.

Here are highlights from its latest report:

· At four-year public colleges for in-state students, tuition, fees, and room and board increased by 5.9% from last year, with the total cost for 2009/2010 averaging $19,388;
· At four-year public colleges for out-of-state students, tuition, fees, and room and board increased by 6.0% from last year, with the total cost for 2009/2010 averaging $30,196; and
· At four-year private colleges, tuition, fees, and room and board increased by 4.3% from last year, with the total cost for 2009/2010 averaging $39,028.

“Total average cost” includes tuition and fees, room and board, books and supplies, transportation, and a small amount for miscellaneous expenses.

The College Board is quick to point out that the average "sticker price" cost figure is not necessarily representative of what most students pay. That's because almost two-thirds of undergraduate students receive grants that reduce the actual price of college. The largest provider of grant aid is individual colleges, followed by the federal government, private sources and employers, and state governments.

For the 2009/2010 year, the College Board estimates that students at public colleges will receive an average of $5,400 in grant aid from all sources and federal tax benefits, and students at private colleges will receive an average of $14,400 in grant aid from all sources and federal tax benefits. Federal tax benefits include the American Opportunity tax credit (formerly called the Hope credit), the Lifetime Learning tax credit, and the deduction for qualified higher education expenses.


If you have any questions or would like help in planning for higher education, please call the Mandalay offices at 713-667-4026 to set up an appointment.

To read the Trends in College Pricing report, visit www.trends-collegeboard.com.

Every year, the College Board also releases a sister report to Trends in College Pricing, called Trends in Student Aid, that examines student financial aid in more detail. To read this report, visit www.trends-collegeboard.com.

Is There a Conversion in Your Future?

In 2010, previous restrictions on converting traditional IRAs to Roth IRAs will be permanently removed. Anyone who wants to do a Roth conversion may. In addition, the government is going to give a tax deferment on any conversions done in 2010.

For conversions occurring in 2010, 50% or the resulting income will be recognized in 2011 and 50% in 2012. In effect, you will have an interest free loan from the government from the date of conversion to until you have to pay the tax – as late as April 15, 2013.

That said, keep in mind that if income tax rates go up, you could end up paying a lot more tax than planned. I believe it’s likely that the top two tax rates will be higher during these tax years. Alternatively, you may choose to include all the income on your 2010 return to be taxed at the rate in effect for 2010.

In my opinion, a Roth conversion can be a very beneficial strategy for some investors. There are specific circumstances which make it beneficial, and we should discuss and consider if a Roth conversion is a good planning opportunity for you.

A Longer Rebound than Normal?

Looking back at the past nine recessions, there has been a definite correlation between the depth of recession and the strength of subsequent recovery. Considering the pent-up demand created because of the extent to which businesses cut back on production, inventories and payroll during a downturn, the reverse response during the eventual recovery is understandable.

For example, following severe slumps in 1973-75 and 1981-82, real GDP grew 6.2% and 7.7% respectively. Recently the average forecast of 52 economists – surveyed by Blue Chip Economic Indicators – call for growth in real GDP of 2.7% over the next four quarters. During the same nine previous recessions, real GDP has never required more than three quarters to regain its peak level prior to the downturn. Can history not predict the strength of our next recovery?

If not, the lingering credit crisis may be a major factor as households may need longer to reduce debt and save more before increasing spending, limiting the business sector’s recovery.

So far, surprisingly positive data in recent weeks supports the historical, upbeat recovery scenario. Only time will tell!

(Source: Business Week, 12 Oct 2009)

Build America Bonds vs. Munis

Bloomberg reported that the Bond Buyer 20 General Obligation Bond Index(1), a measure of how much it costs state and localities to borrow money, is poised to test its recent record low of 4.03% reached in December 2006.

Muni analysts attribute the drop in yields to strong demand from bond funds faced with a shrinking supply of tax-exempt securities. The reason for the shrinking supply is that almost $35 billion in new issues never came to a market because states and localities decided to sell taxable Build America bonds. The interest cost of Build America Bonds is subsidized by the U.S. government reducing borrowing cost below tax-exempt levels.

What does this mean to Mandalay clients? It could mean new purchases of munis may take longer to place and, of course, the expectation of lower yields.

One last thing; the U.S. government subsidy program is not scheduled to expire until December 31, 2010. What may be good for the economy and municipalities isn’t necessarily good for muni investors.

(1) Index of 20 municipal issuers rated Aa2 would pay to borrow money for 20 years.