Sunday, 9 February 2014

How to find brilliant and affordable financial advice

Signing of the agreement  ISTOCKPHOTO
Today’s era of do-it-yourself retirement planning has created a booming market for financial advice. From bankers and brokers to a cacophony of advisors bearing a befuddling array of professional designations, there’s no shortage of professionals willing to help when you don’t want to go it alone.
But beware. Financial advisors are not all alike. And where a good advisor can help you calmly amass the money you need to fund precious goals, a bad one can fritter away your funds on inadvisable investments and hidden fees.
How do you find the right advisor? The answer starts with you.
Start by considering what type of services you need. Do you require help with just investing choices, or do you want someone to draw up a comprehensive plan that would look at your insurance needs, the adequacy of your savings, and your investments? 
If all you need is help with investments, you can generally get that help cheaply, possibly through an advice website such as Financial Engines or Jemstep. In some cases, you can also get help from your mutual fund company.
For instance, mutual fund giant Vanguard Investments has a financial planning division that will help you set up appropriate investments to fund different goals. If you’re not a Vanguard client, the service costs $1,000. But if you have $50,000 or more in Vanguard funds, the fee drops to $250. And if you’ve got more than $500,000 in assets, it’s free. 
However, these plans are basic in nature and really focus on retirement planning -- recommending savings levels and specific investments that will help ensure you have enough. If you need to talk about more complex goals, like planning for a potential disability or for a disabled child, of if you need someone to call on a regular basis to help you make financial decisions, you need to go beyond the basics.
At that point, you should be considering a live (versus virtual) planner. There are mainly two types of planners: those that get paid just by you through fees you pay by the hour or as a percentage of the assets under management, and those that earn commissions from fund companies and insurers for selling you products.
While many experts say you should always choose the fee-only advisor to avoid conflicts of interest, that’s not always the best advice, says Chuck Jaffe, author of The Right Way to Hire Financial Help. 
First, fee-only advisors often won't work with clients of modest means. Because they usually get paid based on a percentage of assets under management -- say, 1 percent of the $250,000 you have them invest -- they don't take clients who are just starting out and haven't amassed a substantial nest egg. 
Besides, there are many great planners who get at least a portion of their income from commissions on products that they sell, some of which may be products you need to buy. In some instances, these planners will offset the cost of drawing up your plan when you end up buying these services. 
However, it’s incumbent on the client to understand where the conflicts arise and determine whether they’re comfortable evaluating recommendations that might be tainted by the planner’s economic interest. By and large, the biggest commissions are generated by whole life insurance policies and so-called "load" mutual funds. If a planner is recommending these, you’ll need to understand how much he’ll be paid if you buy and then  evaluate his recommendation in that context. 
If you come to a conclusion that your planner is too busy selling you things to understand your goals, you need a different planner. However, if what he’s selling fits well with your needs, you may have found a way to get good advice at a lower price.
How do you know whether your planner earns commissions? Here are two ways to find out -- and you should use both, says Jaffe. 1: Ask. 2: Verify by looking up your planner through the government’s broker-check website.
The question should serve as a simple honesty check, notes Jaffe. Any decent planner will be happy to explain how she's paid and provide a copy of her ADV form, which spells it out in writing. This should be the same form you get by going to the broker check website. If the form you get from your planner is different than the one on the government site, or if the planner balks at the question, walk away.
It’s also important to note that regulators require planners to provide a copy of the second half of their ADV -- the ADV, Part II -- to anyone who asks. That part of the form explains their compensation schedule. But you want both parts of this form, Jaffe says. 
Why? Because the first half tells you whether the planner has a disciplinary history and/or client complaints and settlements. A settlement or two doesn’t necessarily mean you should eliminate that planner from consideration, but it should cause you to ask more questions. Numerous complains, of course, are a red flag that should wave you elsewhere. Make sure you see the whole ADV.
How do you find a planner in the first place? The best way to start is to ask for referrals from friends and relatives. Realize that planners tend to specialize, so if you’re a middle-income teacher, you probably don’t want a planner who works primarily with high-end investment bankers. He or she is simply less likely to be familiar with the issues that pertain to you. You can also ask for referrals from trade groups such as the Financial Planning Association and the National Association of Personal Financial Advisors.
You should personally interview at least three planners. Even if you think you love the first one, interview two more, Jaffe says. Because the more people you interview, the better you’ll understand the industry and the right questions to ask to make sure the relationship is a good fit.
The first planner almost always sounds great, Jaffe explains, partly because it’s a relief to hear that he's going to provide an array of services that will take the worry off your shoulders. But after another interview, you’ll realize they all do that. By the third interview, you're capable of looking more deeply at how the partnership between you and a planner might work. At that point, you can go back to the planner you liked most with more specific questions and if the answers are right, your business.
"There are planners who just run the numbers, and there are planners who really want to know about your goals and what they can do to accomplish them," Jaffe says. "You want to see how they answer your questions, but you also want to pay attention to what they’re asking you."
Someone who isn't particularly interested in your goals isn’t going to be able to help you make them real. In the end, this is about forging a long-term partnership.
Says Jaffe: "What you want is to hire a planner who you’ll want to keep for the rest of your life." 

Jay Leno says goodbye to "The Tonight Show"

Jay Leno appears during the final taping of NBC's “The Tonight Show with Jay Leno," in Burbank, Calif., Thursday, Feb. 6, 2014. Leno brings his 22-year career as the show host to an end Thursday in a special one-hour farewell broadcast. (Photo by Matt Sayles/Invision/AP)  MATT SAYLES, MATT SAYLES/INVISION/AP
BURBANK, Calif. - Jay Leno has said goodbye to "The Tonight Show" before, but not like this. The comedian became tearful and choked up Thursday as he concluded what he called the "greatest 22 years of my life."
"I am the luckiest guy in the world. This is tricky," said an emotional Leno, stepping down for the second and presumably last time as host of TV's venerable late-night program.  
Jimmy Fallon takes over "Tonight" in New York on Feb. 17.
 Leno shared that he'd lost his mother the first year he became "Tonight" host, his dad the second and then his brother.
"And after that I was pretty much out of family. And the folks here became my family," he said of the crew and staff of "Tonight."
It was a tender finish to a farewell show that was mostly aiming for laughs, with traditional monologue jokes, clips from old shows and a wild assortment of celebrities helping to usher Leno out the door.
Leno first departure came in 2009, when he was briefly replaced by Conan O'Brien but reclaimed the show after a messy transition and O'Brien's lackluster ratings. In '09, he was moving to a prime-time show on NBC; this time he's out the door, and has said he'll focus on comedy clubs and his beloved car collection.
Looking sharp in a black suit and bright blue tie, Leno was greeted by an ovation from the VIP audience. The typically self-contained comic betrayed a bit of nervousness, stumbling over a few lines in his monologue.
He didn't trip over his opening line, though - a final dig at his employer.
"You're very kind," he told the audience. "I don't like goodbyes. NBC does."

Jay Leno, right, and Billy Crystal appear during the final taping of NBC's “The Tonight Show with Jay Leno," in Burbank, Calif., Thursday, Feb. 6, 2014.
 Leno brought his show full circle with Billy Crystal, who was his first guest in May 1992 and his last  guest Thursday. Crystal played ringmaster at one point, calling on Oprah Winfrey, Jack Black, Kim Kardashian, Carol Burnett and others for a musical tribute to Jay with a "Sound of Music" song parody.
"So long, farewell, auf wiedersehen, goodbye. If Fallon tanks you'll be back here next year," sang Jack Black.
"The Big Bang Theory" star Jim Parsons' contribution: "We've watched you when we're weary. Your great success is called the big chin theory."
In a videotaped segment, celebrities offered career advice to Leno.
"Why would I give am (expletive) about what he does. He's a grown man," said Mark Walberg.
President Barack Obama, like other politicians a favorite target of Leno's, struck back in his clip.
"Jay, you've made a whole lot of jokes about me over the years, but don't worry, I'm not upset," Obama said, then said he was making Leno the U.S. ambassador to Antarctica. "Hope you have a warm coat, man."
Garth Brooks performed his touching song "The Dance" before Leno's farewell remarks. "Now that I brought the room down," Leno joked, he asked Brooks to lighten it up.
Another Brooks' song, "Friends in Low Places," closed out the show.
Before the show, the fenced off area where "Tonight Show" audiences had typically lined up hours early, remained empty throughout the day. Next to the soundstage where the show is taped, a giant white tent had been erected, presumably the setting for Leno's send-off party. Outside the tent were rows of white flowers, as well as a few of Leno's vintage cars.
"It's going to be difficult to not come in and do a show every day for our audience who has been so great to Jay," lamented Vickers, the executive producer. "And also hard for this group of people (the staff) who have all been together for 22 years," said Vickers, who worked on Johnny Carson's "Tonight" before taking the top job with Leno.
Leno, 63, said he plans to continue playing comedy clubs, indulging his passion for cars and doing such TV work as comes his way - other than hosting on late-night.
"It's been a wonderful job. This is the right time to leave," he said last week, and make way for the next generation.
Fallon, 39, starts his "Tonight" gig Feb. 17, with NBC hoping he rides the promotional wave of its Winter Olympics coverage the next two weeks.
Leno's late-night competitors aren't stepping aside for his final bow.
ABC's Jimmy Kimmel, who was harshly critical of Leno when O'Brien lost "Tonight," has the A-list cast of the new film "The Monuments Men," including George Clooney, Matt Damon and Bill Murray.
On CBS, David Letterman's "Late Show" will continue its musical tributes to the upcoming 50th anniversary of The Beatles' appearance on CBS' "The Ed Sullivan Show." Sean Lennon, son of the late John Lennon, will perform a Beatles tune with The Flaming Lips.

Danish zoo kills healthy giraffe, feeds it to carnivores

Children watch as Marius, a male giraffe, is dissected, at the Copenhagen Zoo, in Denmark, Sunday, Feb. 9, 2014. Copenhagen Zoo turned down offers from other zoos and 500,000 euros ($680,000) from a private individual to save the life of a healthy giraffe before killing and slaughtering it Sunday to follow inbreeding recommendations made by a European association. The 2-year-old male giraffe, named Marius, was put down using a bolt pistol and its meat will be fed to carnivores at the zoo, spokesman Tobias Stenbaek Bro said. Visitors, including children, were invited to watch while the giraffe was dissected.  AP PHOTO/POLFOT, RASMUS FLINDT PEDERSEN
The 2-year-old male giraffe, named Marius, was put down using a bolt pistol and its meat will be fed to carnivores at the zoo, spokesman Tobias Stenbaek Bro said. Visitors, including children, were invited to watch while the giraffe was dissected.
Marius' plight triggered a wave of online protests and renewed debate about the conditions of zoo animals. Before the giraffe was killed, an online petition to save it had received more than 20,000 signatures.
Stenbaek Bro said the zoo, which now has seven giraffes left, was recommended to put down Marius by the European Association of Zoos and Aquaria because there were already a lot of giraffes with similar genes in the organization's breeding program.
The Amsterdam-based EAZA has 347 members, including many large zoos in European capitals, and works to conserve global biodiversity and to achieve the highest standards of care and breeding for animals.
Stenbaek Bro said EAZA membership isn't mandatory, but most responsible zoos are members of the organization.
Stenbaek Bro said Copenhagen Zoo turned down an offer from a private individual who wanted to buy Marius for 500,000 euros ($680,000). Stenbaek Bro said a significant part of EAZA membership is that the zoos don't own the animals themselves, but govern them, and therefore can't sell them to anyone outside the organization that don't follow the same set of rules.
He said that is important for the breeding programs to work.
When asked if other zoos had offered to take in Marius, the spokesman said yes but didn't specify numbers or which ones.
The zoo's scientific director Bengt Holst said the giraffe breeding program is similar to those used in deer parks, where red deer and fallow deer are culled to keep populations healthy.
"The most important factor must be that the animals are healthy physically and behaviorally and that they have a good life while they are living whether this life is long or short. This is something that Copenhagen Zoo believes strongly in," he said in a statement.
Holst said the zoo doesn't give the giraffes contraceptives because they have "a number of unwanted side effects on the internal organs" and the zoo believes parental care is an important part of the animal's natural behavior.
The organization Animal Rights Sweden said the case simply highlights what they believe zoos do to animals regularly.
"It is no secret that animals are killed when there is no longer space, or if the animals don't have genes that are interesting enough," the organization said in a statement. "The only way to stop this is to not visit zoos."
It pointed out some zoos work to preserve species of animals, but never individuals.
"When the cute animal babies that attract visitors grow up they are not as interesting anymore," it said.

China crisis may be unavoidable

Mainland policymakers and analysts commonly argue that China's public debt burden in itself is not a problem. They say that as long as gross domestic product growth outpaces credit growth, and that credit-driven growth generates a positive return on investments, all will be fine.
     The accuracy of the numbers reported last month by the National Audit Office is of course questionable. We see that, though, as less relevant than the government's intended message to the market: that overall debt is still manageable.
     I, however, question the idea China can grow its way out of this problem.
     That's because, first of all, the debt issuers are not the primary beneficiaries of gross domestic product growth. The primary beneficiary of GDP growth is the central government, which gains in the form of tax revenues. Debt issuers, on the other hand, are mostly local and their primary revenue source is land sales.
     There is no direct, mechanical or automatic link between economic growth and local authorities' debt service capacities, as we have witnessed since 2008 as total social financing, a broad measure of credit, has exploded.
     The argument that China can grow out of its credit bubble is valid if and only ifGDP growth increases the debt service capacity of the debtors. As GDP is only a measure of economic activity, not efficiency or profitability, GDP growth alone does not guarantee a proportional increase in the revenue of local authorities that could be used to pay down the debt issued via financing vehicles.
     However, local authorities could stand to benefit from growth indirectly, if land values increase alongside GDP. But again, the link between the growth in the size of the economy and the debt service capacity of local government financing vehicles is by no means direct.
Hard assets no help
Investments in city construction, land reserves, transportation facilities and social housing in mid-2013 made up 35%, 11%, 24% and 7%, respectively, of total spending by local authorities, according to Citigroup analysts.
     Bulls would argue that these hard assets could be drawn on to repay the debt. But common sense dictates that financial returns from the physical assets funded by local government are largely unknown and most likely negative. If these projects were financially viable, why didn't local authorities invest in them prior to 2008 rather than waiting till the onset of the global financial crisis? 
     Studies show that few passenger railways in the world, including the longest running ones in Japan and Germany, are profitable if engines and carriages as well as tracks are included in the capital cost. In the U.K., for example, a separate company owns the track from those running the trains. The revenues of the consolidated track and train companies do not cover their full costs. In Spain, revenues from actual and proposed high-speed railways cover less than half of operating costs, let alone capital costs, according to research by Pedro Casares and Pablo Coto-Millan.
     It is clear that policymakers in China are focused on engineering a transition to slower but more sustainable growth without causing a sharp cyclical slowdown. From an empirical perspective, however, the number of economies that have historically succeeded in letting the air out of a credit balloon in a gradual fashion, without creating a credit crunch and a short-lived recession, cannot be counted even on one finger. 
     Whether China will be different, given its unique policy tools and central planning instruments such as quantitative credit controls, is yet to be seen. Nevertheless, policy intervention comes with costs, mostly higher and more convoluted than anticipated.
     One thing is certain: The consequences will be profound and long lasting for global economies and investors.
How to Trick Yourself Into Building Wealth
PHOTO: Dedication and self-discipline are key to building wealth.
Dedication and self-discipline are key to building wealth.
kali9/Getty Images  
Many make New Year's resolutions to save more money each month, but actually following through on this requires a lot more attention than a mere notion amid the heady optimism of New Year's Eve festivities.
As in many challenging endeavors, the devil lies in the details. It's one thing to decide to save and invest more, but it's quite another to muster the month-to-month discipline and take concrete steps to make good on this. At this point in 2014, you may have a creeping awareness of your lack of progress in realizing your saving/investing resolution.
To keep this resolution from winding up in the dustbin of unfulfilled promises to yourself, consider these points:
• Dedicate yourself. Putting money aside for savings and investment takes discipline — the discipline to not spend it. Some who haven't been saving can change their ways by pure force of will, while others need a coach or advisor.
• Pay yourself first. If the money is out of sight, it's out of mind, so you're not as inclined to spend it. Setting up a monthly automatic checking account draft is one of the best ways to save money because it's passive: You don't have to do anything. Instead of making 12 monthly decisions to save money every year, make one decision and set up an automatic bank draft each month. Too many people regard all of the cash in their checking accounts as cash on the launching pad for spending. But by using bank drafts, you can build up a surprising sum over time, especially if you increase your monthly contribution periodically. As Benjamin Franklin said, "Little strokes fell great oaks."
You can authorize a draft to a savings account or directly to investments, such as mutual funds and brokerage accounts; many of these arrangements allow drafts as low as $50 per month. If you would prefer to buy individual stocks, you might choose to direct your bank drafts to services like, which enables investors to contribute small amounts toward whole or even fractional shares. This enables people who can't afford many shares of stock — or even one—to incrementally work toward stock ownership. Whether your incremental payments go into a fund or individual stocks, make sure that commissions and expenses aren't eating too much of your return. Be sure to read the prospectus and annual reports before you invest.
This arrangement has the advantage of enabling dollar-cost averaging — the practice of regularly investing a set dollar amount in a given stock or fund, rather than regularly buying a set number of shares. This means that investors buy more shares when the price is low and fewer when the price is high. Dollar-cost averaging reduces the risk of buying a large number of shares at the wrong time. Over a couple of years, dollar-cost averaging can smooth out returns because if the price is fluctuating, you are automatically buying more when it's down and less when it's up.
• Another "out of sight, out of mind" practice is making monthly contributions to a 401(k) account. This money doesn't even make it into your take-home pay because it's deducted off the top of your gross pay, so you don't pay taxes on this money until you take the money out during retirement. Despite this and the benefit of matching money that some employers put in these accounts as a proportion of your contributions, many Americans don't contribute the allowable maximum amount to their 401(k) plans, and they forgo substantial amounts of employer matching money. 
If you're not sure about investing in the stock market, and your income is below $129,000 ($191,000 household), the new MyRA might be right for you. You can contribute up to $5,500 after-tax per year and the money invested grows tax free; but, if you withdraw the interest before age 59 1/2, you may be subject to tax and penalties on the gain. Unlike other investment plans, this new MyRA limits your options to a single fund that invest in governments bonds, which currently earns an annual interest rate of around 2.5 percent.
If you find yourself unable to save money and keep it saved, then you might want to hire a wealth coach or financial advisor to help you find money inside your current budget to save and more importantly, to hold you accountable to reach your goals. The key to not spending your savings and investment money is to set and steadfastly stick to a budget. Just as a personal trainer can help you realize fitness resolutions, a financial coach can help you reach your financial goals.
For extra motivation, you might want to read "The Millionaire Next Door." This is a classic book about attitudes toward money, financial discipline and the personal qualities that make the difference between acquiring wealth and having little to show for years of work--regardless of your income. The concept of discipline is reflected by the title, which indicates that these self-made millionaires don't seem different from people of lesser means because they live in modest homes and drive inexpensive cars. Who knows, with a little discipline, maybe you'll end up the next "Millionaire Next Door."
This column is the opinion of the author and in no way reflects the opinion of  Strateg

What Would Bond Say? Aston Martin Recalls 5K-Plus U.S. Cars

PHOTO: In this file photo, an Aston Martin Vanquish is inspected by hand inside a light booth at the company headquarters and production plant on Jan. 10, 2013 in Gaydon, England.

The makers of Aston Martin sport cars, one of the most expensive cars in the world and the one favoured by James Bond, has issued a recall with a warning there may be a problem with the roadsters' accelerators that could leave them coasting to a stop.
Aston Martin says on Friday it will notify more than 5,000 U.S. drivers of its Coupes, Roadsters, Volantes, and Rapides that the cars are being recalled. Depending on the model, new Aston Martins retail for between $120,000 and $300,000.
Bernard Swiecki, senior project manager at the Ann Arbor, Michigan-based Center for Automotive Research, tells ABC News that even though Aston Martin is a relatively small manufacturer, the recall is significant because it affects more than 17,000 cars worldwide, which is about two-thirds of Aston Martin's fleet. The only model unaffected is Aston Martin's new Vanquish. Otherwise the company is recalling every right-hand drive car made between May 2012 and December 2013, and every left-hand drive made between late 2007 and 2013.
"Seventy-five percent makes this unique," says Swiecki.
Ultra luxury cars make a comeback
The cause of the recall, according to documents filed by Aston Martin with the U.S. Department of Transportation's National Highway Traffic Safety Administration, was weakness in a part of the accelerator pedal assembly. "If the accelerator pedal arm breaks, the engine will return to idle and the driver will be unable to maintain or increase engine speed, increasing the risk of a crash," Jennifer Timian, head of recalls for the U.S. Department of Transportation, wrote in a Jan. 30 letter to Bill Donnelly, Aston Martin's general manager for North America.
Donnelly, in January, wrote to Timian explaining that its Connecticut dealer had reported a breakage of the part that caused Aston Martin to subject it to "substantial testing." That testing disclosed, according to the company, that counterfeit plastic had been used in its manufacture. Aston Martin specs call for a particular kind of plastic. The Chinese sub-contractor supplying the part, says the company, used counterfeit plastic.
The result is the part is weaker and more subject to breakage.
 The Coolest and Most Rare Cars
"All counterfeit material and all pedal arms made of this suspect material have been quarantined," says Donnelly. He says the company has received no reports from customers of the part's breakage, and that it has no estimate of the number of vehicles that contain the defect.
Aston Martin identifies the offending Chinese subcontractor as Synthetic Plastic Raw Material Co. of Dongguan Zhang Mutou Town Plastic Logistics Center City.
Source: ABC News

7 Steps When Switching Car Insurance 

PHOTO: A man signs car insurance forms.

When renewal time for your car insurance rolls around, it's very easy to just go ahead and pay the premium and stick with the same insurer year after year. But that could be a costly mistake, because you might do better by switching car insurance companies.
"A lot of us are creatures of habit. I've been with the same company since 1983. But if you shop around, it literally could save you anywhere from 5 to 50 percent a year," says Melvin Butch Hollowell, a Detroit attorney and former insurance consumer advocate for the state of Michigan.
Many industry observers suggest shopping for a new policy every two or three years. If you find a rate that beats what you're currently paying and you decide to change carriers, you need to be careful so you won't wind up with a gap in your coverage. Follow these steps to a successful switch. 

Tuesday, 4 February 2014

Al-Qaeda disowns affiliate for being too extreme

It’s an unprecedented move that could change the game in Syria. Al Qaeda has cut ties with an affiliate it says is too extreme.
The terror group says it’s not responsible for what the Islamic State of Iraq and al-Sham is doing in Syria. This is surprising, in a sense, because ISIS claims allegiance to al-Qaeda. (Via Shahba Press)
An expert on militant Islam at the Brookings Institution put it this way to 
The New York Times:  “ISIS is now officially the biggest and baddest global jihadi group on the planet ... Nothing says 
‘hard-core’ like being cast out by Al Qaeda.”
Still, it's a move that's likely been in the works for some time. As a writer for The Daily Beast notes, the group has been known to disobey. “One of the reasons for the disavowal may be that al-Baghdadi’s defiance was beginning to threaten al-Zawahiri’s authority.” ​(Via The Daily Beast) 
Abu Bakr al-Baghdadi is the leader of ISIS. In April, he announced his group was taking over the other high-profile jihadist group in Syria, al-Nusra. But Al-Qaeda’s current leader, Ayman al-Zawahiri, rejected the move. (Via Foreign Policy, Al-Alam) 
SETH JONES, RAND CORPORATION: “This must keep Ayman al-Zawahri up in his bed at night in Pakistan. This is a very, very serious challenge to his authority and a very serious challenge to the future of the organization he has spent so much time trying to build.” (Via CNN) 
Critics of ISIS have accused it of being more interested in setting up its own emirate inside Syria than fighting the regime of Bashar-al Assad. And it's taken a lot of heat for killing fellow rebels and alienating the local population. (Via Aleppo Media Centre) 
Some analysts say Al-Qaeda's decision to cut ties could reduce the infighting among the various rebel groups inside Syria. That infighting escalated recently at the expense of fighting the Assad regime. 
As The Wall Street Journal explains, "The deepening rifts among rebels, in the short run, could further bolster the president's forces. However, if the opposition eventually succeeds in expelling ISIS ... it could strengthen support for the rebels."
The rebel infighting has dramatically increased the bloodshed in Syria's civil war. So far, the conflict has claimed the lives of more than 100,000 people and forced more than 2 million Syrians to leave their homes.
Source: KRMG