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Lauren's Blog

Lauren’s blog covers topics that impact your finances, your family, and your future. Is there a topic you’d like Lauren to tackle? We’d love your suggestions and feedback.

PBS ''Retirement Gamble'' Response

May 17, 2013 

If you choose to believe the rhetoric that you might have recently heard, then I have some bad news: As it turns out you and I are un-American! Just when we thought we’d seen it all and heard every possible argument against our time-tested and recommended investment strategy, a so-called “expert” stretches for a new spin on the same old allegations. This time, the expert in question has resorted to name-calling, as reported in InvestmentNews

The age old debate between active and passive management took an odd, patriotic turn at the Investment Company Institute General Membership Meeting on Thursday. “Index investing is positively un-American,” said Alan Reid, CEO of Forward Management LLC. “What you’re saying is ‘I want to be just a little bit less than average.’” 

One could consider this misguided “advice” slightly amusing… that is if it didn’t cause some investors to decide that it’s their “civic duty” to try to beat the market. Advice ceases to be funny if it convinces even a few individuals to veer off course from adopting a solid, evidence-based investment strategy which has been carefully designed to meet personal goals and risk tolerances.  

In a similar vein, if you’ve not yet had the opportunity to view the recently aired PBS Frontlineepisode, “The Retirement Gamble,” I encourage you to do so. While it contains some talking points with which I disagree, it does illustrate this singular truth: the vast majority of Americans are missing out on the fiduciary advice and solid financial education that they sorely need in order to successfully prepare for retirement. Instead, they are being misinformed – in some cases deliberately – by “experts” who may or may not have their clients’ best interests at heart (and we all know who they are, don’t we?). Furthermore, they are being (mis)led to believe that wageringand investingone’s life savings are one and the same. Let me be perfectly clear on that particular point: they absolutely are not. If you want to wager, go find a casino, if you want to invest, come talk to us. 

In our capacity as your fiduciary advisor, it has been our long-held mission to help you understand, implement and keep true to your own individual long-term investment strategy, so that you can achieve your highest financial interests and meet your essential goals. It may sound corny but the truth is that those same goals are the life-blood that nourishes our great nation’s economy and strengthens its capital markets. And if that’s “un-American,” then I plead guilty as charged.  

If you – my “un-American” friend – would like to review your own retirement and investment plans, give me a call so that we can schedule some time to talk.  



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2013: A First Quarter Review - True Grit

As an associate director of the Motivation Science Center at Columbia Business School, Dr. Heidi Grant Halverson has somewhat more than just a passing interest in understanding the qualities which lead to “success.” However, after assessing the nine most significant traits, even she confessed that she found the results surprising. The number one trait? Believe it or not it isn’t how focused, or how well-informed or even how dedicated you are, although these, of course, help. The number one trait is having enough grit.

Or as Winston Churchill is reported to have once said, “If you’re going through hell, keep going.”

The second-most helpful trait on the road to success is also of great interest and that is knowing exactlyhow far it is that you have left to go. This aligns well with advice from one of the grittiest go-getters of all time, former brokerage bank president Sallie Krawcheck. In a recent article, “The 5 Real Reason to Hire a Financial Advisor,” she advises against seeking an advisor if the only help you are looking for is a way to try to beat the markets. Far better reasons to hire a financial advisor are: (1) to ask (and help answer) the most difficult questions, (2) to help you put a sound financial plan in place, (3) to help you better understand your risks, (4) to help you stick to your plan (there’s that grit issue again) and (5) to learn to recognize your own biases.

“This is a biggie,” Krawcheck writes, about biases; “many of us think we don’t really have any….which is exactly the point.”

Does that sound like anyone you know? Let’s consider one highly susceptible bias known as recency bias– which is the tendency to give recent experience more weight than it deserves in our decision-making process. Believe me when I say that I am thrilled at how well recent markets have rewarded those who have stayed the course through some remarkable risk-exhibiting markets.

Our Focus

I would be remiss in my advice if I did not now take the opportunity to remind you that recent returns, whether fantastic or foul, are merely blips on the radar screen which guide you toward your goals – the ones for which we’ve put your plans in place to achieve. While it is very rewarding to have had a profitable quarter or year, the true measure of success comes when you achieve your ultimate goals. So, yes, absolutely, you should enjoy the recent market gains… but remember, hang on to that grit because you will need it for the long haul.

The Quarter in Brief

It’s only the first quarter of the year and it has certainly been an eventful one. We woke up on New Year’s morning to the good and welcome news that Congress had passed some midnight tax legislation, specifically ATRA 2012, which offered some stability for the personal income tax situation of many Americans. Also in the first quarter:

  • Obama began his second term with a low key inaugural ceremony.
  • The $85 billion in budget cuts, aka the “sequester,” raised concerns about the potential to slow economic growth.
  • The Bureau of Labor Statistics reported that the unemployment rate fell from 7.9% to 7.7%.
  • The Federal Reserve’s Open Market Committee said that it will continue its bond purchases until the unemployment rate falls to 6.5% but has begun to explore options to wind down quantitative easing.
  • After several years as a drag on GDP, the recent data and outlook for the all important housing sector continues to improve. Home sale prices and housing starts are both trending higher; moreover, the expected increase in property sales will have broader implications for the U.S.banking sector.
  • Cyprus became the latest focus of market concerns about the Eurozone’s financial stability as bailout terms included a steep tax assessed on large bank deposits; the real concern is whether or not those terms will have established a dangerous precedent for other troubled Eurozone nations and their respective banking sector.


On a Personal Note

While the primary focus of my life has been work so far this year, I have made time for special events with family and friends. Passover was especially wonderful this year – it was the first Seder with my grandchildren asking the sixteen questions(that’s four grandchildren asking four questions each)! After three years of bridge classes, I’ve decided enough already and just want to sit back, relax and enjoy the game! Jamie loved her adventure vacation in Costa Rica and is imagining destinations for 2013. My long-promised vacation is still that… just a promise. Even so, I am content to lean-into my everyday pleasures and enjoy the lengthening days, local hikes and times with family and friends.

Stay Confident and Stay the Course,

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Klein Financial Advisors- Mid Quarter Update

Mid-Quarter Client Letter
February 14, 2013
It’s been a good run so far in 2013. On February 1, for the first time since October 2007, the Dow Jones Industrial Average closed above 14,000, and the S&P 500 Index returned 5 percent in January; its strongest new-year kick-off since 1997. While we all enjoy the breathing room, let’s shore up a subject we feel is critical to safeguarding your long-term investment experience: In good times and bad, there’s an art to making quality decisions, and it may not be what you think.
Among our roles as your advisor is to remind you (repeatedly) that the quality of your financial decisions contributes as much or more to your investment success as do the fleeting outcomes of hot or cold markets. In Carl Richards’ book, Behavior Gap, we are reminded of an important related insight:
“The outcomes of our decisions may vary. In fact, you can make a good decision and have a bad outcome. But sensible, reality-based choices are our best shot at reaching our goals.”
To illustrate, you could take your life savings to Las Vegas, bet it all on a lucky spin and strike it outrageously rich. Great outcome … to a horrendous decision. In contrast, you can maintain a low-cost, globally diversified portfolio that reflects your personal goals as well as the latest academic evidence on capturing market returns. Fantastic decision, even when market conditions deliver disappointing results.
This is when Klein Financial Advisors can offer tremendous value to you. Whenever you may be tempted off-course by undesirable outcomes — or, on the flip side, by random bursts of success — we want to help you objectively assess what, if any, adjustments might be warranted within your plans and your investments. Making confident, quality decisions toward your next best steps regardless of past-tense outcomes — that’s good advice any time of year. 
Stay Confident and Stay the Course, 

PS. I was inspired by President Obama’s State of the Union Address on Tuesday and his focus on investing in education, infrastructure, basic research and development and stabilizing Medicare and Social Security…an optimistic vision of a possible future.

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2012-2013: Looking Back - Looking Forward

New Year’s resolution-makers, here’s a handy tip: A team of international scientists, analyzing recent health data from more than 25,600 U.S. survey participants, concluded that people who read food labels weigh less than those who don’t (this is especially true of women participants, who averaged nearly 9 pounds less).
You’re probably asking yourself what has food got to do with finance? The answer is all about information and interpretation:

What you need: Your investment experience is improved by a sound philosophy and consistent exposure to meaningful, relevant facts. For example, in 2012 despite continued global economic uncertainty and political gridlock, stocks quietly rewarded investors with double-digit gains (see Market Statistics, below).

What you get:Advertising showcases a product’s most appealing features. If they’re there at all, the blemishes and boring, but important, details are buried in the fine print.

What you must know:There’s no law in our free market system against promoting what is popular, irrespective of how bad it might be for you. It is up to you (and your objective investment advisor), not the product provider, to make informed choices that are in your best interests.
How we help: We live in a world of up-and-down markets in which useful financial disclosures are often opaque to non-existent; and the next great upset – the next fiscal cliff or its equivalent – seems to forever threaten our best-laid plans. Our greatest role is to provide you with solid, steady, evidence-based advice. Like an objective nutritionist for your wealth, it is our privilege to champion your best financial interests alongside you, help you read the fine print and chart out a healthy, happy lifestyle that helps you live the life you were meant to live.

We look forward to remaining at your side throughout 2013.

The Year in Review

Resilience in the face of adversity seemed to have been the theme for 2012. Hurricanes that shuttered Wall Street for two days and cut oil production, the threat of a Greek exit from the Eurozone, Europe’s recession, slowing Chinese growth and uncertainty about elections in the U.S. and abroad slowed the progress of the global economy but – importantly – didn’t bring it to its knees.

Over the year, debt-related news out of Europe continued to play a major role in global bond and equities markets. Despite a few cracks in the French/German alliance, the Eurozone’s policymakers finally appeared more willing to take joint action to enforce fiscal discipline; that’s good news because clearly the European Central Bank cannot do it alone. In exchange for new austerity measures, Greece got a reprieve on its debt reduction deadline which kept a default (and ensuing market chaos) at bay. Despite growth that went from explosive to “merely” (but still enviously) robust, China chose new leadership for the next decade which are expected to favor existing fiscal and monetary policies.
In the U.S., economic indicators showed that the economy is resilient; albeit not surging, signs are positive in most important areas. Unemployment ended the year at 7.7%, GDP was 3.1% on an annualized basis in Q3 and consumer inflation was only 1.8% annualized. The all-important housing sector showed signs that a sustainable recovery is underway with home prices up 4.3% over a year ago and growth in housing starts, construction spending and building permits.
But 2012’s resilience could be tested this year. Though a last-minute bargain averted a full-scale plunge off the fiscal cliff, headwinds could pick up as Washington’s feuding factions address the debt ceiling and spending cuts which are still scheduled to begin in 2013.

On a Personal Note

The new year is off to a bright start for me and Jamie. The holidays were brightened by having Adam and his family nearby… really, what’s better than holidays and little children? I am committed to my fitness goals – I’m working with a personal trainer, riding my new bike, walking and doing yoga. Jamie’s Costa Rica adventure was wonderful… a great way to celebrate a milestone birthday. Looking ahead to 2013, I plan to take a real vacation… not that long weekends in Tahoe, NYC, Austin, TX and Ashland, OR weren’t grand but in 2013 there will be an authentic trip to somewhere in the world that I’ve never been. I’m thinking of a walking trip… your suggestions for destinations and tour operators would be welcome.

Stay Confident and Stay the Course,
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Mid Quarter Client Letter and Sandy Update

Hurricane Sandy is a disaster. On that, there is no debate. Each of us is either in the thick of it ourselves or have close family and friends who are. All of us face a swarm of questions in the weeks and months ahead: Could we have been better prepared? Is it global warming or the way the world turns? How (and with what funding) will we rebuild our communities, our families … ourselves? What comes next?


If we can offer comfort at this time, it might be a brief reminder that there is at least one big, burdensome question from which we have released you: You need NOT wonder what trades you should be making in your portfolio in reaction to Sandy.


As you know from our ongoing conversations, your portfolio should already be positioned to capture the overall expected growth in our markets. It’s also already diversified to dampen as much risk as possible from news like Sandy. Any changes to your holdings should be based on your personal goals and risk tolerances, notin reaction to current events. Hurricane Sandy, as awful as it is, is no exception to these rules guiding your disciplined investment strategy.


Talking about a moving target anyway! We’re drafting this communication hours after the New York Stock Exchange reopened (not to mention shortly following Apple’s abrupt change-in-leadership bomb). At a glance, the market’s visual chart looks like the downhill slope of Mount Everest, with dripping red numbers. To venture out in these sorts of conditions would seem ill-advised to say the least, whether discussing the weather or the markets.


That’s not to say many investors won’t try anyway. Even the venerable Wall Street Journal is sporting a live blog of the market opening, “keeping you abreast of which stocks are bouncing, which ones are falling and how the whole operation goes off.” The blog included a 6:10 a.m. call to action: “Bring on the car pools, crank up those generators and let’s get trading!”

We can’t help but love the indomitable spirit of my home state of New Jersey, New York and the US in general … but seriously? Let’s not “get trading.” Not unless your personal goals or risk tolerances have changed. If that is the case (and it may well be if you suffered significant damages from the event), please contact us at your earliest convenience so we can discuss a sensible revised wealth plan for moving forward. Either way, if we’ve not already done so, we will be reaching out to you in the near future, to learn how you are doing and how we can help.




PS. I am happy to report that those nearest and dearest to me, especially my Uncle Joe, have weathered the storm. Until the electric grid is restored, some are “powerless”, but gratefully, none are homeless.

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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >