Aggregated Data Stream Enables Advisors to Offer Holistic Wealth Management

BOSTON — May 3, 2012 – ByAllAccounts, the leader in account aggregation, and Portfolio Pathway, a portfolio management software solution company, today announced a partnership to provide Portfolio Pathway users with aggregated client data from thousands of financial institutions, across all their accounts. This unified view will enhance advisors’ ability to provide wealth management advice based on all of their clients’ assets, including variable annuities, brokerages, ETFs, trusts, retirement accounts, and more. This addition to ByAllAccounts’ growing list of partnerships further expands their ability to provide aggregated data to wealth management professionals.

The partnership combines daily client balance, holding, and transactional information through ByAllAccounts with the portfolio reporting capabilities of Portfolio Pathway. Using this combined solution financial advisors can help their clients better manage risk and achieve their personal financial goals.

Registered investment advisor David Gratke, of Gratke Wealth in Portland, Ore., has been using the ByAllAccounts account aggregation service with Portfolio Pathway. “For the first time, I have been able to provide truly holistic advice for my clients by using this solution,” said Gratke. “It has even allowed me to work with pre-retiree clients, providing – and billing for – advice on 401(k)s. This has meant better service for my clients and improved profitability for my business.”

Portfolio Pathway serves registered investment advisors, TAMPs and Broker Dealers. “Our users want to be sure that they have access to the data they need to serve their clients,” said Dave Miller, CEO of Portfolio Pathway. “Through this alliance with ByAllAccounts, we can provide extensive reporting to our advisors giving them the ability to manage their clients overall assets and allowing them to be compensated for that level of service.”

“In this post 2008 era, investors want to be better informed and more involved in their financial decision making,” said ByAllAccounts’ President and CEO James Carney. “Portfolio Pathway is addressing this need by providing a unified view of assets across a household, enabling their advisors to help clients make more informed decisions about preserving or growing their wealth.”

For a full list of ByAllAccounts’ portfolio management and reporting systems integration, view its partner listing.

About ByAllAccounts, Inc.
ByAllAccounts, the financial advisors’ choice for account aggregation since 1999, is a service that retrieves, enriches and consolidates reconciliation-ready account data from any custodian. ByAllAccounts’ patented aggregation engine, through which hundreds of billions in assets flow daily, aggregates all client account data — from any source — within an advisor’s wealth management platform or trust accounting system for a truly comprehensive view. Thousands of advisors rely on ByAllAccounts to save administrative time and costs, mitigate risk associated with having incomplete information and grow revenues through client referrals and new business development. ByAllAccounts integrates seamlessly with all of the most popular wealth management platforms and compliance software solutions. For more information, visit www.byallaccounts.com.

About Portfolio Pathway
Portfolio Pathway is a leading provider of web-based portfolio management reporting and back office tools for financial advisors, wealth managers, TAMPs and broker dealers. This next generation system encompasses performance reporting, account aggregation, a flexible billing and payout module, composite reporting, portfolio modeling and a branded client portal. For more information, visit www.portfoliopathway.com.

Yet, I do not read on any regular basis what the impending ‘fiscal cliff‘ will potentially do to dividend growth stocks. The ‘fiscal cliff’ of course being that about 1/3 of US Tax code is set to expire at the end of this year, 2012. If Congress were to do nothing (I won’t touch that) then it would imply an additional $7 trillion (with a ‘t’) in new taxes or lost revenue. Estimates are that it could negatively impact US GDP around -2% to -3%. The US economy is hardly in a position to endure that hit with sub-three percent annual GDP growth right now.

‘back to our regularly scheduled programming-The Dividend Growth Stock story’

Because of Central Bank ZIRP, we now have many people in America who have historically been ‘savers’ now have become (well, have been forced to become) ‘investors’ as  financial repression has squashed their fixed income portfolio cash-flows. Question, are these individuals capable of withstanding a large decline in their dividend growth stock portfolios? I say no.

Note the sage insights below. This topic has been on my mind for some time, and has thus motivated me to opine as well.

The Looming U.S. Fiscal Cliff

If the tax cuts lapse, the impact on the stock market could be significant, because the top federal dividend tax rate would rise from 15% to 43.4% in 2013, while the tax rate on capital gains would increase from 15% to 20%. (is this not a 189% increase in the dividend tax rate and a 33% increase in capital gains tax rates?-D Gratke)

In addition, investors need to assess what news is priced into markets, especially for high dividend paying stocks.  Based on HOLT’s analysis, the derived market discount rate currently is elevated, but not super-high.  If no tax increase is priced in and one occurs, HOLT estimates the downside for the broad market could be in the vicinity of 10%, with high dividend paying stocks faring somewhat worse.

If this assessment is correct, the question boils down to whether an investor is prepared to tolerate a 10%-15% principal hit to a dividend portfolio in the event the Bush tax cuts are allowed to lapse.

To read the full article go here. Source: Western & Southern Financial Group.

I don’t know of too many asset classes that would not ‘re-price’ (go down in value) given significant increases in the tax rate being applied to their present and future cash flows. As the phrase goes… ‘I’m just saying’.

Might the possible decline in dividend growth stocks be exacerbated by ‘the new investor’, the historic saver, fleeing this asset class at the sign of the first monthly statement posting -5% or more loss in principal value?

I think so..

Thanks for reading.

For some time Wall Street has ‘chosen’ to use operating earnings (a larger figure) rather than net income (a lower figure) to calculate p/e ratios. Why? The more ‘official’ response is that Wall Street doesn’t want to penalize companies for all those one-time write-offs that affect net income. Well, those ‘one-time’ write-offs have become all too frequent to be anything but ‘one-time’.

If a company is making bad decisions and has to write-down earnings, I want to know about that and see that priced into the p/e ratio for the company. Note the highlight below from creditewritedowns.com

Reported (GAAP) earnings are calculated in accordance with Generally Accepted Accounting Principles and are the official earnings required to be submitted to the SEC. On the other hand, almost all companies, when reporting earnings in their press releases, headline so-called “operating earnings” that are also used by most Wall Street analysts. These are also the earnings picked up by organizations that compile the widely-used consensus earnings forecasts. Operating earnings throw back into earnings a large number of expenses considered by management as non-recurring, including such items as severance pay, plant closings, plant start-ups, inventory write-downs and any number of other expenses that corporations may want to write off in order to make earnings look better. In the past 15 years companies have become a lot more creative about what items they can write off, and now a large number of expenses that used to be considered normal are called unusual even when these write-offs are taken year after year.

Another problem is applying a 15 multiple to operating earnings in order to estimate fair value of the S&P 500. The widely-used multiple of 15 times is based on long-term studies from the mid-1920s to the late 1990s showing that number to be the average multiple over a long period. But the earnings results used in those studies were trailing GAAP earnings, not forward-looking operating earnings, which did not come into vogue until the mid to late 1980s. Since operating earnings are always higher than reported earnings, the multiple used on operating earnings should be substantially lower than the multiple applied to reported earnings.

So, what is fair value in these markets? Is today’s market fairly priced?

To read the full article ‘Why Valuation Doesn’t Insure Against A Significant Market Decline‘ go here. Source: Comstock Partners

In this article I touch upon numerous issues regarding the bond market and investing in bonds during a rising interest rate environment to include:

• 25-Year Historic Low Interest Rates
• Recent Interest Rate rise causes 10-yr U.S. Treasury to lose about 5% of its value
• What does $9 trillion in global Central Bank Policy do to bonds/interest rates?
• Alternative income ideas vs. ‘conventional’ bond portfolios

To read the full article, go here

In this article I touched upon numerous issues regarding long-term care coverage to include,

Who Will Take Care of You?

• Family
• Public programs
• Personal Assets
• Insurance

Do you have a A Long-Term Plan

1. Do you want to stay at home? If so, what home modifications, such as a ramp or a emergency response system (a radio that is linked to help), are needed?
2. What kind of medical care facilities are needed, if staying in the home is no longer an option? Some assisted living facilities may have long waiting lists.
3. Do you have an up-to-date will? What about a durable power of attorney, which grants a designated individual the authority to make financial and legal decisions? A living will, detailing preferences for end-of-life care? A power of attorney for health-care decisions? Where are copies of important documents kept?
4. What if you become widowed? How would circumstances change?

To read the full article go here

Thanks to Pinterest, I now have a wonderful platform for cataloging these various charts and graphs for easy review, reference and reflection.

Gratke Wealth on Pinterest: http://pinterest.com/gratkewealth/

Source: DShort.

Feb 02, 2012 — The U.S. Department of Labor’s (DoL) Employee Benefits Security Administration (EBSA) issued a final rule on 408(b)(2) fee disclosure Thursday. —

The DoL also announced a three-month extension to the rule’s effective date, meaning service providers must be in compliance by July 1, 2012 for new and existing contracts or arrangements between Employee Retirement Income Security Act (ERISA)-covered plans and service providers.

“As President Obama has said, we’re at a make or break moment for the middle class and those trying to reach it,” said Secretary of Labor Hilda L. Solis.

“What’s at stake is the American value that hard work pays off. The common-sense rule that we are finalizing today will shed light on the true costs of 401(k) accounts and ultimately reward those working hard and saving for retirement.”

Solis continued, “This rule, and its companion participant-level fee disclosure rule, will greatly increase the level of transparency in retirement plans. When businesses that sponsor retirement plans, and the workers who participate in those plans, get better information on associated fees and expenses, they’ll be able to shop around and make informed decisions that will lead to cost savings and a larger nest egg at retirement.”

The DoL’s rule requires service providers to furnish information that will enable pension plan fiduciaries to determine both the reasonableness of compensation paid to the service providers and any conflicts of interest that may impact a service provider’s performance under a service contract or arrangement. It requires disclosures of direct and indirect compensation certain service providers receive in connection with the services they provide.

The rule applies to those service providers that expect to receive $1,000 or more in compensation and provide certain fiduciary or registered investment advisory services, make available plan investment options in connection with brokerage or recordkeeping services, or otherwise receive indirect compensation for providing certain services to a plan.

The DoL also announced that in the near future it intends to publish for public comment a separate proposal that would require service providers, in addition to providing the required fee and investment expense information, to furnish a guide or similar tool to assist plan fiduciaries in identifying and locating the potentially complex information that must be disclosed and which may be located in multiple documents.

The DoL said the three-month extension of the effective date of the final rule was provided to allow service providers sufficient time to prepare for compliance. Service providers not in compliance as of July 1, 2012 will be in violation of ERISA’s prohibited transaction rules and subject to penalties under the Internal Revenue Code. (see DoL Extends Applicability Dates for Fee Disclosure Rules).

The effective date of the final rule works in conjunction with the compliance date of the department’s participant-level disclosure regulation (29 CFR § 2550.404a-5), which requires plan administrators to give workers who direct their retirement accounts in 401(k)-type plans easy-to-understand information to comparison shop among the plan investment options available to them.  Due to the extension of the effective date of the final rule announced Thursday, plan administrators for calendar year plans now must make the initial annual disclosure of “plan-level” and “investment-level” information (including associated fees and expenses) to participants no later than August 30, 2012, and the first quarterly statement (for fees incurred July through September) must be furnished no later than November 14, 2012.

Plan sponsors and service providers with questions about the final rule can contact EBSA’s Office of Regulations and Interpretations at 202-693-8500.

A fact sheet on this regulation is also available on EBSA’s website at http://www.dol.gov/ebsa/newsroom.

Tara Cantore

“The benchmarking process creates the standard for plan sponsors and service providers to follow. It serves as the window into the reasonableness of a 401(k), helps to gauge the plan’s efficiency, determines if the fees are in line with their peer group and identifies what can be done to make any fixes, if required.”

… Tom Kmak, CEO and Co-Founder, Fiduciary Benchmarks, Inc.

Checklist to begin benchmarking will include:

• Plan Assets
• Number of Participants
• Years the plan was bid or last reviewed
• Company industry
• Plan type
• Uses auto-enrollment
• Offers employee match
• Percentage of plan assets in indexed funds
• Percentage of plan assets in managed plans

As pending 2012 401k fee disclosure legislation comes to fruition, and fees are disclosed first to plan sponsors and then later to participants, independent 401(k) plan benchmarking is the best way for the employer to gauge the success of his/her retirement plan.

Source: DC Focus, Summer 2011, Blackrock, Inc.