Wealth Management Blog | WrapManager

Seton McAndrews

CFP®, Vice President Investments

Pros and Cons of Dividend Investment Strategies

Posted by Seton McAndrews | CFP®, Vice President Investments

December 13, 2017

Pros and Cons of Dividend Investment Strategies

Should an investor consider owning dividend stocks? If so, why? And when?

In this piece, we delve into the realm of dividend stock strategies. We’ll look at why dividend stock strategies are important, how they can fit into a broader investment strategy, and why investors may want to consider them now.

What is a Dividend Investment Strategy?

Let’s start with the basics. Generally speaking, a dividend investment strategy is an investment strategy tailored to invest in dividend-paying companies. Asset managers who specialize in owning dividend-paying stocks often have different criteria for the types of companies they want to own. For example, some managers may want to own companies that pay a healthy size dividend, while others may care more about the company having a history of increasing their dividend payments over time. Or, perhaps the manager is looking for companies with a long history of consistent dividend payments versus companies that only recently started paying dividends to shareholders.

How Your Wealth Manager Can Help You with Major Life Changes

November 22, 2017

Life changes come in many forms. Some are joyous occasions—marriage, the birth of a new child, a job promotion, sending a child to college, selling or starting a business, or one of our mainstays, retirement. Other times life changes are more challenging. These might include the passing of a family member, an unexpected illness, divorce, or sending a child to college. Yes, we purposely mentioned college twice! (While wonderful, we know college can be very expensive for parents and sometimes a heartbreaking transition). [+] Read More

Tax Prep: Gifting Strategies

November 1, 2017

With less than two months left in the year, time is running out to take actions that will apply to the 2017 tax year. By ‘actions’ we mean things like charitable giving, tax loss harvesting, and in the case of this post, gifting. Gifting and estate planning can be complex undertakings, due to the myriad of rules, strategies, and even loopholes involved. But the concept of gifting by itself can be rather simple: in 2017, you can give any number of people (it doesn’t matter how many) up to $14,000 in cash or other property without triggering any gift tax. If you include your spouse in the gift, that number jumps to $28,000. An example with actual numbers should underscore just how impactful gifting can be. Say for example that you and your spouse make annual gifts of $28,000 to each of your three children and seven grandchildren. Over a period of 5 years, you will have gifted $1,400,000 – which also reduces the value of your estate for tax planning purposes by $1,400,000. Assuming the federal estate tax rate of 40%, that could mean saving $560,000 in estate taxes (40% x $1,400,000). [+] Read More

Do You Have a Retirement Income Plan? Most Retirees Don’t

October 11, 2017

The key word in the title of this article is “income.” Many retirees believe they may have a retirement plan (at least generally speaking), but when it comes to having a retirement income plan, the numbers don’t look so good. According to new research from LIMRA Secure Retirement Institute, “only 35% of retired clients and 38% of pre-retirees who work with an adviser have a formal written retirement income plan (emphasis ours).”1 Do you have one? Not having a formal, written retirement plan and retirement income plan may decrease the confidence many retirees feel about having enough money in retirement. Unfortunately, with decades of retirement education and growth in the advisor business, retirees are not getting much more confident about retirement security. According to the Employee Benefits Research Institute, in 1993, only 18% of workers felt “very confident” about being able to afford a comfortable retirement. Fast forward to 2016, and there are still only 18% of workers who feel “very confident.”2 When considering that the Dow Jones Industrial Average has risen more than 500% over the period from January 1993 to December 2016, one would think that retirement confidence would be higher. But something is clearly amiss. [+] Read More

The Financial Risks of Cognitive Decline

September 20, 2017

When it comes to investment planning and setting up plans for life in retirement, it would be wonderful if we could just focus on growth, investment, spending, and financial security for you and your family. Those are the exciting features of planning that – while not always easy to work through – are challenges that are rewarding to solve. But proper investment planning should also include addressing issues that are often difficult for families to discuss. One of those issues is cognitive decline. According to State Street Global Advisors, only about 39% of investors believe they have a suitable plan if their decision-making ability becomes diminished. That number may be low because of the following statistic: while 85% of advisors report encouraging their clients to have a plan in case of cognitive decline, only 41% of investors think they actually need one. [+] Read More

Concerned About the Equifax Breach? Here’s How to Freeze Your Credit

September 11, 2017

Over the past few days we’ve had many clients mention their concerns about the Equifax data breach, which got us talking about how to protect your credit if it’s possible your personal information is at risk. And, as the number of impacted Americans continues to grow, it’s worth knowing what options you have to protect yourself from fraud. Equifax built a Cybersecurity Incident website for you to see if your personal information has been impacted - check to see if your security was impacted here. While some people are considering Equifax’s own credit monitoring service, another option that you have is to freeze your credit across all three major reporting agencies. But what does that mean, and how do you do it? A Quick Explanation Freezing your credit basically places restrictions on who can view your credit report. Once your credit is frozen only yourself, existing lenders, or their debt collectors will be able to see it, according to federal regulators. (Government agencies carrying out a search warrant or subpoena are still able to access your credit records as well.) [+] Read More

How “Familiarity Bias” May Impact Your Investment Decision-Making

July 18, 2017

It’s no secret that investors have a tendency to "get in their own way” when it comes to making investment decisions. As we have written before, you may not be your own best financial planner. The idea that investors often make emotional or ill-informed decisions is not an attribute that is just widely-known and accepted—there is actually an entire field of research devoted to it. This field of research is known as Behavioral Economics or Behavioral Finance, and people in the field study “inherent biases that plague individual investors.” These biases are often ones that are difficult for individual investors to come to terms with and overcome. Robert Stammers, the Director of Education for the CFA (Chartered Financial Analyst) Institute, frames the role of investor behavior on decision-making into three behavioral biases: overconfidence, familiarity, and anchoring.1 We will focus on the familiarity bias here. [+] Read More

What is Probate? Why & How to Avoid It

June 22, 2017

Back in mid-May, I wrote an estate planning article about the late artist and global music phenomenon, Prince. The objective of the piece, amongst other things, was to bring to light the problems, expenses, and hardships that can result when a high net worth individual does not adequately prepare an estate plan. In Prince’s case, he did not even have a last will. What followed in Prince’s case was nothing short of troubling. More than 45 people came forward to the court claiming to be related to Prince as a spouse, child, sibling, or some other relative. Prince’s estate then spent over a year in probate court, and at the end of the day it has been reported that his $200 million estate is expected to be cut in half by federal and estate taxes. Can you imagine paying $100 million in taxes? It’s unfathomable! In all likelihood, this outcome could have largely been avoided with some sound financial and legal advice during Prince’s lifetime. [+] Read More

Chasing Heat? You May Get Burned.

June 7, 2017

The Information Technology sector has been on a roll so far in 2017. The returns for the sector year-to-date are nothing short of eye-opening: as of May 30, Information Technology has returned just over 20%, which puts it fairly far ahead of the next best performer, Consumer Discretionary (+11.52%). By comparison, the broad S&P 500 index is up a much lesser +7.7%, which while strong is still pretty modest compared to technology’s run.1 This strong performance has some investors scrambling to beef-up their investment portfolio’s technology holdings, in an effort to ‘join the party’ so to speak. But investors should take pause before rushing to buy more technology stocks. Doing so would essentially mean “chasing heat,” which is just another version of market timing– a tactic that is not necessarily advisable for the long-term investor. [+] Read More

Leaving a Legacy That Spans Generations

May 16, 2017

When most people think of the late artist Prince, they think about a global music phenomenon with unforgettable pop hits and an unforgettable persona. That’s how he should be remembered. But what many people do not realize is that Prince’s fortune – the estate he worked tirelessly to create over time – is currently being battled out in the courts amongst a slew of relatives, “alleged heirs,” lawyers and advisors. Prince passed away over a year ago (April 21, 2016), yet his estate is still very much unsettled.1 The reason for the ongoing court battles and legal headaches? Prince didn’t have a will. [+] Read More