It’s been a busy three months. During that time, we added several key staff members—always with the goal of improving our customer service and support. We hired Chief Information Officer Joe Caputo so that we can utilize the best technology… Read More
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Watch Out for the Froth in the High-Yield Bond Rally
Two-thousand-and-twelve has been an exceptional year for below-investment grade bonds as investors sought higher returns in a record-low interest rate environment. The Barclays High-Yield Bond Index—a proxy for high-yields—posted a 12.09% return for the first nine months of the year,… Read More
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What Our New NPS Survey Means to You
Client satisfaction is the most important metric by which we measure our success. To better understand our clients’ expectations, we recently conducted our first Net Promoter Score (NPS) survey. We are pleased to share the highly positive results with you…. Read More
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What’s Happening at BWFA
BWFA Welcomes Three New Staff Members Sandy Hornor joined BWFA as Director of Sales. He has over 22 years of experience in the financial services industry, including leadership positions at Old Mutual Investment Partners, New York Life Investment Management, and MFS… Read More
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New BWFA Summer Hours
New BWFA Summer Hours 9 AM-5 PM Monday-Friday In Effect from Memorial Day to Labor Day Offices Closed for Federal and NYSE Holidays
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Beneficiary Designations Are Just One of Many Planning Complexities
Four of Douglas Fairbanks, Sr.’s best friends were told they would be remembered in his will, so they were surprised when the document did not mention them. Sixty days after his father’s death, Douglas Fairbanks, Jr. produced an envelope containing… Read More
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Investment Themes for a Slow-Growth Economy
The annualized growth rate for the United States economy was approximately 2% for the first half of this year. Given the massive amounts of monetary and fiscal stimulus from the federal government, this growth rate is considered anemic at best,… Read More
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Considering Taxes in Retirement Location
Everyone knows the story of the Titanic. The “unsinkable” ocean liner struck an iceberg at 11:40 p.m. on April 14, 1912, and sank before dawn on the next day, resulting in the deaths of 1,517 people in one of the… Read More
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BWFA at 25: Serving You
I first began to think about starting BWFA back in the mid-1980s, when I was working in banking. I noticed several trends that I thought might create an opportunity for a new type of financial services firm: Traditional pension plans… Read More
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What’s Happening at BWFA
New Staff Member at BWFA BWFA welcomes new employee, Alece Drnec, CPA, who has joined our tax team as an accountant and tax planner. Alece has worked with Ernst & Young, The Rouse Company, and others. She and her husband,… Read More
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The State of Estate Taxes
Legend has it that the following exchange took place between F. Scott Fitzgerald and Ernest Hemingway: Fitzgerald: The rich are different than you and me. Hemingway: Yes, they have more money. Maryland Estate and Inheritance Taxes Hemingway probably… Read More
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Addressing Investor Trepidation
At any given moment, investors are confronted with a vast array of economic and political issues that affect the global investment landscape. These often dire events create market uncertainty—which, in turn, leads directly to investor apprehension. Based on our conversations… Read More
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Potpourri of Tax Changes
This article is a potpourri of tax changes that are affecting many of our clients. We’ve divided the changes into two main categories: 1) those affecting retired clients; and 2) those affecting our young accumulators. Some of these changes occur… Read More
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Tax Reporting Just Became Easier
Starting with stock sales made this year, there will be a change in the way that brokers (such as TD Ameritrade) are required to report the transactions. Investors will receive more information, which will make recordkeeping and tax accounting easier…. Read More
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QE 2 — Quantitative Easing, Second Round
What is Quantitative Easing (QE 2), and how does it work? Here is how we define it: An attempt by the Federal Reserve to reduce longer-term interest rates by buying longer-term government securities in the market for cash (which the… Read More
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Big Money Mistakes
Actor Jack Lemmon once found Rita Hayworth working her way through a large pile of letters by tearing them up-unopened! “Stop!” he cried, mortified. “There may be checks in there.” “Oh there are,” Hayworth nonchalantly replied. “But there are also… Read More
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The Overseas Investments You Do Not See
Clients often ask us how much of their money is invested in foreign countries. Usually, they have heard that economies in countries such as China, India, or Brazil are growing faster than the U.S. economy, and they want to make… Read More
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BWFA Already Surpasses New IRS Standard for Tax Preparers
It’s about time. Beginning in 2011, all paid tax preparers will need to register with the IRS and will be subject to a standardized set of educational, training, and ethical requirements. As an Enrolled Agent, I support the higher standards… Read More
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Insurance Info for Local Seniors
The Senior Health Insurance Assistance Program (SHIP) in Howard County provides advice on Medicare and other health insurance issues for county residents over the age of 50 and for Medicare beneficiaries of any age. SHIP also offers introduction-to-Medicare presentations. Call… Read More
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Improving Your Finances in a Low-Interest-Rate Environment
Who hasn’t noticed how low interest rates have fallen? If you haven’t refinanced your mortgage several times over the last few years, I’d be surprised. The average rate for a new 30-year fixed-rate mortgage fell to 4.36% at the end… Read More
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Pensions, Loans and Trusts in a Low-Interest-Rate Environment
Before becoming a comedian, Jeffrey Jena worked as a grade-school teacher. “Children are stupid,” he says. “That’s why they’re in school. I’d lecture for an hour about percentages and interest rates, and at the end I’d ask one simple question:… Read More
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Stocks vs. Bonds in a Low-Interest Rate Environment
It’s no secret that bond portfolios have outperformed stock portfolios through August of this year. Stocks have performed poorly as the economy weakened in the second and third quarters, while bonds have benefitted from investors reaching for yield and safety…. Read More
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Lower Mortgage Interest Rates Could Mean Higher Taxes for You
Lower mortgage interest rates are good news for homeowners who are seeking to refinance and for those who are looking to purchase a home. Lower rates add flexibility to the negotiation of loan terms, mortgage interest, points, financed amount, and… Read More
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Attention Students: You Might Need to File a Tax Return
Alert to college and high school students working a summer job. If your total income goes over $5,700 for the year, you’ll need to file a tax return for 2010. If you earn less than $5,700 but also have investment… Read More
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Goldman Sachs: Brokers vs. Fiduciaries
The Goldman Sachs story is arguably the most important story on Wall Street because it calls into question the nature of how “markets are made” and the conflicts that exist between brokers and their clients. Brokers operate under a “suitability”… Read More
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Protecting Your IRA from Creditors or Lawsuits
Though born the son of slaves and reared by his master, George Washington Carver earned a degree in agriculture in 1896 and worked for the Bureau of Plant Industry at the U.S. Department of Agriculture, specializing in the industrial uses… Read More
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New BWFA Summer Hour
New BWFA Summer Hours 9 AM-5 PM Monday-Friday In Effect from Memorial Day to Labor Day Offices Closed for Federal and NYSE Holidays
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TIPS for Protecting Your Investments from Inflation
Will our government’s massive, potentially out-of-control spending and stimulus programs eventually lead to high inflation? Many of our clients have asked this question and want to know what BWFA will do to protect their investments against this threat. We think… Read More
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Budget Shortfalls at the State Level Can Have Impacts on Individuals
Many people who live in the Mid-Atlantic region consider moving to lower-cost areas when they retire. BWFA has clients who have done so. These days, with the financial pressures on individual states, it is worth considering both the tax burden… Read More
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Staying Strong for 20 Years
Everyone keeps telling us that the strength of a business is measured by its profits. In college, the professors called it “maximizing the value of the firm.” Consultants today select the “top” firms in our industry based on the size… Read More
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Retire Now?
What did the late King Prajadhipok, the last absolute ruler of Siam (now Thailand), do to prepare himself financially for life after his anticipated overthrow in the early 1930s? He took out unemployment insurance with French and British insurance companies…. Read More
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BWFA’s Approach to Risk Management
The Merriam-Webster Dictionary defines risk as, “the chance that an investment will lose value”. This “chance of loss” is what the professional portfolio managers at BWFA strive to manage on an ongoing basis. Before delving into the intricacies of BWFA’s… Read More
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Congress Proposes Tax on Investment Transactions: Bad News for Mutual Funds
In December 2009, U.S. Sen. Tom Harkin (D-Iowa) introduced legislation that would create a financial transaction tax on purchases and sales of securities in the U.S. markets. U.S. Rep. Peter DeFazio (D-Oregon) proposed similar legislation in the House. Mutual funds… Read More
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Taxes Take a Bite—Would You Believe 43% of Your Taxable Income?
Most of us think we pay a lot of taxes, probably too much, but what does your total tax burden look like? Of course there is state and federal income tax, calculated and paid now at tax time, but there… Read More
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What Is Going On With Estate Tax Laws?
Last week, our client, Early Retiree, heard that estate tax laws were changing in 2010, and she called S. Tate Planner, to discuss the new law. The following is a transcript of the conversation. Is it true that there is… Read More
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Learning from People Who Know
One of the great things about my job is that I get to travel around the country and listen to very smart people who know things most of us don’t about our economy, the financial markets and the politics that… Read More
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The Taxman Cometh?
“Anyone who says businessmen only deal in facts, not fiction, has never read old five-year projections.” ~ Malcolm Forbes, Forbes Magazine The financial plans created by BWFA project our clients’ income and expenses many years into the future. Unfortunately, sometimes… Read More
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Staff You Should Know
Mike Couch, CFP® Mike joined BWFA’s Tax Services team in 2008, and he has since added responsibilities in planning and investments. He is a Certified Financial Planner®, with experience in addressing the needs of high-net-worth individuals. Mike’s previous experience includes… Read More
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The BWFA Advantage
We are often asked about how BWFA has become one of the most successful Fee-Only financial planning firms in the Mid-Atlantic. What’s our advantage, our secret? Our “secret” isn’t really a secret: Our clients make us a better firm. Because… Read More
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Saving Tax Dollars on Your Roth Conversion
One of the “hot” tax topics for 2010 is the Roth Conversion. Beginning in 2010, Congress will permit anyone, regardless of income level, to convert money from retirement accounts and traditional IRAs to a Roth IRA. Much has already been… Read More
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Tax Preparation Checklist
Personal Data Social Security Numbers (including spouse and children) Child care provider: name, address, and tax ID or social security number Alimony paid: name and social security number of former spouse Employment & Income Data W-2 forms for… Read More
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Staying On Top Of Our Game
Many professions require that practitioners complete ongoing education on a regular basis. The financial planning profession is no exception. The major financial planning organization that BWFA belongs to, the National Association of Personal Financial Advisors (NAPFA), requires that its members… Read More
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Save the Date
Are you Really Ready for Retirement—It’s not just about your wallet! Thursday, November 12, 2009, 7 – 9 p.m. Parsons Auditorium at the Applied Physics Laboratory in Laurel, MD 20723 Mark your calendar for this special program! Learn about… Read More
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Should I Convert to a Roth IRA?
In January 2002, the Coen brothers made their first foray into Super Bowl advertising by directing a commercial for H&R Block. Why did they do it? “We have always been fascinated with the mysteries of the tax code,” the brothers… Read More
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When the Experts Are Mistaken
Understanding the financial marketplace is a critical part of a portfolio manager’s job, and listening to experts is one of the ways we gain important insight into what is going on. Of course, we at BWFA take any comment from… Read More
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It’s Easy to Start a Business of Your Own
Over the years, many of our clients have started small businesses. This may have come about as a result of an offer through the company they worked for, or it may have been the realization of a long-time personal goal…. Read More
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Show Me the Fees
Igor Stravinsky was once ordered by an airport official to pay a surcharge for excess weight. When the composer vociferously expressed his annoyance, the official endeavored to explain the charge. “I quite understand the logic of it,” Stravinsky interrupted. “What… Read More
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We Want to Hear from You … in the Good Times and the Bad Times
Often we hear from clients when they receive good news such as inheriting money, getting a large bonus or earning a major job promotion. However, we also want to hear from clients when the news is not so good, such… Read More
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Lessons Learned from the Recent Market Collapse
The 38.5% drop in the S&P 500 during 2008 and the further drop of 25% by March 9, 2009 have tested the tolerance for risk of individual and institutional investors alike. This has been the worst stock market decline of… Read More
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The Biggest Tax Story Ever
In all well-run households, we make decisions about what we can afford and what we cannot afford. When we overspend at home, we live with the consequences. But when our elected officials overspend public money, they gain votes. This is… Read More
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Your Perspective About Us
Even though the stock market was reaching lows for the year back in November 2008, we decided to go ahead with our “one question” survey to our clients about the quality of our services. We received valuable feedback. If you… Read More
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What’s Happening at BWFA
Susan Frillman has joined BWFA as operations manager. She oversees the account opening process, reconciles daily trades, manages billing, coordinates check and electronic disbursements, and generally keeps our back office working smoothly. She’s always available to help you navigate TD… Read More
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How Safe Is Your Pension?
We are well aware of how declining stock prices affect our investment portfolios. However, little attention has been paid to how the recession is affecting pension plans, even though most pensions hold risky investments, such as stocks and real estate,… Read More
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Linking Corporate Governance and Corporate Financial Performance
One of the casualties of the recession and stock market plunge has been investors’ confidence in the integrity of the public equities markets and the companies they represent. It’s no secret that management of public companies does not always act… Read More
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Your Largest Expense in Retirement
What is your largest expense in retirement? Is it the one you thought it would be? Our newsletter editor brought to our attention a survey done by the Spectrem Group in August 2008 for retirees age 70-75 who have about… Read More
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What You Should Expect From Your Advisor
Disappointment occurs when you expect one thing and get something else. Disappointment in the service we receive from businesses occurs all too frequently these days. So, what should you expect from your financial advisor? Here are the basics: Your advisor… Read More
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Retirement Planning in Turbulent Times
On June 9, 1978, Bob Specas attempted to topple 100,000 dominoes at New York’s Manhattan Center. Unfortunately, his effort to break the world record was thwarted during the preparations when a television cameraman dropped his press badge—and set off 97,500… Read More
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Equity-Indexed Annuities: Are They Too Good to Be True?
Have you heard of equity-indexed annuities (EIAs)? They promote the dual benefits of a guaranteed, minimum return (limited downside) with market returns (upside potential) based on an equity index. On top of that, you can even defer taxes for years… Read More
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Mary is in Good Hands at BWFA
We have always told our clients that they benefit most when they use all three of our services: Retirement and Estate Planning, Investment Management, and Tax Services. Here is an example of how our services work together. Meet Mary Client…. Read More
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Tax Preparation Checklist
Personal Data Social Security Numbers (including spouse and children) Child care provider: name, address, and tax ID or social security number Alimony paid: name and social security number of former spouse Employment & Income Data W-2 forms for… Read More
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How to Catch a Falling Knife
The expression “catch a falling knife” refers to buying stocks or bonds which have fallen significantly in price, with the hope that they will soon return to their former price. If done well, the buyer nets a handsome profit in… Read More
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Retiring During Volatile Times
BWFA and a panel of Applied Physics Laboratory (APL) retirees will give you insights and valuable advice on successfully navigating the transition to retirement. The event will be held on Tuesday, October 21, from 7 – 9 p.m. at the… Read More
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Heir Raising: Understanding Trusts
Following on my last newsletter column, I will continue to look at how BWFA can help you implement the goals of your estate plan. For some clients, trusts are an important part of handling their assets today and cost-effectively transferring them… Read More
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Can Investors Trust Brokerage Firms to Hold Their Securities?
If a brokerage house fails due to bankruptcy or fraud, the Securities Investor Protection Corporation (SIPC) makes sure that investors who hold their stocks, bonds, and mutual funds at that brokerage house get all of their shares back in a… Read More
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Would You Like to Pay Zero Capital Gains Taxes?
We often see eye-catching e-mail advertisements that promise to divulge strategies that will help us (and our clients) reduce our taxes. Often, the e-mails are scams or propose illegal schemes. However, there is an opportunity created by the Jobs and… Read More
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Quality Counts: The One Question Survey
To follow on my last article, “Good Old-Fashioned Service,” I wanted to tell you about how we are working to improve customer service with a new client satisfaction survey, and also to introduce you to another member of our team,… Read More
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Heir Raising Ideas
“I don’t want to achieve immortality through my work…I want to achieve it through not dying.” ~ Woody Allen The first member of the baby boomer generation (1946-1964) is turning 62 this year and becoming eligible for Social Security. Our… Read More
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“De-coupling” Risk from Your Marriage and Your Investments
We know that the stock market drops sometimes, but it has been very kind to investors who can stay the course for the long-term. The question is: How much short-term fluctuation is comfortable for you? I’ll bet your answer is… Read More
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Making the Retirement Transition Work for You—and Your Spouse
Many of us found out that the way our parents raised their families wasn’t an appropriate blueprint for how we raised ours. So why should we expect that our retirement will look like our parents’ retirement? Times have changed, and… Read More
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Why We’re Planning for Higher Taxes
We thought it would be interesting to look at the presidential candidates’ positions on taxes. As you might expect, Senators Obama and McCain propose very different solutions. Looking at the table below, which we obtained from the non-partisan Tax Policy… Read More
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Good Old-Fashioned Service
We value good service at BWFA. When you call, you’ll get someone on the phone rather than voicemail. When you have an appointment, the whole office knows you are coming and is ready to greet you. When you have a… Read More
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Life Expectancies and Portfolio Risk
“Work as if you were to live a hundred years. Pray as if you were to die tomorrow.” ~ Benjamin Franklin Leonardo Da Vinci’s life expectancy was 30 years when he was born in 1452. When my Grandma Branan was… Read More
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How the Stock Market Responds to a Recession…And What BWFA Is Doing About It
With talk about a recession widespread, investors are naturally concerned about what will happen to their stocks if a recession actually occurs. Is it time to sell stocks to avoid further declines if the economy continues to weaken? Is it… Read More
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BWFA Rescues You from Dreaded Estimated Tax Payments
We’ve written several articles on the subject of estimated taxes. These tax payments are required when you do not have enough taxes withheld from your salary, self-employed income, or retirement payments. By making these payments on time, you avoid the… Read More
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More on BWFA’s Future
Conclusion of a three-part conversation about BWFA’s succession plan This article is my third in a series on the subject of succession planning — in other words, how the firm will continue to operate when some of our leadership team… Read More
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When Planning Your Legacy, Don’t Tip the IRS
You must pay taxes. But there’s no law that says you gotta leave a tip. ~Morgan Stanley advertisement Nobody wants to leave the IRS a tip, but without proper planning, we often do that when our retirement ends (when we… Read More
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The Subprime Mortgage Crisis: What Does It Mean for Your Investments?
Like a spreading fungus, the subprime mortgage crisis has gained footholds across the country and has the potential to bring on a recession in the U.S. — undermining an economy that is in most respects fairly robust. The crisis has… Read More
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Estate Planning: Tax Deductions Sometimes Get Lost
As you think about your estate and the assets that your heirs will inherit, it is very important to understand that different items will be taxed differently after they are inherited. One of our jobs at BWFA is to help… Read More
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What’s Happening at BWFA?
E-mail Alert Our firm’s policy is to respond promptly to every communication you send us. However, from time to time you might send us an e-mail from an address that we do not have on file for you. When this… Read More
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More on BWFA’s Future
During our annual meetings with clients, as we talk about retirement plans, we are asked about our own retirement plans and the future of BWFA. It’s a reasonable question. We emphasize long-term planning for our clients, and our clients have… Read More
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Let It Roll, Baby, Roll
“The large print giveth, but the small print taketh away.” —Tom Waits, singer and songwriter We have always advised clients that they should roll over their employer-sponsored retirement plan, such as a 401(k) or 403(b), to an IRA when they… Read More
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Did 14,000 on the Dow Mean Stocks Were Overvalued?
In July, major stock indices reached record levels. For the first time ever, the Dow Jones Industrial Average closed above 14,000. The S&P 500 achieved a record level as well. Subsequently, there has been a sharp downturn in the market…. Read More
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It IS Easy Being Green(e)
Every once in a while we hear something from one of our clients that we just have to pass along to all of our newsletter readers. Thanks to the Energy Policy Act of 2005 (EPACT) and incentives offered by Maryland… Read More
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What’s Happening at BWFA?
Saying Goodbye — Regretfully… Kim Anderson, who has been with BWFA for almost 13 years, is leaving the firm to stay home with her family. Kim was an important part of our team, always participating in many of our important… Read More
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Searching for Mr. Goodyield
Investment advisors today are frequently asked by clients where they can find an investment that has a good return, will maintain principal value, and won’t keep anyone up at night worrying about credit quality. Instruments that offer a high dividend… Read More
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BWFA — Our Mission, Our Plans and Our Future
Our Mission Our mission has remained consistent since the start of our firm — Provide the very best financial solutions to help our clients achieve their goals. We don’t expect this mission to change in the coming years. We will… Read More
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Retirement: What’s In It for You?
Clients come to Baltimore-Washington Financial Advisors with many questions about their retirement. Often, these are financial — How much money will I need in retirement? How do I draw down my savings for living expenses? But we have found that… Read More
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Decumulation: BWFA’s Approach
An important issue that sneaks up on people as they approach retirement is how to cope with the hairs that are popping out of strange places. Another one is how to fund retirement from your savings. Living off your “nest… Read More
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Pay Quarterly Taxes Now, or Pay Penalties Later
Nobody likes to pay income taxes. The tax bite seems even more painful if you are writing the checks instead of having taxes withheld from each paycheck. However, retirees and the self-employed who ignore quarterly tax payments will wind up… Read More
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Retirement Seminar at APL
BWFA conducts seminar at Johns Hopkins University Applied Physics Laboratory. The first half of the seminar included a presentation by BWFA about the financial aspects of retirement. The second half was devoted to a panel of six clients who had already… Read More
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The Roth 401(k)—Is it Right For You?
Many employers will begin adding a Roth 401(k) option to their retirement plans over the next few years. If your employer is among them, you will have to make a decision whether to contribute to the traditional 401(k) or the… Read More
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Any Final Requests?
In 1960, shortly before his execution by firing squad, the convicted murderer, James Rodgers, was asked whether he had any final requests. “Why yes,” he replied. “I’d like a bulletproof vest.” Unlike James Rodgers, most of us can have our… Read More
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Measuring Your Investment Return
Each quarter, we send our investment management clients two reports, the Portfolio Statementand the Portfolio Performance Summary. We have designed these reports to be easier to understand than typical brokerage statements, but they still may be confusing for those not familiar with… Read More
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Searching for Opportunity in New Federal Tax Laws
Every time Congress changes federal tax law, Baltimore-Washington Financial Advisors analyzes how the new rules might affect our clients. The Pension Protection Act of 2006, signed into law in December, is the latest such tax law change that provides new… Read More
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Credit Unions — Get the Difference
We are always trying to bring better financial ideas to our clients. In this regard, we encourage everyone to consider the advantages of using the banking services of a credit union. Credit Unions are an excellent alternative to traditional for-profit… Read More
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What’s Happening at BWFA?
Baltimore-Washington Financial Advisors is pleased to welcome Robert Wasilewski as a new advisor with the firm. Previously, Robert was a managing director and head of Fixed Income at ASB Capital Management in Washington, D.C. He has over 20 years’ experience… Read More
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What’s Happening at BWFA?
Congratulations to Tage Pearson. Tage became our first client centurion by turning age 100 on Friday, January 12, 2007. Tage chronicled his life and many achievements in a book published in 2003. And now a new chapter begins. Happy Birthday,… Read More
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Selecting Investments
One of the questions we get frequently is “How do you select investments?” In this article, I comment on 12 criteria we use to evaluate potential investments for our clients. Only Publicly Traded Securities — We want the relative security provided… Read More
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Routine Checkups — Beneficial to Your Bottom Line
Ron Johnson is a physical therapist who loves to play basketball. During a routine medical checkup he “flunked” his stress test. It turned out that Ron had heart disease and needed quadruple bypass surgery. Fortunately, Ron’s heart disease was found… Read More
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Why Large Investors Choose Individual Stocks
Mutual funds have been around since the 1920s. Since then, they have grown exceedingly popular with the masses. However, high net worth individuals and sophisticated investors continue to choose individual stocks and bonds over mutual funds. Why do they make… Read More