How to Protect Your Identity After the Equifax Data Breach

In early September, we posted our “How to Avoid Identity Theft” blog. Due to the recent Equifax data breach, we are providing a follow up post with additional steps you can take to protect yourself against identity theft.

The Equifax data breach lasted from mid-May through July of this year. Hackers were able to access names, Social Security numbers, addresses, birthdates, and driver’s license numbers. To protect your identity, we recommend that you consider the following actions.

1. Keep an eye on your finances.
• You can check your credit report from each credit reporting agency once a year free of charge on This site is the only site that is federally authorized to provide you with your free credit reports. You can check all three reports at once, or check your report from one bureau at a time every few months. Keep an eye out for unfamiliar credit inquiries, accounts, or derogatory marks.
• You can monitor your credit score from two of the credit reporting agencies for free on If you would like Credit Karma to monitor your report and notify you of changes, you can do so by following the steps below:
      o Profile & Settings > Communications & Monitoring > Check the “Credit Monitoring” box.
• Keep an eye on your bank account and credit card statements for any unfamiliar transactions. One way to monitor these accounts is to set alerts through your credit card providers and banks to notify you of transactions over a specified amount in your accounts.

2. Consider setting a fraud alert on your credit report. A fraud alert notifies lenders to take extra precautions to verify your identity if someone attempts to open an account in your name. Fraud alerts typically last for 90 days, but you have the option to place an extended fraud alert on your report that lasts for 7 years. If you would like to place a fraud alert on your report, you must contact each credit reporting agency separately. You can place the fraud alert for free online or by telephone.
• Equifax: Telephone 1-(888) 766-0008 Online
• Experian: Telephone 1-(888) 397-3742 Online
• Transunion: Telephone 1-(800) 680-7289 Online

3. Consider freezing your credit. A credit freeze prevents lenders from accessing your credit report. This makes it impossible for anyone (including you) to open new lines of credit while the freeze is in place. Credit freezes offer a higher level of protection than fraud alerts but are not a good option if you plan to apply for credit in the near future. It is important to note that your current credit and bank accounts will still be vulnerable to identity theft. In most states, the freeze remains in place until you remove it. In a few states, the freeze is removed automatically after 7 years. To put the freeze into place, there is a fee of between $5 to $10 required by each credit reporting agency (unless you are already a victim of identity theft, in which case, the fee is waived). You must also pay between $5 to $10 if you would like to lift the freeze from your report. You might consider placing a freeze on your credit if you are a victim of identity theft.  You can place the freeze online or by telephone. When you request the freeze, you will be given a PIN. Be sure to save the PIN in a secure location, as you will need it to remove the freeze from your credit.
• Equifax: Telephone 1-(800) 685-1111 Online
• Experian: Telephone 1-(888) 397-3742 Online
• Transunion: Telephone 1-(888) 909-8872 Online

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How to Avoid Identity Theft

There are a variety of ways in which thieves can use stolen personal information to commit fraud. The most common types of identity theft are the following:

1. Account Takeover Fraud: The thief uses personal information to access your financial accounts and reroute your account communications. They may use this information to wipe out your funds or pose as you to apply for credit.

2. Card Not Present Fraud: With this method, the thief uses stolen credit card information to buy items online or over the phone. 

3. New Account Fraud: New account fraud is when a credit account is fraudulently opened in your name and all account information is sent to the thief. 

4. W2 Fraud: This type of theft occurs when the thief sends an official-looking email that says it’s from the IRS requesting W2 or payroll data. These emails are designed to get information that can be used for crimes like filing fraudulent tax returns for refunds.

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Exercise Can Also Improve Financial Health

Everyone knows that regular exercise can improve your physical well-being, but a recent study shows that staying active can also improve your financial well-being. The study, carried out by the American Heart Association, indicates that regular exercise can help keep medical costs down. Medical costs are a major expense for many, especially those in retirement. According to an analysis by HealthView Services, a 65-year old couple retiring in 2017 will need an estimated $400,000 to cover their total health care costs in retirement. To add insult to injury, these costs have been rising at a faster rate than overall inflation and are expected to continue on this trend.

Participants in the study who exercised at recommended levels ­­had significantly lower health care related costs on average than those who did not exercise. Recommended exercise is defined as at least 30 minutes of moderate aerobic activity 5 days a week (for example, speed-walking), or at least 25 minutes of vigorous aerobic activity 3 days a week (for example, running or swimming). Participants with heart disease who exercised at recommended levels saved $2,500 per year on average on medical costs while participants who were already healthy saved $500 per year on average.

If you have trouble sticking to an exercise regimen, keep in mind that exercising can improve your financial health and help you achieve your retirement goals.  

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How to Maximize College Financial Aid Eligibility

It is a common misconception that students from high-income families are not eligible for financial aid. In fact, anyone can be eligible for financial aid if the estimated cost of college is higher than their expected family contribution (EFC). The EFC calculation takes into account family income, family assets, family size, and the number of children in college. There are a variety of techniques that can be used to reduce EFC, and therefore boost eligibility for financial aid.

1. Hold assets in parent’s names. The EFC formula factors in the assets and income of the parents and the student. Students are expected to use up to 20% of their assets to pay for college, while their parents are only expected to use up to 5.6% of their assets. Therefore, to minimize EFC, assets should be held under the parent’s names.

2. Reduce assets by paying down debt or maximizing retirement contributions. Most liquid assets, aside from retirement accounts, are factored into the EFC calculation. You can reduce your includable assets by paying down debt or maximizing contributions to retirement accounts before filing the FAFSA.

3. Defer income. Up to 50% of a student’s income and 47% of parent’s incomes are expected to be used for college. One method of reducing reportable income is deferring it when possible. The FAFSA uses the tax return from two years prior to determine income, so any income reduction strategies must be implemented two years before the student starts attending college.

4. Apply early. Aid is provided on a first-come, first-served basis by some schools. Therefore, the FAFSA should be completed as early as possible. The FAFSA can be submitted from October 1st in the year prior to attendance through June 30th of the year of attendance.

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Tax Planning - What’s Different In 2017 For Taxes

For 2017, the IRS is revising more than 50 tax provisions for both individuals and business taxpayers.  Any changes or modifications made by the new administration may or may not be applicable to 2017 taxes.  So for the time being, the following IRS revisions are effective for the 2017 tax year.

Standard Deduction – will increase from $12,600 to $12,700 for married couples and from $6,300 to $6,350 for single filers.

Alternative Minimum Tax (AMT) – the exemption amount will increase from $83,800 to $84,500 for married couples and from $53,900 to $54,300 for individuals.

Senior (65+) Medical Expense Deduction – the ability to deduct medical expenses will rise to 10% of AGI, up from 7.5% of AGI.

Mileage Expense – is falling from 54 cents per mile to 53.5 cents per mile for business miles & 17 cents per mile down from 19 cents per mile for medical & moving purposes.

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What Imports Into the U.S.


As the president-elect prepares to enter the White House, foreign imports into the U.S. have become a leading agenda item.  According to the Commerce Department, the top imports into the U.S. include electronic devices such as mobile phones, computers and TVs, followed by machinery and automobiles.  The onset of additional tariffs and import duties might change the makeup of imports dramatically, as consumers tackle higher prices along with some manufacturing possibly shifting to the U.S.


The biggest question everyone has is how will higher tariffs affect U.S. consumers and the economy.  The most dominant imports currently tend to be high margin products such as mobile phones, laptops, and computers.  Any additional tariffs might either be partially absorbed by the exporters or passed along to consumers in the form of higher prices.

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U.S. Has Among Highest Corporate Tax Rates


One of Trump’s fiscal proposals is to reduce the inherently high U.S. corporate tax rate from 35% to 15%. The United States currently has one of the highest corporate tax rates of any country worldwide at 35%.  The average corporate rate globally is just over 23%.

Some countries maintain low tax rates or no corporate tax at all, such as Cayman Islands and Bermuda, in order to encourage companies to invest and hire within their countries.  Some believe that if U.S. corporate tax rates drop, it might discourage U.S. companies from seeking tax havens overseas, such as tax inversions.

Inversions occur when a U.S. company buys or merges with a foreign domiciled company in order to adopt a lower tax rate.  A report released by the OECD raises a concern that some European countries are being used as tax havens, but with little or no benefits achieved by the underlying workforce or economy. (Source:  OECD)

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Election Voter Turnout Lowest In 20 Years

Even though election results were still being tabulated at the end of November, the 2016 election has so far had the lowest voter turnout since the 1996 election. The 126 million votes counted means that about 55% of voting age citizens cast ballots for the 2016 election, compared to the 2008 election when nearly 64% of eligible voters cast ballots.

Voter turnout is determined by the number of eligible voters who cast a ballot during an election.  Some voters are individuals while others are members of larger families, thus creating social economic dynamics. Social economic factors significantly affect whether or not individuals and family members develop a discipline of voting in future elections.

It is suggested that the most important social economic factor affecting voter turnout is education. That is, the more educated an individual is, the higher the probability that he or she will vote during any given election. Hence, it’s no surprise that all political parties strongly support a strong educational base in this country. (Sources: U.S. Census Bureau, Bipartisan Policy Center,

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Oil Industry Update - OPEC Caves In & Cuts Oil Production


OPEC agreed to cut production among its 13 members by 1.2 million barrels a day from the current 33.6 million barrels. The agreed upon reduction would reduce global output by about 1%, easing high levels of supplies. Domestically, the U.S. Energy Administration reported that U.S. stockpiles of oil shrank by 884,000 barrels in the final week of November. The price of WTI, the benchmark for domestic crude oil, ended last month at $49.17 per barrel.

Since supply and demand are the primary determinants in setting oil prices, OPEC’s production cuts along with less supply in the U.S. are expected to shore up the price of oil. In addition, the anticipated growth generated from any economic expansion in the U.S. and abroad may increase demand for the commodity, adding pricing pressure as well. The crude oil benchmark WTI was up over 50% at the end of November from January 2016.

Saudi Arabia, OPEC’s largest oil producer, launched an aggressive campaign against U.S. oil drillers two years ago by continuing to produce oil at record levels in order to maintain and build upon its market share. Saudi Arabia’s relentless approach to put U.S. shale drillers out of business is an indication of how serious a threat U.S. oil production has become to OPEC and its members. The U.S. shale industry, known for its fracking technology to extract oil from shale rock formations, has continued to surprise the world oil markets with its resistance to low prices. U.S. drillers have thus far been able to beat Saudi Arabia’s “pump and dump” strategy of lower oil prices in order to maintain market share. (Sources: EIA, Worldbank, OPEC)

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International Reaction To Election Results



International leaders responded differently to Trump’s victory, with sanguine responses from Mexico, Venezuela, and Iran. Russia’s Putin was more upbeat as he welcomed a restoration of ties with the U.S., which have faltered over the past few years.


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British Pound At Lowest Levels Since 1985

The pound traded at its lowest levels versus the dollar since 1985, off 22% from its June high before the Brexit vote. The pound’s strength has become incredibly contingent on the outcome of Brexit, placing tremendous pressure on the currency at a critical time.

There has been a steady descent in the pound since the vote. Markets are concerned that as Britain plans its exit, which is expected to happen in the next two years, it will dramatically hinder the financial and banking sectors. The reason is that exports of British products to the EU might be severely limited once the exit has taken effect.

Britain’s current prime minister has expressed priority in limiting the influx of immigrants into England from the EU. This stance could very well become a significant issue with the EU, since not allowing immigrants from the EU the rights to access Britain would surely threaten Britain’s ability to trade and travel freely throughout the EU.

The most vulnerable sector to such retaliations are the financial and banking sector, which heavily rely on free movement of employees throughout the various countries in the EU. The financial and banking sector accounts for 12% of Britain’s GDP, a considerable portion of the economy. Since Britain’s economic future has become contingent on the outcome of Brexit, the IMF downgraded its growth forecast for the country, predicting that the British economy will only grow a paltry 1.1% in 2017. (Source: IMF, Bloomberg, Reuters)

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2016 Election Results


The financial markets embraced a Trump victory, sending stock prices to higher levels following a nine day consecutive decline in anticipation of uncertain election results.

Market performance following presidential elections have varied over the decades, however, Trump’s effect on the S&P 500 Index of 1.11% was one of the best for both Democratic and Republican presidential victories ever. Obama’s win in 2008 saw the largest drop of -5.27%, while Reagan’s victory in 1980 saw the largest gain of 1.77%.

U.S. Treasury yields rose dramatically with the expectation that a Trump presidency along with a Republican controlled Congress will inevitably ramp up government spending in order to boost economic growth. During the campaign, Trump was very critical of the Federal Reserve not acting to raise rates soon enough, insinuating political influence.

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Over 45% of Households Have No Retirement Assets


As the Baby Boom generation has begun to retire, more attention is being paid to retirement savings and how much retirees will have to live on. In addition to Social Security, a primary source of retirement funds for decades has been pension plans, also known as Defined Benefit (DB) plans. Over the years private sector companies have shifted away from traditional DB plans to Defined Contribution (DC) plans, including 401k Plans.

As employers and employees have shifted their assets from traditional pension plans to 401k plans, the onus of funding and managing these retirement assets has migrated to the individual employee. It used to be that employees were automatically covered by pension plans and funded on their behalf. Today, most 401k plans are voluntary and funded not by employers but by employees themselves.

Many believe that the shift from traditional pensions to 401ks has made it difficult for employees to save. When the average length of employment with a company was much longer years ago, it was feasible to have employers fund their employee’s retirement accounts. The benefit is also used as an incentive for employees. Modern day dynamics have made employees much more mobile, making 401k plans more popular and practical as retirement savings vehicles. (Source: National Institute on Retirement Security)

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The Strengthening Case for a December Rate Hike

Over the past year the economy has improved moderately, which has strengthened the case for a rate hike by the Federal Reserve. The Federal Reserve’s dual mandate is to foster maximum employment and price stability. This year, we have seen progress made on both fronts with the unemployment rate hovering at 4.9% (close to the Fed’s long-term projection of 4.8%) and core consumer prices up 2.3% versus a year ago.

The details of the Fed’s September meeting point to a growing probability of a December rate hike. In the meeting, three of the ten officials voted in favor of a rate hike in September. In July’s meeting, only one official voted to increase rates.  The September statement asserts that near-term risks to the economic outlook are “roughly balanced.” This is the first time the Committee has used this language since before raising rates last December, which possibly indicates a future rate hike. In the “dot-plot” projections released after the September meeting, fourteen of the seventeen FOMC members predicted that the federal funds target rate will rise by at least 25 basis points this year. There are two more meetings left this year: one in November and one in December.  Since the presidential election falls just six days after the Fed’s November meeting, and the meeting is not accompanied by a press conference, it is unlikely the Fed will take action then. This leaves the December meeting as the sole remaining viable option for a rate hike this year.

In addition, the Fed risks losing credibility if they postpone the next rate hike much longer. At the beginning of the year, Fed leaders projected they would raise rates four times in 2016. In the September meeting, that number was reduced to one. If they fail to increase rates at all, the Committee would risk further diminishing public confidence.

Barring any unforeseen developments, we believe the Fed is poised to raise rates in their December meeting.


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Domestic vs. Developed International Stocks - A Tale of Two Market Cycles

Domestic stocks have been a dominantly outperforming asset class over the past three years (see Scott Drown’s January blog titled “Di-worse-ification”). The results displayed on this graph prompted us to dig deeper into the performance of our domestic markets’ international counterpart, the MSCI EAFE Index. The MSCI EAFE Index is designed to represent the performance of large cap securities across 21 developed markets and is widely regarded as the “S&P 500 equivalent” to the developed international markets.

When looking back over the past 45 years, we were able to parse out the relative out-performance of the S&P 500 and the MSCI EAFE indices and have found that over several year periods, one index seems to substantially outperform the other but reverts back at a later period*: 




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Another Great Retirement Savings Vehicle

When we speak to clients about retirement there are two common themes, will I have enough saved and what impact would medical expenses play on my results.  In an effort to increase savings for retirement and mitigate some portion of future medical expenses we are encouraging clients to look into the Health Savings Accounts (HSA).


The HSA provides four benefits:

1. Contributions to the account are tax-deductible

2. It allows you to save money completely tax-free

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2015 ended the year much like 2014 in the equity markets in many ways.  While the returns of major market indices were very different from 2014, the results of a globally diversified investor felt similar. Disappointing returns of globally diversified investors relative to the S&P 500 Index feel all too common place in these markets.  However, we believe that now is not the time to abandon diversification and that the last few years have been anomalies rather than a new normal.


The chart above focuses in on the last three years where the S&P 500 has outperformed almost all other asset classes.  However, when we look back at longer periods of time we see that this is not normally the case.  There have been many opportunities over the past 15 years to add value to investor returns through global and multi asset class allocation mandates.  While it is difficult to accurately predict that this trend will not continue into 2016 given the last few years, we do have a few points to make against it.

Following the 2008 financial crisis the US began multiple iterations of quantitative easing programs in which the Federal Reserve promoted expansionary monetary policy through the use of zero interest rate policy and government bond purchase programs.  The rest of the world did not follow suit until more recently with the Bank of Japan and European Central Bank (ECB) developing their own in early 2015. The US Federal Reserve actions prompted a currency shift that has led to a flow of assets into the US and dollar-denominated assets.  This flow propped up the higher quality and more liquid US assets (Treasuries, Large Cap US Stocks, and Real Estate).

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Planning Through Your Employee Benefits

Free gourmet food and snacks that never-end, complimentary on-site gym memberships, and free on-site daycares are just a few perks that employees at Google get to enjoy. Now not all of us have these types of perks offered to us, but many employers do offer other benefits packages to attract and retain top talent. The problem is that many employees don’t take full advantage or understand their options. This makes understanding your benefits and their effect on your personal finances especially important.


The benefits listed above are all considered fringe benefits under IRS regulation and may be considered taxable to you. On the other side of the coin there are particular benefits that are tax qualified or tax exempt. The following list covers a few important benefits that your employer may offer and provides some info on how each perk can affect you:


Group Medical Insurance

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Tax-Free Retirement Savings with a Roth IRA

One of the best retirement tools available today is the Roth IRA. The Roth IRA allows you to make contributions in after-tax dollars with no income tax on growth or distributions in the future. However, like most qualified retirement vehicles, there are income limits that prohibit high income earners from contributing. The income limits on contributions range from $116,000 to $131,000 for single filers and $183,000 to $193,000 for people who are married filing jointly (for 2015). If you are above these amounts you are not eligible to make a contribution.

In 2014 the IRS provided an opportunity for individuals who would otherwise be ineligible for a Roth IRA contribution, to utilize after-tax contributions to their 401(k) plans as a way to contribute to a Roth IRA. The IRS clarified how pre-tax and after-tax balances in an employer’s 401(k) or other retirement plan can be allocated to traditional and Roth IRAs. The benefit, is that a taxpayer can roll just his or her after-tax plan assets to a Roth IRA tax free, and roll the pre-tax assets, including the earnings on the after-tax monies to a traditional IRA. This became effective on January 1, 2015.

Each 401(k) plan is different and must allow for after-tax contributions. For 2015, the maximum contribution to a 401(k) plan is $53,000 plus the $6,000 catch up. This includes all contributions from the employee, matching contributions from your employer and any after-tax contributions. Assuming an employee contributes the maximum on a pre-tax or Roth basis of $18,000 and then receives an employer match of $7,200, there is an additional $27,800 that can be contributed to the plan on an after-tax basis. You can immediately rollover this amount to a Roth IRA using an in service distribution.

We reached out to our 401(k) plan administrator and although plan sponsors have called about this option not many have implemented it. At Heller Wealth, we have revised our 401(k) plan to allow for after-tax contributions because we see this as a significant opportunity. We recommend that you reach out to your HR department or 401(k) provider to see if this option is available. If the option is part of your plan, we recommend you consider utilizing this strategy to boost your retirement savings. 

Don Hertling is the Vice President of Financial Planning for Heller Wealth Advisors. If you would like to discuss Roth IRA opportunities, please contact Don at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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The Emerging Markets Dry Spell Continues - but is there a light at the end of the tunnel?

August was a particularly tough month across nearly all asset classes, as stocks were down anywhere from 6-10% for the month depending on which market you’re looking at. Past experience shows us that volatility and market draw-downs are relatively common, particularly if you parse performance on a month-to-month basis. The true test for long-term investors comes when there are bad multi-year periods. One specific asset class fits the bill on this one: the emerging markets.

Since coming off their highs in late 2007, the emerging markets have a total return of (-24.3%) through the end of August – that’s a (-3.5%) per year return for nearly the past 8 years. In the same period, the S&P 500 is up around 5.5% per year since the last cycle peaked. A few obvious questions come to mind when looking at this data:


1. Why would an investor allocate any money to emerging markets when they have been lagging for so long?

2. Why would a diversified investor continue to hold emerging markets during this type of environment?

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Liquid Alternatives: A passing grade in their first real test

While many of the first established hedge funds date back to the 1970s, liquid alternatives are a fairly new asset class. Many of these strategies seek to provide hedge fund like returns in a mutual fund format. These funds have recently been put to the test during the recent market correction. A recent article from Investment News magazine entitled “Liquid Alts funds pass first real test with flying colors”  highlights the relative out-performance of this asset class versus traditional markets in the recent market sell off. Highlighted in their analysis is the AQR Managed Futures fund which is one of four managers we have allocated in to this space. The fund gained 4.15% on Monday (8/24/15) when the equity markets (as measured by the S&P 500 index) dropped 3.94%. Even the worst liquid alternative category, Equity Long-Short (as tracked by Morningstar Inc.), only dropped 1.86% on average during trading on Monday. 


 “Winning by losing less is a theme that the liquid alts space has long embraced, but over the past six years, most of the strategies haven’t been able to prove the point. Until now”   -Investment News


We have been investing in liquid alternatives for the past few years in our portfolios. We have seen many new products brought to the investment marketplace. We believe that a few of these products make for attractive components to our client portfolios, but there are also many products that we do not feel are appropriate in that format. Certain hedge fund strategies (managed futures and hedged equity) are liquid and transparent enough for a mutual fund investment, while other strategies (private equity, private real estate, and venture capital) are not. We continue to focus our efforts on managers that can manage volatility and provide relatively attractive returns that are less correlated to traditional markets. We believe that more and more products will be introduced to the marketplace and we are excited for the opportunities that this may provide for our client portfolios.

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Cyber Security and How to Protect Your Personal Finances

In today’s modern world, we are constantly experiencing a rapidly changing technological environment. While technology has definitely made our lives easier, it’s important for an individual to be acquainted with the ways in which technology can harm as well. Without the proper know-how to ensure your digital self is secured, you could be exposing yourself to a costly threat and not know it. As 2014 and 2015 have shown us, large-scale, widespread security breaches are taking place, and more personal data is being compromised. With more American’s losing privacy every day, here are just a few ways to keep you more secure when navigating the digital landscape.


1. Password Security: Keep sensitive files, such as those with account numbers and balances password protected. When sending sensitive files over email, make sure that all files are encrypted so in the event your email account is compromised, your statements will contain an added security feature. Keep separate passwords for every account you have, and keep a list in a safe and secure place that is completely away from your computer.

2. Double Check Before Opening Suspicious Files or Emails: If you receive an email from a financial professional who is requesting personal information, it’s best to delay answering the email right away if you don’t recognize them. Try to avoid opening any file that comes off as suspicious as well. All too often there are people that fall prey to phishing scams. A simple phone call to the financial professional you typically work with to verify the message could save you a substantial problem.

3. Keep an updated machine: Make sure you have the latest security software, update your web browser regularly, and ensure your operating systems are all up to date. Keeping them current is one of the best defenses against viruses, malware, and other online threats.

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Aligning Asset Allocation with Goals and Objectives

We all see the daily headlines: “Ten Stocks Poised for a Breakthrough this Summer” or “Here’s how to Profit by Playing these Oil Companies” or something to that affect. We’ve constantly been inundated by financial headlines, being forced to separate sound and suitable advice from the noise. From all this, the big question I hear from a lot of investors is “Where should I invest my money?” While there’s no “cookie-cutter” answer that fits the mold of each investor, there is one common solution: having a disciplined asset allocation strategy in place establishes a guideline and program for investors to follow.

So what should my asset allocation be? The answer to this question is quite simple – it should be the one that you are comfortable with and the one that you understand will help you reach your goals and objectives. Here’s an example: for a young professional who just became eligible to enroll in his company retirement plan, it may make sense to have a more aggressive, growth-oriented asset allocation. Conversely, retirees who are relying on their 401(k) and IRA assets to supplement their post-retirement income may want to consider a more moderate or balanced allocation.

The most significant determinant to asset allocation is ALIGNING your time horizon because time is an investor’s best friend. The longer your time horizon, the higher the risk/reward opportunities. It’s important to remember that your asset allocation must be flexible as you approach your investment goal.

Mark is a Portfolio Analyst at Heller Wealth Advisors. If you would like to learn more about how to align your asset allocation with your goals and objectives, please contact Mark at This email address is being protected from spambots. You need JavaScript enabled to view it.


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Rising Interest Rates - What are the Impacts for Fixed Income Investors

The United States appears to be at the tail end of a multi decade long period of falling interest rates that dates back to 1982.  These falling interest rates have helped fixed income investors by providing attractive returns with low volatility.  Hence, this has been a great vehicle for meeting investor income needs.

However, over the past several years interest rates have fallen to such low levels that these same investors have been forced into riskier areas of the financial markets to help meet their income needs.  Those who have remained in fixed income, and have resisted the urge to add risk for more income, might now find themselves in a situation where they begin to lose principal.  Investors who cannot wait for their bonds to mature (especially long term bond holders) might find themselves in a situation of having to sell their bonds at much lower prices.

We continue to feel that interest rates will rise over the next few years. We believe the best approach in this new environment may be a higher allocation to non-traditional fixed income that has a more flexible mandate.  That being said, looking forward we do think that returns in the fixed income space will be low and potentially even negative should we see interest rates rise faster than the market anticipates.

Scott Drown is a Portfolio Manager at Heller Wealth Advisors.  If you would like to discuss the fixed income markets, please contact Scott at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Strategies For Maximizing Your Lifetime Social Security Benefits

Anticipating Claiming Social Security: One Strategy Could Help Maximize Your Lifetime Benefits

If you’re age 62 or older, and you’re not already claiming Social Security benefits, chances are that you’ve contemplated filing at one time or another. Many people count on Social Security to supplement their income stream in their retirement. Filing early or late can adjust this income source for the remainder of your lifetime. This makes the strategy you choose that much more important if you’re at all worried about the possibility of outliving your assets.

People have various reasons for filing in different ways. Some individuals believe that filing early is best because they believe the system, in its current unsustainable condition, couldn’t possibly support future benefit payments. Others who file early could have a lack of liquidity and may need extra cash flow. Conversely, there are others who file after FRA to take advantage of earning delayed retirement credits (DRC). This is done by deferring your benefit past Full Retirement Age (FRA), which adds 8% annually from the government for leaving it in the system. The trade-off is that if you would need to supplement that income using assets from your portfolio. There are also people who file at FRA and receive their primary insurance amount (PIA), which is the monthly benefit that is due to you at FRA.

One strategy that has proven itself to many filers is to file and suspend. This is typically done with a married couple where one PIA is higher. The spouse with the larger PIA files for benefits at their FRA and then immediately suspends payment. This allows the other spouse to claim spousal benefits (up to 50%) on the larger PIA while earning DRC’s. This provides the couple a small cash flow early on, but also allows them both to secure the 8% annual increase when benefits are deferred past FRA. It’s important to note that is the spouse with the smaller PIA must be of FRA age to receive the full 50% benefit he or she would claim on their spouse. If the spousal benefits are started before FRA they will be reduced by 25/36 of one percent for every month before FRA up to 36 months. If they start more than 36 months before FRA, they are reduced 5/12 of one percent per month.

It’s important to note the Social Security Administration has submitted legislative proposals for the 2016 fiscal year, which amend the rules allowing the file and suspend strategy. Whether these proposed changes go in to effect or not, it is important to weigh your decision heavily. You are only allowed one withdrawal per lifetime if you decide you do not want to claim benefits if they’ve already started. In addition to only having one chance to re-file, the Social Security Administration requires that you pay back all benefits received once the withdrawal is affirmed.

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Concentrated Stock Positions: Ways to Reduce Single Stock Risk

A single stock can make you rich, but multiple stocks can keep you rich: Strategies to reduce your concentrated positions


As the equity markets continue to climb higher, individuals who hold concentrated stock positions may find themselves feeling a bit uneasy, particularly with one position becoming a much more meaningful part of their overall wealth and future financial security. Those who have been fortunate enough to achieve superior returns on a particular stock may feel hesitant to divest a portion of their concentrated position due to tax issues, loss of potential upside opportunity or simply due to sentimental reasons. However, there are certain strategies available to investors to help manage single stock risk. Here are four risk-reduction strategies to explore:



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Last Minute Tax Tips

As we are getting close to the initial deadline of April 15th, we are sending this note to you about items that may be overlooked when preparing your taxes.


1. Retirement Account Funding. If you qualify, make sure your contributions are funded by April 15th. If you have children with earned income you might consider funding a Roth IRA on their behalf.

2. Tax Credits. Make sure that you are claiming all the credits available to you including the Child Tax Credit, the American Opportunity Credit, etc.

3. 529 Contributions. Some states provide a deduction for contributions made to their state-run 529 plans. An example of this is New York and Pennsylvania. Make sure you claim this deduction on your state returns, if available.

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International Markets - Is the sleeping Giant finally awakening?

The international markets have under performed the US markets heavily over the past five years as the US markets have rebounded from our “Great Recession”, and US Monetary policy has pumped liquidity into the markets through three quantitative easing programs. Additionally, Europe struggled with a debt crisis in 2011 that largely held their markets back from their recovery. However, we do believe that we are seeing signs that European Markets are starting to bounce back. 


Monetary Policy

Central banks in Europe, Japan, and China have started to copy the US playbook regarding monetary policy and are implementing their own versions of Quantitative Easing. Japan started late last year, China earlier this year, and the European Central Bank announced a program that started this week. While the magnitude of these programs is open for debate, these programs are all designed to stimulate each of their economies.


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Oil, Energy, and MLPs – is the worst behind us?

The price of crude oil has rebounded strongly since the end of January after closing down nearly 46% in 2014. Is this the beginning of a new upward trend? Or perhaps it’s just a short-term correction before a further decline? While it has proved difficult to predict short-term and long-term price targets on the oil and energy sector as a whole, we believe that 2014’s energy selloff has provided us with an attractive opportunity in the space. Energy master limited partnerships, or MLPs, are publicly traded corporations that combine the tax benefits of a limited partnership with the liquidity of publicly traded securities. We believe that the energy selloff has provided an attractive entry point into this space.


WHY DID OIL PRICES DROP SO LOW? Although there were many factors that affected the price of oil in 2014, there were two key themes that played out – reduced US dependency on foreign oil and OPEC’s decision not to curb oil production. The United States has now become the world’s largest oil producer, which means we now import far less oil than we have in the past. Additionally, the Organization of the Petroleum Exporting Countries (OPEC) failed to reach an agreement this past November to curb global oil production, which continued to send crude prices tumbling.


HOW DOES THIS AFFECT MLPs? Energy prices can have a significant effect on upstream MLPs, which are typically engaged in the exploration and production of oil and natural gas. The area that has piqued our interest, however, is in the midstream MLP space which services the energy sector by providing pipelines, storage, refineries, and processing plants to the exploration and production companies.

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Are ROTH IRAs Next?

Our President has made it clear that a redistribution of wealth from the top 1% is his main priority. In his recent State of the Union address, he outlined a number of ways he felt would achieve this goal, one of which dealt with 529 plans. The President's plan was to remove all the tax advantages related to 529 plans (as discussed in Pete’s previous blog). Criticism from the media, financial advisors, concerned parents and members of the House and Senate was swift and harsh. The President stepped back from the 529 proposal and decided that taxing 529 plan growth and withdrawals was not the way to go.


Our thought (and one that is popping up more and more in the investment media) is that if the President would go after 529 plans, could Roth IRAs be next. Millions of people use the Roth IRA as a way of shielding future taxes on investments. Millions have converted portions of their IRA accounts into Roth IRAs under the guise of tax-deferred growth, no required minimum distributions and no tax on withdrawals when you do take the money out.


The government established the Roth IRA because they wanted tax money now. They were willing to forgo future tax revenue to do this. Now they are seeing the impact of this decision as the value of Roth IRAs increases significantly over time. Could the government decide that this was a mistake and rollback the tax advantages of the Roth? Who knows, but I am sure that any attempt to roll back the Roth IRA benefits would incur the same backlash as the 529 plan proposal.

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ABCs of 529s

As the costs associated with higher education continue to increase, saving for college continues to become an increasingly daunting task. With college education expenses increasing at a rate close to 6% annually, it is important to start saving as early as possible. When determining where to begin your savings, we typically recommend using a Qualified Tuition Plan, also referred to as a 529 plan.


We recommend 529 plans because the plans are tax-advantaged investment vehicles specifically designed for expenses associated with higher education. The main benefits are that the investment returns are tax-deferred, and withdrawals are generally not subject to federal or state income tax when used for qualified education expenses. Qualified education expenses include items such as: tuition, room & board, books, and computer equipment. Many states also offer income tax deductions or credits to residents who contribute to in-state 529 plans.


529 plans are also and effective estate planning vehicle. An individual can gift assets to relatives or close family friends, and remove the assets from their estate. In addition, there is a provision in the law which allows contributors to front-load five years’ worth of gifts, effectively providing a way for married couples to shift $140,000 of assets out of their estate (provided there are no additional gifts to the beneficiary within that five year period).

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Portfolio Rebalancing

One of our investment management philosophies has always been to rebalance portfolios when tactical opportunities present themselves. We monitor our investment portfolios relative to their intended asset class targets and believe the optimal rebalancing strategy is to trim positions that have done well and add to those which have lagged, bringing asset classes back to their intended targets. This vigilance forces us to sell when positions are high and buy when positions are low, which is part of a sound, long-term investment strategy.

As we approach year-end, we see some significant market dislocations which we believe create an opportunity to rebalance our portfolios. Additionally, we are navigating year-end mutual fund capital gains distributions and tactically harvesting losses in order to potentially reduce tax liabilities for our clients.

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