Our CIO Stephanie Lang appeared on CNBC‘s Squawk Box yesterday where she discussed the U.S. economy and strong consumers.
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Private Security Scams
8/22/2019
The sale of private securities has increased significantly over the last decade. Legitimate private securities may provide increased portfolio diversification and returns. Unfortunately, this has also given rise to fraudulent security schemes. Investors need to be aware, so they do not fall victim to such scams.
Private security offerings do not have to register with the Securities Exchange Commission if they meet minimum guidelines. They are not held to the same scrutiny as public offerings. Advisors and brokers can sell private, unregistered securities to clients with a net worth of at least $1 million or income of $200,000 annually, but agents on the outside of the financial industry are not as well supervised and held to the same standards. It is difficult to identify private security scams because the agents that sell them (insurance agents or former stockbrokers, for example) are not under the supervision of the Financial Industry Regulatory Authority Inc.
Scams go unnoticed until an investor files a complaint with a regulator and an investigation commences.
Additionally, in the past, private securities were sold over the phone or via seminars primarily, but the internet and social media have given scam artists a platform to heavily advertise their investment scams and promises of exciting investment returns to anyone willing to click. They prey upon senior citizens, inexperienced investors, and those without financial advisors. Sadly, these are often people who cannot afford to lose their initial investment.
Unscrupulous registered brokers can also sell fraudulent private securities using a type of transaction called “selling away”. This involves the representative requesting the client to move money from their brokerage account (TD Ameritrade, for example) to their bank account. Then the investment is made from the client’s bank account. This makes it difficult for the broker-dealer firm to supervise.
Here at Homrich Berg, we may alert you to opportunities in private funds occasionally. Those opportunities are reviewed rigorously by our investment department, and we do not receive any commissions on any sales. The investment management fees are the same as if you were invested in a stock, bond, mutual fund, etc. The investment purchase is made directly from your brokerage account. You may hear about private security offerings from your friends. Be sure to run them past your client manager for review before investing.
The sale of private securities will likely continue to grow. Legitimate private securities provide wealthy investors with additional diversification and investment opportunity. Just be aware that not all private security offerings are legitimate.
To find out more, go to https://www.sec.gov/oiea/investor-alerts-bulletins/ia_credentials.html
Homrich Berg Welcomes Evan Byers As Senior Associate
ATLANTA – August 12, 2019- Homrich Berg is pleased to announce the appointment of Evan Byers, CFA, CFP®, CAIA as a new senior associate for the firm. “Evan has extensive wealth management expertise and will be an invaluable asset to HB,” said Andy Berg, co-founder and CEO of Homrich Berg. “ My partners and I are proud to welcome him to HB.”
Evan offers clients more than 8 years of comprehensive wealth management experience, serving as an advisor to high net worth individuals, including multi-generational family offices, corporate executives and entrepreneurs. Evan began his investment career at Fifth Third Bank in Cincinnati, where he managed portfolios for High Net Worth clients, Institutional clients and 401k plans. In addition, Evan maintained research and trading responsibilities for a U.S. Large Cap Equity strategy that was utilized by private wealth clients across the greater Fifth Third footprint. More recently, Evan was an Investment Strategist with SunTrust Private Wealth Management.
Evan holds a bachelor’s degree in Finance and Marketing from the University of Kentucky and a master’s degree from Xavier University. He is also a holder of the Chartered Financial Analyst designation, the Chartered Alternative Investment Analyst designation and has earned the Certified Financial Planner™ designation.
Evan maintains a volunteer position with InheritGA – The Georgia Trust for Historical Preservation and enjoys spending time participating in various financial literacy initiatives sponsored by the ASFIP Foundation. He lives with his wife Paige, and their two dogs in Buckhead.
Homrich Berg Welcomes Evan Byers As Senior Associate
ATLANTA – August 12, 2019- Homrich Berg is pleased to announce the appointment of Evan Byers, CFA, CFP®, CAIA as a new senior associate for the firm. “Evan has extensive wealth management expertise and will be an invaluable asset to HB,” said Andy Berg, co-founder and CEO of Homrich Berg. “ My partners and I are proud to welcome him to HB.”
Evan offers clients more than 8 years of comprehensive wealth management experience, serving as an advisor to high net worth individuals, including multi-generational family offices, corporate executives and entrepreneurs. Evan began his investment career at Fifth Third Bank in Cincinnati, where he managed portfolios for High Net Worth clients, Institutional clients and 401k plans. In addition, Evan maintained research and trading responsibilities for a U.S. Large Cap Equity strategy that was utilized by private wealth clients across the greater Fifth Third footprint. More recently, Evan was an Investment Strategist with SunTrust Private Wealth Management.
Evan holds a bachelor’s degree in Finance and Marketing from the University of Kentucky and a master’s degree from Xavier University. He is also a holder of the Chartered Financial Analyst designation, the Chartered Alternative Investment Analyst designation and has earned the Certified Financial Planner™ designation.
Evan maintains a volunteer position with InheritGA – The Georgia Trust for Historical Preservation and enjoys spending time participating in various financial literacy initiatives sponsored by the ASFIP Foundation. He lives with his wife Paige, and their two dogs in Buckhead.
Disability Insurance
8/9/2019
A disability event can be catastrophic to your financial well-being. Protecting your income should be a top priority. The Council of Disability Awareness states that at least 51 million working Americans are without disability insurance (DI) other than Social Security, which is often inadequate (more on this below).The reality is that a good chunk of us are not prepared for a disability event or even think that we can experience one. However, it’s more common than we may realize. The Social Security Administration estimates that just over one in four of today’s 20-year-olds will become disabled before retirement. This statistic is shocking because over the next decades 25% of us will experience some form of disability. Today, I want to share with you information about the most common types of disability claims, the types of DI, and taxability of DI benefits.
What Are The Common Types Of Disability Claims?
When we think of a disability event, the first thing that comes to mind is a catastrophic accident such as a car wreck that leaves us permanently disabled. Although that could happen to any of us, it’s not that common. Most long-term disability claims are due to musculoskeletal disorders (25%), cancer (15%), pregnancy (9.4%), depression and anxiety (9.1%). A disability event will most likely be an illness and not an accident.
How Do You Protect Yourself From Such Risks?
There are a few ways to protect yourself. The first is Social Security. Although available to most, it’s extremely difficult to qualify under Social Security because its definition of disability is restrictive. The second is group DI. Most employers provide DI as part of your benefits package, and it normally covers 50%-60% of your gross salary. You check a box when you’re electing your benefits, and you’re insured without any medical underwriting. The third option is a personal DI policy. You undergo medical underwriting, and you purchase DI from an insurance company. The individual policy is flexible and can be tailored to your needs.
Are The DI Benefits Taxable?
The taxability of benefits depends on who pays the premium of a disability policy. If your employer pays for the cost of your group DI, then the federal and state government will want a cut of your benefits check. Depending on your tax bracket and the state you live in, the 60% coverage begins to look more like 40-45% of your salary. If you thought it was difficult to live on 60% of your pay, 40-45% is nearly impossible with medical costs being higher and leaving you unable to save. If you’re not saving, then you’re not contributing to your 401(k), and if you’re not contributing to your 401(k), your employer is not matching. I could keep going but you can see how quickly things can turn dire if a disability occurs. Fortunately, you can minimize many of the above risks by purchasing individual DI to supplement your group coverage. Since you’ll be paying the premiums with after-tax dollars, you’ll receive the benefits tax free, and you may even be able to protect retirement contributions. The policy can’t make you whole again, but it can bring you back to 60% of your pay.
Consider doing a review of your current situation. A DI policy can provide you peace of mind that you’ll be okay financially so that you can focus on what matters the most to you.
Andy Berg Named Finalist For National RIA CEO Of The Year Award
ATLANTA –August 8, 2019- Homrich Berg is proud to announce that CEO Andy Berg is one of nine finalists nationwide for the WealthManagement.com Industry Awards in the category RIA CEO of the Year. The ranking celebrates companies, individuals, and organizations that demonstrate outstanding achievement in support of financial advisor success.
Mr. Berg is the co-founder and Chief Executive Officer of Homrich Berg, a fee-only wealth management firm. Andy is currently a member of the Financial Planning Association, the Georgia Planned Giving Council, the Atlanta Estate Planning Council, the Atlanta Police Foundation Board, and the North Atlanta Tax Council.
Andy also serves on the board of directors for the Andrade Faxon Charities for Children, the board of the “I Have A Dream” Foundation, the board of the Atlanta Police Foundation, the Corporate Advisory Board for the Georgia Goal Scholarship Program, Inc., the Atlanta Tipoff Club, the Atlanta Opera, the Buckhead Coalition, and the American Diabetes Association. He graduated cum laude with a BS in Management Accounting from Purdue University.
The winners will be announced at the awards ceremony, which will be held at The Ziegfeld Ballroom in New York City on September 12, 2019.
Andy Berg Named Finalist For National RIA CEO Of The Year Award
ATLANTA –August 8, 2019- Homrich Berg is proud to announce that CEO Andy Berg is one of nine finalists nationwide for the WealthManagement.com Industry Awards in the category RIA CEO of the Year. The ranking celebrates companies, individuals, and organizations that demonstrate outstanding achievement in support of financial advisor success.
Mr. Berg is the co-founder and Chief Executive Officer of Homrich Berg, a fee-only wealth management firm. Andy is currently a member of the Financial Planning Association, the Georgia Planned Giving Council, the Atlanta Estate Planning Council, the Atlanta Police Foundation Board, and the North Atlanta Tax Council.
Andy also serves on the board of directors for the Andrade Faxon Charities for Children, the board of the “I Have A Dream” Foundation, the board of the Atlanta Police Foundation, the Corporate Advisory Board for the Georgia Goal Scholarship Program, Inc., the Atlanta Tipoff Club, the Atlanta Opera, the Buckhead Coalition, and the American Diabetes Association. He graduated cum laude with a BS in Management Accounting from Purdue University.
The winners will be announced at the awards ceremony, which will be held at The Ziegfeld Ballroom in New York City on September 12, 2019.
The Importance Of An Annual Insurance Review
By: Christen Tucker
08/02/2019
Summer is here! Barbecues. Fireworks. Vacations. Makes me think of….a review of homeowners and auto insurance coverage with your insurance agent! Not what you were thinking of? What if you are involved in a car accident on the way to the beach or an out-of-control barbecue chars your home! We hope that doesn’t happen, but are you covered if it did?
Many people view obtaining insurance coverage as a one-time task. Get it and forget it! However, that is not the case. Your old coverage may not suffice especially if you have recently renovated your home or purchased new furnishings, art, or other personal possessions. It is a good idea to make a home inventory and document the items you own. Gather receipts, bills, and brochures to help establish the price and age of everything that would need to be replaced or repaired. Photos and videos of the contents of your home are good documentation tools as well.
When you are ready to review your policy with your insurance agent, be sure to ask the following questions:
Is the coverage on your home and its contents adequate?
The home inventory will help with this. If you have any special items like art, jewelry, or collections (such as stamps or coins), mention them as well. These items may require special coverage.
Is your premium as low as you can expect it to be? Are there any additional discounts available? Can/Should you raise your deductible?
It is a good idea to consider raising your deductibles for losses you can afford to pay.
Are there any losses such as flood or earthquake that may be of concern and are not currently covered in your policy?
Neither flood nor earthquake are covered by standard homeowners policies.
Has anything changed in your coverage from last year?
Insurers may change policy terms at renewal, but they must notify you first. Ask your agent if there are any anticipated changes when the policy renews.
We also recommend that clients secure an umbrella policy to protect them from personal liability. If someone suffers a catastrophic injury on your property or your teenage driver rear-ends a school bus, you can be held liable for lost income, medical bills, and personal damages. While homeowners and auto policies include some coverage, an umbrella policy will protect you from having to sell your home or liquidate your savings if the unthinkable happens. Many insurance agents suggest that your umbrella coverage should roughly equal at least the same dollar amount as your net worth.
These things aren’t the fun part of summer, we know, but life may be a little less hectic this time of year, so it’s a good time to knock off a “need to do” task before you find out too late that your insurance isn’t what you thought.
Please let us know if you have any questions regarding your insurance policies.
4 Tips for Reviewing Your Life Insurance
07/26/2019
Life insurance is an important part of risk management in a financial plan, but it is not a product we typically like to think about. You may have bought a policy in the past and have not looked at it in years. It can be daunting to review your life insurance because there are a lot of moving parts, but here are four aspects to get you started.
1. Amount of Coverage:
Life insurance can have many living benefits, but its primary role should be to provide a benefit in the event of death. Because your needs and circumstances change over time, when reviewing your coverage, it is important to ask the question, “how much do I need and how long do I need it?” You can sit down with your financial advisor or use a life insurance calculator online to determine your need. If you find you have too much or too little coverage, speak with your advisor to help determine your best option.
2. Consider the Type of Policy:
Term Insurance:
Life insurance can generally be grouped into two categories: term and permanent. Term insurance does not accumulate cash value but pays out a death benefit as long as coverage is in force and premiums are paid. If you have term, you do not have to worry about getting an in force illustration on your policy – as long as you pay the premiums then the policy is in force during the term. Employers often offer group term coverage, but keep in mind this is not always portable and can even be more expensive than getting your own individual coverage.
Permanent Insurance:
Permanent insurance policies build cash value over time. Three common types of permanent coverage include universal life (interest rate sensitive), variable universal life (returns based on market performance), and whole life (returns based on dividends paid by the insurance company). Interest rates change, markets fluctuate, and dividend payouts can vary, so it is important to review the policy value periodically.
3. Running an In Force Illustration:
Because universal life insurance cash value returns are based on interest rates, and interest rates are significantly lower than they were 15 years ago, your policy may now be paying a lower current rate. Lower rates on your policy mean it could be underfunded and in danger of lapsing prior to endowment.
You can request an in force illustration to ensure that your policy is adequately funded to meet your goals. This updated illustration will tell you how long the policy will last if you continue to pay the same premium. This illustration can also give you an idea of how much premium is necessary to keep the policy in force until age 100. Knowing this information helps you to evaluate your options and choose what is best for you. You may decide not to change anything, you could continue to own the same policy but change the premium amount paid, or you might look at replacing it with a new policy.
4. Get your Beneficiaries right:
When reviewing your life insurance, you should also make sure your beneficiary designations are done right. Here are a few suggestions:
Keep them up to date – If you have updated your estate plan with trusts or if you have been through a significant life change like a divorce, it is important to ensure that your beneficiaries are up to date.
Not a minor – Do not have your minor child listed as a beneficiary. Instead, set up a trust and make that trust the beneficiary. You can name a trustee to manage the assets for the benefit of the child, which will avoid potential delays and legal issues with getting the funds paid to support them.
Name Contingent Beneficiaries – If your primary beneficiary dies before you (or at the same time), and if no contingent beneficiary is named, the death benefit will then go through the probate process before going to your heirs. Having contingent beneficiaries named will avoid the probate process, potentially saving your heirs from fees and delays in payout.
Homrich Berg Named to 2019 FA Magazine’s Top 50 Registered Investment Advisors
Homrich Berg is pleased to announce it has been named to the 2019 edition of the Financial Advisor’s Top 50 Registered Investment Advisors. The list recognizes top independent RIA firms from across the U.S.
This is Homrich Berg’s 9th consecutive year on the list and is based on Assets Under Management. View the entire list here: https://www.fa-mag.com/userfiles/0000002019_IMAGES_ALL/FA_ISSUES_2019/07_FA_JULY_2019/RIA_Ranking_Online_2019.pdf
Important Information for College-Bound Children
07/12/2019
This is an exciting time for parents with children headed off to their first year of college. Over the past 18 months or so, you have been planning for this transition, and it may be hard to believe that freshman orientation will be starting soon. Hopefully you have had time to have a meaningful conversation with your son or daughter about what it means to be 18 years old and living away from home for the first time.
In the midst of all the change, many parents and young adults preparing for college may not be aware of how their changing legal status will impact them in a variety of ways. For that reason, we encourage parents who have college-bound children to think about estate planning for their young adults. Estate planning for this age group is easy to overlook, however, having certain documentation in place is highly recommended.
Specifically, we recommend that all parents living in Georgia who have children over the age of 18 should ask their children to sign the Georgia Advance Directive for Health Care form. This statutory form enables a child to name a parent or another trusted individual as a health care agent, and it authorizes health care providers to share medical information with the named agent.
Why this is important: Once children reach the age of majority (which is 18 in Georgia and most other states), they are legally considered adults. As adults, privacy laws generally protect their medical information. We hope you don’t ever need to use it, but in the unfortunate scenario where a child experiences a medical emergency, this document helps avoid any challenges in obtaining information about your child’s medical condition or making decisions on his or her behalf. Additional information, including the form itself and some helpful instructions can be found here: https://aging.georgia.gov/.
Once completed, you should give a copy of this form to people who might need it, such as your health care agent, your family, and your physician. Keep a copy of this completed form at home in a place where it can easily be found if it is needed. Many clients also ask their HB client service team to keep a copy in our files.
If you have children who live in other states, we recommend signing both the Georgia form and the appropriate form for the other state. If you sign more than one form, please be sure to name the same health care agent and backup agent on both. You can find links to forms from other states at this website: https://www.nhpco.org/patients-and-caregivers/advance-care-planning/advance-directives/downloading-your-states-advance-directive/
Reshaping HB’s Commute Experience
04/05/2019
In June 2018, Homrich Berg moved into a new custom-made office, perfectly fit for our collaborative culture and a centralized Atlanta location close to the majority of our clients and employees. As ideal as this location was, the building came with a new challenge: 117 seats and only 65 parking spaces in the building! To face this parking capacity issue, we knew we’d need to promote alternative forms of transportation. Fortunately, as part of our office location selection, we picked a building conveniently located right next to the Buckhead MARTA station. So, with the infrastructure there, all we needed to do was change the mindsets of our employees.
Our main goal with our alternative transportation push was not only to break the myth that public transportation was inferior with solid research and educational programs, but find a handful of internal champions who could clearly see the problems with driving to test out alternative transportation options. Having lived in the New York area and working around the world for a number of years, I know that public transportation is often the best form of transportation. Driving in Atlanta traffic is not only stressful, but entirely unpredictable day to day. In our education and comparative experiences, we asked everyone to focus on their QUALITY of time commuting: not driving with some of the most aggressive drivers in the country, being free to check emails on the train, time to prepare notes for an upcoming meeting, time to unwind after a long day, and even time for a nice short walk.
What started as solving a parking capacity issue turned into giving many of our employees a better way to get to work. The changes we made required a small group of energetic people to work out a better alternative, and then an investment in education campaigns and incentives to change. In every instance, the program results have been life changing for our employees, from a much less stressful alternative to Atlanta’s Fast and Furious driving experience to feeling happier having exposure to natural light in our new office space. When people are less stressed and happier, they like each other more and work better together, and that’s a very good thing for everyone!
Oh, and I almost forgot, everyone does have a parking spot!