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Oct 23 15

President Bush speaks to Association for Financial Professionals

by ericg

Former President George W. Bush spoke to the Association for Financial Professional’s annual convention this month in Denver. He discussed the joys of having grandchildren, the role of government and his role in one of America’s most turbulent times.

He continues to worry about terrorist attacks, since they are better funded and have a safe haven in which to plan. The former President notes that the absence of U.S. influence and presence in dangerous parts of the world emboldens our enemies. Without naming the current administration, he suggests if our tactics aren’t working, then change the tactic.

Israel is our one true ally in the region so we should continue close relations and notes the lesson of democracy taking hold in Japan: ‘former enemies become allies”.

Domestically, former President Bush says we need to grow the private sector by reducing regulation and consider trade and tax policy’s effect on business. Citing the Keystone pipeline, he feels this has been a missed opportunity for high wage employment. He sees opportunity in China, with its 350 million citizens in the middle class, as long as trade rules are fair.

The lesson of  September 11, he says, is that “evil is real. People will kill for political reasons”. When confronted with crisis, he says project calm and explain that “we’re going to deal with it”.

Several attendees commented how surprised they were at how funny and self-effacing the former President showed himself to be. He told of how he stated Abraham Lincoln was the best President, next to his father, and his wife Laura was the best First Lady. That’s when he realized his mom was sitting there listening.

He also points out, “Grandkids are one of the few things not overrated”.

Former President Bush remains hopeful for America’s future, citing that the generation coming up cares for people. “Government doesn’t fix problems, neighbors do,” he says. “I know we’re a spiritual country in our core,” and that gives us strength.

Aug 18 12

Simple Online Financial Tools

by admin

Life Coaches tell their clients who desire successful living to tell themselves the truth. The internet offers useful tools to help us take a realistic look at our finances.

Melissa Mains Timberlake, a coach in Chicago, says she’s “ Choosing to look truthfully at who I am, the choices I’ve made and who I’m becoming. Lately, I’ve been courageously considering those area of my life where I feel a sense of uneasiness. Such a gift to accept the truth, embrace my errors calmly and then address them diligently. Dropping the denial games…”

I love this next statement best: “… releasing the self-critism, and recognizing that the best way to continue to improve today and tomorrow is to know where I’ve gone wrong. Accept it. Learn from it. Change it.” Everyone makes mistakes; everyone has set backs. Learn and move on.

One easy tool that give us a picture of where our finances are headed is a Compound Interest Calculator. In just a few minutes you can get a general idea of the outcome of your savings plan.

Take, for example, a 40 year-old who already has $100,000 accumulated. Let’s see what happens if you continue saving $500 per month at a hypothetical 6.5% for 25 years. That would take our imaginary saver to age 65, a point where a lot of people are hoping to work less and play more.

There are investment vehicles, like annuities, that claim to pay 8%. Annuities have built in expenses, which may yield only 6.5% after these extra fees. Bank CDs only yield around 1% at the time of this publication.

So, using very optimistic yields, tells us, if we start with $100,000, add $500 per month and get 6.5% for 25 years we’ll accumulate less than $860,000.

The bad news is Forbes Magazine reports “Just a generation ago, a person with $2 million or more in liquid assets would have had enough for a secure retirement. But not today.”

The beauty of these free online calculators is how easy you can vary the assumptions. Most people haven’t saved $100,000 by age 40. Let’s see what happens if our little saver accumulated $50,000 and increases their monthly contribution to $1000 per month, still netting 6.5% annual return. That turns into slightly less than $994,000 in 25 years.

Unfortunately there is more bad news. Inflation compounds too. Inflation is currently more than 10% when we add the cost of food and fuel back in to the equation. At 10%, inflation cuts your buying power in half every seven years.

My high school English teacher, Gary Masquelier, thought chewing gum in class was an insidious evil that needed to be thwarted with diligence and intention. Former Federal Reserve Board Chairman Alan Greenspan was more concerned with inflation because it is a silent thief. Oppenheimer funds has a helpful write up that explains diminished buying power due to inflation: 

Most people can’t save much more than they already do, at least without drastic sacrifice. The one solution is to earn a higher rate of return. We have a 21 year old student who spoke at a luncheon yesterday who said he made more than 100% in just six months using our market forecasting techniques and the trade suggestions in our newsletter.

Our 21 year old student is quite bright and has an advantage over most people, but what if you could make 50% per year? We take risks, so be conservative: invest only $2000.  You’d have $6,650,000, in only 20 years. You could drive your new Audi R8 to your high school reunion and set on fire a half million dollars, just to tick off your friends, and still be a multi-millionaire!

Connect with Ms. Timberlake at

Aug 6 12

The Trillion $$$ investment you never heard of

by admin

ETFs are widely popular among active investors but largely unknown to the general public. ETF stands for Exchange Traded Funds; they are baskets of stock that act like a mutual fund but have become popular due to their lower fees own, low entry cost and ease of purchase.

Bloomberg reports there are over 1400 ETFs in existence and each seeks a particular niche. There are ETFs that follow commodities such as grains (GRU) or Gold (GLD). Investors should note the purpose of an ETF is to get a similar rate of change in price, but it won’t be exact.

At the time of this writing Wheat futures have risen approximately 50% in the past 60 days. GRU has risen only 40%. There are several reasons. One is GRU includes other grains that haven’t experienced the same change in price, such as corn.

Another factor comes from a warning from the New York Stock Exchange – the underlying asset many times is a futures contract. As these contracts mature there is price fluctuation that doesn’t reflect the actual cost of the asset.

“ETFs began as a low-cost alternative to the mutual fund, a sort of improved index fund. Nathan Most, an executive at the American Stock Exchange, developed the first SPDR-Standard & Poor’s depositary receipt in 1993,” repots Bank Investment Consultant. SPY is the call symbol for the ETF that follows the S&P.

Creating more opportunity and more confusion is the addition of leverage. Some ETFs like FAZ and FAS follow financial stocks, but seek to move an average of 300% more. Both use options to create more gains or losses. Options have a built in “wasting aspect” to them. That is, time diminishes the value.

FAS moves with the financial stocks. If they are rising, so is FAS. FAZ is an inverse ETF, also called a “short”. If the price of financial stocks is falling then FAZ is rising. And because of its leverage, it moves faster.

In May 2012 the DOW fell about 1300 points and financial stocks fell along with it. FAZ moved up over 50% in the same time period. Used wisely ETFs are an important piece of any investment strategy, but they are not a “buy & hold” instrument. Investors must seek trends, ride them and get out. Timing the turns is critical.

Our 21 year old student, Trent C. of Broomfield, Colorado, made over 100% in 6 months using the market timing techniques taught to him by us. Combine the right vehicle, purchased at the right time, investing becomes fun again.

Dec 5 11

Economy “Stuck”

by admin

The December 4, 2011 Denver Post said “More economists are predicting Europe will slip into recession soon, a spillover from a sovereign debt crisis that has roiled stock and bond markets for months.” The Post paints a bleak picture stating, “Italy’s government bonds are 120 percent of the county’s economic output, a burden made heavier by slow economic growth and interest rates that have soared above 7 percent”.


Bank Investment Consultant’s November 2011 cover story describes the economy this way: “In a word, it’s stuck. After a brief period of optimism about fiscal recovery at the end of 2010, the mood has shifted and embraced the reality of high unemployment, lackluster borrowing and an unpredictable stock market.”


Our local mall in Metro Denver, the Colorado Mills Mall, is a reflection of the poor economy described in the above articles. During the most important shopping season of the year they have eight retail stores empty. At least one of the stores there, D. W. Designs, is only present for the 6 weeks preceding Christmas. This pattern continues throughout town. Colfax Ave. is a major business thoroughfare in Denver and runs past the center of power, the capitol. Prime retail space remains empty on Colfax Aveneue and is a foreboding reflection of the trends described here.

Nov 26 11

Thanksgiving Dinner Inflation

by admin

WASHINGTON, D.C., November 2011 – The retail cost of menu items for a classic Thanksgiving dinner including turkey, stuffing, cranberries, pumpkin pie and all the basic trimmings increased about 13 percent this year, according to the American Farm Bureau Federation.

FBF’s 26th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $49.20, a $5.73 price increase from last year’s average of $43.47.

The AFBF survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk, all in quantities sufficient to serve a family of 10. There is also plenty for leftovers.

The big ticket item – a 16-pound turkey – came in at $21.57 this year. That was roughly $1.35 per pound, an increase of about 25 cents per pound, or a total of $3.91 per whole turkey, compared to 2010.  The whole bird was the biggest contributor to the final total, showing the largest price increase compared to last year.

In addition, “the era of grocers holding the line on retail food cost increases is basically over,” Anderson explained. “Retailers are being more aggressive about passing on higher costs for shipping, processing and storing food to consumers, although turkeys may still be featured in special sales and promotions close to Thanksgiving.

Yearly Averages
1986 – $28.74
1987 – $24.51
1988 – $26.61
1989 – $24.70
1990 – $28.85
1991 – $25.95
1992 – $26.39
1993 – $27.49
1994 – $28.40
1995 – $29.64
1996 – $31.66
1997 – $31.75
1998 – $33.09
1999 – $33.83
2000 – $32.37
2001 – $35.04
2002 – $34.56
2003 – $36.28
2004 – $35.68
2005 – $36.78
2006 – $38.10
2007 – $42.26
2008 – $44.61
2009 – $42.91
2010 – $43.47
2011 – $49.20

“Although we’ll pay a bit more this year, on a per-person basis, our traditional Thanksgiving feast remains a better value than most fast-food value meals, plus it’s a wholesome, home-cooked meal,” Anderson said.

A gallon of whole milk increased in price by 42 cents per gallon, to $3.66. Other items that showed a price increase from last year were: a 30-ounce can of pumpkin pie mix, $3.03, up 41 cents; two nine-inch pie shells, $2.52, up 6 cents; a ½ pint of whipping cream, $1.96, up 26 cents; one pound of green peas, $1.68, up 24 cents; a 14-ounce package of cubed bread stuffing, $2.88, up 24 cents; a dozen brown-n-serve rolls, $2.30, up 18 cents; three pounds of sweet potatoes, $3.26, up 7 cents; and fresh cranberries, $2.48, up 7 cents.

He noted that despite retail price increases during the last year or so, American consumers have enjoyed relatively stable food costs over the years, particularly when adjusted for inflation.

The 13 percent increase in the national average cost reported this year by Farm Bureau for a classic Thanksgiving dinner is somewhat higher but still tracks closely with the organization’s 2011 quarterly marketbasket food surveys and the federal government’s Consumer Price Index for food (available online at .

Farm Bureau volunteer shoppers are asked to look for the best possible prices, without taking advantage of special promotional coupons or purchase deals, such as spending $50 and receiving a free turkey. Shoppers with an eye for bargains in all areas of the country should be able to purchase individual menu items at prices comparable to the Farm Bureau survey averages. Another option for busy families without a lot of time to cook is ready-to-eat Thanksgiving meals for up to 10 people, with all the trimmings, which are available at many supermarkets and take-out restaurants for around $50 to $75.

The AFBF survey was first conducted in 1986. While Farm Bureau does not make any scientific claims about the data, it is an informal gauge of price trends around the nation.

A total of 141 volunteer shoppers from 35 states participated in this year’s survey. Farm Bureau’s survey menu has remained unchanged since 1986 to allow for consistent price comparisons. Article excerpted from AFBF’s website.

Nov 14 11

Thinking Through Falling Markets

by admin

Rob Stein of Astor Asset Management runs a separately managed account strategy with $1.25 billion and works with over 600 financial advisers. Stein has noted his clients are becoming increasingly concerned: “Everybody got mugged in 2008, so they’re walking down the street and hearing footsteps and saying ‘I’m not letting that happen to me again.’ So they’re shooting first.” Investors “used to  to feel you could hide in the alternative space, but have now realized, “Oh, you can lose money there too.”

Michael McGrath, head of alternatives at Morgan Stanley Smith Barney, says that if clients are nervous advisers should discuss alternatives with their clients. China’s economic growth is well publicized but Adam Taback of Wells Fargo says “China might be growing at a 10% rate, but long-only equity funds have had a hard time capturing that.” “That’s why investors need to know how to take profits in a falling market. Traders use three primary methods: shorting, inverse ETFs and options,” says Eric Gemelli, an investment and forecasting trainer with

Nov 7 11

Herman Cain’s 9-9-9 plan

by admin

Financial planners tend to toil quietly in the background, but all that changed for suburban Cleveland planner Rich Lowrie when Republican presidential contender Herman Cain identified him as his economic advisor during a televised debate. Cain credited Lowrie with helping to shape his suddenly famous 9-9-9 tax proposal that has helped vault Cain to the top of the polls.

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In an extensive and exclusive interview, Lowrie, a managing director of wealth management for Wells Fargo Financial Advisors in the affluent town of Pepper Pike, Ohio, responded to critics who questioned Cain for not choosing an academic as his senior economic advisor.

“You don’t need a Ph.D. in economics to explain simple economic truths to people,” says Lowrie, 47, who holds a bachelor’s degree in accounting from Case Western Reserve University. “Not surprisingly to us, the American people understand economics a lot better than Washington gives them credit for.”

Wells Fargo’s Rich Lowrie

Or, as Cain has put it, “Rich has more common sense than many who call themselves economists.”

To the charge the 9-9-9 plan will hit the poorest Americans hardest, Lowrie says many of the people at the bottom of the economic pyramid would be exempted. He says the Cain campaign plans to unveil new details of its plan in Detroit on Friday.

Lowrie’s prominence in the campaign may mark a historic moment in the roughly 40-year-old profession of financial planning. Now-retired financial planner Jack Gargan served briefly as chairman of Ross Perot’s Reform Party in the 1980s. But aside from him, none of the leaders of the Financial Planning Association, nor any of the other longtime planners contacted this week, could think of another planner who’s helped shape a national debate.

Lowrie doesn’t have much time to wonder whether he should be on the hot seat. It’s all he can do to keep his campaign work and his advising practice separate, as requested by Wells Fargo. For that reason, he declined to answer even the most basic queries about his business, questions to which most other planners respond readily.

For his part, Lowrie claims no interest in the spotlight. His work as a behind-the-scenes conservative activist dates back seven or eight years. That work has roots in a still-earlier decision he made in the early ’90s to refocus his business to carve out substantial time for new pursuits, from national politics to helping underprivileged kids in Cleveland.

A lightning bolt

“When my oldest daughter Rachel was about 2 and my youngest daughter Ryann was still on the way, I thought to myself, ‘OK, in five more minutes, I can put her down and then dig into those research reports,” recalls Lowrie, who’s now divorced. (His daughters are now 13 and 11.) He caught the thought before acting on it. “It was almost like God sent one of those lightning bolts down and it hit me and that was the turning point. I thought I’ve got to get out of this transactional approach to business and build something with more value for my clients.”

In short order, Lowrie signed up with a business coach who offered a three-year program designed to free clients from the time-sucking daily minutiae of operating a business.

As part of the program, the coach asked Lowrie to envision his death and how he wanted to be remembered. At this time, the demise of his political hero remained fresh in his mind. In 2004, when Ronald Reagan lay in state in Washington, mourners came to view the body at all hours. After a long day at the office, Lowrie drove through the night to the Capitol to pay his respects. At about 4 a.m., he and a friend had their turn to see Reagan’s body. They then drove home, and Lowrie returned to work later that morning.

After the three years of working with the business coach, Lowrie learned how to focus on building client relationships, leaving the day-to-day operations of his practice to others and spending one or even several days every week away from the office.

One of his first new passions became the Club for Growth, the Washington-based political action committee that supports conservative political candidates for Congress. While at an organizational gathering in 2004, Lowrie says he heard a talk by Herman Cain, then a candidate for the U.S. Senate from Georgia.

“I thought this guy really gets it,” Lowrie recalled. “If he has half the impact on the American people as he has with me, he is going to be a force to be reckoned with.”

Cain finished second in the primaries, but soon after landed his own radio show. From afar, Lowrie followed the show to keep up with Cain. In the meantime, Lowrie threw his support behind Kenneth Blackwell, another prominent African-American conservative, in Rockwell’s 2006 bid to become governor of Ohio.

Blackwell was campaigning on a platform of a state spending cap. Lowrie supported the concept and decided to cast a spotlight on it by hosting an event featuring renowned economist, and fellow Ohio native, Arthur Laffer.

The Laffer effect

From the earliest days of his planning career when he was an intern at the investment firm McDonald & Co. in 1988, Lowrie says he’s read research reports by Laffer regularly. A member of Reagan’s Economic Policy Advisory Board, Laffer’s work helped give rise to the Laffer Curve, which proponents say illustrates how lower taxes leads to economic growth. Lowrie says after he cold-called Laffer, the two developed a friendship; he regards the economist as a mentor. While Laffer says he refrains from endorsing candidates during primaries, he strongly endorses 9-9-9.

While Blackwell’s 2006 race ended in defeat, Lowrie had become well connected in the world of politics.

‘You’re not going to believe this’

Last year, Mark Block, a friend of Lowrie, called him and said, “You’re not going to believe this, but Herman Cain is going to run for president and I am going to be chief of staff.’ ” Lowrie says he’d met Block while helping him open an Ohio chapter of American for Prosperity, a conservative advocacy group founded by billionaire brothers David H. and Charles G. Koch.

“This time around, I knew Cain was going to shake things up,” Lowrie says. During the campaign’s earliest days, Block and campaign aides called the planner frequently for advice on economic issues.

“I would get a call from Mark saying, ‘Cain is looking to get rid of taxes on repatriated foreign products,’ ” Lowrie recalled. Companies that operate and pay taxes overseas pay another round of taxes when bringing assets back to the U.S. “I told them to keep driving that one home. … It’s double taxation.”

Lowrie’s connections and informal consulting led Cain to ultimately offer him the job of senior economic advisor of his campaign.

Three ‘truths’

Fundamentally, Lowrie says, he and Cain agree on three “simple truths.” The first, as they see it: Production drives the economy, not spending. “We all have to produce first and only then can we consume,” he says. “Production pulls along consumption like a caboose and people get that backward all the time.” The second, in their view: Risk-taking drives growth. “If you need to expand the economy by one more unit this year, then you need to take a risk, whether that’s one salesman making one more phone call or one company making one more product.” The third: The dollar must hold its value. “Ask people what it would be like to wake up every morning and have to ask how many inches there are in a foot? It would be chaos. The dollar has to hold its value in the same way that there are always 60 seconds in a minute. Instead, it’s up and down like a yo-yo. … If we get these three things right,” he continued, “the natural state of things is prosperity. The only way to screw it up is to screw those principles up.”

Lowrie says he and Cain devised the 9-9-9 plan with these ideas in mind. Lower taxes would lower the cost of production. This would decrease the cost of risk-taking behavior, he says, and attract capital to the U.S. to stabilize the dollar.

The plan is nothing revolutionary, according to Lowrie, it borrows heavily from prior flat-tax plans and so-called fair-tax plans that have sought to overtly tax consumption and eliminate other taxes. Laffer, in an editorial supporting the plan this week in The Wall Street Journal, described it as “not all that different from California Gov. Jerry Brown’s 13% flat tax when he ran for president in 1992. … Who says a flat tax can’t be a bipartisan proposal?”

Lowrie says he and Cain first began discussing how to overhaul the country’s tax code earlier this year while driving together on the campaign trail. “’How bold do you want to be?’” Lowrie asked Cain. The candidate replied with a big smile and a booming voice. “Bold,” Lowrie says Cain replied. “I want something that will tax everything once and nothing twice.”

9-9-9 Details

The plan’s triple nines refers to a 9% tax on income, a 9% business tax and a 9% national sales tax. During the presidential debates in Las Vegas on Tuesday, several of the candidates slammed Cain and his plan, which they claimed would simply add to the current tax burden on most Americans. They were fueled by a report by the Washington-based Tax Policy Center that 84% of Americans would pay more taxes on the plan.

Not so, Lowrie insisted the next day. Including corporate taxes and personal taxes, the marginal cost of producing goods stands at 42%, he says. The three 9% taxes together add up to a marginal tax rate of 27%, a drop of 15 points. The plan would also eliminate a whole raft of taxes, including capital gains, estate taxes and the tax on repatriated profits.

Right now, Lowrie continues, all goods purchased in the U.S. contain embedded taxes that seem invisible. When you buy a $1 bottle of water, he says, that price includes corporate and payroll taxes paid by the bottler, the distributor and the grocer. The 9-9-9 plan would reduce the overall embedded taxes. Although it would add a national sales tax, that tax would become visible to consumers on their receipts. Lowering the cost of production to consumers per bottle to around 90 cents, the sales tax would return the price to about $1, making the plan price-neutral to consumers.

However, Lowrie claims, the most profound effect would be felt elsewhere. By eliminating deductions and other complexities, the plan would eliminate the roughly 30 cents in lost time and direct costs associated with tax preparation that Lowrie claims Americans incur to pay every dollar they hand over to the government.

Excerpted from an article by Ann Marsh, published in Bank Investment Consultant.

Feb 24 11

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by admin

Dec 18 10

Troubled Debt Restructuring Rose 64%

by admin

“Community banks are poised to  to revisit in 2011 many of the troubled loans they worked hard to restructure this year.

Among banks with less than $20 billion of assets, troubled debt restructurings rose 64% as of Sept. 30, compared with a year earlier.

A greater concern is that more than a third of such loans fell back into delinquency, making it difficult to determine whether more restructurings will fix the problem or simply extend the misery.  A number of industry observers take a skeptical view.

The high delinquency rate means restructurings  generally have not been all that successful’ “…….according to American Banker

Dec 11 10

Former Fed Director Predicts Inflation

by admin

Stefan Anderson is a former Director of the Federal Reserve Bank of Chicago with an undergraduate degree in economics from Harvard and a MBA from the University of Chicago. Combined with his experience at the Fed and CEO of a mid-size bank, his voice is as salient as we are likely to find to help us understand the impact of Quantitative Easing 2.0 and its effect on Baby Boomers.

Investopedia describes quantitative easing as “A government monetary policy occasionally used” – not every other year – “to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.”

“Central banks use Quantitative Easing when interest rates have already been lowered to near 0% levels and have failed to produce the desired effect,” as defined in Investopedia. Fed Chief Ben Bernanke announced November 3, 2010 a second attempt to stimulate the economy with $600 billion plus up to $300 billion in Treasuries; this new money is in addition to the $1.8 trillion from Quantitative Easing 1.0.

The national debt is $14 trillion and “We’ve got to confront this problem,” says Sir Julian Robertson, former chief executive officer of the $22 billion hedge fund Tiger Management Corporation. Printing money has “never been the answer to these kinds of problems.” Robertson was praised in Sebastian Mallaby’s book More Money Than God. Said Mallaby: “Tiger’s value-investing tradition made it almost unthinkable for Robertson to buy into the (tech) bubble.”

Likewise, America’s bonds, our primary method for raising money, could become a bad value. “The bigger threat,” says Anderson, “is inflation – which could choke off growth in the equity market – would lead to a significant decline in bond…..
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