Podcast
Retire with Peace of Mind
Hosted by Eclectic Associates, Inc. · EN
The Retire With Peace of Mind podcast by Eclectic Associates will cover various financial planning and investment management topics to help you have peace of mind before -- and after -- you retire. Carl Lachman hosts, edits, and produces this podcast, and the background music is from Bensound.com. Learn more about Eclectic Associates, a fee-only financial planning and investment management firm, at www.retirewithpeaceofmind.com
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Guiding Our Clients Through 40 Years of Market History
Nov 13, 2024Tap to summarizeBy David K. MacLeod, CFA, CFP®As we celebrate 40 years of serving our clients this year, we reflect on all the ups and downs we have experienced in the financial markets since Eclectic Associates was founded in 1984. While the world around us has evolved, our investment philosophy has remained consistent. Our focus on our clients’ long-term goals, diversification, and taking only necessary risks has guided us through periods of economic prosperity and uncertainty alike.In this article, we will highlight five pivotal periods that have shaped our firm’s history and include direct quotes from letters to our clients at the time: Black Monday in 1987, the Dot-Com Bubble of the late 1990s, the 9/11 terrorist attacks, the Global Financial Crisis of 2008, and the COVID-19 pandemic. We have stood alongside our clients through each of these periods, helping them stay grounded and making the best decisions for their futures. Black Monday: October 1987On Black Monday, the Dow Jones Industrial Average fell 22.6% in a single day—the largest one-day percentage drop in history. The sudden decline created widespread fear and uncertainty, leaving many investors worried about the future of their portfolios.In letters to our clients around that time, we sought to provide good direction and reassurance. Prior to the crash, in March 1987, we wrote, "The stock market has increased significantly in value during 1987. It has also been rather volatile with large gains and losses in the Dow Jones averages in any one day. Our view is the market has room to continue to increase... This upward movement will not be a smooth straight-line but will continue to have significant upward and downward movements."Later, in our November 1987 letter to clients, we acknowledged the anxiety many felt in the aftermath of Black Monday: "You, like the rest of us, have to be concerned over the recent violent swings in the marketplace. None of us like what has happened, yet we all know market ups-and-downs are part of every investment."We reminded clients of the importance of focusing on the long term, writing, "None of us are short-term speculators. We all are making investments for the long-term... Over time, ownership (stock) in private enterprise (business) has paid the most consistent and highest rewards to the investor." Our recommendations were clear: "Hang in, do not make major portfolio changes... Study and stick with basic investment practices. Do not get caught up in either extreme: panic or 'get-rich-quick' schemes."Our commitment to these principles—remaining calm, avoiding unnecessary changes, and maintaining a diversified, long-term approach—helped our clients navigate this challenging period.The Dot-Com Bubble: Late 1990s - 2000The late 1990s brought a frenzy of speculation in technology stocks, ultimately culminating in the burst of the dot-com bubble in 2000. During this period, we saw firsthand how investors who chased speculative gains were left with heavy losses. Our philosophy of taking only necessary risks proved crucial.In our January 2000 letter, we anticipated potential volatility, writing: "We expect the year 2000 to be interesting and probably volatile from an investment perspective. Currently, the economy is very strong and unemployment is very low. To us, this sounds like great news. However, from an investment perspective, it makes people more concerned about inflation returning." We reminded clients that the past several years had been extraordinary, with high returns for large growth stocks, but emphasized that such returns were unlikely to persist indefinitely: "We do not expect the high returns (20% +) to continue. Historically, we think of the stock market as growing around 10% per year."Later in October 2000, after the dot-com bubble had begun to burst, we wrote, "From the beginning of the year through mid-March, the Nasdaq gained about 25%, and some market commentators were saying that New Economy stocks would continue their stratospheric growth forever. By that time, investors in technology companies were paying virtually no attention to the price of the shares they were buying. No matter how much they paid, they assumed they could always sell the shares for more. In striking contrast to the declines in companies that were hot, some things that people couldn't sell fast enough earlier this year have come roaring back. The principle of diversification is still very valid."We have continually reminded our clients of the importance of diversification and a disciplined, long-term approach. Our January and October client letters emphasized that avoiding extreme investment allocations—whether driven by greed or fear—was critical to investment success.9/11 Terrorist Attacks: September 2001The terrorist attacks of September 11, 2001, were a profound moment of grief and uncertainty. On September 12th, we wrote to our clients: "Yesterday was a day of great tragedy and evil for the United States. We grieve with you the loss of lives and the loss of our nation's sense of security. We continue to pray for the families of those impacted as well as our leaders who must guide our country through this time. While our security does not ultimately lie with what man can provide, this act of terrorism does make us stop and wonder about what is safe and secure."From a financial perspective, we acknowledged that these feelings of insecurity had extended to the markets: "The papers today are full of renewed worries about the stock market and a possible recession. The stock market is closed again today, Wednesday, and we do not know whether it will open tomorrow or perhaps not until next Monday. We think it is wise that the stock market was closed yesterday and remains closed today. As we saw in overseas markets, the initial reaction to an event like this is to sell stocks and buy bonds or other more secure items. Many of the overseas markets were down three to five percent overnight. But as we write this, those markets are already showing some signs of recovery."Our message to clients was to remain steady and not make major changes: "Our perspective is to ride through this time without making major changes in the amount of money we have invested in the stock market. We may actually view it as a buying opportunity if the stock market drops significantly. Usually incidents like yesterday's cause a drop in the market and then a rebound after things have settled down. How quick the rebound occurs depends on the overall economy and the mood of the country. We do not expect a quick rebound, but if we have a drop in the stock market we expect it to be temporary. Therefore, we will ride through this time of increased volatility."Indeed, the markets did remain closed until the following Monday. The stock market fell dramatically that month before recovering and, in fact, the S&P 500 Index ended the year 2001 5% higher than where it had closed on September 10th.The Global Financial Crisis: 2008-2009The financial crisis was a pivotal moment in modern financial history, marked by the collapse of Lehman Brothers and a near meltdown of the global financial system. The downturn was deep and many investors questioned whether they should continue to invest at all.In our April 14, 2009 client letter, we addressed these uncertainties and shared some hopeful signs with our clients: "While the rally that began in November was nullified by the declines in January and February, there are reasons to believe that the economy—and therefore the market—has turned a corner. Foremost among those reasons is that large financial companies are beginning to return to profitability. The latest rally began in March when Citigroup announced that its operations would be profitable for the first quarter. In subsequent days, Wells Fargo stated that the first quarter would be one of its most profitable ever, even though the quarter included results from digesting the acquisition of a very troubled adjustable-rate mortgage business (Wachovia). Finally, this week, Goldman Sachs announced profits of about $2 billion for the first quarter, and an intention to pay back the money it recently received from the government in the form of TARP funds."We emphasized the importance of the financial sector's recovery: "The return to health of the financial sector is key to the health of the entire economy. Banks and securities firms, through ill-advised lending practices, led us into this crisis, and they should be able to lead a recovery as well. The government has stepped into the breach and has become a lender of last resort, but we would much rather see companies reclaim that role. Profitability is the first step toward allowing that to happen."We also acknowledged the continued uncertainty and volatility: "Uncertainty still has a prominent place in the markets and the economy. We therefore expect to see continued, although lessening, volatility. We would not be surprised to see 10-15% declines in the stock market, even during a long-term recovery, so we recommend you prepare yourself for that possibility. However, as we saw in early March, the market can reverse course dramatically, just when it seems as if there is nothing positive on the horizon."We reassured clients about our firm's stability: "Many of you have asked us how Eclectic is doing during this time. It certainly has been a difficult time as we se...
Transcribe →Does Title Lock Insurance Help Avoid Fraud?
Nov 6, 2024Tap to summarizeBy Clarissa Hartono, CFP®Have you seen advertisements for title lock insurance and felt scared about having your home title stolen? We have had clients ask us about whether they should purchase title lock insurance and where one might purchase it. First, let us clarify that “title lock insurance” is not the same as “title insurance.” Homeowners usually purchase title insurance when they first buy their property. This title insurance protects you from having other people challenge your title, with matters like unpaid taxes, liens, or property disputes. On the other hand, title lock insurance is less of an insurance and more of a service that occasionally monitors your title/deed to protect against title fraud. The name title lock insurance seems deceiving because the service only notifies you after fraud happens, not before. Having title lock insurance would not prevent a thief from transferring your property deed to someone else.While title lock insurance has been marketed as a precautionary measure against title fraud, for homeowners in Orange County, California, it is often an unnecessary expense. A few factors make this form of insurance worthless, including the infrequency of title fraud, protections that the government has in place regarding existing title insurance, and a secure property recording system.Title Fraud is Extremely RareWhile title fraud is concerning, it is an uncommon occurrence. Thieves must first use identity theft to forge documents and then transfer ownership of a property. FBI reports show that title fraud is extremely rare, especially in Orange County, California. (1)If title fraud was as common as the title insurance companies advertised, why don’t we constantly hear it in the news or know a lot of people that have been affected by it? Other government agencies are tracking title fraud crimes and their data shows that this is not a significant issue. Existing Title Insurance Provides ProtectionAs we mentioned in the beginning, most homeowners purchased title insurance at the time of closing. This insurance already covers what matters by ensuring that your ownership is authentic and clear of any prior disputes. While title insurance doesn’t cover fraud, most policies may include legal defense if title fraud were to happen. (2)Secure Property Recording SystemTitle lock is an expensive notification service that probably uses the same system we could use ourselves, for free! Orange County’s public records system keeps detailed records of every property transaction. Homeowners can easily access this information and regularly check these records.Legal Protections for HomeownersLet’s say against all odds, that someone does fraudulently transfer your property title, what happens then? California law states that property obtained through fraudulent actions is not legally binding and cannot be retained. (3) This means that you would not lose your home. The court would eventually resolve the issue and return your title back to the rightful owner. It may help to know that the penalties for title fraud are severe, which makes this a high-risk and low-reward act. The process is over complicated, and the paper trail is too clear for a criminal trying to stay in the dark.Below are a few steps you can take to protect your property from fraud and they won’t cost you anything:- Check your credit report - Check Orange County’s public records system - Review your bills regularlyTo conclude, title fraud is not as concerning as it may seem. While this is not a common type of fraud, there are other types of fraud you should be aware of. Here’s an article that references the other types of fraud.If you ever find yourself in a situation similar to any of these, or you think that someone is targeting you with a scam or fraud in any way, please feel free to schedule a complimentary phone call or meeting with one of our fee-only financial advisors. We would be happy to act as a sounding board as you navigate through your own unique scenario. Footnotes:1) FBI Internet Crime Report, Federal Bureau of Investigation. Available at: FBI Internet Crime Report2) American Land Title Association, "What is Title Insurance?" Available at: ALTA3) California Civil Code §1214-1221, "Title Transfer Fraud and Remedies." Available at: California Legislative Information
Transcribe →Investments: The “How” Changes, But Not The “Why”
Oct 9, 2024Tap to summarizeBy James Moore, CFP® “Investment philosophy: Investment diversification is of key importance, especially in today’s uncertain economic environment. Take no more risk than is necessary to accomplish your goals. Tax savings take second place to sound economics in an investment. Consider the complete cost before getting into an investment: commissions, fees, management expenses.” -Excerpt from an Eclectic Associates financial plan written for a client in 1988 Relevant Artifacts Eclectic Associates began in 1984, which makes 2024 the 40th year that we have served our clients. One of the ways we celebrated this 40-year anniversary was by recently hosting an open house event for our clients in our Fullerton office. As a part of this celebration, we filled up our conference room with a collection of interesting financial “artifacts” that we have collected over the years. This included some of our favorite investing books, newspapers saved from significant moments in financial history, and a collection of financial plans and letters written to clients in the early years of Eclectic Associates’ existence. I particularly enjoyed reading through some of the early financial plans and letters we had written to clients. While much has changed over the last 40 years, it was evident that our investment philosophy has remained the same. The excerpt above was written 36 years ago, but the investment philosophy section in the financial plans we write today is practically identical. Our steadfast investment philosophy is one of the primary reasons why our clients, and therefore our company, have thrived over the last 40 years. The Why At Eclectic, we focus on the long-term and not the short-term. We think it is impossible to predict the future. We value diversification. We think taxes and expenses should be considered as a part of all investment decisions. Risk is an inherent component of investing, but the risk taken should be appropriate for each client. We value research and due diligence before making any investment decision. Our investment philosophy will never be exciting to everyone. We generally won’t be involved in the latest-and-greatest hot new investing trends, but we strive to have a philosophy that will allow our clients to reach their financial goals no matter the market environment. The How Having a consistent investment philosophy does not mean that we never change or improve in other ways. The world of investing has changed greatly over the last 40 years, and we have changed the way in which we implement our investment philosophy as well. For example, many investment processes that used to be time consuming and paperwork intensive can now be done electronically in a fraction of the time. Rather than making trades and tracking investments directly with mutual fund companies, most publicly traded securities can now be traded and tracked with a single custodian like Charles Schwab. Individuals have more investment vehicles and choices than they did 40 years ago because technology has made it easier for companies to create new investment vehicles. These technological improvements have generally been very beneficial for investors, but they have also led to some potential pitfalls. The amount of easily accessible investment options, combined with the overwhelming financial noise coming from new sources like social media, can make focused, disciplined investing a challenge. Convenient, real-time access to market movements and investment account balances can create an impulse to focus on the short-term and make unnecessary portfolio changes. In a way, it’s more difficult than ever to maintain a long-term investment focus, but that’s what we strive to do. What’s Next… “Dear Friends, As we approach the election, we have found a number of people are concerned about the direction of the stock and bond markets. Our crystal ball was cracked a long time ago. We do not try to predict the short-term swings in the market. In fact, we do not believe anyone can consistently predict them. As long-term investors, we recommend a diversified portfolio of investments…with an appropriate balance and a long-term outlook, an investor can ride through the short-term market swings.” -Excerpt from a letter written to clients in September 1988 With another presidential election coming up, this client letter feels especially relevant today, and displays how our timeless principles guide us in uncertain times. Many things are different now than in the 1980s, but we could send this communication to clients today and it would still be appropriate. We have the same investment philosophy now that we did back then. Elections do matter and have consequences, but we continue to believe that it is not possible to consistently predict short-term market movements. We will continue to stay diversified and focus on the long-term outlook so our clients can meet their goals. If you know someone who should consider using our services, please send them our way. We are happy to meet with anyone for a free, no-obligation meeting. Have them call us at 714-738-0220 to schedule a meeting, or they can click here to schedule an introductory call with one of our advisors.
Transcribe →2024 Third Quarterly Letter
Oct 8, 2024Tap to summarizeBy David K. MacLeod, CFA, CFP®Stocks ended the quarter at a new high, with the S&P 500 up 6%, led by dividend payers and utilities while tech stocks cooled off. Diversification rewarded investors as small company stocks jumped up 10% and international stocks gained 9%. Value stocks performed better than growth stocks. Bonds also performed well as the 10-year U.S. Treasury yield declined a half percent to 3.8%.Inflation has cooled for five consecutive months and is expected to reach the Federal Reserve’s target of 2% soon. Concern among economists shifted from inflation to the labor market after the U.S. Department of Labor revised lower the number of jobs added by 800,000 for the 12-month period ending March 2024. The unemployment rate remains historically low at 4% but job gains has been slowing. The aftermath of Hurricane Helene is expected weigh on upcoming jobs reports. The good news is that there are 8 million job openings according to the JOLTS program so there is still about one job opening per unemployed person.The job market outlook will depend on economic growth. At this point, a recession isn’t in the short-term outlook. Real GDP growth for the third quarter is expected to be close to the 3% growth rate achieved in the second quarter. While housing and net imports have held GDP back a little, consumer spending has been driving the economic expansion as U.S. household net worth hit a new all-time high of $164 trillion.One year ago, in our 9/30/2023 quarterly letter, we shared key insights from JP Morgan’s study of the past 40 years of Fed interest rate hiking cycles. The study found that after short-term interest rates peak, stocks and bonds typically perform better than CDs and money markets in the following 12 months. That proved to be true again this time with both stocks and bonds meaningfully outperforming over the past 12 months. Looking ahead, JP Morgan’s analysis also showed that after the first Fed rate cut, stock returns are positive over the next 12 months as long as the economy avoids a recession.All attention is now on the 2024 U.S. presidential election. Research Affiliates has found that, historically, stocks tend to rise after close presidential elections. But we wouldn’t be surprised to see higher market volatility in the weeks ahead of the election. We recommend maintaining a long-term investment strategy that is resilient through presidential elections and ups and downs of the economic cycle.Please do not hesitate to call if you have questions or want to schedule a meeting.
Transcribe →Beneficial Ownership Information Report - Due 12/31/2024
Sep 24, 2024Tap to summarizeBy David K. MacLeod, CFA, CFP®We want to make sure the new federal Beneficial Ownership Information (BOI) report to FinCEN is on your radar, if you are required to complete it. The penalties for late filing are stiff so we recommend you don’t put it off.Congress passed legislation in 2021 that requires certain business entities to report who their owners are, in an effort to crack down on tax fraud and money laundering.The report can be done online and is due by 12/31/2024. Here’s a link:https://fincen.gov/boiCorporations and LLCs need to disclose all owners with >25% ownership interest in the entity and anyone who exercises substantial control (President/CEO). It should be a straightforward report for most businesses. For more complicated ownership structures, some CPAs are offering to prepare it for their clients.This is not an annual requirement – only when there’s a change in the reported information will an updated report be required. A number of entities are exempt from filing such as 501(c)3 charities, banks, and large corporations.Here’s an article with more information. Please feel free to call us if you have any questions.
Transcribe →Wisdom From The Farm
Sep 3, 2024Tap to summarizeBy Carl Lachman, MBA, CFP®Farming is Not EasyOur founder, Bill Camp, originally was a farmer in the Central Valley of California before he changed careers and started Eclectic Associates. Farming is not easy: the days are long, it takes a lot of hard work, a crop is often totally dependent on the timing of rain, and sometimes the difference between success and failure is a narrow margin. Farming also teaches you things, whether you want to learn or not. Although he never told me this, I have to believe Bill’s experience as a farmer had an influence on how he decided to give financial advice and manage investments. Here are some of the ways I think Bill’s start in farming has influenced Eclectic Associate’s fee-only financial planning and investment management. Seasons Come and Seasons GoWe sometimes joke there are only two seasons in Orange County, California: night and day. Farmers, however, have a life that is dictated by seasons, even in California. Spring is the season to plant, Summer is the season for growth, Fall is the season for harvest, and Winter is the season for resting and getting ready for the next time to plant. A farmer cannot control the seasons, but is ready for them and does his best to do the right thing during the right season. I think his experience with farming seasons caused Bill’s approach to financial planning and investing to understand the phases of life and financial market cycles better than many others.At Eclectic we consider the phases — seasons — of our clients’ lives from the very start. Our financial plans are written for our client’s current financial situation, but we immediately plan for their future goals and retirement. We consider current assets and liabilities, the career and saving path a client is following, the big expense goals in the future, and use projection analysis to determine what it will take to make the desired retirement a reality.And, just like a farmer cannot change the seasons, we manage our client’s investments knowing we cannot control financial market cycles. Rather, we put together investment portfolios from the start that we have confidence will do well in the long run, even if the markets swing up and down in the short run. We plan for those cycles and we are not surprised when they come. Like the farmer who is constantly getting ready for the next season, as investment managers we are always getting ready for the next market cycle. The way we get ready is through a consistent and disciplined allocation approach and portfolio rebalancing. We determine a good mix of investments — an allocation — for each client, and we manage to that allocation with percentage targets for each category of investments. A simple portfolio allocation is 50% equities and 50% fixed income. If equities go up and are now at 55% with fixed income at 45%, we rebalance, selling equities and buying fixed income. It’s a discipline that forces us to sell what is high and buy what is low, and it is the right thing to do both when the market is up and down. The Early Bird Gets The WormFarmers work from before sun up to after sundown. So, they know that worms often come out of fertile soil at night and disappear back into the soil at sunrise. They see the birds having breakfast on those worms when it is still a little dark, just before the sun rises. Farmers, like the morning birds, only survive if they get started early and work hard. Bill brought that work ethic to his new business and impressed its importance on his employees. Today, our team of advisors and support staff have the same work ethic in all we do for our clients. We conduct in-depth research into the investments we recommend. We seek out innovative ways to help our clients arrange their finances to reach their goals. We look for new tax approaches that are more efficient and save money. We attend continuing education conferences and study groups. And, we proactively make investment changes and suggest financial strategies before our clients ask. Although they don’t always see the work we do, our clients see the “fruits” of these labors on statements, tax returns, estate plans, retirement projections, and in the peace of mind they experience. Don’t Bet The FarmIf a farmer is making a decision that could cause him to lose his entire farm if it goes bad, he is betting the farm. Farmers that do that usually don’t last long. It is putting too much at risk with one decision. Every farming community has stories of a farmer who made a big, bad decision and lost their farming livelihood. Bill Camp surely saw this happen and learned from others’ mistakes. The way he chose to invest client assets instead relied on many small investing decisions, where some could be wrong but the client’s portfolio could still do well. It’s the principle of diversification and it is a foundational part of our investing approach today at Eclectic. Even without betting the farm, there are risks in farming. Rains might not come, seeds can be bad, insects can spoil crops, fertile soil can wear out, and crop prices can fall. A farmer needs to be strategic, understand the risks he faces with his limited resources, and do his best to minimize those risks. From the start of our company, the mindset of taking measured risks and using strategies to minimize those risks has been part of what we do. For instance, if a retired client has more money than they will ever spend, it’s probably best to have a lower risk portfolio that still stays ahead of inflation. We minimize the risk of inflation with the investments we choose. Alternatively, if a younger client still has 40 years of working before them, a higher risk portfolio might be appropriate since they have so many years of saving yet ahead. The more aggressive portfolio risk is minimized with disciplined rebalancing. And, if a client has a large known expense in the future, we can sell investments at different times to minimize taxes, keep the rest of the portfolio in balance so overall gains are not missed, and use stable, interest bearing investments so the money is ready when needed. Important Values for the FutureWhile some of what Eclectic Associates is today might be explained by our founder’s background in farming, don’t let that make you think we are stuck in the past. Rather, our 40 year old company has foundational values that are right for today and whatever the future holds. We are prepared for future market cycles. We plan for upcoming phases in our clients’ lives. We have a work ethic that seeks to do right by our clients. And, while we take appropriate risks to accomplish client goals, we strategically minimize those risks through advanced techniques.If you know someone who could use some advice with the financial decisions they are facing, please send them our way. We are happy to meet with anyone for a free, no-obligation meeting. Have them call us at 714-738-0220 to schedule a meeting, or they can click here to schedule an introductory call with one of our advisors.
Transcribe →Why Are There So Many Types of Senior Living?
Aug 26, 2024Tap to summarizeBy Russell W. Hall, CFP®, CPWA®The vast majority of retirees say that they would like to stay in their own home for the duration of their retirement. This is often called “aging in place”. But for many people, there comes a point where they need to make hard decisions about their living situation and the future. These decisions are often not made in advance, and are instead forced by other circumstances at an inopportune time. A caregiving spouse may have their own medical issues and can no longer take care of their partner. Dementia creeps up on a parent who has lived alone for many years, and the children do not have the ability to provide care - and sometimes don’t even know what their parent would have wanted. The alternative is to plan in advance, which often starts with a realistic review of finances. If a retiree never wants to leave their home, are there sufficient assets (perhaps including long-term care insurance) to cover medical costs, especially the extremely high charges of 24/7 in-home care? If not, what other steps can be taken? One common scenario: retirees plan to sell their home at some point and move to a retirement community. That can seem to provide a clear path through retirement, but also brings with it a host of other decisions, especially at the beginning. For instance, there are many types of retirement living facilities. Why are there so many, and how do you choose? In this article we attempt to provide an overview of the various types of senior living and care facilities available. For clients here in Southern California, we include local examples of each of these categories (although some easily fit into more than one category). We’ll start with the Retirement Community (sometimes called Senior Independent Living), since that is the broadest term and is often applied to many of the types of facilities we list here. Generally, a retirement community is residential senior housing designed to accommodate independent seniors with few medical issues. Most will usually include social activities, services (including laundry and housekeeping), and one or more meals. Some offer additional levels of care. Continuing Care Retirement Community (CCRC) Retirement community usually paired with assisted living and a skilled nursing facility, all on the same campus. The idea is to provide any level of care that a resident would need, although it may require moving to different areas. These communities usually require a high “buy-in” fee. Average monthly cost: $7,000 to $10,000 (even higher for additional care levels) Local examples: Morningside of Fullerton, Walnut Village, Capriana Assisted Living Community (state licensed) Retirement communities aimed at those who can live independently in their own housing, but would like on-site access to care, meals, socialization, and additional assistance if they need it. Similar to many ways to CCRCs, but cost is month-to-month. Average monthly cost: $5,000 to $8,000 Local examples: Oakmont of Fullerton, Sunnycrest, Ivy Park, Emerald Court Residential Care or Board and Care (state licensed) Senior care in a small-home setting. These facilities are usually located in residential homes and most feature housing and care for 6 residents, with 2 or more caregivers living on site. Staff help with medication and activities of daily living. Often, these facilities can take residents needing memory care or those on hospice. Average monthly cost: $4,500 to $6,500 Local examples: The Hills Senior Living, Glenwood Care Memory Care Facility (state licensed) Specialized care for those with dementia or Alzheimer's. Some communities only accept residents with dementia. In some larger assisted living facilities, memory care is often a separate, more secure area to prevent patients from wandering. Many Residential Care facilities specialize in memory care, and the home-like setting can sometimes be beneficial and calming for residents who are easily confused and upset. Average monthly cost: $7,000 to $9,000 Local examples: Park Vista (Morningside), Villagio at Capriana, Crescent Landing Fullerton Skilled Nursing Facility (SNF) Often called nursing homes and have also been referred to as convalescent hospitals. This is the highest level of care for those needing medical attention and/or unable to perform activities of daily living (and it is probably the most expensive level of care as well). Residents often receive therapies or hospitalization along with medical care. Medicare pays for up to 100 days of a SNF. Average monthly cost: $8,000 to $12,000 Local examples: St. Catherine, Gordon Lane Finally, the following is some advice from a retirement living professional for how to make a good choice on a facility: Staff matters more than amenities. Compassion is more important than décor. Research by visiting at different times; watch activities and mealtime. It’s common to take time to adjust to a new home. We would like to thank Linda Armas, CPRS, CSA of Clear Choice Senior Services for her assistance with this article. Schedule a 15-minute discovery call with a fee-only financial advisor if you want help thinking through some of these options.
Transcribe →Why Are We Fee-Only?
Aug 7, 2024Tap to summarizeBy Russell W. Hall, CFP®, CPWA®“Being fee-only planners, we believe we offer our clients objective advice. We never receive commissions on anything we recommend.” -Letter to a potential client from Bill Camp, December 1985 Big ChangesThe world of investing has changed radically in the forty years since Eclectic Associates opened our doors. When we look back at the mid 1980’s, it’s amazing how difficult it was to do things we take for granted now. Something as simple as making an IRA contribution and purchasing a mutual fund required multiple points of contact and could take weeks. Custodians like Schwab were not widespread yet, so keeping track of investments at different mutual fund companies, making trades, and reporting on investment returns were complicated, labor intensive, paperwork heavy processes.UnchangedWith that in mind, it’s interesting to read through documents from that period and see how Eclectic’s guiding principles and investment philosophies remain largely the same. Our founder Bill Camp’s quote above still applies and could have been taken from a current email. As we pointed out in a previous article, in many ways our fee-only structure was unique in 1984 and it is still the minority in the world of financial services. But why did Bill and then his son Carl choose to be fee-only advisors, and remain that way for all these years?ObjectiveThe answer is in Bill’s quote. Having worked in the world of real estate sales, Bill knew firsthand the experience of trying to earn a commission. That is standard practice in the real estate industry, but as a financial advisor Bill wanted to sit on the same side of the table as his new clients. In other words, he wanted to be as objective as possible. The way he chose was to only charge a fee for his advice and not be paid in any other way. Being fee-only aligns Eclectic’s interests with that of our clients. If our recommendations perform well, client portfolios go up in value and our fee increases. If performance is not good, our income drops along with our clients’ investments. It also incentivizes us to keep other expenses like underlying investment and trading costs at a minimum, so that both we and our clients benefit in the long run.Not PerfectAs with everything, the fee-only model has an inherent conflict of interest: managing more assets translates to higher fees. This conflict could arise when a client is considering withdrawing a large sum to pay off a mortgage or other debt, for instance. In such cases, we are careful to abide by our fiduciary duty of putting the client’s interests before our own. We will point out the issue and do our best to objectively stick to what the numbers are telling us is the best option for our client.As an aside, we are often asked why we split our annual fee into thirds and charge every four months. When Eclectic started, the rules for investment advisors were very different. We couldn’t legally bill one or even two times per year, so we chose triannual billing (instead of quarterly) since billing was as much of a labor-intensive process as everything else in those days. The Eclectic ChoiceOver the years, the industry has evolved and now advisors are charging for their services in many different ways. Options like fee-based (commissions plus management fees), hourly/project, retainer, or flat fee are common in the industry. We have stayed with being fee-only because we believe we have “chosen it from among the best” – the definition of the word “Eclectic” that gave our company its’ name. As Bill said in 1985, we’ve never received commissions and never will, and we plan to keep giving our clients objective advice for the next 40 years and beyond. If you know someone who should consider using our services, please send them our way. We are happy to meet with anyone for a free, no-obligation meeting. Have them call us at 714-738-0220 to schedule a meeting, or they can click here to schedule an introductory call with one of our advisors.
Transcribe →2024 Second Quarterly Letter
Jul 23, 2024Tap to summarizeBy David K. MacLeod, CFA, CFP®Stocks were mixed during the quarter, with the S&P 500 up 4%, led by tech stocks. The utilities sector has also posted remarkably good performance as investors expect strong electricity demand to power data centers for artificial intelligence (AI). Small company stocks were down 3% while international emerging markets gained 4%. Bond returns were positive as the 10-year U.S. Treasury yield remained at 4.3% and short-term interest rates were also unchanged.Economic growth has been slowing this year, but a recession isn’t in the short-term outlook. Consumer spending has increased each month to new highs even as there are early signs that some consumers are experiencing financial stress. Early loan payment delinquencies are ticking a little higher for credit cards and auto loans. Investment spending has been resilient thanks to AI capital expenditures which have doubled in the past 3 years.The ramp-up in AI investment hasn’t contributed much to productivity yet. But there is the potential for long-term productivity gains that could fuel years of higher GDP growth and a prolonged economic expansion. If that scenario plays out, AI could become ingrained in most large U.S. companies and would widely benefit companies in sectors beyond just the technology sector. In fact, we are underweight the high-flying technology stocks that have initially benefited from AI. Many of those companies look very overpriced on a price-to-sales and price-to-earnings basis, even considering above average business growth rates.The stock market has been unusually calm lately, particularly in the month of June, despite uncertainty in global politics and the economic growth outlook. We caution investors not to trade based solely on 2024 U.S. presidential election forecasts. Although stocks tend to rise after uncertainty has passed, we wouldn’t be surprised to see higher market volatility in the second half of the year. We recommend maintaining a long-term investment approach that will stand through presidential elections every four years and through all phases of the economic cycle.On a personal note, we are pleased to announce that our employee, Clarissa Hartono, earned the CFP® certification after passing the education, comprehensive exam, experience, and ethics requirements. Please say congratulations to Clarissa the next time you see her.Please do not hesitate to call if you have questions or want to schedule a meeting.
Transcribe →Where Did We Get Our Name?
Jul 3, 2024Tap to summarizeThe Eclectic Associates Story By Carl Lachman, MBA, CFP®We are often asked why we call ourselves “Eclectic Associates”. It’s a good story.Financial Advisors Often Use Their Own NameBefore I explain where our name came from, it is important to understand why our founder Bill Camp did not use his own name as part of the company name. Why didn’t he call it, “Bill Camp & Associates”?It is a rather common practice for a financial advisor to use their name, their initials, or at least their last name, as part of the name of their financial planning firm. In Fullerton alone there is a Montagna & Associates, a Hall Wealth Management, a Clark Group Asset Management, and a variety of others. It is a pretty common approach, it is rather dull, and it is not too creative. But Bill Camp wasn’t trying to be exciting or particularly creative. Rather, he did not use his name for a different reason: he wanted his firm to continue when he was gone. Bill wanted the firm he started to last a long time past his life and that of his son, Carl Camp. He wanted his firm to grow, develop, innovate, and continue for years and years to come, without being stuck with the name of a founder that was no longer around. Bill didn’t want his firm’s name to be good for only a short time. His decision to name the firm the way he did is a good example of why he was a good financial planner: he was always planning for the long term, trying to make the best long run decision. Bill, Anita, and a DictionaryBill Camp and his wife, Anita, decided on the company’s name in early 1984. Over a number of days they considered a lot of different names, but finally decided on the word “eclectic” while searching out words in the dictionary. They were particularly drawn to one definition of the word “eclectic” which means “chosen from among the best”.Chosen From Among the BestWhat does it mean to be “chosen from among the best”? The following may not all have been in Bill’s and Anita’s thoughts in 1984, but it is what we try to do today to live up to our company’s name.We try to choose our employees from among the best applicants.We try to choose investments from among the best available.We try to choose our financial planning strategies from the best the industry has to offer. We strive to be chosen by our clients from among the best financial advisors in Orange County. Planning for the Long TermWe are hired by our clients to help with important, long-term decisions, so it should be reassuring that our company was founded on decision-making that was made with the long-term in mind. Bill Camp and his son, Carl Camp, set the example of making good long-term decisions, which we continue to follow today. There are many fads and short-term ideas that come and go in the financial industry every year, but because of the way these founders taught our first advisors, we continue to keep a long-term perspective. Eclectic Continues with the Same Values Today, we still hold close to the values and methods that Bill and Carl Camp instilled into our company’s fabric from the start. We are still a fee-only financial advisory firm. We are not stockbrokers, we don’t sell insurance, and we don’t receive any compensation from investments we recommend or professionals we suggest to our clients. We are still held to the fiduciary standard, giving advice that puts our client’s interests before our own. If you know someone who should consider using our services, please send them our way. We are happy to meet with anyone for a free, no-obligation meeting. Have them call us at 714-738-0220 to schedule a meeting, or they can click here to schedule an introductory call with one of our advisors.
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