Master Financial Education

E. F. Moody Jr.


I have asked Errold Moody to provide a brief example of what he has actually found on behalf of a client who engaged his services to review the insurance contracts which funded the client's estate plan. You will be amazed. In my 30 years in the business, I have never seen an authoritative, objective, prudent expert speak so clearly on the use of insurance. What Errold can do is unique in the industry.

Steven Winks

Secretary of State John Kerry - In America,  "you have a right to be (as) stupid (as) you want to be."
(But too many Americans are abusing the privilege)

Why did our systems fail and why will they continue to do so?  From Paul Volcker

"our economics are based on “an unjustified faith in rational expectations, market efficiencies and the techniques of modern finance"

You must not believe everything you think

Stephan Thomas Vitas

  Albert Einstein

Brain fat and Alzheimers

Obesity harms most organs in the body, and new research suggests the brain is no exception. What’s more, the researchers found that getting rid of excess fat actually improves brain function, reversing the ill effects of the extra weight. The new study, which focused on people who underwent bariatric surgery, found that the procedure had positive effects on the brain, but other research has shown that less invasive weight loss strategies, like exercise, can also reverse brain damage thought to be related to body fat.

Here’s why that matters: Obese men and women are estimated to be about 35% more likely to develop Alzheimer’s compared to people of a normal weight. Some research suggests that body fat ups the number of proteins in the brain that trigger a cascade of events that predispose someone to the disease, and other research in mice has suggested that fat cells release a substance called interleukin 1, which can cause severe inflammation and, in turn, gunk up the brain.

In a recent study, a team of researchers looked at 17 obese women prior to bariatric surgery and found that their brains metabolized sugars faster than the brains of a control group of women at a normal weight. The women underwent cognitive function tests before their surgery as well as after. The results show that after surgery, the obese women showed improvement in the troubling brain activity seen prior to going under the knife, and they performed better on their cognitive function tests—especially in the area of executive function, which is used during planning and organization. The findings suggest that the fat loss reversing its bad effects on the brain.

It is possible that the long-term “cerebral metabolic activity”—meaning the way the brains of obese people process sugars—leads to structural damage that can hasten or contribute to cognitive decline

19 things to know about Medicare Advantage

  1. Lost at Sea:The Euro Needs a Euro Treasury




Jörg Bibow


The euro crisis remains unresolved even as financial markets may seem calm for now. The current euro regime is inherently flawed. Recent reforms have failed to turn the dysfunctional euro regime into a viable one. The investigation is informed by the “cartalist” critique of traditional “optimum currency area” theory (Goodhart 1998). Various proposals to rescue the euro are assessed and found lacking. A Euro Treasury scheme operating on a strict rule and specifically designed not to be a transfer union is proposed here as condition sine qua non for healing the euro’s potentially fatal birth defects. The Euro Treasury proposed here is the missing element that renders sense to the current fiscal regime that is unworkable without it. The proposed Euro Treasury scheme would end the currently unfolding euro calamity by switching policy from a public thrift campaign that can only impoverish Europe to a public investment campai gn designed to secure Europe’s future. No mutualization of existing national public debts is involved. Instead, the Euro Treasury is established as a means to pool eurozone public investment spending and have it funded by proper eurozone treasury securities.

Differences in U.S. Cost of Living

Fascinating interactive graph

8/31:Americans Find Conversations About Finances Difficult

– A significant number of Americans find conversations about financial issues difficult, a survey finds.

Northwestern Mutual's 2014 Planning and Progress Study found 42% of American adults have not spoken to anyone about their retirement. Only 39% have had conversations with their spouse or partner about the subject. 

8/28: You heard it here first- if the world does not institute major global warming changes now, by 2050 you will see a drop in actuarial lifetimes worldwide.

8/28 way out of whack


Bernanke: Lehman Was Worse Than The Great Depression (WSJ)

WSJ's Pedro da Costa has pulled a fairly stunning quote out of an AIG bailout lawsuit: Bernanke believed the 2008 financial crisis was worse than the Great Depression. “September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” the former Fed chair said. Of the 13 “most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.”


8/27: I agree- the optimism on manufacturing was simply that- optimism

Factories keep losing ground to global rivals. "America's shale boom has raised hopes of a revival in U.S. manufacturing, in part fueled by cheaper energy. But U.S. factories still are losing ground to rivals in Asia and Europe....The U.S. deficit on trade in goods swelled in the first half to $371.59 billion from $354.64 a year earlier. Imports rose 3.3%, while exports increased 2.6%....Without a strong, sustainable increase in exports, U.S. factories are unlikely to have the kind of resurgence forecast by some pundits. But achieving that growth is difficult as China and other countries have pursued aggressive export strategies and the U.S. has lost manufacturing skills and suppliers after shifting production overseas." James R. Hagerty, John W. Miller and Bob Tita in The Wall Street Journal.

8/27: Interesting-

5 year fixed income note, 5.5% rate, 5 year surrender charge reducing by 2% over 5 years, monthly income or deferral, Very attractive Broker/Dealer or RIA commission/fee.

Available in two months.

Risk must be high


Medicare covers those aged 65 and older, along with younger persons with disabilities and end-stage renal failure. To qualify at age 65, a person must have been a U.S. resident for at least five years and they or their spouse must have paid Medicare taxes for at least 10 years. 

Medicare Part A

Medicare Part A covers in-patient hospital expenses (with limits); skilled nursing care and nursing home care (under certain circumstances and with limits), and hospice care. As for the limitations to coverage, there is a limit of 90 days per stay in a hospital, plus a coinsurance. During the first 60 days there is no coinsurance. However, from day 61 to 90, the individual is responsible for a co-pay of $304 per day. From the 91st day on, the coinsurance is $608 per each "lifetime reserve day" up to a maximum of 60 days total over the individual’s lifetime.

To clarify, a lifetime reserve day is any day over the first 90 days of an individual's lifetime. For example, if a Medicare patient were in the hospital for 100 days during one hospital stay, the last 10 days would be considered "lifetime reserve days" leaving the person with 50 of these days to use over their lifetime. The point here is that Medicare Part A has some potentially expensive gaps which is why a person should purchase a Medicare supplement plan (or see Medicare Part C below). 

Medicare Part B

Medicare Part B is optional and covers outpatient expenses such as lab tests, outpatient surgeries, doctor visits and limited outpatient prescription drugs (typically not drugs you would administer yourself). Coverage begins after meeting an annual deductible of $147 (2014). After meeting the deductible, the individual must also pay a coinsurance of 20 percent of the Medicare-approved charges for services and drugs.

Medicare Part C

Medicare Part C is not actually a separate coverage, but is the part of Medicare which allows private health insurers to create Medicare replacement policies. In short, an individual may elect to purchase one of these plans in lieu of Medicare and a supplement.

In the past, an individual with Medicare would often buy a Medicare supplement to cover procedures or illnesses which Medicare did not cover. However, when Congress passed the Balanced Budget Act of 1997 it included a provision to allow what was originally called Medicare +Choice or Part C plans.

When Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the name of these plans was changed to Medicare Advantage plans. Therefore, Medicare Part C created the Medicare Advantage plan which is an option that can be purchased in lieu of traditional Medicare. Normally, these plans are fairly comprehensive in coverage. 

Medicare Part D

This is the newest part of the Medicare program and covers prescription drugs. Moreover, it is also available to anyone with Medicare. There are two ways to obtain Medicare Part D coverage. They are: 

1) Join a plan run by an insurance company or other private company approved by Medicare; or

2) Purchase a Medicare Advantage plan which covers prescription drugs (see Medicare Part C above). 

Medicare Part D covers prescription drugs up to a maximum of $2,970 per year.

To find a Medicare Part D program, you can view the Medicare choices online or call 800-633-4227

People who are right a lot of the time are people who often change their mindsMuch of dealing with our biases is simply being willing and able to change our minds when its appropriate.  It’s hard, but the reward is huge
Jeff Bezos


8/26: Bad banks:

A new article, published in the New York Times, argues that several European Banks may be on the verge of collapse as new analysis shows that many do not have enough of a capital buffer to absorb the bad loan rates they are experiencing. In the late 1980s an equity analyst invented a very simple ratio for assessing the health of Texas banks during a regional debt crisis—the Texas ratio, which simply compares bad loans rates versus the capital set aside by banks. The ECB is expected to come down hard on banks who do not have adequate cash buffers, so investors have been scrambling to decipher which banks may fall victim to heavy scrutiny, or even closure. According to analysis by Nomura, 11 of the Eurozone’s 100 largest banks stood out as having inadequate capital, but three in particular had ratios of over 150% (bad loans vs. capital)—Piraeus Bank, Banco Popolare in Italy, and Banco Popular Espanol in Spain.

8/26: Gross output:

Why pay attention to gross output? For starters, research I published in 1990 shows it does a better job of measuring total economic activity. GDP is a useful measure of a country's standard of living and economic growth. But its focus on final output omits intermediate production and as a result creates much mischief in our understanding of how the economy works.

In particular, it has led to the misguided Keynesian notion that consumer and government spending drive the economy rather than saving, business investment, technology and entrepreneurship. GDP data at the end of 2013 put consumer spending first in importance (68% of GDP), followed by government expenditures (18%), and business investment third (16%). Net exports (-2%) makes up the difference.

Thus journalists and many economic analysts report that “consumer spending drives the economy.” And they focus on retail spending or consumer confidence as the critical factors in driving the economy and stock market. There is an underlying anti-saving mentality in this analysis, as evidenced by statements frequently made during debates on tax cuts or tax rebates that if consumers save their tax refund instead of spending it, it will do no good for the economy. Presidents including George W. Bush and Barack Obama have echoed this sentiment when they encouraged consumers to spend rather than save and invest their tax refunds.

Although consumer spending accounts for about 70% of GDP, if you use gross output as a broader measure of total sales or spending, it represents less than 40% of the economy. The reality is that business outlays – adding capital investment and all business spending in intermediate stages of the supply chain – are substantially larger than consumer spending in the economy. They make up more than 50% of economic activity.

Going back to my more visual “dials” metaphor, when you look at gross output you see that it gives us an additional and much larger dial for stimulating growth than simply trying to increase consumer spending. The real driver of the economy, as measured by gross output, is not consumer spending but private production and business spending. And indeed, we find that that is where the jobs are, and they are far higher-paying jobs than in the retail sector, which is where final consumption resides

8/26: Idiots


This derives from the fact that economists are not exogenous observers of economic processes. They are, rather, fallible humans who are just as engaged in the phenomena they observe as anyone else. Arguably, more so. As Soros notes, the output of economists' models, as expressed via the economists' own social behavior, affects the behavior of the economic system they are attempting to describe:

"I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity."

We cannot attribute [our adversaries'] responses to the nature of the events or issues that elicited them because we deem our own different responses to be the ones dictated by the objective nature of those events or issues. Instead …. we infer that the source of their responses must be something about them.
 IUL  (Veralytic)

Never have we heard a better description of Indexed Universal Life (IUL) then in the comment section of an article describing IUL looking like the El Camino (part sedan, part truck but it does neither particularly well) of life insurance. IUL has often been described as part downside protection and part upside potential but like the El Camino neither one works really well.  Which is all the more surprising when in 2012, Fox Business had this to say about IUL: “An emerging and fast-growing contract design — the indexed universal life (IUL) policy — may come very close to being the ideal contract for most consumers in today’s interest and overall market environment.” 

The newest type of life insurance product, introduced in 1997, the market share for this product type has grown steadily since 2004 and is the fastest growing of all permanent life insurance products.  Indexed universal life (indexed UL) improved 1 percent in the fourth quarter, ending 2013 up 13 percent and recording the greatest increase in absolute dollars compared to other product lines. In 2013, indexed UL represented a record 35 percent of UL premium and 13 percent of total life insurance premium. (Source: LIMRA).  Does this takeover of market share from other products, such as Whole Life and Current Assumption Universal Life (Current Assumption UL), imply that Indexed UL is inherently a “better” product?  Is it really the ideal contract?

Unfortunately, probably not.  When a new product is introduced, it has no history, no track record, so the illustrations used in the sales process have few if any restrictions.  This can be seen in the 1980s when Current Assumption UL was illustrated at 12%.  As many consumers have come to realize, the crediting rates on those policies have declined to an average of 4% - 5% and many are underfunded and in danger of lapsing without value if they do not pay considerably higher premiums than originally illustrated.

When it was first introduced, Indexed UL was also commonly illustrated at higher rates of return, as high as 12% in some cases.  Over time regulators have now introduced formulas that must be used that restrict the rate of return for the illustrations to something that is more reasonable, but is it really realistic to be illustrating Indexed UL at 7% and Current  Assumption UL at 4%?  Are the products really that different and can Indexed UL produce returns 300 basis points higher than Current Assumption UL?

Indexed UL is said to deliver higher returns than Current Assumption UL with equity-linked participation rates.  The insurance company uses their general account yield to purchase equity exposure from a third party, whereas the Current Assumption UL crediting rate is based solely on that general account yield.  In addition, both products also have expenses that the insurance company deducts from cash values.  Indexed UL therefore, is not that much different from Current Assumption UL.  Both products produce returns that are linked to the insurance company’s general account. Both products are subject to expenses deducted by the insurance company.

  1. Financial Regulation After the Crisis:How Did We Get Here, and How Do We Get Out?




Gerard Caprio, Jr.


Following the crisis of 2007, regulatory authorities either are or should be engaging in a fundamental reconsideration of how they approach financial regulation and supervision. This paper briefly summarizes the present international consensus on regulation as embodied in the Basel framework, looks at how we came to be in such a situation, and proposes a re-start of the process that has been organized by the Basel Committee on Bank Supervision. It reviews the flaws of that framework and concludes that its weaknesses are fundamental, in its neglect of the endogeneity of risk to the regulatory structure, and of the dynamic nature of finance, and thus of its regulation as well. Neither a static rulebook, nor an ever increasingly complex one, will ever provide financial safety and soundness. Specific recommendations are made, starting with an abandonment of risk weights and the adoption of a simple leverage rule, supplemented by CoCo s, and some simple rules. More radically, a different approach is urged, one that focuses on the oversight and accountability of regulators and greater transparency, both of banks and of the regulatory process.

Marginal  Tax Bracket Calculator for 2014


Humans prefer to think linearly, manufacturing a storyline, in effect, with a beginning, middle and end.  That’s why we are so susceptible to the “narrative fallacy.”  We inherently prefer stories to data.  Contingencies and (perhaps random) consequences don’t correspond to the way we like to see the world.  We are — pretty much all the time — either looking backward and creating a pattern to fit events and constructing a story that explains what happened along with what caused it to happen, fitting what we see or assume we see into a preconceived narrative, or both.

Dealing effectively with probabilities and the markets requires that we recognize the power of the random and contingent.  No matter how good a story we have concocted with respect to what we expect to happen, no matter how careful our analysis, stuff happens that can and often does mess up and with our hopes, dreams and schemes.

Decanting a trust.

For many years, practitioners have struggled to find ways to change the terms of an irrevocable trust. However, through common law and through the decanting statutes that have been enacted in many jurisdictions, it is now possible to modify an irrevocable trust. Decanting is essentially a “do-over”.


8/21: $1.25/day to $1.50 per day

A Financial Times analysis of World Bank data this year showed that almost 1bn people in the developing world were at risk of slipping out of the ranks of the nascent middle class, underlining the fragility of the global march out of poverty of the past 30 years.

Kevin Watkins, executive director of the UK-based Overseas Development Institute think-tank, said developing countries risked social discord and instability if they failed to reflect the aspirations of those who had risen out of poverty but remained economically fragile.

“The big public backlash we saw in Brazil was largely from people who have escaped poverty and were being served by abysmal public services but wanted to raise the bar,” he said. “These people are maybe earning $4-$5 a day and they are not just asking can my child get into a school but can they get a good education that will mean something in the job market?”

The ADB report said its existing poverty line of $1.25 a day was not enough to maintain minimum welfare in many parts of the region.

It said the number of poor in Asia would rise from 473m to 1.5bn as of 2015 if this was raised to $1.50 a day and rapidly rising food prices and vulnerability to shocks were taken into account.

That would push the poverty rate in Asia, up from 12.7 per cent to 41.2 per cent

8/21: BIG difference

This commentary ignores the important difference in economic performance between the US and the EU since 2009. In 2009 both the US and eurozone experienced a rise in unemployment to about 10%. Since late 2009 unemployment has fallen in the US to 6.1% in June 2014. During this same period unemployment rose to 12% in  the eurozone in June  2013 and then declined to 11.5% in the euro area in June 2014.  The gap in unemployment between the Eurozone and the US is thus 5.4% in 2014. This is for the eurozone as a whole, rates of unemployment are much higher in the eurozone periphery which is necessary to force through internal devaluations.

Obesity will climb to 50% soon

In June 2013, the American Medical Association (AMA) House of Delegates approved a resolution reclassifying obesity as “a disease state.” This essentially means 1 out of every 3 Americans (78 million adults and 12 million children) suffer from a medical condition that requires treatment and interventions. WC costs could rise significantly as a result.

Obesity as Comorbidity

One effect of the AMA reclassification is more physicians may look to treat obesity as part of the work injury, arguing that it’s required for a more successful chance of recovery. These physicians would cite obesity as a disease on WC medical bills and counsel obese claimants on weight reduction prior to a major medical procedure, such as surgery.

For example in 2009, the Indiana Workers’ Compensation Board decided an injured worker was entitled to bariatric surgery as a precursor to back surgery. The board also decided the claimant should receive temporary total disability benefits while preparing for, undergoing, and recovering from both procedures.

Other Comorbidities and Complications

Obese patients often have additional comorbidities, such as diabetes and high blood pressure, which can slow the healing process. For example, a minor ankle fracture experienced by an obese worker with diabetes has the potential to become chronic, complex, and costly.

BMI, the Unreliable Indicator

Obesity has traditionally been assessed through an individual’s body mass index (BMI), which takes a person’s weight and height into consideration. A BMI of 25-29.9 is considered overweight and a BMI of 30 or greater is considered obese. Using these parameters, roughly 30% of Americans are estimated to be obese.


Hydration and Delirium

By Catherine D’Aniello, MSN, RN


Did you know that:

  • Delirium is different from dementia?

  • Dehydration is a cause of delirium?

  • Older adults can avoid delirium by staying hydrated?

Delirium is a mental disturbance characterized by new or worsening confusion, changes in level of consciousness or hallucinations. Delirium is different from the slow progression of dementia or Alzheimer’s disease. It has a sudden onset from hours to days and although delirium can be reversed, it is easier to prevent than cure.

All “elderly” adults (people over 65 years old) are at risk for delirium due to factors involving their own internal weakness and environmental insults. Some risk factors, such as advanced age or having dementia, are fixed. Other risk factors such as pain, malnutrition, dehydration, sensory loss, depression and fever are modifiable with intervention. With each factor present, delirium risk increases. Therefore, the key to preventing delirium is reducing the number of modifiable risk factors.

Infection and dehydration are common modifiable delirium risk factors. Older adults usually know when they have an infection, but do not recognize when they are dehydrated.

Mental status changes begin with mild dehydration and worsen with each stage, ending in delirium. In moderate dehydration, short-term memory loss occurs.

Once an older person is thirsty, they are already mildly dehydrated. Symptoms of severe dehydration include dry mouth and lips, sunken eyes, increased mental status changes and decreased urine output. This is a medical emergency which results in delirium and if not reversed, death ensues.

Failure to recognize signs of dehydration predisposes older adults to becoming increasingly and chronically dehydrated, which is a slippery slope towards delirium. Closing this knowledge gap will reduce delirium risk because inadequate fluid intake is relatively easy to remedy.

Why are older adults prone to dehydration?

Generationally, older adults are not focused on hydration. Many seniors purposely limit fluid intake because they fear bladder accidents. Others with compromised mobility may curb fluid intake to avoid extra bathroom trips. Poor access to fluids or needing help to drink may limit intake. Many drink water only when taking medication. Living in over-heated indoor spaces dehydrates even without sweating.

Older adults have decreased muscle mass and increased fat; because 75 percent of body water is stored in muscle, seniors have less capacity to store water.  Women have more body fat than men at any age, so older women are at even higher risk of dehydration. Due to decreased kidney function, older adults cannot conserve fluids as well as younger people. 

How do you know if you are drinking enough?

An older adult, their home caregiver or family member can take simple steps daily to check hydration status. First, thirst should not be experienced at any time. Second, urine should be colorless or straw colored, and odorless. Being familiar with a urine color chart is good practice for all ages and critical for older adults to avoid dehydration. First morning urine should not be dark, and urination should occur every two to four hours during waking hours. Some medications and foods such as asparagus give urine an odor, but normally urine should not smell.

Increase daily fluid intake, especially water!

At least half of your daily fluids should be water. Water significantly reduces older adults’ risk of becoming delirious. Milk, vegetable or fruit juice, and soup are also healthy fluid choices. Carbonated and caffeinated drinks should be limited due to their diuretic effect. The body needs water to filter alcoholic beverages from the body. Therefore, increased water consumption is needed overall as well as to balance the dehydrating effects of unhealthy drinks. Drinking healthy fluids is as important as eating healthy foods. 

Family members and home caregivers should:

  • Educate older adults on dehydration risks

  • Encourage/remind seniors to drink

  • Teach loved ones not to wait to feel thirsty to drink

  • Teach loved ones to drink regularly throughout the day

  • Make fluids easily accessible 

  • Serve fluids at a temperature the individual prefers

  • Encourage water with ALL meals

  • Boost the flavor of water by adding drops of lemon/ lime juice

  • Limit fluid intake one to three hours before bed

  • Offer popsicles, juice, gelatin, Italian ice, sherbet and pudding
    to those who dislike water. 

Increased awareness of dehydration as a cause of confusion and delirium should begin when older adults are “young-old” (65-74 years) in order to form healthy drinking habits carrying them into “middle-old” (75-84 years) and “old-old” (85 years and above). Family should report poor eating or drinking to the primary care provider so interventions can be initiated to prevent dehydration and its consequences. Educate your older family members and their caregivers on the importance of hydration and ways to facilitate good fluid intake.

Why not reduce your or an older loved one’s chance of developing delirium by eliminating the dehydration risk factor?

Catherine D’Aniello holds a BSN from University of Connecticut and MSN from University of Hartford. She has 30 years of geriatric experience and is currently a Resident Care Coordinator at a skilled nursing facility.


someone  asked Kahneman why it is so difficult for people generally to compute and deal with probabilities, Kahneman offers an interesting answer. He did not point to innumeracy. Instead, he said, “to compute probabilities you need to keep several possibilities in your mind at once. It’s difficult for most people. Typically, we have a single story with a theme. People have a sense of propensity, that the system is more likely to do one thing than the other, but it’s quite different from the probabilities where you have to think of two possibilities and weigh their relative chances of happening.”

This analysis may well explain much of why models — which simplify, often greatly, of necessity — can be so inadequate, especially with respect to markets, where there are infinite possibilities.  It may also explain, at least in part, why it is so difficult for us to deal with our cognitive and behavioral biases.  Finally, and perhaps most practically for the purposes of this blog’s usual readers, it helps to explain why success in the markets is so hard to achieve.

We prefer to think linearly, manufacturing a storyline, in effect, with a beginning, middle and end.  That’s why we are so susceptible to the “narrative fallacy.”  We inherently prefer stories to data.  Contingencies and (perhaps random) consequences don’t correspond to the way we like to see the world.  We are — pretty much all the time — either looking backward and creating a pattern to fit events and constructing a story that explains what happened along with what caused it to happen, fitting what we see or assume we see into a preconceived narrative, or both.


Disability Benefits:
What Caregivers Should Know
By Glenn Kantor and Peter Sessions

If you are entitled to disability benefits through an employer-provided or private plan, you may be surprised to find that your plan has provisions that allow the insurer to deduct from your benefits other types of income you receive or are eligible to receive for your disability. These deductions are called “offsets,” and are permissible under state and federal law. Common offsets include Social Security disability benefits, workers’ compensation benefits, and benefits from state disability programs like those in California, New York, New Jersey, Rhode Island, and Hawaii.  Insurers can also deduct from your benefit any amounts you receive from working part-time (usually called “partial disability” or “residual disability” benefits), as well as retirement or pension benefits (including disability pension benefits).
The rationale behind offsets is this: If you were allowed to keep the full amount of all of the various disability benefits to which you might be entitled, it would be possible for you to earn more money on disability than you would by working.  Disability benefit programs, both public and private, are designed to avoid that result.
In cases where people are receiving benefits from enough different sources that their disability income exceeds the benefit amount in their policy, most policies have a minimum monthly benefit that is payable regardless of the total offset amount.  Each policy calculates this benefit differently.  Some policies have a set amount, such as $100; some set the amount as a percentage of your regular benefit; and some have a combination of the two.  Some policies, however, do not have a minimum monthly benefit at all­— insurers are not required to include one in their policies.
You can determine whether your plan contains offsets by looking at the part of the plan that explains how your benefit amount is calculated.  Most plans have language indicating that the insurer is allowed to deduct “other benefits” or “other income benefits.”  The policy will then have a separate section shortly thereafter explaining what types of benefits constitute “other benefits,” and how the insurer can offset them from your regular benefit. This language can vary significantly from policy to policy, so it is always extremely important to read and understand your policy to ensure your insurer is applying the offset provisions accurately.
You may wonder what kinds of offsets are allowed under the law and if there are any restrictions on how insurers can apply them.  For the most part, offset provisions are not heavily regulated.  For example, the Employment Retirement Income Security Act, or ERISA, is the federal law which governs employee benefits, including disability benefits.  However, ERISA is primarily concerned with explaining what employers and insurance companies must do if they offer benefits to employees.  It does not tell employers and insurers what kinds of benefits they have to offer, or how those benefits should be calculated.
You may also wonder if there is anything you can do to change the offset provisions that are in your policy.  Unfortunately, if you are receiving a disability benefit through your employer, the terms of your disability benefit plan have already been negotiated between your employer and the insurance company, and you can do nothing to change those terms.  If you are receiving benefits through a private policy of insurance, you can try to negotiate with your insurer to remove offset provisions, but they are unlikely to be receptive to your requests.
There are, however, some rules that govern how insurers may apply policy offsets.  Here are some examples:
Workers’ Compensation  
Workers’ compensation benefits are designed to compensate injured workers for replacement of wages, loss of use, and medical treatment, among other things.  If you receive workers’ compensation benefits, the insurer may attempt to offset all of your workers’ compensation benefits, even if they are not attributed specifically to lost wages. There is a strong argument that insurance companies should not be allowed to do this.  Under this argument, it would be permissible for an insurer to offset your “temporary total disability” benefits, because these benefits are typically based on your prior salary.  After you have become “permanent and stationary,” the insurer would not be allowed to offset the full amount of your “permanent total disability” benefits, because these benefits include compensation for multiple injuries, not just your lost wages.
California has recently enacted an insurance regulation that supports this argument. It allows group disability insurers to offset temporary total disability benefits, but prohibits them from offsetting permanent total disability benefits.  (10 California Code of Regulations Section 2232.45.4)
As always, read your policy carefully because it may contain language that limits the insurer from offsetting your entire workers’ compensation benefit.  For example, some policies only allow offsets for benefits based on “loss of time,” while others are more broadly worded.  This can be a confusing issue, so you should consult with your workers’ compensation attorney to ensure that your benefits are properly attributed to avoid being offset.
An insurer can also offset your benefit by money you receive in a lawsuit against a party who caused your disability. The legal term for this situation is called “subrogation,” and involves the “make whole” doctrine. The make whole doctrine is a legal rule that says that if you are entitled to benefits from different sources for your injury – for example, from both the person who caused your injury and the insurer – the insurer can only collect its offset, that is, enforce its “subrogation rights,” if you have been “made whole” for your injury, or, in other words, you have been fully compensated for your injury. If your claim is governed by ERISA, conflicting legal decisions govern whether the make whole doctrine applies to your claim.  In some states (such as California) the courts will apply the doctrine, but in others, they will not.  If you are in this situation, you should consult with an attorney who specializes in ERISA law to determine whether the make whole doctrine applies to your claim so you can determine if the insurer has the right to offset your benefits, and if so, by how much.
Social Security 
Social Security disability benefits typically increase over time to compensate for the effect of inflation on fixed incomes.  This increase is called a “COLA,” or cost-of-living adjustment.  Some states, such as California, have laws that prevent insurance companies from reducing your benefit if your Social Security disability benefit goes up.  (California Insurance Code Section 10127.1)  Even if no law prohibits an insurer from reducing your benefit, insurance policies will often contain a provision stating that the insurer will not do so.
If you are receiving family Social Security benefits, or “dependent benefits,” in addition to your individual Social Security benefit, be aware that these benefits may also be offset.  Most policies limit offsets only to those benefits you are entitled to receive personally for your disability, but there is no law prohibiting insurers from offsetting dependent Social Security benefits as well.  Again, every policy is different, so read yours to see whether your insurer has the right to apply this kind of offset.
Regardless of what specific offsets might apply in your particular case, you may be surprised to learn that your policy probably gives your insurer the right to estimate those offsets before you even begin to receive them.  Insurers assume that if you are eligible for benefits from them, then you are probably eligible for benefits from other sources, such as Social Security, as well, and will estimate and apply an offset for those benefits as soon as possible.  Sometimes your insurer will give you a choice.  An insurer might ask you if you want it to estimate the other benefits and apply the offset now, or whether you want to wait until you receive the other benefits, and then pay the insurer back.
Some states, however, prohibit certain kinds of estimates.  For example, in California, group disability insurers are not allowed to estimate retirement benefits (10 California Code of Regulations Section 2232.45.2), or workers’ compensation temporary total disability benefits (10 California Code of Regulations Section 2232.45.3), and therefore may not offset those kinds of benefits until you actually receive them.
In sum, offsets are an important part of a disability benefit plan, as they directly affect, and often substantially reduce, your benefit amount.  However, they can also be very confusing.  If you are concerned that your benefit has been miscalculated because your insurer has not correctly applied the policy’s offset provisions, you should request a detailed calculation in writing from your insurer.  If your benefits are governed by ERISA, as most disability benefits are, you have the right to appeal the insurer’s calculation, and if that appeal is denied, you have the right to bring a lawsuit in federal court.  To maximize your chances of succeeding, you should contact an attorney who specializes in ERISA law before going through the ERISA appeal process.  ERISA imposes strict evidentiary limits, so if you do not present your best evidence and arguments during the appeals process, you may be prevented from doing so later when you get to court.  As a result, it is important to get legal advice as early in the process as possible.


Social Security Survivor Benefits: What Advisors Should Know

Social Security survivor benefits have some unique rules which can be especially hard to remember. Survivor benefits can seem similar to other parts of the Social Security system, but they actually have some significantly different features and regulations. Following is a summary of those unique features and and how survivor benefits differ from the more common Social Security benefits.

The formal title of the Social Security program, Old Age, Survivor and Disability Insurance (OASDI) provides an immediate clue that the Survivor program is distinct from the “old age” portion of the system to which most of us are usually referring when we say Social Security. The Disability portion of the program has its own trust fund and is totally separate program. The Old Age and Survivor programs, however, have a hybrid relationship, sharing the same trust fund while operating under some significantly different rules.


The differences between the spousal benefits of the Old Age program and survivor benefits are the heart of the issue. Spousal benefits are benefits based on a living spouse’s (or ex-spouse’s) work history. Survivor benefits are benefits based on a deceased spouse’s (or ex-spouse’s) work history.

Here are the primary differences between Survivor and Spousal benefits:

1) Survivor Benefits are much higher, as much as twice as high. Maximum survivor benefits are 100% of the deceased worker’s last Social Security benefit. Maximum spousal benefits are only 50% of the worker’s SS benefit.

2) The worker’s benefit used to calculate benefits could be different in each case. Survivor benefits are based on the deceased’s Full Retirement Age (FRA) benefit plus any delayed retirement credits the worker may have accrued by waiting as late as 70 before filing for their benefits. Spousal benefits are based only on the worker’s FRA benefit and are not enhanced by any delayed retirement credits for the worker.

3) File before the Full Retirement Age (FRA) and either benefit will be reduced, although not in the same way. At the earliest allowable age for spousal benefits of 62 one will only get 35% of the worker’s benefit. A widow claiming survivor benefits at the earliest possible age of 60 (two years younger, another difference) will get 71.5% of the deceased worker’s benefit.

4) The window for a Full Retirement Age at 66 is slightly different. For spousal benefits FRA is formally 66 for people born between 1943 and 1954. For survivor benefits FRA is 66 for people born between 1945 and 1956. If you are born in 1944 or 1955 you will have a different FRA for each benefit.

5) The minimum length of marriage required in order to qualify for either benefit differs, 12 months for spousal benefits but only nine months for survivor benefits. There are different exceptions to each of these.

6) If one is divorced and collecting benefits on the work record of the ex-spouse, remarrying may affect benefits differently. Remarriage will completely nullify any spousal benefits based on the ex-spouse, no matter the age at which the person remarried.

If the ex-spouse has died however, and the survivor remarries after the age of 60, they can keep the survivor benefit even though they are now remarried. This sets up an interesting situation where the remarried person will ultimately have the option of choosing between three benefit options: a survivor benefit on the ex-spouse, a retirement benefit on their own work record or a spousal benefit based on their current spouse.

It may also present some important planning opportunities. For instance, if a woman collecting survivor benefits on her ex-husband is 59 and planning to remarry, she might want to delay the wedding bells until her 60th birthday in order to keep receiving the survivor benefit based on her decrease ex-husband.

Finally, the benefit calculations for the two benefits are independent of each other. For instance, filing for one benefit before FRA will not affect the filing for the other benefit. For instance, a person can apply for survivor benefits before FRA thereby reducing their survivor benefits. This early survivor filing will not affect their application for their own old age retirement benefits. They would still be eligible to collect their full benefit at 66 or even accrue Delayed Retirement Credits by waiting until age 70.


  1. Model Risk of Risk Models




Danielsson, Jon (London School of Economics)
James, Kevin (London School of Economics)
Valenzuela, Marcela (University of Chile)
Zer, Ilknur (Board of Governors of the Federal Reserve System (U.S.))


This paper evaluates the model risk of models used for forecasting systemic and market risk. Model risk, which is the potential for different models to provide inconsistent outcomes, is shown to be increasing with and caused by market uncertainty. During calm periods, the underlying risk forecast models produce similar risk readings, hence, model risk is typically negligible. However, the disagreement between the various candidate models increases significantly during market distress, with a no obvious way to identify which method is the best. Finally, we discuss the main problems in risk forecasting for macro prudential purposes and propose an evaluation criteria for such models.

8/19: Consumer confidence has deteriorated in the past month.

The University of Michigan's consumer confidence index fell to a nine-month low of 79.2 in August from 81.8 in July.

EFM- this is not the definitive statistic for formal planning but it always bears viewing

Fish are cheaper:  And you can eat them too

It will cost an average middle-income family nearly a quarter-million dollars to raise a child in 2013 to adulthood.

Food, housing, childcare, education and other expenses will total $245,340 by the time the child turns 18, the Department of Agriculture estimates in a new report. That is a 1.8 percent increase over the year before. In 2013 alone, the cost of caring for a child ranges from $12,800 to $14,970.

Dollar cost averaging

Bernstein Global Research recently conducted its own study of the subject, and was able to quantify some of the cost of investing gradually. Using the Standard & Poor’s 500-stock index and its predecessors, Bernstein examined the rolling one-year returns of the stock market through 12-month periods from the beginning of 1926 to the end of 2013 — a total of more than 1,000 such periods. It compared lump-sum investments made at the beginning of each period with stock purchases made through “dollar-cost averaging” — regular monthly investments in the S.&P. 500 for 12 months. Money on the sidelines stayed in three-month Treasury bills.

The firm found that the average one-year return was 12.2 percent for immediate investments into the stock index, 8.1 percent for the dollar-cost-averaging portfolios and 3.6 percent for the cash holdings. The penalty for investing gradually, in other words, was 4.1 percentage points. On the other hand, that gradual approach was 4.5 points better than just holding cash.


True but still wrong

 There is no doubt that if you had been able to time the market perfectly, deliberately avoiding big declines and investing only at market bottoms, you would have been even better off. “We’d all like to do that,” Mr. Bosse of Vanguard said. “But no one can. We don’t think it’s worth even attempting to go down that road.”

EM- the ability to hit the very top or the very bottom is illusory. By the same token, it is possible to ride optimism and to avoid all but 10% to 15% of any slide. As to finding the bottom- you need to wait a bit anyway after the (supposed) bottom is hit because you do not know it is the bottom. It could go lower or rebound just a tad and then drop further. Well, the government comes out with independent statistics about 1.5 years after the bottom and indicates the formal bottom/end of recession was reached on xyz date and the economy improved thereafter. Use this and you will get at least 90% of the upside. 


The CAPE ratio, a stock-price measure stood at around 23 a year ago, far above its 20th-century average of 15.21. (CAPE stands for cyclically adjusted price-earnings.) Now it is above 25, a level that has been surpassed since 1881 in only three previous periods: the years clustered around 1929, 1999 and 2007. Major market drops followed those peaks.

It works like this: Using inflation-adjusted figures, we divide stock prices by corporate earnings averaged over the preceding 10 years. Our ratio differs from a conventional price-to-earnings ratio in that it uses 10 years, rather than one year, in the denominator. It does so to help minimize effects of business-cycle fluctuations, and it’s helpful in comparing valuations over long horizons.


Leveraging Filial Support Laws Under the State Partnership Programs to Encourage Long-Term Care Insurance

Jamie Patrick Hopkins

The American College

Ted Kurlowicz

The American College

Christopher P Woehrle

The American College

July 21, 2014

Widener Law Review, Vol. 20, No. 165, 2014, 20 Widener L. Rev. 165 (2014)

As thousands of the United States’ baby-boomers retire each day, people live longer, families disperse, and the population ages. Financing long-term care needs has become an increasingly important focal point in both civilian and government budget discussions. In order to reduce reliance on government provided long-term care funding programs such as Medicaid, states can leverage the often unenforced filial responsibility laws and State Long-Term Care Partnership Programs. Through the enforcement of existing filial responsibility laws, states can provide the proverbial “stick” to incentivize people to purchase long-term care insurance by increasing their personal liability for their family members’ long-term care expenditures. Furthermore, by offering liability protections from filial responsibility laws under the state’s long-term care insurance partnership program, states will be able to offer a “carrot” to encourage participation in the long-term care insurance market. Ultimately, by leveraging these two existing legal structures, states can incentivize the purchase of long-term care insurance and reduce reliance on government provided long-term care financing programs.


Why Seniors Don’t Eat: It’s Complicated.

More than half of older adults who visit emergency departments are either malnourished or at risk for malnutrition, but not because of lack of access to health care, critical illness or dementia. Despite clear signs of malnutrition or risk of malnutrition, more than three-quarters had never previously been diagnosed with malnutrition, according to the results of a study published online in Annals of Emergency Medicine (“Malnutrition Among Cognitively Intact, Non-Critically Ill Older Adults in the Emergency Department”).

“We were surprised by the levels of malnutrition or risk of it among cognitively intact seniors visiting the ER, and even more surprised that most malnourished patients had never been told they were malnourished,” said lead study author Timothy Platts-Mills, MD, of the University of North Carolina Department of Emergency Medicine in Chapel Hill, N.C. “Depression and dental problems appear to be important contributors, as is difficulty buying groceries. Given that seniors visit ERs more than 20 million times a year in the U.S., emergency physicians have an opportunity to screen and intervene in ways that may be very helpful without being very costly.”

Of patients age 65 and older, 16 percent were malnourished and 60 percent were either malnourished or at risk for malnutrition. Of the malnourished patients, 77 percent denied have been previously diagnosed with malnutrition. Malnutrition was highest among patients with symptoms of depression (52 percent), those residing in assisted living (50 percent), those with difficulty eating (38 percent) and those reporting difficulty buying groceries (33 percent). Difficulty eating was mostly attributed to denture problems, dental pain or difficulty swallowing.

In this study, nearly all (95 percent) of patients had a primary care physician, nearly all (94 percent) lived in a private residence and nearly all (96 percent) had some type of health insurance. More than one-third (35 percent) had a college education.

Malnutrition is defined as lacking “adequate calories, protein or other nutrients needed for tissue maintenance and repair.”

“For patients who report difficulty buying groceries, Supplemental Nutrition Program, Meals on Wheels, Congregate Meals Programs or community-based food charities can be helpful, although other factors may also need to be addressed,” said Dr. Platts-Mills. “The growing role of the emergency department as community health resource makes it an essential place for identifying and addressing unmet needs of older adults. Implementation of oral nutritional supplementation is inexpensive and may reduce overall costs by accelerating recovery from illness and reducing readmissions.”

"Political correctness is a doctrine, fostered by a delusional, illogical minority, and promoted by main stream media, which holds forth the proposition that it is entirely possible

to pick up a piece of shit by the clean end."

8/17: Eurozone going nowhere and getting worse

Very bad omen

8/17: Can a ‘Fiduciary-Only’ Advisor Take Commissions? by Bob Clark

My reply- this is a 20+ year fight with Clark. California DOES have a legal obligation for fee insurance advise but none of those supposed :fiduciary organizations (CFP Board, NAPFA, FPA, CPA society et al) has demanded their reps to adhere. Even told CFPs to keep lying about their lack of legality but just keep quiet about it. NAPFA indicated they had a singular exemption from the law. ( Clark's statement, " In my view, like the other areas of personal finance, insurance consumers need a professional who is legally obligated to act in their best interest when making decisions about their coverage" is correct but fails to note that about 35 states have mandatory laws for fee insurance advice. Some of the laws are just plain 'crap' with no knowledge base needed to do fee advice. No matter, you have to be legal to be a fiduciary. There was only ONE fully licensed and legal CFP fee financial planner in CA for over 10 years. That is a joke. Do not have other statistics but you could probably count the number of legal reps on two hands in each state.

If you charge for advice, you cannot take a commission. If you are in a state with no fee insurance regulations, you can offer fee advice with, I believe, impunity since you are breaking no laws.

Overall however, if you are dumb as a rock in this area and have not attained at least the minimum amount of classes as an agent, you, as I see the current commentary, may act as a fee fiduciary by just saying you will do the best for the client (and apparently believing it). However, even if you did match licensing "knowledge", it still would be a lie because insurance licensing education is for far behind real life necessity as to be prehistoric.

Further, you have to know indexed life and annuities, guaranteed income, long term care (very involved) life settlements, etc - where 98% of insurance agents are unqualified/clueless. That’s going to be hard to accomplish but is the responsibility of the fiduciary.

Lastly, if you did do competent work AND charged a fee, now what do you do? Turn the product implementation over to some commissionable schmuck where you are clearly unsure if your work will be carried out properly. Now the client pays a fee AND a commission!!! In order to do the best for the client, you have to take the lesser value of the two (and if it was term, you’d lose money  since it takes more time to go through a competent process for a client by fee than a commission would pay.

This conversation about fiduciary has a long ways to go.

State Debt Clock


World Debt Clocks

8/17: REtirement

Incomes for the highest-earning 1% of Americans soared 31% from 2009 through 2012, after adjusting for inflation. For everyone else, incomes inched up an average of 0.4%.

Researchers at the liberal Economic Policy Institute say households in the top fifth of income saw median retirement savings increase from $45,539 in 1989 to $160,000 in 2010 in inflation-adjusted dollars. But, for households in the bottom fifth, median retirement savings were down from $8,433 in 1989 to $8,000 in 2010, adjusted for inflation. [$8,000 will provide next to nothing in retirement for the next 30 years.  Sad. These folks must stay in the work force for ever and die with their boots on.]  The calculations did not include households without retirement savings.

 in households where annual income is less than $25,000, nine in 10 saved less than $10,000, up slightly from 2009. For households with six-figure incomes, 42% saved at least $250,000,[$250,000 will provide income of about between $7,500 per year at a 3% withdrawal rate and $10,000 at a 4% withdrawal rate.] up from 34% five years earlier.

The days of retirees being able to count on set monthly payments from pensions continue to fade among non-government workers. Only 13% of private-sector workers now participate in "defined benefit" plans, compared with a third of such workers in 1985. They've been eclipsed by "defined contribution" plans, often 401(k)s, in which employers match a portion of employee contributions.































  • When a long-term care rider is added to a policy, the death benefit can be spent on long term care.
  • Accelerations for long term care draw down the death benefit dollar for dollar.
  • The long-term care benefits are received income tax free.
  • Any remaining death benefit is also received income tax-free.
  • No matter what happens, the full benefit will be distributed to the owner or beneficiaries.

Annual Premium: $250,000 NLG Policy with a $5,000/Month LTC Benefit*

















Women with Urge Incontinence Have an Increased Risk of Falling

By Jennifer B. Buckley

Older women with urge incontinence may be more likely to fall and fracture a bone compared to women who are not urge incontinent, according to a new study. Although slip and falls are common health concerns for older women, their risk of falling increases if they also have urge incontinence.

The study conducted by researchers at the University of California, San Francisco discovered, women who feel a strong need to urinate and have urine leakage before getting to the bathroom, increase their risk of falling by 26% and their risk of fracturing a bone by 34%. Researchers studied more than 6,000 women aged 72 and older, with frequent urinary incontinence. The study was published in the July issue of the Journal of the American Geriatrics Society.

Urge incontinence is a common condition for older women occurring in up to 40% of women over the age of 60. Falls are also a frequent problem in the elderly population. In fact, falls affect one out of three people ages 65 and older each year, according to the U.S. Centers for Disease Control. They rate as the most widely seen cause of injuries and hospital admissions for trauma. In addition, falling and fracturing a bone can change someone’s life forever. About half of older adults who are hospitalized with a hip fracture, are unable to live independently again.

A person with urge incontinence may feel an overwhelming compulsion to empty their bladder, if it contains urine. This increases the likelihood of someone rushing and then tripping on her way to the bathroom. It can be an especially dangerous situation during the night, if there aren’t any lights illuminating the way. A person can’t avoid tripping over something they can’t see. In fact, six out of ten fatal falls happen to older people in the safety of their home.

The findings suggest that identification and treatment of urge incontinence may actively prevent the risk of falls and fractures. Often times, women neglect to speak with physicians about the problem of incontinence and therefore, may not seek treatment, because they are too embarrassed. Some invasive, new treatments for urinary incontinence include: biofeedback, FemSoft Inserts, Neocontrol, tension-free transvaginal tape(TVT) and the prescription medication, Ditropan.

Perhaps the conclusion of this recent study will prompt women, neglecting to communicate with their doctors about their incontinence, to speak up and in turn, receive one of the many treatment options available. Based on the study, women with incontinence may have more to fear then public embarrassment; they could potentially fracture a bone, putting them in an even more precarious situation


Home care planning: 4 things LTC planners should know about the new regs  Very Important

Financial planners will have to read and know this. they will not be able to depend on an insurance agent.
(But I do not know where an FP would really have much of a background on LTC in the first place)

8/14: LTC: States' Medicaid programs pay the nursing home bills for about 60 percent of U.S. nursing home residents.

8/14: 6 sigma outflow

"HY [high yield] flowmageddon," said Goldman Sachs' Charles Himmelberg in a research note we saw via @lebullmarche. "This is the largest HY outflow on record - a 6-sigma event when flows are scaled by mutual fund assets under management!"

Sigma is another way of saying standard deviation. And the greater the number of standard deviations, the more unlikely the event.

A 6-sigma event is extremely rare. If you want to put a number to it, think 1 in 500 million. According to Business Insider quant reporter Andy Kiersz, it's like flipping a coin 29 times in a row and getting heads each time.

US debt clock
Fascinating and very, very disturbing

8/14: Can't spend what you don't have
The latest evidence is a study by the U.S. Conference of Mayors that highlights stark disparities between the jobs lost during the recession and jobs gained since. The types of jobs lost paid nearly $62,000 per year, on average. The jobs gained during the past six years pay only about $47,000. That 23% shortfall adds up to about $93 billion in lost wages per year — money not being spent because it vanished from the economy.

This is a pernicious problem that can’t be easily fixed by policy prescriptions or Federal Reserve maneuvers. The Fed has said repeatedly it sees “slack” in the economy, and the income shortfall could be a prime example of what the Fed means by slack. Yet even if the Fed continues to hold interest rates at super-low levels, it’s not clear that would help boost pay or living standards for ordinary people.

Workers who lose jobs in one sector don’t necessarily go to work in another. It’s not as if there are a lot of former assembly-line workers now manning the registers in stores or waiting tables. Many workers who lose decent-paying jobs basically wait for those jobs to return, drawing unemployment insurance as long as they can and then pulling out of the labor force. This could help explain why the labor-force participation rate — the portion of adult Americans either working or looking for work — has hit the lowest levels since the 1970s.

8/14: What is a plan
The 5th U.S. Circuit Court of Appeals noted that a “pension plan” as defined by ERISA is “any plan, fund, or program . . . maintained by an employer . . . to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program (i) provides retirement income to employees, or (ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan…”

8/14: Wrap fees

The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has recently been focusing on wrap fee programs sponsored by Registered Investment Advisers.  In their most recent request letter, the OCIE requests information on how advisers determine the suitability of wrap fee programs, how advisers ensure best execution for their clients, and whether advisers are allowed to “trade away” from their usual trading desk.  SEC examiners also request that advisers specify which types of fees are covered in their wrap fee programs.

Part of the request letter focuses heavily on the adviser’s review process of the wrap fee program and wrap fee accounts, therefore it is important that the adviser regularly analyze the suitability of wrap fee programs for their clients.  Before placing a client in a wrap fee program, advisers will need to conduct an initial review and document the factors that they considered in making their determination to place a client into a wrap fee program.  Advisers should proactively monitor client accounts for high cash balances, low levels of trading, and other factors relevant in determining the continuing suitability of the wrap fee program.  Examiners expect to see that client accounts in wrap fee programs have high levels of trading in order to justify their higher fees.  The SEC typically focuses on whether or not advisers have inactive client accounts with low levels of trading misplaced in wrap fee programs.  Examiners will want to see that firms are striving to serve client’s best interests rather than their own. 


Caring for the Paralyzed

By Jennifer Bradley, Staff Writer


In 2009, the Centers for Disease Control and Prevention (CDC) reported that 1 in 50 Americans is living with some degree of paralysis. Paralysis can be either complete or partial, occurring on one or both sides of the body. It also can affect just one area, or be a widespread issue. Paraplegia is when paralysis affects the lower half of a loved one’s body, and quadriplegia is paralysis of both arms and legs.

Much of the time, paralysis is caused by strokes or a spinal cord injury. Other causes could be nerve or autoimmune diseases or Bell’s palsy. The care a person needs will vary depending on the cause and nature of the paralysis; but whether from an accident or illness, caregivers can learn ways to make life easier.


Shock and disbelief are probably the most common reactions immediately following the diagnosis of paralyzation. Adjustment takes time and a caregiver can expect a loved one to go through a variety of stages including: grieving, taking control, talking about the disability, taking care of self, and looking ahead.

A caregiver can find a lot of support for themselves and a loved one from local medical and/or counseling professionals, as well as support groups. The Web sites of the Christopher and Dana Reeve Foundation and the American Paralysis Association contain a wealth of information.

One major concern post-diagnosis is paying for the mounting costs of paralysis. The University of Alabama’s National Spinal Cord Injury Statistical Center and the CDC have estimated these costs and say that the first year of any type of paralysis will cost the most (up to $900,000 at the most severe level) and in subsequent years, less, but still total nearly $200,000 per year.

This same group reports that 12 days is the normal stay of initial hospitalization, followed by an average of 37 days in a rehabilitation unit. Nearly 90 percent of all spinal cord injured loved ones are discharged to their private homes, and about six percent to nursing homes.

While all of this can be overwhelming and terrifying to both caregiver and loved one, there is support available through grants and other funding. The paralysis foundations and associations offer a place for caregivers to locate and pursue these opportunities.

In a study done by the CDC and Reeve Foundation, it was found that the annual household income of most people in the paralysis group was less than $30,000, and for 25 percent, it was $10,000. The diagnosis of paralysis often leads to job loss. If the spouse is the main caregiver (as is often the case), he or she may also face job loss and loss of health care insurance. And while it’s been proven that technology is helping people with paralysis live longer, the cost will be extended as well.

The Reeve Foundation explains that being uninsured or underinsured does not mean there are no ways to get health coverage. Hospitals which accept federal funds on any level must provide specified amounts of free or reduced-fee care to patients. The hospital’s financial department can provide qualification information to caregivers.


Loved ones living with paralysis may experience a host of secondary conditions to varying degrees, depending on the location of the paralysis and its severity.

Some of these include blood clots, pneumonia, low blood pressure, pressure sores, spasticity, pain, bladder or bowel infections, and autonomic dysreflexia (AD), an emergency that must be treated immediately.

For general body health, a good rule of thumb for caregivers to know is to change a loved one’s position every two hours. Pressure sores, if not found and left untreated, can lead to a serious complications. They develop when an area of the skin is under a prolonged period of pressure. It can be helped if the pressure is relieved regularly (thus, the changing position guideline).

Choosing a rehabilitation facility is a very important decision and one that significantly will impact the progress of a loved one with paralysis. A caregiver should look for accreditation by the Rehabilitation Accreditation Commission (CARF) for spinal cord injury, which indicates that the facility meets a minimum standard level of care. Always ask if the facility has previous experience with the specific diagnosis and level of paralysis a loved one is facing.

The importance of regular exercise for someone with paralysis cannot be understated. Scientific studies predict that most recovery will come within six months of injury, and is complete within two years. Christopher Reeve proved that these medical expectations could be beaten, and did, having significant improvement five to seven years after his accident. Many believe that this was because of the exercise routine he began the year he became paralyzed. Though his regimen was targeted toward his needs, and each loved one that is paralyzed will not have the same outcomes, professionals all agree that exercise is a good thing for all those suffering with any form of paralysis.


Depression is very common in a newly paralyzed person, and there are warning signs a caregiver can watch for that will red flag this as an issue. They may include: oversleeping, change in weight, loss of interest and negative thoughts. Changes in mood can be gradual, so it may be harder for a caregiver to see a noticeable difference. Many times, other people will notice it first. A caregiver must be open to the observations of those who care for a loved one, but may not be a primary caregiver.

In a paralyzed individual, the onset of depression is two or three times greater than in someone without the condition. Though it’s very treatable when addressed, extra care must be given regarding prescription drugs. The side effects of some of the anti-depressants can be stronger for those living with paralysis. Weight loss or gain is a common concern, especially for those in a wheelchair or dealing with pressure sores.

To help combat the emotional downside of paralysis, there are things a caregiver can do. First, be candid about talking with your loved one about your feelings as well as theirs. Putting a person’s mind at ease is a huge hurdle to overcome at the beginning of such personal caregiving.
It also helps to maintain active conversations about family, friends, activities, plans, etc. A loved one should keep an interest in the world around them, whether it is through personal relationships or world and local news. Having a sense of what is going on around them while they are in the first stages of paralysis and treatment will help maintain optimism and interest and reduce the feelings of loss and disconnect.

A caregiver can encourage visitors to do the same—talk openly about the obvious “elephant in the room,” but also about their lives, mutual interests, friends and community happenings. Laughter is healthy, as is taking a loved one’s mind off of themselves and the difficulty surrounding their situation.

For many decades, it was thought spinal cord injuries were incurable. Today, advances are being made in research to restore sensation to nerves and muscles damaged by accidents, stokes and chronic diseases. The question is not whether major breakthroughs in treatment will occur, but rather how quickly they will be realized. For caregivers caring for those living with paralysis and their families, the future is one of hope of recovery.

Where I'm living now
8/13: I agree- just plain slow

The Federal Reserve’s vice-chairman has pointed to weak labour force participation and a soft US housing recovery as two reasons for disappointing global growth, saying this could be a long-term phenomenon.

Stanley Fischer’s comments reflected continuing concern about the economy that has fuelled debate over whether the Fed should move sooner than expected to raise interest rates, despite solid job growth and strong gross domestic product expansion in the US.

“This pattern of disappointment and downward revision [in growth] sets up the first, and the basic, challenge on the list of issues policy makers face in moving ahead: restoring growth, if that is possible,” Mr Fischer said on Monday in a speech in Stockholm. “It is also possible that the underperformance reflects a more structural longer-term shift in the global economy, with less growth in underlying supply factors.”

Outside the US, the recoveries of advanced economies had been “well below average”, while performance in emerging markets, especially in Asia, is sharply down. The challenge for policy makers was separating the “cyclical from the structural, the temporary from the permanent,” Mr Fischer said.

“The difficulty in disentangling demand and supply factors makes the job of the monetary policy maker especially hard since it complicates the assessment of the amount of slack, or underutilised productive capacity, in the economy,”

8/12: CFPs-
there are 372 board-registered financial-planning programs offered at 227 different colleges and universities.  But many are not finishing the courses and are foregoing  the business altogether.



  1. Window dressing in mutual funds




Agarwal, Vikas
Gay, Gerald D.
Ling, Leng


We provide a rationale for window dressing where investors respond to conflicting signals of managerial ability inferred from a fund's performance and disclosed portfolio holdings. We contend that window dressers take a risky bet on their performance during a reporting delay period, which affects investors' interpretation of the conflicting signals and hence their capital allocations. Conditional on good (bad) performance, window dressers benefit from higher (lower) investor flows as compared to non-window dressers. Window dressers also have poor past performance, possess little skill, and incur high portfolio turnover and trade costs, characteristics which in turn result in worse future performance. --


The indirect effect of monetary incentives on deception

     Janna Ter Meer (University of Cologne)


This paper investigates whether working under competitive or cooperative incentives affects deception in a subsequent, unrelated task. I use a laboratory study with two stages. First, participants work under a piece rate, tournament or team incentive in a real effort task. The second part consists of a sender-receiver game where the sender can gain financially at the expense of the receiver by sending a deceptive message. I find that senders who worked under tournament incentives are less honest than those who worked under a piece rate. I find no increase in honesty for those who performed under team incentives relative to the piece rate. Interestingly, this only holds when participants are not informed about their relative performance during the work task. When such feedback is provided I find that relative performance affects honesty across all incentive conditions. In particular, honesty decreases as relative performance differences become small.


JEL:      M52 C92 D02 D03

Date:     2014-07-07


US banks warn on ‘excessive’ risk-taking

An influential group of Wall Street banks has warned the US Treasury that low volatility in many markets is creating a feedback loop that exacerbates “excessive risk-taking” by investors.

A member of the Treasury Borrowing Advisory Committee – a group of banks and investors selected to help advise on markets and the economy – made the warning in a presentation this week.

The caution from the TBAC comes as volatility in the markets has drifted to historic lows due to central bank policies that suppress sharp market movements and dissuade investors from hoarding cash.

The concern now is that large investors may have grown too complacent following years of one-way markets that encourage them to take on ever greater amounts of risk to hit their return targets.

Sales of riskier investments – such as the junk bonds sold by low-rated companies – have subsequently soared thanks to demand from yield-hungry investors.

“Against [an] environment of low vol[atility] and low returns, the only way to achieve the same return targets is to take on more risk,”

Assets invested into hedge funds, which typically undertake riskier strategies, have ballooned to $2.8tn in the second quarter of this year, up from about $1.75tn just before the financial crisis, TBAC said. Meanwhile conservative investors such as pension funds are still trying to reach an average return target of a little less than 8 per cent, at a time when yields on benchmark US Treasuries are at 2.45 per cent.

Because banks and investors incorporate volatility into their internal risk management models, there is a chance that suppressed markets are creating a feedback loop that amplifies further risk-taking, TBAC noted.

The “value-at-risk” models used by most large Wall Street banks and investors typically incorporate volatility data to try to calculate how much a trading portfolio might be expected to lose in a given day with a given probability.

With volatility drifting lower and lower in recent years, these models are spitting out extremely small chances of investors sustaining large losses, allowing Wall Street to assume additional risk without violating its own internal risk management standards.

EFM- volatility is NOT risk, ipso facto. It is a form of risk only. You determine risk by the risk of loss- which is how much you can lose by a major decline. It is true that a VAR can anticipate a daily loss within, perhaps, a reasonable range, but that is all. After that, the VAR may prove highly debatable to useless.



8/11: The answer is Yes

Do leaders affect ethical conduct?

     Giovanna d’Adda

    Donja Darai

    Roberto A. Weber


We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct—prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders’ strategies reveals that leaders’ statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders’ propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.


Ten Things to Know About the Taxpayer Advocate Service

1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS and is your voice at the IRS.

2. We help taxpayers whose problems are causing financial difficulty. This includes businesses as well as individuals.

3. You may be eligible for our help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should.

4. The IRS has adopted a Taxpayer Bill of Rights that includes 10 fundamental rights that every taxpayer has when interacting with the IRS:

Taxpayer Bill of Rights

  • The Right to Be Informed.
  • The Right to Quality Service. 
  • The Right to Pay No More than the Correct Amount of Tax.
  • The Right to Challenge the IRS’s Position and Be Heard. 
  • The Right to Appeal an IRS Decision in an Independent Forum. 
  • The Right to Finality. 
  • The Right to Privacy. 
  • The Right to Confidentiality.
  • The Right to Retain Representation.
  • The Right to a Fair and Just Tax System.

Our TAS Tax Toolkit at can help you understand these rights and what they mean for you. The toolkit also has examples that show how the Taxpayer Bill of Rights can apply in specific situations.

5. If you qualify for our help, you’ll be assigned to one advocate who will be with you at every turn. And our service is always free.

6. We have at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico.  You can call your advocate, whose number is in your local directory, in Pub. 1546, Taxpayer Advocate Service -- Your Voice at the IRS, and on our website at You can also call us toll-free at

7. The TAS Tax Toolkit at has basic tax information, details about tax credits (for individuals and businesses), and much more.

8. TAS also handles large-scale or systemic problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at

9. You can get updates at

10. TAS is here to help you, because when you’re dealing with a tax problem, the worst thing you can do is to do nothing at all.

8/10: 401k confusement:

Different investment strategies. Managed accounts provide investment management services for 401(k) plan participants, but often use wildly different strategies. The Government Accountability Office conducted case studies of eight managed account providers that represent over 95 percent of assets under management in 2013, and all of them used different investment options, asset allocations and rebalancing intervals for the same hypothetical participant. "Some participants cannot be assured that they are receiving impartial managed account services or are able to rely on accountable investment professionals taking on appropriate fiduciary responsibilities," GAO found.

Unused personalization. Some managed accounts customize the investments for individuals more than others. Two of the eight providers studied allocated investments based on information obtained from the plan's record keeper including age, gender, income, account balance and savings rate. But the majority of the providers used more personal information including risk tolerance and spousal assets to select asset allocations. However, fewer than a third of participants provided this personal information, which means that many 401(k) participants may not be getting the full value of the service they are paying for. "Participants who are defaulted into managed accounts that offer a highly personalized service run the risk of paying for services they are not using if they are disengaged from their retirement investments," according to the GAO report. "Participants who never supply additional personalized information to managed account providers may be allocated similarly over time to those participants in target-date funds."

8/10: Retirement oops

31 percent of people said they have zero money saved for retirement. That included 19 percent of people between the ages of 55 and 64, or those closest to retirement age.

What's going on here? A lot of people said they rarely thought about retirement, at least not until it was too late. About 41 percent of people ages 18 to 29 said they never thought about retirement planning, a number that understandably declined to 20 percent for people above the age of 60.

But researchers said the dismal saving rates weren't fully explained by lack of caring. They also cited a combination of low resources and poor awareness:

For many people, particularly those working part time or earning low wages, the biggest obstacle to a steady retirement savings plan is access. About three-fourths of private sector workers with full-time jobs have access to a retirement plan,

 but that number drops to 37 percent for part-time workers, according to the Bureau of Labor Statistics.


“Demographic transition, frequently considered a long-term problem, is upon us now and will significantly lower economic growth,” said Elena Duggar, a Moody’s vice-president and one of the authors of the report.

Moody’s said the global working-age population would grow only half as fast between 2015 and 2030 as during the previous 15 years. It said all countries except a handful in Africa would see their working-age populations either decline or grow more slowly over that period.

The “unprecedented pace” of population ageing would slow annual global economic growth by 0.4 per cent over the next five years and by 0.9 per cent between 2020 and 2025, it forecast.

The OECD, a Paris-based club of countries that promotes sustainable growth, warned about the issue last month when it predicted population ageing would help to slow global annual economic growth from an average 3.6 per cent in this decade to about 2.4 per cent between 2050 and 2060.

Some societies in Asia are forecast to age particularly rapidly. China will have six working-age adults per elderly person in 2020, but 4.2 in 2030 and 2.6 by 2050, Moody’s said. Hong Kong and Korea will have 3.8 and 4.6 working-age adults per elderly person in 2020, but 2.3 and 2.7, respectively, by 2030, and just 1.5 apiece by 2050.

8/7: Hospice: 

It is normal for a hospice to release a small portion of patients before death — about 15 percent has been typical, often because a patient’s health unexpectedly improves.

But researchers found that at some hospices, and particularly at new, for-profit companies, the rate of patients leaving hospice care alive is double that level or more.

The number of “hospice survivors” was especially high in two states: in Mississippi, where 41 percent of hospice patients were discharged alive, and Alabama, where 35 percent were.

While judging life expectancy is inexact, the rising rates of live discharge in the U.S. in recent years has raised concerns that the rapidly changing industry has become rife with one of two types of improper practices.

First, some hospices appear to be forsaking patients when their care becomes expensive. Hospices bill by the day, so added tests and treatments can cut into their profits. Researchers found, for example, that 1 of 4 patients who leave hospice alive are hospitalized within 30 days.

Some hospices “abandon their end stage residents to the nearest hospital ER and have the legal representative sign the [hospice] revocation papers — all to save money and avoid intensive continuous care at the end of life,” W. T. Geary Jr., medical director at the Alabama Department of Public Health, said in an e-mail.

In what researchers described as a particularly alarming pattern, more than 12,000 patients in 2010 were released alive from hospice, entered a hospital and within two days of leaving the hospital were re-enrolled in hospice. Those are the kind of abrupt transitions that can be disruptive and confusing for the dying, and which hospice care is supposed to transcend.

The other problem driving up the numbers of people leaving hospices alive is the practice of hospices enrolling patients who aren’t actually dying.

The federal government in recent years has sought to recover more than $1 billion from hospices that, according to attorneys, illegally billed Medicare for patients who weren’t near death.

The new research supports the idea that many of the patients released alive from hospice are far from death: More than one-third of patients who were released alive from hospices did not re-enroll in a hospice and were still alive six months after being released.

Between 2000 and 2012, the overall rate of live discharges increased from 13.2 percent of hospice discharges to 18.1 percent in 2012.

8/7: Is there a correlation?????
Oh yeah


8/6: LTC- 
Most people will never be in a nursing home (less than 15% of people who need LTC are in a nursing home)

8/5: Liar liar:

Both men and women lied to women more often than men. In one experiment in the study, 24% of men said they lied to a female participant, but only 3% of men admitted to lying to a male participant in the exercise. Women lied to men 11% of them but lied to other women 17% of the time.


Investors rotate from small to large caps


Underperformance of small-caps on the Russell 2000 index last month by 4.4 percentage points is the largest amount since October of 2009

8/4: Marquette Law School article "review" (
Elder Investments: A Critique of Professional and Consumer Mediocrity)

I reviewed your paper with Marquette on the fraud that takes place involving elderly people. I have my 80 year old mother living with my wife and I (kids are grown) and I see all kinds of stuff that comes addressed to her through the mail. She asked me about them and I explain what they are trying to do, some of the mail "looks" legit and to a unknowing person they might even think it is a government or legal document that they "have" to pay. We talk about how many older people probably send in the money not knowing.

My mother has also attended the "free" lunches you describe in your paper. Her investments are with someone we know and trust so she is safe there, but she went with a friend to this lunch invitation and they are as real as you describe.

Thank you for your efforts in assisting the elderly in understanding the fraud that is out in this world.

8/4: Home ownership
U.S. home prices increased 9.3 percent in the 12 months through May, according to the S&P/Case-Shiller 20-city index released today.

as recently as five years ago, an armada of tankers sailed every month from Africa to the US coast, delivering oil worth billions of US dollars.

Not any more. The American shale revolution, which was supposed to liberate the US from Middle Eastern oil, has instead brought freedom from an unexpected location: Africa. US oil imports from the African continent have this year plunged to a 40-year low.

The trend is unlikely to be reversed anytime soon. Indeed, if anything, African producers should expect even less demand from the US over the next few years, says Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.

“African oil exports to the US may not go exactly to zero but they will drop close to zero [and stay at that level] for a while,” says Mr Bordoff, who until last year was a senior oil official at the White House.

The collapse in the oil trade means the US is the only major region that today trades less with sub-Saharan Africa than before the global financial crisis in 2007-8.

China, the EU and Japan have all increased the import-export volumes compared with eight years ago


The trough in returns on bonds and other fixed-income instruments has been particularly devastating to the carriers. Forty percent to 60% of the money insurers accumulate to cover future claims comes from investment returns,

Nuriel Roubini and Jason Cummins video- Keeping Up with change


“The single most important indicator for evaluating the state of the U.S. labor market is the share of working age population (ages 25 to 54) with a job. Here we can clearly see not only that have we not fully recovered from the ravages of the Great Recession but also that we haven’t even recovered from the first recession of the early 2000s. As of last month, the share of the U.S. working age population with a job was just under 77 percent, a full 3 percentage points below its pre-recession level in December 2007. This means that there are 3.7 million working-age people who’d have a job if we were at employment-rate levels prior to the Great Recession. Being below the 2007 level is enough of an issue, but we are also below the level in 2000. We’re about 5 percentage points below the share of working age people with a job more than 14 years ago. 8

8/3: Long term care
40.2 million: Number of Americans age 65 or older in 2010.88.5 million: Projected number of Americans age 65 or older in 2050.67%: Percentage of Americans age 65 or older who will need some form of long-term care in their lifetimes.6.3 million: Projected number of Americans age 85 or older in 2015. 17.9 million: Projected number of Americans age 85 or older in 2050.Usage
15 million: Number of people in the U.S. using nursing facilities, alternative residential care, or home-care services for long-term care needs, 2000. 27 million: Projected number of people in the U.S. using nursing facilities, alternative residential care, or home-care services for long-term care needs by the year 2050.29.5%: Percentage of nursing home residents who were under age 75 in 2011.27.5%: Percentage of nursing home residents who were between the ages of 75 and 84 in 2011. 35.3%: Percentage of nursing home residents who were between the ages of 85 and 95 in 2011. 7.6%: Percentage of nursing home residents who were over age 95 in 2011.

67%: Percentage of nursing home care residents who were female, 2011-2012. 72%: Percentage of residential care community residents who were female, 2011-2012. 14%: Percentage of people age 71 or older who suffered from Alzheimer's disease or other types of dementia, 2007.  49%: Percentage of nursing home residents who suffered from Alzheimer's or other types of dementia, 2011-2012.4.5 years: Average length of time someone lives after being diagnosed with dementia.

12%: Percentage of adults age 65 or older who suffered from depression, 2008. 49%: Percentage of nursing home residents who suffered from depression, 2011-2012. 2.8 years: Average length of nursing home stay. 5 months: Average length of nursing home stay for patients who eventually died in the nursing home.
$87,600: Median annual cost for nursing home care, private room, nationally, 2014.

4.35%: Increase in cost of private room in nursing home between 2013 and 2014, nationally. $58,765: Median annual cost for nursing home care, private room, Louisiana, 2014. $164,250: Median annual cost for nursing home care, private room, Manhattan, 2014. $42,000: Median annual cost for assisted-living facility, nationally, 2014. $19: Average hourly rate for home health aides, nationally, 2014. 1.59%: Increase in hourly rate for home health aides between 2013 and 2014.34%: Percentage of seniors who had incomes that were less than 200% of the poverty threshold in 2013 ($20,916 for individuals and $26,388 for couples). Unpaid Caregivers
80%: Percentage of long-term care provided by unpaid caregivers at home. 67%: Approximate percentage of unpaid caregivers who are female.14%: Percentage of unpaid caregivers who are age 65 or older. 20%: Percentage of unpaid caregivers who provide more than 40 hours of care per week. 10%: Percentage of unpaid caregivers who go from full-time to part-time work because of their caregiving responsibilities.67%: Percentage of people who plan to have a loved one provide care but haven't asked. State and Federal Funding
$143 billion: Amount of long-term care services and supports financed by Medicaid, 2011. 40%: Percentage of all long-term care costs financed by Medicaid. $117,240: Maximum amount of assets that a healthy spouse can retain for the other spouse to be eligible for long-term care benefits provided by Medicaid. (Actual amounts vary by state.)100 days: Amount of care in a skilled nursing facility covered in full or in part by Medicare following a qualifying hospital stay.

24.7%: Percentage of people who apply for long-term care insurance between the ages of 45 and 54. 54%: Percentage of people who apply for long-term care insurance between the ages of 55 and 64. 57: Average age of long-term care insurance applicants. 92.3%: Percentage of long-term care policies with an elimination period of 90-100 days. 63.7%: Percentage of new long-term care claims that were opened by people over age 80, 2012. $2,466: Average annual cost for long-term care insurance for a 55-year-old couple, 2012; daily benefit of $150 with 3% inflation option and three-year benefit period. $3,381: Average annual cost for long-term care insurance for a 60-year-old couple, 2012; daily benefit of $150 with 3% inflation option and three-year benefit period.$6.6 billion: Amount of long-term care claims paid in 2011. 45.9%: Average premium increase requested for approval by John Hancock for 8,600 long-term care policies in force in Connecticut, 2014. 1%: Estimated lapse rates for long-term care insurance policies.102: Number of companies selling long-term care insurance policies in 2002.12: Estimated number of companies selling long-term care insurance policies at the end of 2009.


Retirement Planning with Annual Available Spend

by John D. Craig, J.D., CPA

General framework of methodology

Implementing the AAS requires a six-step procedure:

  1. The advisor will work directly with the client to determine all parameters of his or her expected spending needs during retirement.
  2. The advisor will obtain a complete analysis of all sources and types of the client's income. Each of these items will constitute a different column in the model. All items will be entered after tax, so it is necessary to have a full understanding of the client's income tax position.
  3. Fundamental returns and inflation will be applied. A conservative year of death will be included. The model will then compute the base-case annual available spend – the amount that can be spent each year, with the value of the investment portfolio decreasing to zero in the year of death.
  4. Negative and worst-case scenarios will be entered into the model. The scenarios chosen will be keyed to the specific situation of the client.
  5. The AAS model can be set to automatically adjust for market value changes and recompute the base-case AAS. Cash and portfolio quantities can be updated monthly. The advisor must determine if and when the base case or negative assumptions should be revised.
  6. The advisor will review the AAS scenarios with the client and evaluate the client's spending and investment plan on a periodic basis. Changes will be made as necessary and appropriate.
8/3: I had used late in this decade but it keeps going up and up. 

8/3: I agree and vehemently disagree

Per Bob Veres: (New software for Financial advisers ) ....frees you up to spend more time in client-facing activities: giving advice on life transitions, holding your clients’ hands during the next market downturn (and the one after that), coaching clients as they create more satisfying lives and careers that require them to navigate difficult financial obstacles.

EFM-.  The word “financial” is a lot more than investments and superficial help- you have to advise on insurance, annuities, long term care, life settlements et al. He has never wanted to address those issues. He simply cannot and does not.

Some of his material is very good- but he has been an enabler to many “financial” entities who act illegally and with limited knowledge.  

I know I have destroyed bridges along the way, but I still refuse to accept the massive losses and destroyed lives of the simplistic buy and hold entities.  

I am also available for Bar Mitzvahs

8/3: Robo advisors

as of July, the 11 leading startups in the robo-advice space currently manage $15.7 billion in client assets.

Back in April, that number was $11.5 billion — a 36.5% growth rate in about three months.

While the term "robo-advisor" is most often used for companies that rely completely on algorithms to manage funds, this analysis broadens the definition to include online investment management companies that are automated to varying extents.





Greenwood, Robin Marc
Shleifer, Andrei


We analyze time series of investor expectations of future stock market returns from six data sources between 1963 and 2011. The six measures of expectations are highly positively correlated with each other, as well as with past stock returns and with the level of the stock market. However, investor expectations are strongly negatively correlated with model-based expected returns. The evidence is not consistent with rational expectations representative investor models of returns.

  1. Expectations of Returns and Expected Returns

GDP growth is the same as always — that's good news and bad news. "After a miserable start to the year, GDP grew a healthy 4 percent in the second quarter. And even better news is that the start to the year wasn't quite as miserable as we thought: first quarter growth got revised up from -2.9 to -2.1 percent....But the bad news is that this latest upswing isn't one so much as a reversion to the mean....Consumer spending growth hasn't really picked up the past year. Neither has fixed investment, which aside from a polar vortex-induced slump, has been remarkably consistent. The only thing that did change in the second quarter is what changes every quarter: inventory spending. It collapsed in the winter, and came back particularly strong in the spring." Matt O'Brien in The Washington Post.

The BEA's warning: Revisions. "The Bureau of Economic Analysis...was far more subdued than the econowonks of Twitter. In the second line of its release it warned everyone that the 4% estimate is highly likely to change....Go back further, and the BEA suggests economic growth is very slow: only 1.8% a year on average between the fourth quarter of 2010 and the first quarter of this year. Yet very few economists will follow suit after the BEA and give this warning the emphasis it deserves. While economic statistics — and in particular GDP — come with a passel of warnings, asterisks and nuances, the headlines and stories and commentaries tend to pick a story and stick with it." Heidi Moore in The Guardian.

There are other measures that you should look at besides GDP. "The BEA releases a figure called 'real final sales,' and it simply looks at GDP without those swings in inventories. By that measure, GDP only fell at an annual rate of 1 percent (not 2.1 percent) in the first quarter, and grew by 2.3 percent (not 4.0 percent) in the second. Arguably, this is a more stable measure of GDP. There are other ways of tweaking the GDP picture as well. The White House in its analysis of second-quarter GDP emphasizes real private domestic final purchases, which takes out not only inventories but net exports." 8/3: Protecting residents from financial exploitation
A manual for assisted living and nursing facilities

8/3: Poverty

In the last decade, the number of Census tracts considered “distressed” — in which at least 40% of residents live in poverty — has risen by almost 72%. The number of poor people living in those neighborhoods has grown by an even faster rate—78%—from 3 million to 5.3 million. In 2000, the percentage of poor people who live in economically distressed neighborhoods was 9.1%. Today, it’s 12.2%.


Persevering Through Mid-Stage Alzheimer’s Disease
By Kristine Dwyer, Staff Writer


Caring for a person with Alzheimer's disease (AD) is a difficult task as each day brings unique challenges and the caregiver copes with changing levels of ability and new patterns of behavior. In recent years, attempts have been made to categorize the stages of Alzheimer’s in order to gauge the progression of the disease. Staging systems can provide useful frames of reference for understanding how the disease may develop and can assist physicians in treating patients. Awareness of these stages can also help caregivers to prepare for their loved one’s needs, as well as determine their own capacity for coping and planning ahead.

In general, Alzheimer’s symptoms can be classified as mild, moderate or severe. Physicians may also use the terms early, mid and late-stage Alzheimer’s.  According to the Alzheimer’s Association, experts have documented seven common patterns of symptom progression that occur in many individuals and developed several methods of “staging” based on these patterns. It is important to note that not everyone will experience the exact same symptoms or progress at the same rate. In addition, people with Alzheimer’s live an average of eight years after diagnosis, but the duration of the disease can vary from three to twenty years.

To more fully understand the mid-stage of AD, one must understand the early and late stages, as well. This expanded framework from the Alzheimer’s Association outlines key symptoms that describe the general stages of AD progression:

Stage 1: No impairment
(normal function)

Unimpaired individuals experience no memory problems and none are evident to a health care professional during a medical interview.

Stage 2: Very mild cognitive decline
(may be normal age-related changes or earliest signs of Alzheimer's disease)

Individuals may feel they have memory lapses, especially in forgetting familiar words or names or the location of keys, eyeglasses or other everyday objects. But these problems are not evident during a medical examination or apparent to friends, family or co-workers.

Stage 3: Mild cognitive decline
Friends, family or co-workers begin to notice deficiencies. Problems with memory or concentration may be measurable in clinical testing or during a detailed medical interview. Common difficulties include:

  • Word- or name-finding problems noticeable to family or close associates
  • Decreased ability to remember names when introduced to new people
  • Performance issues in social or work settings noticeable to family, friends or co-workers
  • Reading a passage and retaining little material
  • Losing or misplacing a valuable object
  • Decline in ability to plan or organize

Stage 4: Moderate cognitive decline
(Mild or early-stage Alzheimer's disease) 
At this stage, a careful medical interview detects clear-cut deficiencies in the following areas:

  • Decreased knowledge of recent occasions or current events
  • Impaired ability to perform challenging mental arithmetic; for example, to count backward from 75 by 7s
  • Decreased capacity to perform complex tasks, such as planning dinner for guests, paying bills and managing finances
  • Reduced memory of personal history
  • The affected individual may seem subdued and withdrawn, especially in socially or mentally challenging situations

Stage 5: Moderately severe cognitive decline
(Moderate or mid-stage Alzheimer's disease)
Major gaps in memory and deficits in cognitive function emerge. Some assistance with day-to-day activities becomes essential. At this stage, individuals may:

  • Be unable during a medical interview to recall such important details as their current address, their telephone number or the name of the high school or college from which they graduated
  • Become confused about where they are or about the date, day of the week or season
  • Have trouble with less challenging mental arithmetic; for example, counting backward from 40 by 4s or from 20 by 2s
  • Need help choosing proper clothing for the season or the occasion
  • Usually require no assistance with eating or using the toilet

Stage 6: Severe cognitive decline
(Moderately severe or mid-stage Alzheimer's disease)
Memory difficulties continue to worsen, significant personality changes may emerge and affected individuals need extensive help with daily activities. At this stage, individuals may:

  • Lose most awareness of recent experiences and events as well as of their surroundings
  • Recollect their personal history imperfectly, although they generally recall their own name
  • Occasionally forget the name of their spouse or primary caregiver,  but generally can distinguish familiar from unfamiliar faces
  • Need help getting dressed properly; without supervision, may make errors such as putting pajamas over daytime clothes or shoes on wrong feet
  • Experience disruption of their normal sleep/waking cycle
  • Need help with handling details of toileting (flushing toilet, wiping, and disposing of tissue properly)
  • Have increasing episodes of urinary or bowel incontinence
  • Experience significant personality changes and behavioral symptoms, including suspiciousness and delusions (for example, believing that their caregiver is an impostor); hallucinations (seeing or hearing things that are not really there); or compulsive, repetitive behaviors such as hand-wringing or tissue shredding
  • Tend to wander and become lost

Stage 7: Very severe cognitive decline
(Severe or late-stage Alzheimer's disease)
This is the final stage of the disease when individuals lose the ability to respond to their environment, the ability to speak and, ultimately, the ability to control movement.

  • Frequently, individuals lose their capacity for recognizable speech, although words or phrases may occasionally be uttered
  • Individuals need help with eating and toileting and there is general incontinence of urine
  • Individuals lose the ability to walk without assistance, then the ability to sit without support, the ability to smile, and the ability to hold their head up. Reflexes become abnormal and muscles grow rigid. Swallowing is impaired.

As the disease progresses from mild to mid-stage, the signs of AD may become more noticeable to family members and friends. At this point, changes in the relationship usually occur, moving spouses or adult children beyond their inherent roles toward caregiving roles. Mid-stage is the longest of the three main stages and during this time, the reality of the disease hits home.

The hallmarks of this stage may include: an increase in memory problems, uncertainty about person, place and time, delusions, troublesome behaviors, incidents of wandering and getting lost, notable personality changes, decreasing motivation levels, disrupted sleep patterns, changes in communication and the performance of personal care tasks. This stage clearly leads to increased dependence on the caregiver for support.

Although there are certainly many focal points of AD to regard during the middle stage, five important considerations emerge: safety, managing behaviors, structured activities, caregiver support and using resources.

1) Safety :
Usually at this mid-stage, the need for caregiver assistance becomes essential for the safety of the individual with AD. A safe environment is critical at this point since problems with memory and judgment increase and the person with AD can become more vulnerable to fires, accidents or falls.

Focal points:

  • There may be times to gently remind the person about their diagnosis, especially as it relates to a safety issue.

  • As soon as (probable) Alzheimer’s disease is diagnosed, a person with AD should be carefully supervised, limited or even prevented from driving. The risk to self and other innocent people is greatly accelerated and although difficult, steps may need to be taken to remove the car keys and plan for alternative transportation.

  • Install home monitoring systems such as alarms, door locks or safety guards if needed.

  • Enroll the person with AD in the Alzheimer’s Association’s Safe Return Program or obtain an ID or medical alert bracelet for them to wear at all times.

  • At some point, safety issues such as not turning off the faucet or stove, or engaging in unpredictable or dangerous activities may determine whether a person needs 24 hour supervision or can continue living at home.

2) Managing Behaviors:
The symptoms of AD make it harder for people to maintain their former lifestyle and function in their surroundings. Many symptoms and behaviors can be better managed with varied communication styles, physician support and adjustments in the home environment that are suitable to the needs and limitations of the person with AD.

Focal Points:

  • Remember the worth of the person with AD and respond with reassuring, supportive care, and affection when able.

  • Refer to AD as a “memory problem” to help maintain dignity.

  • Support positive behaviors while not taking problem behaviors personally.

  • Remember that this disease is no one’s fault.

  • Consider managing behaviors such as wandering, aggressiveness or anxiousness with medication guidance from the physician.

  • If red flags are prevalent and caregiving becomes unmanageable or unsafe in the home setting, placement in an assisted living home, memory care facility or nursing home may need to be considered for the person with AD.

3) Structured Activities:
Apathy, lack of engagement and follow-through with activities are characteristic of all three stages, but are especially noted during the mid-stage period. That is why it is so important to focus on routine and structure for activities of daily living. Also, one of the most meaningful issues at mid-stage is engaging a person with AD in purposeful activities. Caregivers, family and friends may underestimate what the person with AD understands and over estimate what they can do independently.

Focal points:

  • Routines are reassuring to the person with Alzheimer’s and can be a substitute for the memory loss.

  • Plan for a daily walking program together with the person with AD to promote exercise and relieve stress.

  • Try to plan a structure for each day and include them in small projects that provide a sense of purpose and accomplishment.

  • Offer consistent behavior cues or demonstrations to encourage the person to finish a task.

  • Set milestones for the day such as showers, dressing, meals in the home or dining out, visiting with others, coffee breaks, walks, TV shows and bedtime routines.

4) Caregiver Support:
Alzheimer’s is an insidious disease and has profound and extreme effects on both the person with AD and the caregiver. About 80 percent of people diagnosed with AD are cared for at home by family members. Caring for a person with AD is more difficult than other types of family caregiving. Ultimately, the health and well-being of the caregiver will directly impact the care of the person with Alzheimer’s and determine the course of decisions to be made.

During the middle stages of AD, caregivers themselves begin to show signs of exhaustion and stress and often delay medical appointments and procedures that place their state of health at risk. Numerous studies over the past decades have shown that caregiving is associated with mental anguish and poor physical health, with the impact being greater for caregivers of patients with dementia. In a study published in 1999 in the Journal of the American Medical Association, elderly spousal caregivers (aged 66-96) who experience caregiving-related stress have a 63 percent higher mortality rate than non-caregivers of the same age. That is why it is so vital to keep self-care in the forefront throughout the entire caregiving experience.

Focal Points:
It is crucial that caregivers seek out medical as well as mental health support as they try to cope with anxiety, frustration, guilt, and grief and loss while moving through this stage.

AD gradually robs a person of their cognitive and functional abilities, thus leaving the caregiver with the job of providing 24-hour care. Caring for someone with AD can take its toll and it is at this stage that depression is highly detected among caregivers due to the lack of sufficient support and the incidence of troublesome behaviors.

In one study, conducted by Dr. Mary Mittelman of the NYU School of Medicine since 1987, spousal caregivers of patients with AD were given individual and family counseling, telephone support, and encouraged to participate in a support group. The goals of the study were to reduce the negative impact of caregiving on the caregiver, encourage family support and delay or avoid premature nursing home placement. The study showed, without a doubt, that counseling and social support, along with education, helped families keep AD patients at home longer. In addition, these interventions helped increase social connectedness which reduced the impact of loneliness and social isolation, and improved the well-being of caregivers, especially in the areas of stress, depression, and toleration of difficult behaviors.

Recent research has also shown that skill-building interventions for Alzheimer’s caregivers taught in health care settings and support groups leads to emotional and psychological improvements, including reduced caregiver burden. This is accomplished by teaching caregivers how to manage their time better, become more assertive in asking for help from others, direct their thoughts more positively and plan for the future.

5) Using Resources:
Asking for help is a sign of strength, not weakness, and caregivers do not need to try and do it all alone. Utilizing resources one at a time can help caregivers cope better and provide care longer in the home.

Focal Points:
One of the most effective ways to cope with caregiving is to communicate with and receive guidance from others such as social workers, counselors, physicians or clergy and by joining a local support group either in person or on the computer.

Keeping a daily journal for both the caregiver and care receiver is a great resource as one seeks the best care options, and details the care recipient's actual needs. It also can become a guide for the physician and for those who may have to step in and take a caregiver’s place on a short-term basis. The journal can record the caregiving experiences—what hurts, what works, and what brings success. Furthermore, it helps build a stronger foundation for this challenging voyage.

This is also the time to consider using services such as: adult day care programs or respite care support, home delivered meals, housekeeping and chore services, or a home health aide to provide personal care assistance.

Mid-stage often brings role changes within the relationship as the caregiver takes over the day to day affairs of the household, along with the legal and financial decisions.

The Alzheimer’s Association, local social services and the Area Agency on Aging can be contacted for many resources, especially information on legal and financial matters. The Internet also offers numerous resources and educational opportunities at the touch of a button.

Caregivers are a unique group of people who are capable of being resourceful, steadfast and persevering through difficult moments and times of hopelessness. The key is to find strength during this stage of AD through knowledge, skill building, and the support of others who have traveled down this road.  Amidst the anguish, there can still be many rewards in caring for a loved one with Alzheimer’s disease and above all, there is an abundance of support within reach for caregivers as they walk with their loved one on this unpredictable journey.

I cannot figure out a funnier line than the sticker itself

8/3: Macro volatility


8/3:  Hussman comments

Ockham’s razor is a principle that states that among various hypotheses that might be used to explain a set of observations, the hypothesis – consistent with the evidence – that relies on the smallest number of assumptions is generally preferred. Essentially, the razor shaves away what is unnecessary and retains the most compact explanation that is consistent with the data. The same basic principle runs through the history of thought from Ptolemy (“We consider it a good principle to explain the phenomena by the simplest hypothesis possible”) to Einstein (“A theory should be made as simple as possible, but not so simple that it does not conform to reality”).


Let’s start with valuations and expected long-term returns. For well over a quarter of a century, I've used the same essential set of calculations to project long-term returns for the S&P 500, typically on horizons of 7-10 years. These models are not “back-fitted” to the data, but are instead straightforward arithmetic. Let’s do that arithmetic. If math makes your head hurt, just skim through what follows till the pain stops:

Price = Price

Price = Fundamental * Price/Fundamental

Price_future = Fundamental_future * Price_future/Fundamental_future

Price_today = Fundamental_today * Price_today/Fundamental_today

Price_future/Price_today = 
Fundamental_future/Fundamental_today * (P/F_future / P/F_today)

Note that this holds regardless of what fundamental we use, but ideally, we would like to use some fundamental that is relatively smooth, so that the growth rate of that fundamental is not highly volatile over time. Notice also that what we have here is a mathematical identity, which can also be written in terms of annual returns and growth rates. Observe that:

Expected annual capital gain = {Price future / Price_today}^(1/T) – 1

where T is some number of years into the future. Similarly:

Annual growth of the fundamental = {Fundamental_future/Fundamental_today}^(1/T) – 1

Writing the expected annual growth rate of the smooth fundamental as “g”, we can combine all of this to:

Expected annual capital gain = (1+g) * [P/F_future / P/F_today]^(1/T) – 1

Now for total returns, one needs to include dividend income. A rough estimate of that is simply to add in the current dividend yield. But given that the price/fundamental ratio may change over time, and that dividends are likely to grow roughly alongside other smooth fundamentals, a better estimate of average dividend income over time is the average of the current dividend yield and the yield that is likely to prevail at the expected future price/fundamental ratio. I trust it’s easy enough to demonstrate that this works out to:

Expected dividend income = dividend yield * (1 + P/F_today / P/F_future)/2

So it’s a mathematical identity and an implication of basic arithmetic that one can estimate the T-year nominal total return of stocks as:

Expected annual total return = 
(1+g)*[P/F_future / P/F_today]^(1/T) + dividend yield * (1 + P/F_today / P/F_future)/2 – 1

Again, it’s helpful to use smooth fundamentals that have relatively stable growth rates over time, and where the price/fundamental ratio tends to mean revert.
Investment advisers???

only 4 percent of financial advisers in 2013 held the chartered financial analyst designation, perhaps the most rigorous investment designation. Some 17 percent were certified financial planners and 11 percent were chartered financial consultants.

Many of the larger brokerage firms have programs that aim to accredit advisers who want to manage clients’ money directly. Sometimes called “reps as portfolio managers,” they may not be true portfolio managers. Instead, they’re executing the firm’s strategies.


Not good for future economics

The homeownership rate in the U.S. fell to a 19-year low as rising prices and tight credit kept many first-time buyers out of the property market.

The share of Americans who own their homes was 64.7 percent in the second quarter, down from 64.8 percent in the previous three months. The rate matched the level in the second quarter of 1995.

Housing has become less affordable and more difficult to finance for entry-level buyers, even as mortgage rates have held close to record lows. First-time purchasers accounted for 28 percent of all sales of previously owned homes in June, compared with about 40 percent historically

7/31: Mutual funds versus etfs

7,707 to 1,294, at the end of 2013

In debt?

More than 35 percent of Americans have debts and unpaid bills that have been reported to collection agencies

The study found that 35.1 percent of people with credit records had been reported to collections for debt that averaged $5,178, based on September 2013 records. The study points to a disturbing trend: The share of Americans in collections has remained relatively constant, even as the country as a whole has whittled down the size of its credit card debt since the official end of the Great Recession in the middle of 2009.

As a share of people's income, credit card debt has reached its lowest level in more than a decade, according to the American Bankers Association. People increasingly pay off balances each month. Just 2.44 percent of card accounts are overdue by 30 days or more, versus the 15-year average of 3.82 percent.

7/30: THINTELLIGENCE (from Jurrasic Park)

“They (dinosaurs) don’t have intelligence. They have what I like to call ‘thintelligence.’ They see the immediate situation. They think narrowly and they call it ‘being focused.’ They don’t see the
surround. They don’t see the consequences.

Now, put "people" in instead of dinosaurs.

7/30:  Women investors

Seventy-seven percent of women want to be involved in day-to-day investment decisions,, yet 72 percent say they “know less than the average investor” about investing in general. equal, I always preferred an intelligent woman over an intelligent man as a client. They ask more questions and are more involved in the process. And a lot less ego screwing stuff up/

EFM- that is wrong. They only THINK they know less. Everythign else beingfg

7/30: Medicare:

Medicare’s budget has always had two problems. One is inflationary — medical spending has tended to grow much faster than the economy over all. That problem has eased over the last few years as health spending has slowed. But the other is harder to fix — it’s demographic. Medicare covers everyone over the age of 65, and as the United States population ages, that means it will need to care for a growing share of the country’s health care.

This year, enrollment in the program is about 54 million people. In the year that the trustees now project that Medicare will start struggling to pay all its hospital bills, enrollment will be more than 81 million, and the number just keeps going up after that. Even if spending for each individual in the program stopped growing, Medicare would still have to cover all those new people. If spending growth held pace with inflation, Medicare’s budget would look a lot like Social Security’s. The Social Security trustees also came out with a report Monday: They expect that program to face insolvency in 2033.

Hungry, Hungry Medicare

The Medicare trustees project that the health care program will come to represent a growing share of the U.S. economy over time. 

Percentage of gross domestic product spent on Medicare
Projections begin in 2013

The Medicare Program Keeps Getting Bigger

As the population ages, a larger proportion of Americans will enter the Medicare program. That will be true no matter what happens to health care spending.

Share of population enrolled in Medicare
Projections begin in 2013


Fighting Resistance From Seniors

Uprooting an elderly loved one and moving them into your home is difficult enough, but add to that the resistance you may receive, and the caregiving becomes an all-encompassing activity. Your loved one's natural tendency is to resist care and assistance, if only because they do not want to think of themselves as old. Often caregivers will become easily angered and irritated at the thought of a loved one refusing care and this conflict can be very damaging to the entire caregiver-care recipient experience. Understanding the stress and loss of independence your relative faces when they give up their home is the first step in easing the tense situation. Here are a few other ideas that may be helpful if you are experiencing any resistance in your daily caregiving.

  • Allow the loved one to have a part in the decision making process surrounding their care and well-being. Do not let them feel they have no part in their future, and allow them the chance to voice their view about they care they would like to receive.

  • The senior may want to start a fight or bring up past actions that occurred, but remain focused on the matter of their care, and do not take part and say anything you may regret later.

  • Remember to think of your own needs, and set limits in the amount of work your willing to take on. Perhaps you provide the in-home care for them, but are unwilling to bathe them, yet your loved one refuses to allow a home-care aide to assist you. Explaining your feelings to your relative and being honest with what your willing to help with can allow you the control of the situation.

  • Be willing to work with the senior in order to find some kind of agreement. Whether they refuse full-time care and you disagree entirely, consider alternatives such as a weekly visit from a health aide and Meals on Wheels service that may ease tension and be agreed upon by both of you.

  • Realize that they are more than likely not going to be happy about the situation, and focus on maintaining the quality of care. They may not look forward to having someone bathe them and cook for them, but you can see a difference in their care and let the senior in time grow accustom to the change.

  • Do not make the situation entirely about them, instead allow them to see it through your eyes to get an idea the work you put forth. Tell them the stress and workload you face and their understanding and willingness to resist you in the future may be lessened. They will look at it as an opportunity to help you in the process of them receiving the aid.

  • Work up to changing your loved ones life and do not suddenly start changing everything they have grown accustomed to over the years. Alert them to any fears you may have, prepare them for any changes, and be as calm and positive as possible to reassure them it is for the best.

  • Plan ahead in case of a sudden decline in health or hospitalization, because it is at these moments where you may face little resistance and can alter their daily care in the manner you see appropriate.



Market timing

prevailing volatility management solutions involve the purchase of a “tail risk hedge. “These have usually come in the form of insurance-like derivative products that will kick in when returns are overly negative, and they’re generally more popular for institutional investors. “The difficulty is that these instruments tend to be quite expensive and they’re often fairly complicated. And when markets are behaving nicely, they can be a real drain on performance. You’re paying a hefty premium for something that isn’t used, and taking on counterparty risk.”

7/28: Please help and send me $250. I will guarantee lots of money in return

Embassy of the United States of America

Plot 1075 Diplomatic Drive

Central District Area, Abuja.


E-mail :

Contact phone number : +2348162362366

 Dear Friend









 Ambassador James F. Entwistle

U.S. Ambassador to Nigeria


Equally weighted

In a
study Robert Arnott and his co-authors picked 100 portfolios, each with 30 equally-weighted stocks from the 1,000 largest American stocks by market capitalisation. 94 of the 100 “dartboard portfolios” did better than a market cap-weighted portfolio of all the 1,000 stocks. Similarly, in another study Andrew Clare, Nick Motson and Steve Thomas randomly picked American stocks to construct ten million indices. An additional twist to their experiment was that the stocks were also randomly weighted. Nearly all of the ten million "monkey indices” delivered “vastly superior returns” compared to a cap-weighted index.

The most knowledgeable respondents in the survey were found to hold 11.5% more stock in their portfolios than their least knowledgeable peers. It could thus simply be the case that more financially literate individuals hold more stocks rather than being better at picking them. While the authors speculate that the estimated positive effect of financial knowledge on returns could be even stronger if investors face a more complex set of choices (the particular institution in this study offered a menu of mostly index funds), the opposite is also plausible if financially illiterate individuals were to be found to make more random stock selections.

But empowering investors by boosting their knowledge is probably a good idea at any rate. Surveys often show a surprising lack of fundamental financial and numerical skills. A Eurobarometer report, for example, found that only 56% of Europeans are able to correctly compute the first year’s interest on a €50,000 loan with 6% interest (yes, the answer is €3,000).

Going down

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.

“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001


7/27: GDP-

. The International Monetary fund cut its forecast for both U.S. growth and global GDP growth this year. On Wednesday, the IMF announced that they would be cutting its U.S. economic growth forecast for 2014 to 1.7%, down from 2%, citing economic struggles in the first quarter. Then on Thursday the IMF cut the global GDP growth forecast from 3.6% down to 3.4%.

Economic moat: Coined by Warren Buffett and
widely used by Morningstar, this term refers to a company's sustainable competitive advantages over its competitors. This can be achieved in one of five ways: cost advantage, efficient scale, intangible assets, network effect, or switching costs (you can find out more about each of these moat sources in this article). Morningstar assigns its Economic Moat Rating (wide, narrow, or no moat) to all the companies its equity analysts cover. Morningstar research has shown that companies with wide moats tend to be better at sustaining profitability over time than those with narrow or no moats.

Memoir is not an act of history but an act of memory, which is innately corrupt.
Mary Karr
7/27: Climate change- well we screwed that up.
Living animals- pretty much the same:

"Among terrestrial vertebrates, 322 species have become extinct since 1500, and populations of the remaining species show 25% average decline in abundance."

But if humans as a species don't want to take our chances with a sixth mass extinction, we need to start taking drastic measures now. The momentum is already moving against us.

Too late

Investment software"

more than 71% said they now use compliance software, whether on their broker-dealer platform, as an outsourced service or in a product provider's offering. In 2013, 66.1% of respondents said they used compliance software, and in 2012, only 38% of advisers were using it.

Personally, I was interested to see whether more advisers would be using re-balancing tools in 2014, considering many so-called “robo advisers” rely on algorithm-driven software to automatically rebalance client portfolios. The results are in, and the answer is yes. Fully 52.2% of advisers as of 2014 are using portfolio re-balancing tools, versus just 45.0% in 2013 and 37.5% in 2012.

7/27: Groundwater- like individual planning, little may be done until far too late. Certainly where none of the participants can actually see the loss

Since 2004, researchers said, the Colorado River basin — the largest in the Southwest — has lost 53 million acre feet, or 17 trillion gallons, of water. That's enough to supply more than 50 million households for a year, or nearly fill Lake Mead — the nation's largest water reservoir — twice.

Three-fourths of those losses were groundwater, the study found.

"Combined with declining snowpack and population growth, this will likely threaten the long-term ability of the basin to meet its water-allocation commitments to the seven basin states and to Mexico,

7/27: Financial knowledge

a recent National Bureau of Economic Research working paper concludes that “Overall, financial knowledge does appear to help people invest more profitably; this may provide a rationale for efforts to enhance financial knowledge in the population at large.” That paper also cited previous studies showing that more knowledgeable people accumulate more wealth.

But Zimbardo — an emeritus professor who has written more than 50 books and is best known for the controversial 1971 Stanford Prison Experiment that highlighted the ease with which people assumed roles as victim or victimizer — found that financial knowledge does not strongly predict financial health.

“In other words,” a summary of the study states, “given a high level of acumen, it is not possible to predict people’s financial behavior

Dwelling in the past, as it were, is highly correlated with financial health; those who live in the present are poor financial decision makers; and those who live in the future are not generally financially “healthy” but often succeed at avoiding being financially “sick.”

Symptoms of financial sickness include a propensity to borrow money from payday lenders; file for bankruptcy or experience foreclosure; carry a credit card balance; or ignorance of the interest rate one pays on borrowings.

The reason past-oriented people are financially healthier is that they “base their decisions and actions on memories rather than current experience,” the summary states. People with negative past experiences, and a past orientation, take less risk and thereby avoid financial ruin. On the downside, such people may be more likely to keep their wealth in cash and avoid prudent investment risk

And this:

A financial literacy test given by the National Financial Educator's Council found that test-takers from 15-18 years old scored an average of only 59.6%.

7/27: Drink up and buy a coffin

Drunk driving has an estimated economic cost of about $199 billion per year in the U.S.. Additionally, in 2012, drunk driving led to the deaths of 10,322 people.

7/27: Bada bing, bada boom:
10,000 baby boomers retire every day


  1. If I close my eyes, nobody will get hurt. The effect of ignorance on performance in a real effort experiment




Agne Kajackaite (University of Cologne)


This paper tests whether staying ignorant about the negative consequences of one's own actions affects agents' performance in a real effort experiment. We conducted treatments in which subjects' effort either increased only one's own payoff or also increased the donation to a bad charity. Ignorance was introduced by letting agents to decide whether or not to learn if the effort benefits the charity. Overall, we find that in the conditions with complete information agents exert significantly higher efforts if there are no benefits for the bad charity. With respect to ignorance, we show that (i) almost a third of agents stay ignorant, and (ii) the ignorant agents exert significantly more effort than agents who know that their effort benefits the bad charity. We also find evidence for a sorting of low social types into ignorance, as exogenously uninformed agents exert less effort than ignorant agents.

7/23: Perception versus reality

About 81% of overweight boys and 71% of overweight girls believe they are about the right weight

7/23: Very very hot:

last month's average global temperature was 61.2 degrees, which is 1.3 degrees higher than the 20th century average. It beat 2010's old record by one-twentieth of a degree.

 The world's oceans not only broke a monthly heat record at 62.7 degrees, but it was the hottest the oceans have been on record no matter what the month

All 12 of the world's monthly heat records have been set after 1997, more than half in the last decade. All the global cold monthly records were set before 1917.

The first six months of the year are the third warmest first six months on record, coming behind 2010 and 1998

Global temperature records go back to 1880 and this is the 352nd hotter than average month in a row.


Dear Advisors:

Ameriprise has been sued by their own employees (see article).


"In this case, a group of employees who were enrolled in Ameriprise's defined-contribution retirement plan said the firm breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 by offering proprietary fund options that paid fees to Ameriprise and its subsidiaries as well as offering more expensive share classes than necessary of RiverSource funds, a predecessor to Columbia. The plaintiffs claimed $20 million in losses."


Wow! If they would do this to their own employees, what are they instructing their advisors to do? Hmmm.......


Sell proprietary Mutual Funds? YES!


Sell proprietary Variable Annuities? YES!


Ameriprise advisors sell their own RiverSource Variable Annuity for extra fees to clients.


Makes you wonder!




Retirement Planning for the Unwealthy

But volatility is not risk ipso facto. And a 1.9% return over retirement????

7/21: This NY Times article is a travesty

FINRA Arbitration
Last year, about 18 percent of customer cases, or 499 claims, were decided in arbitration. Customers received monetary or nonmonetary damages in 42 percent of those cases. But 77 percent of customer cases — including settlements between the parties and arbitration awards — resulted in some sort of monetary or nonmonetary relief (such as canceling a stock purchase and getting money back).

Investors’ lawyers say, however, that even a $1 win would be considered an award so the statistics don’t necessarily provide the full story. “It is seldom that you see a home run,” even on stronger cases

“One of the big deficiencies in the process is the quality of dedication of the arbitrators. “You can have some that are very smart and they try to do the right thing. And then you have people in there who are career arbitrators, and know if they give a big award they won’t get on another case” because the brokerages will not choose them to be on their panels.

The leading reason consumers pursue arbitration is because of claims of a breach of fiduciary duty, which is the legal way of saying the broker did not act in a customer’s best interest. There were nearly 1,900 of those cases last year,
according to Finra, followed by lesser numbers of cases involving claims of negligence and misrepresentation. Problems involving stock investments were the most frequent, followed by mutual funds and variable annuities.

Then read this

: The Failure of Securities Arbitration

7/21: Hot out there

2013 was somewhere between the second- and sixth-hottest year on record for the planet since record keeping began in 1880.

And the checkup results show the planet ranged well outside of normal levels in 2013, hitting new records for greenhouse gases, Arctic heat, warm ocean temperatures and rising sea levels.

"The climate is changing more rapidly in today's world than at any time in modern civilization,"


  1. John Doe's Old-Age Provision: Dollar Cost Averaging and Time Diversification




Dirk Ulbricht


Do timing and time diversification improve the average investor's stock market return? Contrary to literature's scenario of wealthy investors, average investors invest each month over life. Many purchases prevent investors from buying at peak, but horizons decrease, giving latter investments less time to offset losses. This paper accommodates timing using internal rates of return, facilitating the comparison of wealthy and average investors. One to 480 months investments in S&P and downward trending Nikkei, are compared. In conclusion, average investor's risk and return ratios improve with horizon and, compared to wealthy investors, in bullish and deteriorate in bearish markets.



  1. Advances in Financial Risk Management and Economic Policy Uncertainty: An Overview




Shawkat Hammoudeh
Michael McAleer (University of Canterbury)


Financial risk management is difficult at the best of times, but especially so in the presence of economic policy uncertainty. The purpose of this special issue on “Advances in Financial Risk Management and Economic Policy Uncertainty” is to highlight some areas of research in which novel econometric, financial econometric and empirical finance methods have contributed significantly to the analysis of financial risk management when there is economic policy uncertainty, specifically the power of print: uncertainty shocks, markets, and the economy, determinants of the banking spread in the Brazilian economy, forecasting value-at-risk using block structure multivariate stochastic volatility models, the time-varying causality between spot and futures crude oil prices, a regime-dependent assessment of the information transmission dynamics between oil prices, precious metal prices and exchange rates, a practical approach to constru cting price-based funding liquidity factors, realized range volatility forecasting, modelling a latent daily tourism financial conditions index, bank ownership, financial segments and the measurement of systemic risk, model-free volatility indexes in the financial literature, robust hedging performance and volatility risk in option markets, price cointegration between sovereign CDS and currency option markets in the GFC, whether zombie lending should always be prevented, preferences of risk-averse and risk-seeking investors for oil spot and futures before, during and after the GFC, managing financial risk in Chinese stock markets, managing systemic risk in The Netherlands, mean-variance portfolio methods for energy policy risk management, on robust properties of the SIML estimation of volatility under micro-market noise and random sampling, asymmetric large-scale (I)GARCH with hetero-tails, the economic fundamentals and economic policy uncertainty of Mainland China and their impacts on Taiwan and Hong Kong, prediction and simulation using simple models characterized by nonstationarity and seasonality, and volatility forecast of stock indexes by model averaging using high frequency data.

7/21: LTC riders

The difference between 101(g) and 7702B riders.

It’s easy for consumers to think they are buying “long-term care” coverage, when, in fact, it turns out to be a “chronic illness” rider that only pays benefits if a physician certifies that the policyholder is “permanently disabled.”

Indemnity payments are, in effect, accelerated death benefits. With little or no upfront cost and with fewer underwriting requirements than a 7702B, this type of rider, known as a 101(g), can be appealing. However, the words “long-term care” can’t be used in marketing this type of rider.

In contrast, a 7702B is a true LTC rider, and requires a special license to sell the product. Benefits can be accessed when a physician certifies that for at least 90 days, the policyholder is unable to perform at least two Activities of Daily Living (ADLs) or suffers from a severe cognitive impairment.

7702B riders offer indemnity or reimbursement payments.

The difference goes beyond who receives benefit checks, a policy owner or a third party service provider. The reimbursement option offers the flexibility of making the payments to the policy owner or through a third-party service provider, based on submitting paid receipts to the insurance company. Indemnity payments are made directly to those who provide services.

With reimbursement, payments are limited to the actual charges for the services, even though the amount stated in the policy may be higher. Indemnity plans pay the maximum amount allowed by the policy, no matter what the actual charges happen to be.


  • 7 in 10 people with Alzheimer's and other dementias live at home.*
  • $216 billion/year in non-paid care is provided by family members.*
  • 1 in 3 caregivers of people with Alzheimer's provide care for 5 years or more.*

National  nursing home deficiency reports 

7/19: Half
of america lives in these counties


7/17: Pay attention to this

The following is an excerpt from Chapter 4 of Cullen Roche’s new book “Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance.

Few myths in the world of finance are more pernicious than the many that surround the career of Warren Buffett. Warren Buffett is the most glorified and respected investor of all time. 

After all, it’s widely believed that he became the world’s wealthiest man by essentially picking stocks. But Warren Buffett is also remarkably misunderstood by the general public.  I personally believe the myth of Warren Buffett is one of the greatest misconceptions in the financial world.

To most people Warren Buffett is a folksy frugal regular old chum who just has a knack for picking stocks.  He works hard at finding “value stocks” and then just let’s them run forever, right? It’s the old myth that you can buy what you know (say, Coca-Cola because you like Cherry Coke or American Express because you like its credit cards), go through the annual report, plop down a portion of your savings in the common stock and watch the money grow through the roof. 

Well, nothing could be further from the truth and here we sit with an entire generation who believes the simplistic approaches of value investing or buy and hold are the single best ways to accumulate wealth in the market.  Contrary to popular mythology, Warren Buffett is an exceedingly sophisticated businessman.  In order to understand how dangerous this myth is we have to dive deep into Buffett’s story. 

To a large extent, the myth of Warren Buffett has fed a stock market boom as a generation of Americans has aspired to make their riches in the stock market. And who better to sell this idea than financial firms?  After all, a quick allocation in a plain vanilla “value” fund will get you a near-replica of the Warren Buffett approach to value investing, right?  Or maybe better yet, reading six months of Wall Street Journals and reviewing the P/E ratios of your favorite local public companies will send you on your way to successful retirement. 

By oversimplifying this glorified investor named Buffett the general public gets the false perception that portfolio management is so easy a caveman can do it. And so we see commercials with babies trading from their cribs and middle aged men trading an account in their free time. 

And an army of Americans pour money and fees into brokerage firms trying to replicate something that cannot be replicated. Financial firms want us to believe the myth of Warren Buffett.  In fact, many of their business models rely on our believing the myth of Warren Buffett. 

Let me begin by saying that I have nothing but the utmost respect for Mr. Buffett. When I was a young market practitioner I printed every single one of his annual letters and read them front to back.  It was, and remains the single greatest market education I have ever received. 

I highly recommend it for anyone who hasn’t done so. But in digging deeper I realized that Warren Buffett is so much more than the folksy value stock picker portrayed by the media. What he has built is far more complex than that.

In reality, Mr. Buffett formed one of the original hedge funds in 1956 (The Buffett Partnership Ltd), and he charged similar fees to the fees he now condemns in modern hedge funds. Most important, though, is that Buffett was more entrepreneur than stock picker. 

Like most of the other people on the Forbes 400 list of wealthiest people, Buffett created wealth by creating his own company. He did not accumulate his wealth in anything that closely resembles what most of us do by opening brokerage accounts and allocating our savings into various assets. Make no mistake: Buffett is an entrepreneur, hedge fund manager, and highly sophisticated businessman. 

The original Buffett Partners fund is particularly interesting due to Buffett’s recent berating of hedge fund performance and fees. Ironically Buffett Partnership charged 25 percent of profits exceeding 6 percent in the fund. This is a big part of how Buffett grew his wealth so quickly.  He was running a hedge fund no different than today’s funds. 

And it wasn’t just some value fund.  Buffett often used leverage and at times had his entire fund invested in just a few stocks. One famous position was his purchase of Dempster Mill in which Buffett actually pulled one of the first known activist hedge fund moves by installing his own management at the firm.  Buffett, the activist hedge fund manager?  That’s right.  He was one of the first. His venture to purchase Berkshire Hathaway was quite similar.

Berkshire Hathaway isn’t just your average conglomerate. The brilliance behind Buffett’s construction of Berkshire is astounding. He effectively used (and uses) Berkshire as the world’s largest option writing house. The premiums and cash flow from his insurance businesses created dividends that he could invest in other businesses. 

Berkshire essentially became a holding company that he could run this insurance-writing business through while using the cash flow to build a conglomerate. But Buffett wasn’t just buying Coca-Cola and Geico. Buffett was engaging in real investment in many cases by seeding capital and playing a much more active entrepreneurial role in the production process. 

He was also placing some complex bets (short-term and long-term) in derivatives markets, options markets, and bond markets. The perception that Buffett is a pure stock picker, as many have come to believe, is a myth. 

It’s also interesting to note that the portfolio of stocks he has become famous for is the equivalent of just about 28 percent of Berkshire’s enterprise value as of 2013. His most famous holdings (Coke, American Express & Moody’s Corporations) account for roughly 8 percent of the total market cap.

Interestingly, two of Buffett’s most famous purchases weren’t traditional value picks at all but distressed plays. His original purchases of American Express and Geico occurred when both companies were teetering on the edge of insolvency. These deals are more akin to what many modern-day distressed debt hedge funds do, not what most of us think of as traditional value investing.

Make no mistake – Buffett has the killer instinct prominent in many successful business leaders.  Just look at the deal he struck with Goldman Sachs and GE in 2008. He practically stepped on their throats when they needed to raise capital in the depths of the financial crisis, demanded a five year warrant deal, and profited handsomely. 

Of course Buffett described the deal as a long-term value play. If a distressed-debt hedge fund (which is a role Berkshire often plays) had made the same move, reporters might have described the fund manager as a thief who was attacking two great American corporations while they were down. 

Warren Buffett is a great American and a great business leader, but do your homework before buying into the myth that you will one day sit atop the throne of “world’s richest person” by employing a strategy that is, in fact, nothing remotely close to what Berkshire and Mr. Buffett actually do.

7/17: Women

Only 31% of women in the U.S. use a financial professional, compared to 48% in 2008. "It’s the time factor, that women don’t have time, and also the fear factor of addressing one’s reality. "We’re finding that approaching women in a group setting and workshops where they are talking and asking questions among friends or colleagues is one situation in which women are more open to hiring a financial professional."


7/17: Mentally ill

In the 1980s, researchers found about 6 percent of inmates showed signs of serious mental illness. A survey published in 2009 found 17 percent of jail inmates with serious mental illnesses. Individual jails report far greater numbers

7/16: Designations

About 17% of advisers have a CFP designation, compared to 11% who have ChFCs

The ChFC designation has historically been the domain of agents and advisers working with insurance.
The ChFC program of study will now include nine required courses


Making Final Arrangements for a Terminally-Ill Loved One

By Marie Marley, PhD

No one wants to make arrangements for the death of a terminally–ill friend or family member. It’s painful to think about any loved one’s eventual passing, but it’s important to make the arrangements sooner rather than later. In fact, it’s best to do it when you first learn your loved one has a terminal diagnosis. Why? Because once you have taken care of all the plans, you can just relax and enjoy spending whatever precious time you have left together.

There are other reasons as well. One is that you’ll save yourself untold stress when your loved one does pass away. When you’re grieving and not functioning at your best, you won’t have to rush around making a multitude of arrangements, gathering needed documents and information, making important decisions, and performing a whole host of other tasks, many of which have to be completed quickly.

More importantly, you’ll have time to visit with your closest friends and family at the time of the death. These persons will be critical providers of emotional support for you. If you haven’t made the needed arrangements, you’ll be so busy, you won’t have much time to spend with them.
Although you can’t arrange everything in advance, there are several tasks you can complete. You may want to include your loved one in the planning; but if you don’t, you should find a friend or family member who can help you. That will make it a little less daunting.

Medical/Legal Issues: Hopefully your loved one will already have a living will, power of attorney and durable power of attorney for healthcare. If they don’t, you should encourage them to execute these documents as soon as possible. This will guarantee that their wishes regarding their end-of-life care will be carried out. The documents will provide instructions as to whether they want heroic measures taken to extend their life, whether they want a Do Not Resuscitate order and other issues.

If you’re the parent or guardian of a terminally-ill minor, you won’t need these documents. For a mentally disabled adult who can’t execute the documents, however–such as a person with dementia or severe mental illness, you may have to go to court to gain guardianship of the person, especially when family members don’t agree on what to do.

Call List: One of the first things you will have to do when the person dies is inform family members and friends. This can be immensely draining. It’s a good idea to prepare a list, including phone numbers, of people who will have to be notified. You don’t have to call all of the people yourself. You can indicate on the list which friends and family members you’d like to make each specific call on your behalf. That way, you can reduce your burden by calling only those few people who are closest to you.

Obituary: Obituaries need to be sent to newspapers promptly. You can write it or have someone else prepare it. Start by collecting all the needed information. This will include important dates and other information about the person’s life, such as what years they were in the military (if applicable), the specific years they worked at a particular company, the year they married, the spelling of any names you might not know, and any other details you’d like to include.
Also, select a photograph if you want to have one displayed in the obituary. Finally, record the phone number of the newspaper(s) where you want the obituary to appear. You can always make any needed changes later.

Eulogy: It takes time to prepare a thoughtful, well-written eulogy. The first step is to determine whom you’d like to deliver it and then ask them if they will do it. Have the person write as much as possible in advance. They will probably need you to supply some details about your loved one’s life. If you want to deliver the eulogy yourself, go ahead and prepare it, getting any help you may need from a friend or family member who is a gifted writer. This document, too, can always be revised later if need be.

Funeral: Go to a funeral home and make (and pay for) all the needed arrangements so when the time comes, all you have to do is place one call to them. Also, if you want to make any remarks at the funeral, prepare them now. Give some thought to other people you may want to speak and ask them in advance. This is also a good time to select the music you want played and investigate potential performer(s) if you want live music. Other tasks include designating pall bearers, selecting any prayers you want read, making up the official program, selecting the person you want to officiate, and choosing a religious speaker if you want one.

Reception after the Funeral: If you plan to have some sort of reception or meal after the funeral, figure out where you want to have it. If it will be in someone’s home, pick out a caterer, unless you will ask your guests to each bring a dish.

Memorial Service (if you plan to have one): Think about where you’d like for it to be held. Prepare a framed photograph if you plan to display one at the service. Other duties are the same as those for a funeral service.

Burial Location: If you’re planning to have a traditional burial and your loved one doesn’t have a plot, select a cemetery and purchase one. You can also look into headstones at this time.

Disposition of Cremains: If the person will be cremated, determine where you want the cremains to be placed. And when you’re making those arrangements, which it’s best to pay for in advance, select an urn. This can be an especially gruesome task that’s best dealt with before the time of need.

Making final arrangements for a disabled terminally-ill loved one who is still living can be very stressful and may feel macabre, but it will not be as agonizing as having to do it at the time of their death.

7/14: Water Water NOT everywhere

there are a series of regional predicaments in a world where the distribution of fresh water is so lopsided that 60 per cent of it is found in just nine countries, including Brazil, the US and Canada

Agriculture accounts for 70 per cent of all water use compared with 22 per cent for industry and just 8 per cent for domestic users

Just over 97 per cent of the world’s water is in its oceans. Of the 2.5 per cent that is fresh water, almost 70 per cent is locked away in glaciers and ice caps and about 1 per cent is in lakes, rivers and other surface water sources. The remaining 30 per cent is groundwater, some of it so ancient and hard to replace it is known as fossil water.


Hospice Care
by Peter Ganther   

As caregivers to someone who is terminally ill, we must eventually think about end-of-life care for our loved ones.  We want them to die in familiar surroundings with us and with dignity, and not in a cold and sterile hospital setting.  hospicee care can help.

The term hospicee dates back to the Middle Ages in Europe.  Then it was used to refer to places o charitable refuge offering rest and refreshment to weary travelers.  These homes were usually run by monasteries; the most famous of which, St. Bernard, is still a shelter for those passing over the Alps.  During World War II, the special needs of the dying were recognized and this led to the modern hospicee movement.

The modern hospicee movement was started by a British physician named Dr. Cicely Saunders who established St. Christopher�s hospicee outside of London.   This hospicee combined modern symptom and pain control techniques with compassionate care for the dying.  These same basic principles apply to today�s hospicees as well.  The first hospicee in the U.S. was organized in 1974 in Connecticut.

hospicee is not necessarily a place though.  It is a system of caring for someone who can no longer benefit from aggressive treatment for their disease.  In fact, treatment has become futile.  The emphasis in a hospicee situation is on palliative (easing without curing) care and pain treatment.  Most hospicee care not only treats the loved one, it counsels the families and caregivers as well.  All of this is done through an interdisciplinary team consisting of highly trained volunteers, home health aides, dieticians, social workers, clergy (if applicable), nurses, and doctors.  In addition to providing nursing care, hospicees may supply physical therapy, drugs, and medical equipment.  Most of the care is provided in the loved one�s or the caregiver�s home, but hospicee centers are available in many areas.

Simply put, the hospicee team is a compassionate group of individuals who address the emotional, physical and spiritual needs of patients and families alike.  There is often a spiritual/emotional healing that happens when the patient and family begin to focus on living peacefully and with dignity rather than focusing on the condition or disease.

The therapy that the team provides is designed to relieve symptoms, use pain medications effectively, improve the quality of life, and prepare the loved one and their caregiver(s) and family members for death.  Nothing is done to speed death, but it is allowed to happen naturally.  The benefits are an increase in patient satisfaction, a reduction in costs, and the mitigation of family anxiety.  

The decision to enter hospicee is not an easy one.  To some it feels like giving up, but it really comes down to accepting one part of the natural cycle of life.  For many, dying at home peacefully is a better alternative than fighting in a hospital until their last breath.  It is not for everyone, and, as much as possible, your loved one should decide for themselves.

One must qualify for hospicee care.  In most cases, a doctor must have diagnosed the patient as having a terminal illness that is most likely to cause death within six months.  The patient can leave at any time.  An example of this would be an improvement in the person�s condition to the point where they might want to start treating it again.    Most insurance plans, including Medicare and Medicaid, pay for hospicee care.  Many times even those without insurance are still eligible.  Costs are covered mostly through donations.

The immediate goal of the hospicee team is to develop a �plan of care� for the patient.  Before this can happen, the team meets with the patient�s personal doctor(s) and the hospicee physician to discuss the patient�s history, current symptoms, and life expectancy.  The team then meets with patient and family members.  Available services, the philosophy of hospicee, and expectations are considered here.  Other topics at this meeting might include comfort and pain levels, equipment and medication needs, support systems, and financial and insurance resources.  From these meetings a care plan tailored to meet the patient�s specific needs is developed.  This plan is reviewed and revised regularly as a patient�s condition changes.  Typically, counseling and bereavement services are available to family members for a year after their loved one�s death.     

According to hospicee Foundation of America, the following questions should be asked when selecting a hospicee: 

  • Does the hospicee serve your area?

  • Is the hospicee licensed (where applicable) and Medicare/Medicaid certified?

  • Does the hospicee provide the services you want/need?

  • What does the hospicee expect from you and your caregiver support system?

  • Will your insurance plan work with the hospicee?

  • Does the hospicee have a support program for caregivers?

  • Where is needed inpatient or respite care provided?

  • Is the hospicee�s position on resuscitation, hydration and antibiotics consistent with yours?

  • What out of pocket expenses should you anticipate?

  • Is there a sliding scale payment plan for services not covered by insurance?

If your loved one is diagnosed with a terminal illness, this might be a good alternative for you.  Your loved one�s comfort will be a priority, and they can pass on peacefully, surrounded by the people they have cherished most.  Not only that, the whole family can benefit from the hospicee experience through their bereavement counseling.  You may learn a little more about death, and, in so doing, learn a little bit more about life.




Average performance in financial literacy

Click to edit
Mean score
Range of ranks
Shanghai-China 603 1-1
Flemish Community
541 2-2
Estonia 529 3-4
Australia 526 3-5
New Zealand 520 4-6
Czech Republic 513 5-7
Poland 510 6-7
Latvia 501 8-9
United States 492 8-12
Russian Federation 486 9-14
France 486 9-14
Slovenia 485 9-14
Spain 484 10-15
Croatia 480 11-16
Israel 476 11-17
Slovak Republic 470 15-17
Italy 466 16-17
Colombia 379 18-18
OECD average-FL 500
Source: Figure VI.2.3 | OECD

7/10: Out of whack

Structured Variable annuities

A SNVA embeds a structured note inside a VA. With the Allianz Index Advantage VA, for instance, investors can choose from two profiles. The Index Protection Strategy is the more conservative option. It uses the S&P 500® as the benchmark index and for June 2014 it had a “Declared Protection Strategy Credit” of 4 percent. If the index return is flat or positive for the year, investors’ accounts receive that credit. This strategy also provides a full buffer. That means when the index's return is negative, no gain or loss is credited to the account.

Those investing in the Index Performance Strategy can select the S&P 500 (13 percent cap as of June 2014), the Russell 2000® index (15 percent cap) or the Nasdaq-100® index (12.25 percent cap). This strategy provides a 10 percent buffer. In other words, if the index return is negative but less than 10 percent, the account is protected against that loss. If the loss exceeds 10 percent, the account receives a negative performance credit of the negative index return minus the 10 percent buffer.

Annual fees and contract maintenance can still result in a loss of principal in either strategy, however.

The three insurers’ products offer a range of contract features so you’ll have to compare them to determine which, if any, meets your clients’ needs. The Allianz product uses one-year periods to determine index performance, . AXA Equitable offers one-, three- and five-year terms (referred to as “segments”), and MetLife has one-, three- and six-year options. Downside buffers also vary among the insurers.




12 annuity suitability factors you need to know

7/8: Interest rate Pooling

Current interest rate crediting methods

There are four basic methods of crediting current interest to conventional nonindex fixed annuities.

1. Portfolio method. For an annuity that uses this method, all contracts will be credited each period with the same current, non-guaranteed interest rate, regardless of when annuity contributions (premiums) were received, except for contracts that are still within an initial interest rate guarantee period.

2. New money or pocket of money method. For an annuity using this method, the rate of interest credited to all contracts will depend upon when the premiums were received. For flexible premium annuities, this can mean that a particular annuity contract might receive, on any given interest crediting date, several different rates, each applied to the pocket of money received during the time period specified for that pocket.

Example: Mr. Jones’ flexible premium annuity was issued June 30, 2009. Interest is credited each year, at a rate determined annually. On June 30, 2012, the contract is credited with the following:

a. 4.00% for all premiums received in the period 1/1/2009 – 12/31/2009

b. 3.89% for all premiums received in the period 1/1/2010 – 12/31/2010

c. 3.80% for all premiums received in the period 1/1/2011 – 12/31/2011

d. 3.56% for all premiums received in the period 1/1/2012 – 12/31/2012

3. Tiered interest rate method: Type one

In this method, the interest rate credited to a contract depends upon the cash value of the annuity.

Example: Ms. Smith’s annuity credits interest according to the following current schedule:

a. 4.00% for the first $50,000 of cash value

b. 4.25% for the next $50,000 of cash value

c. 4.5% for cash value in excess of $100,000

4. Tiered interest rate method: Type two

In this method, interest is credited at one rate if the owner annuitizes the contract and at a lower rate if the contract is surrendered. In these contracts, the value is generally reported as two separate items: (a) the annuity value and (b) the cash value or contract value. The cash value will be reduced, on surrender of the contract, by any surrender charge applicable. The amount payable at the owner’s or annuitant’s death may be either the cash value or annuity value, depending upon contract terms, and a surrender charge may or may not apply.

Interest rate guarantee period

Sometimes the current interest rate of a newly issued fixed deferred annuity may be guaranteed for a specific period. If so, then at the expiration of this period, renewal interest is credited according to the crediting method used for that particular contract — subject, of course, to the guaranteed minimum rate.

Interest rate renewal history

One item that every advisor who is considering recommending a fixed deferred annuity must consider is the history of the issuing insurance company with regard to renewal interest rates. Renewal rates, except for contracts in the interest rate guarantee period, are entirely at the discretion of the issuing insurer and subject, of course, to the minimum rate guaranteed in the contract. Some insurers have a distinguished history of declaring renewal interest at competitive levels. Others, unfortunately, do not. In the 1980s and 1990s, a few insurers offered fixed deferred annuities at initial rates well above the level offered by most competitors and, as soon as the interest rate guarantee period elapsed, renewed these contracts at, or barely above, the guaranteed rate. Fortunately for consumers, most insurance companies did not play this game. Nevertheless, the risk with this sort of “bait and switching” is one that the prudent advisor must take into consideration. The authors strongly advise taking a close look at the published history of the renewal crediting rate of any insurance company whose products you are considering.

A final observation on the subject of interest rate crediting is in order. It may appear to the advisor inexperienced in fixed deferred annuities that renewal interest rates, while they may drop from the initial level to as low as the guaranteed rate, may also rise at that point — even beyond that initial level — if interest rates are increasing at that time. That may appear logical, but it is not likely to happen. In the authors’ experience, insurance companies rarely declare renewal interest rates at a level higher than the initial rate. This may, of course, be due to the fact that, for the past thirty years and more, interest rates have, in general, been trending downward. Nevertheless, there have been short periods, during those decades, during which rates increased. In those periods, the initial rate offered by insurance companies, on their fixed deferred annuities, did increase — but the renewal rates for existing contracts did not.


We don't know what's going to happen with anything, ever. And so it's inevitable that a certain percentage of our decisions will be wrong. There's just no way we can always make the right decision. That doesn't mean you're an idiot. But it does mean you must focus on how serious the consequences could be if you turn out to be wrong: Suppose this doesn't do what I expect it to do. What's gonna be the impact on me? If it goes wrong, how wrong could it go and how much will it matter?

Pascal's Wager doesn't mean that you have to be convinced beyond doubt that you are right. But you have to think about the consequences of what you're doing and establish that you can survive them if you're wrong. Consequences are more important than probabilities.


These Are The States That Allow Married Tax Returns For Same-Sex Couples




Hyperthermia: Too Hot For Your Health
Source: The National Institute on Aging (NIA)

During the summer, it is important for everyone, especially older adults and people with chronic medical conditions, to be aware of the dangers of hyperthermia. Hyperthermia is an abnormally high body temperature caused by a failure of the heat-regulating mechanisms in the body to deal with the heat coming from the environment. Heat stroke, heat syncope (sudden dizziness after prolonged exposure to the heat), heat cramps, heat exhaustion and heat fatigue are common forms of hyperthermia. People can be at increased risk for these conditions, depending on the combination of outside temperature, their general health and individual lifestyle.

Older people, particularly those with chronic medical conditions, should stay indoors, preferably with air conditioning or at least a fan and air circulation, on hot and humid days, especially when an air pollution alert is in effect. Living in housing without air conditioning, not drinking enough fluids, not understanding how to respond to the weather conditions, lack of mobility and access to transportation, overdressing and visiting overcrowded places are all lifestyle factors that can increase the risk for hyperthermia.

People without air conditioners should go to places that do have air conditioning, such as senior centers, shopping malls, movie theaters and libraries. Cooling centers, which may be set up by local public health agencies, religious groups and social service organizations in many communities, are another option.

The risk for hyperthermia may increase from:

  • Age-related changes to the skin such as poor blood circulation and inefficient sweat glands

  • Alcohol use

  • Being substantially overweight or underweight

  • Dehydration

  • Heart, lung and kidney diseases, as well as any illness that causes general weakness or fever

  • High blood pressure or other health conditions that require changes in diet. For example, people on salt-restricted diets may be at increased risk. However, salt pills should not be used without first consulting a physician.

  • Reduced perspiration, caused by medications such as diuretics, sedatives, tranquilizers and certain heart and blood pressure drugs

  • Use of multiple medications. It is important, however, to continue to take prescribed medication and discuss possible problems with a physician.

Heat stroke is a life-threatening form of hyperthermia. It occurs when the body is overwhelmed by heat and is unable to control its temperature. Heat stroke occurs when someone’s body temperature increases significantly (above 104 degrees Fahrenheit) and shows symptoms of the following: strong rapid pulse, lack of sweating, dry flushed skin, mental status changes (like combativeness or confusion), staggering, faintness or coma. Seek immediate emergency medical attention for a person with any of these symptoms, especially an older adult.

If you suspect someone is suffering from a heat-related illness:

  • Get the person out of the heat and into a shady, air-conditioned or other cool place. Urge the person to lie down.

  • If you suspect heat stroke, call 911.

  • Apply a cold, wet cloth to the wrists, neck, armpits and/or groin. These are places where blood passes close to the surface of the skin, and the cold cloths can help cool the blood.

  • Help the individual to bathe or sponge off with cool water.

  • If the person can swallow safely, offer fluids such as water or fruit and vegetable juices, but avoid alcohol and caffeine.

The Low Income Home Energy Assistance Program (LIHEAP) within the Administration for Children and Families in the U.S. Department of Health and Human Services helps eligible households pay for home cooling and heating costs. People interested in applying for assistance should contact their local or state LIHEAP agency or go to