Articles for September 2018

What to Do When Your Doctor Has Bad News

It’s what no one ever wants to hear: “The test results have come back positive.”

And yet it’s quite likely that you, a loved one or both will one day be given a serious health diagnosis that throws your world into uncertainty, confusion and fear. That means you have two choices:

  • Wish and hope that you or someone you care about never gets really bad news from a physician—and be forced to react quickly and emotionally if that does happen.
  • Be proactive and get a handle now on the best steps to take if you’re faced with a major medical diagnosis.

 

You can likely guess which approach we recommend. With that in mind, we asked one of the nation’s top concierge physicians—Dr. Dan Carlin of WorldClinic—for his best advice on what to do (and not do) when the news about your health is really bad.

Get grounded

When faced with a shocking medical diagnosis, it’s natural to let emotions—sadness, anger, depression—take over. Another common emotional response, fear, causes many people in these situations to want to immediately hit the ground running and take action for action’s sake—for example, by starting whatever treatment is most readily available.

Carlin’s advice: Slow down. Start by internalizing two foundational concepts that will help guide you through this process more successfully.

  • Don’t play good day, bad day. People tend to respond too strongly to the latest bit of news (good or bad) about their health and treatments. Start the process by recognizing there will be a lot of ups and downs along the way so you’re not tempted to put too much weight on any one moment or development. “The downs aren’t as horrible as you think they are—and the ups aren’t as miraculous as they might seem,” says Carlin.

 

  • Get ready to be tougher, more patient and more emotionally disciplined than you’ve ever been. Treating cancer or another serious disease can be a long road. It requires stamina that won’t be there unless you can find ways to manage your emotions at each step. That will help you stay rational and thoughtful so you can make the best decisions that lead to the best outcomes. Something else you’ll need more than ever before is patience. Says Carlin: “If you lash out at those around you, you end up creating a bad dynamic with the members of your care team and even your family members. A little bit of information can cause you to become hypercritical—but you don’t want to do that, because it hurts your efforts and outcomes. Emotional maturity will maximize your outcome and help your team perform optimally for you.”

FINDING THE HELP YOU NEED

Consider finding a physician who has the skills and the resources to act essentially as your traffic cop—an interpreter, advocate and navigator who can evaluate and coordinate the efforts of the entire team that will work with you on the road to recovery.

The benefits of having one primary care physician who can serve those roles are many:

  • They either know the top specialists in your disease or have the resources to find them, as well as the ability to access them and get them working with you.

 

  • They have the expertise needed to interpret treatment recommendations and plans from various specialists and ensure that all actions taken are coordinated and working in concert for optimal outcomes.

 

  • They can act objectively to ensure that no one member of your health care team exerts too much control or ignores other specialists.

That said, not all physicians are created equal—and in today’s world, identifying a doctor who can and will do these things well is far from easy. Carlin recommends looking for a few key characteristics in a physician:

  • Trust and communication. Is the doctor someone with whom you feel comfortable being open? With a major medical diagnosis, you can experience a long and often bumpy journey with a lot of moving parts. You want a provider you can talk with frankly about technical and medical matters, but also about your emotions and personal concerns.

 

  • Expertise. Trust your gut about the doctor—but then verify. Carlin points out that many doctors with great bedside manner lack the skills and qualifications to coordinate an advanced team of experts meant to help you navigate your illness and get better. To avoid doctors who just don’t measure up, look for ones who are board-certified and who run independent community practices—i.e., they are not part of a large medical center that may be unwilling to look for specialists and other resources outside its network.

 

  • Fee-based. A truly independent physician’s income will not rely on insurance company reimbursements or payments from a corporate parent. You want to work with a doctor to whom you write a check. That way, you can be confident that the physician is sitting on the same side of the table as you at every stage. “The idea is to work with someone who has no conflicts, whose only job is to advocate for you and what’s best for your health,” says Carlin.

 

  • References from other physicians. The whole point of working with this type of physician is to have one point of contact who can coordinate the efforts of other doctors. One of the best ways to find out if a physician can do that is to ask for references from other doctors and health care specialists. A great primary care physician should be able to demonstrate that he or she has lots of high-quality relationships.

Obviously, your best bet is to be as ready as you reasonably can for a bad diagnosis before it comes. The good news is that concierge medical practices are becoming increasingly common. Many of these practices are designed to provide a higher level of care than traditional doctors do—and the best can serve as care coordinators and advocates for patients facing difficult diagnoses.

ACKNOWLEDGMENT: This article was published by the BSW Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2018 by AES Nation, LLC.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. He can be reached at 1-800-827-5577. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Is Now the Right Time to Go Roth?

Some say yes, pointing to the recent federal tax reforms.

Will federal income tax rates ever be lower than they are right now? Given the outlook for Social Security and Medicare, it is hard to imagine them falling much further. Higher federal income taxes could very well be on the horizon, as the tax cuts set by the 2017 reforms are scheduled to sunset when 2025 ends.

Not only that, the federal government is now using a different yardstick, the chained Consumer Price Index, to measure cost-of-living adjustments in the federal tax code. As an effect of this, you could gradually find yourself in a higher tax bracket over time even if tax rates remain where they are, and today’s tax breaks could eventually be worth less.1

So, this may be an ideal time to consider converting a traditional IRA to a Roth. A Roth IRA conversion is a taxable event, and so if you have a traditional IRA, you may be thinking twice about it. If the IRA is large, the taxable income linked to the conversion could be sizable, and you could end up in a higher tax bracket in the year the conversion occurs. For some that literally may be a small price to pay.2

The jump in your taxable income for the year of the conversion may be a headache – but like many headaches, it promises to be short-lived. Consider the advantages that could come from transforming a traditional IRA balance into a Roth IRA balance (and remember that any taxpayer can make a Roth conversion, even a taxpayer whose high income rules out the chance of creating a Roth IRA).3

Generally, you can take tax-free withdrawals from a Roth IRA once the Roth IRA has been in existence for five years and you are age 59½ or older. If you end up retiring well before 65 (and that could happen), tax-free and penalty-free Roth IRA income could be very nice.3

You can also contribute to a Roth IRA all your life, provided you earn income and your income level is not so high as to bar these inflows. In contrast, a traditional IRA does not permit contributions after age 70½ and requires annual withdrawals once you reach that age.2

Lastly, a Roth IRA is convenient in terms of estate planning. If IRS rules are followed, Roth IRA heirs may end up with a tax free inheritance.3

A Roth IRA conversion need not be “all or nothing.” Some traditional IRA owners elect to convert just part of their traditional IRA to a Roth, while others choose to convert the entire balance over multiple years, the better to manage the taxable income stemming from the conversions.2

Remember, however, that you can no longer undo a Roth conversion. The Tax Cuts & Jobs Act did away with so-called Roth “recharacterizations” – that is, turning a Roth IRA back to a traditional one. Now, this do-over is no longer allowed.2

Talk to a tax or financial professional as you weigh your decision. While this may seem like a good time to consider a Roth conversion, this move is not suitable for everyone. Occasionally, the resulting tax hit may seem to outweigh the potential long-run advantages. Study the various financial implications before making the move.

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in

regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial. 

Citations.

1 – money.cnn.com/2017/12/20/pf/taxes/tax-cuts-temporary/index.html [12/20/17]

2 – marketwatch.com/story/how-the-new-tax-law-creates-a-perfect-storm-for-roth-ira-conversions-2018-03-26 [8/17/18]

3 – fidelity.com/building-savings/learn-about-iras/convert-to-roth [8/27/18]

 

Is Your Company’s 401(k) Plan as Good as It Could Be?

Two recent court rulings may make you want to double-check.

How often do retirement plan sponsors check up on 401(k)s? Not as often as they should, perhaps. Employers should be especially vigilant these days.

Every plan sponsor should know about two recent court rulings. One came from the Supreme Court in 2015; another, from the U.S. District Court for the Central District of California in 2017. Both concerned the same case: Tibble v. Edison International. 

In Tibble v. Edison International, some beneficiaries of the Edison 401(k) Savings Plan took Edison International to court, seeking damages for losses and equitable relief. The plaintiffs contended that Edison International’s financial advisors and investment committee had breached their fiduciary duty to the plan participants. Twice, they argued, the plan sponsor had added higher-priced funds to the plan’s investment selection when near-identical, lower-priced equivalents were available.1 

Siding with the plan participants, the SCOTUS ruled that under ERISA, a plaintiff may initiate a claim for violation of fiduciary duty by a plan sponsor within six years of the breach of an ongoing duty of prudence in investment selection.1

The unanimous SCOTUS decision on Tibble (expressed by Justice Stephen Breyer) stated that “cost-conscious management is fundamental to prudence in the investment function.” This degree of alertness should be applied “not only in making investments but in monitoring and reviewing investments. Implicit in a trustee’s [plan fiduciary’s] duties is a duty to be cost-conscious.”2,3

Two years later, the U.S. District Court ruled that Edison International had indeed committed a breach of fiduciary duty regarding the selection of all 17 mutual funds offered to participants in its retirement plan. It also stated that damages would be calculated “from 2011 to the present, based not on the statutory rate, but by the 401(k) plan’s overall returns” during those six years.3

The message from these rulings is clear: the investment committee created by a plan sponsor shoulders nearly as much responsibility for monitoring investments and fees as a third-party advisor. Most small businesses, however, are not prepared to benchmark processes and continuously look for and reject unacceptable investments.

Do you have high-quality investment choices in your plan? While larger plan sponsors may have more “pull” with plan providers, this does not relegate a small company sponsoring a 401(k) to a substandard investment selection. Sooner or later employees may begin to ask questions. “Why does this 401(k) have only one bond fund?” “Where are the target-date funds?” “I went to Morningstar, and some of these funds have so-so ratings.” Questions and comments like these may be reasonable and might surface when a plan’s roster of investments is too short.

Are your plan’s investment fees reasonable? Employees can deduce this without checking up on the Form 5500 you file – there are websites that offer some general information as to what is and what is not acceptable regarding the ideal administrative fees.

Are you using institutional share classes in your 401(k)? This was the key issue brought to light by the plan participants in Tibble v. Edison International. The U.S. District Court noted that while Edison International’s investment committee and third-party advisors placed 17 funds in its retirement plan, it “selected the retail shares instead of the institutional shares, or failed to switch to institutional share classes once one became available.”3

Institutional share classes commonly have lower fees than retail share classes. To some observers, the difference in fees may seem trivial – but the impact on retirement savings over time may be significant.3

When was the last time you reviewed your 401(k) fund selection & share class? Was it a few years ago? Has it been longer than that? Why not review this today? Call in a financial professional to help you review your plan’s investment offering and investment fees.  

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.   

Citations.

1 – faegrebd.com/en/insights/publications/2015/5/supreme-court-decides-tibble-v-edison-international [5/18/15]

2 – cpajournal.com/2017/09/13/erisas-reasonable-fee-requirement/ [9/13/17]

3 – tinyurl.com/yd8s2rq3 [8/17/17]

When Will Travelers Take a Vacation from Fees?

They are everywhere. Do we have to accept them?

An eager bellhop hurries over to grab the single suitcase you could easily take to your room yourself. You buy something in Bulgaria or Malaysia, and your credit card issuer tacks on a surcharge for foreign currency use. A 5-star hotel charges you for basic Wi-Fi. Everywhere you travel, fees are assessed. Can you plan to avoid some of them? Possibly.

Read the fine print on mysteriously low airfares, hotel stays, and cruises; fees are likely to lurk in it, and some might seem ridiculous. (In 2017, one budget airline was charging flyers as much as $65 for a carry-on.) Look for hotels with free wireless Internet rather than hotels that stay mum on that topic. Ask how much a resort fee drives up the price of your room at one lodging versus another. As egregious as some travel fees may seem, they have seemingly become part of the travel industry business model. For example, an Illigo.com study found that nearly 40% of airline company revenues come from “extra fees.”3

Mike Moffitt may be reached at ph#641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

3 – usatoday.com/story/travel/advice/2017/06/25/outrageous-fees/423072001/ [6/25/17]

Think of Your Retirement in Three Phases

Phases, stages, acts, chapters, steps. Whatever you want to call them, consider that your retirement may unfold in a way many others have, in three successive financial segments. Your budget and income could see adjustments as you move from one phase into the next.

In the first phase of retirement, is not uncommon to arrange some “peak experiences” and live some longstanding dreams. These adventures sometimes cost more than new retirees expect, which can be a major financial concern given two possibilities: the prospect of retiring before you are eligible for your full Social Security benefits, and a probable reduction in your household income. If you retire early, you might want to tap tax-advantaged retirement savings accounts first. If you retire to a lower tax bracket, then shifting tax-deferred investments into a Roth IRA could be wise. A Roth IRA conversion is a taxable event, but the tax paid upon the conversion may be at a lower rate than you would pay later when taking Required Minimum Distributions (RMDs). After age 70, retirement may start to become more about relaxation; one key is to keep RMDs from pushing you into a higher tax bracket. After 85, paying for long term care may become the biggest financial worry – and so you may want to look at forms of LTC coverage now, as that coverage could help you avoid spending down your savings.1

Mike Moffitt may be reached at ph#641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations: 1 – forbes.com/sites/josephcoughlin/2018/07/06/how-to-age-independently-retiring-well-requires-more-than-money-diet-and-exercise [7/6/18]