When Will Mortgage Rates Drop?

When Will Mortgage Rates Drop?


So, the Federal Reserve Bank lowered interest rates to a range of 0% to 0.25%. Why aren’t mortgage rates following? Well, time to dust off that old college economics book. Let’s answer that by following the chain of economic reactions to the Fed’s actions and the principals of supply and demand.


How is the benchmark federal funds rate related to mortgage rates?


The rate that the Fed cut is the benchmark federal funds rate.
This is the short-term interest rate banks charge other banks for overnight lending and borrowing. So, bank to bank loan deals.


The Fed dropped this rate on March 15 for the second time in 2020 in response to the economic disruption caused by the Coronavirus. When the target federal funds rate decreases, banks typically follow by lowering their prime interest rates. The prime interest rate is used to set variable interest rates.


So, that new credit card application you just got in the mail might have a lower rate than your current credit card. Lowering the prime rate will cause other consumer interest rates tied to the prime rate to decrease as well. Businesses will have access to short term loans with lower interest rates to help with cash flow needs.


How does the federal funds rate and prime rate affect mortgage rates?


Mortgage rates are different from other consumer interest rates. Generally, mortgages rates don’t track the Fed’s movements. Mortgage rates are long-term loans, versus the short term variable rate we talked about earlier. So mortgage rates will go up or down depending on long term bond yields. The bond market exerts more influence over mortgage rates, not the Fed.


When the stock market falls, investors flee to government bonds for safety and stability. When the demand for bonds goes up, the price of bonds goes up. Bond prices and yield/interest rates have an inverse relationship. So, when bond prices go up, interest rates go down. Mortgage bonds are the same. When demand for mortgage bonds goes up, mortgage rates go down.


When will mortgage rates drop?


Early in March, mortgage rates dropped because the demand for long-term mortgage bonds was high. In response to low mortgage rates, the market was flooded by consumers looking to refinance. The supply of mortgage bonds increased and the demand for mortgage bonds dropped. Within a week or two, mortgage rates rose quickly.


The Fed is using other tools in their arsenal to cushion the economy, including buying Treasuries and mortgage-backed securities. As the demand for mortgage bonds grows, mortgage rates will come down again. However, consumers aren’t likely to see 0% mortgage rates. Mortgage bonds are considered riskier than government bonds. Interest rates are higher to compensate for the additional risk banks take in making the loans.


If you are looking to refinance your current mortgage or buy a house, keep your eyes on the rates. Be ready to go when rates dip. Be aware that you won’t be the only one refinancing when rates are attractive. Mortgage brokers will be busy and lock-in periods of 60 to 90 days (or even longer) are becoming more common.



Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

You’ve Maxed Out Your Retirement Contribution. Now What?

You’ve Maxed Out Your Retirement Contribution. Now What?

Many investors who are able to save a lot of money max out their 401(k) contributions and want to know where the rest of their savings should be invested. Unfortunately, there comes a time when you will have maxed out all your tax-deferred savings! At that point the remainder should go to your nontaxable brokerage account for investing.

That’s not a bad thing. Having a mix of taxable and tax-deferred assets means that you don’t have to withdraw money out of your retirement accounts for emergencies if you’re under 59 ½. So you won’t have to pay the early withdrawal penalty. You may also have some more near-term goals that you can invest in, since you’ve put away all the retirement funds.

But maxing out your 401(k) or TSP doesn’t necessarily mean that you’re finished with retirement accounts, however. There are a few more things you can consider.

After-tax deferral to employer retirement plans

The deductible limit for employer plan contributions in 2020 is $19,500, with the additional catch-up provision of $6,500 for those over 50. Does that mean if you’re over 50 your contribution limit is $26,000?

Not necessarily. That is the deductible limit that you can contribute. Your employer may also provide a match. The limit for all contributions is actually $57,000. Some employer plans will allow you to contribute after-tax dollars until you reach the $57,000 maximum.

Suppose you contribute the full $26,000 and your employer matches a total of $4,000. Contributions are $30,000. If your plan allows, and plans vary when it comes to this, you may be able to contribute an additional $27,000.

Bear in mind that this additional contribution is not tax deductible. However, it is tax-deferred. You won’t receive a current year tax deduction on it, but you won’t pay taxes on it as it’s growing. As you can see, it’s a good choice for investments that generate plenty of current income.

Not sure if your plan allows for it? Check with the TPA (third-party administrator) to see if it’s a fit for you.

IRA retirement contributions

Traditional and Roth IRAs are not considered employer plans. Once you’ve maxed out your employer retirement, you can still make IRA contributions. SEP and SIMPLE IRAs are considered employer plans, so you can’t make additional contributions to them above the $53,000 limit.

As you might recall, additions to a Traditional IRA are 100% deductible for workers not covered by an employer plan. Households filing jointly but covered by an employer plan can deduct their contributions as long as their modified AGI stays under $104,000. Over that, the deductibility phases out until you’re unable to deduct contributions if you make $124,000 or more.

Income limits for Roth IRAs are slightly higher but don’t depend on whether you’re covered by an employer plan. The ability to make contributions starts phasing out at joint AGI of $196,000, and if you make $206,000 or more, you can’t add to your Roth.

However, no matter what your income is, you can always make contributions to a Traditional IRA. The caveat is that they’re not deductible when your income is over $124,000. But you can still contribute and have those contributions grow tax-deferred. Just as with the after-tax deferrals outlined above for employer plans.

You will need to keep good records for your IRA if you contribute both deductible and nondeductible money over time. Many custodians won’t keep the record for you. When it comes time to start withdrawing, you’ll need to be able to show the funds with a non-zero basis. Deductible contributions have zero basis and so they’re fully taxable.

When it comes to withdrawal time, you can’t tell the management company to only withdraw the nondeductible funds. That could lower your taxes, and that would be too easy! Withdrawals will contain a proportional amount of basis and non-basis money. For example, if you have several IRAs and one-third of the funds were nondeductible, then one-third of the withdrawal will come from funds with basis.

529 accounts

These types of accounts are a great way to stash tax-deferred money away. If the funds are used for qualified expenses at a qualified institution, then the withdrawals are tax-free as well. Otherwise you pay a penalty on the gain. Depending on your tax bracket and the size of the gain, it might very well outweigh investing in a taxable account.

Originally the 529 accounts were for college and higher education, but they’re now available for secondary school as well. Contributions are limited by gift tax exclusion rules. In 2020 you can gift $15,000 per person per year. If you have five kids (or grandkids), you could set aside $75,000 tax deferred with no gift tax limitations.

In contrast with UGMA and UTMA accounts, the owner of the 529 account is the adult, not the minor. If you’re concerned that one child may not go to school or may end up with enough scholarships to cover costs, you can simply change the beneficiary of the account when you get to that point.

And the beneficiary can be yourself as well. There are plenty of qualifying golf and cooking schools, for example.

Whether you’re a parent or a grandparent does make a difference. If you’re a grandparent setting up 529s for the grandkids be careful. As you may know, all students applying to American colleges and universities are required to fill out the financial aid form known as FAFSA.

The student’s assets weigh more heavily in the equation, and therefore reduce the amount of student aid that they qualify for. UGMAs and UTMAs are student assets. 529 accounts are not. If parents own the 529, then the account is considered as a parental asset. These have a lighter weighting in the equation.

The grandparent’s 529 isn’t listed on the FAFSA. However, withdrawals from a non-parental account are considered income to the student. Up to half the student’s income is available for college expenses, so it reduces the amount of financial aid required.  

However, the FAFSA uses income tax returns from two years prior. As long as the grandparent doesn’t distribute until junior year, the FAFSA won’t recognize the income.

How about retirement contributions to taxable accounts?

After you’ve gone through the above list, you’ve pretty much maxed out the available tax-deferred accounts. The remainder goes into your taxable accounts.

Don’t forget that when you have capital losses, they’re netted out against your capital gains. And as long as you held them for a year or more, you qualify for the more favorable capital gains treatment.


Are you interested in seeing how much you can potentially contribute to tax-deferred accounts? Give us a call at 619.255.9554 or send us an email.


Why You Should Sit on the Board of Directors of a Company

Why You Should Sit on the Board of Directors of a Company

As a member of a Board of Directors, you are responsible at a high level for the activities of the organization, whether it’s a nonprofit or corporation. You’re not concerned with the nitty-gritty details, because the officers of the organization handle those. The mission of the corporate board is to maximize the benefits to the shareholders.

Bylaws of the organization spell out what your specific duties are, but there are some common tasks that most boards share.

Board members act as fiduciaries to the organization. (Just as your independent wealth manager is a fiduciary to your portfolio!) Meaning that they must put the organization before their own personal interests.

At the beginning of the organization’s existence, the board is responsible for its mission. A mission statement is important to develop, so everyone’s rowing in the same direction. Later on, a board may decide to change the mission of the organization, but this should only be done after careful thought.

The board will set the overall policy for the organization, without getting bogged down in the daily minutia. It also oversees the organization’s officers and executives. At the end of the year, the board holds an annual meeting where any changes to mission, bylaws, etc. are announced or any elections held. At a corporation annual meeting, there’s usually the announcement of any dividends being paid.

Organizations like to have certain professions on their board, such as financial advisors, accountants, or lawyers.

Potential liability concern should not be a deterrent when considering a seat on the board of directors.

If you’re concerned about liability, know that board members have a pretty wide latitude when dealing with policies and other oversight duties. Many companies offer officer and director liability insurance. But you can be sued and held personally liable for acts committed while serving, which this type of insurance doesn’t cover.

For nonprofits, the board typically hires the executive director, and may face issues if the director is derelict in their duties. If you’re on the board of a nonprofit, the expectation is that you will fundraise for the mission. This could be your own money, finding outside sponsors or donors, etc. You’ll set policy as a board member, but implementation is left up to the staff.


As a board member you can help direct operations for a cause you believe in.

Most people find that a great way to give back to their community is to join the board of a nonprofit whose mission they believe in and are passionate about. You may find similar satisfaction with a corporate board.

Charitable boards tend to be volunteer positions only, which makes it all the more important to ensure that the mission aligns with your own beliefs and values! Nonprofits, especially the smaller ones in your community, run lean. This provides a greater opportunity for you to be hands-on in shaping the policies and programs of the charity you’ve chosen to work with.

Sitting on the board of directors will strengthen you leadership skills

Being on a board, whether it’s for a company or nonprofit, gives you the chance to experience different leadership styles. Watch how other leaders respond to issues that may be similar to your own. You’ll also likely be exposed to situations you’re not already familiar with.

Working through them with people you may not know as well, outside your own comfort zone, provides an opening to really stretch yourself as a leader. Eventually you may develop very close friendships with the other board members, as a result of spending so much time together solving problems.

You may even have skills you weren’t aware of, that you may be called upon to deploy as you serve. You may also discover some weaknesses that you didn’t know about, and can begin to work on them in order to improve your leadership capabilities. Awareness is half the battle!

Broaden your network with other Board of Directors

Unless you’re joining a group of old friends, you should be meeting some people you might not otherwise have met. A board that’s composed of directors based on the needs of the organization, instead of who knows whom, is an excellent way to expand your network.

When you develop tight friendships with other leaders, it often results each of you getting to know their connections. You end up helping to build each other’s networks.

As you work together, serving the organization, you’ll be able to see the strengths and weaknesses of your fellow board members.

Remember that networking is about building relationships. Meeting with your fellow board members outside scheduled times, can help you better solve problems. Face-to-face meetings are always preferable, but not always possible. Phone calls or online meetings can assist you to fill in the gaps.


Some extra income

As noted above, most of the time you’re going to be volunteering, if you’re sitting on a charity board. By contrast, most companies recognize that the monthly and annual meetings and travel do add up in terms of time and resources. Some of them will provide a stipend for your service.

Especially when you’re facing retirement, serving on a board can keep income coming in as well as keeping your business skills sharp. Which you may not need for business after you retire, but can keep you in good mental shape.


Career perks

You may have heard that people who serve on boards are more likely to be promoted. Anyone trying to get you to sit on their board has probably mentioned that to you! In fact, it’s true.

An article in Harvard Business Review showed that being on a board does provide career perks. In addition to being promoted, those who serve on boards are more likely to be named as CEO and often see an uptick in their annual income.

It’s a seal of approval to be chosen for a board, especially a corporate one. Other executives are demonstrating their belief that you have leadership skills. In fact, large companies groom their execs by having them serve on other boards.

At Platt Wealth Management, we understand the importance of serving on a board of directors. Both our financial planners sit on boards for a variety of different causes and continue to stay involved.


If you’re interested in legacy planning that includes a mission important to you, please call 619.255.9554 or email us to schedule an appointment.


Making a Charitable Impact

Making a Charitable Impact

As you can tell by looking at our bios, we at Platt WM like to get involved in charitable organizations! There are a number of ways to have an impact with your giving.

Impact of Tax Cuts & Jobs Act (TCJA) on charitable giving

Previously, individuals who donated to charity were able to take tax deductions for their contributions. Donors enjoyed the emotional benefits that come with giving gifts. According to new research, it turns out that giving is more pleasurable for the human brain than receiving is! They also received a tax benefit from their giving.

The deductions for charity could only be taken for those who itemized their deductions. Which pretty much anyone with a mortgage did anyway, to capture the interest deduction.

Certain other deductions are known as “above-the-line”, because you don’t have to itemize to take them. IRA and Health Savings Account (HSA) contributions are examples of above-the-line deductions.

The TCJA increased the standard deduction significantly, so fewer people will itemize. Most taxpayers will save more money if they use the new standard deduction instead of itemizing.  Unfortunately for Californians and others who live in states with higher taxes, the TCJA limited state and local tax deductions. Even those with significant mortgage interest will probably not itemize either.

This has a big impact on 501(c)3 charities, who relied on donors able to itemize their deductions and save taxes on their donations. Although we’d like to think that people donate out of pure altruism, in reality the tax deduction provided a great incentive for people to give.

Which charitable organization to give to

Many of our clients (as well as our planners) have causes that are near and dear to our hearts. Charitable giving may already be mapped out for the year.

But if not, treat your philanthropy like an investment. You can make a bigger impact if you choose a small number of recipients and divide your money and time between them. As opposed to giving randomly as people ask you for donations.

Research the organization online. It’s also a good idea to see if any of your friends and family give to them, and if they have an opinion on it. You can always visit a local organization, though in some cases you might need to call first and make an appointment. There are online websites such as Charity Navigator, GiveWell, and Impact Matters that provide scorecards on effectiveness.

To be a qualified charity, the organization has to be a 501(c)3 group that qualifies for tax exemption per the US Treasury. Generally, qualified charities will be able to furnish their tax-exempt letter that states their qualifications.

Be aware that some charitable missions require a bigger administration budget in order for the organization to do its work properly. Don’t automatically discount a charity on the basis of budget. Of course after doing your due diligence you might cross them off your list anyway.

Find out what will actually be achieved with your charity dollars. For example, you might be offered a chance to donate to a training program for offenders going through rehab. But what you want to know is how many of the offenders will find jobs with this training program, not how much the training program itself costs.

How much money does the organization have? Your charity dollar often goes farther in an organization that doesn’t have much money or is underfunded, compared to a large, well-funded charity.

Donating to a charitable organization

Some higher-income people may still find that they itemize, so they’ll still be able to take a charitable deduction. Charities still need donations and will welcome them! Many donors make an effort around Christmas and Thanksgiving to donate, but groups usually need money and help year-round.

Consider making recurring donations. Household budgeting is much easier when you’re getting a steady paycheck every couple of weeks instead of large project deposits every few months. Similarly, it’s much easier for charities to allocate resources when they have some consistent income.

Check to see if your employer matches a portion of your contribution. It’s a great way to maximize your donations.

Have a lot of friends and family who are always asking for money for their pet charities? Or constantly run into different groups in front of your local grocery store? Just because someone asks you to give doesn’t mean that you have to say yes.

It’s best to have a polite “no” ready to go in all of these situations. You might say that your charity money is already allocated, or that you’ve chosen your charities for the year. Don’t feel bad about saying no. There are plenty of qualified charities and most of them need help, but you can’t help all of them.


Volunteering with a charitable organization

Time is another valuable commodity that many nonprofits could use more of! This is a great way to get the whole family involved, especially if you have young children. They get to see the impact of their efforts, while you’re all spending time together.

Ladling out the food at Thanksgiving is fun, but many groups have more urgent needs. Frequently their need is for expertise in some aspect of business, which you can help with. Smaller charities can almost always use marketing help, for example. They might need copywriters to help with their fundraising letters. Accountants to keep an eye on the books.

Fundraising – especially now that fewer people are donating the way they used to because they no longer have the tax incentive!


Qualified Charitable Deduction (QCD)

This deduction is still alive and well. It’s not a deduction, exactly, but it can help you avoid taxes at the same time you donate to charitable organizations of your choice. And you can donate up to $100,000 each year.

Rather than taking your required minimum distribution (RMD) as income and paying tax on it, you can redirect the distribution to a qualified 501(c)3 charity of your choice.

It’s very important that the money does not come to you first.  Then it still is considered income, and you’ll pay tax on it. Sending it to the charity up-front means that it’s not income to you.

This tactic works best if you’re at the age where you need to take RMDs, and you don’t need the income from your RMD to supplement your portfolio.

You may now be wondering if the new SECURE Act will change this equation. As a reminder, SECURE shifts the RMD start age to 72, for anyone who turned 70 ½ after 12/31/19.

However, although you still need to be at least age 70 ½ to make a QCD, you don’t have to wait until you turn 72 to do it. In other words, even though your RMD age is pushed back by a year and a half, your ability to do the QCD doesn’t change from age 70 ½.

If you’re a 5% business owner, you too will need to begin RMDs at age 72. Even if you’re still working for the company at that age.


In other words, don’t be discouraged by the lack of a tax deduction. There are still plenty of ways to support your favorite nonprofit.


Interested in talking to one of our planners? You can email us or call 619.255.9554.


Will the Stock Market Survive the Coronavirus?

Will the Stock Market Survive the Coronavirus?

Rising fears over the continued spread of the coronavirus have led to a sharp stock market decline as investors grapple with its impact on the global economy. On Monday, March 9, in reaction to news of the virus spread and the recent oil shock, Standard & Poor’s 500 Composite Index fell 7.6%, triggering a 15-minute trading halt. As of March 12th, the Dow closed down 2,352, 10 percent.


How can we make sense of the coronavirus (COVID-19) outbreak and market reaction?


Until January 2020, most of us had never heard of this virus. People are understandably frightened because this is a new disease, and there is much uncertainty over how it will all play out. In short order, we have grown increasingly concerned about the prospect of a global pandemic and its impact on the global economy. First and foremost, the virus has a real human cost. We don’t know how many people are going to get ill or, worse yet, how many may die. Of course, our first thoughts are with the people who have fallen ill and their families.


While this disease is new, there have been many pandemics and other crises in the past, and markets have survived them all. Today, a fair amount of panic has taken hold around the world, and we expect in the coming weeks that a rising number of cases may alarm many people. Eventually, the spread of the virus will slow down and people will get back to normalcy, as will markets.


What does this mean for the economy?

We are already seeing signs of a slowdown in the U.S., not only on the supply side as businesses brace for the road ahead, but also on the demand side. By now we have all heard of large conferences and entertainment events being canceled, firms postponing large meetings, and consumers delaying vacations and seeking to reduce their social contact.


That means businesses related to travel, leisure, entertainment and recreation are likely to be the most impacted, not to mention oil and other commodities where we have already seen a collapse in global demand. 


On the positive side, the U.S. economy remains among the most resilient in the world. It has a history of bouncing back from adversity. Interest rates are low, and the decline in oil prices should further support the consumer. What’s more, in China the spread of the virus appears to have peaked. Given that, the peak of its spread globally will occur sooner than many people anticipate.


What does it mean for markets?


We are experiencing a market decline that we have not seen since the Great Recession. March 9, 2020 was the 11th anniversary of the market bottom during the Great Recession — and the market noted the anniversary by recording the largest single-day point decline we have ever seen. Three days later that was surpassed by the 2,250 drop in the Dow.


With this latest dip markets, as measured by the S&P 500, were down more than 20% from their peak earlier in the year, and we are now in a bear market. This would be the first bear market after more than a decade of generally strong market returns. As a result, in general, equities appeared to be fully valued by most measures heading into this recent period, and markets could remain volatile for some time. In addition to the uncertainty resulting from the spread of the virus, the U.S. is in an election year.


Turning to the bond market, we have seen a flight to safety that has pushed bond yields to unprecedented lows. The yield on the 10-year U.S. Treasury fell to 0.5%. Interest rates could go still lower as the U.S. Federal Reserve seeks to provide liquidity to markets through interest rate cuts and quantitative easing. Over time, low interest rates provide support to equities.


While the pace and magnitude of the recent volatility can be unsettling it is not entirely surprising. Investor sentiment is fragile and will likely remain so until the spread of the virus slows. In times like these, resilient investors who can demonstrate patience can be rewarded over the long term.


We take some comfort in seeing that the Federal Reserve has demonstrated its willingness to take aggressive action, cutting interest rates 50 basis points in an emergency meeting on March 3, which lowered its target range to between 1.00% and 1.25%. The Fed stated that it is “closely monitoring developments and their implications for the economic outlook, and will use its tools and act as appropriate to support the economy.” Markets are generally expecting an additional cut at the Fed’s next scheduled meeting, to be held on March 17 and 18.

How does this compare with crises in the past?


In the 25 years we have spent as fee-only financial advisors, we have experienced a number of unsettled markets, including the tech and telecom bubble in March 2000, and the Great Recession of 2008 and 2009. Each of these crises was very different, with very different underlying conditions. But in each case, the markets bounced back. We believe the markets, and great companies, will survive the current market decline and rebound.


One significant reason why there is such an extreme degree of bearishness, pessimism, bewildering confusion and sheer terror in the minds of advisors and investors alike right now is that most people today have nothing in their own experience that they can relate to, which is similar to this market decline. Our message to you, therefore, is courage! We have been here before. Bear markets have lasted this long before. Well-managed mutual funds have gone down this much before. And shareholders in those funds and the industry survived and prospered.

We have seen many turbulent markets and know how hard it is to avoid getting caught up in the here and now. This is especially true when the media bombards us hourly with news, speculation and rumor. We also know, though, that as long-term investors we must focus on the real world underneath the noise and mesmerizing flow of data.


Should investors expect a quick recovery?


Circumstances may very well get worse before they get better. But we believe eventually markets will rebound. This too shall pass. When it does, long-term investors who can tune out the daily white noise — and red numbers flashing across their screens — and focus on the long term should ultimately be rewarded.


We take the view that we will deal with outbreaks like COVID-19 and eventually we will adjust to it. At Platt Wealth Management, we are taking every precaution to prepare for it. We are working closely with clients, monitoring accounts. We are offering video and phone based meetings and we are reviewing our business continuity plan. We expect that we will be dealing with the COVID-19 virus, and are planning our operations around possible longer term considerations.


What is Platt Wealth Management doing to ensure continuity and care of client assets?


Obviously our first concern is to ensure the health and safety of our associates and clients. But rest assured as this situation evolves, we are working hard to continue to do what we have always done: working with clients to achieve their financial goals, looking for opportunities and making sure clients are confident with their investments. In-depth, long-term view of markets is at the core of what we do. We will do our very best to provide clients with a smooth and less volatile experience than the broader markets.


What should investors be doing?


In periods of declining markets, emotions run high, and that’s natural and understandable. But it is exactly in times like this that a long-term orientation is important. Based on our prior experiences and what has historically occurred, we firmly believe markets will rebound and life will return to normal or what may be a new normal. Now more than ever, investors should be in close communication with their advisors, reaffirming their long-term objectives.

How to Find Credible Financial Information Online

How to Find Credible Financial Information Online

Many clients enjoy looking up news and information about personal finance online, even when they have a financial advisor. Educating yourself is great! However, not all sites are equal. Some have false information, and others are simply designed to sell you something. They’re not always obvious.

How do you know which sites on finance are credible, and which aren’t?

Background on financial industry rules

Have you ever noticed that every chart you’ve seen from the mutual fund company has paragraphs and paragraphs of disclosures on it? All the indices used for comparison are spelled out. The time period of the performance is also detailed.

That’s not an accident, and it’s not because mutual fund companies enjoy making their charts look small and surrounding them with words. All of the disclosure is an industry requirement; the regulatory agencies are very picky about how performance numbers can be disclosed.

SEC (Securities and Exchange Commission) rules are strict, yet they are only for those who hold themselves out as providing financial advice, services or products.

If a company acts as a publisher or in some other way does not provide financial advice, then they can show performance in any crazy way they like. The SEC also binds financial companies from many different ways of advertising, but not other companies.

In other words, those who are not in any way experts in finance, have any credentials in finance, or know what they’re talking about, can put anything they like on their websites. You can sell anything you like, as long as you don’t claim to be a financial advisor.

We have seen some websites that trick a lot of people, because they look reasonable at first glance. There are some warning signs and red flags that you need to pay attention to when you’re studying an unfamiliar website.

It costs nothing, or very little, to run a website yourself. Depending on who’s hosting it, you can get decent-looking templates that you simply fill out with your own information.

It’s very easy for someone who knows absolutely nothing about the topic, and who is not a legitimate source, to set up a website that appears to be reputable. Don’t be thrown off by a nice-looking website, because they’re easy to do even if you don’t have a graphic designer.

Some people still have their old Geocities websites up! If the site looks old and the navigation is hard or impossible, don’t bother with it. Whatever information you’re searching for, you can find on a modern website. One that is run by a financial services person or company, and that you can easily navigate.

What does the site look like?

Chances are, if the financial site you’ve landed on has lots of bright primary colors and lots of moving ads and popups and looks interesting instead of boring, you’ve landed on an unregulated site. Therefore none of their information can be taken seriously or assumed to be true or factual. Is there a “Buy now” button on the site? Fake news! Stay away.

If, on the other hand, it’s a little on the boring side, and all of the charts and graphs have plenty of disclosures along with them, congratulations! You’ve probably found a reputable site.

However, there are no guarantees. Just because the site isn’t gaudy and bright doesn’t necessarily mean that it belongs to a credible authority.

Are there a lot of spelling and grammar mistakes? A credible financial site has the resources to spell-check and hire contributors and/or editors! A poorly written site points to someone who doesn’t know what they’re doing.

In general, when you’re websurfing for anything and you come across a site with too many mistakes, move on. The information you want is out there, and it’s spelled correctly.

Whose site are you looking at?

A good website will tell you exactly whose website you’re looking at. Wherever you go on our site, for example, you’ll see our name, logo and contact information. We’ve tried to make it very clear as to who we are and what we do.

It’s the same with mutual fund companies, trading platforms like Charles Schwab or e*trade, or financial planning associations such as NAPFA or CFP board, etc. The regulatory agencies such as FINRA and the SEC have some good information for investors on their websites as well.

Sites that are trying to trick you may hide the information about the owners or the company. Or make it difficult to figure out how to get in touch with them.


What kind of financial information or product is being sold?

Mutual fund and trading websites are up-front about what’s being sold. There may be a featured fund or product, but more often not. Financial planners and advisors usually won’t sell you anything on their websites, but will encourage you to come in for a consultation. (Like so!) That way you and the advisor can both determine if the relationship is right.

If you see a site where the owner isn’t obvious (or it’s a company you’ve never heard of), you may very well see all kinds of products and services for sale! We would advise against buying any of them, because they’re most likely a ripoff.


How often is the site updated?

As you’re aware, the financial markets move fast. A credible website should be fairly current. Avoid ones that are out-of-date. We try to blog every week, so we have fresh content consistently.


Is there a lot of click-bait?


If you’re not familiar with the term, “click-bait” is used to refer to a sensational headline that doesn’t match up with the content of the article or the post. It’s a headline that baits you to click on the site.

Not all sensational headlines are click-bait. Sometimes they’re just attention-grabbing! The content will answer the question posed by the headline. On a reputable financial website, you shouldn’t see too many sensational headlines.

See a lot of click-bait on a website? Don’t trust it.


Who’s engaging with the content?

Not all sites enable comments, and not all sites have a lot of comments. But if you see a lot of commentary by financial professionals who have alphabet soup after their names (CFP, ChFC, CDFA, CFA, etc.) then the site is likely trustworthy.

If there are comments and none of them are from professionals, think again. This rule isn’t as cut-and-dried as some of the others, because there may be good reasons that you don’t see a lot of commentary from professionals. However, best practice is to treat a site with lots of amateur commenters with suspicion.


Be skeptical out there

Unfortunately, when it comes to financial services, it’s the relatively boring websites that provide you with good information. The above rules work well for any kind of websites, not just financial information. The rules about what you can and can’t say may be different for other industries, but you need to be careful about who’s putting up the site, and whether they’re credible or not.


Interested in talking to one of our planners? You can email us or call 619.255.9554.



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