Year End Tax Planning

Hold on to your wallet!

Now that the election is over many people are wondering "what's next?" on the financial horizon. Some are concerned about the "financial cliff" and how it will affect them if it is not changed. One thing we all know is that taxes are going up. With our new health care system there are many new or old taxes that are going to affect many folks depending on their tax bracket. If nothing changes between now and the end of the year here is a checklist of things to think about concerning your taxes.

Long Term Capital Gains:

As many of you know, the capital gains tax rate is currently 15% for most of us. Next year LTCG will jump to 20 to 23% depending on your income. So if you were thinking of selling one of those stocks that has a large gain that you have been holding on to for longer that a year, you might want to discuss selling it with your financial advisor and your tax advisor. This will also affect real estate that you own and are thinking about selling. Also any other investment assets that you have held longer that one year.

Dividends:

If you have a lot of dividend income you might want to look at what the effects of the new tax laws will be on your tax bill. The tax rate is going to 15% and could go as high as 43% based on your current income tax bracket.

Gifting to Family Members:

The gifting exclusion is going to 2 million dollars per couple down from 10.2 million per couple. This may not affect many people but anyone who has built up a large real estate portfolio may want to analyze what they have and strategize for the future. It will certainly bring a lot more of us into that tax bracket.

Tax increases:

With the Bush tax cuts expiring we will be looking at a 3% tax increase going forward. Some of us may want to accelerate income this year to avoid paying those taxes going forward. Also the social security tax will also increase by 2%.

Some Strategies to Consider:

1. Roth Conversion: With the increase in tax rates you might consider converting your IRA to a Roth. This will prevent further taxation of your principal.

2. Sale of High Dividend - Paying Stock or Mutual Funds.

3. Long Term Capital Gains Sales of Investments, Real Estate or Business.

4. Accelerate Ordinary Income, Bonuses, Annuity And Traditional IRA withdrawals, etc.

5. Gifting to family members.

6. Gifting Large Premiums for Life Insurance.

7. Large Charitable Gifts. Because of higher income tax rates for all taxpayers, charitable gifts have higher write offs.

8. Contribute as much as you can to IRAs, Roth IRAs, and 401K/403b/TSP plans.

If you would like to talk more about any of the above strategies for yourself or loved one who may need help, do not hesitate to contact me. My policy is a free one hour strategy session where I educate my clients to make educated decisions about their finances. And one of those decisions may be to do nothing. No products sold.

Roy Innella
610-695-8748
roy@yourwealthadvocate.com
website : www.yourwealthadvocate.com

Social Security Options -

 Do I collect now or wait to get a higher payment?

Many folks believe that it is better to collect on Social Security as soon as possible. I often will ask my clients what other funds they have before making a recommendation of collecting Social Security at 62. It is possible that you may be locked in to the lower payment amount if you continue to take payments after your start date.

Dr. Shelby Smith has a few options you should consider before making your Social Security decision.

Click here to view the video

Questions You Should Ask Your Financial Advisor

Do I really need a financial plan?

Many clients ask me if they are too old or too broke to make a prudent investment plan. Since I coach my clients to do what is best by using a holistic approach my answer is that it is never too late to create a retirement strategy. Advisors have a tendency to over complicate what needs to be done and how it works in order to impress their clients, making them think that the advisor is really smart. I believe the client should understand what they are investing in and believe it will work to fit their needs.

Are you going to tell me what I need or help me select what I want?

No one can plan a better retirement than the client themselves with the help of a properly trained and properly positioned coach. The definition of coach itself is helping an individual by guiding them through a process. The process of learning how to make your money work for you can make the experience much more rewarding and less stressful. In the world of financial coaches I believe that should go one step further and they should also be an advocate for their clients wealth. The definition of advocate is some one who acts or intercedes on behalf of another. Someone giving support.


Are you a fiduciary or a broker?


In the spirit of giving support my firm practices as an Investment Advisor Representative; someone who has a fiduciary responsibility for the client, putting the client first in all matters. A broker sells products to his/her client and has to adhere to a suitability standard of doing business and not fiduciary unless they are licensed as such.

For those who want a different approach to their investing options I use a co-advisor. They have much more knowledge on investing and have been doing it a lot longer than me. For a quick explanation on how they differ from your ordinary third party money manager you can go to my personalized website by clicking here.

What are the fee's of the product I am buying?

In the world of investing there are many hidden fees below the surface of a mutual fund or stock market like investment. Ask for a prospectus for a mutual fund if you are contemplating buying into one. Check the fee schedule and the amount of trading activity, there are fees associated with each.

How often do you communicate with your clients?

Communication is also a key to great coaching and I communicate with all clients on a daily basis through email. The investor needs support especially when we are going through the ups and downs of the market we've experienced recently.

Your IRA is a Joint Account With the IRS

Were you told these things when you opened your IRA or other retirement account?

1. The contribution that you make to your IRA or other retirement account is tax deductible, meaning that you'll receive a tax deduction for the contribution that you make to your account.

2. Assuming your IRA or other retirement account experiences growth, that growth occurs on a tax deferred basis, meaning that no tax is paid on growth until such time as a withdrawal is made from the IRA account.

3. At retirement or whenever you elect to use your retirement for income you will likely be in a lower tax bracket. That may allow you to take a tax deduction when you are in a higher tax bracket, enjoy tax-deferred growth when in the higher tax bracket, and then when taking withdrawals during retirement when you're in a lower tax bracket.

Did they all turn out to be true? No! The tax laws changed.

So what are the alternatives? 


You have 3 options.

1. Pay the IRS their share. Or if you die your heirs will pay your share at their tax rate.

2. Donate your share to charity in which case the IRS will donate its share to charity.

3. Create a legacy for your family with the IRS's share of your account.

Which do you prefer? Which makes the most sense for you?

We create IRA maximization plan for qualifying individuals to create a "Family Bank"by IRS guidelines, this is a tax free vehicle by the Deficit Reduction Act and Pension Protection Act of 2009.

If you qualify you can use the money from your IRA to fund your family bank. The family bank allows for tax free withdrawals and can be used for any purpose during your lifetime. If you qualify your IRA becomes the "seed money" for your family bank and if you die the money from the bank goes to your heirs tax free.

In order for your IRA to be the ideal funding source it must have the following characteristics.

1. You must have access to the money if needed.
2. The fund must have potential for growth.
3. The fund have protection against loss.
4. The money has to be guaranteed to pay to seed the bank.


If you would like to know more about this concept call me for an appointment and I will be happy to explain the concept to you when you come in. You can call at 610-695-8748 or email me at roy@yourwealthadvocate.com or click here.

Do you know what the VIX index is? Should you?

A google search will readily let you know what the VIX index is and what it measures in the financial markets. Taken from the CBOE website: "The CBOE Volatility Index^® (VIX^®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility."


Now many financial Gurus have long stated the phrase that "if the VIX is high it is time to buy and if the VIX is low that it is time to go." 


An interesting correlation is that as we reach the top of the valuation in the market the VIX is very low and when the market bottoms out the VIX is high. The Dow and S&P are at one of its highest points recently and the VIX is at a 57 month low. The question remains, is it time to get out of the market? Or do we become complacent and see if it is going to go higher.


If you have been advised properly since 2008 your portfolio should be at about where you were before the crash. Maybe it is time to take some dollars off the table.




Now is the time to act.

Are you at or near retirement? Do you think that it would be a good time to investigate protecting yourself from loss? If you want to discuss your options give me a call at 610-695-8748 and I can show you some of your options. or email me at roy@yourwealthadvocate.com.

Financial Coaching

Why Financial Coaching?

I am an income specialist and a fiduciary (or advocate),  who helps people retire with more money coming in and less money going out. My business life has taught me to treat personal financial strategies more like business strategies. It is for that reason I prefer to call myself a financial coach rather that a financial advisor. In the end people need to be comfortable with both me and their investments and need help and nurturing to get through the planning and maintaining of their financial plan.

The biggest mistake an investor can make is to make a decision on a plan and not follow it because they don't understand it. Dalbar, a company that studies the behavior of investors has reported and proven that when emotion gets in the way of investing the investor will lose. They report that the average investor gets an average of around 3 to 4 percent on their investments when the market is returning between 9 and 11 percent.

I don't use complex plans with lots of charts and graphs but a simpler and better method I call the A B C's of investing. Retirement planning is quite different than the accumulation planning we are used to with tradional investing before we retire. For a video explanation look at our financial planning page.

I am anxious and willing to show anyone who feels like this approach will work for them and their investments. If you want to set up and initial meeting of just a phone conversation to see if we can work together call my office at 610-695-8748 and I will be happy to talk to you. If you want to send an email instead send it to roy@yourwealthadvocate.com.

Investment advisory services provided by Redhawk Wealth Advisors, Inc., an SEC-registered investment advisor.

ID Theft Protection

Is Your Company in Compliance with ID Theft Law?

If you collect and store information of your clients or employees, information like names, addresses, Social Security numbers, bank or credit card numbers or other account data you must have certain procedures in place to protect that information. If this information gets into the wrong hands it can lead to fraud or Identity Theft.

The Federal Trade Commission(FTC) estimates that as many as 9 million Americans have their identities stolen each year. You and your business may already be a victim and not even know it! In fact it could take years for you to discover that your Identity has been stolen.

Failure to safeguard the PII that you collect on your employees and your customers could expose you to lawsuits or enforcement actions by state or federal regulators.

Federal and state governments have passed many laws to help protect Personal Identity Information (PII) including:

• Fair and Accurate Credit Transaction Act (FACTA)
• Federal Trade Commission Act
• Gramm-Leach-Bliley Act
• HIPAA/HITECH
• Individual State Data Security and Identity Theft Laws

Who Must Comply?

These laws affect virtually all businesses. Your business may be subject to data security protection laws if:

• You employ one or more people
• Your business keeps PII on file for customers or employees (including name, address, Social Security number, date of birth)
• Your business accepts credit cards for payment
• You buy or sell products on the Internet
• You do a credit or background check on potential employees or customers.

Compliance is the Law not an option

This not only is the law but it makes good sense. Your customers and employees will thank you for protecting them.

What Can Happen?

Given the cost of a security breach – government fines, time and money spent in litigation, and the loss of customer trust in the company – safeguarding customer information just makes good business sense. When you show customers and employees you care about the security of their personal information, you increase their confidence in your company.

What Should You Do?

We have a program setup through our sister company American ID Theft Protection LLC that has an inexpensive "one -time" program that will protect your company and you individually from serious and extensive lawsuits. Please call me at 610-743-8308  or send me an email at roy@americanidtheftprotection.com and I can explain how I can help you for an inexpensive and permanent method to protect you your employees and your clients from the nightmare that can happen when their identity is stolen.

Medical Affiliation - Roy Innella - Financial Coach

Area Financial Advisor Receives National Health Care Recognition

Roy J. Innella of The Wealth Advocate Investment Group recognized for excellence in service to area medical professionals

Malvern, PA (February 16, 2012) – According to the Bureau of Labor Statistics, there are approximately 700,000 physicians in the United States who work in excess of 60 hours per week.  While their earning potential is the highest among any profession in the US, a blizzard of government regulations and a host of clinical and economic issues leave little time for a doctor to manage their professional and personal lives.

In response, an elite group of professionals is emerging as specialists to the medical community.  In recognition of his work with area health care executives and physicians, Roy J. Innella of The Wealth Advocate Investment Group has been named an MD Preferred Financial Advisor.  Each year, US Medical Specialties, Inc., a national medical consulting firm, recognizes excellence in service to the medical community in a number of disciplines including real estate, mortgage lending, insurance, accounting, banking, financial and legal services.  The goals of the MD Preferred Program for financial advisors include identifying, acknowledging and promoting professionals who provide service excellence to the medical community. 

The program provides physicians with an online resource center where they can find profiles of “doctor friendly” professionals who are committed to providing a quality service experience.  “Doctors are very busy professionals,” observed Michael O’Malley, Project Manager of MD Preferred Services.  “When it comes to finding a service professional that specializes in serving physicians, they appreciate an organization that has done the research for them and has pulled a team together to make their lives easier.”

Every MD Preferred financial advisor is selected for their commitment to serving the healthcare industry.  They often work in close concert with other community based MD Preferred professionals helping area medical providers attract and retain talented physicians.     

MD Preferred community teams are uniquely qualified to act as recruiting partners to area practice managers and hospital administrators.  As partners they can tell the community story while the medical recruiter tells the clinical story.  Their knowledge of the area and understanding of the special needs of physicians and their families saves everyone time and resources.     

“We are proud of the recognition we have received.  In an environment of critical physician shortage, we understand that most physicians considering a career in our community will make their decision based primarily on life style issues,” Mr. Innella observed.  “The last thing we want to have happen is for that prospective physician to go elsewhere because the local support services he or she needed were either not available, were unreliable or did not meet the expectations of the physician. We are always ready to meet with area physician groups to demonstrate how a comprehensive financial plan can help physicians chart a course through today’s complex tax landscape, provide for their children’s education and assure a comfortable and secure retirement.”

ABOUT ROY J. INNELLA

Roy’s 30 years of business experience ranges from running and owning a 45 employee printing firm to working in the corporate world as vice-president of sales of large printing desired a career change which brought him to the financial industry with experience in both insurance and investments. Roy’s practical and formal education from both experience in the business environment, hard knocks from the pressures from owning a small business and now recently for the past 14 years as a sole practitioner have given him the knowledge to coach

and help others with their financial and life goals. Roy’s website is www.yourwealthadvocate.com

About MD Preferred physician Services

Each year the MD Preferred designation recognizes a diverse group of ‘doctor friendly’ professional service providers.  MD Preferred providers can be found at an online resource center, www.MDPreferredServices.com.  Access is available at no cost to the medical community.  MD Preferred also manages one of the industry’s largest medical job boards, publishes a daily medical blog and distributes a monthly E-Newsletter to every residency and fellowship program in the country.  For additional information contact Mike O’Malley at 800-260-8366.

The Market Has Been Unpredictable Lately

What is the favorite investment of the month?

The markets have been quite unpredictable lately, how do we protect our investments from becoming a subject of downward volatility(losses)? What mechanisms do we have in place to protect that portion of our assets that needs to be protected? A colleague of mine has developed a system that helps clients understand what should be done with their assets and how to categorize them according to their risk tolerance. I use his system to help my clients as well.

The ABC's of investing

The way I explain it to my clients is to use a simple method on a white board or yellow pad. This method makes it very obvious how my client feels about his/her money and is a natural way to view their own investment strategy. We talk about three categories of money and how the client feels about each one and look at how their money is currently allocated. Then we look at how we can reallocate their funds to make them feel comfortable and get the most out of the reallocation. There is a little more to the process  than I just described but basically it is simple and understandable.

Why Do I Use This Process?

First, If I handed the client a 50 or 60 page "Financial Plan"they would probably cringe at the thought of reading it all the way through. Secondly I use the ABC process to show them that they now have a firm grasp on allocations and know why they are investing in each category or allocation.

Confusion is the technique used by many stock brokers to enamor clients into thinking that the broker is smart and can predict the future of market movements. In reality no one can predict the markets because it has been proven by credible academics (Harry Markowitz, Eugenr Fama and others)who have over 100 years of historic data.

I am only scratching the surface of the ABC method here but if you would like to see how this will work for you, give me a call for a real demonstration.  Call me at 610-695-8748 or click here to contact me.

Friday Folio from Redhawk Wealth Advisors

Friday Folio

Below is a regular Friday email that we publish for those who are tracking our investment portfolios and want to know the "Signals" that are influencing investment decisions. Equity Market Outlook from Bob Doll of Blackrock “Three months ago, stocks were pricing in about a 50% chance of a US recession and it looked increasingly likely that the European debt crisis would escalate into an Armageddon scenario. Today, while we would hardly say that the United States is poised to enter boom conditions or that the eurozone crisis has been solved, these risks have clearly receded, which has helped stocks to regain some footing. Our base case outlook is that these improving trends will continue along an uneven path, suggesting that stocks are poised for additional outperformance in the months ahead. As was the case for the latter half of 2011, the key wildcard for global stocks remains the extent to which progress can be made in terms of resolving the European debt crisis. Over the closing months of last year, there did appear to be a change in tone among Europe's policymakers and elected officials as they moved from a sort of complacency into taking more forceful action. The difficult decisions that need to be made combined with a contentious political backdrop in Europe do mean that progress will be slow and uneven, but we do expect it will continue. Over the near term, we expect volatility levels will remain high given that we will likely see a "two steps forward, one step back" theme in both the eurozone debt crisis and in US economic growth. Nevertheless, we also expect that conditions should improve enough that investors will be willing to move back into risk assets. That trend, combined with attractive valuations and still-decent earnings growth, should set the stage for equity market outperformance. Equity Views Our main investing theme as we enter 2012 is a focus on free cash flow generation, particularly those companies that have the cash flow needed to increase their dividends. These types of companies can be found across capitalizations, styles and sectors. From a geographic perspective, we continue to believe that the United States is better positioned than other developed markets. Regarding emerging markets, we may see a turnaround at some point in 2012, but we believe it is too early to make that call.” For a personal evaluation of your porfolio visit my investment website:  You can plug in you own parameters for investing and get daily updates.

Surging Ahead in 2012

What's New for 2012

As the last quarter of 2011 approached I tried to think of how I could do what I like, as well as serve others going forward in my financial practice. I did some research looking for services that could reinforce the trusted advisor relationship that I worked so hard to relate to my clients and build with new ones. With the help of some peer group advisors with whom I am associated, we came up with a three legged approach for 2012. Below are summaries of the three additional services I am working on going forward in my financial practice.

First I would like to announce the official launch of "American ID Theft Protection LLC." In researching the most needed protection for people in the information era we are living is Identity Theft. It was even higher than illegal drug crimes! This especially applies to companies and their employees. Last year their were over 12 million victims of identity theft.

Business owners have no idea of their exposure and liability when it comes to identity theft of their businesses and that of their clients and their employees. It takes the average victim of ID theft over 5000 hours to correct a problem like this. A group of fellow financial advisors in other areas of the country and myself have put together a plan to be used by businesses and individuals in order to protect themselves with  confidence that their identity will not be compromised.  This process is being used by another advisor in the Chicago area with 100% success in protecting his clients assets and personal records.

I will soon be launching a separate website for American ID Theft Protection LLC at americanidtheftprotection.com. There will be a wealth of information about why you should protect yourself in a preventative mode as opposed to trying to fix things after you have been compromised. Our new phone number is 610-743-8308 and email address is roy@AmericanIDTheft.com.

Secondly, if you have a business with employees and you occasionally need some cash infusion into your business without the headache of going to your bank, I can help your company. We did a small poll of businesses around the country and found that most of them were using their own valuable resources to fund human resource processes and payroll. Now you may say; "Why shouldn't a company fund their own payroll"?  Well if you don't have to why should you if you could use those funds to get discounts from suppliers or use the cash for things to improve your company cash flow. I am just beginning this venture and have gotten a great response from business owners to whom I have spoken. There are a basket of invaluable HR services that come along with this as well. If you would like to know more on how the venture can help your company give me a call at 610-695-8748.

As a third leg to my new services stool, I am servicing federal employees with their benefits and working with them to plan their retirement strategy. I have been federally trained and certified by The Talons Group an endorsed provider of federal retirement benefit planning by many of the federal agency organizations. I have been working with postmasters especially since there have been much consternation in that organization. These benefit scenarios can be quite confusing for the faint of heart so if you are a federal employee or know someone who is, you can pass my name along to them and I will be happy to help them. I have more on my website at talonscoach.com.

I am sure that these additional services to my financial practice will be of great benefit to people who want to protect their identity, or fund their business with some fresh cash or to the federal employees who need guidance from the confusion of the federal maze of benefits. I know that 2012 will be a great year for all of us as long as we keep a positive approach to the year ahead.

If you have any questions about Identity Theft and how to preventively help yourself to be protected or any of the topics mentioned above don't hesitate to call me or send me an email.

Have a great and prosperous and healthy new year!

Roy Innella