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ICYMI - Here's What's Happening

There's been plenty of excitement in the investment industry with Charles Schwab and Co. eliminating commissions on stocks, ETFs, and options, and then purchasing TD Ameritrade. Brian was quoted throughout a fantastic article on financial site, Business Insider. In addition, you won't want to miss our Economic Outlook Breakfast in January, where we hear from one of the best in the industry, Omar Aguilar. All of this and more in this edition of In Case You Missed It.

Schwab Goes to Zero, the Rest of The Industry Follows Suit, Then They Buy a Competitor

Zero

Being an independent fiduciary advisory firm has been incredible for us. We have a moral and legal obligation to put our client’s interests above our own. In performing thorough due diligence prior to launching our firm, we found a fantastic fit with Charles Schwab and Co. as our primary custodian for client assets. It was their size, scale, service, and commitment to independent firms that made this decision easy.

Schwab announced on October 1st that they would be “eliminating commissions for stocks, ETFs and options listed on U.S. or Canadian exchanges”. This is both for their retail clients and for clients of advisors through Schwab Advisor Services. It’s important to note, however, that some mutual funds still carry a $15 transaction fee for purchases and sales. There’s no word on whether these fees will be eliminated at Schwab or the other custodial firms.

Access for Everyone

Within days of Schwab’s announcement, the other major online brokerages and custodians followed suit as TD Ameritrade, E-Trade, and Fidelity all made announcements of zero commissions for stocks, ETFs and options on their platforms as well.

We are witnessing the democratization of investing for the masses. Access to investing has never been easier or cheaper. Anyone can create at least a basic investment plan on their own or hire an independent firm to go deep on financial planning and portfolio management.

There’s no reason for anyone to pay high fees or receive conflicted advice from one of the major Wall Street firms. The exodus started several years ago, but I suspect we’ll see the pace of assets leaving these Wall Street firms accelerate as they head to independent Registered Investment Advisory firms.

Schwab Purchases TD Ameritrade

Then on November 25th, Schwab announced the purchase of their competitor TD Ameritrade for $26 billion in stock. Combined, the two will hold over $5 trillion (with a T) in client assets and one-third of all Registered Investment Advisor assets. If there were any doubt about where smart client money is flowing, this chart provides perspective. 

 

 “The advantage to the Schwab-TD Ameritrade deal is the brokerage giant will be able to cut costs, stream new revenue opportunities and improve the platform for clients, said JMP Securities analyst Devin Ryan.”1 (Emphasis is mine)

Being independent means our duty is to you and you alone. We will continue to monitor the integration of the two custodial firms. Our expectation is that this purchase will only enhance the service both Schwab and Boyd Wealth deliver through economies of scale and improved technology.  

Stay tuned.

“What Everyone Gets Wrong About Planning For The Future”

Creating a financial plan requires a commitment of time and energy. In addition, there must be a willingness to reveal one’s intimate financial details to an expert. It’s for these reasons that the natural tendency for most people is to create a plan and then leave it untouched for years.

The effort to create a plan is worth it, however, as a well-articulated plan brings confidence and clarity for those who engage.

A well-run, detailed financial plan is not a one-time event, rather it is a living breathing document that is updated annually, and even more frequently during major life transitions.

In this excellent article, written by Jillian Kramer for Business Insider, we are quoted throughout on the importance of updating one’s financial plan regularly.

2020 Economic Outlook Breakfast, January 22nd, 2020

We will once again host our annual Economic Outlook Breakfast on January 22, 2020 at Del Paso Country Club. It’s our 12th consecutive year and you won’t want to miss this one.

Our very special guest this year is Omar Aguilar, Ph.D., Senior Vice President and Chief Investment Officer of Equities and Multi-Asset Strategies at Charles Schwab Investment Management, Inc.

Mr. Aguilar will discuss the current macro-economic environment while shining a light on behavioral biases that all investors grapple with when making decisions about their money. With a doctorate in both Statistics and Decision Sciences, he demonstrates how identifying those biases and having a plan to combat them can help investors achieve better financial outcomes.

Mr. Aguilar and his team currently oversee $235 billion at Charles Schwab and is a frequent contributor on CNBC. You can view his most recent appearance on December 5th here.

If you have not received your invite, please contact us to reserve your spot. Space is limited.

Boyd Wealth Sponsors BFBA’s Construction Summit

On October 30th, BFBA, LLP, one of Sacramento’s premier accounting firms, hosted their 2019 Construction Summit. Boyd Wealth Management was a proud sponsor of the event held at the Sac State Alumni Center which attracted over 200 attendees.

We have found many synergies between BFBA and our firm including a strong similarity in serving closely held businesses, a deep specialty in helping business owners get to and through a successful exit/succession, and a mutual commitment to client service.

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In addition to a fantastic economic rundown by Construction Economist Anirban Basu, we heard from local cybersecurity expert Eric Johnson, partner at GNT Solutions, a technology consulting firm for businesses.

Eric cautioned us about password security and how to avoid those mysterious and clever links that trick us into handing over private information to hackers. As a reminder, be sure to read our recent post on Cybersecurity which covers many of the issues and solutions Eric laid out in his presentation. It’s a quick read and will give you action items to take now.

There were then two thoughtful discussions around Construction Leadership and Executive Retirement Strategies. It was a terrific morning with excellent speakers and a fully engaged audience.

Financial Dorks Unite

Ryan and I both did some traveling in the last couple of months to two excellent conferences.

Ryan attended the eMoney Advisor Summit Conference in Austin, Texas October 14th – 16th. eMoney is the technology provider behind the Boyd Wealth Planning Portal which serves as the engine for our financial planning software and client portal.

There, Ryan attended sessions on Advanced Retirement Planning, Tax Planning, and Assisting Business Owners with the sale of their Business.

In addition to the sessions, Ryan spent a lot of time speaking with their software development team.  There are a lot of great things happening behind the scenes, and we should have some exciting enhancements rolling over in 2020.  

Brian attended the Schwab Impact Conference in San Diego, California November 4th-7th. Brian heard detailed economic and market discussions from two of the industry’s most recognized investment strategists, Liz Ann Sonders and Jeffery Kleintop.

Quick summary: the economy is slowing mainly due to the uncertainty caused by the trade war with China and it’s not clear whether or not this slowdown is enough to tip us into recession in 2020. If a recession were to occur now, it would likely be the brief and shallow variety as opposed to what we experience during the recessions of 2000 and 2008 which were ripe with excesses. I wrote more about it here.

Brian also attended panel presentations on how best to serve high-net-worth families, their very unique needs, and what independent advisory firms can do to solve them. It was great to see our firm is leading the way in this space, both is depth of knowledge (commitment to education and improvement from our advisors) and service (we have one of the best advisor-to-client ratios in the industry.)

In another session, Brian spent an hour and half geeking out on the ins and outs of Roth IRAs, Roth 401(k)s, and the specific tax situations where it’s best to take advantage of conversions to maximize a retirement nest egg and income.

Lastly, Brian heard from Charles Schwab himself about starting his firm in the 1970s to bring investors access to investing without the monopolistic high commissions prevalent in the industry at that time. How he struggled and almost failed until he got an unexpected push from deregulation in 1975. And now, even at 82 years old, he is focused on his next initiative to help investors by allowing the purchase of fractional shares of stock.

Today, if you want a share of Apple as an example, you need enough money to purchase one whole share of stock or ~$265 (as of this writing). Allowing fractional shares would enable someone just starting out saving $100 per month to buy .378 shares of Apple. They can begin investing immediately without waiting to accumulate enough cash to purchase one whole share. What a time to be alive!

Happy Holidays to You and Yours

Thank you for reading our periodic blog posts. This is our 20th blog post since we launched in May of 2018. It’s a labor of love, a collaborative team effort, and we strive to get better every single day to inform and entertain you.

Thank you for your trust and faith in us to deliver true financial security to you and your families.

Thank you for sending those you care about to our firm. We're always excited about helping amazing people!

Wishing you a beautiful, joyous Holiday Season and a happy and prosperous 2020!

Happy Planning,

Brian


Further reading and citations:

1. Schwab to Buy TD Ameritrade

2. Schwab Eliminates Commission on Stock, ETFs, and Options

2. Photo credit Pixabay