Five Tips to Help You Control Your Financial Plan

Tax policy will be driven by the calendar this next year as many tax policies will expire come Jan. 1, 2013, no matter who wins the election. The point to remember is that even if Congress addresses these issues in the next year, your financial plan will be affected in some way no matter what income bracket you are in.

However, trying to predict what will actually happen is a lesson in spinning plates. You never know what plates drop first. So here are some tips on ways to at least take advantage of what we do know.

#1. Roth Conversions: Individuals pay ordinary income tax when converting a traditional IRA to a Roth IRA. The fair market value of the securities or cash becomes income for the year on the day the conversion is recorded. At today’s tax rates it may be better this year than waiting. There is no longer an income limit on conversions so anyone with IRA’s can convert. Because it may push you into a higher income tax bracket, conversions should be discussed with a tax professional. Now is a great time of year to talk about your options.

#2. Consider municipal bonds as a tax-free income possibility. Even if you aren’t in high tax brackets a municipal bond gives you a low risk option for earning a little more on your investments.

#3. Revisit asset allocation. As part of the review process this is always part of the conversation. Best thing is to bring your 1040 or tax forms with you to your next review. Let your tax professional know who your advisor is and vice versa.

#4. Revisit your estate plan. If you don’t have a plan, let’s discuss where you are and if you need one.

#5. Lastly, don’t let the tail wag the dog. Review your investments and continue making deposits to retirement accounts and savings accounts. Having a good financial plan is the best plan for dealing with uncertain times.

Protecting Elder Americans from Financial Abuse

Each year the Financial Planning Association puts together a network of professionals to help with a National Hotline that answers questions about financial and medical fraud or abuse. It’s free for anyone to call in and a member of the Financial Planning Association will answer your questions.
Protecting Elder Americans from Financial Abuse

Pass on the information or go to the link above and print the flyer. The event is happening November 10, 2011.

What is an Annuity and is it Right for Me?

An annuity is an insurance product that can pay you an income on a consistent basis. There are many forms of annuities but they all provide tax deferral and some type of guaranteed income. They are sold by companies that pay their agents commissions. What you want to do is ask some crucial questions before purchasing one.

1. How much is the upfront cost to buy this annuity?

Fixed annuities give you a fixed rate of return for a specified time and have the lowest cost. Variable annuities are invested in mutual funds and your return is variable, based on how it is invested. Expenses are higher depending on the extras added to the contract (called riders) and how it’s invested. Typical costs range from 5-8% and can come with steep penalties if you want to cancel. Your return is NOT guaranteed but the amount you can withdraw, without penalties, is guaranteed. For example you buy a variable annuity for $100,000 and they guarantee a 5% withdrawal rate. Every year you can withdraw up to $5000 out of the annuity without penalty. The account value will fluctuate based on the investments. There is NO guarantee on the return. People confuse the withdrawal rate with guarantee on return. Most inexperienced brokers do not explain this well and you believe you have a fixed or guaranteed return. When your policy value goes down you ultimately be disappointed. Fixed rate annuities are the only fixed rate product.

2. How long before I have no surrender charges? What other charges are there?

If you buy A shares you pay more of an upfront charge for the annuity but can withdraw the money later without penalty. Any other share of annuity comes with a 7 to 10 year surrender charge that decreases the longer you have it. Riders on a contract also add to the cost and can be 0.50% up to 1.5% depending on the extras.

3. I want guaranteed income, is an annuity right for me?

If someone wants you to take all of your retirement funds and put them in an annuity, you need to question their intentions. A retirement account is already tax deferred and there are plenty of ways to draw an income from them. Money outside retirement accounts is a better place for annuities and if you are afraid of investing in the market some annuities can offer some attractive features. However an annuity does not eliminate risk, it just allows an alternative way to receive income. Always consult your CPA on the tax benefits of an annuity. Fee based planners are better to consult with as there is no incentive to sell commissioned based products.

Ultimately you need to understand what you are buying and how it works. If you have more questions make sure you understand the answer before you buy.

Are You Saving or Investing?

Every time you turn around the news seems to be worse about our economy, taxes, jobs, etc…. What do you do? If you have a savings account for emergency and/or current needs it should be in a money market or Certificate of Deposit. You’re already ahead of the game. Both are FDIC insured, up to $250,000, and are the most secure place for money you need in the next year or two.

But what about investing for future needs? The easiest way to give yourself options and more control when you do retire is by investing in retirement accounts. Everyone should have a traditional IRA or Roth IRA, you can start one as long as you have wages. If you are self-employed there are options for you. If you are retiring in the next 5 years this may not apply to you, but for those with 5 or more years to retirement you need to look closely at your retirement plan. Too many people wait until the last minute to plan out their retirement income and realize there were things they could have done to make it better. They start looking for investment’s that don’t exist. There is no such thing as no risk, high return investments. Where investors get in trouble is trying to find that one investment that will make up for time lost. Listen to the marketing messages out there. They play on people’s insecurities and fears and end up costing people their hard earned money. Your overall risk is actually lower the younger you are, which gives you more flexibility. If you are reading this and think I’m already old, then make sure you are teaching your kids and grand kids good money management. There is no age limit for clients in my practice. The younger the better.

How many times do you say “If only…..” it’s up to you to seek the information you need to have a powerful and effective plan. I can help you but only you have the power to make it happen.

More Questions People Ask Me about Being Independent

How we are compensated? Financial planning fees have 2 components. The negotiable hourly fee is up to $150/hour and is paid after the consultations.
Written financial plan fees range from $150 to $2,500, depending on the complexity of your financial situation. Half the negotiable fee is due in advance, the rest upon presentation of the plan, which will always be well within 6 months of our engagement. If you cancel, any prepaid fees will be refunded on a pro-rated basis.
Managed money fees also have 2 components. If we manage your money the annual negotiable fee for doing so ranges from ½ of 1% to 2%, depending on the size and complexity of your account. The fee is paid quarterly, at the end of each quarter. If we help you select other money managers and we monitor them for you, the other money managers (registered or notice filed in Oregon) pay us a portion of the fees generated by you. You do not directly pay for this service.

Are we registered representatives of a securities broker/dealer? No one at Clarity is or will ever be a securities broker/dealer or a securities registered representative.

Do we invest in securities we recommend to you? On occasion, we may buy or sell securities we recommend to you. We have found over the years that clients like to invest in the same investments we do. That makes sense. If we like it for ourselves, why shouldn’t our clients like it too? The type of security always depends on the client’s investment goals, objectives and time frames. When we recommend investments we hold ourselves, we’ll always disclose to you what we own and how much we own. (As an aside, we’ve seen that some salespeople tell clients that they own the same thing they are recommending, but it’s often a minimal amount. We find that to be very deceptive.) We feel that there is just a tiny conflict of interest in owning the same securities as we recommend to you because the securities we recommend are widely held and publicly traded and we are too small advisors/investors to affect the market in widely held and publicly traded securities.

Defining Your Goals

One of the biggest hurdles for financial planners is to get your clients to really relax and tell you what they want to achieve. Everyone would like to retire and have enough money to do so, but what does retirement mean? Setting goals is not something to put off. You may need to adjust the goal as you go, but you won’t know what you can do until you have a better picture of where you are now. So many people have convinced themselves that they can’t achieve their goals so they just stop thinking about it. Unfortunately, it may be within reach you just don’t have a plan to accomplish it. One client of mine was so worried that she couldn’t retire that she wasn’t sleeping well. She is older and didn’t save until later in life, but looking at her true expenses and agreeing to watch her spending she will be able to retire this summer. We set up a budget to help guide her, a plan to withdraw from accounts in the most tax efficient manner and set up a travel savings account for her to do the traveling she wants to do.

Want to start simple? Download this file and fill it out, it’s a great start. Then meet with me to see if I can help guide you to accomplish those dream goals. It may not be what you started with, but at least it’s a step in the right direction.

Where the name Clarity Wealth Development came from

Trying to name your business is a difficult thing to do. With so many financial advisors naming themselves as either a financial group or a wealth management something I wanted a different name. Advisors manage money in one way or another, and development sounded more appealing than wealth management.

As for Clarity, that also developed the more I thought about it. People are sometimes intimidated by advisors. They worry about not having enough money or feeling pressured. My philosophy is to educate first, then let people have ownership in their decisions. You are more involved when you understand and have clarity about what you are trying to achieve. My Dad is also a part of this decision. He was a large influence in my desire to own a business. He built a successful farming operation from modest beginnings. His Mother operated a small farm in Coburg but Dad started with his own 10 acres and built it into a 1500 acre farm in Corvallis. In 2003 he sold the farm and did well enough to retire, unfortunately Alzheimer’s disease has taken his memory from him and is shutting down his body also. He has trouble communicating and there is occasionally a clear sentence that he can say, although the thought is gone as soon as it’s spoken. He always had a goal and clear headed thinking that made him successful and that’s what I want clients to understand. I want you to feel like you have clarity so you can make the right decision.

That’s how Clarity Wealth Development came to be.

Dad passed away December 16, 2010. I will forever be grateful for his support and guidance. Thanks Dad.

New Clarity Wealth Development Office


The newly remodeled Clarity Wealth Development office on Polk in Corvallis, Oregon, owned by financial advisor Kay Dee Cole.

We removed dark and obscuring bushes and plants, replaced the windows for more efficiency and installed a new, brighter door to make the new Clarity Wealth Development office inviting for our new clients. Come by to visit us and see the new office!


Clarity Wealth Development office in Corvallis, Oregon, before remodeling and landscaping work.Clarity Wealth Development office in Corvallis, Oregon, before new windows were installed.

The office building before was covered by plants, which made it dark and unwelcoming.

Welcome to the Clarity Blog

Welcome to our news blog, a place to share Clarity Wealth Development’s latest information. We focus on the individual and planning the best route for each person, family and small business we work with, so we won’t be sharing one-size-fits-all investment advice here. Instead, we’ll let you know about the services we offer and how they can help you, along with news about our company and community. Please contact us at any time if you have questions about our business or this blog.