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Money Matter$

Insights from the Sommers Financial Management Team

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Annuity-Like Safety with ETF Efficiency

The allure of variable annuities (VAs) capture many unsuspecting adults. With a VA, you get to participate in some of the upside of the investment markets with no downside; the insurance company ‘insures’ against losses. The problem with VAs are the complexity and costs. The typical VA costs 3% annually, and has steep “surrender charges” (15% is not uncommon!). What if you could have much of the upside of the S&P 500, with downside protection, no surrender charges, and daily liquidity—all for 0.8% per year?

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We’ve officially launched a “Robo” Advisory

We’ve been excited about the movement toward automated, fiduciary investment advice, sometimes called robo-advice, since we saw what WealthFront.com had to offer more than five years ago. I remember looking over Joyce’s shoulder as I walked her through their site, with her jaw dropping to desktop. Now, the likes of Vanguard and Charles Schwab are taking the lead from those first-to-market robos, including Betterment and Wealthfront.

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Outperforming Math Wizards? No problem!

A few weeks back, I attended a due diligence forum in Denver, Colorado with 361 Capital, an alternative asset manager fairly new to the mutual fund space. They currently manage five funds across three strategies: long/short, counter-trend managed futures, and “macro opportunity”. In looking over the offerings, the macro opportunity fund has been a dismal failure since launching two years ago, and was not even mentioned at the forum. That’s okay – I wasn’t planning any diligence on it given its performance history.

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The Era for ETFs

I read Morningstar Advisor last month, and have come to the conclusion that this is indeed the era for ETFs. For the 15 years that I’ve been in the investment business, Morningstar has focused most of their attention on the mutual fund industry. They developed, and have modified, a mutual fund star ranking system, and they have an extensive fund research platform. But this month, they turned their attention to ETFs; and for good reason.

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TD Ameritrade Saves Face - And Our Loyalty

Ever since the merger between Ameritrade and TD Waterhouse in early 2007, I have considered making a change with regard to your custodian. I wrote of my displeasure back in the July 2007 newsletter, and requested feedback. While most clients were annoyed by the over-exuberant mailings and poor technology interface, you don’t seem to require a change. My yearn for a change has most likely been because my biggest complaint against the new TD Ameritrade is related to their customer service and technology offering —both of which Joyce and I here in the office firewall for you.

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