Commissions or Fee-Only!

Here’s a great article written by Stephen Kelley regarding fee-only and commission paid advisors.  I thinks it’s a great article.

Now About My “Obscene” Commissions

Published Saturday, July 23, 2016 by Stephen Kelley

I recently read a column about annuities on is fairly typical of the trashing most media

types and “fee-only” advisers like to dish. As is frequently the case, it was filled with lots of

hyperbole and character attacks on annuities and the insurance companies and agents who sell


I believe this to be a terrible disservice. Not to me and other agents, but to people who might

otherwise consider a retirement strategy that may keep their money safe and guarantee lifetime


In his bio, the author wrote the following: “I write about investments, retirement and related

financial topics. I am the founder and principal of a NAPFA fee-only registered investment adviser

with more than $600 million of assets under management.”

He went on to trash annuities, writing, among other things, the following: “Because the business

is highly profitable, and the product difficult to sell, insurance companies pay obscenely high


Honestly, I am so bored by this topic, which has been repeatedly debunked. However it’s in the

news again with the new Department of Labor ruling, which seeks to make everyone “fee-only.”

To set the record straight, I felt the need to respond. With the intent of being as educated as

possible, I went to the site and searched on “What is fee-only.” There were several

models listed, including hourly, retainer and, lo and behold, assets-under-management fees.

So the post’s author (let’s just call him “Mr. Noble” to keep it easy), could charge a wrap fee on his

$600 million assets under management, or an hourly rate, and either are sanctioned by NAPFA.

Do the math. A 1% wrap fee would net him $6 million a year. In order to receive that much on an

hourly basis, he’d have to charge $2,884 per hour. If he charged a more reasonable $200 an hour,

he’d be limited to about $400,000 a year. Which do you think he does?

Tell me, please, how could two such diverse and totally contradictory models be sanctioned by the

same organization in the same category as “fee only”?

Now Mr. Noble is going to charge between 1% and 2% on a $10,000 investment every year, for

as long as you own the investment, on the full value of the investment, out of YOUR pocket. Mr.

Noble is going to tell you that it puts his interests in line with yours, because the better he does

with your investments, the more he makes.

Question: How is charging you a fee, when you lose money, aligned with your best interest? Maybe

if the wrap fee was tied to gains, I could buy it. But that fee is going to be charged whether you

make money or not.

Further, I have always questioned the notion that something tied to volume of sales should be

called a fee and not a commission. In my mind, fees are charged for services rendered, not volume

sold. In the example above, the $200-per-hour fee truly is one. But the 1% of assets held? That

sounds much more like a commission to me.

So I started thinking about commissions and fees. The only thing I could think of, within this

context, is a fee is paid by the client on an ongoing basis. A commission is typically paid by the

seller, once when a sale is made, based on the amount or quantity of the thing being sold.

Here’s an example. You hire a Realtor to sell your house. He does a lot of work, shows it to a lot

of people, and when it’s sold, he gets a fee. Right? And because the same amount of work goes

into selling a $1 million home as goes into selling a $250,000 home, he gets the same amount for

each. Right? Because it’s a fee.

Oh, wait. It’s not a fee. It’s a commission. It’s a percentage of what’s sold, paid by the seller. Once,

when the item is sold.

However a wrap fee is a percentage of what’s sold, paid by the buyer, year after year after year.

What’s the difference? YOU pay it FOREVER, making it a fee, not a commission. Framed this

way, would you prefer a fee-based product that you have to pay or a commission-based product

where the insurance company pays?

According to many sources, the average mutual-fund fee is anywhere from 1% to as much as 5%.

The average wrap fee is 1%. Don’t take my word for it, just Google “mutual-fund fees.” It’s an eye-

So let’s just assume you put $10,000 in an investment and keep it over 40 years, incorporating both

accumulation and distributions periods and earning an average of 7% which is what Wall Street

likes to claim. Let’s also assume total fees of 2.5%, certainly a reasonable assumption.

After 10 years without fees, the fund balance would be $19,671, after 20 years, $38,696, after 30

years, $76,122 and after 40 years, $149,744. With fees, those numbers are $15,529, $24,117,

$37,453, and $58,163, respectively.

That means the cost of the fees to the client is $4,142 after just 10 years. At 20 years it’s $14,579.

At 30 years, fees have taken $38,669. By year 40, $91,580 has been removed from your account,

leaving just $58,163.

What is the obscenely high commission on an average annuity for this investing lifetime? It’s about

$600-$700, or 1.2% of the so much more ethical wrap “fee.”

So I ask you, what incentive does Mr. Noble have to promote annuities? Right. None whatsoever.

As mentioned earlier, the Department of Labor fiduciary rule primarily targeted the commission-
based products, maintaining that someone who earns $600 to $700 is more susceptible to corruption and conflicts of interest than someone making $58,163. On what planet?

Avoid Financial Retirement Regrets

I once heard the saying “discipline weighs ounces, regret weighs a ton.”  There are a lot of people that have financial regrets that haunt them during retirement.  My belief is with the proper guidance and strategy you don’t have to have any financial regrets. This article published by MarketWatch highlights some of the financial regrets retirees have. They are avoidable.

This article written by Catey Hill gives some great insight.

Most Americans are filled with regrets — financial regrets.

Fully three in four, in fact, admit they harbor financial regrets, according to a survey of more than 1,000 adults published Tuesday by

Their biggest regret: not saving for retirement early enough (nearly one in five Americans put this in the No. 1 spot). What’s more, among those 65 and up, 27% said this was the biggest regret, compared with 17% of those aged 30 to 49.

America’s biggest financial regrets

Percentage who say this is their most significant financial regret

Not saving for retirement early enough 18%
Not saving enough for emergency expenses 13%
Taking on too much student loan debt 9%
Taking on too much credit card debt 9%
Not saving enough for your children’s education 8%
Buying a bigger house than you could afford 3%

Indeed, it is costly to wait. A person who starts saving $300 a month for retirement at age 25 (assuming a 5% return on investment) will have about $450,000 saved by age 65, despite only contributing $144,000 into his retirement account. Meanwhile, if that person waits until 35 to save the same amount each month, he will contribute a total of $108,000 toward retirement but only have about $250,000 saved at age 65. “If you don’t start saving early enough, you will start to notice that later,” says Greg McBride, the chief financial analyst for

What’s more, waiting to save only exacerbates the problem of our already paltry nest eggs: According to 2015 data from the Employee Benefit Research Institute, fully 28% of workers say they have less than $1,000 saved and 17% have between $1,000 and $9,999; meanwhile, just 14% of workers have $250,000 or more saved.

That’s far too little, according to many financial advisers: Guidelines from Fidelity, for example, state that by the age of 30, you should have your entire salary saved; by 40, three times your salary saved; and, by 50, six times your salary saved.

Other financial regrets that Americans have include not having enough saved for emergencies (13%) and taking on too much student loan debt. Indeed, fully 62% of Americans have no emergency savings, according to a survey released last year by; experts recommend that you have at least three months of living expenses in savings for emergencies. Furthermore, the amount of debt that students graduate with has risen rapidly: In 1993, it was less than $10,000 per student, in 2012, it was nearly $30,000, according to the Institute for College Access & Success.

How Much Stock Should You REALLY Have In Your Retirement Accounts?

Half Pie

That’s a very good question.  Here is a link to the Wall Street Journal that asks and answers the question of  “How Much Stock Should You Have In Your Retirement Accounts?”

I’ve also provided the article written by  on my blog as well.  If this question has entered your mind and you’d like some real time feed back call me and let’s talk about how you can structure your retirement plan in a way that’s going to benefit you long term.

How Much Stock Should You Have in Your Retirement Accounts?

With markets so iffy, here are the arguments for four recipes, ranging from having none to the whole pie

By JANE HODGES Updated April 3, 2016 10:15 p.m. ET

It has been seven years since the start of this bull market for stocks in the U.S. Is it time for investors to adjust the equity allocations in their retirement portfolios?

Many financial advisers say yes. But that is where the consensus seems to end. Some believe that investors should start to reduce the amount of money they have in stocks. Others, however, argue for sustaining the stock allocation. What they do have in common is that they believe it is time to tinker with the models, while weighing different reasons to move the stock needle up or down.

There is no universal prescription for equity allocation, of course. Much depends on a portfolio’s size, an investor’s age and how soon he or she wishes to retire. Expectations for annual stock returns have ratcheted back since the stock market recovery began in 2009, with many financial planners modeling for annual returns in the 4% or 5% range, down from as much as twice that before the 2008-09 recession.

Meanwhile, the reduced outlook for equities still exceeds expected returns for other asset classes. But for many, all of the volatility of late makes the near-term risk/reward proposition for stocks less appealing.

“Returns expectations have ratcheted down, but the expectation of short-term volatility in the market continues,” says Christine Benz,director of personal finance at fund researchers Morningstar Inc.

Other factors affect allocation decisions, too, such as whether an investor’s portfolio has been rebalanced along the way, or whether it has passively wandered into an inappropriate asset mix for the person’s risk tolerance or goals.

Ms. Benz notes than an investor with $10,000 invested in a 50% stock, 50% bond-related portfolio in 2009 would have seen—if the portfolio were left unchecked—a transition to a 70% stock and 30% bond allocation by the end of 2015.

The good news? The investor’s money would have grown substantially. The bad news? So would the risk exposure.

Here is a look at four percentages of stock allocation for an investor to consider, and the types of investors that might want to consider each of the levels. 0%: No Stocks, Thank You

Who is using this approach: The very rich, those with low required rates of return.

Rich, or “high net worth,” investors have the luxury of turning to a cash-preservation approach earlier than their less-affluent peers, meaning they can afford to protect the assets they have accumulated rather than pursue potentially high returns at the cost of greater risk. These investors might avoid stocks altogether at any age, opting for fixed income or cash.

But the very rich aren’t the only ones who might use a no-stock approach.

John Flavin, a certified financial planner and registered investment adviser with Synergy Financial in Seattle, makes the case that for the nonelite, a no-stock portfolio isn’t inconceivable.

For each client, Mr. Flavin’s firm determines a required rate of return—the return needed for the investor to accumulate the funds needed to live as planned in retirement. For some investors who have saved carefully or who are able to live frugally, the required return can be low, which means the assets used to achieve it don’t have to deliver anything resembling stocklike returns.

“If you don’t need to be in the market, by all means you can hold zero stocks in your portfolio,” Mr. Flavin says.

He says that he works with an 80-year-old couple who have a low required rate of return, 1.5%, and that he has recommended an all-bond portfolio for them. Based on a rate-of-return approach, stocks aren’t necessary for them, he says. Clients who need a 4% return, on the other hand, would likely use 30% to 40% stocks in their portfolio, Mr. Flavin says, and those who need 8% might need to deploy 60% stocks. 30%: Nearly Out Of the Market

Who is using it: Investors with short-term market concerns and those near retirement who want to reduce their risk.

Andrew Sloan, an adviser with Bluegrass Financial Planning in Louisville, Ky., says that for clients within five years of retirement he has been rebalancing portfolios toward a 30% stock and 70% fixed income/cash allocation, rolling back from a 40% stock and 60% cash allocation.

“You still need to take on some risk with equities to beat inflation,” he says. Where clients are transitioning money out of stocks, they’re not choosing cash, but rather shorter-duration bond funds.

Others are going down to 30% in the short term to protect bull-market gains.

“I’ve gone to 70% cash in my personal accounts,” says Tim Shanahan, a certified financial planner and president of Compass Capital in Braintree, Mass., a fee-only adviser. And it is an approach he has advised clients to consider, too.

Mr. Shanahan says that in the second half of 2015 he began advising many clients away from stocks. He says he decided cash was the wisest bet for the foreseeable future, based on his belief that equities are overvalued, that rising interest rates make rebalancing toward fixed-income riskier than before, and that rebalancing into “alternatives” isn’t helpful given that they are ultimately correlated to the broader stock market.

Mr. Shanahan says he advised several clients—most within 15 years of retiring—to move from a typical mix of 60% stocks and 40% fixed income to a mix of 50% cash, 30% stocks, 20% fixed income.

The shift isn’t one he would recommend for millennials, and even for his midlife investors it requires opportunity-cost analysis. Clients using individual retirement accounts can shift into cash without tax impacts. For those invested in non-IRA vehicles, Mr. Shanahan says, it is worth evaluating the impact of capital-gains taxes connected to selling stocks versus the impact of potential portfolio losses.

“The tax pain is typically much less than losing what could be 20% of their assets’ value,” Mr. Shanahan says. “I don’t know when I’ll personally get back into the market.”

50%: The Middle Way

Who is using it: Middle-aged investors seeking to preserve some of their portfolio after the bull run.

Kris Garlewicz, a certified financial planner with Market Financial Group, a broker-dealer and registered investment adviser in Chicago, says his firm’s views on the long bull run continuing began to turn last August.

He cautions against reactionary portfolio rebalancing or “timing the market”—never a recommendation for long-term investors. But in recent months, he says, he has told a quarter of his clients to readjust their equity weightings.

He has helped some shift from a 70% stock and 30% bond split to portfolios containing 50% stocks, 30% bonds, and 15% to 20% in short-term bond funds or alternative investments, with a small remainder (under 5%) in cash.

“A lot of them see this as a time to take a breather from chasing returns,” he says. “The market has been just one straight line up. Markets don’t go up forever.”

Clients aren’t permanently ditching equities, but are using shorter-term investments they intend to revisit later.

“They want to take some chips off the table,” Mr. Garlewicz says. “It is what I’d call a ‘crash protection’ approach.”

Mr. Garlewicz says most of his clients are still in the prime of their working lives, ranging from their 30s to their 50s. Many are self-employed or operate small businesses and have lived through a variety of market cycles. Many say they have gained enough in the recent bull run that they’d rather protect their recent growth than continue betting with it, he says.

Doug Bellfy, a fee-only adviser with Synergy Financial Planning in South Gastonbury, Conn., says that for clients nearing retirement, rebalancing along the way should keep them protected from overexposure to stocks. He typically reduces near-retirees’ stock exposure by 2% annually in the five years leading to retirement, moving from a 60% stock and 40% fixed-income mix to a 50% stock, 40% fixed income and 10% cash portfolio.

Within the stock portion of such a portfolio, he often rebalances the stock and fund picks away from small stocks to emerging markets, figuring that small-caps have had a strong run and emerging markets are now more affordable.

100%: All In

Who is using it: Some young investors, and the “undersaved.”

All in with stock? There are always people who do it, including entrepreneurs with cash on hand. In theory, younger savers might place all (or nearly all) their retirement eggs in the equities basket, given their long time horizon before retirement, and thus the ability to ride out market cycles. Others may be close to retiring but short of their savings goals, and so hoping that a 100% allocation to stocks will make up for lost time. Few, if any, advisers would recommend such a move.

“You’d be hard-pressed to find anyone holding 100% equities” these days, Ms. Benz says. “Even portfolios for young accumulators should still have 5% cash or fixed income just for diversification.”

Target-date funds for the young, such as those assuming a 2055 retirement, tend to max out at 90% stock allocation. ***

All the cautions aside, Compass’s Mr. Shanahan and other advisers say stocks haven’t lost their status as a valuable tool for investors. Even with downward-calibrated expectations, stocks are still likely to deliver the highest returns, experts say.

Says Mr. Bellfy, “There are a lot of market headwinds going forward, but I still expect equities to deliver the highest returns among asset categories.” Ms. Hodges is a writer in Seattle. She can be reached at

Will Your Money Last As Long As Your Retirement?

At Ritten Financial, my goal is for our clients to have a great retirement experience and that means piece of mind while in retirement.

Below, is a very thought provoking article written by Christopher Robbins of Financial Advisor Magazine, about retirement and how a lot of people are feeling right not.

Americans Worry About Going Broke In Retirement, Survey Says

By Chistopher Robbins

Americans worry about becoming a burden on their own children due to running out of
money in retirement, but are rarely talking to their families about their plans for old age,
according to a study from Radnor, Penn.-based Hartford Funds.

Retirement income weighs heavily on Americans — 40 percent of the survey’s respondents
worry about becoming a financial burden to their children or running out of income as they
age, with most of the concern coming from respondents between the ages of 35 and 54.

Upper-middle-income Americans, making between $75,000 and $100,000 annually, were
most likely to be concerned about running out of money, almost twice as likely as those who
make from $50,000 to $74,999 annually, according to Hartford Funds.

The survey found that Americans are addressing concerns about being a burden on their
children, with 42 percent of respondents making strategic living arrangements like moving to
accommodate their lifestyles or setting themselves up to be more accessible for care giving
by moving closer to children or into a nursing home or retirement community. Women were
almost twice as likely to make arrangements for their future care giving than men.

Men, on the other hand, were more likely than women to work with an advisor to get their
finances in order. Twenty-eight percent of the male respondents reported working with an
advisor compared with 17 percent of women.

The survey found that respondents were worried about their aging parents’ quality of life. —
25 percent worry about their parents having a home that they can maintain and move
around in.

Other concerns included maintaining a social network of family and friends for their aging
parents—20 percent of the respondents reported that as an issue.
Many survey respondents, 32 percent, reported moving closer to their parents or moving
parents closer to themselves to address retirement concerns.

Respondents aged 35 to 44 were more likely than older respondents to move closer to their
parents or to have their parents move closer to them—39 percent versus 20 percent.

Amidst all the moving and preparation, Hartford Funds found that the respondents weren’t
communicating to their families about their plans—14 percent of respondents reported
initiating conversations about their won intentions as they age, and 12 percent say they’ve
initiated conversations with their parents.

Hartford Funds surveyed 1,006 Americans 35 or older with children older than 18 and
parents older than 65 by phone in February.–but-don-t-talk-about-retirement-plans-26127.html?print

Financial Planning and the focus on clients


Being independent gives me the ability to do what’s best for my client not what is best for the company and not being able to put in the forefront what the company wants. So it’s about my client, my client is my priority its everyone is custom to your needs here once their goals. So basically they had is Ritten financial. I’ve grown my practice over the years and I now have lovely office in Southfield right off of the Lodge and humming away.

I transferred and focused more from life insurance into retirement planning tax-free retirement plan
along with social security and when to pull it out, working with the baby boomers to seniors and to the millennials. Its really shocking to see in the number of people that do not have plans set forth yet and the attitude of “well we’ll worry about it when we get there” well if you’re worry about it when you get there then it’s never going to get there.

I urge you if you don’t have plans in place for your retirement please talk to a professional sit down and create a plan, cause only when you create a plan can, can you have a plan and it comes to fruition.

Create a Secure Future

RittenFinancial-dbusiness article“If something you believed to be true wasn’t, when would you want to know?” – Julie Ritten

Living in a world where sound bites lure us with the latest sexy stock picks, and buy-sell schemes are everywhere, Americans are increasingly suspicious and disillusioned with most investment choices. Frustrated and betrayed by the roller coaster of a volatile stock market, there is a palpable loss of faith in a system that is supposed to help plan and save for future financial security. There doesn’t seem to be safe harbor anywhere, and it is difficult to trust anyone.

In an unassuming and decidedly “unsexy” office in Southfield, on a Tuesday evening when most folks are home finishing dinner, Julie Ritten, president of Ritten Financial, gushes with genuine enthusiasm about her work. Her specialty is tax-free and tax-advantaged retirement planning — a subject Ritten’s zeal brings to life. Ritten Financial’s focus is on securing your assets and minimizing your exposure to risk and the impact of taxes on your financial future. And it works. Ritten’s inner circle of specialists includes the creator of the tax-free methods. While your financial advisor collects a commission check from you and wishes you “good luck” with your investment choices, Ritten secures results.

Ritten’s career was borne out of violent and dramatic personal circumstances that catapulted her into the unexpected role of a single parent. She saw her future as scary and unpredictable. A personality test revealed her strong aptitude for business, and Northwestern Mutual Financial Services hired her in 2000. Her stint with Northwestern Mutual molded her into a knowledgeable and authentically passionate financial advisor. She discovered that life is unpredictable, but you can prepare for it with a stalwart strategy. Ritten shot to the top of her industry, and decided to leave Northwestern Mutual behind and open Ritten Financial.

“I can design a financial plan for you that creates a secure retirement.” she says, repeatedly and emphatically. “I give my clients peace of mind.” It’s the same peace of mind she built from scratch for herself and her family, when her life’s circumstances were filled with drama and pain. There is no hype and no empty promises with Ritten Financial, no “Today’s top five trades!” or “The next big Blue Chip winner!”

“We work to lock in your gains and let you retire on your terms,” Ritten says confidently, “and my goal is to minimize your tax exposure in the process.” Nerdy, unsexy, and smart.

Ritten’s arsenal includes a corporate business owner benefit plan called a Restrictive Property Trust (RPT). Designed specifically for business owners with consistent cash flow, an RPT can significantly alleviate a business owner’s tax burden. Unlike a qualified plan, 100 percent of your contribution to an RPT goes to YOU. Your business receives a 100 percent tax deduction, and only 40 percent of the contribution is taxed to you. Additionally, this trust provides a death benefit that can be used for estate planning or buy-sell agreements, and assets held by the trust are protected from creditors. This is Ritten Financial’s expert niche.

Call Ritten Financial for a free consultation, and build a financial plan that creates a secure retirement.

“If you have ever lost sleep worrying about whether you’re going to outlast your money, I want to put your mind at ease,” Ritten says.


Financial Blueprint

retirement question

The Retirement Blueprint

In an article earlier this year at CNN Money Nick from Arizona asked “I’m 40 and would like to begin preparing for retirement, but I don’t know what to do. How should I start?” It also points out from it’s survey results that those who have prepared a financial plan feel confident they are on track to meet their financial goals, such as retirement. It also indicates that those who control their finances are also happier than those that don’t.

Failing to Plan, Planning to Fail

If you don’t know going financially how you get there? A lot of people spend more time planning a vacation than they do planning their financial future. A sound financial plan can put you on the silent course of a secure retirement.

Your financial plan should be reviewed on a regular basis so you can understand the demands of your future retirement. This way, you can adapt, adjust, and make decisions that will best serve those demands, some of which can be unexpected due to life situations.

Retirement Income Needs

In order to maintain a comfortable lifestyle during retirement, on average one will need sixty to eighty percent of their pre-retirement income. Keep in mind that we tend to curtail our spending habits when retire. But it’s important to determine what your income may cover when you retire.

Your house expenses may change. The mortgage may be paid off or close to it by the time of retirement. You may be an ’empty nester’ not having to support your children. Most will find themselves in a lower tax bracket because of lower income in retirement. When retired, you no longer have to include “retirement savings” in your monthly income.

Sources of Retirement Income

After you figure out your retirement income objectives, you will need to determine your income sources. Those sources include Government, i.e Social Security, Company Sponsored Plans such as Defined Benefit Plans and Defined Contribution Plan as well as your Personal Savings.

Proper Planning

In order to properly plan for retirement it is best to seek advice of credible and reputable financial adviser. The sooner you plan the better impact you’ll have retirement. The worst thing you can do is to wait too late in your work life to start planning. Proper planning may take some sacrifice, there may be a few vacations missed, more dining in than dining out, maybe more renting movies instead of going out to catch the latest blockbuster, but in the end it should pay off because sacrifices you make today can make all the difference tomorrow.