Advice for Savvy Retirement Planning

Lansdowne Wealth Management in the News

Robert Henderson

Robert Henderson

Check out some of the articles that Robert Henderson and Lansdowne Wealth Management have published or been quoted in over the years.

Experts Share their #1 Retirement Planning Tip for Startup Founders

Mint.Com – Expert Interview with Bob Henderson on Managing Your Finances During a Divorce

LoanNow.com – Expert Interview with Robert Henderson on Preparing for Retirement

401K Contribution Limits for 2015

USA Today – Is Your Life Insurance Through Work Enough?, Alice Holbrook, NerdWallet

Investment News – Tips for Finding the Dirt During Due Diligence on Funds and Managers, Liz Skinner

Benefits Pro – Orphaned 401(k) Accounts Stacking Up, Paula Aven Gladych

Interest.com – 5 Good Reasons to Open a Roth IRA Right Now, Craig Guillot

NurseZone.com – Nurses Worried About Retirement Prospects, Jennifer Larson

Investment News – Noise of Potential Gov’t Shutdown Worries Advisers, Liz Skinner

Newsmax Finance – Analysts: Govt Shutdown Is Either a Stock Buying Opportunity or a Disaster, John Morgan

U.S. News and World Report – The 10 Most Difficult Retirement Decisions, Emily Brandon

Dividend.com – Financial Planners Every Investor Should Follow on Twitter, Shauna O’Brien

Time – Retirement Planning: How Do You Measure Up?

Benefits Pro – Should Retirement Plans Include Social Security Benefits?, Paula Aven Gladych

Social Security Leveling Options – The Retirement Workshop, Robert Henderson

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

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Fee-Only Financial Advisor in CT

Financial Planners in Connecticut

Lansdowne Wealth Management, LLC (“LWM”) is an independent, fee-only financial planning firm based in Mystic, Connecticut that offers financial retirement strategies backed by education, knowledge, and experience. Our clients depend on us to provide personalized, thoughtful service and advice. As a fee-only Registered Investment Advisor, we present you with objective, independent guidance for achieving your goals. Successful individuals and families in southeastern Connecticut, Rhode Island and throughout the United States rely on us to guide the way so they can be confident in their futures.

Our goal is to provide our clients with the most complete Asset and Wealth Management services available. From the very beginning, our objective is to provide individual investors with the same level of sophisticated management as institutional investors. We are proud to say that the services our clients receive rival that of large institutions.

In addition to providing portfolio management services, we also provide our clients with the opportunity to access our comprehensive Fee-Only Financial Planning and Wealth Management services. More details are provided regarding our Asset and Wealth Managements services in our Services section.

401K Advice in CT

For those individuals that are employed at Pfizer, General Dynamics, or L&M Hospital, we have a unique 401K service that allows us to directly manage their Fidelity 401K assets, without removing their assets from the 401K plan.

Robert C. Henderson is the President and a financial advisor at LWM. Prior to founding the firm, Mr. Henderson was a financial advisor with a nationally recognized brokerage firm. His previous experience included numerous senior corporate financial positions, including Director of Finance and Accounting and Controller positions. Mr. Henderson holds a BS degree in Accounting from Bentley University, earned the Accredited Asset Management Specialist (AAMS) designation from the College for Financial Planning, and is a Certified Divorce Financial Analyst (CDFA).

Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

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Nine Common Mistakes Investors Make

GoldWe see some of the same mistakes repeated over and over again by ordinary investors…

Mistake No. 1:
Looking For a ‘Magic Bullet’

Many investors look for the “best” mutual fund thinking that there must be a handful of funds that can bring the desired return. In fact, each mutual fund focuses on very specific types of investments, such as large company stocks, small company stocks, government bonds, etc. In any given year, any one of these market sectors could do well or poorly. Investors may want to use a mix of different types of funds. This is called asset allocation. Many mistakenly believe that asset allocation is designed to provide greater returns. That’s simply not true. Its goal is to reduce volatility risk. Smoothing things out can make it easier for investors to ride out market turbulence, and avoid major portfolio losses.

Mistake No. 2:
Getting out After Markets Drop

Market declines are inevitable. However, despite all advice about “staying the course,” many investors sell out of their stock position during market declines, often after the decline has bottomed out. Somehow they believe that they can sit on the sidelines until the markets go back up again and then jump in. The problem is that we become aware of market declines and market surges only after they have happened – when it’s too late to do anything. Following the market decline of 2008, investors sitting on the sidelines from March through December of 2009 missed one of the largest market rallies in history. Although there are strategies and indications when markets are overheated, it’s tough for most individual investors to know when to get out and just as tough to know when to get back in.

Mistake No. 3:
Stopping Contributions When Markets are Dropping

For the long-term investor, there really is no better time to be adding money to investment accounts than when they are down in value. Although we know that past performance can’t guarantee future results, long-term investors have the potential to benefit by continuing to purchase during market declines, reaping rewards later if the values return. This works best when the investor is using mutual funds or other broad collections of securities.

Mistake No. 4:
Confusing Stock Market Value with the Economy

The economy is the sum total of all the economic activity in the country: jobs, business profits, debt, consumer spending, and lots of other factors. The stock market represents the perceived value of stocks of individual companies. Companies can make money during recessions. And great economies can lead to poor stock market returns. Profits affect the perceived value of a company, and so stocks can rise during recessions. Just because the economy is slow to recover, that doesn’t mean the stock market will be. The 1990’s were a great period for the stock market, but what we found that much of it was based on speculation and wildly over-inflated stock prices. Investors have to realize that the stock market and the economy can be two entirely different things.

Mistake No. 5:
Paying too much attention to the media

The almost constant onslaught of news about the markets and the economy can cause investors to focus on short-term data that really doesn’t have anything to do with their long-term performance. There is always some crisis somewhere that affects the markets, but in the long run, the markets will for the most part reflect business profits of companies. Just make a list of all the worries and predictions made by the talking heads over the course of a week, and then see how many of those issues are talked about six months later – or six days later. Investors need to stay focused on their long-term plan and not be scared out of the market by short-term events. Remember: media exists to sell advertising – sensationalism sells.

Mistake No. 6:
Choosing an Investment Simply by Historical Returns

Investors often select mutual funds in a retirement plan or investment account based on how they performed over the past several years. There are several reasons why this mistake keeps happening. First, that superior performance may have been due to certain stock selections that just happened to be really profitable, or a particular market condition that no longer exists. That’s now in the past, and no help for the future. Additionally, the manager who did all that great stock-picking may have left the fund for a better deal somewhere else based on their great performance. So a fund’s track record alone isn’t enough. Investors need to consider what type of stocks the fund invests in, who the managers of the fund are, what the expenses of the fund are, the style of the fund, and what the stipulations of the fund are in the prospectus.

Mistake No. 7:
Not Having a Goal

Ask any number of investors what rate of return they expect on their investments, and their answers sound something like, “Uh, I guess I want them to grow as much as possible.” This mistake creates a situation where an investor never knows if they have achieved their goal. Investors can avoid this mistake by knowing what they expect their returns to be over a certain period of time. For example, let’s say that you have decided that you need your money to double in value 12 years from now. To achieve that goal, your account would need to average 6-percent growth per year. This target helps you to decide what to invest in, how to mix up your investments, and lets you know if you are on track. If you know that you are on pace for that rate of return, market declines will be much less worrisome and the urge to “get out” will be easier to avoid.

Mistake No. 8:
Getting Your Advice From the General Trough

There are lots of people in the media handing out specific financial planning and investment advice. However, that advice is often general in nature and provided without any knowledge of a particular investor’s specific individual needs, desires, or any other unique factors. Knowing any or all of these extra pieces of information might change the recommendation that is being presented on the TV or computer screen. General advice, such as the rules for contributing to an IRA account, can be very helpful. However, specific advice as to whether you should convert an IRA to a Roth-IRA requires knowledge of your individual situation.

Mistake No. 9:
Following the Herd

When markets have been rising over several years, the urge to “get in” or to put more money into investment accounts can be strong. Conversely, when markets are declining, the urge to pull out or move to cash can be even stronger. These impulses can be made even more intense when it seems that everyone else is doing them and that you might be left out of a market rally or be stuck in a market decline. Long term-investors who want to achieve their goals may want to avoid both.

Mistake No. 10:
Comparing Your Overall Portfolio Returns to the Stock Market

Although it is customary to use the S&P 500 or Dow Jones Industrial Average as a proxy for U.S. stock market returns, it is not a good way to compare portfolio returns. Why? Because most investors should not be entirely invested in the stock market. Just as one would not wish their portfolio to drop as considerably as the stock market when there is a major correction, they should also not expect it to rise as much in times of prosperity. This is the thesis behind asset allocation.

Robert C. Henderson is the President of Lansdowne Wealth Management in Mystic, CT. His firm specializes in financial planning and investment management for individuals approaching retirement or already in retirement, with an added focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at http://www.lwmwealth.com/services/your401k.html.

A Wild Ride on Wall Street: Where Do We Go From Here?

Ben BernankeA Mid-Month Update
It’s certainly been a wild ride in the markets lately. After a virtually uninterrupted 6-month stock market rally that began in October of last year, and culminating at the beginning of April, we may now be witnessing a topping-off point. Certain sectors such as the real estate (investment) sector have made an equally steady march upwards during the last half-year. And despite the economic and fiscal monsoon unraveling in Europe, international markets have contributed their share of growth in global portfolios.

So what has apparently climaxed at the end of March, sidestepped and danced a bit in April, has now taken a decidedly negative turn in May. The question that has developed is whether this is a temporary setback or a more far-reaching trend.

All Is Not Well
In recent weeks and months, our concern for the state of the market has increased dramatically. The positive 6-month momentum notwithstanding, conditions in the market and the economy have deteriorated significantly – to the point where we may be headed back into another recession.

The Economy & Unemployment
There is a number of factors that lead to our evaluation of current conditions. First, the economy. There is a confluence of factors, which individually would not be cause for alarm, but taken in tandem creates a scenario which can only point in one direction. Much has been made about the slow, steady decline in the national unemployment rate. Though this is technically an accurate observation based on current measures, it is masking the larger issue beneath the surface. Political posturing leading up to the presidential election seems to be masking the fact that unemployment may be a bigger problem than it appears. Take for example the average duration of unemployment benefits (see chart below): Prior to 2009, the longest average duration of unemployment benefits (post-WWII) was in 1983 at approximately 21 weeks, with the 60-year average duration hovering around 12 weeks of benefits. Today, the average duration of benefits stands at 39 weeks, nearly double the previous all-time high. And this number is down slightly from a few months ago when the average exceeded 40 weeks.

Unemployment Duration
To further complicate the unemployment picture, individuals that have become discouraged and either dropped out of the labor force, or chose to retire early (either forced or voluntary), has risen by 2.4 million people in just the last 12 months. Additionally, the number of Americans working part-time due to economic reasons (can’t find full-time work, or slow work conditions), and those that are now under-employed has not improved in any meaningful way in the last 12 months.
The final death-blow to the labor picture is that wage-growth has actually been in decline the last five years, with the rate of growth declining from nearly 4% five years ago to just under 2% today.

Corporate Earnings
Currently, many of the bright market forecasts from so-called “experts” relies almost singularly on the fact that recent corporate earnings have been nothing but spectacular since 2009. Stock prices generally rely on a measure known as the “price-to-earnings” ratio (P/E) to establish price ranges, with the numerator being the stock price, and the denominator being the earnings of corporations (or single corporation). While it may appear at first blush that P/E’s are within a reasonable range right now, what most fail to realize is that corporate earnings (as a % of GDP) fluctuate over time, and that we are now in uncharted territory.

Let’s look at the numbers. In post-WWII history, corporate profits have generally ebbed and flowed between a low of 4% and a high of 8%, with the mean falling somewhere just shy of 6% (these are rough numbers). Even during the hey-days of the Technology Bubble in the 90’s, corporate profits peaked at just below 7% of GDP.

Fast-forward to today, and we are looking at a profit margin of just under 9%, after bouncing off 10% briefly, which is unprecedented in history. If you look at the drivers of corporate profit margins, the concern becomes even clearer. The biggest drivers of profits are Corporate Investment, Dividends, Government Savings, Foreign Savings, and Household Savings. At times, these drivers will swing profits one way or another. When savings from those three entities (Govt, Foreign investors, and Households) are positive, it is a drag on profits. When those entities are spending (the opposite of saving), it generates profits. Traditionally, Net Investments in corporations have been the largest driver of profits (blue section in chart). However, as you can see from the following chart (provided by GMO, LLC), the Fiscal Deficit has been the single largest driver of corporate profits (shown in red). Essentially, government intervention has almost single-handedly supported the stock market since 2008. (As a side-note, “Gov’t Savings” should not be confused with direct Gov’t Spending. The Savings figure incorporates many factors such as transfer payments, taxation, investment, and of course direct spending)

Corporate Profit Margins
So let’s ask ourselves these questions: what do we expect to happen next? If the Fed decides on another round of quantitative easing, are we simply kicking the can down the road to ruin? After all, had the first three rounds of fiscal “Red Bull” not been administered (after various other forms of stimulus, such as TARP), where would we be today? Will the Fed continue with another round? Who is going to pay for it in the end? If the Fed ultimately decides to end their stimulus programs, what happens to the drivers of Corporate Profits? Look again at the chart. What’s going to replace that thick red section if the Federal Government decides to finally tighten its belt? Note the substantial drop off in corporate investment beginning around 2008. Should we expect a dramatic increase in investment over the next few years? What would prompt that?

The worst case scenario is upon us. Millions of Americans are clamoring for the government to clamp down on excessive spending. At the same time, they are out picketing the excessive profiteering of corporations and the supposed under-taxation of the wealthy. Yes, we as Americans are eating our cake fast and furious. So while the federal deficit may remain elevated for some time to come, at some point, the government spending spree will stop, their printing presses will shut down, and corporate profits will quickly erode. When this happens, the stock market will quickly evaporate with it.

Unfortunately, there are no easy options. No simple fix. As the severity of the situation becomes more obvious, and time runs out with federal intervention, markets will begin to react. Then the drum beat of Hope and Change will quickly dissipate.

Portfolio Impact
As I shared with clients late last week, we lowered our allocation to “risk” assets in a meaningful way early last week. My expectations are mixed. As will always be the case in both bull and bear markets, short-term fluctuations will frequently occur (both positive and negative). These are unavoidable, and we would never suggest short-term timing strategies as an attempt to out-maneuver the whims of the markets. However, as our time horizon expands, we can more readily forecast potential long-term future returns. Given that current economic and market conditions are among the worst we have seen in the past 50 years, our outlook is not positive, hence our decision to reduce risk-on investment allocations.

We have not completely eliminated equities from our portfolios. Although conditions have deteriorated, negative conditions (or over-valued conditions) can persist for quite some time before markets respond. So leaving a modest allocation to global equities across multiple asset classes (small, mid, large, etc.) seems most appropriate at this point. The bulk of the portfolios have been spread among various fixed-income asset classes (global bonds, high yield, mortgage backed, short-duration, etc.). We have also significantly reduced our exposure to longer duration U.S. Treasuries (due to depressed interest rates and the potential for those rates to rise and negatively impact prices).

Should conditions further deteriorate, we will consider further lowering our exposure to risk assets.

Robert C. Henderson is the President of Lansdowne Wealth Management in Mystic, CT. His firm specializes in financial planning and investment management for individuals approaching retirement or already in retirement, with a focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at http://www.lwmwealth.com/services/your401k.html.

About Lansdowne Wealth Management, LLC

Lansdowne Wealth Management, LLC (“LWM”) is an independent wealth management firm based in Mystic, Connecticut that offers financial retirement strategies backed by education, knowledge, and experience that are supported by proven industry research. Our clients depend on us to provide personalized, thoughtful service and advice. As a fee-only Registered Investment Advisor, we present you with objective, independent guidance for achieving your goals.  Successful individuals and families in southeastern Connecticut, Rhode Island and throughout the United States rely on us to guide the way so they can be confident in their futures.
Our goal is to provide our clients with the most complete Asset and Wealth Management services available.  From the very beginning, our objective is to provide individual investors with the same level of sophisticated management as institutional investors. We are proud to say that the services our clients receive rival that of large institutions. In addition to providing portfolio management services, we also provide our clients with the opportunity to access our comprehensive Financial Planning and Wealth Management services. More details are provided regarding our Asset and Wealth Managements services in our “Services” section.
Robert C. Henderson is the President and Advisor at LWM.  Prior to founding the firm, Mr. Henderson was a financial advisor with a nationally recognized brokerage firm.  His previous experience included numerous senior corporate financial positions, including Director of Finance and Accounting and Controller positions.  Mr. Henderson holds a BS degree in Accounting from Bentley College (now Bentley University), and earned the Accredited Asset Management Specialist (AAMS) designation from the College for Financial Planning.
Mr. Henderson is a resident of Mystic with his wife and two children, and is active in a number of local civic, community, and professional organizations:
  • Estate and Tax Planning Council of Eastern CT – Board Member
  • Groton Scholarship Fund – Board Member
  • MLK, Jr. Scholarship Trust Fund – Board Member
  • Mystic Rotary Club – Board Member
  • Member of the Greater Mystic Chamber of Commerce
  • Mystic Little League coach and volunteer