Financial Advisor News

Piedmont, CA

Financial Advisor News

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Piedmont, CA

by: ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

(510) 601-1935

Oakland, CA — East Bay Area Sees Wage Gains | Financial Planning News & Services

The U.S. economy remains relatively strong.

Retail sales are good and capital spending is at solid, but not at excessive levels.

Inflation is relatively low on a historical basis and we’re in one of the best employment environments, ever, in the history of our country. People at the bottom of the wage ladder are experiencing real wage gains for the first time in decades. Right now.

U.S. stocks are just a bit below record highs. Trade wars are creating some level of instability and uncertainty and our federal government is increasing spending at an unsustainable rate and spending too much.

Europe is relatively economically stagnant, and may continue in this manner for some time if not dip into recession relatively soon. Europe never really completely cleaned house in an economic sense after the financial crisis and they thus never truly recovered. Bureaucratic overlays and social program spending make their economic system less flexible and thus less resilient. Germany may try for some level of stimulus while the European Central Bank has already talked of making money easier. Italy and Spain have deep and protracted unemployment. China is struggling in relative terms but taking action to prop their economy.

We’re in a very strange time where government debt of many developed countries is trading at a negative yield. If you buy their debt you are effectively paying them to hold your money. In the U.S. you can get over 2% in a savings account federally insured. 

The phenomenon of negative yielding government debt may be tied to seemingly insatiable demand for U.S. government debt and thus our yields are low but positive (as price/demand goes up for debt, yield goes down).

You may have read or heard about our yield curve inverting which simply means longer debt yields less than shorter debt, an unnatural occurrence and one that has preceded recessions in the past. However, every time our yield curve has inverted we haven’t always gone into a recession.

Recessions (simply defined as two, or more, consecutive quarters of contraction) can be painful but are natural and necessary with respect to correcting imbalances in the system and wiping out excesses. While you’re in one it seems like forever but they generally don’t last very long.

Recessions don’t just happen, they are generally brought about by overheating in the economic system whether it be borrowing, or stock prices, or something else, and our Federal Reserve Bank can help them happen by tightening monetary supply to kill excesses that are leading to higher inflation. The Fed’s target rate for inflation is 2% and we’re currently running below that level.

Will we get a recession? Probably someday but without a short term unexpected shock to the system it doesn’t seem likely in the next several months.

Recessions do, however, create opportunities to buy into the stock market at discounted levels caused by panic, as well as opportunities to possibly buy real estate or other assets at distressed prices.

Oakland, CA – Stock Options (ESPP, RSU) for East Bay Resident: Financial Plannin…

Living in the San Francisco Bay area, many of our clients are compensated with stock options and restricted stock units, as well they may have the opportunity to participate in employee stock purchase plans(ESPP).

Recently, Mark and Jane contacted First and Main Financial to help them understand their financial situation and asked us to provide scenarios as to when to sell their stock options, sell their RSUs and if they should continue participating in the ESPP program.  They also wanted to know how much they should save for retirement and how to diversify their portfolio such that they were not concentrated in their employer’s stock.

We worked with Mark and Jane to gather their financial documents such as bank statements, trust documents and budget information, which they uploaded to our secure financial planning software, eMoney Advisor.  They were also able to easily connect their bank and brokerage accounts to eMoney so we could see their current finances.   We produced a base case scenario for Mark and Jane, then created multiple “What If” scenarios that included looking at funding various retirement plans to maximize the value of their retirement assets, identifying when best to convert and withdraw from retirement funds to minimize taxes, and figuring out the impact of retiring earlier or later.

Within each of these scenarios, we projected a “probability of success” of reaching age 90 with enough assets to live.  While the probability of success was 100% in each scenario, we were still able to show them the positive or negative impact of these various scenarios on their total portfolio assets and net worth.  In addition to reviewing their finances, we recommended that Mark and Jane start funding a 529 to cover the private school and college education costs for their 5-year old son.  We also reviewed their insurance (Life, Disability, Auto, Renters/Home, Medical, etc.) to assess if they maintained enough coverage and suggested they get a quote for an umbrella policy since their net worth was significant.

After presenting the financial plan to Mark and Jane, they asked First and Main Financial to manage their assets.  We offer a tiered fee schedule for our clients which, compared to the industry averages usually charged by other firms, is considered a good deal.  We also provide all clients with quality and individual attention as well as complementary guidance on existing 401(K) money.

If you are looking for some financial guidance, whether it be for a one time financial plan or continuing advice on your investments, we invite you to meet with the First and Main Financial advisors for a free consultation.  We work with a variety of clients and would be more than happy to sit down with you, assess your current financial situation, and review with you our services and products to help you navigate your own financial future.

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.

235 Wildwood Avenue,
Piedmont, CA 94610, USA

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Piedmont, CA 94610, USA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.