Author Archives: Andrew Thomas

Class of 2016 – Change the world, but try this first!

Change the world. Find your passion. Make a difference. The number of cliché phrases used as words of advice in commencement speeches would provide for a pretty great drinking game…which I’m sure already exists (à la, drink every time you hear a cliché). The truth is that yes, all of those encouraging words are inspiring, but there is no actionable first step for a graduate to take to accomplish those things. Life is complicated and there are far too many words of advice to fit into a blog post.

One of the areas in a graduate’s life that can be the most confusing is finances. So while we can’t help you or your grad “reach for the stars” or find the “road to success” on a map, here are some quick tips to help 2016 grads get started on the right path financially.

Tackle debt head on

There is no greater financial burden to a graduate in 2016 than their student loans and credit cards. The average graduate this year will owe about $35,000 in student loans and $3,000 in credit card debt. Get those credit cards paid off as quickly as possible using Dave Ramsey’s snowball method, and then start making extra payments to those student loans. Get it all out of your life as fast as you possibly can!

Don’t fixate on salary

Understand that a job is about far more than salary, especially in 2016. Now that millennials have become the largest generational group in the workforce, employers are changing the way they approach culture and benefits. Healthcare costs are rising and an employer that offers a Health Savings Account (HSA) with their group plan should really grab your attention. Financial wellness is huge for young workers as well and voluntary benefits that help workers with their financial lives are worth far more than you may realize right now. Consider voluntary benefits and salary as just two pieces of an overall compensation package. And of course, don’t expect to find that perfect job right out of school. It takes time and different experiences to really find what you love. Don’t beat yourself up if you haven’t found your passion by 25.

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The “F” Word in the Financial Industry

What is this whole fiduciary thing and why is it important?
Overhear the word “fiduciary” from across the room and you might think someone’s throwing around off-color insults. The Urban Dictionary definition isn’t exactly a term of endearment, but the real meaning with regard to your finances is pretty simple: A fiduciary is someone that is working for YOU and puts YOUR best interests ahead of their own (or their firm’s), at all times.

Believe it or not, this is not a requirement for the vast majority of the big brand name institutions in the financial services industry. Nearly anyone can call themselves a financial advisor in some form or another, but that doesn’t mean the “advice” they are providing is anything but conflicted. And what does this mean to you? It means money in the form of fees going into your advisor’s pocket instead of your portfolio.

You may have heard about the latest update to the fiduciary rule, released last week by the Department of Labor (“DOL”). It’s been anticipated for quite some time now and has had most of the industry pretty freaked out that they may have to change their entire business to start acting in their clients’ best interests. For Registered Investment Advisor firms like blooom, which always has been and always will be a fiduciary, a stricter standard on the industry as a whole was something we were pretty excited about. After all, one of the reasons our founders created blooom was to disrupt the industry and shine a light on the largely ignored segment of our population that truly needs non-conflicted advice from someone they can actually trust.

Good or bad, the end result of the new DOL rule thus far has left the non-fiduciary side of the industry breathing a huge sigh of relief, and even popping champagne I would imagine, since the rule is not nearly as strict and comprehensive as originally intended. But regardless of the impact the new 1,000+ page rule (yawn) will or won’t have on the industry and you personally, the good news is that all of this shines a bright light on a pretty important problem and a question that every investor must ask before trusting any professional with their hard earned money – How do I know my advisor is truly looking out for me and my family?

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3 Lessons Your Ruined March Madness Bracket Can Teach You About Investing

And so it begins…the one month of the year where a single college basketball tournament costs employers a collective $1.2 Billion for every hour of lost productivity. And it’s fantastic!

At blooom, we’re big believers that we can find investing lessons in nearly every aspect of our lives, which brings me to my point in writing this. Regardless of what your tournament bracket looks like right now, as the surviving teams march on toward the Final Four, there are several lessons on investing that we can take away from all the madness.

1. Analysts are as Clueless as Everyone Else

No one can possibly have enough time to watch every regular season college basketball game. Unless they get paid to. Expert forecasts are a trusted source for anyone filling out a bracket. But if the pros are always getting it wrong, how can the casual fan have any hope? That’s the point.

The financial media has made millions on the ancient art of fortune telling. No matter how many times they get it wrong, market analysts have made careers out of making random predictions that are usually very wrong. It seems like it takes just one correct guess to achieve the prestigious “guru” title on CNBC. A great example of this is the rise of Marc Faber, aka “Dr. Doom”. He’s a regular on CNBC that is best known for his ability to accurately forecast major market downturns. However, the funny thing is that he has been wrong far more often than he’s been right. If you repeat the same gloomy predictions over and over again, of course you’re going to get it right and cash in big at some point. Does that make him a prophet? No. It makes him a great salesman. 

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BREAKING NEWS: This is Normal…

Not exactly a catchy, attention grabbing headline is it? Traditionally, BREAKING NEWS headlines have implied something out of the ordinary or unexpected. But in 2016, almost anything can be breaking news, including the things that should be no surprise to us. The headline above could be completely wrong. Maybe there’s an asteroid heading right for us that I just don’t know about, or maybe I’m just unaware that the Sun is supposed to randomly burn out in the next few months. If that’s the case, your investments aren’t going to do you any good anyway. I’ve seen the movies. But in the far-off chance that those things DON’T happen any time soon, I think it might be good for us to cover something EVERY long term investor must understand. The Market goes up AND down. And it happens ALL the time. So often in fact that at some point investors saving for retirement owe it to themselves to stop paying so much attention to [insert major news network].

I can’t tell you how many times I’ve seen something similar to these following headlines over the years:

“Expert: Crash is Coming, Time to Sell”
“2008 All Over Again?: Analysts Think So”
“Dow Sheds 300: Pros Say Get Out!”

And the very next day…

“Dow Rebounds 350 Points: Bull Market Marches On”
“Analysts: This Year Could Be the Best Year in Decades for Stocks”
“Risk On: Never a Better Time to Buy!”

You get the point. In a world where we now have a 24-hour news cycle, the very existence of any news outlet is highly dependent upon one thing: RATINGS. There is simply nothing better for ratings than fear and panic, which is why those first three headlines will catch more attention than the last three. It’s also why you will never hear what I’m about to tell you by watching your TV: Negativity is the lifeblood of the news.

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Flu Shots to 401(k)s

Flu Shots to 401(k)s: It’s Time to Bridge the Gap Between Health and Wealth in the Workplace
It’s no secret that your local pharmacy loves this time of the year. As temperatures cool and the year begins to wind down, over-the-counter drugs start flying off the shelves. It’s the start of flu season, and for employers, that means more employee absences, poor productivity, and higher healthcare costs.

Although the flu is a highly contagious virus that nearly every workplace will be exposed to in the next few months, there are ways to limit the flu’s impact – like the flu shot. Encouraging employees to get flu shots is one basic example of a way to improve employee wellness. Offering incentives that encourage healthy living can also limit the flu’s impact. This is not news. In fact, most companies fully understand the value of promoting healthy lifestyles for employees and have therefore introduced wellness programs. Better employee health means lower healthcare costs, better morale, and better productivity. It all makes sense. But as wellness programs focusing on physical wellness have been around for a while now, it’s the financial wellness programs that have often been neglected. But that could be changing…

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