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C.H. Robinson

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Preventing Identity Theft

Written by Becky Botzet on .

We are all well aware of big corporations being hacked and our information being compromised. Many, if not all of us have been victims of this and have likely been offered a year or so of free credit monitoring. It's important to monitor your credit; however, by the time you see something on your credit history, a new credit card has already been opened and likely used. And worse, credit monitoring will not notify you if someone other than you has filed your tax return!

As of March 5, 2016 the IRS had identified over 42,000 tax returns with $227 million claimed in fraudulent refunds. What's more, the IRS prevented the issuance of over $180 million in fraudulent refunds. If you've been one of the unlucky victims of this fraud, you know how it works. The criminal who has obtained your information is able to file your tax return early in the fling season and claim a refund. The IRS doesn't match earnings records until several months after it issues refund checks. When you file your return, the IRS lets you know that more than one tax return has been filed and the fun begins of sorting it out.

Unfortunately, there is not a lot you can do to prevent this from happening to you. The IRS continues to expand filters to detect identity theft refund fraud, however the criminals also continue to expand their abilities of committing fraud!
The best line of defense is to protect your personal information as best you can.

  • Don't carry your social security card.
  • Don't provide your social security number to anyone unless there is a legitimate need for it.
  • Shred your sensitive trash with a cross-cut or micro-cut shredder.
  • Don't leave outgoing mail with personal information in your mailbox for pickup.
  • Never provide personal information to anyone in response to an unsolicited request.

If you are a victim of identity theft, or at risk because your information has been breached, go to: https://www.irs.gov/uac/Taxpayer-Guide-to-Identity-Theft

In addition to credit monitoring, you are able to go a step further to protect yourself if your information has been stolen. You can request a Credit Freeze on each of the three Credit Reporting Bureaus (Equifax, Experian & Trans Union). This is a total lockdown of new account activity in your name. Laws vary by state. Minnesota charges $5 for each of the three Bureaus. To check your state, go to: www.consumersunion.org. You should also know you will need to unfreeze at the Bureaus to open an account and it can be cumbersome to start and stop.

Take precautions now to save yourself time and inconvenience later!


The Fed’s Message to the Bond Market: Don’t Be Negative

Written by Matt Wright on .

The Federal Reserve has just raised its target interest for the first time in 2016 and only the second time since the Global Financial Crisis in 2008. Yields on intermediate-term and long-term U.S. Treasury bonds plunged during the first half of the year but have since recovered to levels a bit higher than they started the year.

Of course, yields still remain fairly low by historical standards and this is a global phenomenon. Believe it or not, U.S. interest rates are higher than much of the world's developed economies. When yields hit their lows during the summer, there were more than $11 trillion of bonds worldwide that had negative yields. Bondholders are willingly locking up money for multi-year periods knowing that they will get back less money than they put in.

If that sounds strange to you, you're not alone! In fact, according to basic economy theory, this was considered impossible until it started happening just a few years ago. It certainly calls into question the idea that economies and markets can be reliably forecast when something that was never supposed to happen is now a central feature of the global bond market. This supports our view that it is best to stick to a well-considered long-term plan and not try to change investment strategies based on your or someone else's guess about what will happen in the financial markets.

If you've come to realize that the forecasting game is just not working in your favor but don't know what do next, contact us today and we'll try to get you on the right path going forward.


ETN vs. ETF - One Letter Can Make a Big Difference!

Written by Matt Wright on .

Do you have any ETNs or other unknown risks lurking in your investment portfolio? Not even sure where to start looking? Contact us today and we can help you sort it all out.

Concerns about Deutsche Bank's solvency have been in the news for the past few months. While the failure of any major bank would have serious implications for the financial markets, there is an investment risk that could hit a little too close to home if Deutsche Bank failed – and many investors may not even know they're taking this risk!

You see, Deutsche Bank is an issuer of a number of Exchange Traded Notes (ETN). The purpose of an ETN is to provide an investor the return of a particular financial index, less expenses. At first glance, this appears similar to an index mutual fund or an Exchange Traded Fund (ETF), but there is actually a critical difference. While index mutual funds and ETFs may have a similar goal in matching an index return, less expenses, they do so by purchasing a basket of securities in an attempt to produce those returns. In other words, an owner of one of these funds indirectly owns a small piece of the stocks, bonds, etc. that make up the fund.

This is not the case with an ETN and the term "Note" is what gives it away. If you buy an ETN, what you are actually doing is lending money to the ETN issuer (such as Deutsche Bank or a number of other financial institutions) that is in turn promising to pay you a return based on a specified formula. If an ETN issuer were to become insolvent, you have no pass-through ownership in any underlying index securities; you instead become an unsecured creditor in the company's liquidation and hope that you get most of your money back. Since investors do not get paid to take on this additional risk, we do not believe it is prudent to put money into ETNs.

Some fans of ETNs would say that is too conservative a view and that the better option would be to buy ETNs but then closely watch the issuer's risk over time and sell the ETN if the risk seems to be getting too high, as might be the case for Deutsche Bank right now. We have a number of counterpoints to this argument, but we'll just give one at this time: When Lehman Brothers filed for bankruptcy in September 2008, it was a surprise to the financial markets and the company still had an investment-grade credit rating. Lehman had issued three ETNs and there were ~$15 million dollars in them at the time of the bankruptcy. Investors in the ETN recovered about 9 cents on the dollar. In that case, someone was left holding the bag and took losses on a risk they were never paid to take on. Financial history is full of surprises and an ETN implosion is one that is easy to avoid so why take the risk?

Contact us today if you need help sorting out your ETNs and ETFs.


Elder Financial Abuse on the Rise

Written by Bruce Primeau on .

I recently read an article on this topic and attended a continuing education class on it as well. The devastating monetary and emotional toll financial abuse is taking on our elders is beginning to become more of a concern across the country. It's disheartening to read some of the statistics, but it's important to recognize when this abuse is taking place and know what to do about it. Here is some of the information I was able to gather that I hope you find useful:

  • The study estimates the average cost per victim is $36,000, which is 20% higher than the study found in 2014.
  • Nearly 50 of respondents say the effect on the elder victim was a "major loss" or "financial ruin."
  • 37% of active caregivers said the elder under their care had experienced financial abuse or exploitation with a loss. This is a considerable increase from the findings of the study's first iteration in 2014.
  • 40% of active and potential caregivers said their elder has been subjected to financial abuse multiple times.
  • 45% of active caregivers surveyed said the elder they cared for exhibited signs of dementia or a decline in mental capabilities.

Beyond the considerable financial loss, the study found that elder abuse is taking a great emotional toll on the victims. According to respondents, 36% of the victims experienced anger, 34% depression, 28% anxiety and 25% guilt. Worse, almost 60% of caregivers reported that the financial abuse had caused the elder with mental decline to isolate him or herself, primarily due to embarrassment or lack of awareness.

Allianz Life suggests several ways you can protect the ones you love:

  • Plan ahead to protect assets and ensure that the elder's wishes are followed.
  • The elder should consult with a qualified financial professional or attorney before signing complex agreements or anything they don't understand.
  • Build relationships with professionals involved with their finances as they can assist in monitoring for suspicious activity.
  • Limit use of cash. Instead, use checks and credit cards that create a paper trail.
  • Feel free to say "no," keeping in mind that it's the elder's money.

Note that much of this information is from a new study of active and potential caregivers by Allianz Life Insurance Company of North America. The study was conducted in August 2016 with 1,000 respondents age 18 to 64 who were either actively providing care for a non-spousal elder age 65 or older, or could be in a position to do so within the next 5 years.


We've Got Your Back

Written by Bruce Primeau on .

Several months ago the Department of Labor passed a new law designed to protect American investors, who have been losing approximately $17 billion annually (in their estimation) due to conflicted financial advice in their retirement accounts. Now, with Donald Trump winning the 2016 Presidential election, the Department of Labor's Fiduciary Rule may be in jeopardy.

This situation doesn't mean anything for SWA clients, as we are already a Fiduciary for our clients. It does mean something for those friends, family members and co-workers of our clients who are not currently working with a Fiduciary. Their advisors and those they are thinking about working with may not be required to look out for their best financial interests.

This is an important ruling in that many unknowing folks have been taken advantage of by their advisors. Those advisors are really representing the best interests of the company they work for and the products they sell and aren't required to take into consideration what might be a better option / recommendation for a particular client. Under the old rules, some advisors are tempted to make recommendations to clientele that maximize their own compensation at the expense of their client portfolios.

For this reason, SWA has operated as a Fiduciary since inception as we feel it is important that clients know that we represent their best interests and clearly sit on the same side of the table with them. The more SWA can cut fees and expenses, as well as reduce taxes over the long-term, the greater chances our clients end up with more dollars in their pockets and a higher likelihood to achieve their financial goals.

If you, or someone you know, feels your best interests are not being represented by their current advisor, please contact us as we are always happy to help.

North Metro: 763.355.5873
227 East River Parkway
Champlin, MN 55316-5873

South Metro: 612.987.9112
5871 Crossandra Street SE
Prior Lake, MN 55372-3337

West Metro: 763.639.3425
322 Greenhill Lane
Long Lake, MN 55356

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