Patrick Collins completes Working Paper entitled: “Investment Basics: Asset Allocation, Diversification and Correlation.”

See the working paper here

SCLC is pleased to announce that Mr. Kenneth A. Clift has joined the firm as an Investment Advisor, effective Tuesday, August 3. Ken will work directly with clients, primarily in the private client side of the business.

Ken comes to Schultz Collins with 20 years of financial services experience. For the last 17 years, he worked for Charles Schwab & Company in several capacities. His most notable experience was performing research, analysis, and commentary on the fixed income markets and the real estate investment trust market. Ken also represented Schwab’s Fixed Income Department on the firm’s Investment Strategy Council. The objective of the Council was to analyze global equity and fixed income markets and provide strategic and tactical strategies to Schwab Financial Consultants and clients.

Schultz Collins would like to congratulate Huy Lam and Bashir Nakhuda on passing the second of the three exams needed to earn the most respected professional designation in financial services, the Chartered Financial Analyst (CFA). The second exam is widely considered the most difficult of the three, so both Huy and Bashir may now breathe a little easier.

It is a pleasure to work with both these gentlemen. Their diligence, intelligence, and the quality of their work are all deeply appreciated. If you visit our office, please take the time to congratulate them on this great achievement.

On July 16, 2010 the Department of Labor (DOL) issued an interim final rule on fee disclosure in 401(k) and other retirement plans. The new regulation (referred to as the 408(b)(2) regulation) is intended to help plan fiduciaries to better understand the compensation paid to plan providers, and to help to highlight any conflicts of interest that may affect a provider’s performance under a service contract or arrangement. The interim final rule will take effect on July 16, 2011.

An interim final rule means that the public has a short period to make comments—in this case 45 days from the July 16 issuance date. Although public comments are invited, the regulations are essentially in final form, but may be modified after additional comments are received. The interim final rule replaces proposed rules, issued in 2007, but never finalized.

The July 2010 issue of Financial Advisor magazine, an industry trade journal, surveyed Registered Investment Advisors nationwide and ranked them by total assets in client accounts. The survey has SCLC at #53 nationally and #9 in California.

Our Investment Quarterly for the second quarter of 2010 digs into indexes. A common strategy for investing in a fully diversified portfolio is to choose a set of index funds that each provide broad coverage of a whole category of stocks or bonds. The problem is that for many categories of security there exist quite a few indexes to choose from; and any given index may be tracked by numerous funds. The indexes that track a given asset class may be quite different from each other, and the funds that track a given index may likewise differ considerably. What is an investor to do?

An important step in the implementation of investment policy is the acquisition of prudent and suitable investments. Investors choosing to diversify their investment positions both within and across asset classes often select pooled investment vehicles like mutual funds or exchange traded funds. Inevitably they must address the question: “what funds should I buy?”

Each year, SCLC develops an annual fund evaluation report. We refer to this report, somewhat tongue-in-cheek, as the antidote for the Morningstar/Lipper/Money Magazine type of approach that often rates investments as if they were restaurants. The report summarizes our analysis and opinion regarding investments as of December 31st of the previous year. Specific reports detailing individual investment holdings are sent to each client; and, we retain a master list for in-house reference.

The main article of our Investment Quarterly for the first quarter of 2010 looks at the controversy that has for many years raged in the financial services industry, and that with consideration of financial reform has spread to the halls of Congress, over whether stockbrokers should be required by law to adhere to the fiduciary standard of care for their clients that financial planners and investment advisors have long upheld. We explore what the fiduciary standard means for investors, and how a requirement to meet it would be problematic for

Kathleen Pender interviewed SCLC Principal Jon Chambers, head of the firm’s ERISA Consulting practice, for an article that appeared in the Sunday edition of April 11, 2010, on the recently launched BrightScope, a company that will provide independent ratings of 401(k) plans.

The main article of Investment Quarterly for the fourth quarter of 2009 should prove useful for several years. It addresses the change to eligibility for conversion of Traditional IRA accounts to Roth IRA accounts that took effect on the first day of 2010: all taxpayers are now eligible for such conversions. But is conversion a good idea? That’s the $64 question that the article explores. It provides a number of examples of situations investors might face, and examines the option from a number of angles. We hope you enjoy our latest IQ.

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