Haven Financial Advisors
Louis (Lou) Kokernak has been serving the investment community for nearly 30 years, after obtaining an MBA from The University of Texas. He founded Haven Financial Advisors as a fee only advisor in 2002. His goal was to deliver unbiased advice to clients. He has been quoted in the Wall Street Journal, Barrons, Bloomberg News among many other media outlets. Lou has taught courses to CFP candidates at The University of Texas, St. Edwards Univerisity, and the University of Texas at San Antonio.
Haven Financial Advisors is committed to their clients' future. They have been a fee only financial advisor since 2002. The first step in the relationship is getting to know clients and what their goals are. It's a two way communications process that requires the engagement of both parties. Lou and his team develop a financial plan that includes a diversified asset allocation tailored to every clients personal situation. Experience tells them that the key value proposition of the plan is the comfort level it delivers to the client - that clients are taking concrete steps to achieve realistic financial goals.
Lou has lived in Austin since 1990. He is a Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) and is a member of the National Association of Personal Financail Advisors (NAPFA). His charitable interests include public health and secondary education.
MBA, The University of Texas
BSCS, Rensselaer Polytechnic Institute
Assets Under Management:
Mission Statement of Haven Financial Advisors
Haven Financial Advisors explains the evolution of the HSA
Haven Financial Advisors Discusses the Benefits of Foreign Stocks
How to invest your Health Savings Account (HSA)
The differences between an indexed mutual fund and an exchange-traded fund (ETF) are subtle, but can be important. Most indexed mutual funds are low cost. There are exceptions to the rule. Mutual funds that track the S&P 500 have management fees that range from 0.03% to over 0.50%. That adds up over several years. Indexed ETFs all almost uniformly competitive with the cheapest index mutual funds.
The security structure of mutual funds and ETFs is different. Mutual funds are marked to market once a day, after close of market. They are priced at the net asset value (NAV) of the underlying holdings. ETFs trade continuously throughout the day like stocks. Their bid ask spread reflects the overall trading volume in the ETF plus a risk premium that dealers require to make a market in a security that may have illiquid underlying assets.
Mutual fund managers must retain cash balances to satisfy share redemptions. Thus, some of the investor money sits idly. On the other hand, the number of ETF shares is fixed in the short term. Almost all of the ETF value is invested in the index.
ETF shares are created and redeemed by authorized participants (APs) in exchange for the market basket of underlying securities. This feature allows the ETF issuer to manage the cost basis of the inventory they deliver during the redemption of shares. Bottom line, equity ETFs are more tax efficient than equity mutual funds. SPY, for example, has paid virtually no capital gains distributions in its 20+ year lifespan.
Some ETFs do pose a disadvantage relative to mutual funds. Prices of the less liquid ETFs can deviate materially from their NAV. Moreover, bid/ask spreads can be substantial with these less liquid ETFs. The mark to market feature of the traditional open-ended mutual fund does insulate investors from trading anomalies like this. Thus, investors should be careful in placing orders for some of the smaller ETFs in the marketplace.
There are vast differences between the emerging market landscape of the 1970s and today's emerging financial markets. There is much better transparency in the financial disclosure of today's emerging market fims. Their stock exchanges have much greater liquidity and the risk of government expropriation is less. Many new emerging market economies play an important role in the space that were not present 40 years ago. Mainland China didn't even have a stock market then. Today China's A, H, and P shares comprise more than one quarter of the capitalization of the emerging market equity space.
There are much better tools available to retail investors to invest in today's emerging markets. There were no ETFs and very few emerging market mutual funds in the 1970s. Today there are at least 97 emerging market ETFs with a wide range of mandates and low expenses. There is now a recognized benchmark for emerging market equity performance so that you can track any investment you make. It has existed since about 1995. In fact, you might consider Vanguard's Emerging Market Stock index (VWO) as a one stop entry into the entire emerging market equity realm.
While the emerging market space is more developed and measurable, it still poses risks. Overall volatility of Emerging markets is higher than our S&P 500. Since the last recession, almost all foreign markets have lagged the USA. The longer term data, however, is more encouraging. Combining emerging markets, foreign developed markets and US stocks can produce a portfolio with lower overall risk.
Yes, I've done in kind transfers for clients on Roth conversions on a number of occasions. In fact, Schwab's IRA distribution form effectively defaults to the in kind distribution if you specify a Roth conversion. Your custodian will track the value of the in kind transfer on the date of the conversion and report it as income on your IRA's 1099-R.
This is a good question. I'll address the potential impact of Peter Navarro and, more generally, Mr. Trump's strident critique of our trade relations with major trading partners such as China. Second, I'll offer up a few words on what his Health Secretary, Tom Price, might do for your tax sheltered saving.
If the new Trump administration uses its executive power (which it can) to implicitly or explicitly raise tariff barriers, it could easily spark a trade war. This is precedent for this from the late 1920s and 30s. Trump could provoke a "tit for tat" retaliation from targeted parties like China, Mexico, and Japan. Keep in mind, the Chinese ironically have been resorting to extraordinary measures to PROP UP their currency in the last few months. They will not be receptive to Trump's criticism that the Yuan is too low.
A trade war will hurt everyone, but the burden in this country will fall heavily on exporters. From a personal investment perspective, that argues in favor of smaller cap US stocks rather than S&P 500 companies. In fact, if you look at the rally in the US stock market since the election, you will find that smaller cap stocks (Russell 2000) have outperformed larger S&P 500 companies. Why? A Trump fiscal stimulus would benefit corporate America in the short run. A trade war, however, would offset a lot of that benefit through reduced exports. Smaller US companies export less. Thus, they would stand to benefit relative to large companies from Trump's trade and fiscal policies.
Tom Price, Trump's choice for Health and Human Services, is a strong foe of Obamacare. There is a strong likelihood that Price will entertain medical reform ideas from conservative think tanks. Look for an expansion of Health Savings Accounts (HSAs) in a Trump Administration. Larger HSAs are part of most conservative blueprints for health care reform. HSAs are a great tax shelter for those with disposable income. You can use it as a long term tax shelter with a little planning. See my article on the topic for more details.
I've consulted on a number of choices like the one you're facing. Full disclosure - I do NOT sell annuities and typically do not recommend them as an accumulation vehicle. That said, lump sum payout offers often are attempts by the plan sponsor to reduce overall pension liability. The annuity option is usually the best actuarial choice for the individual assuming reasonable health.
Some rough math in your case can help. If you are a 65 year old male, your life expectancy is more than 19 years. You'll capture that in nominal cash flow in half that time. With interest rates as low as they are, the EXPECTED return on the entire annuity stream should be significantly higher than the return on a high quality bond portfolio of similar term. If you are adept with spreadsheets, you can compute the expected return on the annuity and compare with, say, a long term investment grade corporate bond yield. Also, annuities insulate you from longevity risk. That's an important consideration in retirement and may be worth a little extra if the numbers are close.
If you would like to do a reality check, consult with a merchant provider of annuities like Vanguard or Schwab. Tell them your birth date and the amount ($150,000) that you are willing to invest. Ask them for the best two quotes on an immediate annuity. See if they can come close to $1,250 per month.