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The Independent Investor: Small Business Linchpin of America's Success

By Bill Schmick
iBerkshires Columnist
The facts are that small businesses still create the lion's share of jobs and at least half the economic growth in this country. It would be wonderful if our lawmakers would finally realize that.
 
Look around you: with few exceptions, we are surrounded by entrepreneurs who have created over 60 percent of the jobs in our communities since the financial Crisis of 2009. What we don't see is the enormous burden that these heroes are living under on a daily basis.
 
A startup is largely a game of survival. Those who stay in business the longest are most likely to succeed.  About two thirds of businesses only survive two years. Of them, another 50 percent will go under within five years. And only 33 percent will make it through ten years. The Labor Department, which supplied these statistics, found the same results across all industries.
 
The biggest challenges small business owners face is economic uncertainty, regulatory burdens, taxes and health-care costs. All but one of those obstacles depends on decisions that are largely made in Washington.
 
In recent small business surveys, a quarter of small-business owners said taxes are the most critical concern they face right now. As such, the outcome of the present debate in Washington over tax reform (or just plain tax cuts) will shape the actions of business owners in the future.
 
Most of us think in terms of tax cuts for the rich (or poor) but that is a simplistic way of looking at this issue. Tax cuts have far more impact on small businesses than on any single individual. Most small-business owners are neither rich nor poor. They are employers who plow back every cent they make into their businesses. As such, how many employees they hire and what they pay them has a direct relation to the taxes they pay.  
 
If you think that these business owners would simply pocket the tax savings — think again. Many owners plan to funnel any tax savings they may receive into additional training and education. It is the entrepreneur's solution to the mismatch we have in this country right now between the demand for and supply of skilled labor.
 
A related issue is holding onto their existing labor force. Unemployment is at historical lows. More and more enterprises will find themselves in a bidding war for labor in a tightening job market. In order to hold on to his existing employees, owners also plan to raise wages with any new tax savings. The implication is that employees could receive a double whammy: their own individual tax cut plus a wage increase.
 
On the other end of the spectrum are Baby Boomer small-business owners that are looking to sell their businesses and retire. Most owners have plowed back every cent they have earned over the years into their businesses. Many have no IRAs or other tax deferred savings plans. Once again, taxes come into play. A lower capital gains tax can make a big difference to someone hoping to sell their company for a few million dollars.
 
Is it any wonder that new business creation in this country continues to decline? Entrepreneurial startups are at nearly a 40-year low. Part of the reason is structural. Internet shopping, companies like Amazon or Walmart, have gobbled up competitors, both large and small, in areas where the Mom and Pop store once thrived.
 
But rising taxes and a growing mountain of rules and regulations from federal, state and local governments threatens to finally kill America's goose that laid the golden eggs. The small-business person, faced with more and more licenses, fees and permits simply to get started are opting not to try. 
 
Our new president, to his credit, has promised relief in just about every area that is near and dear to the hearts of entrepreneurial America. But so far, it has been all words but little action. I blame our bickering Congress for that.
 
Although increasingly frustrated by this inaction, small-business people, by their very nature, are a hopeful lot who still sees the glass as half full when it comes to Donald Trump. Let's hope they are not disappointed.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

The Independent Investor: A Tale of Two Charities

By Bill Schmick
iBerkshires Columnist
As Senate Republicans unveil their version of a new health care law replacing the Affordable Care Act on Thursday, Democrats are already crying foul. But while politicians are busy back-stabbing each other, there are real people out there who are sick and getting sicker.
 
These are Americans who can't afford, or can no longer find, insurance. Their stories are evidently not "newsworthy." Instead, the media prefers to accentuate the divisions among our lawmakers, while President Trump describes the House "Choice Act" as "mean." In the meantime, who is taking care of all those sick and elderly victims in this supposedly divisive America?
Well, the national, 90-clinic strong, Volunteers in Medicine (VIM) are doing their damdest to help. 
 
"A national solution to America's uninsured," is the slogan of this the non-profit organization founded in 1994 by a physician, Dr. Jack McConnell, in Hilton Head, SC. They provide free medical, dental and other health-related services to all those who have no insurance and can't afford it. Sound familiar?
 
It should. In my last column, I wrote about the heroic volunteers of the Mercy Mission, a wholly-volunteer, charitable organization deep in Trump country that is doing a yeoman's job of providing the same — free dental and medical services to the poor and undocumented in Fort Worth, Texas.
 
This week, I visited a VIM clinic in Great Barrington in Berkshire County. Hillary Clinton once called Massachusetts "the Red Army of the Democratic Party." You can't get more liberal than Great Barrington. It is where Arthur Peisner, the local VIM chairman, oversees 150 volunteers that have provided 4,500 hours of clinical services this year alone to the undocumented, uninsured and poor residents in this hot-bed of liberalism. Since their founding in 2004, they have helped over 2,800 people in 30,000 clinic visits.
 
This particular VIM, in addition to medical and dental services, provides mental health, optometry, nutritional counseling, acupuncture and even therapeutic massage. 
 
"We help whoever comes through our doors, however we can," says Peisner, who ran Lionel Trains Inc. for many years before retiring to the Berkshires 17 years ago.
 
His tireless Director of Medical Services Ilana Steinhauer is a firebrand whose compassion and support for the "have-nots" in our society is obvious. Like all their volunteers, she is committed to doing what our politicians can't or won't — helping those in need.
 
I tracked down Sasha Bianchi, the executive director of VIM's national organization, in Bernie Sander's home state of Vermont. To hear tell, everyone in Vermont wants universal health care and a society where government does everything. We talked about the myths that both liberals and conservatives hold about each other and how the press and political parties tend to perpetuate those ideas.
 
"We see none of that here nor anywhere else in the nation, and clinics are popping up everywhere," she said.
 
"But what about the idea, held by so many up here in liberal land, that people in places like staunchly Republican Texas, believe people should fend for themselves and all undocumented Mexicans should be arrested and booted back over the border?" I asked.
 
"All I can tell you is the facts," she said. "We've got more clinics opening up in Texas than anywhere else in the country."
 
The moral of this tale of two charities is quite obvious. Although we are led to believe that the tree-hugging liberals on both coasts want government to do everything, while they sit back and clip coupons, is no more true than every Republican Trump supporter is a die-hard, gun-toting,  minority-hating, red-neck.
 
The truth is that most of us are loving people who are doing the exact same thing: caring in our own way for those less fortunate than ourselves. My advice is to ignore the myths of America that the politicians and media would have you believe. The volunteers at the Mercy Clinic and at VIM should be an example to us all. Put away your social media devices, roll up your sleeves, and go out there and help.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

The Independent Investor: A Tale of Two Charities

By Bill Schmick
iBerkshires Columnist
We are a country divided. Washington is paralyzed. Half the country considers our president a joke and any and all legislation is dead on arrival, according to the TV talking heads. Social media is filled with outrage and despair. As a result, Americans are supposedly wringing their hands, or worse, hiding under the covers. Don't you believe it!
 
To hear the media tell it, on one side of this nation are the ultra-left, tree-hugging liberals, who want government to do everything by taking from the rich and giving to the poor. On the other side, are the red-necked conservatives, who despise government and its welfare programs. They want to whack the Muslims, build "the wall," put God back in the classroom, and generally "live free and die hard."
 
Granted, there probably are people who fit both stereotypes, but this isn't a story about them. It is a tale about real Americans. It's a story about getting off one's butt, rolling up one's sleeves, and helping others, sometimes even saving lives, regardless of your political affiliation or views. It begins deep in Trump country, but it doesn't end there.
 
The Mercy Clinic of Fort Worth, Texas, was founded back in 2013. Its goal is to provide free medical and dental services (including prescription drugs) to 35,000 residents in a particular zip code in the city. Last year, the entirely volunteer staff of 140 treated 1,700 patients, although they were only open two evenings a week. This year, they plan to double the number of patients seen. Dentists, doctors, nurses, computer techs, business people, ranchers, farmers and everyone in-between are volunteering their time and money. 
 
The clinic's budget this year is $140,000 and just about all of their patients were either undocumented aliens working in this country illegally or those who have no insurance and little prospect of obtaining it. The volunteers work out of a two-story building that was originally provided by their church. Twenty-five men, women and children spent months of their own time and money renovating and repairing the place. It's beautiful, tastefully furnished and chock filled with modern medical equipment. But they have already outgrown it.
 
As a result, they have established themselves as a non-charitable, 501(c) organization and are hell-bent on raising $2.5 million to build a bigger, better facility with even better equipment and services to help even more of the city's underprivileged. On my last trip to Texas, I toured the facility, observed those treated, and talked to some of the volunteers responsible for the undertaking.
 
"This isn't about walls or Muslims or Obamacare," explains Bill Rice, a local small businessman and one of the founders of the clinic. "It's about helping those who need it, regardless of whether they are legal, Mexican or whatever."
 
Others explained that while the debate on who is right (or wrong) among politicians and the media rages on, "real people need help, and real people need to help them," says Dr. Jack Keen, the clinic's medical director.
 
Bottom line: while the politicians fiddle and the media incites, someone needed to do something about those in this country who are in trouble. Texans are standing up to be counted. This was just one tiny slice of life in Trump country as I experienced it. Charites like the Mercy Clinic are springing up throughout Texas and elsewhere. It should be a lesson to all of us on how to take America's destiny in our own hands. In my next column, I will be visiting another charity, only this time in Bernie Sanders country.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

The Independent Investor: The Client Comes First

By Bill Schmick
iBerkshires Columnist

As of Friday, putting a client's needs first becomes law.

Despite a bitterly contested battle by brokers, banks and insurance companies to kill it, the on-again, off-again Department of Labor fiduciary rule becomes effective June 9, 2017. Investors should cheer the news.

That's right — it is no longer just a slogan that slick marketers use to woo unsuspecting retail investors into their fee-based, commission-based, fee-sharing web of duplicity and immoral behavior. Since I am already a fiduciary, I tried over the years to advise readers on what is in their best interests since their advisers certainly were not. The new law changes all that.

If your adviser, broker, wealth manager, banker, et al provides you retirement advice for a fee, they are required to act in the best interest of their client. This rule covers all tax-deferred investment accounts. Ordinary taxable investment accounts are excluded from the rule.

"But hasn't my broker been acting in my best interest all along?" you might ask.

The simple answer is no. Previously, the law states that as long as he or she puts you in a suitable investment they were within the letter of the law. Suitable does not mean the lowest cost or best performing fund, stock or any other financial security. It just means they can't put a 92-year-old grannie into a two-cent biotech stock that she knows nothing about.

A number of brokers, annuity shops and others have already abandoned ship sending out letters to their customers that they will no longer be managing their IRAs, 401(k)s and other tax-deferred accounts. Some enterprising brokers are trying to get around the law by having their unsuspecting client sign a paper that releases them from acting in their best interests. Why, you might ask would anyone be naive enough to sign something like that?

Many elderly clients, for example, have established long and trusting relationships with their advisers, despite the suitability — only rule. I understand that. There are brokers out there that genuinely do care for their customer's well-being. It is not the individual that you need to worry about; it is the managers that he reports to and the organization he works for those are the real problems.

What do they do when their boss says "get him to sign this form?" Do they quit or do what the boss says?

Balancing the demands of their firm, versus protecting their customer is a dilemma that many in the financial services sector face every day. The new Department of Labor rule makes it easier for some to do what is in their customer's best interests. Yet, others will use the trust they have built up with their clients to have them sign a waiver form.  Don't do it!

Studies suggest that over a life time of savings, the typical investor has paid out one third of their saved, retirement assets in fees. From the government's point of view, they are condoning the payment of roughly $4 billion per year in fees by savers on the total $3 trillion in assets that represent the tax-deferred savings pool.

In a world where defined benefit plans and pensions for life have disappeared, it is now the American public's responsibility to save for retirement through government sponsored tax-deferred savings accounts. But most of that public has no financial background or education, and yet they are left on their own to make investment decisions.

Until now, financial advisors, who were not fiduciaries, simply compounded this problem by giving advice and charging fees that were not necessarily in the public's interests.  Good advice can make the difference between a satisfying retirements or bagging groceries for income at the local supermarket. Anything that helps savers achieve the former (rather than the latter) has my vote.

Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     

The Independent Investor: Elder Care in an Age of Confusion

By Bill Schmick
iBerkshires Columnist
Many Americans confess that they are confused when faced with the myriad Medicare choices available to them. Others are simply not planning, nor saving enough to meet the challenge of health care costs in old age. In response, a whole new industry has sprung up nationwide.
 
It's called "life care planning," an off-shoot and a natural progression for those practicing elder law. What, you may ask, is elder law and why has it become so important? Attorneys that practice elder law are essentially advocates for the elderly and their loved ones. They routinely handle a range of legal issues that usually accompany an older or disabled person.
 
Many of these topics have been covered in this column: Medicare/Medicaid planning, Social Security, retirement, long-term care insurance, rising health care costs and more. These lawyers can also help with wills, trusts, special needs, probate proceedings, durable powers of attorney, pet trusts and other estate planning matters. These, too, have been topics of many of my columns.
 
Life care planning takes this concept a step further. In most cases, when someone becomes disabled or reaches a certain age there is a level of care that is required. Life care planners first identify the level of care an individual needs, locates the appropriate care givers, and then figures out and coordinates the necessary private and public resources necessary to help pay for it. But it doesn't end there.
 
Once we reach a certain age (or our infirmities escalate) someone needs to both monitor and try to predict the next level of care required and most of the time those responsibilities rest on the shoulders of a family member. Unfortunately, most of us are ill-equipped to make the proper medical and financial decisions required. As a result, our loved ones either don't receive the care they need or if they do they pay an inordinate amount of the family savings to pay for it.
 
Life care planners remain involved, making those decisions for you and anticipating what you will need down the road. They adjust your life care plan accordingly and pursue the best methods to pay for it.
 
"We provide what the aging population in this country needs and we do it well," says attorney Paula Almgren, and founder of Almgren Law in Lenox. Almgren is one of the few elder law firms in the country with a registered nurse and a public benefits coordinator on staff. They also provide life care planning, including a veterans benefits coordinator for those who might qualify for aid and attendance and other veterans benefits.
 
Why should I, a financial columnist and registered investment adviser, be so concerned and involved in this area? After all, the traditional role of a money manager has been to protect a client's money, and when possible, earn a reasonable return, so that our clients can retire successfully.  The answer should be obvious.
 
In my experience, if just one member of a family develops a debilitating illness, or is hospitalized for an extended period of time, or enters a nursing home, or needs 24-hour nursing care, a life-time of savings can disappear in a span of a few years. It is my responsibility to protect my clients from all financial pitfalls, not just the financial markets.
 
I believe that as time goes by, more advisors will realize that the biggest risk to our client's retirement and well-being is not a downdraft in the stock market. It is the far more serious potential downdraft created by a lack of planning in elder care, estate planning and all of the other areas I mentioned and write about.
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
     
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Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



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