Bruce Starks, CPA, CFP® – Page 21

Understanding the Relationship Between Coupon Rates and Duration

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with. Which of the following are true: Can you explain #1 and #3? Instructor Response: Thank you for your question. This can become a bit convoluted. Let’s unpack the word “duration” first. Duration is nothing more…

Does Your Client Really Need an Estate Plan?

Good to Know How many of your clients think a great evening is sitting around a roaring fireplace on a cold night, drinking an excellent Merlot, and discussing death with their sweetheart? The author’s guess (and hope!) is about zero. Yet, even though that romantic setting is not the best time to discuss estate planning,…

Clarifying Tort Liability

Course: Retirement PlanningLesson 2: Qualified Plan Advantages and Disadvantages for Employees and Business Owners Student Question: Hi- I have a few questions regarding tort liability. Negligence is Tort Liability? Why isn’t it contractual? Are all torts criminal in nature? Instructor Response: Good questions here. See below for my response to each. Yes Tort law and…

How Financially Resilient Were Americans During the Pandemic?

CFP® Certificants in the News You may be surprised by some of the conclusions drawn about our financial resilience as a nation according to an article posted in CFP Board’s FINANCIAL PLANNING REVIEW dated May 12, 2022. We’ll frame this discussion in three parts: Context, Methodology, and Findings. Context According to the article, “the economic…

Social Security Survivorship Challenge

Good to Know It’s been said that there are two kinds of CFP Board exams—those that test Social Security moderately and those that test it heavily. From a larger perspective, CFP Board tells us that almost one of every five questions on the average exam will test the examinee’s knowledge of the Retirement Savings and…

Social Security Widower Benefits

Course: Insurance PlanningLesson 10: Social Security Student Question: When it comes to social security widower’s benefit’s, is the widow eligible to take his/her SS benefit early (age 62) and then switch over to the deceased spouse’s full benefit at 67? Or would the widow only be eligible for one of the two benefits? Instructor Response: You are directionally correct. Note that a qualifying surviving spouse can generally receive widow or widower’s benefits beginning at age 60, age 50 if disabled, or before age 60 if caring for an eligible child of the deceased worker. Specific to your question, here’s general guidance straight from Social Security: If you [the surviving spouse] are also eligible for retirement benefits (but haven’t applied yet), you have an additional option. You can apply for retirement or survivors benefits now and switch to the other (higher) benefit later. Caveat – like any general guidance, there are exceptions.

Interest Rate Risk in a Bond

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

Are You Protecting Your Money From Identity Thieves?

Good to Know Anyone with assets, an income stream, or a good credit score can be exposed to identity theft. But before going deeper, let’s dispel a few myths—identify theft happens not only to the wealthy but also to the poor, not only to seniors but also to the young, and not only to financial…

Skewness versus Kurtosis

Course: Investment PlanningLesson 13: Asset Allocation Student Question: Can you help me understand the difference between Kurtosis and Skewness? I can’t quite piece it together. Instructor Response: Entire books have been written on this topic but the following summary should get the points for you on the CFP® Board exam when these topics are tested. …

The Psychology of Financial Planning

CFP® Certificants in the News Rational clients seem to make irrational financial decisions to the puzzlement and frustration of financial advisors. Why? One school of thought blames our emotions for our financial miscues. Regrettably, we are not always self-aware of the power wielded by our sub-conscious emotions in the following behaviors and more: The buy-high/sell-low…