THE MONEY MINUTE: How your retirement account can feed hungry kids in Maine and provide scholarships to trade school students

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

At this time of year four years ago, I gave a talk to 800 people at a Lewiston, Maine, elementary school. In it, I shared some ideas about how the students could create an amazing upcoming summer vacation for themselves. I had an absolute blast at the event, and the reaction from the kids and teachers assured me that my talk was well received.

After my talk, a teacher who was thanking me for my message shared a surprising perspective: she said that, for many of the students I had just met, leaving school on Friday is one of the largest stressors in their lives. When I asked why, I learned that many of these kids leave school at the end of each week knowing they won’t eat again until they return on Monday morning and are fed by the breakfast program. Then I learned a staggering statistic: in Lewiston, 100 percent of public school students receive free or reduced-price lunch, and this is true in many other cities and towns in Maine. This was news to me, as it may be to you. My heart sank into my stomach, and I tucked this piece of information into a file I knew I would someday reopen. This is that day.

At J.M. Arbour, we are changing what we do with company profits and redirecting our focus to Maine’s future, which lies in today’s youth, tomorrow’s leaders. So, here is what we are planning to do.

We will be donating a large percentage of our net profits from the management of employer sponsored plans — anywhere from 51 percent to 100 percent (as I write this, we are waiting to hear back from the tax pros about our corporate structure and ability to do so)—to two causes. The first cause we will support is a weekend backpack program that sends kids home every Friday with six meals so they can eat over the weekend. The second is a program that provides scholarships to Maine students who want to enter the trade industries. Plumbers, heating technicians, electricians, welders, crane operators, builders, diesel mechanics—all these professions are essential and always in high demand.

When I graduated from Bowdoin College, I remember people talking about the “need” to leave Maine in order to find “real economic opportunity.” I believe Maine has an abundance of opportunity, but to bring it to fruition we must align those who can mentor and provide opportunities with those who want to learn and are willing to do the work—access and connections can be simplified and strengthened.

That is why the next part of our plan is to encourage the owners, executives, and leaders of the companies that hire us to manage their company retirement plans to join a network we are building to provide support in the form of books and speeches (and overall mentorship) to kids who want to build fulfilling lives here in Maine.

I will sign off from this month’s column by saying that our goal is to feed kids for a lifetime. We want to feed them food as well as positivity, ideas, and hope, which they also need to thrive. We want to facilitate access to education, mentorships, and career opportunities to give Maine students the ability to build rich and rewarding lives and retire on purpose, right here in Maine. We have titled this effort “The Purpose Project.”
Please call our office for more details; I am always thrilled to speak with people about this project and honestly, we need more teammates; we need your help to spread the word. Together, we can end weekend hunger and provide life opportunities for Maine’s young people.

Here is what I promise: If we focus on what we are doing today, we can aim for a better tomorrow.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management. He can be reached at 207-248-6767.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: Nine considerations for your 401(k) rollover

by Jac M. Arbour CFP®, ChFC®, President
J.M. Arbour Wealth Management

A 401(k) (or a 403(b), 457 Deferred Compensation Plan, Thrift Savings Plan, Profit Sharing Plan, SEP IRA, SIMPLE IRA, etc.) is a retirement account that is sponsored by an employer and offered to the employees, also known as the participants in the plan. These types of plans are known as defined contribution plans and are often attractive to people as they can offer cost-effective ways to invest, receive investment advice, and oftentimes, receive an employer match. Regardless of the plan you have, here are some things to consider.

  • You have four choices when considering a rollover: You can leave the plan where it is (under certain criteria), rollover to an IRA (Traditional or Roth, including self-directed), rollover to the plan at your new employer (if accepted), or cash it out (tax withholdings are mandatory).
  • Direct vs. Indirect Rollovers: A rollover is considered a direct rollover when the money is moved from one qualified account to another (tax-free event). A rollover is considered indirect when the money is transferred from the retirement account to you personally (taxes will be due if not placed into a qualified account within 60 days and only one per twelve-month period is allowed).
  • Consider working with an advisor: An advisor that is comprehensive in their approach gives advice relative to everything going on in a person’s life. Savings, investments, insurances, debt, cash flows, family structure and dynamics, upcoming capital expenses, short- and long-term financial goals, college plans, travel, personal preferences, etc.
  • Open investment architecture: Be sure to understand what you will have access to for investment options regardless of the rollover option you choose.
  • Systematic withdrawals: One, if not THE, most important uses of a 401(k) or retirement plan is to supplement other sources of retirement income, such as Social Security or pensions. Not all plans allow for these withdrawals once retired or no longer employed. Check with your plan administrator.
  • Creditor Protection: Creditor protection in an IRA is not always the same as that of an ERISA governed retirement plan. Be sure to know the differences in your state before making the change.
  • Loans: A qualified plan may, but is not required, to permit loans. IRAs do not offer loans. This is important to note as loans can be a great way to access money in times of need.
  • Consolidate: Many people have several “old” retirement plans at former employers. It can be easier to manage the money when it is all in one place.
  • Required Minimum Distributions: Be sure not to miss these. They begin at age 70.5 (now 72 if you turned 70.5 after January 1, 2020). Consolidation is also useful when calculating these distributions.

Here is what I promise: If you do your homework before making any rollover decisions, it will likely pay dividends (no pun).

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management. He can be reached at 207-248-6767.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: A dose of positivity goes a long way

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

What a world, huh? One day we are cranking along, humming and whistling, and the next, the brakes are screeching and seemingly everything comes to a halt. Life can change quickly.

We have all faced adversity at some point and when we do, it is important to check in with ourselves and examine the lens through which we are viewing life and the experiences we encounter.

In China, the symbol for crisis has duality; it means both danger and opportunity. My good friend and mentor, Harvey Mackay, says that when adversity strikes and “cool heads prevail, opportunity wins most of the time.” Furthermore, it has been said by many writers that opportunity is often times disguised in rags and looks like work.

Around three thousand years ago, Homer wrote that “adversity has the effects of eliciting talents which in prosperous circumstances would have lain dormant.” Today, we see this remains true. Just look at what is happening around you within Maine manufacturing companies.

Companies who make industrial flooring installation kneepads are utilizing their stock materials to make face shields to protect medical personnel. The shields were designed, prototyped, and on the assembly line within weeks of the initial idea.

A company that makes tongue suppressors was asked by the U.S. government to make up to 50 million swabs for medical America. And they are chipping away at it.

Manufacturing plants that use to make “A” are now making “Z” upon the desire to jump in with both feet and do their part to help those in need. From helping supply food to hungry children, to converting their industrial spaces to manufacture face masks, Mainers are stepping up in a very big way.

Mother Theresa once said, “I know God will not give me anything I can’t handle. I just wish he didn’t trust me so much.” The same is true for all of us. We are extremely resilient beings and are capable of anything to which we dedicate our minds, hearts, and spirits.

As the pandemic continues, I choose to view life through a lens that looks at how people are positively responding to the crisis around them. People have a ton of beauty within them and as my wonderful mother always says, it is essential to look for the beauty within people.

Here is what I promise: When you look for the beauty within people, you will be rejuvenated by the positivity you see. Take a dose. It goes a long way.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management. He can be reached at 207-248-6767.

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: Health, wealth and your best self

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

It’s an interesting business that I’m in and there is an interesting perspective amongst the public about what we do as wealth managers. Most people think our careers have to do only with money. The truth is, our duties stretch far beyond the realm of money; at least here at J.M. Arbour they do.

Yes, we manage money. However, we also swim in the sea of human hopes, desires and goals, both short and long term. We experience various family dynamics, legal structures, life altering events, and the unforeseen. We experience weddings, divorces, babies being born, businesses rising and falling, and people at all mile markers on the journey of life.

There are many forms of wealth: I believe happiness ranks at the top of the list. Intelligence, musical ability, athleticism, artistic creativity, and ingenuity are some other examples. Health, in my book, most certainly makes the cut as well.

As a wealth manager, a person’s mental and physical well being are important to me. I ask myself, “what is the purpose of building monetary wealth (or helping a person do it) if the person who owns the wealth is not here to enjoy it or is not deriving happiness from it in some way?” I can’t think of any sold answers.

Health is a state of physical, mental, and social well being in which disease and infirmity are absent. What are you doing while building your career, while raising your family, while being a spouse or significant other, to take care of you and your health? When is the last time you scheduled time for you to realign with what brings you independent joy? For some people, the answer is, “too long ago.”

As a wealth manager, I hear about the most personal details of people lives as the human veil comes down behind closed doors and trust paves the way for open conversation. I am 35, but over the course of the past 13 years, I have conversed with over 2,500 individuals or couples, all being over the age of 60. All of them, each having their own views on life, and more life experience than myself, have shared where “wealth” for them truly lies. It is always in a feeling, and one rooted in happiness.

Here is what I promise: When you strive for happiness, the rest falls into place, including wealth in different forms.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management. He can be reached at 207-248-6767.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: Ever felt financially naked?

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

As financial advisors, we look at the income, expenses, balance sheets, profit and loss statements, and many other documents, for both corporations and individuals, and we do it every day. It seems so normal, so routine.

I recently had a phone call with a friend and she was asking for our help to create a debt elimination plan. I gave her a list of things we would need from her and rattled them off without much thought or hesitation.

A few days later, she asked if other people ever confess to feeling “financially naked” or embarrassed about their finances. She went on to state, “I bet some people would rather stand naked in front of others than expose their financial picture to those same people.” Is this true, I wondered? I don’t know, but it surely got me thinking.

How do you feel about the idea of exposing your financial situation to a financial advisor? What do you have for concerns, if any at all, about revealing your personal financial information to another person? Feel free to share your answers with me in an email (jac@jmarbour.com).

Over the years, many people have told me they are uncertain as to whether or not they need a financial advisor. Other people have told me that if they did meet with a financial advisor, they wouldn’t know what to ask, or what to say, or where to start. Others have told me they don’t believe they have enough assets to warrant hiring an advisor. Others have told me they can’t afford one, but often times are unaware of how advisors charge.

I am here to root you on and assure you that if you hire the right advisor or firm, you will not feel naked, you will learn how an advisor can assist you, he or she will help you identify the areas that need more of your attention, he or she will not tell you that you “don’t have enough to work with,” and overall, you will find that the cost is worth the received value.

We all have things we can improve and sometimes placing ourselves outside our comfort zones is the first step toward true empowerment. I hope you find the right advisor who makes you feel comfortable sharing your information and who in turn, points you in the right direction.

Here is what I promise: Having the right people on your team makes all the difference.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: Own a retirement account? Get a load of this…

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

Do you own an IRA, 401(k), 403(b), 457, Thrift Savings Plan, or some other qualified or pre-tax retirement account? If so, read on.

On December 20, 2019, President Trump signed the SECURE Act into law. This stands for Setting Every Community up for Retirement Enhancement Act. What follows are some of the changes that will impact many retirement account holders. Some people say there are pros and cons to the Act; like most things, it can easily be viewed that way. More important, however, is to understand the changes in order to plan appropriately around each.

Required Minimum Distributions (RMDs) have been pushed back from age 70.5 to age 72. The age limit for IRA contributions has been removed, automatic enrollments in 401(k) plans have more support, annuities within qualified employer sponsored plans are now more of a focus in order to create guaranteed income for participants, and what has been known as the “stretch IRA” for non-spousal beneficiaries has been eliminated. It is this last change upon which I would like to expand and share a few thoughts for this month’s column.

Before the Act was passed, you could leave your IRA or qualified plan to a child or non-spouse beneficiary and he or she had the right to take Required Minimum Distributions (RMDs) over the course of his or her own lifetime, based on their life expectancy. That is no longer the rule. Now, it is required that the non-spouse beneficiary removes the funds from the account over a period of ten years or less. Why is this potentially so important to know? It could greatly affect your retirement spending policy, your estate plans, and you guessed it, your (and your beneficiaries’) taxes.

Imagine leaving your retirement account to a working, non-spouse beneficiary. Imagine this person has an income of their own, and now, they need to take additional income from the inherited account. Will this RMD place them into a higher tax bracket? Due to the fact that the account must be taken over the course of ten years, it means they may need to take a significant amount each year, which could affect their tax bracket.

If you have sizeable accounts and estimate that you will leave some money at death, part of the planning process is to now consider, even more than before, what this could mean for tax purposes for your beneficiaries.

For some people, this means converting to Roth over the next “X” number of years while relatively speaking, we are still in a favorable tax environment. There are a number of strategies to consider and I suggest you speak with your tax professional, estate planning professional, and/or advisor sooner than later.

Here is what I promise: Proper prior planning will allow you to improve your realized results.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767.

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE – Pensions: Do I take the lump sum or monthly payment?

by Jac M. Arbour CFP®, ChFC®, President
J.M. Arbour Wealth Management

For those of you who need to choose a pension payout option, you might agree that the task can seem confusing. In this month’s article, I will share eight key considerations when making this decision.

Terms of the Lump Sum: One must compare the amount of the lump sum to the value of the payments over an estimated period of time (life expectancy). Many people are tempted to take the lump sum, but it is important to note that this may not always be the best choice.

Interest Rates: In low interest rate environments (like right now), the higher the lump sum payout is likely to be. Once the tides turn, so will the lump sum amount.

Life Expectancy: If you have medical issues and do not have longevity, a lump sum may be the best choice. On the flip side, someone who might live well into their 90s could be a strong candidate for the pension payments.

Financial Stability: If the plan sponsor is weak, the lump sum looks more attractive. People often mention the backing of the PBGC, but with its own financial problems, the PBGC may not have the ability or the legal obligation to insure your full amount.

Market Risk: Once a person takes the lump sum, the risk (totally) and performance (somewhat) are in your hands. You will want to consider what type of income you can create with the lump sum and its relativity to the pension payout amounts.

Taxation: You can rollover the lump sum to an IRA, but monthly pension payments you cannot. Therefore, your desire for tax deferral is something to consider.

Habits: Are you the type to spend money if you have access to it or are you a saver and investor? The person with financial discipline will likely prove to be the better person to receive a lump sum.

Beneficiaries: Many people feel as though they have more flexibility to pass money to their heirs by taking the lump sum. If you have a spouse or heirs, the above considerations apply to them as well.

Here is what I promise: All you can do is make the best decision with the information you have. Therefore, it is your job to get all the information before making the decision.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767.

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE – Christmas gift idea: give them an experience

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

Wow. Look at all the advertising. Look at all the products for sale. Look at all the money being spent on stuff—stuff that will soon be obsolete, no longer the “next-best-thing,” and most likely, thrown away, worn out, or placed on a shelf or in a box to sit in the dark for years.

Millennials (I am one of them), as annoying as we can be to some older generations, have reminded the world of something important: There is more value in memories from life experiences than can be found in most tangible products.

In 1993, my grandparents took my mother, my sister, and myself to Disney World, Epcot, Sea World, A Hawaiian Luau, and other major attractions in Orlando. We rented a small silver car. We stayed at Summerfield Suites in Buena Vista. The breakfast buffet at the resort had a cereal lineup that made me very excited (I love my cereals). We sat together for every meal. I did cannon balls into the pool. So did my grandfather, which made him even cooler in my book. I tried wrestling with my sister in the pool. She wasn’t a fan of that. My grandfather got on stage at the Luau in front of hundreds of people and danced in a way that left us all in stitches. We watched movies together on the planes. We did it all.

My family has reminisced about these moments many times, and each time we do, we smile, we laugh, and we comment how we wish we could go back and do it all over again.

To me, those memories are the best gifts in the world. I carry them with me every day. They will never be put on a shelf. They will never become obsolete. They will always be the “best-thing.”

This year, regardless of your budget, consider giving experiences. Some do not cost a dime. Be creative in the experiences you create. More than anything, the energy behind your intent will determine how the experience is well, experienced.

Here is what I promise: You can give the gift of a lifetime without spending a penny.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: Enjoy every age, they’re all good

by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management

Something I enjoy in life more than most things is sitting and chatting with a voice of experience. I recently had a conversation with a friend who is going strong at 91 and certainly has that voice. She was blessed to share a marriage with the love of her life that lasted up until his death earlier this year; they had celebrated 73 years together.

My friend keeps a calendar with important dates, and I felt fortunate when she mentioned that I had a birthday coming up (which let me know I made the cut). “How old will you be this year, Jac?”

“Thirty-five,” I responded.

She sat back in her chair and, with a big smile, reminded me that I have a whole lifetime ahead of me. “Oh, to be 35,” she said. She reminisced for a few moments, and joked about how all the women in her friend group use to lie about their age in an attempt to stop the aging process altogether. She looked at me (just a bit more seriously, but not really), then came the voice of experience: “There is no reason to hide your age,” she chuckled. “They are all good, and you should enjoy every age.”

Later, we were going through a bunch of old things in my friend’s basement, each with a vivid memory attached to it, and she asked if I would carry a number of things upstairs. So, without hesitation I picked them up and, taking two steps at a time as I always do, ran up the stairs to place them where she had asked. When I was halfway up the stairs, I heard her say, “Oh, to be able to go up the stairs like that.”

It’s amazing how much we take for granted or don’t think about simply because we have never been older than we are right now. We don’t know what we don’t know, as they say, or what we haven’t yet experienced. Life itself is clearly one of the greatest teachers, but so too can be those who have been there already.

I hope that, wherever you are on your journey, you stop to acknowledge where you are now. Every point is good. No matter what.

Here is what I promise: There is a difference between communicating and connecting. Aim for the latter, and the voice of experience is something you might get to hear.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767.

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

THE MONEY MINUTE: Attention retirees: How much are you paying for investment advice?

by Jac M. Arbour CFP®, ChFC®, President
J.M. Arbour Wealth Management

For the most part, people know what they pay per month for their mortgage, their car, property tax, etc. However, the same does not seem to hold true for their investments. We always ask the attendees at our monthly educational workshops (and our clients in personal meetings) if they are aware of their exact costs. It is extremely rare that someone does.

There are clearly reasons why 99 percent of the people we ask don’t know, and I believe the main reason is quite simple. Investment costs, management fees, expense ratios, loads on mutual fund, and other internal costs are not always the easiest to identify, nevermind understand.

If you own mutual funds or are considering purchasing some, be sure you know the “load” on each. The load is essentially a commission you are going to pay. Some mutual funds don’t have a load, and others have load fees averaging almost 6 percent. In addition, mutual funds come with what is called an “expense ratio.” This is an internal fee that helps pay the money managers and their teams to manage the fund.

Exchange traded funds (ETFs) and index funds tend to have lower costs than mutual funds; many people seek out such types of investment for this reason alone. With ETFs, which are passively managed, you do not have the active oversight given by fund managers, so it makes sense that the costs are lower.

Most people are coming to the conclusion that it is kind of important to understand what they pay for investment advice, and they want to know. I would encourage you to ask your advisor how much you are paying (or have already paid).

The fee-only investment advisory model is currently gaining major traction. It has been around for a long time, but after the Department of Labor made some noise a couple years ago about investment costs, advocating that advisors should have a fiduciary responsibility to their clients, many more people are now paying attention.

In the fee-only model, you simply pay one, flat, easy-to-understand annual fee that is equal to a percentage of your assets being managed. There are no hidden fees or expenses with this model, and it also ensures that you advisor is incentivized to grow your money, and to protect it when the markets cycle the other way.

Here is what I promise: When you have all the information, you will be able to make better decisions.

See you all next month.

Jac Arbour CFP®, ChFC®

Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767.

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.