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River Wealth Advisors' Currents Newsletter


The advisors at River Wealth are committed to enriching investors by sharing their insights and understanding of the market by regularly publishing the quarterly Currents Newsletter.


First Quarter 2018
Selecting The Financial Advisor That’s Right For You
Women’s Involvement In Financial Decisions Is Still Lagging 

First Quarter 2018

Following an exceptionally long period of calm and expanding equity markets, volatility returned in February. Since then, markets have moved sharply in reaction to news reports, as investors attempt to assess the potential implications of global developments. However, underlying the seemingly endless flow of news is a fairly healthy domestic economy with low inflation, continued earnings growth and a global economy that is expanding. With this fundamental backdrop, the recent spate of volatility, largely tied to daily news and Twitter feeds, is much less concerning. When focusing on long-term financial goals and objectives, discipline and the ability to see past short-run volatility and market corrections is critical.   

Global Economic Conditions

Ten years after the Global Financial Crisis, we are now in what is being referred to as a period of global synchronized growth. Every major economy worldwide is expanding economically. The U.S. is now in its ninth year of expansion and expectations are for increased economic growth, propelled by last year’s tax cuts. The International Monetary Fund now estimates that global growth will reach 3.9% this year, up from 3.7% last year and 3.2% in 2016. 

Corporate Earnings

Corporate earnings growth has accelerated, largely boosted by the recent tax overhaul in the U.S., which significantly reduced corporate tax rates. Expectations for 2018 remain optimistic as analysts project double digit earnings growth to continue. Thus far, the majority of companies reporting 1st Quarter earnings have provided shareholders with positive reports.  

Domestic Policy Activity

Following a year where domestic policy was a significant focus of investor attention, the current policy agenda has attracted much less attention. That could change if an infrastructure bill gains some momentum, or if trade issues reach Congress. 

Central Bank Activity, Rates and Inflation

In March the Federal Reserve increased the Federal Funds rate, a widely expected move, to a range of 1.50% to 1.75%. Despite an expanding economic and employment situation, rates remain relatively low and modest inflation numbers have given the Fed room to act gradually. It is broadly expected that the Fed will increase rates three times in 2018.

Geopolitical Concerns

As has been the case for some time, underlying what seems to be a fundamentally sound economic situation is the specter of geopolitical events. Most recently, trade policy and military conflict. While a true trade war would indeed be economically disruptive, all we have seen so far is talk, not policy. Likewise, recent military action in Syria and potential conflicts elsewhere may result in short-term market reactions. Unless these become protracted military campaigns, history indicates that their market impact will be short-lived. 

With volatility back in financial markets, being driven by minute-by-minute news flow, it is important to keep things in perspective, and recall that uncertainty and volatility are normal parts of investing and functioning markets. As always, we encourage you to remain focused on long-term objectives. 


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Selecting The Financial Advisor That’s Right For You

Start By Understanding The Costs And Services Provided


As people begin to accumulate wealth, they may find themselves needing financial advice to help grow their portfolio. After you have been working for years and perhaps have more than $250,000, seeking advice on a financial strategy may be beneficial.

But before hiring a financial advisor, it is important to know exactly what their fees are and what services are included. Most financial advisors offer a range of services and fee structures to fit different investor portfolio levels. Unfortunately, many investors feel uncomfortable questioning advisors about the details or lack understanding due to the complexity of fee structures. 

Fee structures can vary depending on a range of variables including amount of assets being managed, level of client contact and types of services requested. Fee-only advisors will have a yearly fee based on the assets managed, such as 1% a year. However, the total costs associated with the portfolio can end up being significantly higher due to various factors. 

One reason is that some of the financial products in a client’s portfolio can include embedded fees. Most active mutual funds have a one-time fee for when it is purchased or sold. As well, both active funds and ETFs (Exchange Traded Funds) have expense ratios, meaning that there is an annual percentage of assets that they charge shareholders to manage and administrate expenses. These fees tend to be lower when someone works with an advisor, rather than when investing alone. 

These expenses tend to average from 0.5% annually for ETFs to 1% for active funds. So someone who is paying 1% of assets under management in advisory fees may actually end up having a cost of 1.6% a year due to other investment expenses. Some advisors will spell out these additional fees with their overall charges. Once you have a full understanding of the advisor’s fee structures, it’s also important to be aware of what services are available. Because there are so many alternatives, consumers need to be mindful of how much advice they actually need. Everyone’s situation will be different but there are generally some rough guidelines to follow. As you progress through life, your needs pertaining to your financial planning will also change. The financial services that you need now probably won’t be the same as five to ten years from now. When selecting a financial advisor, find one who offers a wide range of services, so that they can provide you with help now as well as in the future. 

It pays to engage a financial advisor to evaluate every facet of your personal situation, since different components of your life impact your finances. While investments are a huge component, they are only one piece of financial planning. Developing a personalized financial strategy will allow focus on all aspects that are unique to a person or family. A person’s lifestyle as well as life events will affect the financial services they need. 

Prospective financial advisors should provide you with an overview of the services they provide. To get a full picture including what is offered and what is not, people can check the Securities and Exchange Commission’s Investment Advisor Public Disclosure website, which lets users search for advisors by name or by firm and review the ADV form they must file when registering with the SEC. Oftentimes consumers may assume their fees cover a certain bundle of services when they actually don’t. When facing an unexpected event like a financial reversal or a divorce, you don’t want to be left scrambling to track down another professional since your financial advisor doesn’t offer the services you need.

Women’s Involvement In Financial Decisions Is Still Lagging

Majority Of Wives Rely On Husbands To Make Major Decisions


A recent survey[1] of women and married couples revealed that the vast majority of women are still abdicating their participation in financial decision making. The interviews, with investors who had at least a quarter of a million dollars in assets, shed some light on how women perceived their roles when
it comes to family finances.

It’s not surprising that women feel less than competent when it comes to financial matters. The banking and investment industry, until all too recently, actively discriminated against women and discouraged their involvement with financial matters. Until the Equal Credit Opportunity Act was passed in 1974, women were not able to apply for credit. In the 1960s, lenders could refuse to issue a credit card to an unmarried woman.

A woman applying for a credit card would be asked personal questions like: Are you married? Do you plan to have children? Many banks required single, divorced or widowed women to bring a man along with them to cosign for a credit card. It wasn’t until 1988 that the Women’s Business Ownership Act put an end to state laws that required women to have male relatives sign business loans.

In light of these systemic practices to limit a woman’s access to financial resources, it’s understandable that women feel that they don’t know enough about investing to actively participate. Only 55% of the women interviewed felt confident about making financial decisions, compared with 79% of the men.[1] Though a large percentage handle the day-to-day household finances, 56% of women leave the larger investment decisions to their spouses.[1]

All of this flies in the face of actuarial data that confirms that women tend to live longer than men. Eight out of ten women will end up alone during their lifetime, either due to divorce or widowhood.[2] Given these facts, it’s shocking that 80% of women[2], from every generation, are OK seceding control to someone else.

Finding themselves solely responsible for understanding investment options and making financial decisions, especially during a stressful time like a divorce or death of their spouse, can mean that these women struggle to manage. Not knowing the details of investments or estate planning can mean some unwelcome surprises like outdated wills, hidden debts or a distressed financial state.

The good news is that it’s not too late for women to become involved in understanding and actively participating in their financial lives. Nearly all of the women who experienced divorce or became a widow said they would encourage other women to take steps now to educate themselves about finances and take an active role in making decisions that will have a great impact on their futures.[3]

At River Wealth Advisors, when working with married couples, we encourage both spouses to be informed and involved with the financial planning process. Having input from both helps us to refine the personalized financial strategies that will guide them through the changing currents of their lives. 

We can also assist women who suddenly find themselves faced with making major financial decisions, but have limited experience with investment matters. River Wealth Advisors can provide portfolio management and guidance on major financial decisions. We work closely with our clients’ attorneys and accountants to assure that their lifestyle can remain intact.

[1] UBS, Union Bank of Switzerland, Own Your Worth, 2018
[2] Yahoo Finance, Business Wire, UBS Reveals Top Reason Married Women Step Aside in Long-Term Financial Decisions: They Believe Their Husbands Know More, April 13, 2018
[3] Bloomberg News, Business, Rise of ‘Gray’ Divorce Forces Financial Reckoning After 50, Suzanne Woolley, April 13, 2018

IMPORTANT DISCLOSURE: Please note that it is the intent of your Plan to be 404(c) compliant. This means that you will receive sufficient information through various documents to make initial and ongoing investment decisions and that Plan fiduciaries are relieved of liability for losses resulting from participants’ investment decisions.

In addition, fees shown on your brokerage account statement listed as “Other Plan Fee” are administrative fees.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author’s opinions may change, without notice, in reaction to shifting economic, market, business and other conditions.

Any information contained herein obtained from third-party sources is believed to be reliable, but its accuracy or completeness is not guaranteed. 

Indices are unmanaged, do not incur fees or expenses and cannot be invested in directly.