Gary Allen on Business, Sunday, May 22, 2016 – Podcast Now Available

Business Alert!

California Employers Facing State Mandated Retirement Program

So far it has remained under the radar, but a major new State government program is rapidly heading towards a collision course with private employers in California. The California Secure Choice Act is a program that states private employers must offer a retirement plan to their employees or the employer will be forced to participate in a new retirement program mandated by the State of California.

California employers with five or more employees must comply with the mandate or face heavy penalties if they do not. Critics of the state program, including myself, have identified numerous issues small and large that plague the offering. My personal opinion is employers face significant potential risk (based on the current version of the regulations (5/22/2016). Further, the program in my opinion, falls short on providing an optimal solution for employees as well. The program design is flawed and incomplete leaving many questions unanswered. 

Currently, Secure Choice is on track for a 2017 debut, but could slip into 2018. However, make no mistake about it, this program is coming soon. And even if you do offer a retirement plan to your employees that may not exempt you from the mandate. The State is working on rules that would mandate coverage for part-time or contract workers that are excluded from your existing plan.  

There is a much simpler solution for employers to avoid the California Secure Choice Act. Employers can offer a payroll deduction IRA program to their employees without cost or personal liability to the business or its owners. Payroll deduction IRAs have been around for decades and work very well for employers of any size. You can provide your employees with a simple and effective way to save for retirement without cost to you.

I am very concerned that the California Secure Choice Savings Program will turn out to be the equivalent of the Affordable Care Act (ACA) for retirement plans. You can avoid the headaches and the uncertainty by offering a private solution today. 

You can listen to more about the California Secure Choice Act in segments three and four of my show this week.

In segments one and two of the program, I discuss the flaw of retirement planning that focuses on building wealth instead of a stream of income for retirement.   

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Gary Allen on Business: Sunday, May 15, 2016 – Podcast Now Available

Jim Cramer of Booyah Fame Mainly Delivers “Boo”

Jim CramerJim Cramer of Mad Money fame on CNBC has popularized fame with his fast paced show that has its roots in the production values of the Jerry Springer show. You may laugh, but Cramer’s Mad Money show is the brainchild of Susan Krakower, the former producer of the over the top Jerry Springer show. If you think about Springer, sports talk radio and a touch of a traditional financial show, you have the secret sauce that became Mad Money.

The show has seen a ratings decline in recent years but the frenetic energy remains. Adding some spice, this weekend a new movie titled Money Monster starring George Clooney has opened across America. But the focus of my story on the show this week is a research report that also was released on Friday. That report from researchers at the Wharton School of Business look into the track record of Cramer’s stock picks.

It may come as a surprise to some, but I was not caught off guard by the results of the research report. Bottom line, Cramer has not done well compared to the S&P 500 with his charitable fund. While Cramer is just one example, he is the poster child for “smart” active management. At this point the numbers are in and Cramer like most of his peers trail the returns of the stock market.

The Living Wage Movement For A Few

Protest

Everywhere you turn these days, people are protesting for a living wage. Currently, the living wage benchmark according to the protestors and their supports is $15 per hour. However, the part of the story that most protestors are missing is who will be left working once $15 per hour becomes reality.

Fast food workers are some of the primary protestors pressuring employers to raise the minimum wage to $15. Too often companies are vilified for underpaying their workers and having profits that are too large. Are there companies that take advantage of their workers, of course, but I never remember anyone until now talking about a fast food job being a place to work to support a family of four. 

Fast food jobs and most retail jobs have traditionally been entry level positions for young and or unskilled workers to enter the workforce. In my opinion, the majority of the workers currently protesting for $15 per hour will be worse off if they achieve their goal. The reason is simple, automation will replace most of the jobs and they will be unemployed. A fraction of the current workers will be left earning $15 per hour watching customers order and pay for their own meals at self-service kiosks, while a couple folks will be left in the back feeding machines that prepare most of the food. Wendy’s this week became the first major fast food chain that said it will install these kiosks this year at all of its locations.

The problem is not $15 per hour for entry level jobs. The problem is too many low or unskilled workers who do not have access to training or education opportunities to improve themselves.  

Gary Allen on Business – Sunday, May 15, 2016 – Podcast

The Cramer story and $15 for the few highlight the show this week. Hope you enjoy the podcast. – Gary 

CONTACT GARY:

If you would like to contact Gary, the best way is through email at gallen@prudentllc.com. Or you can try to reach him at his office at 916.436.8331.

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Gary Allen on Business; April 10, 2016 – Podcast Now Available

scared-kidFinancial Gibberish

Communication is such an important thing. Countless books have been written about the subject yet we still struggle to communicate with one another. In the world of financial services, some miscommunication is unintended while some happens to be on purpose. It is hard to question the advice or the validity of an investment strategy when you cannot understand it. The real trick is to know when someone is struggling to communicate with you or if they are purposely trying to talk circles around you. The first is irritating and CAN cost you a lot of money, while the second WILL cost you a lot of money!   

 I spend some time on the program trying to translate financial speak into common sense. It is hard to translate but well worth it. The difference can mean thousands of extra dollars in your pocket instead of in the pocket of the person trying to sell you a product.  

The Active Management/Passive Management Debate (Case Closed)

Analysis
Analysis

Later in the program, I provide the basic facts of how active management fails to deliver on its promise of beating the market. I still wonder why so many people believe in the Wall Street Santa Claus of superior performance when study after shows that the Grinch is alive and well in the canyons of Manhattan. 

As always I hope you enjoy the show. – Gary 

CONTACT GARY

If you would like to contact Gary the best way is through email at gallen@prudentllc.com or you can try him at 916.436.8331.

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Gary Allen on Business, March 13, 2016 – Podcast Now Available

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Human Capital and Financial Capital Equals Life Cycle Investing

Unfortunately, too many people do not understand the interaction between human and financial capital. Human capital is the collective skills, knowledge, or other intangible assets that you possess in order to create economic value. A simpler way to understand human capital is your present and future earning power. Education is an investment in your human capital that pays off in terms of higher productivity. 

Our economic life cycle is driven by a balance between our human and financial capital. Early in life we have a lot of future earnings power in the form of human capital. As we work, we have a choice; to either consume our present earnings or save for future needs. That balance between consumption and savings is one of the primary drivers of our economic life. Consumption is spending, while savings is the process of turning human capital into financial capital. That financial capital becomes our investments.

In this program, I discuss the general concepts of human and financial capital and how it is crucial to understand the big picture. Hope you enjoy the program.

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CONTACT GARY

Have a question for Gary or would like to contact him? You can reach Gary at gallen@prudentllc.com. Or you can try to call him at his office at 916.436.8331.