Monday, December 11, 2017

Did You Know Watters Financial Services Runs on Referrals?

Did You Know Watters Financial Services Runs on Referrals?

At Watters Financial Services, one of the differences between our business and others is how we grow our firm. Simply put, we run on referrals and we are grateful for them.
Your generous referrals are especially important because of an unusual rule we have in our industry. Did you know that because of regulations in our industry, sharing, posting or advertising testimonials from clients is strictly prohibited, regardless of the experience? So, because we can’t use or ask for testimonials, referrals are especially important and essential for building our business.

Luckily, we’ve been fortunate to work with a wide range of clients who do refer their friends and family to us. We believe many people have referred others to us for a few different reasons:

1.     Independence. We are independently owned and therefore free to give  unbiased and objective advice. We are not affiliated with any bank, investment firm, insurance company or parent company.  We do not receive compensation for selling products for investment portfolios or for trade transactions.

2.     Fiduciary. As a Registered Investment Advisor (RIA) we are legally required to act as a Fiduciary which means putting the client’s interests above our own, acting in utmost good faith, and providing full disclosure/transparency. Full disclosure is available on our website in the ADV form. This is not required of brokers and “financial planners”(who are not Certified Financial Planners ™).

3.     Customized and Personal Service. We have purposefully chosen to be a boutique size Wealth Management firm in order to deliver a level of service that is truly personal and customized. Our client base is large enough to gain access to funds with lower minimums or closed to new investors and to negotiate institutional fee discounts.

4.     Certified Financial Planner Clients work with two CFP® Professionals, who continue to meet the education, examination, experience and ethics requirements set by the Certified Financial Planner Board of Standards Inc.

Our fee for Financial Planning is hourly and the fee for Wealth Management is based only on a percentage of assets. We can prepare a comprehensive financial plan or provide advice about a particular issue. Wealth Management combines managing investments as well as quarterly financial planning reviews using a Client Engagement Roadmap and follow-up letters after each quarterly review. We meet with clients both in New York and New Jersey.

If you have a friend or family member who has questions or needs unbiased advice, we are here to help. We can offer them a free introductory phone call to learn what they want to accomplish and if our services would fit their needs. We can work with them in New York, New Jersey or via webinar. You can suggest that they learn more about us on our website

If you are a client with our firm and you have enjoyed working with us, we hope you’ll refer a friend, colleague or family member who may benefit from our services. If they are currently looking for a Certified Financial Planner ™ with over 30 years of experience, please have them contact us today at 201-843-0044 or email

Friday, November 24, 2017

Here are five steps to protect your identity after the Equifax Breach

Here are five steps to protect your identity after the Equifax Breach

Many people were stunned to learn of the Equifax Data Breach. Over 145 million people were affected by the breach. Here are a few things you can do to protect yourself:

The first way to protect your identity is to place a security freeze on your credit files at Equifax, Experian, and TransUnion. For additional security, you can also apply a freeze on your credit files at a fourth, lesser-known consumer reporting agency, Innovis. You can do this by contacting each bureau either through their website or through the customer service phone number. Depending on where you live, there may be a small fee for placing the freeze. Equifax, however, said it would not charge for credit freezes for those affected by the data breach.

The second way to protect your identity is to activate two-factor authentication. In today's world of digital crime, two-factor authentication is an important extra layer of safety. It requires not just a password but a second element, such as a code texted to your smart phone, which you have but a fraudster can't easily access. Set up and activate two-factor authentication on all of your existing mobile banking, savings, credit card, home equity line of credit, and other online accounts that offer it.

The third way to protect your identity is to maximize your mutual fund security. Although the Securities and Exchange Commission requires mutual funds companies to identify, detect, and respond to red flags of identity theft, unlike FDIC-insured banks, these investment firms aren’t required to restore assets stolen by hackers.

You should also consider calling your 401(k) plan provider and other investment managers to learn their fraud protection policies, as they can vary from company to company. If your investment company doesn't explicitly reimburse stolen funds, consider moving your money elsewhere. Many small mutual fund companies don’t explicitly reimburse stolen funds.

TD Ameritrade Institutional, has an asset protection guarantee that promise to reimburse assets stolen in unauthorized online transactions. TD Ameritrade Institutional is the custodian for Watters Financial Services, LLC.  A custodian is a financial institution that holds customers' securities for safekeeping to minimize the risk of their theft or loss.

To get protection, TD Ameritrade Institutional and Watters Financial Services, LLC request that you follow certain safeguards, which you should be doing anyway, including regularly reviewing your account statements and promptly reporting any errors or suspected fraud; keeping up-to-date security on any computer or other device you use to access your account (firewall, antispyware, and antivirus software); not responding to, clicking a link in, or opening an attachment in an e-mail that you suspect might be fraudulent and that requests personal financial information; and using two-factor authentication.

The fourth way to protect your identity from the Equifax data breach is to place a fraud alert on credit reports. A fraud alert is different from a credit freeze. The fraud alert is a notice on your credit report that warns both current and prospective lenders that they must take reasonable steps to verify your identity before granting credit, such as a new credit card or loan, or extending credit on an existing account. An alert lasts 90 days. If you’re an ID-theft victim, you can get a fraud alert that stays in place for seven years. But you may be better off with the 90-day alert, because that allows you to get a free credit report from each of the four credit bureaus each time you renew the alert, which means you can get up to 16 free reports per year.

The fifth way to protect your identity from the Equifax data breach is to secure your smartphone and email. How you manage your smartphone and email accounts can be critical to your online security. Your phone is where all your second-factor text message codes are sent and where your mobile banking and other money apps live. Email is where your financial institutions send alerts and password reset links.

Here's how you can make your phone and email safer:

Activate two-factor authentication on your email account.
Use a password management app such as LastPass on your computer's browser and on your phone. LastPass creates and plugs different passwords into each of your accounts when you log in, so you don't have to invent and keep track of dozens of passwords. This eliminates the temptation of using the same password for multiple accounts, which can provide a master key for hackers. Never click unsolicited, unexpected, or suspicious-looking links sent to you by email or text. They could download malware capable of spying on your phone or personal computer activity.

By following these steps, you will be in a better position to protect your identity.

If you have additional questions, please feel free to call us at 201-843-0044 or check out our website at:

Thursday, October 5, 2017

Should you provide a Loan to a Family Member?

Should you provide a Loan to a Family Member?

Making loans to family members is fraught with danger and it can destroy relationships if not dealt with correctly. However, it can be a good planning move.

It is a common situation, even for young adults who are succeeding on their own, post-college: Asking if mom and dad can help out financially for a specific need, whether it's a down payment on a first house or helping pay off some lingering student loan. It is easy to have a misunderstanding of whether or not the money that was given was a loan or a gift. Also, if you were the one who gave the loan and the borrower does not make payments on a timely basis, you may find yourself frustrated every time they go on vacation or make a large purchase.  You may wonder why they are not making payments on your loan if they have enough money to do those things.

I have assisted many clients in arranging intra-family loans over the last 30 years. Intrafamily loans can be a popular way to take advantage of a low interest rate environment to shift wealth with a minimum of tax consequences for you or an heir and they can help your children to get ahead.

With an Intrafamily loan, parents can provide a financial resource to their children for a specific use. The key thing with the loan is to determine if the person is a good risk. You have the right to request a credit report on the borrower. You may find that they are not current with many of their bills and have a low credit score.

I'd be less inclined to recommend a client provide a loan to help a family member pay off credit card debt unless there's an extraneous reason, like a medical bill or job loss. 

Many of the most successful family loans I've been involved with are relating to the purchase of a home.  Often, young people can't quite afford the down payment on a home but they can afford the monthly payment and their credit score is good.

There are a few important guidelines to follow:

·     There needs to be a promissory note or other evidence of indebtedness. The loan has to be documented with a clear understanding of the interest rate, the terms of repayment. It's important to have the right supporting documents and terms in place for a true intra-family loan; otherwise, the IRS may treat the loan as a gift.
·     I recommend clients set the interest rate at a rate that is 3% higher than a 10 year Treasury note yield because there is a substantial risk of nonpayment.
·     If you want to offer a low interest rate to a family member, you should also know about the IRS Applicable Federal Rate (AFR). The IRS publishes an interest rate index called the AFR. These interest rates are determined by variety of economic factors and are used for various purposes under the IRS code including calculating imputed interest on below market loans between family members. When it comes to family loans above $10,000, the AFR represents the absolute minimum market rate of interest the lender should consider charging to prevent unnecessary tax complications.
·     Ideally, you will want to either get a book of checks already signed and dated for the different months for the cycle of the repayment or have them send automatic online payments to you.

You need to declare the interest income on the loan. This will help you to prove it was a valid loan if you ever need to challenge the borrower in court to make repayments.

While there are challenges here, depending on the goals involved, intrafamily loans can be an effective planning tool.

Call me at 201-650-0753 if you want to discuss this topic more and I can give you more insights.
Tim Watters, CFP  
Watters Financial Services, LLC

Friday, September 8, 2017

protect yourself and if necessary recover faster from a weather disaster.

With the devastation of Hurricane Harvey and Hurricane Irma we thought it was a good idea to review steps that you should take to protect yourself and if necessary recover faster from a disaster.

During a disaster, liquidity is king. It is a good idea to have a few thousand dollars in cash on hand and to make sure that you have extra money in your checking account as well. This way, if you can't get access to your bank for a while, you can buy supplies and if possible pay bills. 

It is important to understand homeowner’s insurance. Most homeowner’s policies have a separate hurricane deductible. A standard homeowner's insurance policy deductible is typically $500 or $1,000. Hurricane deductibles are calculated as a percentage of the insured value of the house. That percentage, along with details about a policy's hurricane deductible, usually appears on the declaration page. States that let insurers tack hurricane deductibles onto homeowner's policies are Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, Virginia as well as the District of Columbia. Hurricane deductibles apply only to damage caused by hurricanes, and typically range from 1 % to 5 % of the insured value of a house, according to the Insurance Information Institute. For example, a policyholder whose house is insured for $200,000 with a 2 % hurricane deductible would have to pay the first $4,000 needed to repair the home if a hurricane caused the damage.
Damage caused by flooding is generally not covered by a standard homeowner’s insurance policy. A flood typically involves external water rising onto the land from an overflowing river, hurricane, tsunami, mudslide or even heavy rains. You may want to consider buying flood insurance. Many people are surprised by the limitations to these policies. For example, they do not cover damage to contents stored in basements. If you buy this coverage, learn about all of the exclusions so you can plan accordingly.
One of the byproducts of water damage is mold and mildew. Besides being potentially hazardous for your health, mold can reduce the value of the house by discoloring the walls and/or ceilings, rotting wood or ductwork, and creating a foul odor. Most basic homeowner’s insurance policies exclude coverage due to damage caused by mold, fungi, and bacteria.

Many homeowners may not realize that they are responsible for the maintenance and repair of the pipeline between the city sewer main, usually located in the street, and their house. Sewage backup coverage is available from most insurers as a rider to a homeowner’s insurance policy. It costs very little and should be obtained if your home is connected to a sewer.

Most automobile insurance policies do cover flooding. Most standard automobile policies with collision and comprehensive coverage replace flood damaged cars after the deductible.

It is important to store financial documents such as deeds, title insurance, auto ownership documents, insurance policies and estate planning documents remotely.

Photos and/or videos should be made of the contents of the house and stored electronically. This way, when it comes time to submitting a claim to the insurance company, there will be an accurate record and proof of what was damaged or lost. 

Periodically review life insurance and disability policies. Confirm the beneficiaries. 

Check the title to the house. This is a required part of the application process for a mortgage and it is protection in the event of a claim. Without an accurate title it is difficult to prove ownership or eligibility to submit a claim for insurance benefits or government assistance.

By following these steps, you will be in a better position to weather the storm.

If you have additional questions, please feel free to call my office at 201-843-0044 or check out our website at:

Monday, August 7, 2017

How Do You Survive The Inevitable Storms of Life?

How Do You Survive The Inevitable Storms of Life?

Over the last thirty years of being a CERTIFIED FINANCIAL PLANNER ™, I have helped many clients survive a crisis in their lives. Here are some tips I recommend.

Whether the crisis is an illness, loss of a job or the death of a spouse or loved one, there are things you can do to minimize the trauma for you and your loved ones. Here are a few tips that can help:

·       Create an advisory board and make sure your loved ones know who is on the board. This board could include your CERTIFIED FINANCIAL PLANNER ™, your Lawyer and your tax advisor. Make sure your spouse meets with each of them periodically.

·       Review who has what job in your estate planning and make sure they are still the right people.

·       Review your Estate documents with your Attorney at least every 5 years and make sure you follow your Attorney’s advice on Beneficiary assignments.

·       Review all of your insurance coverage annually to make sure the pricing is competitive and you have adequate coverage.

·       Get Disability Insurance if your employer does not provide it. If your employer does provide it, thank them! It is hard to get it privately and it can be expensive.

·       If you own a business, please do not wing it. If you have partners, get a Buy sell Agreement and fund it so that in the event of a disability or a death, it pays out the money. I have assisted two widows in this process so far. It can be ugly without a funded Buy Sell Agreement.

·       If you own a business and have no partners, buy life insurance to protect your family. Your business will probably be worthless unless your family can sell it within 30 days.

·       Build a liquid reserve fund for emergencies. They will happen. It can take months to find a job if you lose one. If you lose one during an economic downturn, your investments may be worth considerably less at that time.  It is a bad idea to rely solely on a 401(k) plan or IRA at that time. Anything you take out will be subject to tax (and penalties if you are under 59.5 and do not qualify for one of the exceptions).

·       Accept that denial is not a planning strategy. Long Term Care is an inevitable part of aging. Be realistic and consider getting Long Term Care Insurance.

·       Only invest in stock related investments if you plan to keep invested for ten years or more. If you need the money back in the next few years- stay in an online savings account instead. You have to be prepared to ride out an extended (3 years or more) downturn without selling.

I always tell my clients to plan for the worst but hope for the best. Following some of these tips can help you, and your loved ones, weather the inevitable storm.

If you have additional questions, please feel free to call my office at 201-843-0044 or check out our website at:

Friday, July 7, 2017

Is it time for a lifeboat drill for your Life Insurance and Estate Planning?

Is it time for a lifeboat drill for your Life Insurance and Estate Planning?

Cruise ships often have lifeboat drills, which are a little bit sobering when you are in the middle of the North Atlantic. However, they help you prepare for a potential emergency that could happen. I find that it's a good idea to do the same thing with your life insurance and your estate planning. I often have these types of “drills” with my clients and I'm often surprised to see how poorly prepared people are.

Many times people think that they have life insurance when they don't. Also, I have found that they don’t know who the policy insures and may think that the policy covers the husband when it really only covers the wife or visa versa. Often, they don't have the actual insurance policies, merely some old statements from several years ago. This creates a mess for your family.

Insurance companies love to not pay claims.  There are often media stories about the many life insurance policies that could have been paid out that don't get paid out because the families didn’t even know the policy existed. Everybody should have a copy of their current life insurance policy stored in a safe place. With that policy, they should keep the most recent statements for the policies as well. 

I am often surprised to find that many small business owners have a cavalier attitude about “what if” planning. They often have no succession plan or Buy-Sell Agreement for their business.  Many times, they haven't even given their spouse access to their business files or business financials. It doesn't do you much good if your wife can’t sign checks on your behalf if you are disabled or die. I have been there for several clients who have died and have counseled many widows over the last 30 years. One Attorney I respect, Frank Brunetti, Esq, often says “you only die once, you might as well do it right”. I know it's an obvious point but, everybody should have a Last Will and Testament, a Durable Power of Attorney and Health Care Proxy document on file and you should know where those documents are stored.  Sometimes people store estate documents directly with their attorneys. Another option is to store them in your home. If you don't have the originals, it can add thousands of dollars to the estate process.

I am also not a fan of self-made estate planning documents. The ones I have seen were not done correctly; with scratch outs, no signatures, no witness affidavits etc. Would you self-diagnose and operate on your own Appendectomy?  The cost of getting your documents created should be viewed as a cost that is spread out over many years. It is a comfort to know that they have been done right.

Are your beneficiaries up to date? This is also an area that needs to be addressed. I recommend reviewing the beneficiaries every two years to make sure that they still match your wishes. Many people do not realize that the Last Will and Testament does not govern assets that have beneficiaries (retirement accounts, life insurance, annuities) unless you mention your Last Will and Testament in the beneficiary assignment.

Finally, I often recommend clients create short Voice Memos on their cell phone to cover different estate topics that are important for this type of planning. Here are some examples of short voice memo topics:

·       Who to call and how to deal with short term cash flow after death.
·       Where are the estate documents and life insurance policies stored
·       Where you have banking and investment accounts.

These memos should be updated periodically to make it as easy as possible for your loved ones to access.

If you have additional questions, please feel free to call my office at 201-843-0044 or check out our website at:

for additional information concerning Financial Planning and Wealth Management topics.

Monday, June 5, 2017

How Much Do You Know About Social Security Retirement Benefits?

Quiz: How Much Do You Know About Social Security Retirement Benefits?

Social Security is an important source of retirement income for millions of Americans, but how much do you know about this program? Test your knowledge, and learn more about your retirement benefits, by answering the following questions.
1. Do you have to be retired to collect Social Security retirement benefits?
a. Yes
b. No

2. How much is the average monthly Social Security benefit for a retired worker?
a. $1,360
b. $1,493
c. $1,585
d. $1,723

3. For each year you wait past your full retirement age to collect Social Security, how much will your retirement benefit increase?
a. 5%
b. 6%
c. 7%
d. 8%

4. How far in advance should you apply for Social Security retirement benefits?
a. One month before you want your benefits to start.
b. Two months before you want your benefits to start.
c. Three months before you want your benefits to start.

5. Is it possible for your retirement benefit to increase once you start receiving Social Security?
a. Yes
b. No

1. b. You don't need to stop working in order to claim Social Security retirement benefits. However, if you plan to continue working and you have not yet reached full retirement age (66 to 67, depending on your year of birth), your Social Security retirement benefit may be reduced if you earn more than a certain annual amount. In 2017, $1 in benefits will be deducted for every $2 you earn above $16,920. In the calendar year in which you reach your full retirement age, a higher limit applies. In 2017, $1 in benefits will be deducted for every $3 you earn above $44,880. Once you reach full retirement age, your earnings will not affect your Social Security benefit.
2. a. Your benefit will depend on your earnings history and other factors, but according to the Social Security Administration, the average estimated monthly Social Security benefit for a retired worker (as of January 2017) is $1,360.1
3. d. Starting at full retirement age, you will earn delayed retirement credits that will increase your benefit by 8% per year up to age 70. For example, if your full retirement age is 66, you can earn credits for a maximum of four years. At age 70, your benefit will then be 32% higher than it would have been at full retirement age.
4. c. According to the Social Security Administration, you should ideally apply three months before you want your benefits to start. You can generally apply online.
5. a. There are several reasons why your benefit might increase after you begin receiving it. First, you'll generally receive annual cost-of-living adjustments (COLAs). Second, your benefit is recalculated every year to account for new earnings, so it might increase if you continue working. Your benefit might also be adjusted if you qualify for a higher spousal benefit once your spouse files for Social Security.

For more information, visit the Social Security Administration website,