The H Group Blog

Investment and Financial Planning news from some of the best in the business.

Weekly Review - July 5, 2016

Guest Post - Tuesday, July 05, 2016


Economic data for the week was highlighted by stronger manufacturing results in the ISM and Chicago PMI surveys and higher consumer confidence, while real estate activity was mixed—a combination of higher home prices but weaker building activity for the prior month.

Investment markets recovered sharply following the 'Brexit' surprise last week, with equities higher globally. Interestingly, bonds also fared well with bond yields falling on net for the week in both developed and emerging markets. Commodity prices, including crude oil, generally showed continued strength during the week.

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Diversification vs Asset Allocation—Which Makes a Better Cake?

Ron Kelemen - Wednesday, June 29, 2016

Our clients know that we are big proponents of diversification, which basically means spreading your eggs into different baskets to reduce risk in an ever-changing investment world.  Since 1970, a portfolio of 10 equally divided asset classes would have had an average return of 9.82%. 
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Question of the Week - June 27, 2016

Guest Post - Monday, June 27, 2016

Now that the U.K. is leaving the EU, what now?

We discussed the 'Brexit' situation through a separate note mid-week, and economists are now reviewing various scenarios and linkages even more deeply to determine their potential effects. Politics and economics are often strange bedfellows. Much of the sentiment that resulted in the vote's outcome appeared to be driven by the immigration issue, as opposed to a deeper assessment of economic benefits by the citizenry, although voters did appear to be swayed by advertised numbers showing the U.K. contributing a substantial amount of annual funds to the EU, while the gains earned from that investment were much less certain.

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Weekly Review - June 27, 2016

Guest Post - Monday, June 27, 2016


Most global attention was focused on the U.K. 'Brexit' referendum, which was assumed to be doomed to failure earlier in the week—until final results showed it passed by a small margin. In a slower week for U.S. economic releases, housing results were mixed, with home prices higher but building activity lackluster.

Equity markets gained ground early in the week globally as concerns over 'Brexit' dissipated before actual voting but reversed as results came through, causing a broad sell-off of risk assets. Bonds fared well in the week in response, and commodity markets declined with oil and agricultural futures falling back as well as a stronger U.S. dollar.

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Day One After the “Brexit” Vote –Life Goes On

Guest Post - Friday, June 24, 2016

Contrary to what some experts assumed and last-minute polls indicated, U.K. voters opted to leave the European Union (EU).  The most recent polls had indicated that the Brexit would fail by a small margin, so this outcome was a surprise to the financial markets which had been anticipating a “Bremain.”  The final tally was 52% to 48%.  Here's our take:
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Weekly Review - June 20, 2016

Guest Post - Monday, June 20, 2016


The week was highlighted by the FOMC meeting, at which no interest rate policy changes were made. In other data, retail sales surprised on the upside, manufacturing and production data were mixed, and inflation came in little changed as expected.

Markets suffered through a week of negativity generally due to the mixed economic data, digesting of Fed communications and heightened 'Brexit’ concerns. Bonds fared better with lower rates, especially abroad, while commodities fell slightly as oil production and inventories appeared to pick up.

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Question of the Week - June 20, 2016

Guest Post - Monday, June 20, 2016

What are the primary concerns with a 'Brexit'?

The U.K. is a member of the European Union, which is an organization consisting of 28 nations on that continent dedicated to economic efficiencies, which includes free movement of labor, capital, goods and services, and includes a removal of trade barriers, such as tariffs, as well as other quasi-political functions, such as judiciary and environmental. The EU was formed in the 1950's as a reorganization and enlargement of several smaller unions that had been in place beginning in the years following World War II in an attempt to 'keep the peace' and soften support for some of the war's major causes, such as intense nationalism. After a few decades of existence, it was enhanced under the Treaty of Maastricht in 1993 with additional features, and that's how the monetary union component was formulated and implemented a few years later (although not all nations in the EU chose to participate in a shared currency, and several, such as the U.K., still don't). Encompassing nearly 30 countries, mainstream economists often generally agree that the union is beneficial to its members, through the classic free trade argument that each member is allowed to export the goods/services it is best at providing, while importing what it needs from others doing the same thing.

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Fed Note

Guest Post - Thursday, June 16, 2016

By Ryan Long, CFA Read Entire Article Here

Understanding the New Fiduciary Standard for Retirement Accounts

Ron Kelemen - Wednesday, June 15, 2016

By now, you may have heard of the “Fiduciary Rule” published by the Department of Labor (DOL) on April 6.  The thrust of the rule is to require that anyone who provides advice regarding IRAs and 401-k rollovers to adhere to the Fiduciary Standard.  Previously, this standard for advice applied to only employer-sponsored retirement plans, such as defined benefit pensions and 401-k plans.  The final details are still subject to some back-and-forth with Congress and won’t go into effect until January 1, 2018. You will no doubt hear much more about it, so we thought it would be helpful to explain the Fiduciary Standard and provide you some context.

 We have been a fee-only firm for many years now.  However, to this day we find that some current and prospective clients don’t quite understand what fee-only or the Fiduciary Standard really mean. 


Fee-only means fee-only, all the time, for all accounts.  Our revenue comes directly from our clients—not from product or brokerage commissions, finder fees, trail commissions, or revenue from related entities.  We are fiduciaries, not only for retirement plans, but for all other advice and type of account.  In recent years, the distinctions have become more blurred as brokerage firms entered the advisory arena. They often use the term fee-based, which always doesn’t mean fee-only all the time (more on this under the Broker-Dealer definition below).   

 Here are two standards, followed by who must abide by them. 

Two standards:

Fiduciary—(adj) Involving confidence or trust; (n) held or holding in trust for another.  In the financial world it means putting the clients’ interests first. The duty is to the client, not the company. 

Suitability—whether or not an investment recommendation is appropriate (but not necessarily the best) for an individual.  This is the more lenient standard to which those in the broker-dealer world are held accountable.


Two types of firms:

Registered investment advisor (RIA)—a person or firm that is registered with the Federal Securities and Exchange Commission (SEC) or the states to provide investment advice for a fee.  (That’s us:  The H Group, Inc. is the RIA, and we are Advisory Associates of it.)  The Fiduciary Standard applies in all instances, and full disclosure of all conflicts of interest must be disclosed.  RIAs operate on a fee-only basis all the time.

Broker-Dealer—a firm (typically called a brokerage firm) registered with The Financial Industry Regulatory Authority (FINRA), a self-regulatory organization that governs all business dealings between dealers, brokers and all public investors. Many banks and insurance companies are also affiliated with broker-dealers to sell financial products.  Representatives of a broker-dealer sell products and receive commissions and trail commissions, and only the suitability standard applies. This also applies to in-house inventory and proprietary products manufactured by their broker-dealer.  Many broker- dealers also have created related RIA firms so that they can charge fees.  When they do, the fiduciary standard applies to that portion of their business.  For clients it may be difficult to know which standard is being followed.  Advisors who wear multiple hats are often referred to as fee-based advisors.


The DOL’s Fiduciary Rule is going to require major adjustments for broker-dealers and their representatives in the IRA marketplace.  However, they can still continue with business as usual on other business until the Fiduciary Standard becomes the standard for all types of accounts.  The RIA firms, such as ours, will have fewer adaptions to make, depending upon the final details of the rule.   We’ll keep you posted as the Fiduciary Rule is finalized.

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Weekly Review - June 13, 2016

Guest Post - Monday, June 13, 2016


In a quiet week for economic data, inventories rose, which was a positive for forward-looking GDP, jobs data was decent but consumer sentiment dropped a bit.

Equity markets in the U.S. ended generally flat, while foreign markets lost ground, with global growth and Brexit fears. Bonds ended higher with interest rates falling around the world. Commodities gained with strength outside of crude oil, which was little changed on the week.

 Read Entire Article Here

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