Echo Blog

Echo Blog

Echo Wealth Management Now Hiring an Associate Wealth Manager

starting in spring or early summer 2018

Company Website: www.EchoWealthManagement.com

About the Company

Echo Wealth Management is an independent, focused wealth management firm located in Plymouth, Minnesota that takes the complexity out of wealth management.  We offer integrated, comprehensive strategies that address every facet of our clients’ financial lives.  We do this by building the highest levels of trust, integrity and respect while always collaborating using a team approach.  Our clients range from corporate executives planning a secure retirement, to families looking to preserve their assets for future generations, to businesses seeking expert investment advice.  Echo Wealth Management was formed in February 2015 as a Registered Investment Advisor (RIA) and is looking for an Associate Wealth Manager to join a growing firm and support Echo Huang, CPA, CFP®, CFA, founder of this firm who has over 20 years of experience.

What is an Associate Wealth Manager, you ask? Our Associates are more like apprentices than support staff, and go through a rigorous three-year program where they learn to be a wealth manager, and not just any Wealth Manager... an Echo Wealth Manager.

Qualifications 

  • Bachelor’s degree (Financial Planning, Finance, Accounting, Economics, or a related field)
  • Driven to succeed in a collaborative environment
  • Excellent interpersonal and relationship management skills
  • Positive attitude and an extraordinary client service orientation
  • A genuine interest in serving and caring for other people
  • Dependable, ability to multi-task, manage time effectively, and work unsupervised
  • Intellectual curiosity, with a high attention to detail
  • Strong written, verbal, math, financial analytical, problem solving, and organizational skills

My "Me Too" Story

By Echo Huang, CPA, CFP®, CFA

As the Harvey Weinstein story has been in the news for the past month, I am grateful to see more women having the courage to raise awareness of sexual harassment in workplaces and protect more women.  One of my “Me Too” stories happened many years ago when I was about 19 years old in China.  

After graduating with an accounting diploma from Shenzhen School of Business and Economics at age 17, I received a great job offer to become an accountant at the Bank of China, Shenzhen Branch.  In this, my first full-time job, I was paid more than my parents, who were high school teachers, had ever been paid. I felt excited to spread my wings to fly far away and I requested a placement to the office in Shekou, a small seaside town about 30 miles from my parents’ home.  I moved into the two-story building the bank provided, where each person had own room and shared the two bathrooms at the end of each floor.  I liked my room at the corner on the second floor as it had a door to an outside large balcony.

On a winter night, a few days before the Chinese New Year, I went to bed as usual after listening to soothing piano music and studying English.  It was a dark and cold night (there were no heaters in the rooms back then). I put an extra blanket on the top of my comforter and closed my eyes.  

I woke up suddenly in the middle of the moonless night, feeling a great weight on top of me.  Before I could react, duct tape covered my mouth. I opened my eyes, but couldn’t see him in the darkness, even though he was close. He was sitting right on top of me with the comforter and blanket between him and me.  His right hand was pressing the duct tape on my mouth very hard.  I immediately used my left hand to grab his right wrist and then my right hand to grab his left wrist, feeling his metallic watch band.  He didn’t say a word.  I was so afraid, but my natural instinct told me to get out of there fast!  Holding onto both of his wrists tightly I twisted to my left, trying to shake him off my small bed.  

What Should You Do Now to Protect Your Identity?

By Echo Huang, CPA, CFP®, CFA

This month, we were told that 143 million Americans had key identifying information stolen through the credit reporting company Equifax.  In addition, we just learned that Equifax purchased an identification protection service called ID Watchdog on August 10, two weeks after Equifax discovered the data breach but a month before disclosing it publicly.  Law enforcement officials from about 40 states are in the process of investigating Equifax’s behavior before and after the data breach.  At this time of uncertainty, what should you be doing right now to protect your identity?

  1. Monitor credit reports closely.  You can request your free credit report on an annual basis by going to www.annualcreditreport.com.  Download a copy and read through everything to ensure accuracy.  In addition, consider using a free credit monitoring service such as www.creditkarma.com and use its mobile app to stay up-to-date in real time.
  2. Open your account with Social Security Administration.  You can go to www.ssa.gov to open your own account and download your recent social security statement.  You should verify that your past income information is accurate.  You should compare the income on this statement to the numbers on your past tax form W-2.
  3. Consider a credit freeze.  A credit freeze is the single most effective way to protect against fraud, in my opinion.  It literally freezes the ability of anyone, including you, to open new credit of any kind in your name or under your social security number.  If a prospective lender can’t pull your credit report, he won’t issue a new loan.  This usually stops identity thieves from setting up fraudulent accounts in your name.   Not everyone is blocked from getting your credit report, but it's close.  Banks and credit unions where you already have accounts can still check your credit report, as well as collection agencies and certain government agencies.  In light of recent events, I decided to place a credit freeze this week. In doing so, I evaluated the website and the telephone customer service line and found out that using its website is easier than calling the phone number due to the large volume of phone calls.  These are the links and phone numbers to use if you decide activate your own credit freeze:

A. Equifax, 1-800-349-9960. www.freeze.equifax.com

B. Experian, 1-888-397-3742.  www.experian.com/freeze

C. Transunion, 1-888-909-8872.  www.transunion.com/securityfreeze

Evernote: The Best Tool to Get Organized

By Echo Huang, CPA, CFP®, CFA

Evernote is a cloud-based, information organization app.  I have been using Evernote since 2011 to capture ideas, notes, important documents, images, and track projects and my goals.  Initially I used the free basic version, but then I upgraded to the premium level ($69.99 per year now) and I find it is well worth it as I can do so much more by adding Word documents, PDF documents, and Excel files as well.  I would like to share with you a few of the ways I use it to increase my productivity and reduce paper clutter.

  • Organizing Projects.  We started building our new house in spring 2012, and there were just so many decisions and checklists to be made every day to meet deadlines.  I took pictures of homes, materials and web pages and uploaded them to my Evernote account.  I can attach notes and use multiple Tags for each note so that later I can search for it easily when I need it, even from another computer. 
     
  • Keeping Track of Receipts.  This is important, especially the receipts for the expenses that are tax deductible.  I can scan paper receipts to Evernote, so when I receive a receipt in my email inbox, I forward it to my Evernote and then Tag it as “Receipts” and “Tax Deductible”.  If the receipts are related to products I bought that have a warranty, I add another Tag for “Warranty” and the name of vendor.  Later, I can find them easily by searching for the Tags. 
     
  • Clipping Web Pages to Read Later.  How often do you say to yourself “I will read this later” when you browse websites?  Now it’s easy: Launch Web Clipper to start clipping. Click the elephant button in your browser toolbar to launch Web Clipper. Select a clip type, full-length or sections of web pages, such as news stories or research articles. Save time and review clipped content offline, during your commute.  I Tag these article as “Read Later” in Evernote and read them later.  After I finish reading them, I then remove the Tag.
     
  • Taking Notes on My iPad and Then Filing Them in Evernote.  This is so convenient when I go to conferences and monthly FPA meetings outside my office.  Using tags such as “FPA Symposium” or “TD Conference” I am able to find them later in my office to share the Notes with my team.  If I didn’t bring my iPad to the meeting, I can use my iPhone to take notes using the Evernote app and it will sync with my Evernote account immediately.  If you write something on the handout and take a picture to be unloaded to Evernote, you can actually search for the words you scribbled in the picture. It’s amazing.
     
  • Taking Pictures of License Plates, Printer Cartridges, Air Filter Models, My Foundation #. Anything you want to reference later and not use part of your brain to memorize should be captured.  When you are at the store, you can pull up the images you filed in Evernote to get the shopping done quickly.  Pictures of my daughter at special events, and the amazing art projects, photographic essays, and slide presentations she creates are filed and tagged accordingly.  Exactly two months ago today, we welcomed our first puppy, Luna, a petite Goldendoodle to our home!  She will have her first haircut this evening, and I will take a picture of her before and after, then upload them to my Evernote account.  If I like the hairstyle, next time I will show the picture to the groomer without even having to describe it.
     
  • Tracking My Goals and Reviewing Them Periodically. It doesn’t matter how big or important a goal is, if we don’t review it, it’ll fade from memory. It’s almost as simple as the old saying: “Out of sight, out of mind.”  Unless I’m tracking my progress against my goal, I’m probably not actually making much progress.  What that means is that we need an intentional, regular review process for our goals.  Evernote is perfect for tracking goals.  It’s a better goal-tracking solution than more robust, dedicated applications. (Remember: “Complexity is the enemy of execution.”)  In addition to business goals, I track personal goals including “New Year Resolutions”.  Don’t laugh, I still write down my resolutions, not on paper, but in Evernote.  Looking back a few years, I’m amazed how much I have accomplished in business by using this tool  Personal goals status: falling behind in learning Spanish, but doing well with piano practice, reading and travel.

Echo Huang, CPA, CFP®, CFA Awarded the Five Star Wealth Manager Award for 2017!

 

Echo Huang has been a six-year recipient (2012 - 2017) of this award.

Alternative Fixed Income Strategies in a Rising Interest Rate Environment

By Echo Huang, CPA, CFP®, CFA

After a long wait, the Fed finally did raise the federal funds rate by 0.25% last month.  You may not have noticed the impact in your financial statements yet, but investing in fixed income is becoming more challenging, because traditional bonds with fixed coupons or longer maturities typically recede in price as interest rates rise.  Bonds have performed well in the past decade but even they may struggle to deliver the total return you expect over the next few years.  So what can you do to reduce the interest risk in your portfolio?

Hedged Equity Strategy - Targeting A Smoother Ride for Equity Investors

By Echo Huang, CPA, CFP®, CFA

As the US stock markets have done well for the past 8 years, many investors wonder if their portfolios are positioned well for potential market corrections.  Though it is impossible to predict the future, expecting volatility in the coming years is a safe bet.  Market volatility is normal, and feeling uneasy about a lower portfolio value is normal too.  Historical analysis shows that pullbacks of 5% have occurred about once a quarter, and pullbacks of 10% are likely to occur once per year.  Large pullbacks greater than 20% tend to occur just once per market cycle.  It is especially important to be mindful about how to dampen portfolio volatility in the later stages of the business cycle.

With the memories of large losses in stock markets in year 2008 when S&P 500 Index lost 38%, many investors feel like allocating more to bonds and cash now to reduce volatility of portfolios.  However, while bonds are part of a diversified portfolio, bonds are not paying much interest and the value of bonds tend to go down as interest rates are likely to increase in the future.  Money market funds are earning less than 1% and are not likely to provide returns exceeding inflation.  At Echo Wealth Management, we have considered various alternative strategies to reduce equity risk and have implemented three equity alternative strategies in our client portfolios.

One of the equity alternative strategies is hedged equity strategy that can hedge against equity’s downturns in order to help investors stay invested by avoiding the emotional mistakes of getting out of the stock markets near the bottom.  This is not a hedge fund (with tax form K-1), it is a liquid equity alternative solution that is engineered to be constantly hedged. 

Downside protection:   This disciplined option overlay is combined with an enhanced index portfolio.  Buying puts at 5% below the investment and selling puts at 20% below this investment aim to limit declines in this investment to a negative 5% in any given quarter (capped at negative 20%).  So if the investment declines 16% in one quarter, this investment is only down 5%.  To generate additional cash flow, calls are sold at 3.5% to 5% above the investment price that allows this investment participate in about 3.5% to 5% upside in any given quarter.  While this is riskier than a bond, it has much more upside potential and it is not sensitive to interest rates.  

Have You Considered This Mega Roth Strategy?

By Echo Huang, CPA, CFP®, CFA

Last month, one of my new clients and I called the administrator of her old 401(k) plan to rollover the balance to her IRA account at TD Ameritrade.  To her surprise, she had $36,000 in after-tax contributions (not the same as a Roth) with earnings of $70,000 from the after-tax contributions she made many years ago in addition to $700,000 pre-tax contributions and earnings.  She was able to request two checks - one for the $36,000 to a new Roth IRA account (a Roth conversion that is tax-free because there is no taxation on otherwise after-tax funds!) and one for the $770,000 to a traditional IRA account (which does not incur an income tax assessment by virtue of being a rollover).  The end result – now she has $770,000 of all pre-tax funds in an IRA, $36,000 in a Roth IRA, and her tax cost this year is zero!

One great benefit is that the balance in her Roth IRA account will now grow tax free!  It was a pleasant surprise for both her and for me, but I thought to myself “If she had rolled-over the $36,000 to her Roth IRA earlier in 2014 or 2015, the earnings from this after-tax contribution in the past two to three years (i.e. $7,000) would have been tax-free instead of being in an IRA that will be taxable upon distribution.”  And this made me want to tell you, that if you have made any after-tax contributions to your 401(k) from before the Roth 401(k) became available, you should consider reviewing the plan provisions on in-service withdrawals if you still work for this company.  If you have already left or retired from this company, it’s still easy, you can do what my client did.  But leaving an after-tax balance in the plan does not help you grow tax-free because the earnings from the after-tax contributions are taxable if you take distributions from the plan to spend in the future.

Financial Planning Like It's 1999!

By Tyler Lodahl, Associate Wealth Manager

When we are children and young adults, it can be easy for us to go about our lives without thinking about the true value of learning particular skills now, when we are young, rather than waiting until we’re older. When I look back at my life through those halcyon days of middle and high school, and even college, it makes me truly realize the significance and value of learning particular financial life skills when we’re young. These skills, I now realize, not only impact a young adult’s knowledge and understanding of finances at that age, but also evolve over time as they gain life experience and exposure to new and more complex financial concepts. As a Junior and Senior at the University of Wisconsin-Madison, I served as a peer educator for two Financial Life Skills courses, one for freshman/sophomore students, and the other for upper classmen, with most of the students being seniors preparing for life after graduation. The courses covered topics ranging from our personal view of money based on our core values, beliefs, upbringing, etc., to preparing financially for unexpected life events by establishing a “rainy day fund”, to utilizing insurance to best fit our needs. My interactions with these college students and other students over the years related to personal finance have highlighted for me a few key financial life skills/concepts. Three concepts that consistently arose and that I wish I was exposed to in greater detail at a young age are:

  1. Budgeting/cash flow management;
  2. The power of paying yourself first as a saving strategy;
  3. The value of compound interest.

Are Investment Advisory Fees Tax Deductible?

It’s tax season again, and a question we get from a number of clients after receiving their year end statements is, “Are my investment advisory fees tax deductible?” And the answer is an equivocal, “It depends.”

Congress did grant a tax deduction for certain investment expenses, but with anything to do with the tax code, the devil’s is in the details. Not to worry though, we’ll use this opportunity to settle the issue no matter your situation.

In general, the tax code allows for the deduction of expenses incurred in the production of income. With regards to investment income expenses, there are essentially two types:

Any expense incurred in the purchase or sale of a security, such a commission or a sales load on a mutual fund. These expenses are not tax deductible. Rather, they are applied against the cost basis in the purchase or sale of the security.

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