Financial Considerations When Facing Divorce

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By SJS Investment Services Associate Advisor Catherine Stanley.

You didn’t begin your married relationship thinking it will end in divorce. But life and people are imperfect, and if you find yourself facing a divorce, you know that significant changes are impending. Not the least of these changes is your financial situation. Fear of the unknown and uncertainty about outcomes can cause anxiety, and even take a physical toll.

During this emotional time, it is important for you to acknowledge the magnitude of this life transition, recognize that you don’t have to have all the answers now, and leave space to take care of yourself. Finding the support of qualified legal and financial advisors is an important step to take. At SJS, we are here to make this difficult time manageable for you and help you navigate to a life of new opportunity.

The divorce process requires couples to make decisions about dividing the property that was acquired during the marriage. State laws govern divorce, and each state has different laws that determine how property is divided. In addition, there may be consideration of whether one partner will provide child and / or spousal support, and how much. When dividing resources, it’s important to consider your full financial picture so you understand what is available to you. This includes a thoughtful consideration of the division of retirement assets, even if retirement seems a long way off. Tax implications and timing regarding division of the assets involved can have an important impact on your long-term financial health. 

We understand this transition, and will support your well-being, financial and otherwise. Some topics you should consider include:

• The most tax-efficient way to split assets, including a home, investments, and deferred compensation plans such as a pension, 401(k), or other type of retirement plan. 

• Consideration of all retirement plans from current and previous employment.

• A possible new home purchase, and resources available to accomplish this.

• Caring for children as a single parent, and resources available to accomplish this.

• How and when to file taxes separately, and tax projections with a change in filing status.

• Understanding spousal and child support, and any tax implications.

• Eligibility for future Social Security spousal benefits, and how remarriage may impact eligibility.

• Estate planning strategies so that transfer of assets remain with children, even in the event of remarriage.

• Creating an appropriate asset allocation according to your personal risk tolerance, and designing a cost effective portfolio to support your goals.

Many of these considerations and decisions, if uninformed, can be costly and may not be reversible. We can help you understand the future impact of the financial decisions you are considering today so that you can make the best choices to support your new future. 

Your direction and path of life has changed significantly. At SJS, we are here to be your trusted advisor and to accompany you as your personal and financial journey evolves.

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For more information on how SJS Investment Services works with people going through divorce, please click on the below image.

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Important Disclosure Information:

There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide legal or tax advice. Please consult your legal or tax professionals for specific advice. This material has been prepared for informational purposes only.

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Are Your Assets Protected From Cyber Attack?

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By SJS Senior Advisor & Managing Director Jennifer Smiljanich, CFP® and SJS Associate Advisor Catherine Stanley.

If I asked you the question: How have computers, mobile devices, and the Internet benefited you, you probably would have no trouble answering. These tools have become such a part of everything we do that we often take them all for granted. The fact is – technology has completely upended how we view the world, how we share information, how we do business, and how we communicate.

There is, however, an undesirable side to the technology revolution that seems to reveal its depths daily. The alter ego to the Internet’s free-flow of information is the creature called “cybercrime.” And as long as we are wired together, the network we all enjoy will include the criminal element from around the globe.

Case in point, the Internal Revenue Service recently announced that Americans who received COVID-19-related stimulus checks have been subject to many text and email scams, thus costing many Americans significant money (and time) at a time when they may most need it.[1] According to PurpleSec LLC, cybercrime since COVID-19 onset is up nearly 600% compared to previous years.[2] The IRS Commissioner recently said, "Criminals are relentlessly using COVID-19 and Economic Impact Payments as cover to try to trick taxpayers out of their money or identities. This scam is a new twist on those we've been seeing much of this year. We urge people to remain alert to these types of scams."[1] It is important to emphasize that the IRS doesn't initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information.[3]

At SJS, we know that cybercrime is becoming more prevalent, and we recognize that no business is immune. We are aware that client accounts may be targeted, and email fraud can be a real threat.

CYBERCRIME IS COMMON

According to a Securities and Exchange Commission report from February 2015, 74% of Registered Investment Advisors like us reported they have experienced cyber-attacks, primarily involving malware and fraudulent emails; we think that this number has probably increased over the past few years.[5] Our core value of “Continuous Improvement” comes into play as we work vigilantly to keep up with an ever-changing landscape. 

The custodians we typically work with, including Schwab Institutional and TD Ameritrade, are deeply committed to safeguarding client assets. Both custodial web sites use advanced encryption technology, including 128-bit Secure Sockets Layer (SSL3) encryption. This allows us and you to communicate and share information more safely with them. Both custodians also maintain advanced firewalls, which separate public web servers from the servers that contain account holders’ personal data, to keep unauthorized parties from accessing your personal information. Additional measures, including security certificates, token technology, anomaly detection, and restricting access to client information further help to protect the privacy of your information.[6][7]

There are several other steps you can take to help protect your personal, private information:

• Update your computer’s operating system and browser.

• Activate / install your computer’s firewall, antivirus software, and anti-spyware software.

• Use two-factor authentication (such as requiring both an online password and phone security code text when logging into an account).

• Be cautious using public computers.

• Use wireless networks you trust.

• Don’t use sensitive information in your login ID or password, and especially avoid using your social security number and date of birth.

• Create a unique password and change it at least every six months, and DON’T share it with others.

• Be very cautious responding to an email, call, or text that asks for your account number, user ID, PIN, password, or other personal information, even if it appears to be from a source you trust or recognize. Always double check that the source is legitimate, such as by asking for a separate way to provide this information and searching online whether the request is safe.

• Make sure that SJS has updated contact information for you, especially email and telephone numbers – including an emergency contact, if you so desire.

So the next time we ask you to provide a verbal confirmation before we act on an email request, or when we send you information via your MySJS portal or an encrypted email, know that we require this extra step with your best interests in mind. Our goal is to make sure any attempted fraud is unsuccessful. It’s important to be aware and prepared, but we are hopeful this information will reassure you, not raise additional concerns.

If you want to learn more about our privacy and security policies, or those of the custodians we typically work with, please ask us. In the meantime, we’ll continue doing our best to safeguard your information, leaving technology a true enhancement to our lives.

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Important Disclosure Information And Sources:

[1] “Security Summit partners warn taxpayers of new COVID-related text scam.“ Internal Revenue Service, 04-Nov-2020, irs.gov.

[2] “2020 Cyber Security Statistics.“ PurpleSec LLC, 2020, purplesec.us.

[3] “Tax Scams/Consumer Alerts.“ Internal Revenue Service, irs.gov.

[4] The numbers refer to internet crimes reported to the governmental Internet Crime Complaint Center.
Methodology of evaluating loss amounts: FBI IC3 Unit staff reviewed for validity all complaints that reported a loss of more than $100,000. Analysts also converted losses reported in foreign currencies to dollars. The final amounts of all reported losses above $100,000 for which the complaint information did not support the loss amount were excluded from the statistics.

[5] “Cybersecurity Examination Sweep Summary.“ Office of Compliance Inspections and Examinations, 03-Feb-2015, sec.gov.

[6] “Schwab Bank Online Security.“ Charles Schwab Bank, schwab.com.

[7] “Our Security Procedures.“ TD Ameritrade, tdameritrade.com.

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. This material has been prepared for informational purposes only.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

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Saving as a Young Professional: Give Yourself Options

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By SJS Associate Advisor Catherine Stanley and SJS Managing Director & Senior Advisor Jennifer Smiljanich, CFP®.

Never in a thousand years could we have imagined what it would be like to personally live through the upheaval of this 2020 global pandemic! While there are some silver linings, to be sure, many of us, to some degree, have been affected by feelings of fear, isolation, disruption, limitation, and boredom. Some of us are left feeling a little vulnerable, and it might not feel good.

But sometimes, uncomfortable feelings can serve as a catalyst, and can move us to take action that might not occur during times of “business as usual,” when we may feel happy and at ease. The uncertainty of our world today can open us up to thinking about how we can make our life a little safer, better, or a bit more comfortable in the future. Ironically, one of the greatest things we can do in an attempt to ensure a better future is to acknowledge that something should be done, and to start as young as possible with a plan to make it happen.

The something referred to here is saving and investing for your future. For young professionals in their 20s and 30s, the future, and the idea of retirement can seem very far off and too hard to predict. Not knowing where to start can seem overwhelming, to the point where doing nothing is an easy default.

Although we never know what tomorrow will bring, we do know that our future self will want to be able to choose from options. One of the ways for this to happen is for young professionals to start a savings and investing plan today, so that the power of time and compounding may work on your side. Wise decisions and actions today can often give you more options tomorrow. We hope the uncertainty of this pandemic, and knowing you have someone at SJS to talk to, may nudge you to start your savings and retirement plan. If you’ve already started, well done!

To that end, we will revisit some of the tried and true strategies behind a solid investment plan.

Live within your means

Simply put, spend less than you earn. By doing so, you can save to take care of future YOU! There are many thoughts on how much you should save, but according to George S. Clason, author of The Richest Man in Babylon, at least 10%. Mr. Clason states, “A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn. It can be as much more as you can afford.”[1]

There are many good budgeting tools available to help you track how much you are spending to live within your means.[2] If you don’t know how much you spend, this is a good place to start!

Automate your savings / investing so it has priority

For every paycheck, set up an automatic transfer to your savings or brokerage account. Making YOU important enough to come first is very affirming!

Start young, start early, start now!

I mentioned the power of compounding before, and I cannot explain it any better than this powerful graphic. Take a look, and trust that you are doing yourself a huge favor by acknowledging its power and harnessing it for your own good. Save as soon as you can, as much as you can, and let time and interest on interest help build your nest egg!

Be prepared

By doing some pre-planning and using the tools available to you, you can increase the likelihood of staying on track.  

• Have a Plan B.  Set aside funds in case of an emergency. Ideally, your emergency fund should be between 3-6 months of living expenses, kept in a safe, liquid vehicle such as a savings account or money market account.[3] So when your next “uh, oh” moment comes along, you will be ready.

• Don’t just save. Invest for retirement.  With investing, you will need to learn about the trade-off between risk and reward. Investments that give you higher returns may potentially get you to your retirement goal sooner, but they inherently come with greater risk. On the other hand, the safest of investment vehicles, such as a US Treasury bill, probably won’t earn enough return to outpace inflation over time. Find the right balance for you! Seek out a CFP® professional or trusted investment adviser to help you set a plan that meets your needs and stay the course. If you have a long-term plan and stick with it, then the daily volatility in the market may be just noise.

• Maximize your resources.  If your employer has a 401(k)-matching plan, take advantage of it to the greatest extent that you can…matching funds are free money! Consider making IRA contributions if you can. Pre-tax contributions to retirement plans and IRAs may decrease the amount of tax you pay on your income each year, and the funds will grow tax-deferred, compounding over the 30+ years you have until retirement.

• Start a 529 education savings plan as a way to use compounding to help pay for your child’s college education. There is often a state tax deduction or credit available for 529 plan contributions, varying by state.

Starting your savings and investment journey today means you’ll have to balance today’s current enjoyment with tomorrow’s future enjoyment. Decisions or circumstances along the way may create diversions from the path, but if you have a strategy, you can always come back to it. The goal is to stay on track so that over time, future You will appreciate that you gave yourself options to choose from. At SJS, we are happy to have these conversations with you, and to help guide you to an investment plan for the long-term that you can stick with.

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Important Disclosure Information and Sources:

[1] The Richest Man in Babylon. George Clason, 1926, Berkley.

[2] “10 Simple and Free Budgeting Tools.” Maryalene LaPonsie and Lars Peterson, 21-Jun-2019, money.usnews.com.

[3] “Emergency Fund: What it Is and Why It Matters.” Margarette Burnette, 20-Mar-2020, nerdwallet.com.

Advisory services are provided by SJS Investment Services, Inc.., a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only. There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.

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Welcome, Catherine Stanley, to SJS Arizona

SJS is delighted to welcome Phoenix native Catherine Stanley, who joins our team in Scottsdale, Arizona as Advisor Support Associate.

Catherine earned her bachelor’s degree in marketing from the University of Arizona, and she also holds her MBA from the Thunderbird School of Global Management at Arizona State University. Before joining SJS, Catherine worked for more than 20 years in international marketing and operations throughout Latin America and China. She loves the richness and challenge of communicating across cultures, speaks both Spanish and Portuguese fluently, and learned some Mandarin while living in China.

Catherine has had a passion for personal finance from a young age, and her interest in studying global markets arose from her extensive experience living abroad.

Most weekends, you’ll find Catherine supporting her son’s soccer competitions, or spending time with her family, including her two adult children, granddaughter, and her parents who live nearby – as well as her two dogs.

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