Banking News You can Use

From our July 2011 Creating Confidence Newsletter

Your regularly scheduled Go Green article has been interrupted for this important announcement…..

Last week I attended Vistage’s All-City Meeting. It’s a day of great presentations & great networking opportunities. One of the last speakers of the day was Mike Prescott, President of US Bank. I believe he was supposed to speak about the recession, but what I got from him was so much more valuable.

First & foremost he spoke about four cheap services that can protect your bank accounts from fraud. I honestly didn’t even know these existed, but now that I do you can bet your sweet bibby Mackey Advisors will be utilizing these services!

1. ACH Block: ACH blocks are the simplest of all the products to use. They allow companies to notify their banks that ACH debits should not be allowed on certain accounts. With a block in place, no ACH debit, even one that is authorized, will be able to get through on a given account. Everyone is advised to put blocks in place on all accounts where ACH activity is not likely to be used. Quoted Source

2. ACH Filter: An ACH filter allows organizations to give their banks a list of companies authorized to debit their accounts. The banks will then “filter” incoming debits and allow through only those that are on the list submitted earlier. This filter does not check for dollar amounts or whether the particular transaction has been authorized, only that the company doing the debiting is on the approved list. Quoted Source

3. Positive Pay: Positive pay is a service whereby the company electronically shares its check register of all written checks with the bank. The bank therefore will only pay checks listed in that register, with exactly the same specifications as listed in the register (amount, payee, serial number, etc.). This system dramatically reduces check fraud. Quoted Source

4. Reverse Positive Pay: Reverse positive pay is similar to positive pay, but the process is reversed, with the company, not the bank, maintaining the list of checks issued. When checks are presented for payment and clear through the Federal Reserve System, the Federal Reserve prepares a file of the checks' account numbers, serial numbers, and dollar amounts and sends the file to the bank. In reverse positive pay, the bank sends that file to the company, where the company compares the information to its internal records. The company lets the bank know which checks match its internal information, and the bank pays those items. The bank then researches the checks that do not match, corrects any misreads or encoding errors, and determines if any items are fraudulent. The bank pays only "true" exceptions, that is, those that can be reconciled with the company's files. Quoted Source

Secondly, he spoke about 8 questions to ask yourself when choosing a banker. I feel you should ask all of these questions about any company or person you go into business with, whether personal or professional.

1. Do I trust this person?
2. Do I like this person?
3. Does he/she understand my business?
4. Does he/she add value to my business?
5. Is this person an Advocate for me & my company?
6. How is this individual viewed within his/her company?
7. What sales method are they using? Is there transparency in the sale?
8. What is this person’s next job (e.g., promotion within current company, move to a similar company, retiring, changing career paths)?
9. (Personally added) Does this person align with my values?

Thank you Mike Prescott for handing down your worldly banking wisdom. It will not soon be forgotten.

by: Gracie Mohr

Despite Market Swells, Advisors Maintain Allocations

By: Donna Mitchell
May 21, 2010

The financial planners at Seattle-based Moss Adams Wealth Advisors knew how to respond to the ongoing European sovereign debt crisis, which included the punishing market dip on Thursday. Largely, they did nothing, and that was alright with their clients.

There was no dumping of equities across the board. They did not pull up stakes and hunker down in cash positions. “We don’t change our allocations based on the markets dropping or increasing,” said Sheryl Rowling, a San Diego-based partner at Moss Adams Wealth Advisors.

The company generally takes a passive approach to investing, and uses institutional mutual funds for their low costs to investors. The firm does believe in using talented managers when the markets are less efficient, Rowling said, but there was no overwhelming sense that clients were clamoring for change.

After the so-called flash crash on May 6, and leading up to the $1 trillion debt bailout extended to Greece, Moss Adams emailed letters to its clients assuring them that such market upheavals happen, and that they should not react by changing their positions. “Not surprisingly, we got zero phone calls and emails expressing concerns,” Rowling said. “They understand that the market will be volatile, and they understand that what they have is a long-term strategy to meet goals in the long run.”

Certainly, the markets have given advisors and clients enough to spur them to action. The MSCI EAFE Index, a benchmark used by many international mutual funds, was down 13% through Wednesday night. Negative currency exchanges made matters worse, says Alec Young, an international equity strategist at Standard & Poor’s. On Monday, the Euro was down 20.3% against the dollar, and by Wednesday had hit a four-year low below $1.22. Early Friday, the Euro had recovered briefly against the dollar.

“That is more currency risk than clients are used to taking,” Young said. S&P, which lowered its recommendation on international stocks from overweight to marketweight, now says clients should hold back on making new investment decisions. “We are not recommending initiating any new positions.”

Further upstream, executives at asset management firm PIMCO, based in Newport Beach, Calif., say independent advisors on a whole are not shifting their portfolios around dramatically. Instead, they are making changes on the margins. They are hedging for inflation by picking up Treasury Inflation-Protected Securities. To ensure that clients will have money on hand for short-and longer-term needs, they are buying staggered durations of money markets, Doug Ongaro, a managing director at PIMCO, said in a phone call. Ongaro is head of its registered investment advisor channel and a member of the management team for the firm’s global wealth management group. Aside from that, advisors are mainly asking a lot of questions about what their appropriate allocations should be. “They have strategic allocations and methodologies that they stick with,” Ongaro said. “They are trying to be smart about what those allocations mean, and they are trying to be more flexible, in terms of what the markets are providing.”

But some professionals, like the ones at Rockingstone Advisors, a wealth management firm that manages separate accounts for high-net-worth clients, felt they had the answers to those questions: overhaul the portfolio. Rockingstone, based in Larchmont, N.Y., slashed its European equity positions, holding on to just one stock, the AerCap Holdings [AER] the Dutch aircraft leasing company. Emerging markets positions, which used to account for 15% of its clients’ holdings, were also dumped. But it did hold on to emerging market government bonds from markets like Chile and Vietnam. It kept long positions on large-cap technology companies like Apple [AAPL] and Intel [INTC], said Brandt Sakakeeny, the firm’s managing partner.

The market was disappointed with the $1 trillion debt bailout, and felt that Greece should have been allowed to default and leave the Euro, Sakakeeny said. But Germany’s unilateral ban on naked short selling of securities two weeks later really undermined the market’s confidence in European leadership during the crisis. In that practice, a trader sells assets he or she does not own hoping to buy them back cheaper at a later date.

“I confess, we were on the long side of this,” said Sakakeeny. “We thought the initial European response would have been sufficient, but clearly it was not.”

Goldman Sachs vs. SEC - Missing the Point - It's About Fiduciary Duty To Your Clients - R.W. Roge - April 22, 2010

Clearly this is the most critical issue in delivery of financial services today. Mainly because the public does not understand the regulatory differences in advisors. Education yourself about the fiduciary standard before you engage a financial professional.

Goldman Sachs vs. SEC - Missing the Point - It's About Fiduciary Duty To Your Clients - R.W. Roge - April 22, 2010