Friday Financial Five – February 14th, 2014

Friday, February 14, 2014

Dan Forbes, GoLocalWorcester MINDSETTER™

Another delay in the Affordable Care Act mandate

The U.S. Treasury Department released final regulations for the Affordable Care Act (ACA) and they contain another delay in required implementation for businesses with 50 to 99 employees. One would think that businesses could comply by the beginning of 2015 given over a year to prepare. That leads to speculation that the actual implementation is either more expensive or more detrimental to business practices than originally projected. The Treasury estimates that this will affect roughly two percent of businesses in the U.S.

Increased scrutiny of 401(k) rollovers

There will be special attention paid to advice ex-employees or retiring workers receive regarding their 401(k) plans. After leaving a job, an ex-employee can leave the money in the former employer’s plan or move the money to an IRA Rollover. The variables of that decision and the advice of investment advisers will come under more scrutiny by federal regulators. For example, if the old 401(k) has numerous low cost investment options and an advisor is suggesting the money be moved to a variable annuity within an IRA, there will have to be documentation that this transition best benefits the client.

Hedge funds trail again in 2013

Last year, the Bloomberg Hedge Fund Aggregate Index again trailed the S&P 500 by a wide margin. In returning only 7.4% for 2013, this index even greatly underperformed a traditional balanced allocation of equities and fixed income holdings. For hedge funds, there certainly was a benefit provided by restricting losses in 2008, but recent evidence to justify large management fees continues to be sparse.

The return of Fantex

After an uneventful initial attempt to connect athlete brands and investment markets using Arian Foster, Fantex (https://fantex.com/ ) recently paid San Francisco 49er Vernon Davis $4 million for a piece of his marketability. This will be a true test of this investment premise, as Davis is in line for a new contract and has various outside business interests. It’s a truly speculative premise, with success seemingly dependent on Davis transitioning to a successful post-playing career. The company’s site currently prices a share at $10 with just over 400,000 shares being offered.

Valentine’s Day and the economy

Today is Valentine’s Day, and the prevailing wisdom is that there’s an economic bump due to increased spending in an attempt to impress loved ones with candy, flowers, or tickets to a Brown basketball game. The fact that it’s on a Friday would only seem to bolster this theory. However, the National Retail Federation expects sales for this day to come in $1 billion less than 2013. Per person spending is expected to increase, but a dramatic drop in the number of people celebrating the holiday is expected to account for decreased spending.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected] .