Accountability of Schwab Advisers

Comment on “How Schwab Invests, and His Views on the Broker Industry,” an interview with Charles Schwab, in the March 2020 AAII Journal:

Charles Schwab Corp. (SCHW) is a savings and loan corporation that delivers its portfolio management services through a separate company that houses all its independent advisers. Our financial fortunes are pretty much at the mercy of the capabilities and character flaws of the people in positions of trust that control market access and the “invisible” mechanisms used to deliver our objectives. Charles Schwab did not discuss how he ensures that his Schwab advisers subscribe to the same highly principled ideas he sets forth in his book or the advice he shares in this interview.
—Barry C. Johnson from Texas

Rebalancing & Market Movement

Comment on “Rebalancing Update: First Signal in Six Year to Adjust Allocations Issued,” by Charles Rotblut, CFA, in the March 2020 AAII Journal:

What was the actual date of this proposed rebalancing? It’s likely that the market’s drop self-corrected this out of balance issue.
—Tom from Texas

Charles Rotblut responds:
Tom, I used end-of-year data, so as of December 31, 2019. While the recent volatility is impacting the allocations, what the models show is that over time, simply relying on market movement is not enough to preserve the allocation.

Planning for the End of the Road

Comment on “Key End-of-Life Planning Tasks to Complete,” by Michael Falk, in the March 2020 AAII Journal:

Excellent article. I’ve been working the last couple of years on just what you preach, I’m calling it a road map to my life and endings. I’m copying this article and will put a copy in the family trust papers along with a much more personal letter, wishing the kids well with figuring out what I have cobbled together over the last 80 years. Thanks for your input and for giving me the confidence that I’m doing good with what I have accomplished so far.

By the way, don’t forget computer passwords and login names; make a list since these days everything we do is on the computer.
—Capt. Bill Ludwick from Florida/Ohio

Dividend Date Clarification

Comment on “Essential Dividend Dates You Should Know,” by Derek Hageman, in the March 2020 AAII Journal:

What happens if a stock is sold after the record date but before the payment date?
—Elmar Lawaczeck from Alabama

Charles Rotblut responds:
If you sell a stock after the record date, you are the owner of record for purposes of the dividend payment, so you would receive the dividend.

Fund Outperformers

Comment on “Outperforming Funds Stop Outperforming,” from Dispatches in the March 2020 AAII Journal:

My view: Nothing is forever. I will hold a stock or exchange-traded fund (ETF) until performance degrades below its peers. The latest AAII Top Mutual Fund and ETF guides show no (or very little) correlation between, say, year 1 & year -1, -2, -3, -4, -5. Discard it all and just compare charts of top leaders for latest gain and momentum, pick the top ones, buy and then monitor them similarly. Sell when your holdings deteriorate. Repeat.
—Roger from Florida

Estimating Retirement Needs

Comment on “How Future Retirees Overestimate Their Benefits,” from Dispatches in the March 2020 AAII Journal:

The question to ask is also whether future retirees are understating their needs at/during retirement. I think people should not be counting on Social Security benefits at all with their retirement planning, especially younger people. It is unlikely that young people will save enough in defined-contribution plans, even when augmented by Social Security, to satisfy their expected lifestyle in retirement—especially as people live longer.

Finally, the accepted “wisdom” that, at retirement, a retirement investment portfolio will be liquidated over time suggests poor retirement planning. Properly invested, almost anyone has the potential during their working life to accumulate a properly structured portfolio that can actually increase during retirement.
—Anonymous