Friday Financial Five – September 23, 2016
Friday, September 23, 2016
It’s a poorly kept secret that markets are reacting in a highly dependent fashion to Federal Reserve policy. While economic indicators are strong as a whole, the Fed has repeatedly delayed action to make sure positive trends are sustainable. Avoiding any possible adverse side effects of raising rates is taking priority. Retirees and savers continue to bear the brunt while borrowers will more than likely get another few months of extremely low loan rates. Assuming the election doesn’t create an overly emotional market reaction, the Fed will have the December meeting to possibly raise rates for the first and only time in 2016.
States file suit against overtime rule
Twenty-one states have filed a lawsuit against the federal government for imposing an overtime rule that the states feel will hamper their economies. The suit was filed in Texas to combat the December 1st ceiling hike for Americans to get overtime pay. The plaintiffs argue the rule issues fiscal mandates to states, making it unconstitutional. If the Obama adminstration averts this legal hurdle, the threshold will jump from $23,660 to $47,476 with the expectation that close to 4 million workers will benefit in the first year.
Congress looks to improve small employer 401(k) plans
The Senate Finance Committee passed to aid small business retirement savers. One provision, if implemented, would allow small employers to work together in Multiple-Employer Plans in an effort to save on administrative expenses. Annuities are another big issue as workers look for a way to guarantee return or provide retirement income without traditional pensions available. Finally, those over the age of 70 ½ may finally be allowed to contribute past that magic age. Slowly but surely, changes may be put into place that recognize the nation’s increased longevity.
Morningstar analysis favors passive over active
Morningstar Inc., which conducts a periodic review of performance by different types of mutual funds, has again determined that passive funds are superior to actively managed funds due mainly to lower internal fees. The difference is glaring when it comes to larger company stock funds. According to the Morningstar analysis, only half of actively managed large-cap growth funds have survived the last decade without being closed or merged.
Tim Duncan’s advisor indicted on wire fraud
The merry-go-round of advisors that take advantage of wealthy athletes continues. One of the more famous cases involves retired San Antonio Spur, Tim Duncan, suing his advisor last year for mishandling $20 million dollars. More details are emerging, as the advisor was indicted by a federal grand jury on two counts of wire fraud. The advisor allegedly defrauded Duncan on multiple loans, in which the advisor had a financial interest. Conviction would mean a maximum jail term of 25 years.
Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected]
Related Slideshow: Power List - Business
Kevin Tracy and Oliver Bennett— There are deals and there are BIG DEALS. In Rhode Island, with all of the changing players and banking relationships, one reality is pretty much the same. If you have a big deal that needs sophisticated financing, the community banks may not be able to handle it.
Bank of America may have abandoned the Superman Building, but they are still in Rhode Island and still doing big deals. Kevin Tracy, the former Brown golfer and Oliver Bennett — long ago Fleet Bank trainees — are now the guys you bring in for a $50 million deal. The more things change - the more they stay the same.
John Hazen White, Jr. — White has taken Taco to new levels as he has made a series of strategic acquisitions to bolster the Rhode Island manufacturing company into a global firm.
He continues to be a leader in American manufacturing investing in worker retention and employee training.
Behind the scenes, White is a combination of an adviser and moral compass to many in Rhode Island. Despite taking a lower profile than his Lookout RI days, White is still a force pushing for ethics reform.
Joe Paolino — Once the young Mayor who took over in the 1980s when Buddy Cianci was forced to resign (the first time), now the leading corporate voice in Providence if not Rhode Island.
While others complain at lunches at the Hope Club and University Club about the plight of the Capital City, Paolino has rolled up his sleeves and taken on issues like panhandling and homelessness.
With a real estate empire that includes much of downtown, some of the top properties in Newport and Hasbro’s campus in Pawtucket to name a few, Paolino has close ties to Governor Gina Raimondo and even closer ties to the Clintons - could a federal appointment be in the works in 2017?
Steve Kirby — No one dominates commercial real estate in Rhode Island like Kirby does on Aquidneck Island. His red “Kirby Commercial” signs are literally everywhere across the island and in Newport proper -- they are more frequent than street signs.
Want to open a clothing store in Newport? Go see Steve Kirby. Looking to launch a startup tech firm? Call Kirby. Developed cool technology and want to start producing for the Navy? Email Kirby.
Kirby maybe the most influential in business on Aquidniick Island. (PS He will tell you which bankers to talk to).
George Nee — President of the AFL-CIO, Nee is one of the most influential players in business in Rhode Island.
He is Vice Chair of the Convention Center Authority Board, on the Commerce Corp board, the most influential voice for labor at the State House, and involved one way or another in just about every negotiation on constructing public buildings or issuing a tax stabilization agreement in Providence.
For the most part his public persona has been more muted recently, but that has not impacted his private influence. If it happens in Rhode Island, Nee has probably touched it.
Sally Lapides — If Teddy Roosevelt were alive today and saw the number of Residential Properties’ real estate signs on the East Side he would call it a monopoly and want to break up the company. Lapides not only dominates one of the most affluent sections of Rhode Island, but she also delves into the arts, education and politics.
When you sell the wealthiest and most influential their homes, you make a lot of friends.
Lapides is a force in residential real estate and it will be interesting to see what she does next.
Helena Foulkes — Two of the biggest decisions CVS ever made were the brain children of Foulkes. The Extracare card and the removal of tobacco from its stores were both influenced by Foulkes.
She has emerged as a national power in business and makes all the business lists for top women, but make no mistake - she is wildly influential in Rhode Island.
She is close to Raimondo and she may decide to jump into political waters in the future - or may decide if she can snag the CEO spot at CVS.
Visionary or Free Rider
Buff Chace — One of downtown Providence's biggest real estate magnates is a lightning rod in the Capital City. Widely considered to be one of the prime catalysts of Downcity's resurgence, Chace's accumulation of properties on Westminster Street is straight out of a Monopoly playbook.
His recent acquisition of the ProJo building has further solidified his dominance, which has not been without intense scrutiny, given his ability to continually secure -- and extend -- tax stabilization agreements at a time when the city's dire financial straits are close to reaching a head.
Wealthy, influential, and active in the community, Chace has chaired the Downtown Providence Parks Conservancy and has been a member of the Executive Committee of the Providence Foundation, and is a director emeritus for GrowSmart RI and a trustee emeritus of Trinity Repertory Theatre.
Richard Baccari — One of the biggest real estate developers in New England. For decades he has been a major player in Providence, Rhode Island and the northeast.
During that span, he has been the driving and innovative force behind some of the region's most significant residential and commercial development endeavors.
See a Stop and Shop development and Baccari probably built it. Has fought back business challenges and much more.
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