Blog

Stepping Up Defense Spending, Cybersecurity Tips for Small Business, a Possible National Suicide Hotline and Affirming the U.S. Press Is Not the Enemy

John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515) – Introduced by Rep. Mac Thornberry (R-TX), this bill increases the size of the Army, Navy, Air Force, Naval and Air Reserve and Air Guard; fully funds a 2.6 percent pay raise for troops; and extends special pay and bonuses for service members in high-demand fields. The legislation increases funding for training for each branch of the Service, such as flying hours and other training operations, and to improve and modernize major combat range and test facility bases, including advanced threat radar systems. Other allocations for the total $717 billion bill include repairing and buying new equipment, military installation construction and infrastructure, nuclear deterrence and missile defense, space warfighting deployment and acquisition planning, and to combat adversarial aggression from emerging technologies, terrorism and countries including Russia, North Korea and Iran. The bill was introduced on April 13 and signed into law by the president on Aug. 13.

National Flood Insurance Program Extension Act of 2018 (S. 1182) – This bill was introduced by Sen. Todd Young (R-IN) on May 18 and signed into law by the president on July 31. The bill temporarily extends the National Flood Insurance Program through Nov. 30 without any reforms.

NIST Small Business Cybersecurity Act (S. 770) – Sponsored by Sen. Brian Schatz (D-HI), this bill authorizes the Director of the National Institute of Standards and Technology to make available guidelines and resources designed to help small businesses identify, assess, manage and reduce their cyber security risks. The bill was introduced on March 29, 2017, and was signed into law by the president on Aug. 14.

National Suicide Hotline Improvement Act of 2018 (H.R. 2345) – This bill directs the Federal Communications Commission, in consultation with the Substance Abuse and Mental Health Services Administration, to study and report on the feasibility of designating a three-digit dialing code to be used for a national suicide prevention and mental health crisis hotline system. The bill was sponsored by Rep. Chris Stewart (R-UT) on May 3, 2017, and signed into law by the president on Aug. 14.

Strengthening Career and Technical Education for the 21st Century Act (H.R. 2353) – This bill was introduced by Rep. Glenn Thompson (R-PA) on May 4, 2017, and signed into law by the president on July 31. The legislation reauthorizes the Carl D. Perkins Career and Technical Education Act of 2006 to help train more Americans for high-skilled, in-demand careers. Specifically, the legislation streamlines the state application process for federal funding, imposes fewer performance measures and reduces the federal role in transparency and accountability.

A resolution reaffirming the vital and indispensable role the free press serves (S.Res. 607) – Introduced by Sen. Brian Schatz (D-HI), this simple resolution affirms that the press is not the enemy of the people. It reaffirms the vital and indispensable role that the free press serves to inform the electorate, uncover the truth and act as a check on the inherent power of the government. The bill also condemns the attacks on the institution of the free press and views efforts to systematically undermine the credibility of the press. The resolution was introduced and agreed upon on Aug. 16. That is the end of the legislative process for a simple resolution.

 

Posted in Blog, Congress at Work | Leave a comment

Cyberattack Prevention Planning

Every year we experience new challenges in the world of computer hacking – as well as new solutions. Cyber hackers have become aggressive, and so business owners must be more vigilant. Because clients are the source of your revenue, it is critically important to ensure their data never gets into the wrong hands.

According to a recent survey conducted by the Better Business Bureau, more than half of small business owners reported they would no longer be profitable just one month following a data breach.

According to Bill Fanelli, the chief security officer for the Council of Better Business Bureaus and co-author of the report, a primary vulnerability for small businesses is the carelessness of its employees. In fact, Fanelli observed that one of the most cost-effective prevention tools – employee education – is used by less than half of the companies surveyed. All it takes is for just one employee to click on a nefarious link or open an infected attachment for a cyber attacker to walk through an open door to your business.

In many cases, business owners simply need to make employees aware of the types of behaviors that enable hackers to breach system security. To this end, the easiest prevention plan is to periodically conduct brief training sessions to reiterate the importance of:

  • Choosing a strong password
  • Changing the password often
  • Installing software updates as soon as alerts are received
  • Avoiding opening suspicious emails or online links
  • Never downloading unauthorized software or apps on company computers or smartphones

Firms should conduct a full assessment to protect their business from data breaches at least once a year. Also, it is recommended that business owners ensure all transactions are secured through solutions such as:

  • Automated Clearing House payments – an electronic network for financial transactions
  • Secure Point of Service terminals – an electronic device used to process card payments

One way to help protect your financial transactions is to consult with your small business banker for a review of your current transaction management services to ensure you’re doing all you can to protect your business and your customers.

How to Develop a Cybersecurity Plan

Consider using this five-step approach to help prevent your firm from being vulnerable to a data breach:

  1. Devise a step-by-step written communication plan detailing how your firm will conduct ongoing monitoring and maintenance, and recover normal operations should a cyber attack occur
  2. Identify at-risk assets, such as systems, data and financial operations
  3. Protect each asset by using tools such as IT security, off-site/cloud backup and vendor protection measures
  4. Develop an automatic alert system to detect incidents that indicate current or imminent threats to system integrity and lost or compromised data
  5. Create a response plan that encompasses worse-case scenario and contingency planning, staff training, written procedures, reporting and outreach communications to staff, vendors, customers and the public, if necessary.

Cybersecurity might not be your area of expertise, but your customers rely on you to keep their data safe. It’s important to take precautions to minimize your risk from this ever-growing danger.

Posted in Blog, What's New in Technology | Leave a comment

8 Ways to Stay Healthy When You Sit All Day

According to Dr. James Levine, an endocrinologist at the Mayo Clinic, sitting is the new smoking. In his study that spanned 15 years, it was determined that spending more than six hours a day on your behind contributes to unhealthy blood pressure, obesity, depression and some types of cancer. And that’s just for starters. Here are a few simple things you can do every day to combat these potentially life-threatening conditions.

  1. Set a timer. When you’re engrossed in your work, time can slip away. You glance at your watch and you’ve been sitting for two hours. This can take a toll on your health. Set a timer for every 30 minutes. Get up, stretch, go the restroom, drink water, take a lap around the office while your files are downloading or step outside and get some fresh air. The more you move around during the day, the better your overall health – both physical and emotional – will be.
  2. Wash your hands. Those pesky germs are everywhere: door knobs, keyboards, conference rooms, you name it. They’re invisible and potentially harmful. And, as much as you may (or may not) like them, your coworkers are also a source of infection, with their sneezing and coughing. Keep some hand sanitizer at your desk. Even better, get up and wash your hands in the restroom, the latter of which is doubly healthy because you’ll be moving your body.
  3. Walk and talk. You’ve seen those movies where the boss says, “Walk with me.” It turns out this dynamic has some merit – and health advantages. Instead of sitting down with someone, ask them to take a walk with you to discuss the subject at hand. If it’s a phone meeting, get up and pace. Moving those legs is a good thing.
  4. Drink plenty of water. Hydration is key to keeping yourself in tip-top shape. But know this: thirst doesn’t always signal that you need liquids; it can also be a sign of hunger, at which point you might be tempted to grab a sugary snack. Solution? Drink water instead to quell your grumbling stomach. Thirst is also a symptom of lack of sleep, which leads us to the next tip.
  5. Get a good night’s sleep. When you don’t have enough sleep, everything has the potential to be off-kilter: your mood, attention span and your sense of being satiated. In case you feel hungry, drink water – or even hot tea. When your stomach is full, you minimize the chance of overeating or eating something that’s full of fat or sugar, which can lead to weakening your immune system in its already compromised state (sleep deprivation).
  6. Invest in a pedometer. Getting steps in is not just for people over 65. Everyone needs them. Pedometers are generally affordable – between $15 and $35. According to an article in Prevention magazine, after one woman increased her daily activity to 9,950 steps a day, she lost five pounds and lowered her cholesterol 24 points. Get steppin’ for feeling better and staying well!
  7. Check your posture. If refrains of “sit up straight” from parents and teachers are circling through your head, don’t push them away. Turns out that bad posture can lead to all kinds of detrimental effects: sore muscles, spinal curvature, blood vessel and nerve constriction, not to mention depression, low energy and stress. No one needs that. Instead, adjust your backside so that it touches the back of your chair. Look at the ceiling to stretch your neck. Raise your arms and reach for the sky. Relax your shoulders. And lastly, breathe.
  8. Adjust your monitor. Sitting too close to your monitor can cause eye exhaustion, burning and muscle aches. And when your monitor is too high or low, it can lead to headaches, double vision, difficulty focusing your vision, nausea and dizziness. Here’s the remedy: sit about an arm’s length away and align the top of your screen with your eyes so that you look down a bit at your monitor. This should alleviate any irritations that might arise.

So, the next time you’re sitting at your desk and are in between tasks, give these tips a read. See if one of them applies and give it a try. One small tweak to your daily routine could make all the difference for your health and well-being.

Posted in Blog, Tip of the Month | Leave a comment

Funding Options For Long Term Care Expenses

The longer people live, the greater the chance they will need assistance in old age. And today, people are living longer than ever. As if providing for one’s own retirement isn’t hard enough, now we must factor in the cost of providing long-term care.

Health insurance – including Medicare – is designed to cover only expenses related to acute care, such as a trip to the hospital. It does not cover the cost of assistance over a long period of time – and certainly not for the rest of your life. Unless you qualify for government benefits or purchase some form of long-term care insurance, this form of assistance must be paid for out of your retirement income.

In addition to whatever saving and investment vehicles you are using to accumulate a retirement nest egg, it’s also important to consider what options are currently available to help pay for long-term care.

Medicaid and Medicare

Medicaid offers benefits for long-term care, but generally it requires that beneficiaries use their own assets to pay for care until they are down to their last $2,000. Certain assets are excluded such as home equity in your primary residence of up to $572,000 – $858,000, depending on which state you live in. Medicaid coverage is available only for traditional nursing homes, but not every facility accepts Medicaid patients.

Historically, Medicare offered coverage for nursing home care only up to 100 days after a hospital stay. However, in March of 2018 the Centers for Medicare and Medicaid Services (CMS) announced that, starting in 2019, Medicare Advantage (MA) plans would be permitted to offer coverage for certain long-term care services. The CMS has left it up to individual MA insurers to determine specific coverage options, but suggested that it might include home aides to help with daily living activities as deemed medically appropriate by a licensed health care provider.

Be aware that only Medicare Advantage plans, not original Medicare, is able to implement long-term care coverage under this new rule.

Veteran’s Benefits

If you are a veteran who served at least 90 days during a time of war, you might qualify for long-term care benefits through the Veterans Aid and Attendance program. Eligible applicants may not exceed certain income and asset limit requirements. The benefit offers as much as $1,830 per month to a qualifying veteran and as much as $1,176 for a surviving spouse specifically for long-term care assistance.

The Housebound Benefit is another long-term coverage option for veterans with a permanent disability that leaves them mostly shut-in at home, but who do not need daily assistance. The benefit is paid as an additional stipend to a veteran’s monthly pension.

Long-Term Care Insurance

Traditional long-term care insurance (LTCI) works much the way we use auto insurance. In other words, you pay a premium whether you end up using the coverage or not. The purpose of this insurance is to help protect a household’s assets. Because long-term care is expensive, it can use up an entire nest egg – leaving nothing for the other spouse to live on.

Long-term care insurance generally pays for daily assistance resulting from a disability or chronic illness from which the patient is not expected to fully recover. The policy may pay out a fixed sum to the policy owner for home health aides, or a fixed per diem paid directly to a nursing home or assisted living facility. Generally, both indemnity and reimbursement policies have contractual limits.

Note that many LTCI policies require a waiting period (e.g. 90 days) before coverage kicks in, and there is generally a limit to how long coverage lasts (e.g. three years).

Hybrid Insurance Options

These days, different types of life insurance policies now include long-term care coverage as an optional rider or as part of the policy. For example, a long-term care rider may be added to a whole or universal life insurance policy for an additional fee. Or, a policy might offer terminal illness benefits, which pay out a portion of the policy’s death benefit if the policyowner is diagnosed with a terminal illness or cognitive impairment.

Annuity Options

Some annuity contracts now allow distributions for long-term care expenses. The Long-Term Care Doubler or Home Health Care Doubler allows the lifetime income benefit to be doubled and paid out for a limited time or for the duration of the long-term care stay. Also note that these annuity-based long-term care benefits are distributed on a tax-free basis.

Posted in Blog, Financial Planning | Leave a comment

Investment Bank Fees Indicate Strong Equity Capital Market Activity

Investment banks can be a good predicator for the health of the market in the near future. Investment banks make the bulk of their money on mergers and acquisitions, initial public offerings and financing activities (bond issuances and syndicated loans). As a result, we can look at investment bank fees and performance as a proxy for the strength of the economy and markets in general. Strong performance means there is a lot of activity – and since this activity is almost always reliant on financing, it also can hint at a strong lending environment and good overall liquidity. Together, these factors are crucial to strong capital markets.

Taking a Look at Last Year

In order to understand where we are going, let’s first look at the past. Globally, capital markets saw strong activity across all investment bank product lines throughout 2017 as measured by investment banking fees, which hit an all-time high. Nearly 75 percent of these fees were from capital market activity and indicative of global markets. Chinese companies in particular saw a surge in both debt and equity issuances, along with M&A activity as they continue to acquire targets outside of China.

M&A and IPO Activity as Leading Indicators

M&A activity was strong during the first half of 2018 – especially large transactions. Total equity issuances also increased, rising from 1,320 in the first quarter of 2018 to 1,344 in the second. While this is lower than the last quarter of 2017, it still remains above historic norms –  with the average number of deals being around 1,250 over the past four years. Large deals picked up the most momentum, with the average deal size exceeding $150 million for the second consecutive quarter. Fueled by steady economic growth accompanied by higher corporate earnings from tax reforms, the momentum is expected to continue through the remainder of the year. The current tariff-driven trade issues and rising interest rates in the United States could pose some headwinds, but generally M&A deal volume is anticipated to accelerate into the end of 2018 and early 2019. This indicates strength in the overall capital and equity markets.

Beyond M&A activity, Initial Public Offering activity has grown steadily since the beginning of this year and is expected to remain strong or even accelerate, being driven by favorable equity markets, solid corporate earnings and improved investor confidence. During the second quarter of 2018, companies raised almost $203 billion in new capital through IPOs and FPOs (Follow on Public Offerings), according to Thomson Reuters.

Second Half of 2018 and Beyond

Moving forward, we are seeing a sharp differentiation based on industry within capital markets. The strongest IPO activity is in the health care, real estate, industrial and technology sectors.

The recently enacted tax reform could also impact capital markets as the effects are starting to flow through the economy. Sector-specific issuances are set to increase among traditional industries like regulated energy utilities due to lower corporate tax rates.

Interest Rates and Debt Activity

While IPO and M&A activity is expected to remain strong, slowly rising interest rates are subduing refinancing activity. A resurgence in collateralized debt obligations is supporting loan activity, driven mainly by syndicated loan issuances (where multiple banks or other sources pool together to fund a loan). Interestingly, lower credit quality debt has not been as rate sensitive.

Conclusion

Overall, investment bank activity as evidenced by their earnings indicates strength in the overall capital and debt markets going into the end of 2018 and into 2019. The resurgence in collateralized loans was a surprise and is somewhat concerning given what happened the last time they got out of control; however, most believe regulators are keeping a closer eye on things this time around.

Posted in Blog, Stock Market News | Leave a comment

Help Reduce Call Reluctance Among Sales Professionals

When it comes to selling, there are a lot of challenges in the industry. According to a 2016 report by Accenture and CSO Insights, 55 percent of sales professionals believe that their organization’s sales tools make them less productive; and 59 percent of those surveyed said they have too many tools at their disposal. 

Accenture and CSO Insights also found in 2014 that middle-of-the-road performance reduces business revenue by 3.2 percent, which could be improved by a multiprong approach of more effective tools, more targeted training and more efficient data and analytics. It also determined that the top 20 percent of sales performers created three-fifths of a business’ sales, compared to the remaining 80 percent of the organization’s sales professionals producing the rest. Hence, the need to address gaps in performance exists, including sales call reluctance.

Defining Call Reluctance and Causes for Sales Professionals

Simply put, call reluctance by sales professionals is when an agent has a much harder time than normal picking up the phone to pursue the next sale. This is oftentimes due to a fear of being rejected. While this is more common among new sales professionals, it also can happen to the most seasoned salespeople.

Strategies to Reduce Sales Call Reluctance

Depending on the person, there are many ways to tackle this problem. One way to work through the fear is to acknowledge it by not overthinking and just jumping right in and dialing the next person on the list.

If making numerous calls within a week, 50 to 100 for example, seems too overwhelming and causes sales call reluctance, breaking up the number of outbound calls or the length of continuous cold calling with related tasks could help. The break might include answering existing client emails or improving product knowledge for upcoming sales calls, helping to break down calls into more attainable tasks.

Another reason why sales professionals – especially new hires – might experience sales call reluctance is because they don’t have much experience. Developing a script for them might be helpful because it gives them confidence when they’re on the call.

When it comes to creating and using a script, remember that it serves as a general guideline and not a verbatim talking guide for salespeople. For financial professionals for example, regardless of their experience level, it can remind them to explain each financial acronym to a cold-call prospect. By saying return on investment instead of ROI or required minimum distribution instead of RMD, sales professionals can help each prospect understand what those acronyms mean. By not assuming a potential customer understands industry jargon, it will make it easier for each prospect to understand the product or service. This can potentially raise interest in its benefits.

Sales professionals can also use scripts to customize their call, depending whether it’s a cold call or they’re following up on a referral, a sales email or a piece of direct mail marketing. For individuals who receive direct mail, sales professionals will already know who is targeted and this can give them time to make themselves aware of the current promotion before the call. This gives the salesperson more confidence, because when they do reach the person on the other line, they’ll be able to answer questions from the potential customer.

 

Sources

Productivity Initiatives Distracting Sales Teams and Stifling Business Performance, Accenture Strategy Study Finds

Mediocre Performance by a Majority of Sales Representatives Cost Companies 3.2 Percent in Potential Revenue, Accenture Research Shows

 

Posted in Blog, General Business News | Leave a comment

Would a $1,000 Tax Deduction get you in the Gym?

America is one of the heaviest societies in the entire world. Two-thirds of Americans are classified as obese or overweight using Body Mass Index as a measurement. These aren’t just ugly statistics; medical conditions linked to obesity caused more than 100,000 deaths in 2017.

On top of all of this, obesity-related medical issues are a very expensive problem, costing society more than $190 million annually in preventable costs.

What’s the Solution?

At this point you’re probably thinking, OK, so what do we do about it? Basically, at a societal level, the core of the issue is what can the government do to motivate or incentivize diet and exercise, if anything? (Please, indulge me here and leave aside the argument over whether or not the government should even get involved in something like this.) Perhaps making gym memberships or fitness equipment tax deductible would help?

Some in Washington are thinking about this as we speak. Congressman Jason Smith (R-MO) is attempting to tackle the issue with the the PHIT Act, giving a deduction for taxes capped at $1,000 for qualified fitness-related expenses.

Current Versus Proposed Tax Law on Fitness Expenses

The current tax law allows a deduction under IRS code Section 213 for amounts paid for qualified medical care expenses that are not covered by insurance. While weight reduction programs can be deductible if directed by a doctor, gym memberships and fitness equipment are generally not deductible.

The PHIT Act aims to expand what constitutes medical care to include certain fitness-related costs such as gym memberships, exercise instruction (group or personal trainers), participation in physical activities (sports leagues) and safety equipment for such programs.

Certain sports such as sailing, golfing, horseback riding and hunting do not qualify, and neither do the purchase of exercise books or instructional videos. Under the bill, the tax deduction for memberships and instruction are capped at $1,000/$500 for married/single taxpayers. Fitness related safety equipment is capped at $250.

Limits on Deductibility

As great as this sounds, there are a few potential issues with the execution of the bill, which could prevent it from helping as many people as possible. The first is the medical expense floor.

Under tax law, deductions are limited to the amount of qualified medical expenses that exceed 7.5 percent of AGI. This means that anyone with an AGI of $85,000 would have to have $6,375 in medical expenses before they start to see any incremental benefit. Add to this the increased standard deduction (to $24,000/$12,000 for married/single taxpayers) under the Trump tax plan, and almost no one would qualify for the PHIT Act deduction since only an estimated seven  percent of taxpayers will continue to itemize under the new law. This also disproportionately impact lower income taxpayers, who are more prone to obesity.

The PHIT Act also provides a second way to capture the deduction through the use of a Health Savings Account. Instead of a deduction, taxpayers could pay for the qualified fitness costs with pre-tax dollars up to $1,000.

The third and last way to benefit from the PHIT Act as written would be to reimburse yourself through a Health Flexible Spending Arrangement or Health Reimbursement Arrangement. The problem here is that you will need your employer to offer one of these plans before you can take advantage of them.

Watch and Wait

OK, so you’re thinking that you will get the deduction though one of the ways above – but don’t run out and join the gym just yet. Back in 2015, a similar bill was proposed that sought to allow a $2,000 deduction for fitness-related costs. Ultimately, the bill died; and there’s a good chance this will happen again since the PHIT Act would tack on $3.5 billion to the deficit over the course of 10 years.

As always, consult your tax professional for the latest news in legislation that might affect your bank account.

Posted in Blog, Tax and Financial News | Leave a comment