Here’s a sneak peek at the three factors facing the finance industry today – and how to ACT on them!

1. There will be future bankruptcies (or negotiated defaults) for California cities and counties. Vallejo, which went bankrupt in 2008, and Stockton, which is on the verge of bankruptcy, are the tip of the iceberg.  Municipalities will continue to be saddled by cumbersome pension commitments they cannot deliver, as well as staffing and entitlements for citizens that have lacked meaningful reforms.  Without strong political leadership, cities and counties will continue to struggle and fail in staggering numbers.

ACTION:  Be very selective when choosing your municipal bonds.  

2.  A cloud will continue to hang over large banks who took bailout money and that cloud will manifest itself in the form of increasing regulation. Congress will be able to use a version of, “we bailed you out once and we never want to bail you out again,” as justification for tightening the regulatory noose.

ACTION:  Ensure you are with a strong and stable bank who doesn’t need a bailout to survive

3.  People will need financial advice more than ever. Thirty years ago, you retired at age 65 with a pension and fully-funded social security, and on average died at age 72. Today, people are living longer and trying to retire earlier. Pensions have disappeared from the private sector and will likely be modified for future public sector employees. Workers are being forced to PLAN for their own retirements. You may be frustrated and frightened by the financial meltdown, but the zero interest rate environment means you can’t just stick your money in a tin can and hope to have enough for a 20 or 30 year retirement. 

ACTION: Choose advisors you trust and engage in the process with them. If you do not trust your advisor, your future financial stability is not worth risking. Your discomfort now will leave you really uncomfortable in retirement.