The Year of The Fiduciary Rule

For about a year now, the industry has witnessed much conjecture and debate about the proposed Department of Labor’s Conflict of Interest rule, also known as the “Fiduciary Rule.”  The rule attempts to broadly categorize anyone offering investment advice to retirement plans or IRAs as a fiduciary.  It is in the final stages of review with the Office of Management and Budget and is expected to pass.

The mechanics of how this works are seemingly straightforward.  An advisor recommending a rollover of retirement assets into an IRA or similar account would be considered a fiduciary.  That matters because a fiduciary cannot make a recommendation that would cause his or her income to increase.  The rule indicates a five-prong test to determine if a person is advising retirement assets.  If any of the following apply, you are now considered a fiduciary:

  1. If you advise on the purchase or sale of securities or property in a retirement account;
  2. advise taking a distribution from a plan or IRA;
  3. manage securities or property including rollovers from a plan or IRA
  4. appraise or offer a fairness opinion of the value of securities or property if connected with a specific transaction by a plan or IRA; or
  5. recommend a person who is going to provide investment advice for a fee or other compensation.

Retirement plan sponsors should take note because if you read the rules correctly, it suggests anyone (including laymen) offering advice to a plan participant or an owner of an IRA would likely be considered a fiduciary and could be held personally liable for their recommendations or advice.

Registered Investment Advisors may not see a significant change in business practice.  We are already considered fiduciaries.  However, broker/dealers (B/D) may not have it as easy.  B/Ds are generally not considered fiduciaries to retirement plans or IRA assets, they are instead held to a less stringent “suitability” standard.  In the light of the proposed rule, one of the chief issues B/Ds face is how to handle variable income and commissions.  Changing their business model to accept level income would likely be an onerous undertaking.  There is an unattractive alternative.  Under the DOL’s Best Interest Contract (BIC) exemption, the broker/dealer may be exempt from the fiduciary rules if certain requirements are met.  These include:

  • obtaining a written contract prior to the offering of any advice,
  • supplying the prospect information and costs for every investment they could own,
  • providing performance information on each investment,
  • fully disclosing compensation arrangements and
  • maintainging this information for a period of six years.

In addition to this, the aforementioned information must be maintained a public website. Consider the amount of work and man-hours it would take to become compliant with the BIC exemption.  Because of this, it is expected that smaller B/D’s will exit the industry or merge with larger providers.

One of the controversial rules surrounds the “seller’s carve out” and its impact on small business retirement plans (plans with either less than $100 million in assets or 100 participants).  Under the rule as proposed, the advisor is not considered a fiduciary to the investments of these small business plans.  I question why every plan, irrespective of size, wouldn’t be required to have a fiduciary.  After all, under this specific rule, if the DOL is trying to protect consumers, why protect some of them and not all of them?

In closing, we at Parsec have been watching this unfold for months and are eager to see the final form of the rule.  Perhaps an unintended consequence is that many customers and retirement plans may have to reconsider their advisory relationship.  Regardless of the new rule, it is important to always put the best interest of your clients first.  Parsec will be prepared for whatever the DOL comes up with.

Neal

Neal Nolan, CFP®, AIF®
Senior Financial Advisor
Director of ERISA Services

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Important Changes to your Social Security Benefit

In October, President Obama and the US Congress passed the Bipartisan Budget Act of 2015.  Included in that act was a clause that eliminated two popular Social Security claiming strategies: File-and-Suspend and Restricted Application.

File-and-Suspend:  A strategy where a person, who is at least full retirement age, files for social security benefits, but then immediately requests to suspend those benefits. This allows his/her spouse to take a spousal benefit on the filer’s record, while the filer’s benefits are delayed and continue to grow.

Restricted Application:  A strategy where a person, who is at least full retirement age, files for spousal social security benefits and delays his/her own benefit so it continues to grow. This allows the filer to receive some benefit now (the spousal benefit), and a larger benefit later.

Delaying your benefit pays off big. When you delay your benefit you earn delayed retirement credits, which equate to an annual 8% increase in benefits.

Those born before April 30, 1950 were grandfathered in to the old rules and may continue to use File and Suspend and Restricted Application strategies while delaying their credits. Please note, if you were born before April 30, 1950 and you wish to implement the File and Suspend Strategy, you must submit your application before April 29, 2016.

Those born after April 30, 1950 or on or before January 1, 1954 (age 62 in 2015) may only use the Restricted Application strategy.   If your spouse is receiving benefits and you have reached full retirement age, you may apply for a spousal benefit, while allowing your own benefit to accrue Delayed Retirement Credits.

For those born after January 1, 1954, neither strategy is available.  However, you may still choose to delay taking your benefits until age 70.  By doing so, you stand to increase your future benefits by 32%.

Please note that if you are already drawing Social Security, or if you have already set up File and Suspend, the new laws do not affect you.

Summary of Available Strategies

Age Can Participate Cannot Participate
66  by 04/30/2016 File & Suspend /Restricted Application
62 by January 1, 2016 Restricted Application File & Suspend
62 by January 2, 2016 File & Suspend /Restricted Application

There are many factors to consider when determining when to start taking Social Security.  We recommend that you meet with your financial advisor for guidance to help you with that decision.  And if you were born before April 30, 1950, please remember the April 29, 2016 deadline.

Tracy Allen, CFP®
Financial Advisor
Tracy Allen
Tracy Allen
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Remain calm and carry on: why stocks and stress don’t mix

The popular press is generating a lot of recession-related articles lately and with stocks starting the New Year on a weak note, it’s no wonder investors feel a little nervous. Year-to-date, U.S. large cap stocks are down about 10% while most international markets are down even more. Commodities continue to slide and global economic growth has been revised lower. This is certainly not a confidence-inspiring picture, but here’s why keeping calm and carrying on is the best course of action.

First, I want to illustrate why stocks and stress don’t mix. Let’s say that stocks are down 10% year-to-date, the global growth outlook is muddy at best, and you’re seeing a lot of articles suggesting that the US is headed for a recession. Assuming the above facts and a meaningfully-sized investment portfolio, most humans are likely to feel anxiety, stress, and maybe some fear. Is the market going to fall further? Are we heading for a recession?

Having read enough about neuroscience to be dangerous, I know that when we’re feeling anxiety, stress, and fear, the more evolved part of our brain – our neocortex – is usually off-line and the more primitive part of our brain – our limbic system or brain stem (a.k.a. lizard brain) – is typically running the show. When our lizard brain is calling the shots we often make poor, fear-based decisions because we can’t see the big picture. Our brain shuts down and we become reactive instead of proactive. In these instances our capacity to think higher-level thoughts is greatly reduced.

Speaking of the big picture, did you know that from 1926 – 2015, stocks have delivered average annualized returns of 10%? Notice that includes the two largest US market declines, the Great Depression, and the Great Recession. Not bad. When we get triggered by stress, facts like these can get overlooked and we could make decisions we’ll come to regret. Here’s a schematic of how that might look:

graph 1

You can see how our thoughts and emotions affect our behavior which then reinforces the above pattern or one like it. Unfortunately, the outcome stinks and so I’d like to propose an alternative – – one that leads to a much happier, healthier outcome.

In the alternative pattern, the same triggering event happens, only this time you’re aware of the stress and anxiety it triggers. The fact that you’re aware of the stress and anxiety is huge! It means you’re not identifying with the emotions and thus your rational-thinking, neocortex brain is still online. You now have choices. Given the old pattern, one strategy would be to call your advisor and get some reassurance that the sky isn’t falling. Another option is to simply turn off the TV or the computer and take some deep breathes. Maybe take a walk around the block or engage in an activity you enjoy. The point is to interrupt the old pattern. The more you can do this, the more your awareness grows, and in turn, the more options you have.

Following through with this example you can see that giving yourself a break from the triggering event and getting some perspective allows you to stay calm, and thus make better decisions. Just like the first illustration, when repeated, this one will also reinforce itself. And the outcome is much better.

graph 3

So now that you’re hopefully in a calm, peaceful state, we can talk about the current environment. Yes, stocks have gotten off to a shaky start but the US economy remains on stable footing. Jobs growth is strong, oil prices are low, consumer debt is in-check, and wage growth is finally starting to rise. It’s true that US manufacturing is contracting but it only accounts for about 12% of GDP. Meanwhile, US services sectors, which account for 88% of GDP, remain in expansion mode.

Stocks have been spooked by falling commodity prices, slowing growth in China, and fears of deflation. But most leading indicators remain strong and every recession since the 1970’s has been preceded by a spike in oil, not a decline. Finally, and speaking of perspective, there will always be some risk of recession simply because contractions are a natural and a healthy part of any business cycle. Without them we can spiral out-of-control into bubble-like environments. I for one intend to stay calm and carry on. Nothing else seems to help anyway.

Carrie A. Tallman, CFA
Director of Research

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2015 IRA Contribution Rules

The deadline to make IRA contributions for tax year 2015 is April, 15 2016. The maximum contribution is $5,500 per individual ($6,500 if age 50 or over) or 100 percent of earned income, whichever is less.

There are income limits which determine whether you can deduct your Traditional IRA contribution or if you qualify to make a Roth contribution. The following table gives the phase-out range for the most common circumstances.

Do you qualify to deduct your Traditional IRA contribution?
If your income is less than the beginning of the phase-out range, you qualify. If your income is over the phase-out range, you do not. If your income falls inside the range, you partially qualify.

Modified Adjusted Gross Income Phase-Out Range

Tax Filing Status For 2015 Contributions For 2016 Contributions
Single, participates in an employer-sponsored retirement plan: $61,000 – $71,000 $61,000 – $71,000
Married filing jointly, participates in an employer-sponsored retirement plan: $98,000 – $118,000 $98,000 – $118,000
Married filing jointly, your spouse participates in an employer-sponsored retirement plan, but you do not: $183,000 – $193,000 $184,000 – $194,000

Do you qualify to contribute to a Roth IRA for 2015?

Modified Adjusted Gross Income Phase-Out Range – Roth

Tax Filing Status For 2015 Contributions For 2016 Contributions
Single: $116,000-$131,000 $117,000-$132,000
Married, filing jointly: $183,000-$193,000 $184,000-$194,000

If your filing status differs from those listed above, please contact your advisor and he or she can help you determine whether you qualify.

Harli Palme, CFA, CFP®
Partner

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Holiday Retail Trends & Your Budget

In the midst of this holiday season, is your budget holding together? In this blog, we’ll look at the latest holiday spending stats, the most recent trends in giving, and offer a few tips to help you maintain a financially-stress free holiday season. While money is most definitively not the reason for the season, examining current holiday spending trends gives us some insight into the health of the U.S. consumer and might even inspire reflection on our own holiday spending habits.

According to the National Retail Federation (NRF), total U.S. holiday spending will rise about 2% in 2015 compared to 2014. NRF estimates that the average American will spend about $1,017 in holiday-related items this year versus $1,000 in 2014. No surprise that the bulk of spending, or 72% of budgets, is expected to go towards gift-giving. Family still comes first in this category as consumers plan to spend four-times as much on relatives than on friends. Spending on food comes in at a distant second, eating up 12% of the average American’s holiday budget, but arguably a very important piece of the pie. Other must-haves like decorations, cards, and flowers account for the remaining 16% of most Amercians’ holiday spending.

While holiday spending isn’t surging by any means, it’s up significantly from the depths of the Great Recession when the average American spent only $682 in November and December. For the last several years wage growth has been relatively lackluster while consumer debt has inched lower and savings rates have grown. This suggests consumers learned a valuable, if not painful lesson during the financial crisis: moderation. Lower debt levels and more savings are both net positives for economic growth and asset appreciation. These trends, coupled with signs that wage growth is finally starting to improve, suggests healthier consumers in the years ahead. Given that household consumption accounts for 70% of U.S. gross domestic product or GDP, we may be in for more holiday cheer for years ahead.

Now that we’ve covered some stats, let’s talk about gifts! What do family members want from Santa this year? A poll by the National Retail Federation found that our female relatives rank gift cards as their top gift item, followed by clothing/accessories, books, CDs, and DVDs. While men also named gift cards as number one choice, more of them wanted consumer electronics or computer-related products than women. Looking to give something a little more personal than a gift card? Check out Amazon’s most gifted list (www.amazon.com/gp/most-gifted) for a bevy of ideas by category. Some of the world’s largest online retailer’s best-selling gifts this year include the LEGO Minecraft Playset, the “Inside Out” movie DVD, Amazon’s tablet “fire”, and Adele’s latest CD, among others.

Have a twenty-something in the family mix? A survey from Eventbrite suggests that Millennials prefer experiences over things. In which case you might consider a gift card to the spa or tickets to a play or ball game for the young professionals in your clan.

All this gift-giving talk, while fun to think about, can really strain a budget if not carefully considered. While we’re more than half-way through the holiday season, it’s not too late to reassess your spending plan and even start strategizing for next year. If you’re feeling some financially-related holiday strain, now is the perfect time to stop and take inventory. What was your original holiday budget? Did you have one? And how much have you spent on holiday-related items so far?

In order to relieve money stress, the best and only place to start is by honestly looking at your current situation. The key is not to use your predicament as an opportunity to criticize yourself, but as a starting point for improvement in the years ahead. By intentionally setting a limit on the amount you’ll spend on decorations, gifts, food, etc… you’re less likely to overspend and more likely to avoid feeling financially overwhelmed during the most wonderful time of the year. If you’re already over-budget and swimming in financial strain, don’t sweat it! What’s done is done. The best thing you can do is use this as a learning experience for next year and beyond.

With that in mind, I find that planning ahead is often the best way to navigate any budget. Once you’ve determined a comfortable amount that won’t strain your finances – and you can do this as early as January – you’ll have an entire year to purchase thoughtful gifts for family and friends, on your terms. You can take advantage of sales throughout the year or simply be open to discovering the perfect gift for that special someone. By planning ahead and giving yourself plenty of time to find just the right gift, you’ll have more time to enjoy being with family when the holidays finally arrive. Instead of rushing around the mall at the last minute or spending a fortune on over-night shipping, you can relish the charm of the season and enjoy time spent with loved ones.

Good luck! Wishing you a happy and financially healthy holiday season!

Carrie A. Tallman, CFA
Director of Research

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Five Gas Saving Travel Tips for the Holidays

It’s that time of year again- entertaining, eating too much, and lots of travel.  Marshall Doney, AAA president and CEO, stated in a recent press release that over 46 million Americans will journey 50 miles or more from their home this Thanksgiving.  The chart below shows that gas prices are actually in our favor for traveling this Thanksgiving.

Here are five easy ways to save on fuel prices – not just for the holidays, but all the time!

2012-2015_Avg-Gas-Prices-11-23-15

    1. Drive the more fuel efficient car.  Many people jump to taking the family car with the most leg room and luggage space.  Perhaps take this opportunity to assess your packing and squeeze into the smaller more fuel efficient car.
    2. Lighten the load.  Take an inventory of what’s in your car.  By having a heavier car you use more fuel.  Take off the roof rack that you don’t plan on using this winter and empty out the trunk, leaving only the necessities.
    3. Get a tune up.  Consider getting your car serviced before taking off this holiday season.  The better shape your car is in, the more fuel you will save.
    4. Go back to driver’s ed.  Take this time to remember the basics of driving.  Accelerate slowly, eliminate aggressive braking and speeding.  All of these things lead to increased fuel cost.
    5. Find cheaper gas prices.  GasBuddy is my favorite app for this purpose.  You can use this to find the cheapest prices on your route.

Every penny counts when trying to stick to a budget to meet your long-term goals!

Ashley Gragtmans, CFP®
Financial Advisor

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NPR Report on Excessive Fees

Investors have a strong desire to be good stewards of their retirement funds. This often includes seeking out professionals for financial advice.  For the retirement plan sponsor, the Department of Labor (DOL) is helping by creating fee disclosure rules and requirements.  A few years ago, the DOL mandated fee disclosure rule (404(a)5) in an effort to ensure plan sponsors are able to determine if the fees for services rendered are “reasonable.”

NPR ran a story this morning about excessive 401k fees.  See link here.  If I could add to this article, I would suggest plan sponsors review their plan fees and services at least every couple of years, if not more often through a fee benchmarking process.  The generated report should give plan sponsors a general idea of how their plan compares to others of similar size.  Benchmarking has other benefits as well.  Not only will this help to uncover fees and what services are being provided, but also some service providers are willing to re-price their services to lower fees.

While many thought the disclosure rules were a bright spot in a dark corner, we feel that further disclosure and transparency is warranted in this industry.  Since not all advisors are the same, we are thankful that the DOL has re-proposed a Fiduciary Rule which seeks to make anyone giving investment advice to 401k/retirement plans (and also IRAs) to act in the account holder’s best interest.  For RIAs like Parsec, it is business as usual.  However, broker-dealers may have a bit more difficulty with this rule, as they operate under something called a suitability standard.  While not to debate the virtues of the fiduciary standard versus the suitability standard, we do feel that greater disclosure is a good thing and will ultimately drive costs down even further.

Neal Nolan, CFP®
Director of ERISA, Financial Advisor

Neal

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What’s Up (or down) with Commodities?

While stocks have been front-and-center lately given sharp price swings, fewer media outlets are focusing on commodities despite the critical role they play in global markets. They too have experienced wild price swings, although mostly to the downside. Year-to-date, the widely held S&P GSCI (Goldman Sachs Commodity Index) has fallen 20% and declined 41% over the last twelve months. What’s driving these big declines and why do they matter to your portfolio?

Commodities are defined as a raw material or primary agricultural product that can be bought and sold. This includes everything from aluminum to zinc, but also oil, natural gas, coffee, beef, and corn, among others. A key differentiator between commodities and other assets are that commodities are valuable only as an input of the production process. They’re not a store of value or wealth, like a stock, bond, or work of art. Because of their utilitarian purpose (with a few exceptions like gold), commodity prices are closely linked to global supply and demand. Simply put, when demand is strong for a commodity and supply is tight, prices go up. Likewise, when demand is falling and/or supply is abundant, commodity prices tend to fall. This causes prices to be very cyclical and closely tied to the health of the overall economy. In an increasingly globalized world, that means all economies affect commodity prices to varying degrees.

While stocks have surged over the past six years, commodities have languished. The widely-held commodity index, the S&P GSCI, has fallen 35% from 2009 to 2014 while the S&P 500 Index rose 131%. As U.S. stocks benefited from improving economic growth at home, commodities never saw a similar bounce-back given their exposure to the broader global backdrop. Lackluster global demand and excess supply of many commodities weighed on commodity prices. The supply/demand imbalance has worsened recently as China, the world’s largest consumer of commodities, has seen economic conditions deteriorate and is curbing its appetite for input products. Likewise, it continues to produce too much supply and is dumping some commodities, like steel, onto global markets, further pressuring prices. It’s a vicious cycle, one that usually reverses when excess supply is finally worked-off and most investors have given up on the asset class.

As an investor, where does this leave you? Should you include commodities in your portfolio? Is now a good time to buy? According to Dr. Rouwenhorst, a leading expert on commodities, research suggests that commodities do outpace inflation over the long-term. And he’s looked at data going back to the 1800’s. At the same time, commodity prices tend to have low correlations with other asset classes like stocks and bonds; meaning that when stocks go down, commodities tend to go up. Thus, adding commodities to a portfolio can help improve your overall volatility and gives you a good chance of out-pacing inflation.   But…we’ve also learned that during massive global crises, like the one in 2008, commodities tend to move in lock-step with other asset classes. People panic and tend to sell everything. We’ve also seen substantial price declines in most commodities over the last six years, and if you’ve owned these assets you know your portfolio has suffered as a result. What to do?

During most periods, a small position in a diversified basket of commodities such as the S&P GSCI or the Dow Jones Commodity Index can help insulate investors from wild swings in traditional asset classes like stocks and bonds. And commodities can experience periods of strong price appreciation. However, it’s difficult to identify those periods and at the same time, avoid sharp declines like we’ve seen in recent years. If you have a long enough time horizon, of twenty years or more, a small allocation to commodities can make sense, but another option is to own high-quality stocks that derive their revenue from commodities. While these companies are also subject to the cyclical nature of commodities, they often have diversified revenue streams and strong balance sheets that can help provide some insulation during cyclical downturns.

Overall, commodities are important to understand in order to gauge the health of the global economy. Although they tend to be a volatile asset class, owning a small amount can provide diversification benefits in your portfolio. Another and perhaps less volatile option is to own high-quality blue chip companies that deal in commodities and have the resources to weather cyclical downturns. This approach also provides the diversification benefits associated with commodities but often with smaller price swings then owning a basket of commodities directly.

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The “What” of Retirement Planning

Most working-age Americans focus on the “how” of retiring: how to maintain a decent standard of living today while saving enough money for retirement tomorrow, or how to play catch-up and cover their retirement savings shortfall. Sadly, another group of Americans wonder “if” they’ll be able to retire at all. The sobering statistics tell a bleak tale. According to U.S. Census Bureau data, the average 50-year old has just $42,797 in retirement savings while 38% of Americans have no savings at all. This is scary stuff considering that average medical costs alone for an individual over 65 years old are north of $100,000. Clearly we’re not as prepared for retirement as we could be. Despite lots of media doom-and-gloom about the pending retirement crisis, it hasn’t improved retirement savings trends. Thus, I’d like to propose a new approach, one that focuses on the “what” of retirement planning instead of the “how.”

The “what” of retirement planning involves an intentional mental shift, one that approaches the retirement conundrum from a new angle. Instead of focusing on how much more you need to save or how far behind you are versus your peers, try imaging what you want your years in retirement to look like. What new hobbies would you like to explore in retirement? Or what countries do you want to visit? Etc… This approach, coupled with an honest assessment of your current situation, is more likely to help you reach your goals than beating yourself over the head.

Focusing on the problem or what’s missing can increase stress levels and sap your energy – because you need more energy to help manage those higher stress levels. It can also lead to financial paralysis, which only exacerbates the problem and reinforces our old, unhelpful patterns – ensuring we get what we fear the most: not enough retirement savings. In contrast, anchoring your goal to the positive end result – your vision of a relaxing, meaningful retirement – can increase the odds of realizing that reality. Either way, you’ll feel a whole lot better on your journey there.

The point is to look carefully at the way in which you approach your retirement goals, because the methods you use will help determine your success rate. It all starts with taking an honest and sometimes difficult look at your current situation and determining what your goals are. Once you know where you are and where you’d like to be in the future, crafting a plan of action that will reinforce helpful, constructive habits is key. This brings me to one of my favorite quotes from St. Teresa of Avila, “The whole way to heaven is heaven itself.” A lifetime of berating ourselves is unlikely to lead to financial bliss in our twilight years. It will probably just lead to more stress and anxiety. Instead, it seems we’re better off focusing on “heaven” in the here and now. We can do that with a proactive, realistic plan that’s anchored on the positive feelings we’d like to experience in our retirement years. And who knows, we might even start to feel better today.

Carrie A. Tallman, CFA
Director of Research

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Ways to Cut Wedding Costs

I’m getting married this year, and I couldn’t be more excited . . . about getting married, not necessarily about planning the wedding. The process can be stressful and overwhelming – the organization, details, responsibility, and not least of all, cost.

As a financial planner I’ve thought a lot about the cost of this important day. A quick Google search reveals that the average amount of money spent on a wedding in the United States is over $30,000. It’s not like the old days where fathers paid men a dowry to marry their daughters (thankfully). While both of our families are helping us on wedding cost, we still need to pony up quite a bit of cash on our own. I did not want to start off this next phase of my life in debt.

Through my planning I’ve come across a number of ways that people have saved money on their wedding. While I didn’t choose all of these options, I think they’re all worth considering.  If you know someone who’s planning on tying the knot soon, you may want to share these ideas with them: 

  • Cut the guest count.I’ve experienced night sweats on who to invite to my wedding. I wake up thinking: “They invited me;” “She’s my second cousin twice removed;” or “What about my best friend from kindergarten?” A recent survey by theknot.com shows that it costs over $200 per guest at a wedding. That’s right – over $30,000 for just 150 people! Try to limit your guest to friends, immediate family, grandparents, close aunts and uncles, and close cousins. People will understand you can’t invite everyone.
  • DIY.This isn’t for me, but it is for a lot of people. I’m not overly handy or creative, nor do I have the patience for doing anything myself on my big day. However, if you are that type of person, you should do as much as you can on your own. Try printing your own invites and save-the-dates cards. Research sites like Etsy to get ideas. Pick a creative family member to help decorate for your rehearsal dinner; have a girlfriend do your hair. Every little bit that you can do yourself (or others can do) will save hundreds or even thousands of dollars. Maybe a friend’s participation could be given in lieu of a gift.
  • Don’t be so traditional.More of my friends are not getting married on Saturday. In most cases they are moving to Friday and Sunday where wedding vendors and venues don’t charge the same premium as a Saturday wedding. Also, think lunch reception and maybe not a sit-down, four-course evening meal.  Or, you could just do a champagne toast and appetizers and cut out early for the honeymoon 😉.
  • Pick a season and stick with it.Try to purchase decorations, flowers, and food that are in season. If you are trying to get Birds of Paradise or sunflowers in the dead of winter, you will pay for it. You can save a lot by having a Christmas wedding because most venues are already decorated. Another option is to try for a spring wedding when everything outside is blooming. If you are planning your meal options, do a sautéed veggie option with items that are in season.
  • Bundle. Try bundling items to cut down cost. For example, instead of having a cake and party favors, maybe have a candy station for people to grab something on their way out the door. This way, you still have sweets and favors, but you’re cutting the expense down by really having one.  If you have something around the house that you can use as your guest book, do it! I’ve seen people use globes from a bookshelf to sign, as well as old corn hole boards that were painted with the wedding colors.
  • Keep it casual. Buffets may not give the same vibe as a plated meal, but it’s a lot cheaper. If you really don’t want people to wait in line for food, then try doing family style. This is a bit more expensive but doesn’t come with the extra cost of servers.
  • Hire a coordinator.  This goes against the DIY bullet, but you can save money in the long run. Most wedding planners have discounts and perks arranged with partners and vendors… but be wary and do your research before hiring someone to plan for you.
  • Do everything memorable early. Try to get the bouquet toss and cake cutting out of the way early. If you do everything memorable first thing, you can let your photographer and videographer leave early to cut down on their hourly time. Your guests will continue to snap pictures throughout the night.
  • Buy someone else’s wedding. This may sounds crazy, but sadly, many people cancel their wedding every day. Most deposits are already put down and can’t be returned. Decorations have been bought, and gifts have been purchased.  Check out http://www.bridalbrokerage.com/to purchase someone else’s unfulfilled day.

Finally, the number one way to save money… ELOPE! Have a quick wedding, a potluck in the backyard, good conversation and s’mores by the fire, and call it a good day!

Good luck on planning your special day!

Ashley Woodring, CFP®
Financial Advisor

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