Happy Monday/Tuesday to everyone.

Today’s email, I want to share some insights to our industry. A look “behind the curtain look at Oz” in a financial advisory office. Some behind the scenes limitations. These topics are the genesis of my 2nd book currently being written.

Before I do, at the bottom of this email in the Opportunities section, see info on Medicare open enrollment, and Coronavirus affecting the KC real estate market.

Advisors who work for a larger home office company, (I don’t want to name names) have the big company name, they have lots of commercials and they have lots of limitations. For those advisors, when they make a sale and get paid a commission or a fee, have to share part of that commission with their home office. Their home office provides name recognition. But that home office also provides health insurance and 401K benefits. Those home offices have contacts with various investment companies and “arrangements” on compensation. Therefore the home office will usually dictate to the advisors what to sell and what not to sell. This is called their preferred list. All the while, the investor clients think their advisor has access to a world of products. Home offices typically don’t allow their advisors to advise on tax planning or social security. Liability is one reason, but the biggest reason is in tax planning or social security planning, there is not a product to be sold from that discussion. Therefore it doesn’t make that home office any money. Clients would typically not know of any limitations. The fear is the client doesn’t know what they don’t know…

Compliance also influences what advisors can and can’t sell. Compliance is like the Sheriff of the industry. They watch over you and the advisor to make sure all parties are doing the right thing. They review email exchanges, paperwork, and service work. Each compliance has their own standards to what they feel is “acceptable risk” or not, therefore allowing or not allowing their advisors to sell or not to sell certain products. Compliance in many cases won’t allow their advisors to discuss or implement any comprehensive planning that is tax “sensitive”, meaning every income source or asset is individually looked at for income taxes. What is mostly allowed in comprehensive planning is what is called tax “neutral” planning. This is where the advisor inputs an assumed tax rate and everything is taxed exactly the same at that rate which we all know is not at all accurate. Different income streams and different accounts are all income taxed differently. Many compliances officers won’t allow advisors to sell certain products and they limit what can be sold, therefore, limit what they need to monitor for compliance.

Licensing limitations is another one. There are many different licenses and/or registrations a “financial advisor” can get. I used quotations because many of us in this industry are referred to as a “financial advisor” but really are not. For example there is an insurance license. For those who only have that license, which is the largest percentage of “financial advisors”, they can only sell fixed annuities. In the industry we call them insurance agents, but they call themselves financial advisors. They cannot sell mutual funds, stocks, bonds, ETFs, etc… There are the more basic securities registrations to get in the industry on the securities side. Some registration allow an advisor to sell only commission based products. They buy or they sell something for you, you pay a commission, the advisor and their home office receive that commission. There is the other registration that is for fee-based advisors. They get paid a percentage fee of the asset size. No commissions. Their compensation is based on account values, so when the accounts go down, their fees go down, and they the accounts go up, their fees go up. They have financial “skin in the game” as its called. Many advisors are not fully registered and most advisors don’t have staff that is licensed or registered to provide the best service. Everyone at Affinity that provides service or advise is all registered.

Trading platforms or custodial limitations. This refers to the company/platform that holds the money. For example, if you have a Blackrock account, all that money is with Blackrock and can only buy from Blackrock’s menu of mutual funds. If it was Schwab, Pershing, TD Ameritrade, those are what is referred to as trading platforms, and for those accounts, you can buy and sell from different companies like stocks, mutual funds, bonds, ETFs… etc. Though, even those trading platforms have limitations. It is by far the most broad way to hold client’s money, but they too will not allow the advisor to just sell anything because each investment selected needs to be on their pre-approved list. Most advisors use home office based models for investing their clients and those investments selected in those models are done at the home office level, not at the advisor’s office, and typically done with the investment companies the home office has contracts with and which pay the advisor and the home office a bigger share of the commissions. This is why Affinity uses Pershing. They are the largest trading platform and have the least limitations (having said that, we haven’t come across anything that limits us).

Lastly is technology limitations. This is a big one. Technology is a major expense to any advisor. The less they pay, the less they have access to and the more they pay, the more technology they have access to. The largest majority of advisors do not have the ability to block trade. Block trading is the process where we can place a trade to buy or sell something and do that exact transaction on as many accounts as the advisor wants all at the same time. A similar concept to mass emailing everyone versus having the ability to individually email each person. Therefore all clients can be treated equally and at the same time regardless if that is a large account or a small account. Most advisors don’t spend the money on great technology or they are stuck with whatever their home office allows them to use. A very small percentage of advisors have the ability to block trade like Affinity.

Why am I sharing this with you? I get to talk to new clients all the time and hear what their advisor was doing or not doing. I also speak to lots of advisors all over the U.S. for training and mentoring. In the past, I would travel all over the US speaking to advisors with other companies. In 2020, I traveled twice in January to speak in person, but since then and Coronavirus, it has been all zoom.com based mentoring and training. I know what they have or don’t have access to for technology. I hear the incredibly simple questions they ask me all the time, and when I hear those types of questions, I always say to myself, “man, if your end clients heard you ask me that question, they would run, fearing the lack of ability or lack of knowledge their advisor has.

At Affinity Asset Management, we are independent. We are company agnostic (meaning we can use almost anything out there for our clients that best fits their needs) and only use what we have researched as the best of the best at that time. We do not have a home office over us providing us benefits, nor do we have anyone telling us what to sell and what not to sell based on some home office agendas. We also have lots of the latest technology (updated monthly) the industry provides for research and analysis work. We are fully licensed and registered for insurance, commission, and fee based. We always strive to act in the best interests of our clients. We do comprehensive planning for retirement longevity, income needs, income taxes savings, and social security maximization. Affinity also uses Pershing, LLC for our trading platform on which we have found no limitations on anything we wanted to invest into our clients accounts.

All this being said, when advisors do nothing, there is a reason behind that. There are limitations. I have owned this company for 24 years now. The first 12 years, I was contracted under a home office, and the last 12 years, we went completely independent. My first 12 years, had limits from technology, to compliance, to licensing, to what is on the approved list to sell and what we shouldn’t sell. We no longer wanted a home office to dictate to us what is in our client’s best interest especially since that home office doesn’t know our clients or have ever met them. At Affinity, we have hired some of the brightest minds in our industry, and we give them the best technology out there to work with. All this is so we can strive to provide the absolutely best service in money management and overall financial planning.

After 24 years, I have met thousands of advisors, and many of them have become friends. This section was not to brag about Affinity or to put down any other advisor, but to share the biggest fear all investors have; “you don’t know what you don’t know”. This is a common quote I say. I even write this in the cover of each of my books that I sign. At Affinity, we pride ourselves in client education. Not only do we want to answer your questions, but also to be proactive to teaching you about other things you haven’t asked for.
(sorry this section was so long-I just try to be as clear as possible in emails)

Performance DJIA:
Mon 9/7 Labor Day, Market closed
Tues 9/8 -2.25%
Wed 9/9 +1.60%
Thurs 9/10 -1.45%
Fri 9/11 +0.48%

Last week -1.66%
Since 2/19 market high -5.73%


Tid Bits:
1. Sudden volatility in tech stocks unnerves investors.

2. The market roller-coaster ride into the Labor Day weekend is confronting investors with fresh questions about the soundness of the technology-led advance in major stock indexes.
The Nasdaq Composite slid more than 6% over two days last week after hitting a fresh high, led by Thursday’s record one-day decline in market value at Apple Inc., the most-valuable U.S. listed company. Selling intensified Friday, at one point pushing the index down almost 10% from its record and spreading to markets including crude oil and gold, before a broad reversal narrowed losses in some stocks and sent others back into more familiar, green territory.

3. Few investors believe the late-week rout signals the end of a rally that has taken the Nasdaq to 43 record closes and pushed the S&P 500 up more than 6% for the year. The economy continues to show signs of improvement and with interest rates near record lows, the investor mantra that “there is no alternative” to purchasing the shares of major U.S. corporations remains very much intact. The main driver of the tech boom — strong growth that has been boosted during the pandemic as more consumers work and learn remotely — also still holds, investors say.

4. “They’ve run up so much and they’re overextended,” said Leslie Thompson, managing principal at Spectrum Management Group in Indianapolis, which manages about $700 million. She has been cutting her investments in tech stocks such as Apple and chip maker Nvidia Corp. recently. The speed of the climb “was just really ridiculous,” she said.

5. The five biggest internet companies — Apple, Amazon, Microsoft, Google parent Alphabet and Facebook — made up 26% of the S&P 500 at the end of August, up from 14% for the five biggest stocks in the index three years ago.


Global 29,220,334 cases 929,088 deaths
US 6,710,588 cases 198,542 deaths (+6.04%, +11,310 increase from 2 weeks ago)
KS 49,402 cases 531 deaths
MO 104,737 cases 1,839 deaths


Highlights from analysts and economics

From Invesco
Long-Term Capital Market Assumptions (Q3 Update)

It is difficult to imaging that only three months ago we were writing about riding out the first global recession, record levels of unemployment and declines in earnings not seen during any of our lifetimes. Not unlike how we started the year, two long quarters ago, investors are faced with low returns for stocks and bonds, full valuations and political uncertainty.
We expect the global business cycle to remain in a recovery regime, with growth below trend and expected to improve over the next few months. Meaningful, timely economic policy developments in Europe contributed to boost market sentiment, but the favorable cyclical outlook is threatened by a sputtering fiscal impulse in the US and potential for second waves of the virus and lockdowns.

The cyclical macroeconomic and capital markets outlook are critically dependent on the path of the pandemic and public health, monetary and fiscal policies. The longer-term outlook in turn depends both on how the pandemic, the cyclical recovery and structural reform of the international system and national economies all evolve. Both are uncertain, but both our short- and long-term views argue for diversification and a mix of risk-seeking and perceived safe assets in strategic asset allocation and tactical portfolio construction.

From JP Morgan
Notes on the Week Ahead

August employment report, released last Friday, showed that the U.S. has now recovered 10.6 million, or 48% of its pandemic job loss. However, that still leaves us with 11.5 million fewer payroll jobs than six months ago and regaining these jobs will be a slow process. Most of these jobs were in the restaurant, retail, hotel, entertainment and transportation industries. With the pandemic still raging, recovering jobs in these areas will be difficult. Over the last three months, payroll jobs grew by 4.8, 1.7 and 1.4 million jobs sequentially. We expect the pace of job growth to fall below one million per month between now and the end of the year and it is hard to see it reaccelerating in 2021 until the widespread distribution of a vaccine and the suppression of the pandemic allow the most affected industries to get back to normal.

It should be noted that while the number of payroll jobs is down 11.5 million since February, the number of unemployed workers has only risen by 7.8 million. This, in part, reflects the fact that 3.7 million people have dropped out of the labor force since February. While this may be due to many people regarding searching for a job in their old industries as pointless, the expiration of the $600 weekly payment in supplemental unemployment benefits could force some of these people to reenter the labor market to look for any job, causing the unemployment rate to rise from its current 8.4%.

Overall, then, the labor market is likely to see much slower improvement in the months ahead following a strong initial bounce.
A similar pattern should be observed in GDP figures.

Following declines of 5% and 31.7% annualized in the first two quarters of 2020, we now expect real GDP to rise by as much as 31% in the third. However, growth could downshift sharply to about 3% annualized in the fourth quarter and we expect that real GDP will not exceed its 2019 peak until sometime in the second half of 2021.

Corporate profits, in the short run, are likely to bounce in line with real GDP and S&P500 operating earnings could be down by less than 20% year-over-year in the third quarter following a 33% decline in the second quarter. However, thereafter, the pace of earnings gains should slow sharply in response to a deceleration in economic growth. Moreover, Washington will need to address the yawning budget deficit, which the CBO estimates at $3.3 trillion this fiscal year and $1.8 trillion in fiscal 2021, even without further stimulus. If the federal government increases corporate taxes in 2022 as part of an attempt to tame the budget deficit, it would clearly have a negative impact on after-tax corporate earnings. However, if they neglect to tackle the issue, there is a growing risk of a fiscal crisis within the next few years that could hit corporate profits with the unpleasant cocktail of even higher taxes and recession at the same time.

The pandemic marathon will come to an end one way or the other. However, for long-term investors, success in the rest of the race and beyond may depend on recognizing that the recovery will be slower from here on out and having the discipline to maintain discipline when others are embracing sectors which have shown very strong momentum in the short-run but seem over-priced for a slow return to normal.

Weekly Market Recap

The roller coaster ride in equity markets over the past couple of months has been driven in large part by a handful of technology stocks. While this dynamic has pushed U.S. markets to all-time highs and valuations to extreme levels, we do not see the same fundamental challenges today as were present prior to the tech bubble. Despite the pandemic, technology earnings rose 0.5% y/y in 2Q20 while overall S&P 500 earnings contracted by roughly 27% on a pro-forma basis. In contrast, in 2000 the sector contributed roughly 16% to earnings, yet earnings contracted severely through the first half of 2001 before turning negative by the third quarter. In addition, free cash flow margins reveal the sector’s far better operating performance relative to the broader market. By expanding into software and away from hardware, technology sales growth has accelerated, leading to cash-rich balance sheets. Free cash flow margins have expanded from less than 5% in the aftermath of the tech bubble to over 23% today. Looking ahead, the outlook for technology earnings remains positive and momentum could continue to push the market higher in the short term. With that being said, however, a more broad-based market recovery across other sectors will be needed to sustain the rally over the medium to long term, suggesting investors will need to complement tech exposure with cyclical value and international equities.



***Open enrollment for Medicare is coming up. Here is a referral for you…

As an independent insurance agent that contracts with major carriers, I can help you decide which plan is right for YOU! Whether you are in the market for Medicare Supplements, Prescription Drug Plans, Advantage Plans, or just want to know your options, I can guide you through the process.






Community Café is Wednesday, September 23rd at 8:00am for 30 minutes. Topic will be on: All things COVID with Mike Jensen

  • Will live stream on Facebook Live anyone who is friends with me on Facebook or Click Here to Follow The Community Café Facebook Page
  • Invitations will go out via email with a link to join on zoom.us, plus those who are friends with me on Facebook
  • Speaker this week, Mark Roberts
  • Invitations will go out via email with a link to join on zoom.com, plus those who are friends with me on Facebook

Estate Planning Webinar Tuesday September 15 at 6:00pm

Click Here to Register for September 15th Or email Stacy at [email protected]

  • Pros and cons of a Will based estate plan
  • Pros and cons of a Trust based estate plan
  • Co-hosted by Glenn Stockton with Stockton & Stern Law firm

Social Security and Tax Strategy Webinar on Tuesday September 15 at 6:00pm and Wednesday September 16 at 12:00pm


Referral rewards program:












Don’t forget that the news creates drama. The stock market moves for 2 reasons which are greed and fear.
Any service work you would like us to do for you, please email your request to us.

Please feel free to share this email with anyone you know, as the best way to battle stock market anxiety is education.

Thank you for your time in reading these updates.

Stay safe and stay healthy,
Mark Roberts