Schwab Fraud Prevention: A Must-Read for DWM Clients!

Schwab app logoThis month I attended the annual Schwab Solutions event in Chicago. It is an excellent opportunity for DWM to make sure we are up to date on all the recent enhancements to Schwab’s technology offerings, which we offer to our clients. The focus was on cybersecurity and fraud prevention: Cybercrime is now more profitable than the illegal drug trade. That’s scary. In addition, “Financial services firms are hit by security incidents a staggering 300 times more frequently than businesses in other industries, with attack patterns changing frequently to outwit IT pros, according to Websense.” Phil Muncaster, Info Security Magazine. One great way to help prevent fraudulent wires or identity theft is to take advantage of electronic signatures and approvals through the Schwab Alliance website and the Schwab Mobile app on your smartphone. No pen needed! They also have some other really handy features too, like remote deposit (great for those April 14th IRA contributions!). It’s quick, easy, and, most important, secure. Schwab even has a guide that will walk you through setting up both.

On the Schwab Alliance website, you can view real-time information, nickname your accounts, retrieve 1099s, enroll in paperless delivery, approve wires, electronically sign applications, and more. You can even update your contact information (no need to sign a change of address form!)

Schwab also offers a very useful app. As with the website, you can see your Schwab accounts, approve wires, and electronically sign applications. And you can remotely deposit checks. It’s available for iPhone/iPadAndroid, & Kindle.

Schwab screen shot account list             Schwab screen shot check deposit             Schwab screen shot market overview

The electronic approval tools are a key feature of the website and app. It enables you to access forms and wire requests securely by logging directly into Schwab with your credentials, thus helping prevent fraud. Besides coming to sign in person, this is the most secure method. Email was not designed with security in mind, and accounts can be easily hacked. You may not realize what kinds of data a thief could mine from your sent and filed emails. It could be enough for them to commit wire fraud or steal your identity. For this reason, it’s best to avoid using email for anything that contains sensitive information.

So what’s the next step? Follow the guide to set up your Schwab Alliance credentials and app on your phone. Make sure your cell phone number and email address are up to date (which can be done through Schwab Alliance). That’s it! The next time we need you to sign a Schwab form or approve a wire, you will receive an email with a link to the Schwab Alliance login page. You will also receive an alert on your phone screen prompting you to log in to the Schwab Mobile app to approve/sign digitally. It will walk you through the signing or wire process; just click a few buttons and you’re done! We can even include DWM forms in the same ‘envelope’.

We are confident the Schwab Alliance website and mobile app will save you time and give you peace of mind.


For more on preventing identity theft and fraud, see my blogs on two-step verification and identity theft.

Download the New and Improved DWM App!

App icon2If you haven’t yet downloaded the DWM app, now is the time! It has just been updated with some great new bells and whistles.

You can see all your accounts in one place, check balances and positions, see performance, run reports, view statements, and contact us. It’s available for iPhone/iPad & Android.

Here are some sample screen shots:
DWM screen shot Menu       DWM screen shot Accounts

DWM screen shot Holdings       DWM screen shot performance
















Feel free to bring your tablets and smart phones to our meetings. We would like to make sure you are able to login and answer any questions you might have. The new app is really a fantastic tool to keep current with your portfolio. We’re sure you’ll love it.

Systematic Investing and Dollar Cost Averaging

Systematic investing3You’ve probably heard the investment advice, “Buy low, sell high.” It would be nice if it were that easy, but no one can accurately predict when the market, let alone an individual security, will be at its high or low, making this advice extremely difficult to follow. Instead, many experts recommend staying fully invested, even during market downturns, to increase your chances of investment success. Historically, investors who stay fully invested fare better than their market-timing counterparts, because timing the market is nearly impossible. When an investor pulls assets out of the market in an effort to avoid losses, they will likely also miss some of the higher returning days. By remaining fully invested, you never miss the best performing days.

Many investors who stay invested use the systematic investing method to help achieve dollar cost averaging and meet long-term investment goals. Systematic investing is simply investing a specific amount on a regular basis, such as contributing a certain percentage of your pay to your 401k from each paycheck. When you invest systematically, you add to your investments regardless of market conditions. This is how you achieve dollar cost averaging (“DCA”). When prices are low, you will be able to purchase more shares for your money, and conversely, less shares when the price is higher. Rather than sitting in cash waiting for ideal market conditions, where your money is not working you, invest a set amount automatically and you will end up with an average price over time. If you establish an investment plan involving systematic monthly or semi-monthly investments, it is easier to stay the course when the market goes through rocky periods than it is when you invest without a plan. This helps you to stay committed to your long-term goals and takes the emotion out of investment decisions. The main reason to use DCA is that it reduces the timing risk of investing a large amount of cash at the wrong time.

DCA doesn’t always have to be used in combination with systematic investing. DWM typically employs DCA when a large infusion of cash comes in from a client. Rather than put it all into the market immediately, we may implement the money by investing equal portions over a few month’s time. I.e. 1/3 immediately, 1/3 a month later, and a 1/3 two months later. To limit transaction costs we don’t do this with smaller amounts. We also don’t typically use DCA when we receive a non-cash transfer, i.e. $400,000 worth of securities from an old broker. In this case, the money already has exposure to the market so there’s no reason to DCA back in.

Systematic and DCA investing are smart ways of putting cash to work and putting you on a disciplined, emotion-less investment schedule. If you’d like more information, we’re happy to help!

Ask DWM: What do I need to know about (and do with) my credit scores?

CreditScoreRangesAnswer: Great question. Banks severely tightened their lending standards after the subprime mortgage crisis, making your credit score more critical than before, even for high net worth individuals. When lenders are determining whether to extend credit and at what interest rate, one of the most important factors they look at is your credit score.

Actually, you don’t have one score, but several. You have a Fair Isaac Corp. (“FICO”) score from Equifax, Experian and TransUnion. Each is a score on a particular day of how much of your available credit you have used, payment history, length of credit history, types of credit, and new accounts and inquiries. They vary slightly because some creditors don’t report to all of the credit bureaus, and some bureaus may have errors on your report. The balance of how these factors affect your score depends on your length of credit history and other factors, and their impact on your score changes as your credit profile changes over time.

Before extending you credit, a lender will not only consider how much credit you have available to you, but also how much (as a percentage) of that credit you are currently using, as this could be an indicator that you are experiencing financial difficulty. For example, if you have a $50k total credit card limit (spread over several cards), and are carrying a total of $20k in balances (40% utilization rate), it will have a negative effect. This is true even if you use your credit cards to earn reward points and pay off the balance in full each month. You want to keep your utilization ratio below 30%, and people with the best scores generally use less than 10% of their available credit at any given time. Of course, lenders take into consideration how much credit is already available to you, whether you are utilizing it or not, because they want to make sure you would be able to afford all your payments if you did choose to use more credit. So, it’s a balancing act.

Avoid late payments. One late payment can hurt your score for more than a year. If you’re out of town or just flat out miss making the payment on time, call the credit card company and ask them to waive penalties and most importantly, not report this infraction to the credit bureau. Consider signing up for automatic payments to prevent this situation. Credit cards and most other loans offer the option of having the minimum payment deducted, and if you wish to pay more or pay early, you may still do so.

The length of your credit history gives a lender an idea of your behavior over time. This includes how long you have had credit, how old your oldest account is, and how long it has been since you used certain accounts.

“Types of credit” generally makes up a small part of your score. This may include installment loans, retail accounts, credit cards, and mortgage loans. Lenders like to use this to gauge how you handle installment vs revolving credit for example.

Credit inquiries hurt your score. When you shop for a mortgage or a car or education loan, those inquiries count slightly against your score. However, multiple inquiries about your credit within a few weeks, typically count only as one “demerit”. Additionally, opening several accounts in a short period generally signals a greater risk to creditors.

Once a year, you can get a free credit report by going to You may order a report from all three bureaus at once, or order one from a different bureau every four months to keep a more diligent eye on your credit throughout the year. Be sure to dispute any errors you find. This will provide details of what’s in your credit file but not your score. If you are planning to apply for new credit in the next year, you should check your score and take steps to improve it if needed. Generally scores over 740 receive the best mortgage rates. (Scores range from 300-850). There are several ways to keep an eye on your score over a period of time. Discover credit cards provide a score for free on your monthly statement, or you can check it any time you log in. You can also get a free FICO report on several websites like Credit Karma, but the score on the free one may not necessarily be the score a potential lender would receive. The same goes for buying your score directly from the bureaus. (There are actually 56 different versions of your FICO score, depending on which software and industry-specific versions the lender is using- auto, mortgage, credit card, etc.) A general version FICO report for one bureau costs $19.95, or $59.85 for all three, and includes ratings for different factors that are helping or hindering your score.

We encourage you to take a look to see where you stand and take steps to maintain great credit scores. Like your other assets, they need to be maximized and protected.

Quick Bytes: Tech Tips for Real Life

binary-code-475664_12801. Where not to use your debit card: Although your debit card may look just like a credit card, there are some key differences and places you really shouldn’t use it:

  • Online or over the phone. If your card information is hijacked, your bank account could be wiped out and you might have a cash flow problem until your claim is processed and the funds are reimbursed. If the same thing happens with a credit card, the worst case scenario is you can’t use that card until it’s sorted out.
  • Use a credit card for big ticket items, recurring payments, or anything else you might potentially have a dispute over. Besides rewards program benefits, credit cards offer dispute rights that debit cards typically do not.
  • Don’t use your debit card for future travel or hotel reservations because they will keep your information in their system until your trip and it will be at risk of a data breach for an extended period of time.
  • Lastly, don’t use your debit card anywhere ‘risky’. Restaurants, businesses you haven’t dealt with before, and self-checkout or ATM equipment that looks like it’s been tampered with can put you at risk of having your information stolen and account drained.

2. What ever happened to my Social Security statements? Remember when you used to receive a report from Social Security with your yearly earnings history and estimated benefit in the mail each year? It’s been a while since the Social Security Administration stopped mailing those, but you can still request one by completing a form. Better yet, go to to set up an account. (Be prepared- they ask some very specific questions to help prevent identify theft.) With an online account you can keep track of your earnings, get estimated future benefits, update your address, start or modify your direct deposit information if you’re receiving benefits, etc. We urge everyone to verify your earnings annually and monitor your estimated benefit so you don’t have any surprises when you’re ready to retire.

3. Scams- not just for email anymore: Most people who have used email for years are pretty savvy when it comes to avoiding common scams. (I.e. when you receive an email riddled with grammatical errors, from an unknown person in another country, claiming someone left you $10MM or that you won a lottery you didn’t enter, you don’t open it). However, scam artists are always adapting. Many have started using more believable angles like ‘delivery failure notification’ emails that look like a well-known carrier is notifying you they weren’t able to deliver a package. If you click on the tracking number or attachment, you will inadvertently download malicious software. They also target certain groups who are likely to be interested in a certain ‘opportunity’, such as the work from home scam recently targeted at university students. Other recent scams include:

  • Fake (but familiar sounding) charities soliciting donations after a natural disaster,
  • Notices of unpaid parking tickets or other government fees or taxes (where the user may be directed to an official looking website and enter personal information in addition to paying the ‘fine’), and
  • Family/friend in distress emails where it looks as if your friend or family member is stranded in another country and needs money to obtain new documents and get home.

Always verify before you do anything. Have established charities you give to- don’t accept solicitations. (You can verify their worthiness through websites such as CharityWatch). Received a notification of an unpaid parking ticket or IRS back taxes you didn’t know you owed? Look up the phone number of the city or agency that allegedly sent it and call them to inquire. (Don’t rely on contact information listed on the notice). Didn’t know your friend was in Spain? Call them. The Federal Trade Commission, FBI, and Snopes are good places to check if you’re suspicious of something.

In the last few years, as social media has rapidly grown in popularity, scammers have followed. Scams can be found everywhere: LinkedIn, Snapchat, Pinterest, Instagram, Google+; you name it! Because most users aren’t as experienced with these platforms as they are with email, they may be more likely to fall for a scam. Countless people on Twitter and Facebook forward chain letters they would have deleted immediately had they shown up through email. (Apple is not giving away the newest iPhone to the first 500 people to repost/retweet the message. Sorry). Other common, more malicious scams, include being directed to fake homepages that look like the real thing. For example, shortened URLs are common on Twitter. But since you can’t see the actual address, you don’t know what site it’s really taking you to until it’s too late. If you enter your login information you just inadvertently gave it to a scammer. You’ve been phished. Now they can use your account to post friend/family in distress messages (see above) and take their money and information, and so on. Other than verifying before acting, make sure your spyware, malware, and antivirus are always up to date. Scams are nothing new but they are always changing to take advantage of the latest news, trends, apps, and seasons (ie tax season or holiday giving). They use psychology to appeal to our charitable, greedy, religious, social, or law-abiding nature.

Budgeting: Putting the Pieces Together


Budgets are like a puzzle. You have a finite amount of money, regardless of how much you earn. You need to figure out where each piece of it is, and should be, allocated. It’s an honest look at your spending and saving rates. Many people have a negative attitude towards budgeting, thinking that it’s restrictive, time consuming, or unnecessary, but a budget is really something positive. It’s a tool to help you get where you want to be one day.

DWM works with clients to create custom financial plans. Why is that so important? The CFP website says it perfectly: “Creating a financial plan helps you see the big picture and set long and short-term life goals, a crucial step in mapping out your financial future. When you have a financial plan, it’s easier to make financial decisions and stay on track to meet your goals.” These plans help you define and quantify your goals. They’ll help you identify how much you will need to save to make these goals.

To create a realistic plan, one needs realistic numbers. One of the most important figures in all of this is the amount of money you spend, since the more you spend the less you have to save. Remember, you have a finite amount of money. Some people like to know exactly what they are spending, and we have clients that have created Excel budget spreadsheets that detail their spending down to the penny. On the other hand, some people don’t think about their spending (or live in denial about it) and have no clue. But burying your head in the sand doesn’t change reality. The money is still being spent whether you’re aware of how much you’re really spending on discretionary items vs saving for goals like retirement, or not. It’s better to face things now when you still have a chance to change your spending habits, and save to meet the goals that are important to you.

For DWM to provide you with a meaningful plan, we need solid numbers on your spending. So if you’re not currently tracking where your money goes, here is some advice to get you started:

  1. Take a look at your current spending. This is the part where many people stop before they get started because many budget worksheets contain 50+ categories. Trying to classify and tally everything into that many categories is daunting and time consuming. Instead, download a full year’s worth of transactions from your bank accounts’ and credit cards’ websites to an Excel spreadsheet, and sort by category or description to get an idea of where your money is really going. Label each category as Fixed, Goals, or Flexible according to the guidelines below in step two, and figure out what percentage of your take-home income each of the three composes. For some people there will be surprising or depressing revelations, but don’t be dismayed. You can take control of your spending habits. Now you’re ready for step two.
  1. Set goals and adjust your current spending accordingly. A good, easy to follow guideline is to divide your total take-home income 50/20/30:

–  Fixed expenses such as home, student, and car loans, utilities, insurance, memberships, and other expenses you are committed to and don’t vary much should make up 50% of your budget at the most.

–  Financial goals such as retirement, saving for college or a down payment on a vacation home, building an emergency fund, and paying off credit card debt should total at least 20%. (Note that you may be saving more towards retirement goals than reflected in this number because it only includes take-home income, and 401k contributions are deducted before your paycheck is deposited. For more on the ideal saving rate, see Brett’s recent blog.) For our clients, this is where a financial plan from DWM really helps you to know how much to allocate each month to meet your goals. Of course, we also review and offer our advice on fixed expenses and flexible spending as part of our comprehensive financial planning process.

–  Flexible spending makes up the other 30% (or less). This includes things that usually vary month to month like food (both grocery shopping and dining out), hobbies, medical costs, entertainment, shopping, gifts, etc. This portion may be spent on whatever you want or need, as long as you stay within budget.

This guideline is proportional (it uses a percentage of your income for each of the three categories), so it is scalable for all income levels.

We strongly suggest setting up automatic payments/contributions for the fixed expenses and financial goal categories. You will save time, avoid missed or late payments and contributions, and it can help keep your flexible spending portion in line. If 50/20/30 is a big change from your current spending and you are having a hard time cutting your fixed or flexible spending, start with adjusted percentages and continue to make small changes until your budget is in line with your goals. Monitor your actual-vs-budgeted spending monthly to see if your actual percentages are in line with your budget. Once you are consistently finding your percentages are where they should be, you can move on to step three.

  1. Re-evaluate as circumstances change. For example, if you receive a raise or bonus, your mortgage increases, decreases, or is paid off, you buy a new car or pay off an existing loan, when you are no longer saving or paying for college, etc. Otherwise, if you are making all your fixed expenses and financial goal payments/contributions without running up debt from flexible spending expenses, you know you’re doing fine and don’t have to track expenses each month.

So, look at how your income is being spent and be honest with yourself. With DWM on your team, you can develop a budget and make sound financial decisions that help you meet your short and long-term goals. Please contact us to update your plan or learn more about budgeting, saving, or our comprehensive financial planning process. Your future self will thank you.