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Cedar Point Financial Services LLC March 2018 Newsletter
1. Cedar Point Financial
Services LLC®
Todd N. Robison, CLU
President
10 Wright Street
2nd Floor
Westport, CT 06880
203-222-4951
todd.robison@cedarpointfinancial.com
www.cedarpointfinancial.com
March 2018
What Is Cyber Insurance and Should Your
Business Have It?
Deducting 2017 Property Losses from Your
Taxes
What can I learn from looking back on my
financial situation in 2017?
What can I do to crack down on robocalls?
Cedar Point Monthly Newsletter
Elegant solutions to complex financial issues
What's Your Money Script?
See disclaimer on final page
Have questions? I can help.
Email Me:
todd.robison@cedarpointfinancial.com
Visit My Website:
www.cedarpointfinancial.com
linkedin.com/in/toddrobison
Services:
Estate Planning
Retirement Strategies
Executive Benefits
Group Benefits
CA License #0B77420
Money is power. A
fool and his money
are soon parted. A
penny saved is a
penny earned.
Money is the root of
all evil.
Do any of these
expressions ring
true for you?
As it turns out, the money beliefs our families
espoused while we were growing up may have
a profound effect on how we behave financially
today — and may even influence our financial
success.
Beliefs drive behaviors
In 2011, The Journal of Financial Therapy
published a study by financial psychologist
Brad Klontz et al., that gauged the reactions of
422 individuals to 72 money-related
statements.1 Examples of such statements
include:
• There is virtue in living with less money
• Things will get better if I have more money
• Poor people are lazy
• It is not polite to talk about money
Based on the findings, Klontz was able to
identify four "money belief patterns," also
known as "money scripts," that influence how
people view money. Klontz has described these
scripts as "typically unconscious,
trans-generational beliefs about money" that
are "developed in childhood and drive adult
financial behaviors."2 The four categories are:
1. Money avoidance: People who fall into this
category believe that money is bad and is often
a source of anxiety or disgust. This may result
in a hostile attitude toward the wealthy.
Paradoxically, these people might also feel that
all their problems would be solved if they only
had more money. For this reason, they may
unconsciously sabotage their own financial
efforts while working extra hours just to make
ends meet.
2. Money worship: Money worshippers believe
that money is the route to true happiness, and
one can never have enough. They feel that they
will never be able to afford everything they
want. These people may shop compulsively,
hoard their belongings, and put work ahead of
relationships in the ongoing quest for wealth.
3. Money status: Similar to money
worshippers, these people equate net worth
with self-worth, believing that money is the key
to both happiness and power. They may live
lavishly in an attempt to keep up with or even
beat the Joneses, incurring heavy debt in the
process. They are also more likely than those in
other categories to be compulsive gamblers or
to lie to their spouses about money.
4. Money vigilance: Money vigilants are
cautious and sometimes overly anxious about
money, but they also live within their means,
pay off their credit cards every month, and save
for the future. However, they risk carrying a
level of anxiety so high that they cannot enjoy
the fruits of their labor or ever feel a sense of
financial security.
Awareness is the first step
According to Klontz's research, the first three
money scripts typically lead to destructive
financial behaviors, while the fourth is the one
to which most people would want to aspire. If
you believe you may fit in one of the
self-limiting money script categories, consider
how experiences in your childhood or the
beliefs of your parents or grandparents may
have influenced this thinking. Then do some
reality-checking about the positive ways to build
and manage wealth. As in other areas of
behavioral finance and psychology in general,
awareness is often the first step toward
addressing the problem.
1 "Money Beliefs and Financial Behaviors," The
Journal of Financial Therapy, Volume 2, Issue 1
2 Financial Planning Association, accessed October
24, 2017
Page 1 of 4
2. What Is Cyber Insurance and Should Your Business Have It?
Does your company use electronic data? Does
it store or communicate potentially sensitive
information about customers, employees, or
competitors? If so, then a breach of that data
could cost your company plenty. Some
well-known organizations have experienced
data breaches, including WalMart, JP Morgan
Chase, Yahoo, eBay, Target, the IRS, and,
more recently, Equifax. Unfortunately, just
about any size company or organization that
retains personal information can be hit with a
cyber attack. One way to transfer some of the
risk and costs associated with a data breach or
network security failure is through cyber
insurance.
What is cyber insurance?
Cyber insurance provides protection against
potential costs and financial losses resulting
from data breaches caused by cyber attacks,
viruses, and other threats. It also helps cover
third-party lawsuits filed against your company
resulting from data breaches or your failure to
adequately protect sensitive or confidential
information.
What does cyber insurance cover?
While individual policies may differ, cyber
insurance can help cover:
• Loss of data: Cyber insurance may help
cover the cost of restoring or reconstructing
data that was lost, stolen, or damaged.
• Losses from data breach or security failure:
Cyber insurance assists in covering some of
the costs of investigating how and where the
breach occurred; expenses associated with
regulatory fines; legal costs of defending
against lawsuits and settlement of claims
brought by victims whose information was
inappropriately accessed, shared, or lost;
expenses related to notifying victims of the
data breach, such as customers and
employees.
• Costs associated with extortion or ransom
demands: That's right, often a cyber criminal
will demand a ransom or try to extort money
from your company in exchange for your
data. Cyber insurance covers some of the
costs of paying the ransom for the data or for
the restitution to victims whose information
was captured.
• Losses from business interruption: If your
company must close while the data breach is
investigated and resolved, cyber insurance
can help offset the ordinary costs and
expenses of your business during its down
time.
Who needs cyber insurance?
Your company or organization may be a
candidate for cyber insurance if it does any of
the following:
• Sends or receives documents electronically
• Communicates with customers or third parties
via email, text messages, or social media
• Stores third-party information on a computer
network that may be considered sensitive or
private, such as an individual's identity, tax
information, income, address, Social Security
and/or credit card numbers
• Stores confidential company information or
data (e.g., tax documents, sales or marketing
figures or projections, trade secrets) on a
computer network
• Advertises company services or products via
a website or social media
Aren't these risks covered by business
insurance?
Unfortunately, most of the risks and losses
resulting from data breaches or losses are not
covered by standard commercial general
liability insurance. In fact, many policies contain
a specific electronic data exclusion. In addition,
loss or damage to electronic data isn't
considered property damage under a business
policy, so coverage wouldn't apply.
Questions to think about
Cyber insurance has policy exclusions, terms,
and conditions. When thinking about the
purchase of cyber insurance, here are some
questions to consider:
• What specific risks are covered, and what
risks are not covered?
• What deductibles or coverage limits apply?
• Will the insurer require your company to
undergo a security risk review?
• Are there security controls your company can
adopt that will decrease the premium?
• Will the insurer identify security risks and
offer alternatives to minimize or eliminate
those risks?
Plan ahead
Cyber attacks and loss of data can be
devastating to a business. Plan ahead before a
cyber attack occurs. Evaluate your business
and determine areas of particular vulnerability.
Then create cybersecurity policies and
procedures for company employees to follow.
Finally, consider the purchase of cyber
insurance to help cover at least some of the
risks associated with a cyber attack.
Forty-eight states and the
District of Columbia have
laws requiring private or
governmental entities to
notify individuals of security
breaches of personally
identifiable information. In
addition, the Health
Insurance Portability and
Accountability Act (HIPPA)
requires HIPAA-covered
entities and their business
associates to provide
notification following a
breach of unsecured
protected health
information.
Page 2 of 4, see disclaimer on final page
3. Deducting 2017 Property Losses from Your Taxes
Hurricanes, wildfires, tornadoes, floods,
earthquakes, winter storms, and other events
often cause widespread damage to homes and
other types of property. If you've suffered
property loss as the result of a natural or
man-made disaster in 2017, you may be able to
claim a casualty loss deduction on your federal
income tax return.
What is a casualty loss?
A casualty is the destruction, damage, or loss
of property caused by an unusual, sudden, or
unexpected event. Casualty losses may result
from natural disasters or from other events
such as fires, accidents, thefts, or vandalism.
You probably don't have a deductible casualty
loss, however, if your property is damaged as
the result of gradual deterioration (e.g., a
long-term termite infestation).
How do you calculate the amount of
your loss?
To calculate a casualty loss on personal-use
property, like your home, that's been damaged
or destroyed, you first need two important
pieces of data:
• The decrease in the fair market value (FMV)
of the property; that's the difference between
the FMV of the property immediately before
and after the casualty
• Your adjusted basis in the property before the
casualty; your adjusted basis is usually your
cost if you bought the property (different rules
apply if you inherited the property or received
it as a gift), increased for things like
permanent improvements and decreased for
items such as depreciation
Starting with the lower of the two amounts
above, subtract any insurance or other
reimbursement that you have received or that
you expect to receive. The result is generally
the amount of your loss. If you receive
insurance payments or other reimbursement
that is more than your adjusted basis in the
destroyed or damaged property, you may
actually have a gain. There are special rules for
reporting such gain, postponing the gain,
excluding gain on a main home, and
purchasing replacement property.
After you determine your casualty loss on
personal-use property, you have to reduce the
loss by $100. The $100 reduction applies per
casualty, not per individual item of property.
Two or more events that are closely related
may be considered a single casualty. For
example, wind and flood damage from the
same storm would typically be considered a
single casualty event, subject to only one $100
reduction. If both your home and automobile
were damaged by the storm, the damage is
also considered part of a single casualty event —
you do not have to subtract $100 for each piece
of property.
You must also reduce the total of all your
casualty and theft losses on personal property
by 10% of your adjusted gross income (AGI)
after each loss is reduced by the $100 rule,
above.
Keep in mind that special rules apply for those
affected by Hurricanes Harvey, Irma, and
Maria. The Disaster Tax Relief Act of 2017
increased the threshold for claiming a casualty
loss deduction to $500, waived the requirement
that the loss is deductible only to the extent it
exceeds 10% of AGI, and allowed a deduction
even for those who do not itemize.
Also note that the rules for calculating loss can
be different for business property or property
that's used to produce income, such as rental
property.
When can you deduct a casualty loss?
Generally, you report and deduct the loss in the
year in which the casualty occurred. Special
rules, however, apply for casualty losses
resulting from an event that's declared a federal
disaster area by the president.
If you have a casualty loss from a federally
declared disaster area, you can choose to
report and deduct the loss in the tax year in
which the loss occurred, or in the tax year
immediately preceding the tax year in which the
disaster happened. If you elect to report in the
preceding year, the loss is treated as if it
occurred in the preceding tax year. Reporting
the loss in the preceding year may reduce the
tax for that year, producing a refund. You
generally have to make a decision to report the
loss in the preceding year by the federal
income tax return due date (without any
extension) for the year in which the disaster
actually occurred.
Casualty losses are reported on IRS Form
4684, Casualties and Thefts. Any losses
relating to personal-use property are carried
over to Form 1040, Schedule A, Itemized
Deductions.
Where can you get more information?
The rules relating to casualty losses can be
complicated. Additional information can be
found in the instructions to Form 4684 and in
IRS Publication 547, Casualties, Disasters, and
Thefts. If you have suffered a casualty loss,
though, you should consider discussing your
individual circumstances with a tax
professional.
New rules for 2018 and
beyond
Recent tax reform legislation
eliminates deductions for
casualty losses that occur in
2018 through 2025, except for
losses in federally declared
disaster areas.
The legislation also makes
changes that apply
retroactively to 2016 and 2017
for net disaster losses arising
from 2016 federally declared
disaster areas.
Page 3 of 4, see disclaimer on final page
4. Cedar Point Financial
Services LLC®
Todd N. Robison, CLU
President
10 Wright Street
2nd Floor
Westport, CT 06880
203-222-4951
todd.robison@cedarpointfinancial.com
www.cedarpointfinancial.com
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018
Securities offered through Kestra
Investment Services, LLC (Kestra
IS), member FINRA/SIPC. Cedar
Point Financial Services LLC is a
member firm of PartnersFinancial.
Kestra IS is not affiliated with
Cedar Point Financial Services or
PartnersFinancial.
What can I do to crack down on robocalls?
You may not mind if a
legitimate robocall provides a
helpful announcement from
your child's school or an
appointment reminder from a
doctor's office. But sadly, criminals often use
robocalls to collect consumers' personal
information and/or conduct various scams.
Newer "spoofing" technology displays fake
numbers to make it look as though calls are
local, rather than coming from overseas, which
could trick more people into answering the
phone.
Robocalls have been illegal since 2009 (unless
the telemarketer has the consumer's prior
consent). In mid-2017, federal agencies
announced they are ramping up enforcement
by fining violators and encouraging blocking
technologies. What should you do if you want to
help put an end to this nuisance?
1. Don't answer calls when you don't
recognize the phone number. If you pick up
an unwanted robocall, just hang up. Don't
answer "yes" or "no" questions, provide
personal information, or press a number to
"opt out." Responding to the call in any way
verifies that it has reached a real number
and could prompt additional calls.
2. Look into robocall blocking solutions that
may be offered by your phone service
provider. If they're available, you may need
to follow specific instructions to "opt in."
Otherwise, consider a mobile app or
cloud-based service designed to block
robocalls; some of them are free or cost
just a few dollars.
3. Consider registering your phone number on
the National Do Not Call Registry. While
taking this step can help mitigate the
amount of robocalls you receive, it's only a
partial solution to the problem. The Federal
Trade Commission advises consumers
whose numbers are on the registry but still
receive unwanted calls to report robocall
violations at complaints.donotcall.gov. The
phone numbers provided by consumers will
be released each day to companies that
are working on call-blocking technologies,
which largely depend on "blacklists" with
numbers associated with multiple
complaints.
What can I learn from looking back on my financial
situation in 2017?
If your financial plan for 2017
didn't work out the way you
wanted it to, don't beat
yourself up. Instead, ask
yourself the following questions to determine
what you can learn from reflecting on your
financial situation in the last year.
Did you meet your financial goals and
expectations for 2017? Perhaps you started
the year with some financial goals in mind. You
wanted to establish a budget that you could
stick to, or maybe you hoped to build up your
emergency savings fund throughout the year. If
you fell short of accomplishing these or other
goals, think about the reasons why. Were your
goals specific? Did you develop a realistic
timeframe for when they would be achieved? If
not, learn to set attainable and measurable
goals for your finances in the new year.
How did your investments perform? A
year-end review of your overall portfolio can
help you determine whether your asset
allocation is balanced and in line with your time
horizon and goals. If one type of investment
performed well during the year, it could
represent a greater percentage of your portfolio
than you initially wanted. As a result, you might
consider selling some of it and using that
money to buy other types of investments to
rebalance your portfolio. Keep in mind that
selling investments could result in a tax liability.
And remember, asset allocation does not
guarantee a profit or protect against loss; it is a
method to help manage investment risk. All
investing involves risk, including the possible
loss of principal, and there is no guarantee that
any investment strategy will be successful.
Are your retirement savings on track? Did
you contribute the amount you wanted in 2017?
Or did unexpected financial emergencies force
you to borrow or withdraw money from your
retirement savings? In that case, you can help
your savings recover by contributing the most
you can to your employer-sponsored retirement
plan and taking advantage of employer
matching (if it's available to you). Contributing
to a 401(k) or 403(b) plan can help you save
more consistently because your contributions
are automatically deducted from your salary,
helping you avoid the temptation to skip a
month now and then.
Page 4 of 4