Barack and Michelle Obama need some better financial planning advice.

Some clues to the president and first lady's finances can be found in their 2012 tax return, released this month, and their 2011 financial disclosure report (filed in 2012) -- and those reports suggest they should consider changing their investment allocations and their mortgage, as well as other elements of their financial strategy.

Start with their income as well as their tax payments. The Obamas earned $662,076 last year. Subtracting out their qualified plan deductions, itemized deductions and exemptions, their taxable income was $335,026.

After being hit with the alternative minimum tax, which is partially offset by a foreign tax credit, the Obamas paid $112,214 in federal taxes. That equates to just over 18.4% of their adjusted gross income. The White House declined to comment for this story.

HIGH MORTGAGE COSTS

Digging deeper into their finances, the Obamas seem to have an immense amount of what advisors often call low-hanging fruit -- the ability to earn much more with less risk.

Take their mortgage: The Obamas paid $45,046 in mortgage interest in 2012, which appears from the disclosure statement to be at a 5.625% interest rate with Northern Trust. That suggests an outstanding principal balance of about $800,000.

On the other hand, the bulk of their investments are in Treasury notes. Based on the disclosures, I estimate they hold about $3 million in Treasury notes (also held by Northern Trust), yielding 0.71% if averaging a five-year maturity.

By selling some of those Treasuries and paying off the mortgage, they would effectively be getting five more percentage points on the amount; they would also be about $40,000 better off each year before taxes, not to mention being less exposed to notes that could take a hit from possible rising rates.

The Obamas would pay more in taxes but make much more after taxes -- especially since they aren’t getting the full deduction anyway, due to the AMT. That's more money going to the U.S. Treasury and more money for them; Northern Trust would be the loser.

ASSET ALLOCATION CHANGES

A good planner may also want to investigate the $115,516 tax-loss carry-forward in Schedule D. While this could have come from many sources, these typically come when investors buy at the top of the market and then panic and sell after the plunge. But regardless of where it came from, it would take almost 40 years to utilize this loss carry-forward at the annual limit of $3,000 a year.

To increase the value from this loss by creating more taxable capital gains, the Obamas need to reverse their asset location. They currently own Treasuries in their taxable account and Vanguard S&P 500 index funds in their retirement accounts. By switching, they continue to invest in U.S. capitalism, but get a much better chance of gains.

A savvy advisor may also suggest that rather than only invest in the large-cap companies of the S&P 500, they should consider a total U.S. stock index fund that would also invest in mid- and small-cap companies -- a move that, additionally, would provide some political benefit by showing the Obamas' support for small businesses. (While many also believe in international investing, this might not sit as well politically.)

Their overall asset allocation also seems a bit skewed. While holding about $3 million in Treasuries, they have only about $400,000 in the stock index funds. Treasuries are unlikely to keep up with inflation, so taking a bit more risk is in order. With markets near an all-time high, perhaps they should consider dollar-cost averaging.

OTHER RECOMMENDATIONS

Other areas the Obamas should explore involve management of the AMT. There are two things they could do to reduce AMT. If they are in IRAs -- it's not clear from the disclosures what type of retirement accounts they hold -- the first to consider is a possible Roth conversion of their retirement accounts. That would generate more income, which would lower the AMT and effectively allow them to convert at a lower tax rate. And if it doesn’t work out as well as they thought, the Obamas could always recharacterize next year. The second action would be to reduce the $150,034 they have given to charities, an idea that might be a nonstarter.

If the president and first lady do contact an advisor out there for some financial planning, a lot more will be needed than the two public disclosures, but hopefully this will get them started.

Allan S. Roth, a Financial Planning contributing writer, is founder of the planning firm Wealth Logic in Colorado Springs, Colo. He also writes the Irrational Investor column for CBS MoneyWatch.com and is an adjunct faculty member at the University of Denver.

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