Congress Pushes Us to the Cliff's Edge

Well, here we are on December 31 and there’s still no deal on Capitol Hill to avoid the Fiscal Cliff. Negotiations on Sunday had Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell holding closed-door meetings. Their goal was to reach a compromise by mid-day, but they fell short, even as Vice president Joe Biden joined in.

Senator Reid announced the Senate would meet again Monday, December 31, at 11:00 AM, noting that “Although there is still significant distance between the two sides, there is still time left to reach an agreement.”

A major point of contention remains individual income-tax rates. President Obama has called for raising taxes on family income above $250,000. In the latest round of Senate talks, Republicans proposed a $550,000 threshold, which Democrats moved to $450,000.

Bitter disagreement on tax increases extends to how the money raised should be spent. Republicans want any tax increase, which they have reluctantly accepted, to go toward reducing the deficit. Democrats want any increased tax revenue to offset spending cuts that are scheduled to kick in as part of the fiscal cliff, and to pay for extending unemployment benefits.

Of course, with this much distance between the two parties on tax rates, there’s little hope of getting any resolution on the estate tax this year.

In the absence of a bipartisan deal later today, Senator Reid has said he will ask for a vote on a bill to carry out President Obama's backup proposal, which addresses only a few items on the long list of tax sunsets and budget cuts. Most significantly, the bill includes extending current tax rates for incomes up to $250,000 for couples filing jointly. Democrats say they could pass the bill through the Senate. However, it’s questionable whether the Republican controlled House would approve it.

We’ll know the outcome in just a few hours. As all the political rhetoric and posturing on the Hill continues, I think Senate Chaplain Barry Black’s opening prayer for last weekend’s session accurately describes the desperate situation our elected leaders have put us in. “We gather this weekend with so much work left undone,”  he said. “Look with favor on our nation and save us from self inflicted wounds.”

I will address this once again in the New Year.  In the meantime, my wish to you is that you will have happiness, good health and prosperity in the New Year!  Happy New Year!

A Way to Honor the Precious Lives Lost

“When we meet real tragedy in life, we can react in two ways -- either by losing hope and falling into self-destructive habits, or by using the challenge to find our inner strength.” That inspiring thought comes from the Dalai Lama and it is certainly applicable in the wake of the unfathomable tragedy in Newtown, Connecticut. Last Friday, as the nation came together to reflect in a moment of silence and ring church bells 26 times to honor the lives lost at Sandy Hook Elementary School,  the “26 Acts of Kindness” campaign was gaining steam. The idea’s as simple as it is cathartic -- commit to performing one act of generosity for each of the victims lost at Sandy Hook, and share the results.

NBC journalist Ann Curry, who tweeted about her 20 acts of kindness in honor of the child victims, is leading the charge.  “Right now, this country wants to heal,” she wrote in a blog post. “I think the only thing comforting in the face of a tragedy like this is to do something good with it if you can. Be a part of that wave.”

The idea, which invites everyone to carry out acts of kindness has evolved into a viral effort known as 26 Acts of Kindness on Facebook and #26Acts and #20Acts on Twitter.

The Facebook page was started on the day of the tragedy Warren Tidwell, a 34-year-old auto parts salesman. He posted a photo of his first act, giving a box of chocolates to a woman at his local supermarket in Auburn, Alabama. His note read, “To honor the 26 taken from us at Sandy Hook we are doing 26 acts of kindness. You are #1.”  Later, he and his four-year old son donated toys to the local firemen's Toys for Tots drive.

“I felt empowered, instead of the helplessness, hurt, and fear,” Tidwell said in an interview with NBC. “I can put the good back in the world that was taken from it.”

Students nationwide, struggling to understand the tragedy and to feel safe in their own schools, spent the days before their holiday vacation trying to do just that. They gathered Christmas gifts for underprivileged kids, collected canned goods for local food banks, acknowledged their own teachers, and created artwork to send to the new Sandy Hook School. All of these efforts are helping our nation to hold on to hope and to heal.

As Ann Curry asks at #26 Acts on Twitter, “An act of kindness, big or small. Are you in?

It's Christmas time.  Give charity, spread some smiles and bring cheer to hearts!

Know How Your Advisor Gets Paid

Know what you are paying for; and know how your advisor gets paid.

Amazingly, studies continue to show that many clients of financial advisors have no idea how they pay for the financial advice they receive. That’s certainly not how we transact with our doctors, lawyers, or contractors, so why is it true in the financial services industry? The root of the confusion could be that financial advisors use so many different compensation models.

To set things straight, it’s first necessary to divide the advising world into three camps.  First, there are advisors who earn their living by commission and therefore may have an incentive to sell you particular products.  Second, there are fee-only financial advisors like Bernhardt Wealth Management that charge clients a percentage of assets under management and operate as fiduciaries who always put the needs of clients first.  And third, there are advisors who utilize fee-based accounts but can also earn commissions on other products they sell.

Calculating fees as a percentage of the assets we manage enables us to operate on a relationship basis, rather than a transactional basis. That is, we get to know each client so that we thoroughly understand their values and goals. We then develop a long-range investment strategy that is true to those values and goals, and systematically review portfolios to ensure our clients stay on course as their circumstances and the markets change.

Further, we seek to add value for clients on a range of financial issues, well beyond managing an investment portfolio. Our fee encompasses a broad suite of personalized services, including tax planning, college planning, insurance planning, retirement planning, estate planning and philanthropic planning.

In all aspects of our relationships, we are motivated by one goal: Do what’s right for each and every client. Our clients know what they pay for our advice and that we will always recommend the course of action that is in their bests interests.

(Note: For a discussion of the six core characteristics--Six Cs--an advisor should have, read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)

Retail Investors, Out of Sync and Stymied by Choices

When State Street's Applied Center for Research recently asked retail investors what steps they needed to take over the next ten years to prepare for retirement, the number one response (40 percent) was to become “more aggressive.” However, when they analyzed the respondents’ portfolios, they found that cash was the number one allocation, at an average of 31 percent. More alarming, when asked to project their allocation 10 years into the future, respondents still chose cash as the dominant asset class. Clearly, these allocations seem out of sync with the stated long-term goal of becoming more aggressive. So what gives, especially as nearly two-thirds of these retail investors rated their current level of financial sophistication as advanced?

It could be that too many investment choices have resulted in cash paralysis. According to the 2012 MFS Investing Sentiment Survey, 40 percent of investors think investment products are “overly complex,” and 34 percent feel “over-whelmed” by the investment choices available.

Psychologist Barry Schwartz has demonstrated that too much choice leads to reduced happiness and a feeling of missed opportunities. As he writes in The Paradox of Choice, “Choice no longer liberates, but debilitates. It might even be said to tyrannize . . . the fact that some choice is good doesn’t necessarily mean that more choice is better.” And in Pension Design and Structure: New Lessons from Behavioral Finance, Sheena Sethi-Iyengar, Gur Huberman and Wei Jiang highlight reported that participation rates in company retirement plans decrease between 1.5 and 2.0 percentage points per every additional 10 mutual funds offered.

The paralyzing effect of too many choices was illustrated again when researchers conducted an experiment in a California grocery store involving a display of jams. In the first test, they featured 24 different jams to taste; on another day they displayed just six. The results? Although more shoppers stopped at the display of 24 jams, just 3 percent made a purchase. And while fewer shoppers stopped to sample at the table of six jams, 30 percent purchased a jar.

Investing doesn’t have to be an overwhelming shopping experience. Working with a trusted advisor, your personal shopper, can narrow your choices and align your investments with your risk tolerance and financial objectives to ensure you meet your short- and long-term goals.

Protecting Your Accounts from Thieves

Did you see USA Today's report where a would-be thief tried to dupe a financial advisor into making a withdrawal from a client’s account? The impersonating e-mail carried instructions to wire $15,850 into an account at PNC Bank and was worded in a casual style similar to old e-mails the financial advisor had received from his executive client. Luckily, the advisor phoned his client and the fraudulent request was exposed.

Red flags we watch for were part of this attempted theft – a balance inquiry via e-mail followed by an unexpected disbursement request via e-mail and the “client” offering excuses for not being able to talk on the phone.

Obviously knowing our clients’ voices and their spending patterns also deters theft. And because as TD Ameritrade cautions, “Fraudsters prey on our natural service instincts,” we carefully review all requests for funds.

What can you do to help us? The FDIC offers these tips:

• Ensure your transactions are encrypted. Encryption is the process of scrambling private information to prevent unauthorized access. To show that your transmission is encrypted, some browsers display a small icon on your screen that looks like a "lock" or a "key" whenever you conduct secure transactions online. Avoid sending sensitive information, such as account numbers, through unsecured e-mail.
• Choose your passwords carefully. Your password should be unique to you and you should change it regularly. Do not use birthdates or other numbers or words that may be easy for others to guess.
• Protect your personal computer with virus protection. Contact your hardware and software suppliers or Internet service provider to ensure you have the latest in security updates.

What Makes a Competent Advisor?

A trusted, competent advisor must provide the knowledge and insight necessary to chart an investment course for his clients – as well as the discipline necessary to keep them invested when markets get choppy. Moving away from the nautical metaphors, I recently heard an advisor’s role compared to a pedestrian bridge over an eight-lane highway. Yes, it’s possible to cross those lanes of traffic on your own, but getting to your destination will be a little more harrowing than if you cross safely over a pedestrian bridge.

In addition to providing investment expertise, getting clients safely over the bridge requires helping them to make good decisions. Naturally, those situations are intensely personal. However, if asked for some generic financial decision-making advice, I would say to avoid “trusting your gut.” In fact, our instincts can lead us astray when it comes to our finances. For example, the primitive “flight or fight” impulse that causes us to flee from danger is the same feeling that prompts many investors to sell on a stock’s downturn, precisely at the wrong time. The flip side, of course, is that, pumped up by what Alan Greenspan referred to as “irrational exuberance,” investors are more than willing to overpay for hot stocks.

The emerging field of neuroeconomics probes these financial decision-making idiosyncrasies—and opens pathways to better decisions. Importantly, neuroeconomics teaches that the instinctive regions of the brain constantly, and more immediately, react to stimuli all day long. Yet, we only intermittently apply the slower, more advanced cognitive part of the brain because it requires more time and energy.

Therefore, the competent advisor must ask questions, listen to clients’ answers, develop thoughtful investment and wealth management strategies, carefully monitor their progress, and serve as his or her clients' personal Chief Financial Officer. This process keeps clients from reacting emotionally in times of market stress and keeps them on the road to reach their goals.

(Note: For a discussion of the six core characteristics--Six Cs--an advisor should have, read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)

Is Apple Another Polaroid?

For anyone who wonders if Apple can maintain its creative edge and remain on top without Steve Jobs, Bill Frezza, a fellow at the Competitive Enterprise Institute and a Boston-based venture capitalist, poses another simple question – Remember Polaroid?

As Frezza chronicles in Forbes, Polaroid was once the apple of Wall Street’s eye. Like Apple, Polaroid had a charismatic founder, Edwin Land – who is second only to Thomas Edison in the number of patents he received. “Where Jobs was the impresario of form, function, and business model, Land was the wizard of optics, chemistry, and physics,” writes Frezza. He also notes that Land’s patent victory over Kodak, a supplier that tried to steal Polaroid’s technology to launch a competitive instant camera, is strikingly similar to the recent Apple/Samsung battle won by, you guessed it, Apple.

Yet Polaroid’s time at the top was short-lived because the limited capabilities of Polavision instant movies couldn’t compete with emerging videotape technologies. And, today, little remains of Polaroid.

Could competition take a bite out of Apple’s seemingly untouchable market share? According to Frezza, the day Apple “stops building insanely great products, the day it loses its knack for thrilling loyal customers with new releases, the day a younger generation turns up its nose to chase a brand that’s fresh and new is the day the grim reaper goes to work. And this is as it should be, freeing up the capital and talent necessary to build the next great company, the consumer making the ultimate choice between winners and losers.”

He concludes with a simple statement that rings true throughout the decades. “Capitalism only works if companies are allowed to succeed and fail – on their own merits, in their own time, with their fate dependent on pleasing customers, not politicians.”

Clearly, Frazza is no fan of the notion that some companies are “too big to fail.” He notes, “The death of companies is always painful. But out of death comes rebirth, a cycle we interfere with at our peril.” I couldn’t agree more.

And, if you are interested in learning more about Polaroid’s founder, check out his biography Insisting on the Impossible.

Passive Beats Active, Again

Study after study confirms the same thing – passive investing beats active management. The latest data comes from financial advisor Harold Evensky, president of the financial planning firm Evensky & Katz, in the latest issue of the Journal of Investing. Along with Shaun Pfeiffer, a professor at Edinboro University in Pennsylvania, Evensky, who is also a professor at Texas Tech University in Lubbock, examined 20 years of mutual fund performance data, tracking expansions and recessions separately and collectively.

Specifically, the two researchers were interested in testing the widely held notion that actively managed funds outperform in bear markets. After all, an active manager could make defensive moves to protect portfolios and preserve investor capital in a significant downturn. However, a passive index fund would simply continue to own the stocks in the index and would fall victim to falling prices.

In fact, the researchers found that active fund managers do indeed generate enough outperformance to cover their fees in recessions. However, in bull markets, active managers’ returns do not beat passive index funds. And, in addition to underperforming passive strategies in periods of economic expansion, active managers also fall short of passive managers over longer investment horizons that encompass both expansions and recessions.

The study’s findings further weaken the case for active management by reporting on the wide variance among actively managed portfolios and their inconsistency across business cycles. Generally speaking, the top decile of actively managed funds generated alpha, but the bottom-decile funds performed poorly.

The bottom line is that the alpha generated by active managers in recessions isn’t enough to justify their under performance across full market cycles.

Who are the 1%?

Nina Easton’s recent article “Stop Beating Up the Rich” begins by quoting the French historian Alexis de Tocqueville who chronicled American society’s often contradictory pursuit of both equality and the almighty dollar. “The love of wealth is at the bottom of all that the Americans do,” he wrote.

Between the Occupy Wall Street movement and the Presidential campaign, we’ve certainly heard a lot about the wealthy 1%. All the rhetoric encourages us to conjure images of powerful executives who make hundreds of times what the average worker earns, fly about the country on private jets, and would rather take federal bailout money than pay their fair share of taxes.

But, as Easton points out, it’s inaccurate to categorize the 1% as “greedy, tax-avoiding, selfish capitalists.” In fact, she notes that most of the 1.4 million taxpayers who comprise the top 1% gained their wealth through hard work rather than by inheritance. “This group consists of a large number of doctors, lawyers, engineers, and small-time entrepreneurs, many of whom are working hard to create jobs. To vilify them is the wrong debate,” she writes.

Yes, the number of millionaires has grown over the past decade. In fact, a 2011 study by the Deloitte Center for Financial Services found that over the past decade the number of millionaire households rose from 7.7 million to 10.5 million. And the number of American millionaires is expected to double by 2020.

However, Easton suggests that pitting Americans against one another “distracts from the harder and far more important conversation: how to jump start the escalator for 23 million unemployed and underemployed -- and for those whose incomes were stagnating well before the 2008 recession.” She also shares the perspective of Harvard Business School professor Michael Porter, who studies competitiveness in the United States. Although he is critical of unfair executive compensation practices and corporate America’s failure to invest in the entire American workforce, he says, “It’s not a good idea to declare that people who are successful are bad. The better question is: Do we have a fair system for getting that education and skill? Are people unfairly handicapped? Are we doing enough to open the gateways?”

That’s food for thought.

Caring -- One of the Six Cs

Theodore Roosevelt once said, “Nobody cares about how much you know until they know how much you care.” That old adage has become almost a customer service cliché, but nowhere does our 26th president’s advice ring more true than in the financial planning profession. Make no mistake -- It is impossible to provide useful financial advice unless you really know -- and care about -- your clients. Simply, our knowledge of our clients’ current circumstances and future aspirations serves as the essential foundation for building both portfolios and solid, long-term, caring relationship.

“Caring” is the third of the six core characteristics I mentioned in What Makes a Great Financial Advisor? (I’ve written blogged about character and chemistry; competence, cost-effective and consultative round out the list.)

Caring factors into the advisor/client relationship because financial decisions are always about more than money. In that regard, it helps to have someone on your side who really understands you. Because we know and care about your family, values and goals, when we discuss your investments, we view your finances in the context of who you are as a person rather than allowing your net worth to define you and dictate a particular course of action.

Without an advocate, someone who really cares about you, it can be easy to let daily life get in the way of pursuing your dreams. We guide clients through a financial planning process that aligns their dreams with their financial resources. And, our ongoing planning ensures they have the freedom to dream big for tomorrow.

(Note: For a discussion of the six core characteristics--Six Cs--an advisor should have, read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)

Too Big for a Single Regulator?

Think back to America History class. Do you remember learning about the Glass-Steagall Act? The law dates back to the Great Depression and enforced a strict separation between banks that take deposits and those that invest in capital markets – that is until it was repealed in 1999.

Ironically, former Citigroup chairman Sanford "Sandy" Weill, who was the architect behind the 1998 merger of Citigroup and Travelers Group (which also owned the investment firm Salomon Smith Barney at the time) that resulted in the repeal of Glass-Steagall recently suggested adopting a new two-tiered banking model. Weill would split banks into the traditional deposit takers who could make loans and more “creative” institutions that could take more risk. In a recent interview, he urged, “Let's have a creative banking system, like we always had, where the financial industry can again attract the best and the brightest young people like they do in Silicon Valley, so that we can lead innovation that is necessary and [encourage] the entrepreneurship that's necessary. We can't have a world where it is impossible to make a mistake."

Allowing bankers to makes mistakes will be a tough sell in the wake of the recent financial crisis, and with the recent London Whale trades and Libor scandal now playing out. While Weill’s unlikely to garner much support to allow bankers to operate in a more risky fashion, the question of just how commercial banking and investment banking should be regulated will persist.

In an article in Knowledge@Wharton, Wharton management professor Mauro Guillén expressed his preference for central regulation for the big banks, noting, "When a bank is in 10 kinds of financial services, it does not need more regulation; it needs one regulator." He says the Dodd-Frank Wall Street Reform and Consumer Protection Act “hands more powers to the Fed, the Treasury and other agencies with authority over systemically important financial institutions. But owing to political pushback, none have full powers.”

Let’s hope that financial regulation and reform stay at the forefront of Washington’s agenda because, as Guillén wisely notes, “Untrustworthy banks are the last thing that’s needed if we are to overcome this crisis.”

Consider These Three Tax Planning Opportunities

With all the talk of higher taxes when the Bush tax cuts expire at the end of the year, it’s important not to become so focused on future tax policy that we overlook some short-lived opportunities.

• Prior to the implementation of the Jobs Growth and Tax Relief Reconciliation Act of 2003 (JGTRRA or the second Bush tax cut), dividends were taxed as ordinary income. With the passage of JGTRRA, qualified dividends became eligible for the more favorable capital gains rate of 15%. At the end of this year, however, the qualified dividend rules will sunset, and dividends will once again be taxed at ordinary income rates. At the same time, the highest tax bracket will increase from 35% to 39.6%, and high wage earners will be subject to a new 3.8% Medicare tax on investment income. Therefore, the dividend tax could shoot up to a high of 43.4%, not including state tax. This means owners of closely-held businesses have a unique tax planning opportunity to pay dividends this year and take advantage of the 15% tax rates.
• Until the end of 2012, couples with taxable income up to $70,700 (or $35,350 for individuals) do not have to pay capital gains tax. That presents a great opportunity for parents to gift appreciated stock to their adult children. (Remember, children over age 18 are not subject to the kiddie tax.) However, it’s important to watch that parents’ gifts of highly appreciated mutual funds or stocks don’t push the child into the next higher tax bracket.
• If you have been thinking about converting your traditional IRA (where distributions are taxed at ordinary income rates) to a Roth IRA (where, after five years, distributions are tax-free), 2012 may be the year to convert. Why? If you convert this year, you will be taxed according to this year’s tax rates, which are scheduled to increase across the board when the Bush tax cuts sunset at the end of the year.

As always, you should consult your accountant on these and other tax planning opportunities.

Short-term Thinking Magnifies Risk

We always talk about the harm short-term thinking can inflict on your investment portfolio. Now, a new study from Professors Francois Brochet, Maria Loumioti, and George Serafeim at Harvard Business School further explores the risks for companies and investors who are attracted to short-term results.

Not surprisingly, their research shows that companies with short-term mindsets attract short-term investors looking for quick payouts. This naturally puts pressure on the company’s executives to generate positive returns, and short-term oriented corporate managers are therefore more likely to take risks to deliver the performance their investors demand. In fact, the short-term companies studied had more volatile stock returns and higher estimated cost of equity capital, two characteristics that make them riskier than companies with longer-term investment views.

It follows, then, that investors looking to temper the volatility of their portfolio should consider the short- and long-term goals of the company before they invest. But just how does one determine whether a company thinks long- or short-term? The Harvard professors studied transcripts of 70,042 earnings calls held by 3,613 firms from 2002 to 2008. They searched for 14 terms used by management such as "latter half" and "weeks" that would suggest a short-term view, versus 15 words or phrases such as "long term" and "years" that likely would dictate a longer time horizon.

Harvard Business School Assistant Professor George Serafeim said one important takeaway from his research is that many companies are, in fact, being managed for the long term. he noted. According to the researchers, industries focused on long term include beverages, retail, pharmacy, and medical goods. In particular, they singled out Coca-Cola, Ford, and Nordstrom as long-term thinkers. Short-term-oriented industries included banking, electronic equipment, business services, and wholesale, with Cisco, Goldman Sachs, and Chevron on the short list.

Of course, investors should still focus on building a diversified portfolio with the proper allocation based upon their goals and risk tolerance.

Turner Gill, A Class Act

As many of you know, I am an avid Nebraska football fan. One of my favorite players is Turner Gill. Turner led the Cornhuskers to a 28-2 record as a starter and is one of the most beloved Husker players of all time. He was an incredible leader and athlete in college. Today, he represents everything that is good—he is an incredible role model, leader and coach; his integrity, character and values are beyond reproach; he is simply a very classy individual.

Turner is now in his first season as the Head Coach of the Liberty Flames in Lynchburg, Virginia. Since Lynchburg is only a few hours from Northern Virginia several Nebraska fans in the area decided to attend a Liberty football game to show our support for Turner Gill. After comparing the Liberty and Nebraska football schedules we decided to attend the Liberty-Lehigh football game on September 22nd.

We bought 20 tickets so that we would be able to have an assigned tailgate spot. Unfortunately, only 11 Husker fans committed to attend. Not wanting to waste any tickets we reached out to the Opportunity House and invited them to bring some of their young men to tailgate and attend the football game with us.  We enjoyed sharing our experience with those young men and bought Nebraska T-shirts to give them.

Liberty University learned what we were doing and on game day came to our tailgate to take video and photos of us. Even Coach Turner’s wife, Gayle, came to our tailgate to thank us for our support. And Turner Gill met us after the game, talked with us, and signed autographs.

As a huge fan of Turner Gill, this is one of my fondest memories. However, the real reward was the reaction of the young men. Many of them told me after the game that it was the best day of their life. In fact, Martin Cox, the Casework Supervisor at the Opportunity House, sent me the following note:

Mr. Bernhardt,

Just wanted to thank you and your group of Nebraskans for showing our young men a great time. During the game, I received a few messages from Mr. Allen expressing how well they were being treated and about how well the guys were enjoying themselves. Also, I was present at the facility when they returned and their faces expressed what a great time they had even before they opened their mouths. When they did begin to tell me about their experience there was no doubt each of them was truly grateful.

You and your group have truly given these young men an experience they will not soon forget, and shown them that nice things can happen when you make good decisions.

Thank You Again,

I didn’t think many things could top meeting someone like Turner Gill but making an impact on these young men while meeting a class act like Turner Gill will make September 22nd stand out as one of the best days of my life.

John Bowen Interviews Gordon Bernhardt

On August 24, 2012, I was interviewed via Skype by John Bowen, the CEO of CEG Worldwide.

In Celebration of Hard Work

When I came across the article People Who Worked Incredibly Hard to Succeed which celebrates the quintessential American trait of hard work, I was reminded of a quote from F. Scott Fitzgerald: “I never blame failure. There are too many complicated situations in life, but I am absolutely merciless toward lack of effort.” As the article points out, although successful people are often said to be “blessed with talent,” or just plain “lucky,” if you dig a little deeper into the stories of successful athletes, business people, and even government officials, you’ll find hard work and dedication at the core of their success.

I hope everyone, from our nation’s entrepreneurs who put it all on the line and work hard to build something to students just beginning the school year and looking to bright futures, can draw inspiration from these hard workers cited in the article:

• NBA legend Michael Jordan spent his off seasons taking hundreds of jump shots a day
• Starbucks CEO Howard Schultz continues to work from home even after putting in 13 hour days
• Dallas Mavericks owner Mark Cuban didn't take a vacation for seven years while starting his first business
• Phillies pitcher Roy Halladay's workouts are so intense, others can't make it halfway through them
• GE CEO Jeffrey Immelt spent 24 years putting in hundred hour weeks
• Apple CEO Tim Cook routinely begins emailing employees at 4:30 in the morning
• American Idol host Ryan Seacrest hosts a radio show from 5 to 10 AM and runs a production company while appearing seven days a week on E!
• Nissan and Renault CEO Carlos Ghosn flies more than 150,000 miles a year
• Venus and Serena Williams were up hitting tennis balls at 6 AM from the time they were 7 and 8 years old
• Lakers superstar Kobe Bryant completely changed his shooting technique rather than stop playing after breaking a finger

And, yes, I did notice that the list is light on women, so I’ll add a few of my own:

• German Chancellor Angela Merkel, the "Iron Lady" of Europe and the lead player in the eurozone economic drama, has vowed to do everything in her power to preserve the 17-country EU.
• Our own Secretary of State Hillary Rodman Clinton, a hardworking diplomat, has this year alone traveled to 42 countries.
• Virginia M. Rometty, IBM's president and chief executive officer, was recently elected as chairman of the board and has held senior leadership positions in IBM's services, sales, strategy and marketing units.
• Oprah Winfrey, who launched the Oprah Winfrey Network (OWN), now can be seen in 83 million homes.

After all, as the old adage goes, “Man may work from sun to sun. But woman's work is never done.”

And for inspiration from local CEOs, business owners and executives, you may want to read their stories at Profiles in Success.

Can You Talk to Your Advisor?

Maybe you’ve seen those speed dating commercials where it’s clear in 30 seconds that the couple doesn’t click and it’s time for them to move on and keep searching for love. Chemistry is important with your financial advisor, too. Let’s face it, you have to be comfortable enough with your advisor to share your hopes and dreams -- as well as your fears.

That essential chemistry begins when you find an advisor with good listening skills. And that doesn’t mean sitting across the desk from someone who consistently nods like a bobble head doll when you talk. Really listening to clients involves inviting them to open up, taking to heart what they say, asking some follow-up questions, and helping place their goals or worries in context of their bigger financial picture.

In my book, that intangible, know-it-when-you-feel-it good chemistry serves as the foundation for problem solving. That’s because feeling comfortable with each other enables us to ask each other questions and work together to find answers.

Finally, because the planning process requires some work and it’s a relationship we hope to enjoy for the long-term, it’s worth it to put the time and energy in upfront to ensure that the financial advisor you select is someone you like. Of course, you want an advisor with the expertise and skills to manage your wealth, but it sure helps if that person is also someone you honestly enjoy meeting with.

Just as satisfaction with your co-workers affects your overall job satisfaction – and your overall happiness, so, too, can an enjoyable relationship with your advisor positively impact both the planning process and your general sense of well being.

(Note:  For a discussion of the six core characteristics--Six Cs--an advisor should have read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)

You Can Do Better with an Advisor

In Our Ridiculous Approach to Retirement, Teresa Ghilarducci, a professor of economics at the New School for Social Research, writes that the 401(k)/individual retirement account model, a “do-it-yourself pension system,” has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers. She asks, “What results would you expect if you were asked to pull your own teeth or do your own electrical wiring?”

The statistics Ghilarducci cites in her article certainly illustrate American workers’ inability to save for retirement: Seventy-five percent of workers nearing retirement age in 2010 had less than $30,000 in their retirement accounts. Almost half of middle-class workers will be living on a retirement food budget of about $5 a day. And, according to the Employee Benefit Research Institute, only 52 percent of Americans expressed confidence that they will enjoy a comfortable retirement. (Twenty years ago, that number was close to 75 percent!)

Ghilarducci writes, “To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less.”

If you work with an advisor, you know your retirement “number,” but Ghilarducci’s blunt talk will come as a surprise to the many individuals not working with a financial advisor. Equally distressing will be her insistence that simply working longer is not a solution for folks who have not saved enough. She stresses that the Boomer generation’s plans to “never retire” are particularly unrealistic and risky given current high unemployment rates for older workers.

The bottom line is that today’s self-help, “I can find the answers I need on the Internet” applies to personal finance just about as much as it does to dentistry or electrical wiring. Certainly, you can read and educate yourself about the issues, but when it comes to constructing and executing a retirement plan, you are in better hands with an advisor – someone who operates as a fiduciary. In fact, a 2010 report from the ING Retirement Research Institute, Working with an Advisor: Improved Retirement Savings, Financial Knowledge and Retirement Confidence, found that investors who seek advice from an advisor tend have higher retirement balances, more discretionary income, and feel better about retirement. And in this uncertain economic environment, it is undoubtedly more beneficial than ever to have a professional in your corner.

Slim Thug's Advice

It’s tough trying to reach the next generation with money advice. If all else fails, you might encourage them to check out the advice from Slim Thug in his new book, How to Survive in a Recession. Marketing himself as “the black Suze Orman,” you’ll find Slim’s book listed in the “Humor” section on Amazon. However, some of Slim’s advice could land the book in the “Personal Finance” section as well.

Here’s some of what the rapper shares about money management:

1. When u get a check put at least 50% up.
2. Never buy a house with unnecessary space.
3. Never have Bentley bills with a Benz salary.
4. Never spend a lot of money on things you can't get money back from.
5. Never buy a car that will have you working overtime to afford.

Slim is a rapper and the youngest of seven children. Born Stayve Jerome Thomas in Texas, Slim says he learned many of these the lessons as part of his modest upbringing. Today, it’s estimated he’s worth $2 million. Asked in an interview about the biggest money mistake people tend to make, Slim responded, “They forget that they have to pay taxes and what the check says isn’t really what they have.”

According to Slim, one of his most important and easy-to-apply rules is: “If you can’t buy it 3 times over, you can’t afford it.” However, infusing humor into finances, he also admits in the interview, “I myself am even guilty of rapping about spending money in careless ways.”

Just What is the Fiscal Cliff?

The ominous term “fiscal cliff” has crept into our lexicon, but just what does it mean? The fiscal cliff is a perfect storm of disastrous events that could push our recovering economy back into recession. First, there’s the scheduled expiration of the Bush tax cuts at the end of this year. Additionally, our economy will need to absorb automatic cuts to the federal budget, including significant reductions in defense spending mandated by last summer’s agreement to raise the U.S.’s debt ceiling. Finally, our national debt continues to spiral out of control and Congress finds itself stymied by partisan gridlock.

Focusing on doom and gloom, magazine covers feature pictures of the Capital Building slipping off the cliff. But this is not just media hype. Last week, the nonpartisan Congressional Budget Office (CBO) issued a report warning that the economy will indeed enter a recession next year if the country goes over the so-called fiscal cliff. According to the CBO, the economy would contract by 0.5 percent in calendar year 2013 if the Bush-era tax rates expire and automatic spending cuts to the federal budget are implemented. Further, the CBO estimates that unemployment also would rise from 8.2% in 2012 to 9.1% next year.

Federal Reserve Chairman Ben Bernanke has underscored the dangerous impact of the fiscal cliff, warning that “there is absolutely no chance that the Federal Reserve would be able to have the ability whatsoever to offset that effect on the economy.” Notably, over the course of the last few months, Chairman Bernanke’s warnings have become more dire. In April, he noted that “a sharp fiscal tightening could occur at the start of 2013” that could lead businesses to defer hiring and investment. Yet, minutes from the Fed’s July 31-August 1 meeting describe “a sharper-than-anticipated U.S. fiscal consolidation” as a “significant downside” risk to our economic outlook.

In the CBO report, Director Doug Elmendorf urges Congress to act in September to avoid the fiscal cliff, reasoning that the sooner uncertainty was resolved, the better for our economy. However, Congressional action is highly unlikely given the magnitude of the task and the distraction of a polarizing Presidential campaign. I hope that one day soon the importance of our nation’s fiscal health can transcend politics and that Congress and the President can reach an agreement. And for the sake of our fragile economy, let’s hope that day comes sooner rather than later.

However, despite this news an investor should not abandon their long-term investment strategy.  The pundits have been wrong before and it is more rational to stick to one's long-term plan than to abandon it on what "might" happen.  Furthermore, once an investor abandons his or her plan he or she must decide when to reactivate the plan.  And by the time that decision is made most investors would have been better off if they had stuck to the plan.

What Makes a Great Financial Advisor?

I have a one-word answer to that question: An advisor must be trustworthy.

The Dodd-Frank Act, passed two years ago this July, was intended to increase the integrity of the financial services industry. Yet, in the last few months, we’ve read about J.P. Morgan’s $6 billion loss as a result of the “London Whale” trades, The New York Times’ expose on J.P. Morgan’s campaign to push high-priced proprietary products, and Barclays’ problem with their manipulation of LIBOR. Given these recent events, it didn’t surprise me to read an article on AdvisorOne that reported that the law firm Labaton Sucharow’s survey of 500 senior executives in the United States and England found that 24% of the respondents believe financial services professionals need to engage in unethical or illegal conduct in order to be successful.

So, with so much distrust, how do you find an advisor you can trust? Working with an advisor you can trust begins with finding a fiduciary, someone like me, who always puts your needs first. In my mind, serving as a fiduciary means possessing and upholding six core characteristics—the “Six Cs” – which I’ll cover individually in future posts.

My first C is Character. An advisor with character acts with complete integrity, loyalty, and transparency and avoids all conflicts of interest to put you first in all situations. An advisor with character provides objective guidance and sits on the same side of the table as his clients, 100% committed to putting their interests first. Character is the most essential relationship building block. It serves as the foundation on which we build a trusting bond that serves as foundation of a productive and collaborative relationship.

As Theodore Roosevelt said, “In the long run, character is the decisive factor in the life of an individual and of nations alike.”And, as the debate over regulating a universal fiduciary standard continues, the observation of Alan Greenspan, past chairman of the U.S. Federal Reserve Board, holds particular weight, “But rules cannot substitute for character.”

(Note:  You can read the a summary of the other "Six Cs" in our August 2012 article on our website.)

Tick, Tock on Estate Planning Opportunity

One of life’s certainties -- taxes -- is a little less certain in 2012. It’s increasingly unlikely Congress will address the expiring Bush tax cuts before the November elections. Instead, the debate will be left to a lame-duck Congress, or even pushed into 2013. That’s not great timing for tax planning.

As investors focus on whether to accelerate portfolio gains due to scheduled increases to income and capital taxes, they may be overlooking a small window of opportunity in the estate planning arena. If Congress fails to act before the end of the year, today’s high gift tax exemption levels and low estate tax rates will expire on January 1, 2013. And when the federal gift tax exemption and estate tax revert to 2001 levels, the change will be significant.

For 2012, both the estate tax and lifetime gift tax exemption are $5,120,000 per person and $10,240,000 per couple, with a 35% top tax rate. Beginning in 2013, however, unless new legislation is enacted, the exemptions will drop to $1 million per person ($2 million per couple) and the top tax rate will increase to 55%.

If you're single and have a taxable estate worth more than $1 million, or if you're married with a taxable estate worth more than $2 million, now’s the time to think about the implications of these new taxes on your estate. Making immediate outright gifts is probably the easiest way to get money out of your estate in advance of these changes, but you might also talk with your attorney about a grantor retained annuity trust (GRAT), a qualified personal residence trust (QPRT), or gifting into an irrevocable trust.

Remember, in order to use the higher exemption, your gifts must be completed by December 31, 2012. It is important to note, too, that as the market continues to recover, it may be that getting all future appreciation of the gifted assets out of your estate may be an additional benefit of this strategy. While it’s impossible to predict how a new Congress will deal with estate tax reform (Remember when they let the estate tax expire all together in 2010?), this is a valuable estate planning opportunity that is available today.

How Many of Covey’s 7 Habits Do You Practice?

Dr. Stephen R. Covey passed away last month at the age of 79 from complications of an April bicycling accident tin Provo, Utah. As you undoubtedly know, Covey was the author of the epically successful The 7 Habits of Highly Effective People. The groundbreaking book was published in 1989 and has sold more than 25 million copies in 38 languages. In Covey’s honor, I thought it might be worth reviewing his 7 habits here:

• Habit 1: Be Proactive
• Habit 2: Begin with the End in Mind
• Habit 3: Put First Things First
• Habit 4: Think Win-Win
• Habit 5: Seek First to Understand, Then to be Understood
• Habit 6: Synergize
• Habit 7: Sharpen the Saw

Remember that much of this language was new in 1989, leading 7 Habits to be one of the most influential management books of all time. One of the world's foremost leadership authorities, Covey also published Principle-Centered Leadership and The 8th Habit: From Effectiveness to Greatness. Additionally, he founded Covey Leadership Center, which later merged with Franklin Quest to create FranklinCovey Co., a “global consulting and training leader in the areas of strategy execution, leadership, customer loyalty, sales performance, school transformation and individual effectiveness," with 44 offices in 147 countries, according to the company’s website.

At Covey’s passing, Utah Gov. Gary Herbert commented, “His combination of intellect and empathy made him a truly unique and visionary individual. The skills he taught, and importantly, the personal example provided by the life he led, will continue to bless the lives of many.”

Clearly, the universal applicability of Covey’s rules is what has made 7 Habits so useful, but it’s striking how many of his tenets apply directly to financial planning. Be proactive. Begin with the end in mind…

Olympic Thinking - Try It On for Size

The 2012 Summer Olympics in London have certainly been inspirational – even prompting a London man to attempt to swim across the Atlantic Ocean! I recently read a piece “Olympic Like Thinking, Olympic Size Producing” where Bill Bachrach, one of the financial services industry’s leading authorities on building high-trust client relationships, encourages what he calls “Olympic Thinking,” or the adoption of high standards in our personal and professional life.  He listed five characteristics of "Olympic Thinkers" and it made me reflect that many of the business owners and C-Suite executives I have interviewed have these characteristics.  The five characteristics Bill cited were:

• Olympic Thinkers Take Risks
• Olympic Thinkers Don't Make Excuses
• Olympic Thinkers Tend to be Perfectionists
• Olympic Thinkers Have High Standards
• Olympic Thinkers Seek Feedback

Bill notes that raising your own standards involves a level of risk-taking to improve your performance and writes, “In our business and personal lives we can’t play it safe and expect to achieve our highest levels of success. Fortunately, the risks are seldom as bad as we imagine and the rewards are often greater than we expect. If the primary motivation behind your decisions is to avoid unlikely worst-case scenarios, your options will be severely restricted. Olympic thinkers take risks and don’t permit the remote possibility of a negative outcome to overshadow the probable positive results.”

Adding that Olympic thinkers focus on results, don’t make excuses for poor performance, and tend to seek perfection, Bill also has some interesting insights as to the benefits of working as an Olympic team. Rather than letting one another off the hook for sub-par efforts, he writes, “People with high standards truly support one another with encouragement to take their endeavors to the highest levels possible.” That’s how I think of our relationships, two team members with high standards, dedicated to working together to achieve your goals.

Bill closes his three-part article with this observation ,“Feedback serves as the measurement system for improvement. Feedback sets the benchmarks for achieving the high standards you have set for yourself. Feedback, not Wheaties, is the true breakfast of champions.”

As always, I invite you to let me know how you think we are doing.

High Volatility and Portfolio Losses Weigh On High-Net-Worth Individuals

According to the World Wealth Report 2012 from Capgemini and RBC Wealth Management, last year was the second most volatile period in the last 15 years. While the number of people with over $1 million of investable assets increased by 0.8% worldwide, the number of ultra-high-net-worth individuals with $30 million decreased by 2.5%, losing 4.9% of their wealth.

The report points out that these higher-net-worth individuals suffered losses because they invested in riskier, less liquid securities, such as hedge funds and commercial real-estate. The same group now seeks capital preservation.

A new survey from Spectrem Group underscores that trend, finding that millionaires are becoming more pessimistic about a strong economic recovery. Specifically, Spectrum’s Affluent Investor Confidence Index plunged 7 points in May to a minus 5 rating, down from a rating of 2 in April and a 5 in March of 2012. Additionally, the firm’s Millionaire Investor Confidence Index fell 5 points to a 3 score, the largest one month decline in nearly a year.

George H. Walper, Jr., president of Spectrem Group, attributes the pessimism to the ongoing European debt crisis. And that may be. However, it is also likely that the pessimism has surfaced due to a frustration with their previously high risk investment portfolios. Especially in times of extreme market volatility, a diversified portfolio gives you the best chance of staying invested in the market to meet your goals.

Straight-Up with Chris

On July 12, 2012, I had the opportunity to appear on "Straight-Up with Chris:  Real Talk on Business & Parenthood" with Chris Efessiou.  Chris is a successful entrepreneur and the author of CDO Chief Daddy Officer: The Business of Fatherhood.  The show was titled "Money Management 101:  A Family Business Affair."  Click on the link below to listen to the broadcast.

Election Cycle Departs from Historical Trends

Did you know that stocks rally in the year leading up to a U.S. presidential election? Although market volatility remains this year’s story, a solid rally has been the historical trend.

In “Trade the Election,” David Keller, managing director of research with Fidelity Asset Management, does a great job of presenting the facts. He reports how Wesley C. Mitchell, co-founder of the National Bureau of Economic Research (NBER), developed the 40-month cycle theory. Mitchell found that, from 1796 to 1923, the U.S. economy fell into a recession every four years on average, excluding the years of four major wars. Later, stock market historian Yale Hirsch connected Mitchell’s four-year pattern to U.S. presidential elections. Hirsch reported that, from 1832 until the 2004 election, the stock market had risen 557% during the last two years of each administration, a rate of 13.6% per year. However, the market posted just an 81% gain during the first two years of a president’s term, a rate of 2% per year. That’s quite a differential. Hirsch has also noted that, since 1965, none of the 13 major stock market lows occurred in the last year of a president’s four year term, while nine downturns happened in the second year.

You’ll notice that 2008 is absent from this cycle analysis. In fact, the 2008 financial crisis resulted in a huge market decline during President George W. Bush’s final year in office. So have the recent recession and the ensuing European debt crisis combined to thwart the presidential cycle? And where does that leave us?

David Keller sums it up this way, “You have to remember that the presidential cycle happens in the context of larger structural market trends, and that secular moves in equities can either enhance or minimize the effect of something like a four-year market cycle.”

I agree that plenty of extraneous factors can affect these cycles. Accordingly, the presidential cycle is more entertaining cocktail conversation than solid investment strategy.

Eye on Greece

What does the slim victory of Greece’s pro-bailout party mean for the country that has been at the center of the European debt crisis? While Greece has certainly already begun the process of restructuring with strict austerity policies that cut government spending and increase taxes, the newly appointed Prime Minister Antonis Samaras believes more cuts are needed. In fact, his first act was to cut the salaries of his cabinet members by 30%. He’s also asked to renegotiate the terms of Greece’s bailout loans. Lower monthly payments might give economic reforms such as more liberal employment practices time to generate necessary growth. As Charles Goodhart, emeritus banking and finance professor at the London School of Economics, noted at a recent European University Institute (EUI) workshop, “Austerity without growth is a recipe for depression, despair and growing social and political dissonance.”

And while the media focuses on the staggering debts and bailouts in Greece where this year’s GDP may drop by 8%, and unemployment now tops 20%, it’s important to understand the human toll. Aristides Hatzis, a professor at the University of Athens, wrote in the Financial Times, “Almost every day extremist violence breaks out in Athens and beyond. Greek people are disillusioned, miserable, exasperated and very frightened.”

It’s crucial, too, to acknowledge that other European countries, including Spain and Italy are also in serious trouble. In fact, Spain recently requested a loan to help clean up its troubled banking sector. While Eurozone finance ministers must find short-term solutions to bailout Spain’s banks and renegotiate Greece’s two rescue packages, they must also work to develop a long-term plan to integrate the European Union’s finances and banking regulations to prevent future crises.

Investment Quiz

The following was taken from Weston Wellington's Down to the Wire dated July 11, 2012.  Weston is a Vice President of Dimensional Fund Advisors and his Down to the Wire provides timely commentary and insight in response to prominent financial media headlines and topics concerning investors today.

Investment Quiz
by Weston Wellington
 
Question:
The twenty-two prominent firms listed below share a common characteristic. What is it?

• AT&T Inc.
• Abbott Laboratories
• Allstate Corp.
• Altria Group
• Amgen Inc.
• Berkshire Hathaway 'A'
• Bristol-Myers Squibb
• Coca-Cola Co.
• Colgate-Palmolive
• Costco Wholesale
• Hershey Co.
• Hormel Foods
• Johnson & Johnson
• Kimberly-Clark
• Eli Lilly & Co.
• Merck & Co.
• Monsanto Co.
• PepsiCo Inc.
• Union Pacific
• Verizon Communications
• Wal-Mart Stores
• Weyerhaeuser Co.

Answer:
If you guessed each firm is a constituent of the S&P 500 Index, you would have been close--but wrong. (Weyerhaeuser is not included.) If you guessed that each firm pays a dividend, you were close again--but still wrong. (Berkshire Hathaway has not paid a dividend since 1967.) The correct answer is that the stock price of every firm on the list (and dozens of others) hit a fifty-two-week new high last week.

It is also intriguing to see a long list of homebuilding and building materials firms on the new high list, including nine of the eleven stocks in the Standard & Poor's Supercomposite Homebuilding Sub-Industry Index. If we cheat and include the previous week, M.D.C. Holdings also makes the list, making it ten out of eleven. KB Home is the lone holdout.

• D.R. Horton *
• Hovnanian Enterprises Cl 'A'
• Lennar Corp 'A' *
• Louisiana-Pacific
• Lennox Intl. Inc.
• M.D.C. Holdings *
• M/I Homes *
• Meritage Homes *
• NVR Inc. *
• Pulte Group *
• Ryland Group1 Standard Pacific *
• Smith (A.O.)
• Toll Brothers *
• USG Corp.

We don't want to read too much into this exercise lest we get tempted to start predicting market trends by studying the squiggles in stock price charts. But we suspect many investors would be surprised to learn how many widely held stocks are quietly inching their way higher despite unsettling news from unemployment numbers, European finance ministers, or the presidential campaign trail. Investors waiting for a more opportune time to purchase stocks may discover that, by the time cheerier news headlines appear, the price tags on a wide range of businesses are sharply higher.

Footnotes & References:
* Standard & Poor's Supercomposite constituent.
NYSE New Highs and Lows, Wall Street Journal, (accessed July 9, 2012).
Standard & Poor's Stock Guide, June 2012.

Gordon's Note:
The focus of an investor should be on developing an Investment Plan based upon his or her goal's and risk tolerance, implementing the Plan with diversified asset class investments, and remaining disciplined throughout the various market cycles.  Those activities will increase the investor's probability of having a successful investment experience.

With Investing, Stick with What You Know

Peter Lynch, the legendary manager of Fidelity’s Magellan Fund, is famous for advising investors to “invest in what you know.” The Prophet of Omaha, Warren Buffett, also advocates investing within your “circle of competence.” Maybe JPMorgan Chase traders should have followed this sage advice.

I was struck when JPMorgan Chase’s CEO Jamie Dimon recently boldly told the Senate Banking Committee that the trades that led to billions in losses were placed by traders who didn't understand the risks they were taking.

More alarming than that, Dimon suggested the bad trades could not have been prevented by regulations. In fact, when the senators asked Dimon about the Dodd-Frank Act’s Volcker Rule, which would restrict banks’ right to speculate with their own money, he called the yet-to-be-finalized rule “vague” and “unnecessary.”

Instead of federal regulations, Dimon said financial firms need proper capital, liquidity, risk measures and risk controls to succeed. I’d add one thing – an understanding of the securities they trade.

The Wall Street Journal estimates JPMorgan Chase could have lost as much as $5 billion from trading a synthetic credit portfolio that Dimon insists was meant to hedge risks, not to speculate. With the FBI poised to begin an inquiry into this staggering loss, it remains problematic that the company's internal risk management committee did not appreciate just how risky the strategy was, whatever its design.

In short, based on their track record, leaving the JPMorgan Chases of the world to regulate themselves doesn’t seem prudent.

Fourth of July

Unrelated to this blog I wanted to share some photos I took of the Fourth of July fireworks at our Nation's Capital.  You can see the others I took by clicking on this Fourth of July Fireworks link:

Good News - The Bauchus Bill Will Have to Wait

When the House Financial Services Committee recently announced the remainder of its schedule, I was relieved to see that the so-called Bachus Bill was not listed and will have to wait until next session to be debated.

Rep. Spencer Bachus (R-AL), Chairman of the House Financial Services Committee, introduced the Investment Advisor Oversight Act of 2012 last year. If passed, it would create a separate regulatory organization (SRO) to monitor and regulate financial advisors. The bill’s most troublesome provision is that the Financial Industry Regulatory Authority Inc. (FINRA) that now regulates brokers SRO would become advisors’ SRO.

An article in Investment Advisor listed "eight ways in which FINRA oversight will hurt independent advisors and the American public"  They are:

1. FINRA's exorbitant operating expenses and bloated salaries make them more Wall Street than Main Street.
2. FINRA's mandatory membership fees will put many independent financial advisors who offer adviceto middle-class savers out of business.
3. The burden of making small business owners pay mandatory fees to fund FINRA salaries is unconscionable.
4. FINRA is not subject to Sunshine Laws and doesn't have to hold open meetings.
5. FINRA is not subject to the Freedom of Information ACT and is notoriously secret about its books and records.
6. FINRA is an organization run by Wall Stree's executives who, with a "wink and a nod" purport to oversee their Wall Street colleagues.  This is like ENRON overseeing CPAs or drug companies overseeing your family physician.
7. FINRA has no experience working with financial advisors held to the high fiduciary standard.  (Gordon's Note: They are accustomed to working with brokers who are hld to the lower suitability standard.)
8. FINRA acts like a government authority, but without government accountability.

David Tittsworth, executive director of the Investment Adviser Association, and other opponents that include Charles Schwab and TD Ameritrade have argued that an SRO would add a costly new layer of regulation, eliminate jobs, and be particularly burdensome to small advisory firms. As it is now, the Securities and Exchange Commission (SEC) regulates investment advisors who manage more than $25 million in assets and the individual states oversee advisors with less than that under management.

Backers of the SRO measure insist that the SEC reviews only about 8% of nearly 12,000 registered investment advisors (RIAs) annually. Other reports indicate that the SEC annually examines 40% of advisors under its jurisdiction. I certainly agree that more investment advisors should be examined each year, but regulating RIAs as if they were broker-dealers is a mistake.

An obvious solution would be to increase the SEC’s budget so they have the resources they need to conduct more advisor reviews with advisors paying a user fee. And, surprisingly, that could happen before the end of this session of Congress. Of course, additional funding for the SEC could, in turn, influence the fate of the Bachus Bill. Stay tuned.

Do You Have an Eye for Art?

When Edvard Munch’s “The Scream” recently sold at auction for $119.2 million, I wondered about how investments in the art world have been performing over the last few volatile years. “You Can’t Buy Taste” by David Serchuk provides some interesting answers. Among the statistics offered in the article: "The Mei Moses All Art Index" posted a 10.2% in 2011 and, according to Deloitte Luxembourg and Artastic, a firm that provides intelligence on art as an asset class, the global art market grew from $21 billion in 2002 to $64.9 billion at the end of 2011. Deloitte also reports on performance of various “sectors”; contemporary art—including artists such as Jackson Pollock, Roy Lichtenstein and Andy Warhol—returned 11.4% last year while traditional Chinese art returned 15.8%.

Referring to the art market as a “minefield for the uninitiated,” Serchuk offers numerous warnings to would-be investors. First, he mentions that commissions can be as high as 40% of the selling price of a piece. He also notes that performance data for art, like that quoted above, may be flawed because the Mei Moses All Art Index uses only data gathered from pieces of art that have sold at auction twice and excludes auction pieces that don’t sell. Add to that the fact that insider estimates have auctions accounting for less than half of all art sales and the measure seems even more unreliable.

If you invest in art, you should also be mindful of the fact that when you leave your collection to heirs that the value of treasures must be declared as part of your estate and can be subject to estate taxes. If you own an inherited piece of art and this documentation is not complete with any estate taxes due paid, you may have trouble selling it through an auction house.

If you are interested in investing in art, it behooves you to consult with an expert. Just as a real estate broker often holds the key to the secret of the local housing market, it helps to work with an art consultant who can represent you in deals and ensure you don’t get taken.

With correlations of numerous traditional asset classes moving closer, art’s low or negative correlation with mainstream financial investments may propel it to be viewed as a serious asset class.

Job Insecurity Drains Retirement Confidence

Every year, the Employee Benefits Research Institute (EBRI) delivers an insightful glimpse into how Americans are preparing for retirement – and how they feel about their future prospects. This year, American’s confidence in their ability to retire comfortably sits at a historically low level. Just 14 percent are very confident they will have enough money to live comfortably in retirement.

Significantly, employment security is a great worry. Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today.

Why is the outlook so bleak? Many workers report they have virtually no savings and investments. Sixty percent of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.

Moreover, 25 percent of workers say the age at which they expect to retire has changed in the past year. In 1991, 11 percent of workers said they expected to retire after age 65, and by 2012 that more than tripled to 37 percent.

Is there hope for this situation to turn around? The answer to that question can be found in what I see as the most disturbing part of this year’s study. More than half of workers (56 percent) report they and/or their spouse have not tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement. Study after study proves that investors who have a financial plan are better able to ride out tough times in the market and succeed in meeting their goals, and yet individuals and families continue to procrastinate and ignore the need to plan and save for their future. If you find yourself in this 56%, an excellent first step would be to meet with an advisor who operates under the fiduciary standard to review your situation and develop a plan.

My Father's Story

Grit

 The Life of Bobby Jean Bernhardt

Born October 1929

I. A Hundred Years

When I was young, I made a promise to myself that I’d live beyond a hundred, and I’m not about to make a liar of Bobby Bernhardt. I’ve always felt that if you believe in something and stick with it, you can do it. Holding something in your mind’s eye like that gives a man the tenacity that less mindful men lack. I think that vow is why, today, I can look forward to many more years of living life to the fullest. And I think that vow is why, today, I can look back on the last 82 years of my life with a pride and gratitude that humbles me—the pride and gratitude of a man that has been blessed time and time again.

When we think about the concept of a hundred-year life, folks tend to focus on the sheer breadth of it. They tend to think about that hundredth year. Me, I think mostly about the days my life changed—the day I met an angel named Irene, and the day I made her my wife. But what about that first year, or even the first day of that first year, when it all began? It was a crisp autumn day in 1929 when Fern Morgart Bernhardt gave birth to me in a hospital in Marion, Kansas. The Great Depression was just starting to take hold of America, but I was born ready. While you might say that my wife Irene was born with grace, I was born with grit.

II. The Lessons Learned Early

I was the oldest of ten children. I had six brothers and three sisters. During my childhood we lived on farms outside Marion, Tampa, Ramona and Lost Springs, in Kansas. We always had a big garden and our own milk and meat, but we had few conveniences; truth be told, I don’t know how my parents got by. My father, John Balzer Bernhardt, was thin, quite short, but with a grit all his own. Raised in a family of all boys, he made us work, and we grew up as stronger, more determined people because of it. He was a good father. I learned respect, discipline, the value of hard work, and the love of family from my parents.

You could say that my father was a handyman of sorts. When the first Model T car had come out when he was young, he learned how to be a mechanic. Then, as the years passed, he diversified his skills more and more. I remember a time when folks would hire him to saw firewood with a portable saw he had made with a motor from a car frame. When the Works Progress Administration was launched in 1935 under the New Deal, he volunteered for one of its projects, though that only lasted a week or two. “I just can’t do it; I don’t want to be away from the family,” he said.

I can still remember a classic father-son moment when Dad and I took apart a Model A car’s differential. He told me to put it back together. When I did, I became frustrated because the rear wheels would spin in different directions when I turned either of the rear wheels. I didn’t know what I had done wrong, but when Dad saw it, he laughed and told me that it was the right way to do it, and that everything was working the way it was supposed to work.

My father was always the strict one, with my mother responsible for carrying out his orders. Discipline was different in those days, and I’ll never forget the eighteen inch strap that hung on the cabinet. It had a foot-long board handle attached to a leather switch, and when one of us boys misbehaved, my mother would use the leather end. When it was Dad who was disciplining us, however, he used the board, and one time was all you needed to know you’d never do it again!

Yes, my father was generally in charge, but when it came to suppertime, my mother took the reins. She would always see to it that we ate what was on our plates. She was born with a slight deformity in her hip, which left one leg six inches shorter than the other and gave her a limp. When she was young, she had started school, but the experience put too much strain on her hip, so she dropped out to be home-schooled. She did graduate with her class, though, demonstrating that she had a fire to her. That fire came out from time to time, like the day she and I were walking to the Post Office and I greeted a passerby by his first name. She scolded me, “You don’t call older people by their first name! He’s Mister to you.” She was a small woman, but the reprimand was correct, and to this day it is easier for me to remember the last names of people I meet, rather than their first names.

Though they put us to work, my parents made childhood good for us kids. I can still remember one of my first Christmases as a little boy—I couldn’t have been more than eight at the time. There were six of us then, four boys and two girls. That Christmas morning, we woke up to find two wagons waiting for us, one painted red and the other painted green. I don’t know where my father found those wagons, but we loved them.

Religion was sown into my skin before I was born, and though our farm was too far away from the church to permit frequent attendance, we went every Christmas and Easter, and our beliefs were an important cornerstone in our daily lives at home. I remember being taller than the other children at church, and having the feeling that I was too big. This early boyhood self-consciousness surfaces even today, at 82, when I still find myself occasionally anxious with the sense of being in the wrong place at the wrong time. It’s funny, the things we carry with us.

Growing up in Central Kansas, softball was a big thing for community. When I was a boy, all the kids living nearby would come to our place in the summertime to play it. There was an assortment of city teams that competed viciously with one another—all in good fun, of course. I was always one of the better players, known for my curve balls and fastballs. But my key pitch was the riser, catching the batters off guard when I’d throw the ball in such a way that it would rise on the way to the plate. It was an expert move that would serve me well for many years to come.

Even in those early years, it was clear I was meant to be working with my hands. While I excelled in sports, I was mediocre in the classroom, especially struggling in sixth grade when World War II was just breaking out and Pearl Harbor was bombed. While I have forgotten most of my teachers, I’ll never forget that day. It was sunny and bright, and I was in school when we got the news that the Japanese had bombed Pearl Harbor. It was a somber moment but I can remember feeling at peace about it, having a sense that everything would turn out okay. It’s interesting that I remember that historical event so vividly, and the only teacher imprinted on my memory was Mrs. Hammond, an elderly lady who taught me history in high school. I remember sitting in the one-armed student desk chairs, learning from her in her big horn-rimmed glasses.

I loved high school because I had the opportunity to work with my hands in shop class and because I played sports. I stuck to a strict regimen of softball, basketball, and the mile-long race in track. My classmates and I were quite agile and athletic, but with only five of us in the class during my senior year, we didn’t have enough players for a football team.

That year, for our senior trip, the Lost Springs High School principal and his wife splurged and took us to Colorado, and they paid for most of the trip. We were thankful for the experience, and though it was a bit cramped with all of us crowded into their two-seater vehicle for the drive to Denver, we enjoyed visiting the museums before school ended and life would take us down our various paths.

III. The One I Chose

I was eighteen when I left home to venture out on my own in 1947. With five brothers and two sisters at the time, the house was crowded, and it seemed like my place as the oldest to stretch my wings and move on. Our neighbor, Alvin Reimann, offered me a job on his farm in exchange for room and board, so I tried that out for a while before moving to Nebraska the following year to work for Alvin’s brother, Henry. We had heard you could farm quite a bit of land there, so we loaded up a truck with furniture and set out in 1948 for a new state and a new life.

I thought that new life started when I first set foot on the property that was to be my home, but I was wrong. It didn’t start until a little later in 1949, when I attended a church group called Luther League and met a girl—the girl. The Luther League held social gatherings once a month, and that’s when I started to notice that this slender, dark-haired young lady with sky blue eyes had a sweetness about her that I couldn’t forget. She was seven years younger than I, and when she graduated from high school, I fell in love.

The thing that most drew me to Irene Elizabeth Anne Wittig was her demeanor. She was kind-hearted and compassionate, and she was playful without being flighty. She worked in a hospital in Rushville, and it was clear that she cared about people in the most sincere and selfless way. Sure, I had dated other girls, but for silly reasons—that’s what young people do. But as I got a little older, values became more important, and Irene had a grace about her that is rare in this world. I could see that, and I knew I would love her forever for it.

Irene and I shared a sweet courtship until the Korean War intervened. The threat of the draft loomed before us, menacing and certain. “Irene, I said, “if I make it through the service, I’d like to marry you. And if I do, you’ll never have to work outside the home as long as we have young children. I wouldn’t allow it.”

It was hard for us to separate, but I finally made it to Kansas City for my pre-draft examination and volunteered my name in Marion, Kansas to be drafted at the next picking. Sure enough, they chose me. It was 1953, and I had worked for Henry for four years by the time I left.

I completed my medical basic training at Camp Pickett, Virginia—a relatively straightforward experience, save for the fact that our lives were systematized and disciplined 24 hours a day, seven day a week. After basic training ended, our time was freed up a little, but work in the classroom became harder as we broached more advanced topics. I was stationed at the 93rd Evacuation Hospital in Fort Riley, and once a month, we’d set up an evacuation hospital for about a week for training purposes, feigning the “front line.” As a medic who was 5 feet, 6 inches in height, the front line is where I would have been, had we been called overseas. All of us on the medic team were short, as taller people in front would surely draw more fire. It was a strange reversal of roles, considering my memories of being the tallest kid at church.

Though we were blessed to not be called overseas, we were ready. We worked hard, but we played hard too. The hospital administrator loved sports, especially softball, and in that sense, our passions intersected. I still had decent skills as a pitcher and was confident in my pitching ability, and we played all the time while I was in the Army, winning championships at Fort Riley two years in a row because I was the main pitcher. I was even hired to play for a team in Abilene, Kansas.

During that time, Irene went off to Dana College in Blair, Nebraska, to study administrative nursing. I’d drive up to see her whenever I could get away, whisking her into the town of Omaha on Saturday nights and treating her to our favorite delicacy, shrimp. In a sense, I hated the service, but I made the best of the circumstances, and visiting her lent its own special brightness through those years.

When I was released from the service and returned to Nebraska in 1955, I took up work on Henry’s farm again and remained there for another three years. He treated me like a son, and I looked up to him like a father. He offered to let me live on some of his land with the understanding that, if his landlord passed away, both of us would have to move. As a veteran, that’s how I was able to borrow money to start my own farm and begin living on my own for the first time.

Life has a sad way of changing suddenly, and a time later, Henry was killed in a tractor accident. But I still remember the opportunity he gave me at that crucial time in life, when I was really just a young man trying to start something great, and I’m still thankful to this day.

And though the Lord takes away, the Lord gives. I’ll never forget the day, several months after returning home, when I took Irene out and told her all about the new fishing bait I had just gotten, and how it was sure to catch me something phenomenal. I drove her to Walgren Lake, parked the car, got out, and instead of opening up my tackle box, knelt on my knee and pulled the bait out of my pocket—a ring. Sometimes it still gives me a shiver to remember that her answer was Yes.

True to my word, Irene would not have to work outside the home after our wedding. She dropped out of nursing school to focus entirely on the new journey we were about to embark on. People told her she was making a mistake, but she and I both knew better. “I got a better offer,” she would tell them with a playful smile.

IV. With Our Own Hands

The church was spacious, rural, Lutheran, and filled with guests on June 1, 1956. Words cannot describe the way it feels to watch the love of your life walking toward you, the aisle lined with goodwill, the air sweet with promise, the wood of the walls sacred and threaded with years of prayer, and our prayers weaving into them too—prayers that this new life, to be lived side by side, would be a good one. She made her dress with her own hands, and we would make our future the same way—with our own hands.

After we read our vows and were pronounced husband and wife, the gravity of that moment and all the happiness it meant for my life became real, and as I looked at Irene while we walked back down the aisle, I cried. To this day, I know that our marriage was God-ordained. I don’t know anyone who would have been more proper for me. Marrying her was the day my life truly began.

In that new life, Irene and I started off on a small farm near Hay Springs. It was a simple farm life, and even now, so many years later, that’s all I can really relate to. We continued our standard policy of attending church every Sunday, and I was a very active member of the community. I taught Sunday School classes in a nearby church and was active in the National Farmers Organization, to name a few.

Even in the beginning, I was looking toward the future, and I wanted to grow the farm. I told the landlords nearby that, if they ever wanted to change their renters, I’d like the chance to farm their land. In that way, I transformed the Bernhardt farm from a modest size to a farm of fifteen quarters, which was almost four sections of land, including my pasture. There was a time I had four landlords at once, and farming was a full-time job that relied on the efforts of each member of our family for success.

I think my landlords saw me as someone who worked hard and was honest and responsible. In fact, if I ever borrowed a piece of equipment or a tool, I would return it in better shape than when I had received it. My children would comment on this later and reminded me that I would return a truck with a full tank of gas or would clean and sharpen a shovel that I borrowed.

The Bernhardt farm raised wheat and cattle, and in our heyday, we had 500 acres of wheat and around 120 cows. For a single crop, we worked the ground for one year before planting and harvesting in the second year, and I put up my own hay as well. On top of all that, I raised hogs for many years, and I had almost 1,400 pigs each season. I put that practice to an end, however, when I read a book—The Curse Causeless Shall Not Come by Nord W. Davis, Jr.—about cancer and pork. Growing up, I had noticed that the one thing my father didn’t excel at was eating well, and it caught up to him when he passed away from a heart attack at age 56. My mother, however, didn’t pass away until 2002. It must have been that fire about her. I have that fire too, and I stoke it with a finely-tuned, health-conscious diet.

As our farm grew, our family grew too. Though Irene wanted me with her, I couldn’t handle being present for the births of our five children, and I didn’t take her to the hospital myself. It was a different time back then, and my excuse was that someone had to be home taking care of the farm and the livestock and the chores. After she began to have birthing pains I would take her to an intersection near the farm, where she was picked up and taken to the hospital. I fully admit that I was chicken about the process—I would go meet her at the hospital after it was all said and done. You’d think that, with all my medic training, I would have been tougher in that situation, but no. Perhaps it was because I loved her, and seeing someone you love in pain is something you can’t really train for.

Our first child, Donell, was born two years after we were married. So small, so trusting. When she was just starting to stand up, I could hold her up and balance her on my hands like a little gymnast. What is it you hold in your hands when you hold a baby? Time itself? A future, pre-planned or otherwise?. She would grow up to be active, popular, athletic. She had grit. She made sports records in school that were not broken until recently. She even played football, and when she would get the ball, everyone knew not to even try to stand in her way. Because of her, the town ended up deciding football was a bit too rough for girls, and it hasn’t been played since. I think you could say she had that fire about her—the same one her grandmother had.

Our second child, Gordon, came almost two years after Donell, and where his older sister gravitated toward physical activity, I could tell he always had his sights set on learning. He would become a successful business owner—generous, hardworking, and goal-oriented, with a love of helping people and an unshakable commitment to running his wealth management business with integrity and high ethical standards.

I’ll never forget a day he was in fourth grade when Donell, Gordon and Devonne were loading straw bales one autumn Saturday. I met them later in the day to drive the trailer of bales back home. Gordon was riding on the trailer with the bales, and I completely forgot that the trailer would shake when we crossed the cattle guard. The stack of bales began to collapse, and a few bales fell off onto the cattle guard—along with my son! The wheel of the trailer ran over his leg while he was in the cattle guard and gave him a compound fracture of his right femur.

When I got home, I realized he wasn’t on the trailer. Donell had been following in the pickup truck and saw him in the cattle guard. She pulled him out and rushed to the house to meet me. We called an ambulance to take him to the hospital in Rushville, where the nurses spoiled him.

Devonne was born just fourteen months after Gordon. She grew up to be hardworking, determined, and focused—a phenomenal mother and grandmother who earned her college degree in 2012.

Gloria was the next to enter the family, and though all of the children worked on the farm, she was a harder worker than most. Those currents of dedication would garner great success later in life as a leader and manager. She was shy but lovely, attracting a lot of attention from the young boys around town; kind and thoughtful, she would grow into the type of woman who would give the last dollar she had to someone in need. She has her mother’s grace.

Six years after Gloria, Barbara was born, the last addition to the family. I’ll never forget the afternoon Irene was cutting green beans she had picked from her garden, while I was loading grain in a truck. Suddenly, she came running to me carrying our little girl, not more than two years old and blue as all get-out. As luck would have it, I had learned just a week earlier how to dislodge something from the throat, and when Irene handed Barbara to me, I turned her over my arm and gave her a slap on the back. Thank God the bean popped right out; otherwise, I think she would have died.

Barbara would grow up to be much like her mother as well, warm and friendly to everyone she met. She would later become a great mother herself who inspires her children to give, getting her family involved with organizations like Meals on Wheels and 4-H. All the girls grew up to be wonderful mothers, and I’ve no doubt it is due in part to the wonderful mother they, themselves, had.

The children’s future success was mirrored even in the beginning by their pure spirits, strong morals, and burgeoning work ethic. They were all excellent tractor drivers and worked whole fields, even when I left them alone unsupervised. I could always trust that they were going to get the job done right.

Those long days of hard work in the hay fields were well rewarded when Irene brought dinner out for us, as she always did. We’d sit in the shade and have dinner together as often as we could—we were a strong, close family, and I treasure those times very much.

V. Softball, Strong Will (The Lessons Learned Later)

Softball was a constant theme throughout my life—so constant that the thousands of games run together in my memory, though certain moments stand out particularly strongly in my mind. For instance, I remember proving myself. When I first moved to Hay Springs there were several softball teams in the area. Irene and I went to nearby Gordon, Nebraska to watch some games one evening. One team was a team from Gordon composed of local farmers. They were beaten badly that night primarily due to poor pitching, so I approached them and asked if I could play with them.

“What do you do?” they asked me.

“I pitch a little softball,” I replied nonchalantly.

They wanted to see what I could do, so the catcher came over and I pitched to him. As the rest of the team watched, they all began to smile knowing that they were going to be much better if I pitched for them.

From that day forward, my reputation as a good softball pitcher continued to permeate Hay Springs—especially my commitment to have more than twice as many strikeouts as walks. Having a good pitcher on a team is key—it’s the spark that sets the team apart, and that’s what I defined myself as. The bonus for me was having Irene as my own cheerleader. What more could a man want?

There is nothing like the crack that rips the air when leather meets wood in that perfect intersection of muscle and might and skill. There is nothing like the byproducts of that intersection—the arc of the ball, the throng of the crowd amplified, the chain of events set into motion in accordance with the laws of the game. Softball, strongwill. These are moments I’ll never forget.

I’ll never forget the day I pitched at Fort Riley, and the other team’s batter sent the ball soaring backward over the catcher, over the whole stand. It landed behind the small bleachers and someone eventually threw the ball to the third base umpire, but just barely.

Just barely was all I needed. The home plate umpire threw me a new ball before the original ball was thrown in, but I wasn’t about to use it, so I waited until the original ball was returned. Our team was winning our own company division at Fort Riley, and was now in the midst of a game against the main post team. Softball and life are not only a matter of rules, or of aptitude, but also of self-definition—a matter of will. I saw my chance to define the game, and I was taking it.

I refused to use the new ball. The other team argued, saying I had to do what the umpire said, but my resolve was steel; the original ball was now in the field of play, so I had the right to use it. I waited them out and then the umpire agreed with me, and it broke their spirit. We played out the remaining innings, but the game had been won right there, in that moment. In the end, we beat them by a landslide.

Seared in our memories just as sharply as victories are moments of defeat. I remember, more than any other game, one in which I pitched fourteen innings. We were tied going into the fourteenth, but the other team got a run, and we couldn’t pull up. We lost two to one. I guess that measures the breadth of a man’s character—the moments we soar the highest, and the moments we sink the lowest. Pressing those boundaries can be hard, but it makes for a range of capability we wouldn’t give back for the world.

VI. The Giving and Taking

We worked hard on the farm, and I played hard on the softball field, but we managed to find time for some fun, too. Eventually, we bought a television set, and on Saturday nights, Irene and I would watch Gunsmoke and Grand Ole Opry. What we loved most, though, was playing cards. Many winters, a group of about ten families would meet at someone’s house every Saturday to play pinochle.

What I remember the most about our family was our insurmountable work ethic, and our insurmountable love. The Bible instructs us to never let the sun go down on an argument, but even that phrase was hardly necessary for Irene and me. I don’t recall ever having a single argument with her. She was always supportive, always loving, and I hope our kids remember me loving their mother all the time.

Yes, we were blessed. So much was given to us for so many years. But the Lord giveth, and the Lord taketh away. It still surprises me how, in an instant, so much can be taken away.

Irene had just flown home after a week-long health lecture in Georgia, and Donell and her fiancé, Maurice Turnbull, went to pick her up from the airport in a neighboring town. Donell was driving, Irene was in the passenger seat, and Maurice was sitting in the back, when suddenly, their car collided with another.

“Oh, no,” Donell exclaimed—her last words before turning the steering wheel as the two cars careened into one another. Her neck was broken immediately, and she died upon impact. Maurice suffered severe injuries and had to spend the next several months in the hospital. Irene, as well, was rushed to the hospital, but she only had a cut on her forehead and another across the top of her hand. The true wound—the loss of her daughter—was one the doctors could never mend.

The shock, the sadness, the heaviness of that time—it was among the greatest hurdles of my life. Donell was to be married in only a few weeks’ time—the invitations had all been sent out.

I remember that the funeral was among the largest in the area. What is it you hold in your hands when you bid farewell to the daughter you once held in your hands? A tiny gymnast from long ago, a young woman who will stay a young woman, thin air. You hold a new future—reinvented and evolving, as it does every moment, defined as much by what is lost as it is by what is left. Irene and I were devastated, but we knew we each had a role to play in maintaining the integrity of our family. What love we had lost, we channeled around our other children, and we took pains to set the sadness within a structure that promised we would come out on the other side a family still.

VII. With His Protection

And we did make it to the other side. With such a strong belief in God and His protection, we couldn’t let even something so tragic as Donell’s loss break the strength of our family. We persevered.

When the kids had grown up and Irene and I had some time to ourselves again, we vowed to take a trip somewhere in the U.S. every year, and we did. We’d mainly fly to visit my sisters and brothers, and we made a point to spend time with my mother as well. Georgia, Kansas, Oklahoma, Texas, Nevada, California, Minnesota. We flew to D.C. to visit Gordon, and we drove to Canada and saw the Great Lakes. I hated flying over large bodies of water, fearful that the motor might deteriorate and we’d be done for, but generally speaking, I loved flying. I loved it so much, in fact, that I even learned how to fly a plane myself when I was middle-aged. I’m adventurous, I suppose.

The sky wasn’t the only foreign domain I ventured into later in life. I had always told Irene that the shop was my kingdom, and the kitchen was hers, but when I started suffering from serious chest discomfort at age 39, I decided to change my diet, venturing into the one territory of the house that remained uncharted as far as I was concerned. I’ve been extremely health-conscious ever since and today I eat mostly fruits, vegetables, seeds, and nuts. I’m in such good health that, when I asked my doctor at my last exam what I could do better, he was at a loss with any further advice. Irene almost never had a sick day in her life, either.

We had a lovely 50th Golden Wedding Anniversary in June of 2006, a perfect celebration of the love, family, and friendship that has always made our lives full. Several days later, however, Irene had a stroke, which required an operation. She wasn’t as health-conscious as I was, and to be honest, I regret not talking to her about a minor stroke earlier as I was told of an incident at a Garden Club meeting. After the surgery, we began taking walks together again, but she could only go about fifty yards before feeling so exhausted that she’d want to turn around. I resolved to carry a chair for her so she’d be able to sit down for a short break when she needed it, and before long, we had worked up to a hundred yards, and then to a quarter-of-a-mile, and finally a half-mile.

On one of those walks, I had gone several paces ahead of Irene before realizing that she had stopped along the road. The weather was sweet and spring-like, with a light breeze, and the leaves of the cottonwood tree nearby were rustling—talking. She was staring up at the tree, and several minutes passed. I asked her what she heard, but it was as if she were in a trance I couldn’t break. Even later, when I asked her if she remembered, or if she saw something, she wouldn’t say one word about it. Shortly after that, she had a major stroke and never regained consciousness.

Did she hear something that day? See something? I don’t know the answer. All I know is that, through it all and even now, she is in God’s protection and presence. Losing Irene was the other tremendous hurdle of my life, but my faith brings peace again. She was loved by many.

Irene’s mother, Margaret, was still alive when Irene passed. She was living in a nursing home nearby, and had been bedridden for several months. She would always pull me down to hug her—she was my mom-away-from-home. She passed away a couple months after her daughter, and I take comfort in the fact that three generations of Bernhardt/Wittig women are together now in Heaven.

VIII. Vital Signs

I am 82 now, but I’m still self-sufficient, learning, and strong. I still live in the country in Northwestern Nebraska, six miles north of Hay Springs, and it seems like if the world fell apart, I’d have everything I need here on my own farm to survive. If the electricity goes, I’ve got candles. I burn wood if I need to keep warm. I’ve got an electric pump and a windmill nearby that pumps water into the supply tank, all naturally. I’ve lived on the land and with the land my whole life. I don’t need anything else, and some people who stop by here say it’s Heaven. My wife was an angel, so that would make sense.

I usually get up around 5:00 or 5:30 in the morning and go to sleep anywhere up to 11:30, which means I get between six and eight hours of sleep every night. Oftentimes, though, I wake up within four or five hours, and the only way I can get back to sleep is to pray. I pray for my children, for my friends, for wisdom, for understanding. I’m asleep again before I’m ever finished.

Usually I wear blue jeans, a good shirt, and a string tie that signifies Western culture. I like to wear a baseball cap and have several to choose from. I think I should be respectful and dress accordingly. In church, I dress up with a suit and tie—to me, it’s mandatory.

Now, I weigh about 140 pounds. I know I’d feel incredible if I’d lose a few pounds, but I feel great as I am. Sure, I’m concerned about my eyesight and prostate, as all men my age should be, but everything else functions fairly well. When my brothers and sisters see me, they can’t believe how trim I look and how active I am. I walk several miles each week.

Yes, I espouse the importance of health any chance I get. It’s my passion, and I’ve studied it thoroughly, both in the classroom and beyond it. In fact, I’m too busy reading about health or law to watch sports on TV. I loosely follow how the Colorado Rockies and the Nebraska Cornhuskers are doing, but that’s about it. I don’t have a favorite team, and I don’t watch baseball much. I’d rather watch a good softball game, or learn more about health.

I don’t care at all for newspapers, save for the local paper, where I write an article about health every now and then. I read all the health books I can get my hands on and have one of the best health libraries in the area, complete with books, DVDs, and CDs. I would say it’s worth between $3,000 and $4,000, as some of the books were written in the late 1800s and early 1900s. The books I most cherish are the ones written by some of the oldest doctors, which add unparalleled dimension and breadth to the library I’ve built over the years. I also have a list of about five medical websites that I check regularly, and I do a lot of online research and reading about health. I also have a list of about a hundred people I correspond with regularly via email regarding health and law. Even at 82, one might call me an avid student.

Considering the fact that I’d been a medic in the Army, a doctor once asked me if I had ever wanted to become a doctor myself. The thought had never crossed my mind, but to this day, I’m glad I didn’t. I don’t think I could practice medicine and recommend the many drugs that are prescribed today. I do hope that someday there’ll be more natural hygienist doctors.

I also like to read good, clean jokes online, and I’ll send them out to my friends and family on occasion. I try not to send out any junk, although I might send a dirty joke every once in a while to a specific person if I think they’ll really get a laugh about it. Down the road, I may get an iPad, but I’m not sure. I only have a cell phone because the kids insisted on it. I live in too low a region and can’t use my cell at home, but the kids wanted a way to contact me when I go places. The minute I get out of here, I have my cell with me. I text a little as well, but not a great deal. I don’t like to, because the keyboard is too little. I do send out pictures, though.

What I really love is woodworking. I made two beautiful wooden caskets for my closest friends, who were like brothers to me. When people saw those caskets the night before the burial, they couldn’t believe they were homemade here in town.

IX. Whispering Pines

My other hobby is raising bees. Most people think it’s dangerous. When my eyesight was getting a little worse, I quit raising my own queens. At one time, though, I had about 300 hives. Since Irene passed away, I said, to heck with it—I’ll have around twenty to fifty hives and let it go at that. I call it the Whispering Pines Apiary. I order queens in from Texas and split them up, placing a new queen in each hive that needs one. I like to place my hives amongst dandelions and wildflowers, so each spring you’ll find me hoping the weather will be warm enough to coax a lot of blossoms to bloom.

I know two doctors with research experience in honey, and they say they’ve never tasted any honey better than mine. Whenever there are farmers’ markets, I go to the store to get store-bought brands, as well as those little-bitty taster spoons. I let my customers taste the difference between the store-bought honey and my own, and it’s never been a competition. I’d put my honey up against anybody’s. It’s straight from the hive to the jars, and for health, you will never find any better honey.

Besides the farmers’ markets, I sell the honey locally to whoever calls. There are signs on my pickup truck that say Honey for Sale. Call This Number… Whenever folks see that sign on my vehicle, I’ve got honey with me.

People love it. They’ll stop me and say, “Are you a beekeeper?”

“Yep,” I say. “Can I get some honey for you? I have some with me right now.”

They buy a quart or a gallon. There was once a gal who stopped me and said she’d like to buy some. She was on her way to California to see her mother. She took the honey, and on her way back through town later, she said that her mother had never tasted any better honey and wanted more. The gal had me deliver seven gallons to her in a town nearby and has been a customer ever since.

X. Now

Now, a good softball game is hard to find around here. This whole area doesn’t play it like they used to. They’ve moved into the slow-pitch game—the ball has to be a certain height off the ground before it’s legal. Frankly, it kills the whole game. Sure, everybody can play, but the best ones don’t stick around very long.

Now, I’m still a student of health and of law. I volunteer at two nursing homes and play ten-point pitch with the residents. I try to make their days better.

It’s in my nature to try to do good like that. Irene and I always taught our children the paramount importance of the ten percent rule, which means giving ten percent of what you earn to charity. Anytime you give liberally of your talents, knowledge, or money, you’ll benefit fifty times over—that’s just God’s way.

Beyond the ten percent rule, I’ve always been very conservative about money and taught my children the importance of saving it. As a result, none of them spend lavishly, and they’re all very generous to me now in my old age, which I appreciate. An important lesson about money came one day many years ago when Gordon and I were coming home from working in the hayfields, and a Native American Indian in a pickup truck stopped us in the road. He was in need of money to replace a damaged chain saw and asked if I would advance him some in exchange for a good deal on cedar posts for the farm. He didn’t have the posts with him, but I took him at his word and agreed. I never heard from him again, and there was no way to track him down, so I learned the lesson right then and there that if you’re going to buy something, make sure there’s a way to enforce the agreement.

Still, I didn’t let that sully my views of humanity, and of the importance of giving. I still give money every now and then, as we do in church, trusting that one should give even without a return, because the very act of giving renders that money blessed.

When the Lord takes me home, I pray it will be fast. I’m not going to have a disease—of that, I am confident. I’m trying to do what’s right, and I don’t worry about aging because I made that vow—to live past a hundred years. It’s a strange thing, getting older. My mind and my thinking aren’t getting any older at all, or so it feels, but when I look at my body, it’s a different story. Still, it’s a strong body, and I’m very active, walking at least three times a week. Sometimes I walk six miles into town. If it’s snowing, I use a treadmill, though I’ll still trudge the quarter-mile to the mailbox, which makes for excellent exercise in the snow.

Things are different now, but I’m happy. I’m thankful for my mind, for my strength, for the happy life I’ve lived and continue to live. And most of all I’m thankful for my greatest happiness—my family. They are my life’s greatest joy. Every one of my children has become an excellent adult, and I consider my biggest accomplishment to be that I instilled good values in them. They all have an incredible work ethic, so much so that one might say that if you have Bernhardt in your blood, you’re sure to be a workaholic.

It wasn’t all me, though. So much of their cultivation was Irene, and so much of the strong characters they have now comes from their own good sense and spirit. With children, you just have to let them find their own life. You can talk to them and say what you want, but it’s up to them to implement it. It’s up to them how they want to live their lives, and mine have each made the most of what they were given, and continue to give of themselves.

And now, they’ve given me thirteen grandchildren and four great-grandchildren. They’re my pride and joy; in fact, if I had it all to do over again, I’d have my grandchildren first!

The secret to my success is my work ethic, doing what’s right, staying healthy, being honest, and having faith that there’s a God in this universe. I have a few years left till I’m a hundred and I’m free to meet Him, but I know—the blessings in my life have been too marvelous and too many for it to be otherwise.

Addendum: Bobby Bernhardt’s Guide to Living to be 100

Then God said, "I give you every seed-bearing plant on the face of the whole earth and every tree that has fruit with seed in it. They will be yours for food.  — Genesis 1:29

One of the fundamental steps to a long, healthy life is converting your diet into one that is centered around natural, raw fruits, vegetables, seeds and nuts.

I fear, however, that all the pesticides and sprays are going to hurt us over the long haul. I eat organically as much as possible. The majority of the food I eat is raw, and as I strive to be a vegan, I eat meat only a few times a month.

Don’t smoke. After the age of 40, if you smoke, I believe you’ll start to lose a few teeth every ten years.

Along with smoking, I think of alcohol as the other worst “junk food” a person can partake in. It’s one of the greatest detriments to the brain there is. I believe Alzheimer’s and Parkinson’s can be cured, but it will take the introduction of more natural fatty acids into our systems to do it. The only two I’ve found are coconut oil and virgin olive oil. If, like me, you have at least one tablespoon on your salad each day, I believe you’ll dramatically decrease your chances of getting those terrible illnesses.

Six of my close friends got cancer, and their doctors all instructed them to go the chemotherapy route. Today, they’re all six feet under. I think if you have chemo, you may live a little longer, but your chances of a complete recovery are slim. The natural hygiene route, however, has a soaring success rate if you adopt it early enough. You can extend your life twenty to forty years if you change your eating habits. Your body has the ability to correct anything; it’s wonderfully made.

© 2012 Gordon J. Bernhardt. All Rights Reserved.

Acknowledgement: Thank you to my father, Bob Bernhardt, and my three sisters--Barbara Wood, Gloria Bernhardt, and Devonne West for contributing their thoughts and memories to Dad's story. And thank you to Emily Burns for taking those thoughts, organizing them, and crafting this story.