On August 24, 2012, I was interviewed via Skype by John Bowen, the CEO of CEG Worldwide.
Wednesday, October 3, 2012
Monday, October 1, 2012
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:
And for inspiration from local CEOs, business owners and executives, you may want to read their stories at Profiles in 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
- 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.
And for inspiration from local CEOs, business owners and executives, you may want to read their stories at Profiles in Success.
Monday, September 24, 2012
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.)
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.)
Monday, September 17, 2012
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.
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.
Monday, September 10, 2012
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:
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.”
Here’s some of what the rapper shares about money management:
- When u get a check put at least 50% up.
- Never buy a house with unnecessary space.
- Never have Bentley bills with a Benz salary.
- Never spend a lot of money on things you can't get money back from.
- Never buy a car that will have you working overtime to afford.
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.”
Monday, September 3, 2012
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.
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.
Monday, August 27, 2012
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.)
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.)
Monday, August 20, 2012
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.
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.
Monday, August 13, 2012
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:
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…
- 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
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…
Monday, August 6, 2012
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:
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.
- 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
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.
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