When considering investing with a particular financial planning firm or mutual fund consider looking at what benchmark they’re comparing their returns (disclosure: the funds we use are the benchmarks). It’s pretty easy for a mutual fund company or adviser to tout their funds when they have beaten the benchmark over a certain period of time. For example, I had the opportunity to look at a client’s investment performance report that they had with another company. Written across the top in the adviser’s handwriting was the phrase, “Looks like we beat the benchmark.”
fiduciary
The Benefits of Financial Planning
If you’re wondering about whether or not you need to do some financial planning, either on your own, using resources on the internet, or by hiring a financial planner, you might want to know what the benefits of financial planning are. From my perspective of many years providing financial planning and advice to folks, there are three primary benefits of financial planning: Organization, Efficiency, and Discipline. We’ll talk about each of these in order. Organization One of the most important benefits of financial planning is ORGANIZATION. Statistics tell us that fewer than 25% of Americans know their financial net worth. In addition, (prepare to be astounded) the average individual’s credit card debt is over $8,000. Think about that for a moment…
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Should You Worry About the Dow?
The last few weeks have shown that the market is certainly volatile. Once at a peak of over 17,000 the market has pulled back to just over 16,000. While this certainly makes for news (notice how I didn’t say interesting news) I wanted to give our readers a little perspective on why I (nor they) shouldn’t care.
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Yoda Would Suggest a Low-Cost Index
Recently a colleague told me that he’d “give that a try”. I responded (tongue in cheek of course) “Try not. Do or do not. There is no try.” In case you don’t recognize it, that’s a line that Yoda gives to Luke Skywalker in the Star Wars “Empire Strikes Back” movie. Yoda was pointing out to Luke that if he simply “tries” to undertake the action, he will not succeed. I think it shows that Yoda would also suggest a low-cost index mutual fund for investing. If you think back to the excellent article that Sterling wrote a few weeks ago, “Not All Index Funds are Created Equal”, Sterling used a particular load mutual fund as an example. The objective of the fund (paraphrasing here): Seeks to match the performance of the benchmark… Let’s analyze that objective. The “benchmark” in question is an index, in particular the S&P 500 index. […]
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Ten Essential Tips for a Bright Financial Future
See a lawyer and make a Will. If you have a Will make sure it is current and valid in your home state. Make sure that you and your spouse have reviewed each other’s Will – ensuring that both of your wishes will be carried out. Provide for guardianship of minor children, and education and maintenance trusts. If you have divorced and remarried, make sure that your retirement account beneficiary designations are up-to-date reflecting your current situation. Pay off your credit cards. Forty percent of Americans carry an account balance on their credit cards or other personal credit – this is not good for your financial future. Create a systematic plan to pay down your balances. Don’t fall into the “0% balance transfer game” as it will hurt your FICO score. Credit scores matter not only to credit card companies but to insurance companies and future employers as well; you […]
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It’s Never Too Early to Teach Your Kids About Money
I have two daughters and it has given me the pleasure of seeing them grow up and get excited about even the little things like chasing butterflies or finding a lucky penny. My kids find lucky pennies all the time. In fact, they find lucky coins all over the place. Some are by chance as we’re walking down the sidewalk and other times it’s a lucky coin that I may place in an inconspicuous place so they stumble upon it and find it (sometimes it’s fun creating luck for my kids). Whether they find the coin by luck or otherwise, it gives me a great opportunity to teach them. After the excitement of the find goes away, they get even more excited when I ask, “Where should we put that lucky coin?” With glee they almost always reply, “In the piggy bank!” I feel parents can teach their kids about […]
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Predicting the Market is Like Predicting the Weather
If you’ve ever planned for a day out, picnic, family day or relaxing day outside chances are you turned on your TV, radio or grabbed your smartphone app and got an idea of what the weather was going to be for the day of your trip. When you looked you got a prediction, based on the probability of what the weather patterns have shown in the past and you got an idea of what your day would look like. And sometime in your life, what was predicted to be a bright sunny day was laden with storm clouds, rain and gloom. Trying to predict the market is like predicting the weather, only more confusing, more expensive, and less likely to get your desired outcome.
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Why Spending a Little On You Is Ok
Read any financial column or blog and chances are the writers (including yours truly) have advocated that readers save their income, reduce expenses and get rid of debt. Sometimes this valuable information can get interpreted as you can never spend any money on yourself for little things here and there such as a meal out or grabbing a movie with a friend. These little things can help keep you on track for your bigger savings targets by allowing you a bit of autonomy and a chance to enjoy the money you’re working hard to earn and save. Think of it this way: let’s say someone is going on a diet and they absolutely refuse to eat any type of sweet, junk food or anything that would keep them from getting to the proper fitness level or weight they are looking to achieve. What can (and usually does) happen is by […]
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Should You Have Gold in Your Portfolio?
We had a great question come in by request this week that we address the question of whether folks should have gold in their portfolios. Gold can be included under the umbrella of a larger asset class known as commodities. Think of commodities as items used to make or produce other items – such as gold is used to produce jewelry, circuitry and coinage, while timber is used to make lumber and paper, while coal is used to make electricity and disappoint not-so-good kids on Christmas morning (sorry, couldn’t resist). Getting back to gold, the reason an investor may want to consider it as part of their portfolio is because gold is correlated differently from the stock market. Simply put; its pricing moves differently relative to the stock market. This does not mean I’m recommending investors buy gold. Here’s why. Imagine a lump of gold sitting on your kitchen table. […]
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What Keeps Your Planner Up at Night?
I thought I’d share some of the things that go through my mind, financially, even though I’m “in the business” of being a financial planner and teach classes on finance and investments. The goal is to help readers understand that although we give an objective point of view when working with you there are times with our own financial well-being that we too have worries and concerns. We’re certainly not immune.
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Should a CFP® Be Required to Always Act as a Fiduciary?
Folks interested in engaging a professional for financial planning help and advice should generally seek out the advice of a CFP®. A CFP® has had the education, experience, ethics and exam (the Board’s 4 E’s) that qualifies he or she to hold the mark. We often encourage clients that they should look for this designation at a minimum before engaging with a financial planner and then meet with the planner to decide if the client and planner are a good fit. Due to an excellent marketing campaign by the CFP® Board many clients understand what a CFP® is, what they do, and how they may be able to help. Many folks choose to work with a CFP® because they know that the CFP® is held to a higher standard. Some may believe that the CFP® is always a fiduciary – meaning the CFP® must always put the best interests of […]
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Should Insurance Agents Provide Financial Advice and Services?
Over the last few weeks I’ve had the opportunity and fortune to work with graduate students on a number of financial and ethical issues presented to them in their classes. Of the many issues presented there was one issue that we discussed (argued) over more than any other topic; it was the suitability versus fiduciary standard. Most of our readers know that our firm not only follows but embraces the fiduciary standard where we are legally bound to act in the best interests of our clients. This brings me to the title question of this piece – should insurance agents provide financial, advice and or financial services?
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Apple Pie and Ice Cream…Vanilla Ice Cream
From time to time we get asked by our clients and prospective clients why we manage our clients’ money the way that we do. Some even gravitate to our firm because of the way that we invest and our philosophy. Others shy away because they are looking for management that will beat the market and always make money and never lose money. Note: This is impossible. But hey, some folks still chase that illusion. As many of our readers know our investment philosophy is pretty plain – like apple pie and ice cream. To make this summer analogy more apropos, when you go to the store to buy ice cream vanilla is generally cheaper and in more supply. As you peruse further into the freezer you start to come across more exotic flavors, combinations and brand names that not only look (and may taste) more appealing, but are also more […]
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Should The CFP® Board Require Recertification?
I wanted to post this article to see if any of our readers, both planners have an opinion on the question of whether you think the CFP® Board should require CFP® professionals to get recertified in order to keep the prestigious CFP® designation. In recent years the Board has been marketing the CFP® designation as the trusted mark and gold standard when it comes to clients seeking professional financial planning. As you may or may not know there are no laws dictating who can call themselves a financial planner. In other words, anyone can say they’re a financial planner regardless of expertise, experience, ethics, or education (the Board’s 4 E’s). To be a CERTIFIED FINANCIAL PLANNER™ requires much more rigorous work, testing and education, among others.
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Emergency Fund vs. Credit Card
During moments in our lives we are faced with bad luck or simply things that go awry and inevitably cost us money. From a car needing repairs to the water heater going out, or an unexpected doctor bill we don’t plan for these to happen, but we can in place in case they do. As financial planners we generally recommend that our clients have emergency funds in the event that such events are going to happen. On different occasions I will get the argument that an emergency fund isn’t necessary if one has a credit card to simply pay for the unplanned expenses when they happen. Generally, in an emergency a credit card can come in handy as one may not have quick access to cash, etc. However, the flaw with thinking that a credit card can be used in place of an emergency lies here: How do you pay […]
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The Designation Everybody Should Be Aware Of
At some point in your life you have probably started a new job, applied for life insurance, started an IRA or retirement account, or opened a bank account. You may remember when filling out the paperwork that the form asked for a beneficiary – both primary and contingent. This is simply telling the account’s custodian to whom you want your account to go to should you pass away. Your primary beneficiary is the first (hence the name primary) that receives account balance or death benefit. The contingent is who receives the account balance in the event your primary beneficiary predeceases you. When choosing beneficiaries you had the choice of allocating a certain percentage to the primary and some to the contingent if needed. You may have even had two or more primary beneficiaries that you allocated a certain percent of your account to totaling 100% Then you may have forgotten […]
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A Quick Trick to Reduce Your Tax Liability
Now that most folks are recovering from tax time there may be some individuals that paid an excessive amount of tax to Uncle Sam and are looking for ways to reduce their tax liability for next year. This post will be short and sweet, but hopefully it will drive a few points home. The best way to explain this is through an example. Let’s say that Mary and her husband Paul both work and file their taxes jointly. Their tax liability for 2013 was $4,000 – meaning that’s the amount of the check they wrote to the IRS. Needless to say, they are both looking for a potential way to reduce that liability – at least in the here and now. In this case, their marginal tax rate is 25%. The quick trick in this example is to take their tax rate which is 25% and divide it into their […]
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New Advisor?
This article is geared mainly toward advisors and planners new to the business or considering changing careers to become a financial advisor or planner; but it can also be useful to folks considering working with an advisor. As you start your new vocation it’s important to know what vocation you are actually in. What I mean by this is don’t be fooled by your future manager or company in to thinking that your job title is what you’ll be doing. For example, your job title might be financial advisor, insurance advisor, financial consultant, etc. You need to consider what it is you’re doing. If your main job (and the main method you get paid) is by selling a product, then your primary job title is salesperson, not financial advisor. This isn’t necessarily a bad thing (unless you don’t like doing it) but it’s important to understand what you’re really doing. […]
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More Money Isn’t the Answer
How many times have we said or heard the phrase, “If I only had more money…”? Whether wanting to purchase a new car, house or trying to pay down bills such as credit card debt and student loans we can fall into the trap of thinking that more money will be the answer to our problems. Most often, this is not the case. The question we face is how we manage our money – not how much we make. Granted folks need a certain amount of money to survive (although there are some extremists that would argue otherwise) but think of it this way: if someone is poor at managing their money they currently make, how is an increase in income going to make them a better money manager? Let’s give this some perspective (shout out to last week’s post). Let’s say you were a bank and you were lending […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.