M. Barton Waring does an excellent job in his book Pension Finance. The book essentially covers what’s wrong with the way conventional accountants and actuaries think using conventional math and accounting practices to justify the payments (or lack thereof) funding corporate and municipal pensions. A concept talked about at length in the book is the idea of long-term average returns and how many pension actuaries rely on them to determine funding. Mr. Waring would argue that there is too much reliance on the long term average returns thus allowing pension actuaries to fund their pensions with less money due to assuming higher rates of return. Instead, one of the areas that may help the crippling pension system in the US is to get realistic about long term returns and use a combination of a smaller returns, and bigger contributions (among others). The book is heavy on the analytic side (great […]
financial planning
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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Be Careful of Average Returns
When saving and investing for retirement many folks as well as advisors helping those folks plan save and invest for retirement generally will have the conversation that includes how much they can save per month or year, how much they need at retirement and how long they have to save until retirement. Essentially, all of the ingredients in the previous paragraph boil down to a phrase mentioned many times in financial planning classes as well as courses in finance, investing and business: the time value of money. The time value of money helps individuals and businesses figure out how much they need to save, earn, and spend in order to achieve certain financial goals. What it boils down to is what is a dollar worth, if not spent today, and instead invested and allowed to grow for tomorrow (the future).
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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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Not All Index Funds are Created Equal
As readers of this blog know we believe that markets are generally efficient and any time they’re not we accept that we won’t be the ones to exploit such inefficiencies. Readers further know that our choice of investment vehicles for both our clients’ and our money is index funds. But that doesn’t mean that just any old fund will do. Even index funds can be different and by that we mean the expenses they charge. Generally, an index fund at least in theory should charge significantly less than its active fund counterpart. The reason being is that index fund manager really isn’t actively managing anything. They’re simply replicating whatever index they are supposed to be replicating according to the fund’s parameters. So a person may logically think that all index funds should charge roughly the same expenses. But that isn’t the case. Take for example the well-known Vanguard S&P 500 […]
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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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A Consequence of the Affordable Care Act
As much as I wanted to put the word unintended before consequence in my title, I had a hard time believing that what I’m about to write about was unintended. As many of you are aware, the Affordable Care Act a.k.a. “Obamacare” is the law passed that requires, among other things, that everyone carry health insurance, subject to some specific exclusions. What I want to talk about is how this affected my insurance specifically and likely affected the insurance of many others. Before the Act was passed my family and I enjoyed health insurance through our HSA. A health savings account allows a person or family to have a high deductible health insurance plan while also making tax deductible contributions to an account that can amass funds for medical expenses. Funds from the account that pay for qualified medical expenses are tax free. Self-employed individuals can also deduct their health […]
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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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The Power of Endorsements
Whether you rent or own your home chances are you have (or should consider having) renter’s or homeowner’s insurance. Generally these insurances cover you in the event of being liable for damages or if you suffer a loss of your own due to a fire, tornado, hurricane, etc. What many polices do not cover or provide very limited coverage on is specific items such as jewelry, antiques, coins, firearms, etc. Generally if there is coverage for these items it’s for an aggregate amount not to exceed a certain dollar limit – such as $1,000 for the total amount lost. For example, Herb has an extensive coin collection worth $50,000 and his wife Peaches has an engagement ring worth $10,000. Under their normal home policy, if there was a theft, fire or tornado causing a total loss of their coins and ring, they may only get up $2,000 (assuming the aggregate […]
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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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Are Target Date Funds Off Target?
It seems that an easy fix for saving for retirement for many folks is to simply choose a target date fund. Generally how target date funds work is a fund company will have a set of different funds for an investor to pick from depending on a best guess estimate of when the investor wants to retire. For example, an investor who’s 30 years old and wants to retire at age 65 may choose a 2045 fund or a 2050 fund. In this example since the investor is age 30 in the year 2014, 30 more years gets him to 2044. Most target date funds are dated in 5 year increments. If the investor was age 60 and wanting to retire at age 65, then he may choose a 2020 fund to correspond to his timeline. Generally, the goal of target date funds is to follow a glide path […]
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 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
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”.