People tend to know the commercials for their car insurance company better than they know their coverage, so here’s a fly-by primer of how to understand your auto insurance with an extra special surprise at the end that’s bound to make you laugh.
Tuesday, October 26, 2010
Tuesday, October 19, 2010
Ben Frankin was, without question, a man of wisdom. He was right about many things, but one area in which I must respectfully disagree with the sage is his insistence that the only certainties in this life are death and taxes. Of course, taxes and death are hard to avoid, but there are also other things in life that we will most definitely not evade. In this last of an 18 blog series on the subject matter contained in the book I co-authored with best-selling author, Jim Stoval, we address another one of those certainties and the steps that one must take to adapt and thrive in the face of it.
From The Financial Crossroads, Chapter 18, “Your Story, Your Plan”:
We have made reference in other parts of the book to the oft quoted phrase about death and taxes. I enjoy history, so I had to trace its origin. It appears that Daniel Defoe, in 1726, was the first to make this now famous claim, albeit more eloquently: “Things as certain as death and taxes, can be more firmly believed.” Much closer to the modern day phrase, however, was Ben Franklin’s redux in a letter to Jean-Baptiste Leroy in 1789, in which he said, “In this world nothing can be said to be certain, except death and taxes.” Regardless of the veracity of this line of thought, I find it all quite depressing. But I do think that we could turn this into a phrase in which we’d all agree: One guarantee in this world is change.
Do you embrace, reject, resist or retreat from change? The fact that you purchased this book tells me you probably don’t reject it. That you read this far tells me you probably don’t resist it. The question now, however, is whether you will embrace it or retreat from it. The easier path is to retreat, because as Arnold Bennett tells us, “even a change for the better, is always accompanied by drawbacks and discomforts.” Regarding the intersection of money and life, there are two different types of change: fundamental change and practical change. In a perfect world, fundamental change happens first and practical change follows almost effortlessly. But fundamental change does not always come easily. Often times, practical change precedes fundamental change as we allow a discipline to shape our view fundamentally.
A fundamental change is seeing the world as a risk manager; practical change is altering your insurance policies. Fundamental change is shifting from a retirement plan to a fulfillment plan; practical change is taking degree or certificate college courses that could lead to a job change. Fundamental change is seeing your estate plan as a legacy plan; practical change is updating your will.
Practical change is cutting up the credit cards, your path to more; fundamental change is genuine contentment with enough. Practical change is beginning a giving program; fundamental change is having less of an attachment to material things. Practical change is writing your Personal Money Story; fundamental change is realizing its significance. Practical change is dealing with the dollars and cents in life; fundamental change is life itself.
Tuesday, October 12, 2010
Unfortunately, the "financial planning process" has the unintended consequence of rushing you (and the financial planner) through the most important steps of the process in an effort to get the planner paid the quickest. See how in "The Financial Planning Timeline in 90 Seconds."
Wednesday, October 6, 2010
The financial services business is… interesting. It’s not entirely devoid of good intentions and well-meaning people, but there is no question whose interest is the top priority—and it ain’t yours! To paint you a picture, I’ve included an excerpt from The Financial Crossroads; the story of how I first entered (then temporarily left) “the business.”
From Chapter Seventeen: Everyone Is Biased:
“Everyone is biased.” Those were the words of a mentor of mine shortly after I entered the business of financial advising. I had already been working in the financial industry for several years, but this was the second time that my idealistic view of the objective, trusted financial advisor received a healthy dose of reality. The first time was about three years earlier. I had just finished celebrating my rite of passage into the stock brokerage world——successful completion of the “Series 7” examination that allows one to sell stocks, bonds, mutual funds, options, and various other securities to the public——when I left my entry-level back office job at a reputable brokerage firm to join a successful team of stock brokers at another firm as a “junior broker.”
I showed up the first day, bright and early, in my token blue pin-striped suit, starched white shirt, and bold power tie. I sauntered into the team leader’s office to await my very first “Morning Call.” I listened intently and began feverishly taking notes as a man’s voice rang through a small box detailing the economic events and non-events that were expected to influence the stock and bond markets that day, as well as the state of the current “inventory” that the company held.
As the call wrapped up with a dose of encouragement——akin to a team chant before a football game——I took a deep breath, a final swig of coffee, and moved forward onto the edge of my chair, eagerly awaiting the golden wisdom from my suspender-bound leader as I set out to save the populous from their deviant financial ways. He stood up, glanced out over the magnificent view of the Baltimore harbor visible from his corner office, and invited me to walk across the hall to get comfortable in my new confines.
He grabbed a three-ring binder, six inches thick, and opened it to the first page. Then he told me to write down the only note he had taken during the morning call: “BGE 6.5% Preferred.” My mission was to call the first number attached to the first name (of many) on the first page (of many) and begin a conversation to help bring whoever answered the phone to the conclusion that they could simply not go another day without putting some of their hard earned money to work for them in this bargain basement deal with an unbeatable yield on this new issue of the bedrock Baltimore utility company’s preferred stock.
I was told to start by putting a smile on my face, because my joy would better translate through the other end of the phone. I should talk and talk and talk until the voice either transitioned into a static dial tone or submitted to my plea to “talk to the resident expert” in house (my team leader), at which point I should put them on hold and alert the big shark that we had a fish on the line (I’m not stretching the metaphors here; that’s really how they talked).
This was my dream?? Several weeks later, driving home from a client lunch with my leader, I got up the nerve to ask him a question, the answer to which I was dying to know: “What drives you? A genuine interest to guide a client to the path of financial success or a pure love of the sale?”
I appreciated his honesty as he let out a “hrmph” and retorted, “The sale——of course! If this business dried up, I’d sell snow cones to Eskimos!”
He was the resident trainer for the company’s new breed of financial advisors that would guide (or pester) the residents of the Baltimore metropolitan area. I talked to him a few days later and told him that I felt we had a “philosophical disconnect” in the way we viewed the business. He agreed, saying, “Yeah, some people just aren’t cut out for the phone,” and we parted on good terms.
The celebrated entrance into the business I had dreamt about since the eighth grade ended in disappointment after only two months.
Tuesday, September 28, 2010
When I say, “Financial Planning,” it’s altogether likely that the first thing that comes to your mind is either INVESTMENTS or INSURANCE. And while each of those disciplines are fundamental and foundational to every good financial plan, it is easy for me to say that the most important recommendation that I see in most financial plans does not fall under either of those categories, but instead, in the realm of estate planning.
And, of course, the first thing that comes to mind when I mention stuff like wills, powers of attorney and advance directives is, “Oh, yeah, I know I need to do that.” You’re in good company if you haven’t; over 80% of people don’t have these documents, and most of those who do, have insufficient or outdated documents. Why is it, then, that I could suggest that the MOST IMPORTANT recommendations in your financial plan fall under the heading of estate planning?
First, if you have minor children and haven’t yet created wills (or you have children who’ve blessed you with grandchildren), you should stop whatever you’re doing and purpose yourself to contacting an estate planning attorney to get these documents drafted immediately. Ordinarily, I try to avoid using such dramatic words as best, most and immediately, but I’m not exaggerating here! The reason this is so important if you have minor children is because you stipulate in your will who the GUARDIAN would be for your children in the case that you and your spouse are both… gone. Sure, the probability of that happening is very low, but if you don’t determine who should raise your children in your absence through a will, your state of residence will decide for you!
Second, whether you just became a legal adult or have recently gained access into the centenarian club, the time is likely to come when you’ll need someone else to help you with a financial or health decision because you’re unable (through a disability) or unavailable (you’re settling on a house and are out-of-town for business). You can clear up exactly how these things would be handled with a well written power of attorney document and advance directives. The former allows someone else to act on your behalf in financial matters; the latter, in decisions surrounding healthcare or end-of-life decisions (like the tragic Terri Schiavo case).
Third, of the very few things you can count on as certainty in this life is that your stay here on Earth will eventually come to an end. So even if you’ve made definitive plans to join the prophet Elijah, who reportedly left the planet on a chariot of fire sometime around 800 B.C., you’ll likely be leaving someone (and something) behind when you go. Deliberating over what you intend to leave behind—both monetarily and otherwise—may be seen as not only an opportunity, but an obligation for a life-well-lived.
So why do you think people have a tendency NOT to check-off this big to-do item of having solid estate planning documents created? People have a tendency to avoid conversations about their own demise, as though they might attract it sooner. Instead, I encourage you to see this as an incredible opportunity! Whether your 20 or 120, I encourage you not just to leave an estate, but a legacy.
For more information on HOW to put together a proper estate plan, you’ll find a more detailed explanation in Chapter Sixteen of THE FINANCIAL CROSSROADS.
For more information on WHY, enjoy my CROSSROADS co-author, Jim Stovall’s, best-selling novel, THE ULTIMATE GIFT.
Tuesday, September 21, 2010
My greatest reward in writing The Financial Crossroads has been the opportunity to work with and learn from my co-author, Jim Stovall. With no disrespect intended to Jim’s colleagues on the speaking circuit, Jim is one of the only “motivational speakers” who has caught my ear. That is especially because he’s not one who has made a career out of mere celebrity and motivating slogans. Jim’s never stopped doing the things that made him one of the nation’s great success stories. He continues to write books of varying genres at a pace unknown in the publishing realm and he runs the Narrative Television Network. In short, Jim’s not cashing in on some former success; he’s living out his success story and sharing it with us along the way. So it is with great pleasure that I feature a guest blog post from Jim for this week:
Being the B.E.S.T.
by Jim Stovall
In our society, we revere those who are the best at what they do. Chants of “We’re #1” are heard frequently. You will never hear, “We’re #2,” or “We’re not great, but we’re better than we were last year.” If we want to be the BEST at whatever we do, we’ve got to break it down into its individual components.
“B” is for Balance. It is the element that keeps our lives stable. We’ve all heard about superstar athletes, multi-millionaires, and movie stars who wreck their health or family relationships in their quest for greatness. No matter how much we achieve in one area of our life, if we lose the overall perspective that we are many-faceted beings, we can never be successful.
If we want to have balance in our lives, we are going to have to be proactive. Most of us plan our workday. We have things we are going to try to do, things we really need to do, and the ever-present list of “things we better do today, or there will be no tomorrow!” But how many of us really plan—with the same degree of diligence—our family time, recreation time, exercise, etc?
Several years ago, my wife Crystal and I began a tradition. We take the week between Christmas and New Year and focus on the things we have done in the previous twelve months and those we hope to do in the twelve months to come. We plan our leisure time and focus on where we are in each area of our lives. While I have certainly not reached the levels I want to in every area of my life, this practice has brought a degree of balance to me that I had never known before. Most of us spend all of our time, effort, and energy on professional and business pursuits, and the other areas of our lives get whatever is left over or—in too many cases—they get shoved completely aside.
Balance means investing in yourself in every area of your life.
“E” is for Enthusiasm. This is the first thing we receive when we enter this world as the doctor slaps us on the backside, and the last thing we give up before they close the coffin lid. I have had the privilege of interviewing superstars from the worlds of entertainment, sports, and politics. The one thing that each of these individuals has in common is a tremendous passion or enthusiasm for what they do. If you don’t feel that kind of daily passion, as you pursue your life goals, you need to either get a new career or a new attitude about the career you currently have.
I remember interviewing Katharine Hepburn. When I asked her what she would have done with her life had she not pursued show business, she replied, “If they did not pay me to be an actress, I would have to find another way to support my acting habit. I have an innate need to do what I do.”
This type of enthusiasm will bring you an Academy Award or whatever is the highest honor in your field.
“S” is for Single-mindedness. This is the ability to focus on one thing at a time. This does not mean we are one-dimensional in our lives. It simply means, when we are working, we work; when we are playing, we play; and any other task we choose to undertake receives our total attention and focus.
We spend far too much time living in the past, worrying about things that cannot be changed or living in the future, planning for eventualities that may never come. If we will live in the moment, we will find that mistakes of the past and frets of the future simply fade away.
If something is worth investing your time in right now, it deserves all of your attention.
“T” is for Tenacity. This is the one element that will always result in eventual success. As a blind person myself, I could hit a baseball thrown by the best pitcher in the major league if you would let me keep trying until I succeed. The immortal message from Winston Churchill echoes down through the years, “Never, never, never, never, never give in.”
The whole world belongs to the man or woman who realizes that the game is not over until you quit; and when it comes to your dreams and goals, remember that it is always too soon to quit.
Wednesday, September 15, 2010
The number 37.4 probably means very little to you. But to those who live with Cystic Fibrosis and their friends and family, the number is very significant because the life expectancy of someone with CF is 37.4 years. What impact would it have on your plans for the future if your life expectancy was rapidly approaching… or if you’d already passed it? How, for example, would you plan for retirement and allocate today’s material resources? In the course of writing The Financial Crossroads, I had the privilege of asking my good friend who lives with CF—and also happens to be a financial planner—these very questions.
From Chapter Fifteen: Retirement (Fulfillment) Planning:
A good friend and associate of mine has a unique posture towards retirement planning in the short, mid, and long term. Marcus Harris is a Certified Financial Planner™ practitioner and a board member of the Cystic Fibrosis Foundation. At the age of 35, he is a husband, father, financial planner and one who suffers from Cystic Fibrosis, a life-threatening genetic disease that at this time has no cure. I asked Marcus how the knowledge of this disease has altered his view of retirement.
He told me that his personal financial planning philosophy took a serious turn about a decade ago. Up to that point, Marcus assumed that his life would be dramatically shortened——“in 2008, the median predicted age of survival rose to 37.4 years, up from 32 in 2000,” according to the Cystic Fibrosis Foundation website——and, therefore, he had little need for saving for the long and even the mid term. He was a spender. But in his mid-twenties, Marcus made a conscious decision that he wasn’t going to live life in the shadow of this disease; that he was going to continue to enjoy life, but he was going to approach it as though the cure was imminent. And it may be. This realization opened the door to Marcus entering into serious relationships, and in 2003, he got married. Now, he and his wife have five-year-old twins, and Marcus is a saver.
I think that his is a situation that offers us all a profound lesson in financial planning. Especially because of Marcus’s condition, he is very motivated to plan for his family’s future so that it is secure even if Marcus is unable to enjoy it with them. At the same time, Marcus is reminded daily, with a host of medications that follow him, that he has a disease that could have already taken his life. You might not know Marcus personally, but you know someone, or you may have experienced something similar personally that screams out that we are all living on borrowed time.