Might Modi Lose?
3 hours ago
Sunday, December 23, 2012
Wednesday, December 19, 2012
Monday, December 17, 2012
Thursday, December 13, 2012
Defining the Art of Investing
Barry Ritholtz today offers this...
The art of investing is the probabalistic decision-making using imperfect information about an inherently unknowable future.
I find that to be a more scientific explanation than mine. My definition of the art of investing is this:
The art of investing is the probabalistic decision-making using imperfect information about an inherently unknowable future.
I find that to be a more scientific explanation than mine. My definition of the art of investing is this:
The ability to refrain from making investment decisions based on market or life events that create constraints, uncertainty, or euphoria that may cause future pain based on trying to hit an unpredictable moving target.
Friday, December 7, 2012
Random Stock Behavior and the Worthless Pursuit by Analysts
If you need another reason to not waste your time chasing individual stocks and analyst ratings, look no further.
S&P500 Stock Performance based on analyst rankings
Source: Bespoke
This pursuit leads to having fewer great experiences, so why do Wealth Managers choose to reduce the numbers of great experiences for their clients, by either creating higher fees, taxes, or poorer returns by chasing this stuff?
Tuesday, October 23, 2012
Tuesday, October 16, 2012
What would your expenses be if...
These expenses didn't exist or were cut substantially?
The link has the media spending for some folks you may have heard of. Notice Vanguard isn't on here.
The link has the media spending for some folks you may have heard of. Notice Vanguard isn't on here.
Sunday, September 30, 2012
Mr. Obama, it is impossible to redistribute wealth
Benjamin Franklin once said, "Early to bed and early to rise makes a man healthy, wealthy, and wise."
Notice that he didn't say "healthy, rich, and wise." Why do you think that is?
One of the cornerstones of this marathon 2012 campaign has been that Obama wants to redistribute the wealth. The problem is, it can't be done.
Think about yourself for a minute. What defines your wealth? Sure having money is nice because it allows you to enjoy your wealth, but my wealth, and likely yours, is defined by the time and experiences you have with others. Two weeks ago, we went to the Oceana Air Show. It was free. We brought our lunch. It cost me 6 gallons of gas to experience the look on my son's face when he saw the Blue Angels. That is wealth.
Not stuff. Not money. But being empowered to use and pursue your passions and skills.
People that are constrained and dependent on the government are less motivated and less likely to pursue what makes them wealthy.
My iPhone doesn't make me wealthy, it makes me free of a cord and in constant contact with my clients. I don't have a single game downloaded on it.
Taking the money of the rich and redistributing it to those in need, doesn't make them wealthy. It makes them have more stuff. Doug Moran says it much better than I do in his blog entry here.
Benjamin Franklin had it right - pursue wealth, not money. Money won't change that for those in need.
Notice that he didn't say "healthy, rich, and wise." Why do you think that is?
One of the cornerstones of this marathon 2012 campaign has been that Obama wants to redistribute the wealth. The problem is, it can't be done.
Think about yourself for a minute. What defines your wealth? Sure having money is nice because it allows you to enjoy your wealth, but my wealth, and likely yours, is defined by the time and experiences you have with others. Two weeks ago, we went to the Oceana Air Show. It was free. We brought our lunch. It cost me 6 gallons of gas to experience the look on my son's face when he saw the Blue Angels. That is wealth.
Not stuff. Not money. But being empowered to use and pursue your passions and skills.
People that are constrained and dependent on the government are less motivated and less likely to pursue what makes them wealthy.
My iPhone doesn't make me wealthy, it makes me free of a cord and in constant contact with my clients. I don't have a single game downloaded on it.
Taking the money of the rich and redistributing it to those in need, doesn't make them wealthy. It makes them have more stuff. Doug Moran says it much better than I do in his blog entry here.
Benjamin Franklin had it right - pursue wealth, not money. Money won't change that for those in need.
Wednesday, September 19, 2012
Tuesday, September 18, 2012
Starting with Why
"JC, you have a degree in Nuclear Engineering. Why are you a Wealth Manager?"
I have probably heard this question a few hundred times.
Chernobyl and Paul Tsongas not winning the Presidency are the cynical answers.
There are other answers like I enjoy the analysis and working with numbers. I like being in control and seeing my results.
None of those answers are tied to people and my passion.
I am a Wealth Enabler because I understand that Money and Experiences are what truly define Wealth.
This weekend I went to the NAS Oceana Airshow. It was free. It didn't cost a thing. Sharing the Blue Angels with my son was a great experience. It was a form of wealth.
We just came back from a week vacation at Myrtle Beach. 4 Nights in a 2 Bedroom Condo on vrbo.com for $800. Perfect weather and got to see my daughter really enjoy the beach for the first time. The $800 allowed my to have that experience. Make no mistake about it - the experience made me feel wealthier than keeping that $800 in my bank account.
Typically, the next question I get is "How do I do it and what do I do differently?"
I focus on three things: Risk, Expense, and Taxes
Risk: How can I reduce your risk to what is necessary for you to experience Wealth? I am more than willing to give up 1% upside to avoid the chance of 25+% downside. Behavioral Finance really kicks in here.
Expense: The lower the expense, the more money is necessarily in your pocket. It's that simple.
Taxes: How can I allow you to keep more of your money by making the moves that improve your tax efficiency. I put a lot of emphasis on this and it really separates me from others.
There is one more collateral benefit: time. Why do you go to Starbucks? Are you buying coffee or are you buying and experience or are you buying time? You are likely buying all three, but you often forget about the time aspect. You are saving time, by not having to make the coffee or clean up the coffee pot, etc.
The same concept translates to the Wealth Management world: Investing is not easy and it takes time. Time that you likely don't have if you have an active family. That lack of time can be costly in the form of complacency or apathy. The experience if you do it yourself can be frustrating - filled with unhealthy emotions like greed, fear, worry, and regret.
I have probably heard this question a few hundred times.
Chernobyl and Paul Tsongas not winning the Presidency are the cynical answers.
There are other answers like I enjoy the analysis and working with numbers. I like being in control and seeing my results.
None of those answers are tied to people and my passion.
I am a Wealth Enabler because I understand that Money and Experiences are what truly define Wealth.
This weekend I went to the NAS Oceana Airshow. It was free. It didn't cost a thing. Sharing the Blue Angels with my son was a great experience. It was a form of wealth.
We just came back from a week vacation at Myrtle Beach. 4 Nights in a 2 Bedroom Condo on vrbo.com for $800. Perfect weather and got to see my daughter really enjoy the beach for the first time. The $800 allowed my to have that experience. Make no mistake about it - the experience made me feel wealthier than keeping that $800 in my bank account.
Typically, the next question I get is "How do I do it and what do I do differently?"
I focus on three things: Risk, Expense, and Taxes
Risk: How can I reduce your risk to what is necessary for you to experience Wealth? I am more than willing to give up 1% upside to avoid the chance of 25+% downside. Behavioral Finance really kicks in here.
Expense: The lower the expense, the more money is necessarily in your pocket. It's that simple.
Taxes: How can I allow you to keep more of your money by making the moves that improve your tax efficiency. I put a lot of emphasis on this and it really separates me from others.
There is one more collateral benefit: time. Why do you go to Starbucks? Are you buying coffee or are you buying and experience or are you buying time? You are likely buying all three, but you often forget about the time aspect. You are saving time, by not having to make the coffee or clean up the coffee pot, etc.
The same concept translates to the Wealth Management world: Investing is not easy and it takes time. Time that you likely don't have if you have an active family. That lack of time can be costly in the form of complacency or apathy. The experience if you do it yourself can be frustrating - filled with unhealthy emotions like greed, fear, worry, and regret.
Wednesday, September 12, 2012
Thursday, September 6, 2012
Wednesday, August 1, 2012
What is missing?
When I came up with my last two posts, I put a lot of thought into the concept of a Wealth Journey. The Journey needs a road map and it needs to be prepared for risks and challenges that will make the Journey not as pleasant.
That said, there is something else missing that really differentiates the experience on the Wealth Journey that I need to talk about - probably even more so than the road map and the obstacles.
Many Wealth Managers will talk about how many client discussions have a perception of being important but far from urgent, which leads to postponed meetings, etc. How many things do we do that are urgent, but not important? The Wealth Journey if not attended to, is like a helium balloon. It starts up at the top of your ceiling and slowly makes its way down before you notice (until your three year old starts complaining about it, but that is a different story for a different time).
That slow leak is the difference between one person I have been talking to since May. They are paying $8000 more in fees than they would be if they moved over to me. I have a few clients like that. It's easy to say it's them. The truth may be it is me. Maybe I haven't made a good enough case to make what they want to do = what they have to do.
I haven't changed the paradigm in the industry. I need to remove the transactional feel. So how do I do this with my current clients?
Truth: Unexpected Honesty (how can I share personal stories that create a deeper personal connection, what can I reveal about our industry), Unbiased Facts (statistics), Proactive Integrity (what constraints and limitations have I put on myself that go beyond the industry). This is the difference between facts and a personal truth. However, I need to make this personal truth relevant to those I am talking to.
Relevance: Active Listening (am I engaged), Meaningful Point of View (Do I have a strong opinion on a challenge people are facing), Surrounding Context (what is hot in the media, what matters to that person right now).
Unselfishness: What am I giving? What am I offering? Where do I demonstrate human empathy for their personal challenges?
Simplicity: Focus on a clear core concept that they can easily share with a non-financial language
Timing: Is there a necessary urgency? Is there a seasonal event to capitalize on? Is there a habitual connection to make?
What matters is (1) Do I add value, (2) Do I save them money, (3) Do I make their retirement more secure?
So I haven't really focused on my previous two posts and I am focusing on how I can build my message on these elements.
That said, there is something else missing that really differentiates the experience on the Wealth Journey that I need to talk about - probably even more so than the road map and the obstacles.
Many Wealth Managers will talk about how many client discussions have a perception of being important but far from urgent, which leads to postponed meetings, etc. How many things do we do that are urgent, but not important? The Wealth Journey if not attended to, is like a helium balloon. It starts up at the top of your ceiling and slowly makes its way down before you notice (until your three year old starts complaining about it, but that is a different story for a different time).
That slow leak is the difference between one person I have been talking to since May. They are paying $8000 more in fees than they would be if they moved over to me. I have a few clients like that. It's easy to say it's them. The truth may be it is me. Maybe I haven't made a good enough case to make what they want to do = what they have to do.
I haven't changed the paradigm in the industry. I need to remove the transactional feel. So how do I do this with my current clients?
Truth: Unexpected Honesty (how can I share personal stories that create a deeper personal connection, what can I reveal about our industry), Unbiased Facts (statistics), Proactive Integrity (what constraints and limitations have I put on myself that go beyond the industry). This is the difference between facts and a personal truth. However, I need to make this personal truth relevant to those I am talking to.
Relevance: Active Listening (am I engaged), Meaningful Point of View (Do I have a strong opinion on a challenge people are facing), Surrounding Context (what is hot in the media, what matters to that person right now).
Unselfishness: What am I giving? What am I offering? Where do I demonstrate human empathy for their personal challenges?
Simplicity: Focus on a clear core concept that they can easily share with a non-financial language
Timing: Is there a necessary urgency? Is there a seasonal event to capitalize on? Is there a habitual connection to make?
What matters is (1) Do I add value, (2) Do I save them money, (3) Do I make their retirement more secure?
So I haven't really focused on my previous two posts and I am focusing on how I can build my message on these elements.
Tuesday, July 17, 2012
On any journey, even a WealthJourney, you need a road map
Earlier today, I talked about the challenges folks have on their WealthJourney. Despite having unique goals and personalities and circumstances. We all face the same challenges. I placed them into four themes which we will begin discussing soon.
As opposed to just presenting problems in the challenges, I want to also discuss solutions. The four challenges are not mutually exclusive, they are variables that impact the biggest variable of all - how you enjoy the currency of experiences and relationships. Experience Equity and Return on Relationships is how you should measure your wealth.
The solution isn't parallel with the challenges, but we will also discuss how we chart our way on the journey. This is your personal map and GPS that we will use.
(1) Write Your Wealth Story - In the world of Lean Six Sigma, user stories are designed to explicitly define conditions of satisfaction to the user. Your wealth story is no different. Also no different is that in Corporate America, they are dealing with constraints - time, budget, scope. Your life has those same limits so we need to identify where those limits exist.
(2) Place Desired Behaviors on Auto Pilot - Auto Pilot can prevent us from getting off track. It can keep us on course. You may need to account for previous bad behaviors, changing headwinds, or many other activities, but as long as you account for these, you will know where you stand and when action is required.
(3) Create Action Limits - Any time you get too far off path (or glideslope from my Naval Aviator days), you need to know how far is too far. You don't want to over correct, especially in the financial services world because those course corrections (ie, trades) create friction that eat away at your wealth. We will carefully craft action limits so we take the right action at the right time. Less is more, and if pragmatic and calculated, it can be A LOT more.
(4) List your action plan for those respective limits - How did you reach the limits - was it changes in your behavior or needs? Was it caused by market misbehavior. Knowing what to do ahead of time and how you feel before the emotional triggers kick in is a good exercise.
(5) Chart our Path - There are two timeframes to be concerned about - the next six years and then the values we expect to see at peak (often retirement). Lots can happen over the course of a lifetime, but we often have a lot more clarity over the next six years. 30 year plans introduce bad timing situations and lots of changes in policy that we can't even think about, let alone model. Ambiguous uncertainty runs amuck. Combine this with choice and you often just get decision paralysis. It is better to hit the themes that we need to think about, but let's focus on what we have clarity and control on....the next 6 years.
As opposed to just presenting problems in the challenges, I want to also discuss solutions. The four challenges are not mutually exclusive, they are variables that impact the biggest variable of all - how you enjoy the currency of experiences and relationships. Experience Equity and Return on Relationships is how you should measure your wealth.
The solution isn't parallel with the challenges, but we will also discuss how we chart our way on the journey. This is your personal map and GPS that we will use.
(1) Write Your Wealth Story - In the world of Lean Six Sigma, user stories are designed to explicitly define conditions of satisfaction to the user. Your wealth story is no different. Also no different is that in Corporate America, they are dealing with constraints - time, budget, scope. Your life has those same limits so we need to identify where those limits exist.
(2) Place Desired Behaviors on Auto Pilot - Auto Pilot can prevent us from getting off track. It can keep us on course. You may need to account for previous bad behaviors, changing headwinds, or many other activities, but as long as you account for these, you will know where you stand and when action is required.
(3) Create Action Limits - Any time you get too far off path (or glideslope from my Naval Aviator days), you need to know how far is too far. You don't want to over correct, especially in the financial services world because those course corrections (ie, trades) create friction that eat away at your wealth. We will carefully craft action limits so we take the right action at the right time. Less is more, and if pragmatic and calculated, it can be A LOT more.
(4) List your action plan for those respective limits - How did you reach the limits - was it changes in your behavior or needs? Was it caused by market misbehavior. Knowing what to do ahead of time and how you feel before the emotional triggers kick in is a good exercise.
(5) Chart our Path - There are two timeframes to be concerned about - the next six years and then the values we expect to see at peak (often retirement). Lots can happen over the course of a lifetime, but we often have a lot more clarity over the next six years. 30 year plans introduce bad timing situations and lots of changes in policy that we can't even think about, let alone model. Ambiguous uncertainty runs amuck. Combine this with choice and you often just get decision paralysis. It is better to hit the themes that we need to think about, but let's focus on what we have clarity and control on....the next 6 years.
Let me lead you on the wealth journey
Unique clients like to be treated uniquely, and they should be. Unique personalities, risk appetites, life goals. It makes sense.
Regardless of where your wealth journey takes you, you must navigate the same challenges.
Challenge #1: Risk - Stock picking vs Asset Allocation, Too much vs too little risk
Challenge #2: Human Behavior - both cognitive and emotional
Challenge #3: Fees - The Endless Pursuit of Fee Awareness and Detection of Hidden Fees
Challenge #4: Products - How products often adversely impact wealth and introduce conflicts of interest
Over the coming weeks, I will tackle each one of these challenges. I hope you will join my so that I can take down your personal wealth path and make it as enjoyable as possible.
As much as we are going to talk about money, the currency of wealth is about relationships and experiences. That is what the wealth journey is all about.
Regardless of where your wealth journey takes you, you must navigate the same challenges.
Challenge #1: Risk - Stock picking vs Asset Allocation, Too much vs too little risk
Challenge #2: Human Behavior - both cognitive and emotional
Challenge #3: Fees - The Endless Pursuit of Fee Awareness and Detection of Hidden Fees
Challenge #4: Products - How products often adversely impact wealth and introduce conflicts of interest
Over the coming weeks, I will tackle each one of these challenges. I hope you will join my so that I can take down your personal wealth path and make it as enjoyable as possible.
As much as we are going to talk about money, the currency of wealth is about relationships and experiences. That is what the wealth journey is all about.
Thursday, June 21, 2012
High Fees, the equivalent of feeding your portfolio rat poison
High Fees - Source: Marketwatch.com
Research focuses on two big investor errors: (1) The inability to separate past performance is not an indicator of future results, so they don't mind paying more, and (2) not realizing how fees impact portfolio value over time.
Here is the actual research paper.
University of Pennsylvania - Mutual Fund Fee Impact
Research focuses on two big investor errors: (1) The inability to separate past performance is not an indicator of future results, so they don't mind paying more, and (2) not realizing how fees impact portfolio value over time.
Here is the actual research paper.
University of Pennsylvania - Mutual Fund Fee Impact
Saturday, June 16, 2012
The Impact of Fees on your portfolio
I am a strong believer that nothing will impact your portfolio more over time than:
(1) Avoid steep declines
(2) Active management of passive investments that meets your risk profile through tax and placement strategies
(3) Modest Fees
Here is a blog post on the impact of fees
WSJ: The Impact of Fees
(1) Avoid steep declines
(2) Active management of passive investments that meets your risk profile through tax and placement strategies
(3) Modest Fees
Here is a blog post on the impact of fees
WSJ: The Impact of Fees
Thursday, June 14, 2012
Status Quo and the Seven Dwarfs - Notice what you are noticing..
I don't believe you can time the markets, but that doesn't mean I don't like to follow the markets and try to do it.
I also don't believe there is any "Holy Grail" to market timing and that you need to triangulate to get the best possible fix. Simultaneously, I think it is destructive to look at too many indicators.
I look at six things to help me find the intermediate to long-term trend of the market. Most of them now are 'yellow' or 'red'.
If I don't believe you can time the markets, why do I bring this up? Because there are two mistakes you can make with risk - having too much and having not enough. If you have too much, and you experience the risk that is in the market - you eventually will. Then you are going to need to either take more risk which may be uncomfortable, or save more, or retire later.
If you don't have a financial plan to help you find the appropriate amount of risk and know when to be alarmed, I have one bit of advice.
NOTICE WHAT YOU ARE NOTICING...
When markets misbehave and you are unprepared, you will naturally have an emotional reaction. Notice your emotions. What I try to do is prevent and avoid this emotional response because you are more likely to make mistakes that will cost you even more money.
Notice your emotional reaction, it is likely one of the "Seven Dwarfs" as I like to call them.
Fearful and his twin brother Greedy
Worry and his twin brother Regretful
and then we have the triplets
Complicated, Complacent, and Apathy
Status Quo and the Seven Dwarfs can make your life much harder than it needs to be.
Status Quo is made stronger by Choice, Ambiguity, and Decision Paralysis. What I try to do is filter these choices down. When you have finite choices and clarity above what those choices delivery, we eliminate ambiguity which allows you to make a good decision.
The Financial Services Industry has a well-earned reputation of hidden fees, unnecessarily high costs, and conflicts of interest which is another reason it is easy to just stay with Status Quo and the Seven Dwarfs.
There is nothing I enjoy more than revealing these costs and having a direct impact on your life.
I also don't believe there is any "Holy Grail" to market timing and that you need to triangulate to get the best possible fix. Simultaneously, I think it is destructive to look at too many indicators.
I look at six things to help me find the intermediate to long-term trend of the market. Most of them now are 'yellow' or 'red'.
If I don't believe you can time the markets, why do I bring this up? Because there are two mistakes you can make with risk - having too much and having not enough. If you have too much, and you experience the risk that is in the market - you eventually will. Then you are going to need to either take more risk which may be uncomfortable, or save more, or retire later.
If you don't have a financial plan to help you find the appropriate amount of risk and know when to be alarmed, I have one bit of advice.
NOTICE WHAT YOU ARE NOTICING...
When markets misbehave and you are unprepared, you will naturally have an emotional reaction. Notice your emotions. What I try to do is prevent and avoid this emotional response because you are more likely to make mistakes that will cost you even more money.
Notice your emotional reaction, it is likely one of the "Seven Dwarfs" as I like to call them.
Fearful and his twin brother Greedy
Worry and his twin brother Regretful
and then we have the triplets
Complicated, Complacent, and Apathy
Status Quo and the Seven Dwarfs can make your life much harder than it needs to be.
Status Quo is made stronger by Choice, Ambiguity, and Decision Paralysis. What I try to do is filter these choices down. When you have finite choices and clarity above what those choices delivery, we eliminate ambiguity which allows you to make a good decision.
The Financial Services Industry has a well-earned reputation of hidden fees, unnecessarily high costs, and conflicts of interest which is another reason it is easy to just stay with Status Quo and the Seven Dwarfs.
There is nothing I enjoy more than revealing these costs and having a direct impact on your life.
Tuesday, June 12, 2012
Monday, June 11, 2012
NY Times - The Biology of Bubble and Crash
NY Times - The Biology of Bubble and Crash
A rather interesting article on how our body responds to market volatility and events.
A rather interesting article on how our body responds to market volatility and events.
Friday, June 8, 2012
Tuesday, May 22, 2012
Tuesday, May 15, 2012
Sunday, April 29, 2012
Wednesday, April 25, 2012
Tuesday, April 24, 2012
Thursday, April 19, 2012
Monday, April 16, 2012
Sunday, April 15, 2012
Friday, April 13, 2012
Why am I different as a Wealth Enabler?
Many in my industry sell themselves as Investment Managers, Wealth Managers, or Financial Planners.
I consider myself a Wealth Enabler. I enable people to pursue and enjoy their wealth.
Father Mike Renninger once said that he knew of married couples that were much lonelier than he was even though he is obviously single. Likewise, I know of people that have far less money than most, but are much wealthier based on what they do with their lives and how they live.
So to distinguish myself as an Wealth Enabler, I need to share with my clients and prospects what I believe, promise, and deliver that is different from everyone else.
I believe that wealth is everything that money can't buy. Money simply allows you to enjoy your wealth to various degrees. The traditional investing relationship doesn't distinguish between money and wealth. I imagine a relationship with my clients that has asset allocation tied to a lifetime of fulfillment goals because that is what wealth truly is.
I promise to remove the cost of complexity, complacency, and unnecessary risk to allow my clients to have more wealth to enjoy and to do it with less worry, more trust, and more fulfilling experiences. I do this through:
I consider myself a Wealth Enabler. I enable people to pursue and enjoy their wealth.
Father Mike Renninger once said that he knew of married couples that were much lonelier than he was even though he is obviously single. Likewise, I know of people that have far less money than most, but are much wealthier based on what they do with their lives and how they live.
So to distinguish myself as an Wealth Enabler, I need to share with my clients and prospects what I believe, promise, and deliver that is different from everyone else.
I believe that wealth is everything that money can't buy. Money simply allows you to enjoy your wealth to various degrees. The traditional investing relationship doesn't distinguish between money and wealth. I imagine a relationship with my clients that has asset allocation tied to a lifetime of fulfillment goals because that is what wealth truly is.
I promise to remove the cost of complexity, complacency, and unnecessary risk to allow my clients to have more wealth to enjoy and to do it with less worry, more trust, and more fulfilling experiences. I do this through:
- Active management of low-cost, passive investments
- Tireless pursuit of tax efficient opportunities presented
- Customized asset placement and percentage cost averaging strategies
I deliver on my principle of wealth enablement through fulfilling desired experiences by:
- Serving my clients unique needs uniquely
- Limiting my client base to 84 clients so I may maintain the highest possible service level
- Analyzing their situation, investments, and life goals
- Choreographing an asset allocation and financial plan to allow their goals to be realized
Hopefully, this give you a better view on me and how I think about my clients and their wealth. I transform the complex, ambiguous world of transactional investing relationships into simple, personal wealth experiences.
Thursday, April 5, 2012
Washington Post: Americans "unprepared" to manage retirement funds
Washington Post - Retirement Funds are more complex than you think
but not so complex that they are worth the cost that most Americans pay.
but not so complex that they are worth the cost that most Americans pay.
401k fees about to be unveiled
WSJ: Inspect your 401k fees
If you are a small business owner, or if you contribute to a 401k, you are about to witness how much your 401k has been costing you each year for the "privilege" to participate.
Sure you may have lower taxes today, but at what cost...especially if there isn't a company match.
If you are a small business owner, or if you contribute to a 401k, you are about to witness how much your 401k has been costing you each year for the "privilege" to participate.
Sure you may have lower taxes today, but at what cost...especially if there isn't a company match.
Saturday, March 31, 2012
Three year returns - expect marketing hype
http://www.fool.com/investing/general/2012/03/09/the-best-3-years-you-may-ever-see.aspx
Looking to see what I can find on the 18 month returns after the top 2% of 3 year returns.
Looking to see what I can find on the 18 month returns after the top 2% of 3 year returns.
Tuesday, March 27, 2012
Monday, March 5, 2012
Why Investor Behavior Costs them...
“It’s because of two mistakes that retail investors make—one is trying to time the market and the other is chasing the performance of a manager. The retail investor performance in mutual funds is 600 basis points lower—six percentage points lower—than the mutual fund itself.”
Thomas Brown, Second Curve Capital, Bloomberg Surveillance, 21 February 2012.
Friday, February 17, 2012
The Illusion of Skill
Are Wealth Managers a commodity? It depends.
I think this article gives the justification that the traditional relationship is focused on the product, and not the client.
That said, Wealth Managers must focus on the experience and the relationship to differentiate themselves.
I think this article gives the justification that the traditional relationship is focused on the product, and not the client.
That said, Wealth Managers must focus on the experience and the relationship to differentiate themselves.
Tuesday, February 14, 2012
Thursday, February 2, 2012
Stream of Consciousness Thinking - Reflecting on Serving My Clients
Every January, I take some time to reflect on how well I did serve my clients and what I could do better. Typically the list is very tactical and more like a checklist of action items. This year, I have taken a different approach and read something about "The Fluid Customer" and have developed what my opportunities are.
So after taking notes, I have tried to find what each client wants, needs, and deserves. Here is what I got out of that reflection....
Productivity = What is Done/What is Required to Do It
Today "What is Required to Do It" is Time so Finding Client Time is the measure I need to focus on. When/where does that exist?
Today they are real-time, more demanding, always on and they are "Right Here, Right Now". Lots of touchpoints. Give them information for inspiration, but don't make them think. Serve them through aggregation.
What used to be a value proposition is now a value expectation: Achieve goals, there at the point of need, an experience that includes products, services, and process
Do Clients want service or do they want to be served?
So after taking notes, I have tried to find what each client wants, needs, and deserves. Here is what I got out of that reflection....
Productivity = What is Done/What is Required to Do It
Today "What is Required to Do It" is Time so Finding Client Time is the measure I need to focus on. When/where does that exist?
Today they are real-time, more demanding, always on and they are "Right Here, Right Now". Lots of touchpoints. Give them information for inspiration, but don't make them think. Serve them through aggregation.
What used to be a value proposition is now a value expectation: Achieve goals, there at the point of need, an experience that includes products, services, and process
Do Clients want service or do they want to be served?
- Anytime, Anywhere value that they can't live without
- Be where they are and be contextually relevant
- Bring my Value Proposition to them with emotion and value
- Demonstrate how I am improving their productivity
Top 5 Regrets of the Dying - Guardian Article
Top 5 Regrets of the Dying
Definitely something that can shape me to be a better Wealth Manager. These regrets were lost wealth opportunities.
1. I wish I'd had the courage to live a life true to myself, not the life others expected of me.
"This was the most common regret of all. When people realise that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even a half of their dreams and had to die knowing that it was due to choices they had made, or not made. Health brings a freedom very few realise, until they no longer have it."
2. I wish I hadn't worked so hard.
"This came from every male patient that I nursed. They missed their children's youth and their partner's companionship. Women also spoke of this regret, but as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence."
3. I wish I'd had the courage to express my feelings.
"Many people suppressed their feelings in order to keep peace with others. As a result, they settled for a mediocre existence and never became who they were truly capable of becoming. Many developed illnesses relating to the bitterness and resentment they carried as a result."
4. I wish I had stayed in touch with my friends.
"Often they would not truly realise the full benefits of old friends until their dying weeks and it was not always possible to track them down. Many had become so caught up in their own lives that they had let golden friendships slip by over the years. There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying."
5. I wish that I had let myself be happier.
"This is a surprisingly common one. Many did not realise until the end that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called 'comfort' of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again."
What's your greatest regret so far, and what will you set out to achieve or change before you die?
Definitely something that can shape me to be a better Wealth Manager. These regrets were lost wealth opportunities.
1. I wish I'd had the courage to live a life true to myself, not the life others expected of me.
"This was the most common regret of all. When people realise that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even a half of their dreams and had to die knowing that it was due to choices they had made, or not made. Health brings a freedom very few realise, until they no longer have it."
2. I wish I hadn't worked so hard.
"This came from every male patient that I nursed. They missed their children's youth and their partner's companionship. Women also spoke of this regret, but as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence."
3. I wish I'd had the courage to express my feelings.
"Many people suppressed their feelings in order to keep peace with others. As a result, they settled for a mediocre existence and never became who they were truly capable of becoming. Many developed illnesses relating to the bitterness and resentment they carried as a result."
4. I wish I had stayed in touch with my friends.
"Often they would not truly realise the full benefits of old friends until their dying weeks and it was not always possible to track them down. Many had become so caught up in their own lives that they had let golden friendships slip by over the years. There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying."
5. I wish that I had let myself be happier.
"This is a surprisingly common one. Many did not realise until the end that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called 'comfort' of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again."
What's your greatest regret so far, and what will you set out to achieve or change before you die?
A New Look at Risk and Spending
Am I asking the right questions to you?
This blog is controversial, but I post it anyway. It is controversial because it is extreme and black and white in his premise.
How much risk are you comfortable with? How much of your income will you spend in retirement?
I don't believe I ask this, but reading this has allowed me to focus on sharpening my questions and message.
First, let's talk about spending in retirement. I personally like to think about it in two "buckets". The I have to spend this bucket and the discretionary "fun" bucket. The article here says that most people when you ask say 75%, but when you ask differently, that number goes to 135%. Both answers in my opinion are incorrect and why I try to treat unique people uniquely. You may need 60 to 75% to pay your bills. The mortgage goes away, savings will fade away. Other expenses will likely favorably change as well.
Risk. I am definitely in the camp that you should minimize investment risk until opportunity presents itself. Opportunity presented itself 3 years ago. Simultaneously, we must avoid the trap of gambling with market timing. Dollar/Percentage Cost averaging, rebalancing, etc are strategies you can use to avoid that. There are other tactics to employ as well.
This is just another awareness article that I am posting and to get people thinking and to challenge your wealth manager with healthy skepticism regarding their collaboration techniques.
This blog is controversial, but I post it anyway. It is controversial because it is extreme and black and white in his premise.
How much risk are you comfortable with? How much of your income will you spend in retirement?
I don't believe I ask this, but reading this has allowed me to focus on sharpening my questions and message.
First, let's talk about spending in retirement. I personally like to think about it in two "buckets". The I have to spend this bucket and the discretionary "fun" bucket. The article here says that most people when you ask say 75%, but when you ask differently, that number goes to 135%. Both answers in my opinion are incorrect and why I try to treat unique people uniquely. You may need 60 to 75% to pay your bills. The mortgage goes away, savings will fade away. Other expenses will likely favorably change as well.
Risk. I am definitely in the camp that you should minimize investment risk until opportunity presents itself. Opportunity presented itself 3 years ago. Simultaneously, we must avoid the trap of gambling with market timing. Dollar/Percentage Cost averaging, rebalancing, etc are strategies you can use to avoid that. There are other tactics to employ as well.
This is just another awareness article that I am posting and to get people thinking and to challenge your wealth manager with healthy skepticism regarding their collaboration techniques.
Behavioral Finance Articles of Interest
I found both of these articles very compelling and a way that I link to consider the investing environment.
Behavioral Finance - RSA Fellowship Journal
This one is a little less directed at Finance and more about confidence and cognitive thinking. Look at this excerpt:
" The confidence we experience as we make a judgment is not a reasoned evaluation of the probability that it is right. Confidence is a feeling, one determined mostly by the coherence of the story and by the ease with which it comes to mind, even when the evidence for the story is sparse and unreliable. The bias toward coherence favors overconfidence. An individual who expresses high confidence probably has a good story, which may or may not be true."
The Hazards of Confidence in Leadership and Picking Stocks
Lots of good stuff later in the article about how when stock pickers sell one stock to buy another, that the one they sold tends to outperform on an average of 3.3%.
Behavioral Finance - RSA Fellowship Journal
This one is a little less directed at Finance and more about confidence and cognitive thinking. Look at this excerpt:
" The confidence we experience as we make a judgment is not a reasoned evaluation of the probability that it is right. Confidence is a feeling, one determined mostly by the coherence of the story and by the ease with which it comes to mind, even when the evidence for the story is sparse and unreliable. The bias toward coherence favors overconfidence. An individual who expresses high confidence probably has a good story, which may or may not be true."
The Hazards of Confidence in Leadership and Picking Stocks
Lots of good stuff later in the article about how when stock pickers sell one stock to buy another, that the one they sold tends to outperform on an average of 3.3%.
Tuesday, January 31, 2012
Time to harvest gains? 401k Fees in the news
http://cnsnews.com/news/article/cbo-taxes-will-shoot-more-30-percent-over-next-2-years
http://money.usnews.com/money/retirement/articles/2012/01/30/how-to-take-advantage-of-new-401k-fee-disclosures
http://money.usnews.com/money/retirement/articles/2012/01/30/how-to-take-advantage-of-new-401k-fee-disclosures
Monday, January 30, 2012
What is going on with Government Statistics?
I will tell you the economic recovery seems fragile at best. I know of two Fortune 500 companies that have initiate a hiring freeze and one of my consulting clients is cutting back services by 25%. The headlines may make you think differently.
Then, I read this...
GDP numbers don't tell you how weak things really are
and this...
Seasonal adjustments are making employment numbers look artificially good
Do I (or anyone else) know which way the markets are heading in the next 3 months or 3 years? No. However, if you read Howard Marks book, The Most Important Thing, he emphasizes that you need to know where you are right now.
If the markets aren't looking favorable, you really need to know where you are. If your Wealth Management Plan hasn't been updated lately, it is probably time to look at it and see if dialing down risk can happen and understanding how that will impact your other life goals (retirement age, college plans for your kids, retirement spending, etc.). Based on how the markets have bounced back since October, it may be appropriate to change your asset allocation.
Then, I read this...
GDP numbers don't tell you how weak things really are
and this...
Seasonal adjustments are making employment numbers look artificially good
Do I (or anyone else) know which way the markets are heading in the next 3 months or 3 years? No. However, if you read Howard Marks book, The Most Important Thing, he emphasizes that you need to know where you are right now.
If the markets aren't looking favorable, you really need to know where you are. If your Wealth Management Plan hasn't been updated lately, it is probably time to look at it and see if dialing down risk can happen and understanding how that will impact your other life goals (retirement age, college plans for your kids, retirement spending, etc.). Based on how the markets have bounced back since October, it may be appropriate to change your asset allocation.
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