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The reason why the financial planning process works so well is because it aligns you and your clients.

The plan puts you on the same wavelength; you tend to work far more efficiently together. And here’s a real biggie…. there are far fewer trust issues to deal with, than if there is no financial plan in place.

Let me ask you a question: Have you ever had a successful relationship when there were trust issues, financial or otherwise? I’m going to say NO to that.

Here’s another question: What would you say, is a major problem that has plagued the financial services business for as long as I can remember? Trust.

Continue Reading “Fixing the alignment”

I’m sorry if I kept you on the hook from the last post… I was only trying to be dramatic in order to make a point.

There isn’t a magic account that few know about… that’s rarely the case in finance. There aren’t many new things, in fact, just the same time tested ideas packaged differently.

BUT… An exception to that statement is the Roth IRA; letting Americans take their IRA monies out TAX FREE was a wonderful NEW idea.

Continue Reading “Fuggetta ‘Bout It - A Winning Investment Psychology”

I’ve talked about how a financial plan brings clarity to a client’s current situation and allows you to plot a course for the future.

The planning experience gives the client more confidence and a new resolve that is hard to shake. But I never said the client’s new resolve “can never be shaken”.

As helpful as a financial plan can be, it doesn’t insulate the client from overreacting to the volatility the markets can create. This is especially true of growth oriented clients that were invested in stocks over the past 10 years.

Continue Reading “A client’s resolve”

Yesterday I wrote a piece about the upside of good planning. I wrote about the powerful psychological effects a formal financial plan can have on a client. Well, I slept on it and completely changed my mind!

I think if you throw darts into the financial section of the WSJ you have a better chance of putting together an investment portfolio that works for the long haul. Just kidding, joke joke haha.

If you’ve been reading CFTPM, then you know by now that I’m a huge believer in the planning process. But my objective here is not to paint this overly rosy picture of how financial planning is the answer to all of life’s mysteries. My objective is to tell it like I see it and share some insights based on my experiences.

Which got me thinking about the downside to poor planning. So I racked my brain and decided to share one of the few negative experiences that I can remember. Continue Reading “Financial planning gone wild”

I’ve had times in my life where I’ve just felt overwhelmed, not knowing where to start or how to deal with something out of my comfort zone.

I’ve gotten discouraged, frustrated and ended up pushing things off indefinitely, feeling somewhat paralyzed… you ever feel that way?

Well, I think that’s how many people feel when it comes to managing their personal finances.

Not unlike a lot of things in life you have to address the problem, educate yourself and find someone you trust to help you…

Continue Reading “The upside of good planning”

I’ve dedicated a lot of time to the Roth IRA and referenced the traditional (or regular IRA) many times… its about time I took a closer look at the traditional IRA. Individual Retirement Accounts are primarily self directed savings and investment accounts, as opposed to employee benefit plans.

IRA contributions

Anyone who has earned income and has not reached age 70 1/2 may make contributions to an IRA. If a husband and wife both have earned income of $4,000 or more, both can contribute up to $4,000 to an IRA. If one spouse is working and the other is not, as long as the total earned income is above $8,000, the working spouse may contribute up to $4,000 on behalf of the non working spouse.

Continue Reading “Tenets of a Traditional IRA”

I’m still pumped up from writing about all those TAX FREE withdrawals but I’m also in a bit of pain right now. I went for a run at lunchtime today and sat by the water for a half hour and somehow caught a bad sunburn… my poor fair skin.

I’ve never been too good at judging the sun’s intensity, especially when there’s a bit of wind like there was this afternoon.

I know I should just stay out of the sun but from time to time I’m seduced by the siren song and promise of a bronzed complexion… or in my case a less pale complexion. I can’t help it, sometimes you don’t always want to be the whitest guy on the beach… haha. OK enough feeling sorry for myself, time to get focused here and get my mind off the burn…

The future

I want all the GenXer’s to really understand the benefits of investing for your future and why this needs to be addressed sooner than later. From my perspective, I see clients all the time and most of them are lucky enough to have secured their retirements’ and legacies.

Continue Reading “Lying in your beds”

I have made a lot of references so far to the mighty Roth IRA. I’ve stated before that the advent of the Roth IRA is one of the most beneficial pieces of legislation to ever come out of Washington D.C.

In my mind, Uncle Sam has given the American public a gift here, its time to take that ball and run with it, especially those of you in your 30’s and 40’s.

Because of the importance of the Roth IRA I plan on covering it thoroughly here… probably over the course of many many many posts. Lets start with the basics…

What is a Roth IRA?

Continue Reading “What is a Roth IRA? and Why You Need To Own One”

Did not get around to writing Part II last night, after going for a hard run I ate some chicken I had grilled up the day before, strung a tennis racket and watched the Mets lose to the lowly Cincinnati Reds. It’s a beautiful Saturday morning here in NY so I’m going to write this post and then get outside and enjoy the rest of the day.

Back to EGADIM

Step 4 - is to Develop and present a customized financial plan to the client. The plan is broken down in to many parts, usually with a net worth analysis and a cash flow statement to begin (depending on your financial planning software).

The cash flow analysis provides a basis to evaluate your current spending and savings amounts; from here we can target areas where expenses can be reduced to channel more income towards your most important financial goals.

Other parts of the plan include detailed analysis on: Continue Reading “The financial planning process - Part II”

Since I’ve gotten to talking about the purpose of the financial planning process and the benefits of having a formal plan… I’d like to break it down for you even further so you can really conceptualize what I’m talking about.

As the title references, the planning process is six steps long. The process is also known by the acronym EGADIM… each letter representing a step in the process.

When I was first studying for the certified financial planning exam I would remember the letters because it spells MIDAGE backwards… a funny coincidence based on the subject matter.

Continue Reading “The financial planning process - Part I”