Will A Vacation Home Provide a Good Return on Life?

How do you define Return on Life?


A vacation home can provide years of enjoyment and fond memories for multiple generations of your family. They can also create an extra layer of headaches and expenses that prove more trouble than they’re worth.

Here are 4 reasons to think twice before buying a vacation home, even if doing so won’t break the bank:

Full-time bills for part-time enjoyment.

Most workers receive around two weeks of vacation time from their employers. Self-employed “gig economy” workers or small business owners might manage to carve out a few extra days. Or, they might be so busy running their businesses that even a week of vacation time is a stretch.

Regardless, the bills associated with your second home are going to be there 52 weeks of the year: mortgage payments, electricity, basic upkeep, etc. Are you going to spend enough time at your vacation property to justify those costs?

“Landlord” is a job.

Many folks plan to offset the expense of a vacation home by renting it when they’re not using it. This can be an effective way to earn some extra money and make your mortgage payments without stressing your finances.

But when you rent out a property you own, you’re taking on a new job: landlord. That means vetting potential renters and dealing with any unruly folks who slip through your screening process. That means more wear-and-tear on the house, appliances, and furniture. That means repairs. That means complicated insurance and tax issues.

And all that means more work while you’re still working.

Maybe taking on that job appeals to you, especially if you’re retired and enjoy doing handiwork. But if you don’t want to add “landlord” to your resume, don’t use renting your vacation home to justify the purchase.

Visit more, travel less.

Buying something new is exciting, especially when it’s a big-ticket purchase like a vehicle or home. But that excitement can be surprisingly fleeting. Take your new sports car around the block a few times, and it’s suddenly just your car. Watch a few movies in your fancy home theatre, and suddenly it’s just your TV.

A vacation home could be an exception to that rule, especially if it becomes a focal point for family gatherings. In that case, what you’re really buying isn’t a home: it’s an experience of time shared with loved ones. The same holds true if your vacation home is near activities you and your spouse both enjoy, like a cluster of great golf courses or a vibrant restaurant scene.

But if your vacation home is just a nice house, that “getaway” feeling is going to become just another part of your regular routine. Vacationing will start to feel like visiting, or worse, like walking into another set of rooms in your house. When vacation time rolls around, it’s going to be hard to justify spending additional money on “bucket list” travel when you know your second house is just sitting there, racking up mortgage interest, waiting for you to replace the leaky water heater.

Retire TO, not FROM.

So: you don’t want to be a handyman, you dream of crisscrossing Europe, and vacationing for more than 10 days per year makes you antsy.

Still, there’s that voice in the back of your head saying, “We love that place. We have the money. If we don’t buy now, we never will.”

Why not?

Maybe buying a second house isn’t going to improve your Return on Life right now. But retiring to your favorite vacation destination could be an invigorating change of scenery. There’s a big difference between putting off your goals until it’s too late and putting a plan in place that will let you hit that goal when the time is right.

In the meantime, keep that favorite spot in your vacation rotation. Who knows? After a few more years, the shine might wear off and you’ll start dreaming about a new retirement home.

Ready to move but not sure where to go? Check out Money.com for the 8 best cities to retire in.

And as your plans evolve, make sure you keep us in the loop. Wherever you decide to settle down, our planning process can help you get there.

Dwyane Wade Was One of the Greatest Leaders the NBA Has Ever Seen. Here’s What Made Him So Special


Dwyane Wade is so much more than basketball. And leaders should strive to be so much more than business.

Once in a great while, an athlete comes along who performs incredible in-sport feats, all of which pale in comparison to the kind of man or woman they are outside the sport. On Wednesday night, that elite group slipped a member’s jacket over the shoulders of Dwyane Wade.

That’s when Wade played his last NBA game, suiting up for the Miami Heat, who narrowly missed making the playoffs. The Heat lost to the Brooklyn Nets 113-94 but Wade managed 25 points, 11 rebounds, and 10 assists–the coveted triple-double.

The class act gave his final act in front of opposing but adoring fans who gave him repeated standing ovations. Also in attendance were friends LeBron James, Chris Paul, and Carmelo Anthony–an indication of just how respected Wade is.

After the game Wade thanked all the people who helped him along the way–one classy final assist.

You could be dazzled by Wade’s on-court accomplishments: three NBA championships, 12 consecutive all-star appearances, the 2006 finals MVP, and his 2009 scoring title. But Wade’s greatest skill isn’t his basketball prowess. It’s his in-all-ways impressive emotional intelligence. A skill he wields as a leader that every leader should strive to emulate.

In 2011, Wade’s Heat unexpectedly lost in the NBA finals to the Dallas Mavericks. Throughout the season, superstar teammates Wade and LeBron James showed friction that needed mending.ADVERTISING

After that finals loss, their families took a vacation together to the Bahamas. Wade recently told Sports Illustrated that the 2011 season made him realize LeBron was better than he was. It made him want to better himself–off the court. He made his move to do so during that family vacation. As he told SI:

I knew that LeBron could go to a level that I couldn’t go to. And I wanted to take a little bit of that ‘looking over his shoulder’ mentality away. So I said, go ahead bro,’ be your great self and we will all figure out how to be great around you.

Miami Heat head coach Erik Spoelstra said this of the gesture:

How many guys are willing to do that? He’s emotionally stable and has an incredible emotional intelligence. That’s when our team really took off, when LeBron was able to be the best player on the galaxy. Dwyane kicked that off.

Wade’s astonishing EQ was celebrated on Tuesday in a now-viral Budweiser ad that honors Wade for being “so much more than basketball.” Watch for yourself, but be warned, your defenses are useless. It doesn’t matter whether you’re a basketball fan or not: You will need a tissue.

The video lauds Wade for honoring Joaquin Oliver–a Parkland shooting victim who idolized Wade–by writing his name on his sneaker. For taking a family on a shopping spree after their house burned down. For paying full college tuition for a girl whose family couldn’t afford it. For giving words of encouragement to a young man who hailed from a place where people don’t fare well. For supporting his wayward mother through a prison sentence, and buying her a church thereafter.

Wade, as one of the people in the video points out, simply cares.

Of the commercial, Wade said last night on NBA TV, “The people in the commercial reminded me of why I try to be more than basketball.”

Dwyane Wade is so much more than basketball. The best leaders are so much more than business.

That’s the core of emotional intelligence. You either care or you don’t. There’s no gray zone. What’s trickier is whether or not you show it. Intent is the false idol of many a leader.

The single biggest thread connecting all the best, most memorable leaders for whom I’ve ever worked was their effortless way of showing they cared. They didn’t have to work hard to care. They just did. It can be that way for you too–it’s a choice, a matter of prioritization.

Here’s a simple trick you can employ for those harried days when it’s easy to forget that the troops want to know you care about them. Remember the number 29. Is that a new status symbol–29 is the new 30? The legal drinking age in Bulgaria? 

No–it’s a percentage, as in only 29 percent of 1,000 employees I surveyed said they felt their boss genuinely cared about them. Or maybe the inversion of that number, 71, is a better prompt for you, as in 71 percent believe their boss doesn’t genuinely care about them. This is one number you don’t want to hit as a leader.

One thing I can say with great pride about my own leadership is that I’ve never seen myself as “in business,” despite being in business for 30 years. I’ve always been in the people business. And business was always good, which meant–not coincidentally–that business was always good.

Dwyane Wade is now retired. His number will be retired too, soon enough. But his role-model ability to care–those are shoes he’ll never hang up.

Nor should you. And if you haven’t laced yours up yet as a leader–game on.

This article was written by Scott Mautz for Inc.com

How To Take 100% Responsibility For Your Life


Most people will not act on their dreams because those dreams don’t have certain outcomes.

In his bookOutwitting the DevilNapoleon Hill discusses a moment in which he met his “other self” — the side of him that wasn’t indecisive and unclear about the future. This “other self” operated entirely out of faith and definiteness of purpose.

After several months of deep depression, when Hill was at a personal rock bottom, he reached a point where enough was enough.

He got to the point where he no longer cared what other people thought of him.

He heard the voice in his head — his “other self” — and he decided to follow that voice with complete obedience, regardless of how ridiculous or seemingly crazy it was.

He had nothing to lose, and only to gain.

He listened with exactness and acted immediately — regardless of the uncertainty and regardless of the potential consequences. He didn’t allow himself even a second to question himself or hesitate.

As the ancient philosopher, Cato said, “He who hesitates is lost.”

Research done at Yale University has shown that, if you hesitate for even a few seconds when you feel inspired to do something — like help someone — that your chances of doing it drop DRAMATICALLY even after 2-4 seconds.

If you feel inspired to do something, you must act IMMEDIATELY. Every second counts.

Hence, Hill decided to act with complete obedience, immediately, no matter what his other self told him to do.

A Life Without Hesitation

This voice told him who to seek for financial aid in publishing his books. It told him to book world-class suites at hotels when he didn’t have the money to pay for it. It gave him brilliant business ideas which he acted upon immediately.

At a personal and profession rock bottom, Hill entered a mental state with infinite power. Having spent over 25 years interviewing the most successful people of his era, he had heard others talk of this mentality, yet he had never experienced it himself. Now, he was having an experience that validated everything he had learned.

Many others have been gripped by their “other self.” Tony Robbins explains this notion as a 3-part process:

  1. Makea decision while in a passionate or peak state
  2. Committing to that decision by removing everything in your environment that conflicts, and by creating multiple accountability mechanisms
  3. Resolve within yourself that what you have decided is finished.It will happen.

Make Big Decisions While In A Peak State

If you don’t make your decisions in a peak-state, your decisions will be weak and small-minded. When you make your decisions while in a clear and edified mental place, you’ll put yourself on a more elevated trajectory.

It is your responsibility to put yourself into a peak state, every single day. Why would you want to live any other way? Why would you want to drag yourself through the day and through your life?

Upgrade your standards for yourself. Upgrade your standards for the day. Put yourself into a heightened state and then make some profound and committed decisions to move forward.

What Commitment Really Means

Making a commitment means you’re seeing it through to the end. It means you are leaving yourself no escape routes. You are burning any bridges that might lead to lesser paths of distraction. Your decision has been made. There’s no going back. You’ve passed your point of no return.

Where decisions are made in a single moment, commitment is seeing those decisions into the future. Especially when life gets difficult.

Resolving Within Yourself That The Decision Is “Final”

Resolve means it’s done,” said Robbins. It’s done inside [your heart], therefore it’s done [in the real world.]When you are resolved, there is no question whatsoever. To quote his Air-ness, Sir Michael Jordan, Once I made a decision, I never thought about it again.

When you resolve within yourself that “it’s done,” then it’s done. It doesn’t matter that the path to your goal is uncertain — come hell or high water — you’re going to get what you want.

There are two people in the world: those who 1) get the results they want and 2) those with excuses for why they didn’t get the results.

As Yoda said, There is no try. Only do or do not.”

Are you doing, or not doing?

Seriously?

Are you committed and resolved?

Is it done in your mind?

Or are you still unsure?

Most People Want Certainty

Most people will not act on their dreams because those dreams don’t have certain outcomes.

People would prefer external security over inner freedom.

However, when you have inner freedom, you are completely fine embracing the uncertainty of pursuing your dreams. You don’t need the outcomes to be certain. You already know within yourself that if you really want something, you’ll get it. You know God will help you. You know that when you set goals and dreams, and follow the process of transforming yourself into a person who can have those goals, that nothing is impossible to you.

Resolve Means You Know Your Goals Are Already Yours

When you resolve within yourself — it means that you already know it’s going to happen. You believe it. Every day you cause yourself to believe it even more by affirming to yourself that what you want is already true. Hence, Neville Goddard has said, Assume the feeling of your wish fulfilled.

When you’re resolved, nothing can stop you. You don’t react to situations, you impact and alter them. All doubt and disbelieve have left your mind.

You’re committed.

Few People Have Confidence

Most people have an incredibly weak relationship with commitment. People break commitments to themselves all the time. They perpetually lie to themselves. As a result, few people have genuine confidence.

Confidence is not something you can fake. It’s a reflection of your relationship with yourself. And if you aren’t consistent with yourself, then you don’t love yourself.

When you can’t trust yourself to do what you tell yourself you’re going to do, you’re not going to make any real decisions. Rather, you’ll dwell in a state of indecision, which is a weak and powerless state.

Most people are too afraid to commit to anything because they already know they’re going to break their commitment.

A Challenge to Anyone Hearing Something Deeper From this Message

If you are feeling something inside of you wanting to be more in your life, I have a personal challenge for you.

Make a decision today. Something you’ve wanted to do or have been planning to do for a long time.

Commit to doing that thing.

Right now. Do SOMETHING. Create action, right now. The moment you begin moving forward, you alter your trajectory and identity.

Act now, or forever hold your peace.

Resolve within yourself that you already have it in you. If you didn’t, it wouldn’t have been gnawing at you all this time.

Research has found that when people commit to something, their desire to be seen as “consistent” drives them to act according to the commitment they’ve made.

Commitment has been defined as, “Pledging or binding of an individual to behavioral acts.”

For example, one study found that people who made a public commitment to recycling were far more likely to do so than those who didn’t make a public commitment.

When you make a commitment, you develop a self-concept that lines-up with your new behavior. This perceptual shift is your cognitions, values, and attitudes aligning with your new behavior. Hence, your desire to be viewed as consistent — firstly to others and then eventually to yourself — shifts how you see yourself.

You begin to see yourself based on the commitment you’ve made. Eventually, if your behavior matches your commitment for a long enough period of time(this study argues it takes around 4 months), your attitudes will also change.

Fake it until you make it?

No.

Make the decision you want to. Eventually, you grow into that decision through your commitment and personal resolve.

This isn’t faking anything.

It’s living with intention.

It’s living with definiteness of purpose.

So what’s the challenge?

Publicly commit to something to TODAY. Don’t be rash or impulsive about this. Think about it for a moment. Make a plan! That plan doesn’t need to be elaborate. In the least, consider the goal you have and a few sub-goals that would be required to achieving your larger goal.

Research has found that non-planned reward-seeking is the fastest path to impulsive behavior.

Don’t put the cart before the horse.

But make a decision.

Make it highly public.

By Benjamin P. HardyContributor, Inc.com

Don’t Just Work for Money, Work for Meaning

Have you found your WHY?

In a recent survey of 12,000 workers worldwide conducted by the Energy Project, only 50% of respondents found meaning in their work (1). Imagine spending 40 hours a week doing meaningless work. It’s soul-sucking, but it doesn’t have to be that way.

We understand why so many people stick with jobs that don’t provide meaning—it’s the money.

And working “for the money” is not all bad. Having financial security so we can provide for our families is obviously a worthy reason.

However, as important as money is, feeling that the work we do is meaningful matters too. It’s better for our health. It’s better for our relationships. And it just makes getting up in the morning much more desirable.

In an article in The Atlantic, author and cultural commentator David Brooks said, “There is no income level at which people are not desperate for meaning.” (2)

The good news is, there are proactive things we can do to derive more meaning from our work.

For some of us, finding that meaning in work might require a company or career change. For others, it could be as simple as reframing how we think about our current jobs and finding new ways to engage our talents. Here are a few strategies for maximizing your sense of meaning from 9 to 5.

Craft a new job out of your current job.

Hospital custodian isn’t a job that most people would consider meaningful, or even desirable. But Amy Wrzesniewski, now a professor at the Yale School of Management, found that many of the custodians she talked to didn’t consider their jobs low skilled or unfulfilling (3). Instead, they felt they were part of a team that was helping people get better. They may not have been performing surgery or prescribing drugs, but they believed their job was an important part of a bigger process.

In addition to basic cleaning duties, these custodians also went out of their way to bond with patients and visitors. They talked to unvisited patients, and even kept in touch with some after they were discharged. Rather than trying to find a different job, these custodians had crafted a more meaningful job out of their assigned work.

The job crafting concept can provide a new perspective on the work you do (4). Your current job might provide opportunities for expression, connection, and creativity that you never realized were there. Try to reconfigure your approach to daily work tasks around these opportunities.

Focus on WHY, not what.

It’s easy to get so bogged down in the things we have to do at work that we lose sight of why we do them. It can be helpful to your sense of meaning to consider the end result of your work. Especially, as it impacts other people.

For those happy hospital custodians, the Why was helping the ill. Your Why doesn’t have to be that altruistic. Although, somewhere at the end of all that paperwork and accounting there’s a person with a need you helped fill. Or maybe a problem you helped solve, an experience of joy you helped deliver.

Your Why could be the meaning you find from engaging your unique skill set. Instead of sagging under the weight of all that copy you have to edit, appreciate how your work engages your writing skills. Maybe a problem along the company’s supply chain engages your critical thinking. The company itself could also be your Why, if you’re working for a business that has a mission that you really believe in. You could also find a meaningful Why in the social bonds you create with the people you work with and the customers who rely on your products and services.

Examine your mindset.

If adopting a new mindset about your work doesn’t help you find more meaning … try examining your mindsets.

Business writer Dan Pontefract believes that we have three distinct ways of thinking about our work as it relates to our sense of meaning (5):

The Job Mindset is a “paycheck mentality,” in which people perform their jobs purely for compensation.

The Career Mindset is triggered when we focus on advancement. Things like making more money, getting that big promotion, increasing our power or sphere of influence.

Finally, the Purpose Mindset engages our feelings of passion, innovation, and commitment, and an outward-looking focus on serving your employer as a whole.

Pontefract recommends spending a week tracking your mindset. At the end of every day, write down approximately how much time you’ve spent in the Job, Career, and Purpose mindsets. At the end of the week, tally up the totals.

What do these numbers tell you about your mindset at work? Are you spending the majority of your time grinding towards that Friday paycheck, or looking for ways to get ahead? Further, how does your time spent in the Job and Career mindsets compare to the time you spend in the Purpose mindset? Can you use job crafting to adjust your mindset and focus your energy more? What about how your work contributes to something bigger than money?

If you can’t balance out these mindsets in a way that allows you to find more meaning in your work, you might need to adjust your role. Or you might need to explore new career paths. Either way, we’d be happy to discuss this with you and help you position your financial resources to support your decision. Please contact our office to setup an appointment.

Sources
  1. https://www.nytimes.com/2014/06/01/opinion/sunday/why-you-hate-work.html?_r=1
  2. https://www.theatlantic.com/business/archive/2016/07/meaning-work-happiness-brooks/489920/
  3. https://www.inc.com/jessica-stillman/what-you-can-learn-about-career-satisfaction-from-a-hospital-janitor.html
  4. http://positiveorgs.bus.umich.edu/cpo-tools/job-crafting-exercise/
  5. https://hbr.org/2016/05/youre-never-done-finding-purpose-at-work

Financial Planning is About Making Your Life Plan A Reality

Many folks who have just begun working with us are surprised by how our planning process starts. We don’t begin by talking about IRAs, 401(k)s, or how much you’re saving. Instead, we begin by talking about you, not your money.

Putting your life before your financial plan.

As Life-Centered Planners, our process begins with understanding your life plan. We start by asking you about your family, your work, your home, your goals, and the things that you value the most.

Our job is to build a financial plan that will help you make your life plan a reality.

Of course, building wealth that will provide for your family and keep you comfortable today and in retirement is a part of that plan. So is monitoring your investments and assets and doing what we can to maximize your return on investment.

But we believe maximizing your Return on Life is just as important, if not more so. People who view money as an end in and of itself never feel like they have enough money. People who learn to view money as a tool start to see a whole new world of possibilities open in front of them.

Feeling free.

One of the most important things your money can do for you is provide a sense of freedom. If you don’t feel locked into chasing after the next dollar, you’ll start exploring what more you can get out of life than just more money.

Feeling free to use your money in ways that fulfill you is going to become extremely important once you retire. Afterall, you’re going to have to do something with the 40 hours every week you used to spend working! But you’re also going to have to allow yourself to stop focusing on saving and start enjoying the life that your assets can provide.

Again, having money and building wealth is a part of the plan. But it’s not THE plan in and of itself.

The earlier you start thinking about how you can use your money to balance your vocation with vacation, your sense of personal and professional progress with recreation and pleasure, and the demands of supporting your family with achieving your individual goals, the freer you’re going to feel.

And achieving that kind of freedom with your money isn’t just going to help you sleep soundly at night – it’s going to make you feel excited to get out of bed the next morning.

What’s coming next?

So, when does the planning process end?

If you’re like most of the people we work with, never.

Life-Centered Planning isn’t about hitting some number with your savings, investments, and assets. And we’re much more concerned about how your life is going than how the markets are performing.

Instead, the kinds of adjustments we’re going to make throughout the life of your plan will be in response to major transitions in your life.

Some transitions we’ll be able to anticipate, like a child going to college, a big family vacation you’ve been planning for, and, for many of you, the actual date of your retirement. Other transitions, like a sudden illness or a big out-of-state move for work, we’ll help you adjust for as necessary.

In some cases, your life plan might change simply because you want something different out of life. You might start contemplating a career change. You might decide home doesn’t feel like home anymore and start looking for a new house. You might lose yourself in a new hobby and decide to invest some time and money in perfecting it. You might decide it’s time to be your own boss and start a brand new company.

Planning for and reacting to these moments where your life and your money intersect is what we do best. Come in and talk to us about how Life-Centered Planning can help you get the best life possible with the money you have.  Visit Our Website to learn more.

We also have some really great resources on our YouTube Channel, so head on over there to check it out.

What Is a Fiduciary Financial Advisor?


“A fiduciary duty is the highest standard of care,” according to the Cornell Law Dictionary. (istockphoto)

IN APRIL 2016, A NEW word entered many investors’ vocabularies: fiduciary. Even for those who’d heard it before, the term took on a whole new meaning when the Department of Labor’s Fiduciary Rule was released. All of a sudden financial advisors fell into two camps: fiduciaries and non-fiduciaries, adding a new level of confusion – and risk – to the advisor-client relationship for many investors.

Research by digital wealth manager Personal Capital found that nearly half of Americans falsely believe all advisors are legally required to always act in their clients’ best interests. Not only is this inaccurate, but it can also be detrimental to investors who unwittingly expose themselves to biased and potentially costly advice from advisors who put their own interests before investors.

“Not all advisors are required to put you first,” says Jay Shah, chief executive officer of San Francisco-based Personal Capital. “Only financial advisors who are fiduciaries are required to act in the best interests of their clients.”

What is a fiduciary? A fiduciary is a person or legal entity, such as a bank or brokerage firm, that has the power and responsibility of acting for another (usually called the beneficiary or principal) in situations requiring total trust, good faith and honesty.

The most common example of a fiduciary is a trustee of a trust, but anyone can be a fiduciary. If you undertake to assist someone in a situation where they place total confidence and trust in you, you have a fiduciary duty to that person. Corporate officers are fiduciaries for their shareholders, as are attorneys and real estate agents for their clients. Some, but not all, financial advisors are fiduciaries.

When you’re the beneficiary of a fiduciary relationship, you give that fiduciary discretionary authority over your assets. So a fiduciary financial advisor can buy and sell securities in your account on your behalf without needing your express consent before each trade. Because fiduciaries have this discretionary authority, they’re held to a higher standard than non-fiduciary advisors.

The fiduciary duty is the highest standard of care. According to the Cornell Law Dictionary, “A fiduciary duty is the highest standard of care.” It entails always acting in your beneficiary’s best interest, even if doing so is contrary to yours. For a financial advisor, this may mean recommending a product that results in reduced or no compensation because it’s the best option for the client.Play VideoPlayUnmuteLoaded: 0%Progress: 0%Current Time 0:04/Duration 1:39

According to the Securities and Exchange Commission, which regulates registered investment advisors as fiduciaries, the fiduciary duty also entails:

  • Acting with undivided loyalty and utmost good faith
  • Providing full and fair disclosure of all material facts, defined as those which “a reasonable investor would consider to be important”
  • Not misleading clients
  • Avoiding conflicts of interest (such as when the advisor profits more if a client uses one investment instead of another or trades frequently) and disclosing any potential conflicts of interest
  • Not using a client’s assets for the advisor’s own benefit or the benefit of other clients

The commission concludes by stating that “departure from this fiduciary standard may constitute ‘fraud’ upon your clients,” which could result in the firm’s or investment advisor’s registration being revoked, the advisor getting barred from the industry or multi-million dollar disgorgement’s, among other penalties.

Fiduciaries have a “duty to care.” That means these obligations extend beyond the first meeting. A fiduciary will continually monitor a client’s investments and financial situation and adhere to best practices of conduct for the duration of the relationship.

“I think most investors would expect their advisors are doing that anyway, but that’s not always the case,” says Shelby George, senior vice president of advisor services at Manning & Napier, an investment manager in Fairport, New York. Non-fiduciaries are held to the suitability standard, a lower standard of care.

Fiduciary standard versus suitability standard. For advice to be considered merely “suitable,” the financial professional must only have an adequate reason to believe a recommendation fits the client’s financial situation, needs and other investments. For that to be the case, an advisor must obtain adequate information about the investment as well as the customer’s financial situation before making the recommendation.

The most common difference between “a fiduciary and an advisor acting under a suitability standard is the decision-making process,” George says. Before making a recommendation, fiduciaries undergo a prudent process designed to determine their client’s best interest. After making a recommendation, they discuss it thoroughly with the client to ensure there’s no misunderstanding about the recommendation and the fiduciary’s rationale for making it.

“Advisors acting under the suitability standard may, but are not required, to have the same depth of discussion,” George says. As a result, their duty to a client’s investments and financial situation ends once the trade is placed. These advisors aren’t obligated to monitor client accounts or financial situations on an ongoing basis.

Instead, the suitability standard only calls for fair dealing and best execution, which means the advisor must do the following:

  • Execute orders promptly and at the most favorable terms available, determined through “reasonable diligence”
  • Disclose material information
  • Charge prices reasonably related to the prevailing market
  • Fully disclose any conflicts of interest

The suitability standard does not require advisors to put their clients’ best interests before their own, nor must they avoid conflicts of interest.

“If your advisor isn’t a fiduciary, he can steer you into products that put more money into his pocket, as long as they’re considered suitable for you,” Shah says. For instance, when faced with two comparable investments, one of which has a higher commission, a fiduciary couldn’t recommend the pricierinvestment because paying more in fees isn’t in the client’s best interest. An advisor held to the suitability standard, however, could recommend the more expensive product provided it’s “suitable” for the client.

“Of course, not all non-fiduciaries are bad guys hoping to eat your financial lunch, but it’s important to understand that, legally, they can,” Shah says. “What’s more, their compensation structure could inherently make it difficult for them to act without conflicts of interests.”

How advisors are compensated. Generally, you pay for financial advice in one of three ways: advisory fees for fee-only advisors, commissions, or a combination of fees and commissions for fee-based advisors.

Fee-only advisors are either a flat or hourly rate, on a per- service basis or as a percentage of assets under management. They do not earn commissions or trading fees so their compensation is independent of the investments they recommend.

Commission-based advisors are paid from the sale of investments. They may also receive a fee from their financial institution for selling a particular product, collect a percentage of the assets a client invests or be paid per transaction.

The Financial Industry Regulatory Authority requires that commissions and fees be “reasonable” and disclosed at or before the time of investment. The organization’s 5 percent guideline considers any markup at or above 5 percent seldom reasonable and any commission near that threshold is subject to regulatory scrutiny and must be justified.

An advisor who receives both a flat fee and commissions is considered fee-based. Fiduciaries must be fee-only or fee-based. Non-fiduciaries can be commission-based or fee-based.

The commission structure opens the door to conflicts of interest between advisors and their clients. An advisor who is paid based on the products recommended would have an incentive to steer clients toward investments that generate a higher commission. If an advisor is compensated per transaction, clients may be encouraged to trade excessively, a practice known as churning accounts.

“Many advisers do not provide biased advice, but the harm to investors from those that do can be large,” writes the Department of Labor in the Federal Register Vol. 81, No. 68. The Obama administration’s Council of Economic Advisers estimated that advice from advisors with conflicting incentives costs IRA investors about $17 billion per year. The council estimated that recipients of conflicted advice earned 1 percent lower returns each year.

If conflicted advice is given when a 401(k) is rolled over into an IRA, it can cost the investor an estimated 12 percent of his savings over 30 years, with those savings running out more than five years sooner as a result.

These findings, coupled with investors increasingly seeking investment guidance for retirement savings outside of an employer-sponsored plan, particularly with rollovers, provided the impetus for the Department of Labor’s Fiduciary Rule.

The DOL’s Fiduciary Rule “is not moot.” The goal of the rule was “to encourage more transparency of fees, close certain payment loopholes, simplify retirement advice and improve investor education,” says Jason Schwarz, president of Wilshire Funds Management and Wilshire Analytics in Santa Monica, California. But the Fifth Circuit Court of Appeals found the rule “inconsistent with governing statutes” and said the department was “overreaching to regulate services and providers beyond its authority.”

President Trump told the department “to re-examine the Fiduciary Rule and prepare an updated economic and legal analysis” of its provisions. The department could then ask the Fifth Circuit Court of Appeals could be asked to review the rule again or it could be taken before the Supreme Court.

As the Fifth Circuit Court of Appeals writes in its decision, the case “is not moot. The Fiduciary Rule has already spawned significant market consequences.” Many firms have removed products like high-fee, low-cost mutual funds that don’t meet the fiduciary standard, Schwarz says. The result for investors is higher-quality investments and an easier investment selection process. “I think it’s not unreasonable to expect the fees advisors charge will come down along with the fees of the underlying products they use,” he says.

“It’s impossible for the industry to roll back the change that’s taking place, as much as some institutions would like to,” Shah says. Investors are demanding more objective, transparent advice and fee structures. “Smart advisors will realize this change is coming and that advice that is ‘good enough’ is no longer good enough for today’s investor.”

Meanwhile, “among the over 300,000 brokers and advisors across the industry, the delivery of fiduciary advice is uneven, erratic and irregular,” says Knut Rostad, founder and president of the Institute for the Fiduciary Standard, a nonprofit advocate of the fiduciary standard in McLean, Virginia.

*This article was written by Coryanne Hicks for U.S.News

How To Test Drive Retirement!

Mike Desepoli, Ask The Advisor

Want to Retire? Take It for a Test Drive

There are many reasons why people who could retire are hesitant to do so. Some people think they need to wait until they’re 65 or older. Some are worried about running out of money. Many parents want to keep supporting their children through some major life transition, like college, marriage, or buying a first home. 

Maybe the most common reason we see for a retirement delay is folks who just can’t imagine their lives without work. That’s understandable. A routine that’s sustained you and your family for 30 or 40 years can be a hard routine to shake. 

But retirement doesn’t have to be all or nothing right away. If just thinking about retiring makes you jittery, use these tips to ease into retirement a little at a time. 

1. Talk to your family.

Clear, open communication is an essential first step to approaching retirement. Be as honest as possible about what you’re feeling. What worries you about retirement? Does the idea excite you? What do you envision your days being like? Where do you want to live? What does your spouse want retirement life to be like? 

2. Talk to your employer.

Many companies have established programs to help longtime employees transition into retirement. You might be able to trim back your hours gradually to get an idea of what days without working will be like. You’re also going to want to double-check how any retirement benefits you may have are going to work. Discuss any large outstanding projects with your supervisor. Make a plan to finish what’s important to you so that you can leave your job feeling accomplished. 

Self-employed? Give your favorite employee (you) less hours and fewer clients! Update your succession plan and start giving the soon-to-be CEO more of your responsibilities. Make sure you have the absolute best people working for you in key leadership positions so that your company can keep prospering without your daily involvement. 

3. Make a “rough draft” of your retirement schedule. 

What are you passionate about? What are some hobbies you’d like to develop into a skilled craft? Do you want to get serious about working the kinks out of your golf swing? Are there household projects, repairs, or upgrades you want to tend to? A crazy idea you kicked around at work you’d like to build into a new company? A part-time job or volunteer position you’d like to take at an organization that’s important to you? New things you want to try? New places you want to visit? Grandkids you want to see more often?

Try filling out a calendar with some of your answers to these questions. As you start to scale back your work hours, take a few lessons or volunteer shifts. Sign up for a class. Leave town for a long weekend. See what appeals to you and what doesn’t. 

Remember, you don’t have to get your schedule right the first time! A successful retirement will involve some trial and error. Learn from things you don’t like and make a point to spend more time doing the things you do like. 

4. Review your finances. 

This is where we come in! 

Once you and your spouse have settled on a shared vision for retirement, we can help you create a financial plan to help ensure you are financially fit for (semi)-retirement. We’ll go through all of your sources of income, retirement accounts, pensions, savings, and other investments to lay out a projection of where your money is coming from and where it’s going.

We can coordinate all aspects of your situation and collaborate with you on the best course of action. You don’t have to face retirement alone and make big decisions without expert guidance. 

Coming in and talking to us about your retirement is a great “Step 1” option as well. So if you are dreaming of those days when work is optional, give us a call and we can help you through this phase of life.

For more retirement resources check out some of our other blog posts.

For more help with retirement, the AARP website can be a great resource as well.

Did You Inherit Your Beliefs About Money From Your Parents?

Did You Inherit Your Beliefs About Money From Your Parents?

Parents know that children hear, see, and pick up on everything that is going on with the adults in their lives. And when you were a child, you were no different.

Our attitudes about money are formed at an early age, as we absorb how people around us deal with money. Some of these beliefs, such as a commitment to disciplined saving, are positive. Others, like skepticism about the stock market, can be more harmful than helpful as we try to build wealth in our own lives.

Answering these four key questions can help you look at your financial upbringing with a fresh perspective. When you’re done, think about which money beliefs you want to pass on to your own kids, and which might be preventing you from living the best life possible with the money you have.

  1. What was money like growing up?

Your childhood experiences of money are a composite of details both big and small.

You probably compared the comforts of your home to what you saw next door and drew some conclusions about how comfortable your family was.

Did your parents get a new car every couple years or drive around the same station wagon until it died? Did you take frequent vacations? What were holidays and birthdays like?

Watching mom and dad carefully balance their checkbooks or set next week’s grocery budget also might have made a strong impression. And at the more serious end of the spectrum, an unexpected job loss, debilitating medical condition, or death could have had a profound impact on your family’s finances.

  1. What was money like for your parents growing up?

Many baby boomers were raised by parents who had to tighten their belts during the Great Depression and World War II. The Greatest Generation probably impressed upon your parents the value of the hard work, the importance of saving, and perhaps some real apprehension when it comes to money. Your parents may have passed on these same values to you, or swung in the opposite direction and tried to make money as stress-free as possible.

How much do you know about your parents’ childhoods? If they’re still living, ask some questions that will fill in your family’s history a little more clearly. You might learn something surprising. And you might gain some insight into how their experiences of money are still affecting you.

  1. What specific lessons were you taught that you have continued?

People who grow up in working-class households often learn negative lessons about wealth. Their parents may view affluent people with suspicion or even resentment. Sometimes there are valid reasons for these views. In other cases, hard-working adults see greener grass on the other side of the fence. They underestimate how much hard work and discipline really go into wealth-building. Their kids learn to do the same.

On a more positive note, your parents also made decisions that taught you what was more important. Perhaps they sacrificed their own leisure and comforts so that you could attend a good private school. A parent might have earned a modest living as a teacher or working for a nonprofit that made your community better.

  1. What was the best thing you were taught about money?

As a child you probably rolled your eyes whenever your parents doled out maxims about money or started reminiscing about what money was like when they were growing up.

Now that you’re the one doing the earning, some of those lessons probably ring true. “Live on less than what you make” is hard to hear when it’s used to explain why you can’t have a new bike or take a big vacation. No child wants to sacrifice their weekends or summers working part time because their parents insist on it. But the lessons that were hard to swallow when we were young. These are the lessons that often create attitudes and habits that benefit us as adults.

The sum of all these memories, the positive and the negative, is a blueprint to your financial thinking. It’s also the schematic that we use to build your life-centered financial plan. Come in and share your blueprint with us so that together, we can lay a strong foundation for your family’s future.

7 Habits That Will Improve Your Life In 2019


Young financial advisor helping a young couple photo credit: Getty GETTY

At times it can feel like life is bad on all fronts: you work is stagnant, you personal life is unsuccessful and your personal health, physical and mental, has been neglected. You are not achieving your goals or fulfilling your potential, and you are unhappy as a result. First, know this happens to everyone- you are not alone. Also know that this does not have to be your life, you can change it. You can better yourself. It will take a lot of work, a lot of courage and a lot of grit, but if you keep going and believe in yourself you are going to achieve your goals and be the best version of yourself. Here are some good habits to improve your life in the new year, that will help you reach your goals when it becomes hard to continue:

Stop Sacrificing What You Want Most For What You Want Right Now  

It would be lovely to relax, watch a movie or a show, meet a friend for dinner, etc. instead of working longer on a project that needs attention, going to the gym, making dinner at home, etc. Instant gratification is seductive and satisfying, but not when it is at the expense of long term goals, especially goals that will help build your self-esteem and help make progress towards your goals. Stop sacrificing substantive happiness, that will bring you consistent and lasting joy for superficial, momentary happiness, which will fade quickly and ultimately extend unhappiness.

Stop Making Excuses 

If you are looking for a reason/excuse not to do the right thing, you will surely find one. Part of taking ownership of your life and reflecting on how you got to an unhappy state is understanding how you are enabling your poor decisions. It is usually with excuses, like you’re tired, or you don’t have time when you’re not making time, you will do it tomorrow, etc. Stop making excuses, and start owning your life and pushing yourself to do the work. Happiness doesn’t fall into your lap, it takes work like everything else. So get out of your own way and stop making excuses.

Stop Taking Things Personally 

When someone makes a comment, gives unsolicited advice, or treats you poorly, unless you did something to merit a reaction, chances are the comment says more about the commenter than it does about you. Do not let people discourage you, or tell you who you are when they are not close to you. Keep moving forward, build on your progress and do not let people get you down. Not only because you should stay focused and because what they said likely isn’t true and doesn’t matter, but because most of all it wasn’t really about you in the first place.

Exercise 

If you need to feel better at this moment, go change your clothes and go get some exercise. Endorphins make you happy; they release stress and help clear your mind. If you want some perspective, go work out first then revisit the issue. Chances are your emotions will be stabilized, your mind will be sharper and you will have less anxiety than you did before you got some exercise. So if you panic and feel overwhelmed by whatever you have been confronted with, try and see if you can get some exercise before you make a decision. You will make a decision that is less reactive and more grounded in reason than emotion.

Eliminate Distractions 

If you find yourself wasting a lot of time staring at various screens, constantly checking social media or mindlessly doing things on your phone, start trying to monitor those habits and change them. Whatever your go-to distraction is, start managing it so you can be more productive and stop wasting time.

Stop Playing The Victim 

You are not a victim of every whim and circumstance, you do have some control over your life at any given time. It is about how you wield that control that determines whether you change your circumstances. Stop resisting responsibility for your life, because the sooner you take ownership of it and stop blaming others, you will have more autonomy, you will start doing the work therefore you will begin making progress.

 Face Fear  

Any wildly successful person has failed, sometimes on a massive, humbling scale. No one who is successful will ever judge you for failing, so start summoning your courage and stop being afraid to work hard and fail. The only people who will ever judge you are people who have not failed themselves, usually because they’ve made incredibly safe choices. So face your fears, stop being afraid of failure and do the work. Doing the work is how you gather courage and begin making progress towards becoming your best self.

*This article was written by Frances Bridges.

**This article appeared on Forbes.com