Elections Matter But Life Transitions Are More Important


Many folks are feeling as much anxiety about the end of this contentious presidential election as they were feeling during the long months of campaigning. It’s impossible to predict with 100% accuracy what a new president and a new Congress are going to do. That feeling of uncertainty can send out ripples through our financial and political systems until we get a clearer picture of the agenda for the next four years.

As important as elections are, we believe that a solid financial plan gives you the tools to keep improving your Return on Life no matter what’s happening with our nation’s politics. Instead of fretting about what may or may not happen starting in January, try to focus on these three areas of your life that will help you control major transitions.

  1. You can’t control the economy … but you can control your career.

Elections sometimes spark short-term volatility in the financial markets. But the economy is bigger than any one president, especially while Covid-19 continues to change everyday life and  global business.

As companies continue to adapt to the pandemic landscape, job opportunities are becoming less centralized and more diverse. You might be able to take your dream job on the other side of the country without leaving the home your family loves. Or you might spot an emerging market in the middle of all this displacement where you can open your own company.

  1. You can’t control taxes … but you can control your saving and spending.

Presidential candidates talk a lot about their tax plans on the campaign trail. The need for Congress’ cooperation to put that plan into action usually isn’t discussed quite as much.

Whether your preferred candidate won or lost, there’s no guarantee that your taxes are going up or down. But you can anticipate when your kids will be going to college, if you’ll need to replace the family car soon, or if you want to move to a beachfront condo when you retire.

Your tax rates will play a role in handling these transitions. But your levels of saving and spending have a bigger impact on your financial plan than any other factor. If you’ve never kept a monthly budget before, make 2021 the year that you start. Sit down with your spouse and weed out all those recurring subscriptions and memberships you’re not using. Make a weekly meal plan so you’re not eating out so often. The couple hundred dollars you economize every month could grow into a comfortable padding for your nest egg over time.

  1. You can’t control who’s president … but you can take control of your financial plan.

Per the clamor on social media, was this really “the most important election of our lifetimes?” It could be decades before we have enough perspective to judge. But as far as your financial planning goes, here’s another way to think about presidents:

A 67-year-old baby boomer eyeing retirement might have taken her first part-time job when Lyndon Johnson was president. As of 2020, that senior has lived and worked through ten different presidents.

It’s very doubtful that you’re going to love every single president who serves during your career. Yes, certain things that each one does might move the needle on your retirement accounts in the short term. But it’s folks who stick to their plans and continue to save and invest regardless of what’s happening in the outside world who build long-term wealth.

No matter how you feel about the election, you can take action today to keep your financial plan on track. Get in touch and we’ll schedule an appointment to start planning for 2021 and beyond.

Election Resources

7 Obstacles That Prevent People From Starting Businesses (And How To Overcome Them)

Millions of people dream of becoming entrepreneurs, but they never take that all-important first step. Too many things get in the way of their pursuit of business ownership, or they keep convincing themselves that their dream isn’t realistic. 

If you ever want to move past this phase and found your own business, you need to acknowledge the specific obstacles that are holding you back and work to resolve them. Here are seven of the most common challenges that may be standing between you and your entrepreneurial dreams—and ways you can kick them to the curb. 

1. Financial limitations

Launching a business takes money, and most people don’t have ample cash to throw at a startup. There are several options here. First off, you could begin saving now for the funds to establish your business. If you shop for a better mortgage and reduce your house payments by refinancing, you can sock the savings away in your startup fund. You can trim costs in other areas to put away a few hundred dollars each month or save even more by picking up a side gig.

Barring that, you can secure funding in a variety of ways, such as borrowing from friends and family, crowdfunding, seeking loans and grants or even working with angel investors and venture capitalists. There’s always a way forward. 

2. Inexperience

Becoming a successful entrepreneur typically demands experience; you need to understand your industry and business management in general if you want to earn a living from your venture. When you have limited experience, you may be reluctant to move forward, and understandably so.

You can make up for this, however, by actively seeking the experience you lack. Take an online course to gain a grasp of business management basics. Strive for a leadership position with your current employer so you’ll acquire strategic planning and people management skills. Work with a mentor or shadow an entrepreneur you admire. 

3. No standout idea

You can’t build a business if you don’t have a promising idea for a product or service you can sell. Without a solid business plan, you won’t be able to convince investors or partners to join you—and you won’t even know where to begin. Unfortunately, this is one of the least “fudgeable” obstacles on this list. Without a good idea, you can’t start a business, period.

Luckily, there are ways to stimulate better idea generation, such as talking to a broad range of people, reading entrepreneurial content and taking a more robust approach to brainstorming. Techniques like mind mapping and word banking can get your creative juices flowing. 

4. Current responsibilities

Some people avoid starting a business because of existing responsibilities or constraints on their time. Their current full-time job, their status as a parent or other personal responsibilities hold them back from their entrepreneurial ambitions.

Here the best approach is to determine how much of an impact these responsibilities have and consider ways to delegate or remove them. Could you realistically quit your day job, for example, or hire someone to help with household duties or childcare?  

5. Fear of failure

Lack of confidence is an entrepreneurship killer. It’s true that the failure rate for new businesses is relatively high, with half of new companies failing within five years. To buck those odds, you’ll need a healthy dose of confidence in yourself and your idea. 

The only solution to a fear of failure is to change your mindset. You have to see failure as an opportunity for learning and growth and stop seeing it as the end of the road, an indictment of your abilities or a stain on your character. Reading accounts by successful entrepreneurs will inspire you to see the possibilities rather than focusing only on the risks.  

6. Aversion to stress or hard work

Starting and running a business demands a lot of effort. You’ll likely be putting in long hours and dealing with stressful issues. On top of that, your first few years are apt to be highly inconsistent, with your business only making a profit some of the time. This can wreak havoc on your finances and peace of mind. If you’re not feeling up to this kind of pressure, or if you’re loath to work more than 40 hours a week, entrepreneurship may not be for you.

Again, the only way around this obstacle is to change your attitude. Remember that all this hard work will be in service to yourself, not an employer. While the risks are on you, so are the rewards.

7. Poor timing

One of the most common excuses you’ll hear (or hear yourself saying) is that it’s “just not the right time” to start a business. The truth is, there’s never a truly “right” time—you can always find some reason that today, or this month or this year isn’t ideal for launching your venture. 

But like beginning a diet on a Wednesday or joining a gym in February, the trick is to make your own right time. Microsoft was born during the oil crisis of the 1970s, while Airbnb and Uber were founded in the depths of the Great Recession. Remind yourself that the success of your business will depend not on “the times” but on you.

The Realities of Entrepreneurship

It’s true that anyone can become an entrepreneur with enough grit and persistence. Most entrepreneurs with solid ideas have a good chance of becoming successful if they remain adaptable. But it’s also important to realize that not everyone is cut out for entrepreneurship

If you’re intimidated by the stress, inconsistency and long hours associated with startup life, or if you truly love your day job and you’re afraid to leave, maybe business ownership isn’t right for you. That said, if you feel the pull of entrepreneurship but keep making excuses to avoid getting started, you owe it to yourself to challenge those excuses and try to move past them.

This article was written by Serenity Gibbons and published on Forbes.com.

Uber is reportedly in talks to buy food delivery firm Postmates for $2.6 billion

Uber is changing tack after acquisition talks with Grubhub fell through by switching its attention to food delivery startup Postmates, the New York Times reports.

Three sources familiar with the matter told the Times that Uber and Postmates were holding ongoing acquisition talks. One of the sources said Uber is offering to buy Postmates for roughly $2.6 billion.

Uber was reportedly in acquisition talks with food delivery startup Grubhub earlier this year, but Grubhub announced on June 11 it was instead merging with European takeaway service Just Eat. Sources told CNBC Uber walked away from the deal over concerns it would attract antitrust scrutiny.

As a much smaller player in the food delivery business, Postmates could be a safer option.

According to analytics firm Second Measure, Postmates makes up a significantly smaller chunk of the US market than Grubhub. Grubhub captured 32% of food delivery sales in 2019, while Postmates made up 10%. Uber Eats meanwhile accounted for 20% of the market.

Antitrust fears are not the only possible reason why Uber may have walked away from Grubhub, various reports emerged that the two firms struggled to agree on a price for the acquisition. Just Eat paid roughly $7.3 billion to acquire the startup.

Uber’s desire to bolster its food delivery service has reportedly been spurred on by the coronavirus pandemic, as demand for taxi services has plummeted while food delivery has skyrocketed.

Two sources told the Times Postmates has also held sale talks with Grubhub and DoorDash over the past year.

Postmates confidentially filed plans for an IPO with the SEC in February 2019, but has yet to go public. Sources told Reuters on Monday that the company is considering reviving its IPO plans due to the boom in food delivery brought on by the pandemic.

Uber and Postmates were not immediately available to comment when contacted by Business Insider.

This article was written on BusinessInsider.com by Isobel Asher Hamilton

Gain Personal Momentum Coming Out of the Pandemic

Part 1: Better Habits for a Healthier Mind

Since the Covid-19 outbreak we’ve all had to make adjustments so that we could cover our basic needs, care for our loved ones, and remain productive during quarantine. No matter how well you’ve adapted to these extraordinary circumstances, there’s probably a part of you that feels like you’ve been just trying to get through the next day. But it’s important that we create some personal momentum as life returns to normal, so we can hit the ground running.

And, to your credit, you have!

But as the country begins to reopen, it’s time to stop “getting by” and start approaching our lives and work with the same vigor we had before the pandemic. Regaining our old momentum isn’t going to be as easy as flipping a switch. So we asked some leading experts on behavior and peak performance what mental strategies they would recommend to help us start building personal momentum as we approach, hopefully, the end of quarantine life.

  1. Live in your “Present Box.”

Licensed clinical psychologist Dr. Beth Kurland says that evolution instilled a “wandering mind” in humans as a survival mechanism. We’re never totally in the present because our survival instinct is constantly reminding us of things we overcame in the past and alerting us to potential future dangers. Dr. Kurland says, “In this pandemic of uncertainty, these kinds of mental ruminations can really increase a lot of the anxiety that people are experiencing.”

The more that we focus on the here and now, the less anxious we are going to be, and the more motivated we will feel to tackle immediate problems. To help achieve this mental shift, Dr. Kurland recommends drawing two large boxes on a sheet of paper. Label one “The Present,” and label the other “What If?” Then, write the things that are occupying your mind in the appropriate box. According to Dr. Kurland, separating what’s happening right now from what could happen helps us “to really think about what is in our sphere of influence, what we have personal agency and control over.”

Yes, eventually, you might have to move some of those “What Ifs?” into your “Present” box. But for the moment, try to imagine putting a lid on your “What Ifs?” and structure your time around what you need to do – and can do – today.

  1. More Teflon, less Velcro.

Psychologist Rick Hanson says, “The mind is like Velcro for negative experiences and Teflon for positive ones.” The anxiety and worry we’re all experiencing during quarantine only enhances our tendency to dwell on the negative and overlook the many good things we have in our lives.

Dr. Kurland believes that an added benefit of her Two Boxes exercise is that the more present we are, the more likely we are to notice and appreciate the positive. For example, many of us are feeling closer to our extended friends and families thanks to Zoom calls and care packages. Other folks have used the working from home experience to chart new career paths.

However, a Teflon mindset doesn’t mean boxing away some of the real emotional hardships you’ve experienced during the pandemic. Instead, Dr. Kurland encourages us to find a healthy balance between letting our feelings in and not letting them keep us down.

“I think it’s really important to acknowledge and have an opportunity to process those emotions,” Dr. Kurland says. “But try to both hold a space for the grief, the sadness that may be there, and also really find ways to notice the moments where we can really appreciate the positive things that we can take in. The warm glance from a family member or a kind word from a coworker. These kinds of things that really, as we take them in, can help us to get through a difficult day, a difficult moment.”

  1. Separate good stress from bad stress.

“Stress is good to a certain extent,” says Commander David Sears, who served for 20 years in active duty within the United States Special Operations Command as a U.S. Navy SEAL officer. In Commander Sears’ experience, stress can be a catalyst for growth and improvement. Right now stress is instilling good new habits in you, such as wearing a mask when you go shopping or retooling your monthly budget to adjust for changes in your work and living conditions.

But Commander Sears cautions, “You can get overwhelmed by stress and then it starts to become chronic, debilitating and it turns into a sort of pain.” To manage his own stress response, Commander Sears leans on lessons from his military service, including the importance of having a support system around you and finding order in a personal routine.

“It’s Physical Distancing”

“This whole idea of social distancing that we have is wrong,” says Commander Sears. “It’s physical distancing. We still need that social interaction, you need to have those communications. And you have to put in some structure in order to put some sanity into your life. Maybe develop your own schedule in the morning: I’m going to get up, I’m going to work out, I’m still going to put on my pants and get out of my pajamas. I’m going to then go to my first project of the day, then I’m going to go to the second. You might even need to implement a little more structure and discipline in your life in these times so you don’t feel like you’re wandering.”

We understand that transitioning back to living and working outside of your home is going to present its own set of challenges. We hope the expert strategies discussed here will help you approach those challenges from a more positive place. We’re also available for video calls or in-person meetings to discuss how your Life-Centered financial plan can help you build more momentum towards living your best possible life after quarantine.

If you would like to create personal momentum in your personal finances, reach out to us.

Additional Government Resources

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

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.

Where Not To Die In 2019!

After Trump’s estate tax cut, the federal estate tax is reserved for the richest of the rich, but in the 17 states and the District of Columbia that levy estate and inheritance taxes, it’s another story. These taxes can kick in on the first dollar and have other sneaky provisions, and the tax bills often come as a surprise to unsuspecting heirs. Yet, in many cases, taxes can be avoided or at least minimized with legitimate planning.[Is the bull market in U.S. stocks over or merely taking a pause? Regardless, Forbes’ Smart Money Moves For 2019 package has you covered.]

In New York, for example, if an individual were to die in 2019 with an estate of $5.74 million, no estate tax would be due, but with an estate of $6.027 million, the tax would be $514,040! “In other words, an increase of $287,000 [in the value of your estate], will cost $514,040, for a tax rate of 179%,” says Bruce Steiner, an estate lawyer with Kleinberg Kaplan in New York. For individuals with estates on the cusp of this dreaded cliff, they could leave the excess to charity, or thanks to a new provision that kicks in in 2019, they could make deathbed gifts. Gifts within three years of death will no longer be included in New York estates after this year, so that will favor gifts of high-basis assets such as bonds and cash, Steiner notes.

Inheritance tax laws are equally onerous, but the problems hinge more on relationships and reek of inequity. Leave assets to your grandkids and they pay zip, while a nephew could pay a 16% inheritance tax, for example. In a case in Iowa, the state Supreme Court stuck a widow with the full $19,000 inheritance tax bill levied on a brokerage account she inherited from her father-in-law, despite having handed over half of the account’s balance to his grandchildren (from her late husband’s first marriage) in a settlement.

In a case in Nebraska, the state Supreme Court ruled that a woman who cared for her late mother’s live-in boyfriend of three decades (after her mother’s death, she helped him once a week with grocery shopping and home maintenance, and he referred to her as his stepdaughter), failed to prove he was like a parent to her, so she wasn’t eligible for the state’s reduced 1% inheritance tax meant for that class of heirs on the assets he left her.

Of the 17 states and the District of Columbia that levy an estate tax or inheritance tax, Maryland is the sole jurisdiction with both levies. For 2019, the map hasn’t changed, but eight states and D.C. are ushering in changes.

Explore estate and inheritance taxes in 2019.

The backdrop for all of this is the federal estate tax, which is assessed at 40%, and is expected to hit fewer than 2,000 estates in 2018, according to Tax Policy Center estimates. The federal exclusion amount—the amount you can leave to heirs exempt from tax—was set at $5 million in 2010, indexed for inflation. The Tax Cuts & Jobs Act doubled the tax break through year-end 2025, making the federal exclusion amount $11.4 million per person ($22.8 million for a married couple) for 2019.

In some states that tied their state exclusion amount to the federal numbers, the states rebelled this year, saying $11 million was too generous. See States Rebel, Won’t Conform To Trump’s Estate Tax Cuts. A Maryland fiscal and policy note related to the legislation showed how the number of Maryland taxable estates would have plummeted from 188 in 2018 to 40 in 2019 if the higher exclusion amount wasn’t halved. (By comparison, when the Maryland exclusion amount was $1 million in 2010, there were 1,057 taxable estates in the state; see Exhibit 1.)

The outcome is more inconsistency in state exclusion amounts for 2019. New York’s exclusion amount is $5.47 million. Hawaii’s is $5.49 million. Maryland’s is $5 million. And in D.C. and in Maine, it’s $5.6 million. D.C. will use a local CPI for indexing, so those will diverge soon. Maryland added a taxpayer-friendly provision called portability that lets a surviving spouse use an unused portion of the first spouse’s break.

Inflation adjustments bumped up Rhode Island’s exclusion amount to $1,561,719 for 2019. In Washington State, it appears to be staying at $2.193 million, the same as 2018, because indexing is based on the consumer price index for the Seattle-Tacoma-Bremerton metropolitan area, which no longer exists (the federal government changed the consumer price index areas this year).

In Minnesota, the exclusion amount has been going up steadily. It’s $2.7 million for 2019 and is scheduled to top out at $3 million in 2020.

Connecticut is the one state that could potentially have an exclusion amount that’s higher than the federal exclusion amount—in 2026. For 2019, it’s set at $3.6 million, then scheduled to increase to $5.1 million in 2020, $7.1 million in 2021, $9.1 million in 2022, and to match the federal exemption amount in 2023.

*This article originally appeared on Forbes.com.

**This article was authored by Ashlea Ebeling.