Archive for the ‘financial planning & planners’ Category

$5million & your piggy bank: financial planners’ standard target for retirement
January 14, 2008

“Mrs. Foster, you & your husband should save at least $5million for retirement…at least!”


That’s my psychological (& literal) piggy bank passing out from that advice. Most all financial planners I met with last year suggested $5million be our retirement savings target (east coast).

What the SAM HECK do we need to save that amount for?! I’ll calm my drama-momma attitude … & attempt to answer with some calm. Feel free adding ideas to this list:

  • Longevity (age 100 to be commonplace)
  • Health care (allocate $150k-200k for health care costs excluding long term care)
  • Inflation
  • Housing (assuming a paid-in-full home, consider property tax per US Treasury)
  • Food
  • Fun (one trip annually)
  • With above factored in the equation — leaving $1k/mo for health care costs during retirement — our current retirement savings quest is $2.5million. It makes financial planners smirk but, although hefty it’s an aggressive goal that doesn’t leave my mental or literal piggy bank in shock.

    More from:
    FreeMoneyFinance writes on the $5million topic with an active discussion thread;

$1million by 2012: dream it, plan it, live it
October 13, 2007

So it’s time to take ownership & aim big.

I remember once being fearless in the face of challenges and dreams — going after them was the fun rush of life. Then on the financial front – I learned how much it costs to retire, to retire with decent health care protection, to raise children and their education, to run one’s own business, and more …. my momentum to achieve sobered-up.

Why is that? Maybe it’s just looking at too much at once -vs- one step at a time. Maybe it’s taking one’s self too seriously. Maybe dreams were too high with resources & energy too low. Is it even possible to have dreams too high?

…a mix of all likely but here’s the sitch: family members need our help. They’d never, ever ask for financial support. But bottom line, their situations are precarious & their means too small to evoke stability on their own. My judgment could be off but after reviewing all up, down, and sideways my husband and I agree taking action helps more than fretting.

And results just don’t fall from the sky. So can we realistically help? yes. Can we preserve our basic needs & personal savings plan too? yes. So is it time for a plan?

Yes and here it is:

$1million by 2012 (that’s $1million in overall paper value vs net).

It makes my stomach tight writing this out, tight as in nervous. But Jonny Goldstein just published his big dream. And his resolve and zeal are contagious.

So here it is:

Summary of Intent:

We are millionaires by 2012. By that year, we will have built our financial wealth to at least $1million through dedicated & united partnership to include: multiple income streams, property ownership in secondary cities, tax control, & wealth protection. Our love of life motivates this intent – and our family, whom we most dearly want to help.

It’s posted at our desks.

…along with the plan, the numbers, the benchmarks, a list of mentors (…need to contact them), & somewhere deep down is something that feels like resolve.

More from:

edelman’s financial planner, part 2: integrity trumps a short-term sale
September 12, 2007

Last week’s Edelman rep owns a completely different philosophy.

After a few hours of reviewing our situation, he offered to draft an official financial plan – an $800 service. But he immediately said directing that $800 toward our debt pay off would be his first recommendation … vs investing it toward his fees at this time.


More from:

  • Edelman’s financial planner post, part 1
  • Code of Ethics per the folks at Certified Financial Planners Board of Standards.

reviewing one’s portfolio, investing money, & the duh factor
September 11, 2007

I meet with the administrator of our retirement plan tomorrow and look forward to nailing down:

  • what our monthly contributions should be to retire age 65 with 75% of current salary;
  • what our monthly contributions should be to retire age 65 with 100% of current salary (omg that seems nuts but heck why not know the number);
  • and the biggie: what our current allocations should be to achieve any or all of above.

I predict we have too many domestic equities (vs having at least some international stocks). But at this point I’m talking out the wazoo.

Considering one’s age & risk tolerance are key, sure. Yet it’s perspective and context that I crave from tomorrow’s discussion (a follow-up to this first meeting).

Beckoning to tomorrow’s planner:

Help us afford more than tooth picks & water during our sunset years!

More to follow post meeting manana.

More from:
Our retirement plan administrator TIAA-CREF

Edelman’s financial planner, part 1: my credit card & the taj mahal
September 10, 2007

In my quest to find a financial planner for my family, I met with one last week from Ric Edelman’s firm. I’ve read a few of Ric’s books & appreciated his no-nonsense style & wit. I theorized associates working for his company would espouse similar credibility.

And that proved true with the planner I met.

On credit card debt:
I liked how he asked questions about my family’s entire financial outlook before honing in on the credit card reality. I was fully prepared to defend my debt philosophy on that topic when he casually whipped out his calculator.

He said:

Well you’ll pay xxx in interest payments and lose xxx percent in interest gains despite your current investments. I’d suggest your top goals to accomplish are to continue retirement contributions toward the 403(b), continue saving toward your emergency cash reserves, pay off the credit card debt, get a will, and then max out your retirement contributions once the card’s paid off.

His suggestions did not surprise me; what did surprise & appeal however was how debt pay-off was one factor in a greater proposal — a rounded outline for our circumstance. Granted it was our first meeting but he wasn’t condescending about credit card debt or my resistance to pay it off.

He came across as very credible. I look forward to further debriefing our meeting via Housewifery this week. What do you think of his suggestion?

More from:
Liz Pulliam Weston & her keen reasoning on when – ironically – not to pay off debt.

financial roots: your fiscal beliefs, fears, confidence must come from … where?
September 5, 2007

In preparing for another financial planner interview this week, I imagined how a certain discussion could play-out regarding our debt:

Planner to me: So do you have credit card debt?

Me: Sure do.

Planner: So why don’t you pay it off right now or at least increase your payments?

Me: Because the thought of having zero dinero in our emergency reserves makes me vomit.

For my family right now, it comes down to rebuilding habit.

For a while, it’s been ‘pay off the card’. Then a perceived emergency that warrants use of it occurs again (we wouldn’t have much in emergency reserves since we focused on debt pay-off).

And the cycle played out many times in our lives.

So I shared this tact with husband Sean – to which he concurred on changing focus. He was creeped-out by the card balance (predominantly tax payments) but appreciated the underlying philosophy: build up cash reserves to prevent credit card usage in emergencies.

Then comes the self-reflection:
What has the most impact on one’s financial beliefs? Is it more than just live-and-learn as an adult?

That must be a complex answer for everyone.

Yet these two childhood memories stand out as canyon-wide influences on my financial beliefs:

  • family thrived with their business during the Oklahoma oil boom;
  • family sank deep into fiscal ick-ville when that boom went bust

Don’t wanna go back there … ever.

So what’s the first step – forming a positive vision to strive toward (vs always looking back at that which we want to avoid)?

More from:

  • WiseBread’s Sarah Winfrey outlines those wise, internal questions that can frame what we really want. …joy? chocolate? companionship? love? a Twinkie bath? Winfrey’s reflective approach proved a useful tool to carve out purpose — financial or otherwise.
  • Request:
    Please treat yourself to Jonny Goldstein‘s above Twinkie bath clip, 3 minutes. The ribs crack from cackling every time.

remember trinity in the matrix: how financial planners profit
August 21, 2007

It’s the first Matrix movie.

We see Neo (pre-freedom) in a tech dance club with Trinity leaning over, whispering in his ear:

It’s not the answer but the question, it’s the question that drives you…

And the same the-question-must-drive-you theory applies when researching how financial planners make their money. I find it central to seeing if my best interests govern their decisions -vs- their eyes for profit.

commissions? commissions on which products? salary? fee-based? a percentage of your assets?

But what about chump change?

One must ask the fee question to be clear on a planner’s loyalty. Do they get a percentage for select products? If so – how compatible are those products with your needs?

Liz Pulliam Weston with MSN Money outlines clear, crisp questioning for potential financial planners, and the compensation point.

To avoid a good ‘ole head spin on this topic, I find knowing how to verify planners’ answers is key. Frankly compensation can range from fee-only per product sold or an annual fee based on your assets or wrap fees where management fees + annual percentages + fee-based amounts are rolled into one charge or hourly charges or annual retainers.

It’s plenty if not too prickly to process if it’s not your profession. (alliteration addiction…)

So ask to at least learn how your assets & purchases impact their fees, and therefore their judgment. And if the potential planner admits to offering limited services with limited products — I vote walking out the door. They would be admitting to having limited capacity to advise your overall financial reality.

To reiterate, knowing how and where to cross-check answers is useful (and empowering to the layman). Weston says it well, referencing where to cross-check your potential planners’ answers to the payment question:

Ask — and then do more research. If your planner is a registered investment adviser (RIA), ask for a copy of his form ADV, Parts I and II. This document, which must be filed with the Securities and Exchange Commission, outlines whether the adviser accepts fees, commissions or both. If the adviser’s practice is too small to be regulated by the SEC, ask for the state equivalent of this form.

To cross-check their licenses, check these registered authorities:
Certified Financial Planners Board of Standards
American Institute of Certified Public Accountants, financial planning division
Society of Financial Services Professionals

get tough, 10 second vid: wanting a hard arse for a financial planner
August 20, 2007

Kiplinger’s annual retirement planning issue gives keen & concise interview tips for your financial planner search.

One example here re: learning their client complaints policy:

I’m meeting with different planners and comparing their advice.

I liked last week’s planner, his personality & warmth. But after considering Kiplinger’s points to consider, I wouldn’t trust him with significant decisions. I’m not sure why except he seemed almost too warm and fuzzy. Professional, yes; dressed in fine business attire, yes.

But he didn’t offer that clear, decisive tone aka “Jill I want you to consider, this, this, and this.” Possibly this would emerge after that initial meeting. I led the meeting, which is what I prefer. So – ha – maybe I didn’t give him a chance to be decisive. And Russell Bailyn makes an intriguing point about emotions, financial planning, & cookie cutter advice.

More questions to ask per Kiplinger’s:
— what process do you follow to identify goals and evaluate performance?
— what are your sources of research and information?
— what’s your fee structure?

And what you should be very honest about, even if your gut says they’d be fun for beers:
are they candid & intelligent?