I’m just wondering…

I read a great review of a finance-tracker app called “Personal Capital Money and Investing”“. Since I’m always looking for tools to recommend to those financial coaching clients who are interested, I read the reviews (great), and decided to download it and give it a try. so I gave it an email address, and the first thing it asked for was the name of my bank…and my account login and password. And that’s where I stopped. Any financial institution I deal with has security software and regulations about access – and while I’m sure having all my information at my fingertips in one place might be more convenient, I’m just old fashioned enough to wonder if a free app is the place to have it. Is that so yesterday?


The perfection complex

In the May issue of NY Magazine, there is an article which asks “Are You Suffering from Perfection Anxiety?” , which quotes an article by AA Gill in a recent Vanity Fair (I’d provide a link, but it doesn’t come up easily – too much traffic?). Though I assume the article is more than a bit tongue-in-cheek, it got me thinking about “comparanomics”(definition: having what someone ELSE has be the foundation for what YOU spend your time – and money – pursuing). As one art expert in the article points out: the return on a $60M piece of art is likely to be…below $60M – but doesn’t that assume it’s measured strictly in terms of $? What if the return was measured in impact: say the purchasers decided that the coast of installing complex security systems (or hire a manager or dedicated security person to watch over the painting) in their new LA home was more than they needed to pay – especially since they only intended to spend a month or so here and there in LA. So they decided to leave it in the museum where it resides – on the condition that they could close down the museum a few times a year for a select gathering of their closest friends and family – to get together, socialize and celebrate their great taste in art. So now, they have a beautiful painting, they have one less thing to worry about protecting, they will gain extra benefit (or at least studies show they have the potential to) and happiness by DOING something with the art instead of just HAVING it, and the museum will still have people flocking to see the art (in fact, attendance may rise because of the publicity). So: return = $ cost of art + impact? As they say in the MasterCard ad: “priceless”. How would that affect the perfection complex, I wonder?

How many “variables” do you control?

There’s a lot to read about financial advice, investing and retirement – and as I read yet another article this week about “planning for retirement”, in which the author was suggesting that advisors adopt a model long used by institutions to plan pension obligations (“how did that work out?” I hear some of you asking – for another article but THAT issue is one of inflow.) and articulated 18 points, I paused and wrote two lists “things you can control” and “things you can’t control”. And guess what? There are 5 things you can control (things like: having no plan, overspending, trapping yourself into the “illiquidity box”) and 13 things you can’t (interest rates, inflation, the market – not to mention the length of your life and whether you will have a catastrophic health event). So, given that there are almost 3x as many things you CAN’T control than the things you CAN control, and given that THAT list is relatively short, it seems there are two choices: 1. give up because the things out of your control are overwhelming OR 2. do what you can and leave the 13 uncontrollable chips to fall where they may. Maybe because I’m an eternal optimist, I’ll choose to take the short list: doesn’t mean I won’t get frustrated about the long list and, in the end, the plan won’t be perfect – but I’m willing to give it a shot….

Personal Finance

Recently, as the stock market has gyrated from a surprisingly up year last year into an early “correction”, I’ve been thinking about returns – and financial advisors – and it seems to me that we can (and need to) do the “advising” model better. A friend of mine has been attending a 6 week lecture series on personal wealth, and the group has heard from a financial planner, a tax attorney, an estate attorney, a stock broker and a cpa – all of whom are potential players on a personal financial team – and the information they’ve shared has, by and large, been really helpful for him as he seeks to increase his personal knowledge and make thoughtful choices. As he was reflecting on the course thus far, though, and doing the math (not complicated – simple addition) – he realized that if he hired each of these professionals at their stated rates, he would be paying an annual rate of 6% of his wealth – in fees. (I should say that he depends on this portfolio as his income source). “I’m just learning about this, but this is my perspective: I’m being told that over the long term, a conservative expectation for returns is 4-6% in this ‘new normal’ economy. If I’m paying these professionals 6% in fees, and I’m only making 4-6%, I’m going to be spending the principal so I can pay myself. Which means that if I have a budget of spending 6% of my portfolio annually, I need a return of at least 12% annually, or I’m behind the eightball before I start.” It’s true that he probably doesn’t have to hire ALL of these professionals at the same time for an annual fee, but can we understand how confused, upset, angry – you name the emotion – people get when they are trying to plan for their financial health – and end up paying for everyone else’s??? I don’t know what the perfect solution is (yet), but something’s gotta give – and support a healthier conversation – and solution.

Financial Intelligence vs. Financial Literacy

“Literacy”, according to Webster’s dictionary, is “the ability to read and write”. So it follows that “Financial Literacy” is the ability to read and write numbers. When I first saw the term “Financial Intelligence” on the cover of the book by Karen Berman and Joe Knight, I thought “THAT’s what I’ve been looking for!” – because a lot of us can READ numbers, but what we really want to do is TRANSLATE the numbers and figure out what they are telling us. Right? Numbers are like a language – only easier: if I’m learning Spanish, I have to learn nouns, verbs and adjectives, feminine and masculine, past, present and future AND the grammar rules that give a sentence that wonderful rhythm – and meaning! Numbers don’t have tenses or genders or parts of speech – but they DO have meaning. Leave the complicated stuff to the professionals and learn the simple stuff: what is the story my numbers are telling me. If you need a translator at first, check out http://www.financedog.com or any of the books on “Financial Intelligence” at The Business Literacy Institute http://www.business-literacy.com. Before you know it, you’ll know your story – and you can begin to write the next chapters!

For a real light touch, if business books are not your thing, check out the Financial Intelligence graphic novel (okay – comic book) at http://www.business-literacy.com

Just one thing

A friend forwarded an email that he had received from the manager of his retirement fund, which included an article about “happiness”, with this recipe:

Practicing gratitude
· Cultivating optimism/hope
· Avoiding social comparison (ruminating on what others have and we do not)
· Practicing acts of generosity and kindness
· Developing deep social relationships (versus an abundance of those that are superficial)
· Developing resilience/endurance through trials
· Practicing forgiveness (even more, forgiveness that is undeserved)
· Increasing “flow” activities – those where your gifts /talents are most utilized
· Savoring life’s joys (versus unbridled indulgence)
· Establishing purpose/setting goals
· Pursuing “spirituality” – acknowledging a power beyond oneself
· Physical and social activity – movement and engagement with those around us

As every media outlet I’m in contact with today is tempting me with all kinds of incredible deals – at incredible prices, I looked at this list – and it’s source – with some cynicism (see? – not cultivating happiness – yet). And yet, yesterday’s Thanksgiving celebration was – for me – a savoring of just one of life’s joys (with “bridled” indulgence): a gathering of friends to share – whatever each of us felt like sharing. So – that’s the point, isn’t it: I may eventually be able to do all the things on the list above, but for today, I just need do do one thing. So I’ll continue from yesterday and move and engage with those around me – though I’m tempted to stay by the fire, protected from the weather outside…

We all make assumptions…don’t we?

Years ago, my cousin Hap and I were talking about financial advisers and financial planners – we were both relatively new in our careers and wanting to do the right thing about saving for retirement – and saving, period. He told me that he had been working with “a guy” at Merrill Lynch for a few years and just that morning, his “guy” had called him to say that he was now a Portfolio Manager (a timeout, while I just clarify: a broker is someone who arranges a transaction between a buyer and a seller and receives a commission, and a portfolio manager is someone who makes investment decisions using money other people have placed under his/her control). My cousin said “So, Bob, what have you done in the last 12 hours that qualifies you to move from being a ‘broker’ to being a ‘portfolio manager'”. “I got new business cards.” Now, it turns out that Bob had the talent and he has done well as a portfolio manager for my cousin. But some of us treat people who manager our money like doctors: do what they say, even if we don’t think it is in our best interest. Do ask questions, check your assumptions, and take the time to find an adviser who you will be with for a good long time – it is worth the effort.

Check out Friday’s radio show:http://www.voiceamerica.com/episode/74185/is-your-advisor-listening