Wednesday, August 4, 2010

Introducing the Retirement Resource Center

Recently name was asked a few questions about firm name's activities with the Retirement Resource Center.

Can you explain to me what the Retirement Resource Center is?
The RRC is a not for profit undertaking of (firm name).  Our purpose is to provide a reliable source of financial and retirement education and advocacy for those within a few years of retirement and the newly retired.

Where did the RRC concept come from?
The RRC is a response to the enormous stresses that the 2008 financial crash placed upon those in or near retirement.  We saw people's 401K plans halved, long laid plans go up on smoke which had to have caused people a lot of anxiety.  Yet no one was coming into our offices to talk about it. 

Why do you think that was?
We concluded that people were either in denial or had given up.  It was clear to us that they didn't realize the magnitude of resources that were available to cope with the unprecedented events of 2008 and 9.  It was also clear to us that they had a healthy distrust of the "Investment industry" - they've been 'sold' so many times and were worried that by sharing their concerns this would happen again.

So what did you do? 
We decided to do something completely out of the box.  We began giving away a part of each week on a pro bono basis to give people a safe place to explore their financial concerns, free from the pressure to purchase anything.

How does the Center operate?
Typically we have a series of one hour face to face meetings between a qualifed financial advisor and an individual or couple.  We go through a series of topics:  first we acquaint ourselves with their circumstances, hopes and unique concerns.  We then collect all the information on all their investing, insurance and other financial activities and analyze it and then feed it back to them.  For most of them, this is the first time that they are seeing the whole picture at once

What is their reaction to seeing it all laid out?
It's a little like watching an old Polaroid picture develop before your eyes.  It enables them to see just what the real issues are and to let go of some of the things that they had been worrying too much about.  And once the picture is clear the rest is relatively easy, though not simple:  We have a strategy session where we go through all of their options on how to manage their financial assets and other related components like wills, insurance and taxes.  We help them organize in their minds how their finances should be managed and what outside expertise they need.

You make a special effort to focus on healthcare, don't you?
Yes, one of the most predictable and dangerous events retirees can face is a health care crisis.  We help them look explicitly at the impact of such an event.

What's the catch?  What do you want from them?
No catch.  We simply say that if they found the RRC to be useful that once their time is done, they introduce another similarly placed couple to the  program.

What has been the response to the RRC?
Nothing short of amazing.  We knew there was a need but we were initially unprepared for the scale of the response.  We increased our share of time devoted to the program from 10 to 25% just to cope with the demand.

Who underwrites the Center’s activities?
We (company name) and other like minded financial advisory firms provide the infrastructure and skilled resources to fulfill the Center's mission on a pro bono basis.

If there was one more thing that you wished that people knew about the RRC what would it be?
RRC is a safe, pressure free environment where you can honestly share your hopes and dreams and begin to build a vision of what the future could be.

How can someone who is interested in taking advantage of the Center do so?
It's simple, just contact me on or call me on

Why are we such lousy investors? Episode 4: Embracing your inner cave man

Why do most of us earn investment returns far below the market? Why are we such bad investors? In the first installment of this series I explained that our tendency to make poor financial decisions is innate: it comes from our ancestors. In the second session I showed you how our behavior hurts investment returns. And last time I shared with you some strategies that financial planners use to close this behavior gap. In this final segment I'd like to give you a constructive way to think about this problem - a way for you to 'embrace your inner cave man'.

Cave men (and women) weren't all sloped foreheads and grunts, the ones that survived to be our ancestors developed effective strategies to cope with their environment. There's a lot we can learn from them that can help us ensure our financial survival.

Like that the big kill is great but it is roots and berries that keeps us alive - in the investment world it's what you do day in and day out that determines your financial survival - setting and following a consistent savings plan, keeping to a family budget, avoiding extravagant purchases. And if by chance your tribe kills a 'financial mastadon' great! But build your future around things that you can do, not things beyond your control.

Don't make bets that you can't afford to lose. I don't know this for sure but I'll bet when the tribe found one of those hairy elephants our ancestors weren't on the front line where they could be trampled. Part of the hunting band, yes, but a few steps back so as to take advantage of the fresh meat at a reasonable risk to life and limb. It's the same with our investments.

Leverage the wisdom of the tribe. For a cave man to live to a ripe old age was quite an achievement. And the 'tricks' and 'techniques' that the tribal elders had perfected were incredibly valuable. The wise cave man spent as much 'quality time' with these 'survival experts' as he could - asking them questions and getting their advice on how to navigate a dangerous world. Likewise you should take advantage of the financial, legal and tax experts available to you. While they're not necessarily older than you, they have critical expertise that can help ensure your financial survival.

So there you have it: You're inner cave man can get you into investing trouble as well as get you out.  I'll bet you never thought you could learn anything from a cave man.

Why are we such lousy investors? Episode 2: What the Behavior gap does to returns


Landing Page Description:
Why does the average investor earn returns far below the market return? In part two of this four-part series, we show exactly how ‘normal’ investor decision-making can turn a great investment into a poor return.

Video Script:
Why do most of us earn investment returns far below the market? Why are we such bad investors? In the first installment of this series I explained that our tendency to make poor financial decisions is innate: it comes from our ancestors. Today I'd like to explain to you just how that behavior leads to poor returns.

Imagine two great investments: they both go up 10% every year without fail. But you don't know that, so you decide to 'lock in' your return every year by selling one and then buying the other. What happens? Well first you pay a transaction fee and if it's in a taxable account, you pay taxes on the capital gain. So let's say you end up with only 8% of the 10% gain that you had. Then you buy the other fund. You do this every year, jumping from one to the other. After twenty years your investment would be 430% larger. Pretty good, but if you had stayed in one investment for all ten years and then sold it, your total after tax return would have been 580%. We call it "excessive trading" and it's one source of the behavior gap.

But it gets worse. When we jump out of an investment we almost never jump into another similar one. Instead, we 'sit on the sidelines' with money in low yielding money market accounts for 2, 4, 6 months before we reinvest it. The result? We lose the benefit of the time that our money could have been working for us. By waiting just 3 months to reinvest the money each year in our example, the ten year return falls from 430% to 353%.

But it gets even worse than that. I'll let you in on a little secret: there are no perfect investments. It's much more likely that our two investments will swing up and down in value depending upon circumstances and market sentiment. So lets say they rise 20 percent and then fall 10 percent every year. Our tendency to pay too much attention to our neighbors leads us to buy when it's rising and sell when it's falling - after all, that's the reason it rises and falls so much: everybody's doing it. This tendency to do what the crowd is doing is euphemistically called 'momentum' investing, but the momentum it provides to the typical investor is usually down.

Excessive trading, sitting on the sidelines and following the crowd: three  ways to reduce your investment returns because of the behavior gap.

Why are we such lousy investors? Episode 3: Closing the behavior gap


Landing Page Description:
Why does the average investor earn returns far below the market return?  In part three of this four-part series, we describe several strategies that investment advisors use to help their clients avoid the pitfalls of poor returns.

Video Script:
Why do most of us earn investment returns far below the market?  Why are we such bad investors?  In the first installment of this series I explained that our tendency to make poor financial decisions is innate:  it comes from our ancestors.  In the second session I showed you how our behavior hurts investment returns.  Today I'd like to share with you some strategies that financial planners use to close this behavior gap.

The first strategy is diversification.  A diversified portfolio is composed of many different asset types like stocks and bonds, and also different securities within a type like GE versus Exxon.  The idea is that while all of these assets will fluctuate in value, they will do so at different times and at different rates so that the swings will tend to cancel each other out, making the overall portfolio fluctuations smoother. A Diversified portfolio does not guarantee a profit or protection from losses in a declining market. Therefore, the benefits of diversification will hold only if the securities in the portfolio do not react to market events in a similar fashion.

Advisors also use the 'tea saucer' strategy.  Just as people used to pour their hot tea into their saucer to cool it off, your advisor encourages you to route all trades and transactions through him or her.  The result is that you always have a conversation with someone who is well informed and less emotionally involved before making a move.

Finally, financial planners make sure that your mix of investments is appropriate for both your psychological and financial health.  They work hard to ensure that the riskiness of investments is appropriate for you and your circumstances and to set expectations for the volatility you should experience.  Knowing what to expect helps us to better manage our emotional response to events.

At the end of the day you make the decisions for your investment future.  Your advisor's job is to make sure that you have the best possible information and advice available when you need it.  All the better to keep that inner cave person at bay.

Tuesday, August 3, 2010

IFG Interview


Landing Page Description:
Recently I was asked a few questions about our partnership with Integrated Financial Group and the role I play as a financial advisor.  Here’s what I said:

Video Script:
Recently, was asked a few questions about partnership with the Integrated Financial Group.  

First of all, what exactly is Integrated Financial Group?
IFG is a consortium of top independent financial planning and personal investment management firms located in cities throughout the nation who have joined together to provide the industry’s best tools, solutions and expertise to our clients.

How do you get to be a member?
IFG chooses its members from among the top 10 percent of financial advisory firms in the nation.  To be selected, a firm must already be a leader in their own community and have a reputation for competence and integrity.  So you can see that we're very pleased to be chosen.

What makes the combination of and IFG different than a big brand name brokerage?
Independence WITH expertise.  IFG members are completely independent of all external pressures to sell this product or move that security.  With IFG we have the ability to leverage some of the top talent in the industry - each IFG member brings a particular set of expertise that the entire group can leverage.

How does that difference translate into value for your clients?
First, they have our total attention – they know that we’re not focused on hitting the next bonus level or winning that trip to Maui, because we don’t have those things.  Second, our advice is completely independent – we have the total freedom to do what’s best in a client’s particular circumstance without having to consider any corporate goal.  And we do this while offering our clients access to the highest quality services, products and expertise usually associated only with mega-firms.

Anything else that our audience should know about you and IFG?
The only way to determine if a financial advisor is a good fit is to sit down with them and talk about it.

How can someone get in touch with you if they would like to learn more?
You can contact me at or telephone me on