Integrated Wealth Planning

Roles of the Integrated Wealth Planner

8:44 pm | Mon, Feb 21st
In Integrated Wealth Planning, Life | Wealth Integration | No Comments

At Bolen | Dodson & Associates, our vision is that you will live an inspired life, free from worry about your money matters. There is a lot of value in plain vanilla financial planning and asset management services. However, we believe there is much more to be accomplished through truly integrated Wealth Planning.

Integration occurs when your core believes and highest goals become the reference point for financial and life decisions. Uncovering your core beliefs and highest goals requires a well developed “Discovery” process. Last week I attended Kingdom Advisors annual conference in Orlando, FL. Kingdom Advisors is a faith based association which advocates operating one’s financial advisory practice on Biblical principles. In one of the sessions, they discussed a model of the different roles of the advisor and I wanted to share that with you today.

An Integrated Wealth Planner fills at least three roles for clients: Leader, Advisor and Coach. My role as Leader is to provide inspiration and direction towards better financial and spiritual health. My role as Advisor is to provide technical advice along with an understanding of how best to implement that advise relative to your aspirations and goals. Most of traditional financial planning and asset management services reside here. As Coach, my role is to remove barriers to growth and change by engaging clients in meaningful dialogue. The integration of any two of the roles blends the expertise accordingly. The integration of all three roles will help you define and establish your worldview and how best to facilitate narrowing the gap between your ideal self and your actual self.   

Enjoy your President’s Day

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Managing Life’s Perspective Fosters Increased Happiness

8:54 pm | Wed, Jan 26th
In Integrated Wealth Planning, Life | Wealth Integration | No Comments

I am attending Dan Sullivan’s Strategic Coaching Program, which is helping me grow my practice, improve client service and increase my own productivity and sense of well being. One of Sullivan’s coaching constructs is “Learning How to Avoid the Gap.” I see this as managing one’s perspective on life. Regardless of the words, the construct works and improves happiness and one’s sense of well being. Please read on. 

The Gap is the space between our Ideal selves and our Actual selves. Our “Actual selves” are our actual achievements and results in life. It’s what we actually get done. Our “Ideal selves” is who we are after we accomplish our long list of goals and desires. It is a mental construct that helps us set goals, dream about the future and motivate us towards our goal accomplishments. 

Unfortunately, Ideals exist only in our minds. The ideal is rarely if ever actually achieved. As such, how we manage the Gap, or our perspective, directly influences our level of happiness. If we always measure our Actual results against our Ideals, we will fall short and we can become frustrated and even despondent. That is seeing the glass as half empty. However, if we measure our results against where we started, we will see how far we have come and be more likely to be pleased with the progress. We will see the glass as half full. 

Let’s call where we started as Actual 1 and where we are now Actual 2. Measuring our achievements from Actual 1 to Actual 2 is quite productive. Realizing we have more progress to make is also useful; that is, the distance between Actual 2 and the Ideal. But remember, we are unlikely to ever get to Ideal. We will set new goals, change our plans or whatever. Ideal is always in the distance.  

I know many individuals that are very successful, but they are not particularly happy because they always fall short of their Ideal selves. They don’t give themselves credit for the ample progress they’ve made over time. I encourage them and you to reframe your perspective and see the progress you’ve made. You will be much happier if you do.

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2010 – Poster Child of a New Era?

4:33 pm | Mon, Jan 3rd
In Integrated Wealth Planning, Wealth Planning | No Comments

2010 ended on a high note, with December market returns of about 6.7% (for the S&P 500 Large Cap index) coming close to matching the previous 11 months returns of 7.8% and bringing the full year returns to 15%. Notably, in August, the market was down 4.6% year to date after having been up 7% through April. I believe this market volatility, likely coupled with an upward bias, may be the real “new normal” over the next several years. While large cap stocks preformed admirably, small caps returned almost 27% for the year. Almost ½ of that total came in September, with a return of 12.5% for the month.

Fixed income produced reasonable returns as well with the Barclays Intermediate Term Credit Bond index returning 7.6% for the year. While not nearly as volatile, but in contrast to equities, fixed income was down each of the last two months, shaving a combined 2% from total year returns.

If this increased volatility continues, which we believe is likely, opportunistic rebalancing will take on additional importance to capture the incremental returns that the market is offering. At present, we have our rebalancing software set to alert us to a rebalance opportunity if a particular asset gets more than 10% out of balance. This forces a “buy on weakness, sell on strength” discipline. For example, if the strategic allocation to large cap equities were 20%, we would be alerted to a rebalance opportunity if the allocation moved above 22% or below 18%.

This rebalancing strategy will work as long as pullbacks don’t turn into real routs. If this occurs, it is good and appropriate to have a backup plan such as using moving averages to help assess “stop loss” points on an asset class by asset class basis. This forces a culling of laggards. We lowered positions in Developed International and in Healthcare during the year based on these conditions, both to good effect. Developed International rose 6.7%, about ½ the domestic US return, on Sovereign Debt issues, while the Healthcare sector rose a modest 2.4% on uncertainty surrounding Healthcare Reform.

The markets are responding well to the Federal Reserve efforts of monetary easing, improved GDP growth, modestly lower unemployment and low core inflation pressures. While things can obviously change, for now, it is steady as we go.

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“Sudden Money” – Financial Transition Planning

4:00 pm | Fri, Dec 10th
In Financial Transition Planning, Integrated Wealth Planning, Wealth Planning | 3 Comments

I am now an official member of the Sudden Money Institute, which is an organization that builds processes around successfully navigating through financial transitions. I spent last week at their annual conference, getting some basic training and learning about their processes and best practices. You’ll be hearing more about our new service offering, but we are pleased to introduce the concept to you today.

Financial transitions might be caused by loss of a spouse, divorce, inheritance, retirement, career change, insurance settlement or even signing a sports contract or cutting a record. Regardless of the reason, what all these have in common is that transitions begin with an ending of some sorts and end with a new beginning. In between is the transition. Transitions mean change and when life changes, money changes and when money changes, life changes.

During a financial transition, most people focus primarily on the money because it is quantifiable and is the elephant in the room. However, during transitions, physical, psychological and social realities change and these are the real challenges. Stress increases and can cause fatigue. People in transition often experience irrational or exaggerated thoughts. Our sense of who we are can change, either positively or negatively. Often, there is a loss of footing socially because the status quo is gone. Comfortable patterns disappear and the range of new possibilities is unclear. When you settle into your “new normal” after your transition you’ll either be in a financially and emotionally secure space or one fraught with obstacles, anxiety or possibly chronic physical and/or financial problems.

The Sudden Money Institute synthesizes decades of experience in financial planning with cutting-edge research in neurology, sociology and psychology. SMI has developed a process that transcends those fields of study by integrating the technical aspects of financial planning with the human experience of the person in transition. By understanding the art and science of transition, they have developed an optimal way to guide clients through turbulent and transformative times. These financial transition processes works very well with Bolen | Dodson & Associates’ already well developed Integrated Wealth Planning processes.

If you are presently experiencing a financial transition, or know of someone that is, please give us a call and let us help successfully navigate through the transition and arrive at the new normal in solid shape.

May you and your family be blessed this holiday season.

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Deciding with clarity and confidence improves results

7:48 pm | Fri, Sep 24th
In Integrated Wealth Planning, Wealth Planning | No Comments

Last week, I talked about aligning your actions with your goals and values to vastly improve the odds of a desirable outcome. An integral aspect of choosing actions that don’t come back to bite is to control emotional decision making. Making wise decisions that support your values and goals are most often decisions made with clarity and confidence.

The more clarity and confidence you have around a decision/action the more likely it will bear fruit. Clarity is essentially being clear about all pertinent facts surrounding the proposed situation, including the reasons you are headed in a particular direction. Clarity is the opposite of ambiguity. If the situation is ambiguous or you have unanswered questions, pause. Confidence is being certain that the action contemplated will support your values and take your toward your goals. Confidence is the opposite of doubt. If you are uncertain as to the likely outcome of your actions, wait. Keep digging and seek more certainty or clarity.

We are human and humans have emotions. Emotions help us in time of fight or flight, but rarely help us in making wise financial decisions. Buying an item spontaneously on impulse often results in buyers regret. Have you ever been pressured to act right away? The sellers know that if you have time to think, you’re more apt to say no. Buying an annuity when you are uncertain about the terms and conditions usually results in regret as well.

Understanding market dynamics is imperative to investing successfully. Too many people buy on optimism and sell on fear, when they should be doing the opposite. “Stocks go as earnings go” is a long time investment axiom. Markets are connected to companies that sell products and services and that adjust appropriately over time to supply and demand forces. As such, while specific companies can go bankrupt, whole markets never will. A large and growing population with unmet needs, a profit motive, productivity enhancements, business ingenuity, and plain determination will make sure of that.

Sir John Templeton famously said that “bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” The best time to buy into or add to market positions is when pessimism is high (and thus, valuations are typically low.) The best time to reduce positions or take some “off the table” is when everyone is talking about how smart of an investor they are. We call that bull market brains.

I recommend meditating or praying over all major decision for at least a few days before acting. Which value does this proposed action support? Are there any values it goes against? Will this action take you towards your longer term goals? What does your spouse and or trusted advisors have to say about it? Are you clear about the pros and cons of the action and are you confident that it is a wise decision?

God bless and have a great weekend.

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Making Wise Decisions

9:15 pm | Fri, Sep 17th
In Integrated Wealth Planning, Wealth Planning | No Comments

Making wise decisions is always easier looking in the rear view mirror. After the fact we can see whether or not the decision bore fresh fruit or something more like sour grapes. But how do we make consistently wise decisions in advance? Generally speaking, by making decisions with forethought (not out of emotion) and that support our values. By making decisions that align with what is important to us, we are more apt to be happy and content with our decisions. Said another way, we advocate using your money to support your lives, rather than using your lives strictly in pursuit of money.

In this context, values are the relative worth, merit, or usefulness of something to somebody. It’s how much something matters to us. The Lennick Aberman Group has developed an “alignment model” that helps make your actions consistent with your goals and values. http://www.lennickaberman.com/the_group/alignment_model.php. You are “living in alignment” when your behavior is consistent with your life goals and your life goals are consistent with what you value most for your life.

First, you have to understand what it is that you most value. Please visit http://www.modern360.com/LAtools/LAValues/demo/mgr_select_values.asp and take a quick quiz to clarify what is most important to you. Once you take the quiz, please email the results to us and we’ll add the information to your file. This will help us help you.

Goals spring from your most important values. What do you want your life to look like? What is your life purpose? By considering your talents and passions, you are off to a good start. What are you doing when time flies by? Financial goals are most satisfying when they are in support of your life purpose. Take time to write out your shorter and longer term goals. Written goals are much more meaningful and have a much better probability of coming to fruition than goals that are kept bottled up in your brain or even just shared with a friend. Write them down and review them regularly.

Actions speak louder than words. You can talk a good game, but are you walking the walk? Is your behavior consistent with your expressed goals? Financial behavior that is in alignment with your values and goals is imperative to financial success, with success being defined as “achievement of something planned or attempted.” Be aware of thoughts and emotions that work against your goals and values. Acting out of emotions is often regretted and shown to be inconsistent with what you are trying to achieve. Think impulse buying or selling a stock simply because the market went down. We’ll have more to say on controlling negative emotions in a future blog.

Have a blessed weekend,

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Harvard Business Professor teaches on “The Meaning of Life”

3:56 pm | Fri, Aug 20th
In Integrated Wealth Planning, Wealth Planning | 4 Comments

I had the distinct honor to hear Harvard Business School professor and author, Clayton Christensen, speak on his book “The Innovator’s Dilemma” and the consequences of disruptive technology at a Telecommunications conference back in 1998. He is a very engaging speaker and has a lot of wisdom to share so when I saw an article by him entitled “How Will You Measure Your Life” in the Harvard Business Review, my interest was piqued.

Here is a link to the full article: http://hbr.org/2010/07/how-will-you-measure-your-life/ar/1

On the last day of this year’s HBS 2010 class, Dr. Christensen asks his MBA students three questions and asks that they turn his management teachings on themselves in finding the answers. His questions are 1) How can I be sure that I’ll be happy in my career? 2) How can I be sure that my relationships with my spouse and my family become an enduring source of happiness? And 3) How can I be sure I’ll stay out of jail? He notes that Jeff Skilling of Enron fame was a HBS classmate of his so the last question is not totally off center.

Regarding the first question – how to be sure we find happiness in our careers, he quotes Frederick Herzberg who believes a more powerful motivator in our lives than money is the opportunity to learn, grow in responsibilities, contribute to others and be recognized for achievements. Christensen teaches that managers have the opportunity to help others to learn and grow, take responsibility, be recognized for achievement and contribute to the success of a team. He asserts that these are the more important yard sticks than just money.

Regarding the second question – How can I ensure that my relationship with my spouse and my family become an enduring source of happiness? – Christensen asks the students to define and implement a “strategy for your life.” Strategy evolves from actions. Poorly designed actions cause unintended consequences. Design the purpose of your life on the front end and create a strategy to fulfill that, rather than make a series of short term decisions made in the heat of the moment that might well result in a less than ideal life. Properly allocating “scarce” resources of time, energy and talent will shape your life strategy. Or in other words, don’t short change the things that are most important to you. Creating a culture of learning, cooperation and respect in the household is much better than coercion, threats and punishment, which we know quit working as children reach their teen years.

The third question – how to live a life of integrity (stay out of jail) – requires we avoid “marginal cost” mistakes. Marginal cost as it relates to life can be thought of as the one-off decisions that go against our morals and values. “Just this once” decisions is a slippery slope than can land a person in jail. Define what you stand for and don’t be drawn in to “marginal” thinking.

Christensen’s final recommendation is to think about the metric by which your life will be judged, and make a resolution to live every day so that in the end, your life will be judged a success.

At Bolen | Dodson & Associates, we focus our attention first on the meaning of life – your life; what do you value? What is important and worthy of attention? We then work to have the client’s monetary resources support that life. As it says in Ecclesiastes, if you focus on the money, you will never have enough. Money provides a cushion, but nothing more. Life is about relationships. Love God and love your neighbors. These are the true riches. 

But will it Make You Happy?

7:17 pm | Mon, Aug 16th
In Integrated Wealth Planning, Wealth Planning | No Comments

I came across a New York Times article recently that really piqued my interest. The article is entitled “But Will It Make Your Happy?” by Stephanie Rosenbloom and speaks to simplifying your life and focusing your purchases on those things that bring you longer lasting happiness.  Here is a link to the article:

http://www.nytimes.com/2010/08/08/business/08consume.html?pagewanted=1&ref=business&src=me

The article begins with a profile of a lady who had plenty of stuff, but wasn’t happy. She decides to downsize her life style so she could more easily follow her dreams and 3 years later she is both following her dreams and she is happy. The main point is that simply buying more stuff only temporarily satisfies the happy quotient and is not a recipe for contentment/happiness. Bigger is not necessarily better. A more meaningful approach is to prioritize your spending goals and to make sure you focus spending on longer lasting happy triggers.

The author cites studies that indicate spending on experiences rather than products produces a longer lasting feeling of happiness. Evidently, memories of experiences, such as a vacation, help to rekindle the original positive feelings and even subdue negative memories (such as standing in long lines.)

We have long been advocates of the perspective that money does not buy happiness. We have seen too many unhappy people of wealth. Rather, we must all individually learn what satisfies us on the inside and use our money judiciously to manifest those things. Relationships matter more than things. A walk in the park with a loved one might bring more happiness than a fancy dinner out on the town or a trip to the shore might make more sense than a new wardrobe.

Consumer’s have begun saving again and are paying down debts from past buying binges. This is a very good thing. It’s nice to know that we can improve our happiness simultaneously by focusing our remaining purchases more effectively. The key is to learn what truly makes you happy. What makes you happy?

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Half Time by Bob Buford is an inspirational read

8:31 pm | Thu, Jul 29th
In Integrated Wealth Planning, Wealth Planning | No Comments

It seems like I am always looking for more and/or better ways of being and doing. My main fear is that I get older, look back and say “wow, I could have had a V8”, or something like that. Ever since I read Discover Your Destiny by Bill and Cathy Peel back in 2001, I’ve been on a quest to follow God’s plan for my life, to use my skills and talents and be of service to others. That is why I started my own integrated wealth planning practice and why I talk to clients about merging financial success with lifestyle significance.

I got the idea of merging success with significance from Bob Buford’s book Half Time, which talks about moving from success to significance. The thought is that we spend the first half of our lives becoming successful, building our families and businesses or whatever our careers are. Then, sometime around mid life, which might be 45 to 55’ish, some people begin to look for more meaning in their lives. They want to find significance. Buford helps those of us looking for significance. If this thought strikes you as something of interest, I highly recommend this book. I also recommend Discover Your Destiny as a wonderful tool to help you decide what you want to do when you grow up.

Buford recommends taking stock of your mid-life. What has worked and what has not. What do you believe? He suggests finding that one thing that really turns you on and inspires you and figuring out how you can integrate this one thing into your daily life. Maybe it’s a hobby at first which then becomes a part time endeavor. Do you need additional training? How much would this adventure cost to get started, if anything? Can you slow down in your first career to make room for your second? I jumped in with both feet as I moved from being a securities analyst for a regional brokerage firm into being a financial advisor, but that’s just me.

The point is, pay attention to what feeds you. What do you long to do or be? What would make your second half truly inspiring? They say that when we get older the years get shorter, but the days get longer. Please make sure your days are filled with fun, meaningful, memorable endeavors.

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Biblical Principles regarding money are sound today as always

3:02 pm | Fri, Jul 23rd
In Integrated Wealth Planning, Wealth Planning | No Comments

I am a member of Christian Executive Officers (CEO) Fellowship and we meet on Friday mornings to learn and discuss operating our businesses on Biblical principles. This fellowship inspires me and helps keep me focused on helping my clients achieve their heart felt goals.

This morning, I gave a brief testimony to the group and reviewed some of the many Bible verses we rely on here at Bolen | Dodson & Associates to guide our advice. Regarding money management, I want to share three verses with you today.

Proverbs 21:20 “The wise man saves for the future, but the follish man spends whatever he gets.” We are taught from an early age to regularly put a little back from our paycheck and save for our retirement. Well, God thinks it’s a good idea too. The power of compounding is his mathematical creation.

Eccleseastes 11:2 “Divide your portions into 7 or even 8, for you do not know what misfortune may occur on the earth.” Diversification of your portfolio will reduce risks by spreading out your assets into uncorrelated investments. You never know what misfortune may occur on the earth. Can I get an Amen?

Proverbs 21:5 “Steady plodding brings prosperity, hasty speculation brings poverty.” Winning at investing takes time. Chasing performance or jumping in and out of the market at every turn is a losers game. Investing requires homework and fundamental knowledge of earnings, margins, valuations, technicals, etc.  Speculating is betting on near term price action. Be an investor, not a speculator.

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