Intelligent Investing helps you understand all your employer options to ensure you make wise and informed decisions, so you know how to rollover your employer retirement plan assets. In addition, you’ll get an array of portfolio planning tools, research and education, so we can design a portfolio that aligns with your retirement goals and your ability and willingness to accept risk. Whether you have a concentrated stock position or a simple 401(k), we minimize financial stress to maximize your life.
Reading Time: 4 minutes
We’ve all seen the school supplies on sale at our local stores. That can only mean one thing….school’s about to begin… if it hasn’t already started.
Most articles written by financial advisors on education feature the savings plans for accumulating college funds, such as 529 plans. In fact, so much has been written about it that I would be remiss to bore you with one more article on a subject that has been covered so well, and so extensively. So, guess what….I’m not! If you live in South Carolina, there was a great way to calculate the estimated cost of college by using this Future Scholar Tool. Also, Investopedia has an excellent article on the basics here.
Few families have unlimited financial resources, especially larger families (lots of children), and of course the costs continue to rise. Additionally, student loan financing is an option, and this is a major decision that merits much reflection.
Unfortunately, when it comes to financing your children’s education (note, I did not say college), most people do not talk about it, let alone establish a formal Family Education Policy.
So…what is this Family Education Policy I’m talking about?
Family Education Policy
At Intelligent Investing, each client receives a personal Investment Policy Statement (or IPS), and the importance of this document is vital to the success of their financial plan. The Investment Policy Statement establishes reasonable objectives and guidelines regarding our client’s assets. It sets forth a target portfolio indicating risk levels, allocations, and return targets that the client’s money will typically be invested to achieve. We think it is just as vital to have a Family Education Policy, which is a tool used to make sure everyone is on the same page when it comes to any education beyond high school (postsecondary education). We’ve included a free template further down.
Importance of Family Unity
One of Intelligent Investing’s Four Unique Factors is to unify families in financial communication. Intelligent Investing strives to unify families in financial communication. Click To Tweet It is important for husbands and wives to come together on this subject and agree on their goals regarding the education of their children. The more children you have, the more important to come to an agreement early on as parents. This was a major part of my wife’s and my financial picture over our working years. And, sometimes, it doesn’t hurt if the grandparents get involved…it just might even help (can you say estate planning?).
Questions you may consider when making a Family Education Policy
- What will we be funding? How much of an education benefit do we want to provide to each child?
- What is our goal? What do we seek to fund?
- Will we pay just tuition, or tuition and books? Or, tuition, books and housing all three?
- What about spending money, transportation and other incidentals?
- Are we planning to fund any trips, be they educational or spring break vacations?
- What about post-graduate education?
Skin in the Game
Often parents will choose to not fund 100% of their child’s education, even when it is possible financially to do so. We all know that we are more committed when we have some “skin in the game”, and this increases the student’s odds of academic success. That summer job, and buckling down and studying hard to merit greater scholarship money may even help them excel in the work place once they graduate.
Scholarship money, you say? The words “College scholarship” were among the first words we taught our daughter, and fortunately, it did pay off.
The earlier and more often we discuss education and education funding with our children, the more aligned we will be as a family. It also gives our children the opportunity to discuss their hopes and dreams.A Family Education Policy gives our children opportunities to discuss their hopes and dreams. Click To Tweet
Assuming our child wins scholarships towards college expenses, and assuming we require our child to pay a portion of their college costs, how should we apply these funds? To the child’s portion or to the parent’s or grandparent’s portion? How we apply scholarship money may indeed affect the student’s academic motivation.
College May not be the Best Path
This may be a hot topic for debate, but what if you have a child who is not interested in college, and instead wants to be, say, a homebuilder? Trade school can lead to business ownership potentially much quicker than college, and business ownership can be the path to both independence and wealth generation. Contractors, auto repair centers, and other such businesses are quite profitable, and once established are often very stable when compared to careers in corporate America. The quickest path to CEO is not necessarily up the corporate ladder. Also, student loans are daunting and continuing to increase. The quickest path to CEO is not necessarily up the corporate ladder. Click To Tweet
With trade school you are focused immediately on a certain curriculum, while in a University there is an opportunity to explore various fields.
Trade schools are much less expensive that colleges and universities, but remember, treating our children fairly and equitably based on their aspirations and aptitudes doesn’t have to mean treating them equally.
Download a free copy of your Family Education Policy
At Intelligent Investing, we have access to hundreds of college tuition and room and board costs, and our financial planning allows us to choose whatever specific college your child may want to attend using today’s costs. We can then customize how much we want to inflate those amounts and project them into the future. The bottom line is that we think it is important to discuss, determine and communicate a family education policy plan so everyone is on the same page.
Helping our clients meet their goals is our passion at Intelligent Investing. If we can help you with education planning or in any other way, please let us know!
Reading Time: 3 minutes
How to Prepare for the Solar Eclipse Video
Ever since I was a kid, I’ve been fascinated with astronomy (not astrology–big difference). My neighbors introduced me to the planets and moon’s craters using a telescope on their back porch in Pennsylvania. I used to wake up in the middle of the night to watch meteor showers, took Astronomy as an elective in college, and have even been to a star party. (but that is for another blog). OK, so I’m an official geek. Well, this year is a big year for astronomy. Unless you’ve been hiding under the shadow of a rock (see what I did there), you know a total solar eclipse is coming.
The Great American Total Solar Eclipse
A solar eclipse is when the moon is in between the earth and the sun, and the moon blocks the sun’s rays. The first total solar eclipse visible in the U.S. in nearly four decades is expected to dazzle on Aug. 21, 2017. During the so-called Great American Total Solar Eclipse, the 70-mile-wide shadow cast by the moon will darken skies from Oregon to South Carolina. During most solar eclipses, the moon takes just a “bite” out of the sun — these are called partial solar eclipses. However, the August event will go down as the first total solar eclipse whose path of totality stays completely in the United States since 1776. How patriotic is that?
Historically important eclipse
Ancient cultures tried to understand why the sun temporarily vanished from the sky, so they came up with various reasons for what caused a solar eclipse. Legends surrounding solar eclipses involved mythical figures eating or stealing the sun, and others interpreted the event as a sign of angry or quarreling gods. Though the following story relates to a lunar eclipse which is where the earth’s shadow appears on the moon, it still applies:
On June 30, 1503, Christopher Columbus was stranded in Jamaica. The indigenous people of the island welcomed Columbus and his crew and fed them, but Columbus’ sailors cheated and stole from the natives. After six months, the natives stopped their food supply.
Columbus had on board an almanac and upon consulting the book, he noticed the date and the time of an upcoming lunar eclipse. He was able to use this information to his advantage. He requested a meeting that day with the leader and told him that his god was angry with the local people’s treatment of Columbus and his men. Columbus said his god would provide a clear sign of his displeasure by making the rising full moon appear “inflamed with wrath.”
On March 1, 1504, the lunar eclipse and the red moon appeared on schedule, and the indigenous people were frightened.
So what can the solar eclipse teach us about markets?
- There is a Cycle
- The Current Cycle Doesn’t Last Forever
- Don’t Misbehave Emotionally
There is a Cycle
Just as there is a schedule established for the location and time of eclipses, there are business cycles as well. The business cycle consists of four phases:
- Expansion– a period of economic increase or positive growth
- Peak– the highest turning point of a business cycle
- Contraction– a period of economic decline or negative growth
- Trough– the lowest turning point of a business cycle
The Current Cycle Doesn’t Last Forever
Columbus timed the eclipse with his hourglass, and shortly before the totality ended after 48 minutes, he told the frightened indigenous people that they were going to be forgiven. When the moon started to reappear from the shadow of the Earth, he told them that his god had pardoned them. Intelligent investors know that the current phase we are in doesn’t last forever. That doesn’t mean you should try and time the markets, but you should be prudent and be aware of where we are compared to historical averages. A diversified portfolio should be able to weather all phases of the business cycle. That doesn’t mean there won’t be losses, but the eggs shouldn’t be placed all in one basket.
Don’t Misbehave Emotionally
Many economists believe we are in the latter parts of the expansionary phases, while others believe this could be a new floor to new heights. It is important to not be fearful or greedy as we are likely in the mid to late parts of the expansionary phase of the current business cycle in the U.S. Below are some common emotions that people have when they face different market phases. Whatever your viewpoint, be sure to have an accountability partner who can help you weather the storms. Remember that behavioral coaching is one of the most important things an advisor can provide.
Unfortunately for the indigenous people, they didn’t have the knowledge about the eclipse and acted emotionally out of fear. However, you are now aware of the market cycles and with some help can protect yourself from the next downturn in the markets.
Reading Time: 3 minutes
As many of you already know, I joined Intelligent Investing, LLC as a partner in May. I can’t think of any way to give a greater vote of confidence than that.
Hans Blake, founder of Intelligent Investing, is not only a CPA, but also is a CFA® charterholder. CFA® charterholders or Chartered Financial Analysts®, is the highest distinction in the investment management profession. Hans’ wife Amanda is an incredible resource herself and provides professional support that helps make the client experience seamless and satisfying.
I’ve known Hans a number of years now, as we have spent a significant number of hours in professional seminars together having CPA backgrounds. As we visited over the years, I came to appreciate his philosophy of how money should be managed, and as my friends and family know, I can be a harsh critic.
With my CPA background, and experience as a Certified Financial Planner® we feel we have the best credentials possible to serve our clients well. We think it is important to understand the “financial alphabet soup” of credentials as there are new credentials coming to the scene every year. As a member of the American Institute of CPAs Personal Financial Planning Section, I achieved the PFS, or Personal Financial Specialist designation as well, a financial planning credential only available to those with a CPA background. Hans is also part of the South Carolina Association of CPAs.
Our family has been blessed to have started financial planning early in marriage, along with a thoughtful and aggressive approach to individual investing. As someone who is extremely goal-oriented, I’m excited to work with clients and client families who seek clarity in these these areas.
Chick-fil-A® of Wealth Management
Hans worked at Chick-fil-A for four years growing up and was trained by the leadership teams at the corporate headquarters. Hans’ goal is for Intelligent Investing to be known as the “Chick-fil-A® of wealth management.” We want people to have a wonderful experience in the onboarding and ongoing relationships that make the wealth management a byproduct of our client service.
Whenever you walk into a Chick-fil-A® restaurant and say, “thank you” to an employee, you will hear them reply “It’s my pleasure.”
One way that client service shines in organizations is when the workers enjoy what they are doing. I can tell you that it is a joy to be able to help others at this time of life. We work with clients of all ages, but as you can imagine, retirement transition is a passion of mine. As individuals, we work for decades to make money, and as Hans is quick to point out: “people know how to make money in so many ways, but once they have made it, they often don’t know what to do with it”. As we near retirement, we are faced with many one-time decisions, for which we have no experience, and these decisions have a huge impact on whether or not we have a successful retirement.
Fee Only Transparency
As a 100% fee-only RIA firm we bring complete transparency to our client-advisor relationships, and the client can rest assured we are on the same side of the table with them. Every commissions sales agent on the planet is pushing products at retirees, who are often not well versed in how to evaluate if these products are appropriate for them or not. As we make these one-time decisions, it is especially important to have professional and unbiased advice. When couples enter their retirement and “Golden Years”, one thing we don’t want is a “regret period” in which to reflect on mistakes made during this very important life transition.
As a firm, we are independent from outside pressures. This independence allows us to not only be unbiased in all that we do, but to be completely unconstrained in sourcing the best investments and economic research to serve each client best. Similarly, peace of mind and financial freedom are hard earned rewards for decades of work and savings. It is our goal to take the worry and anxiety out of the retirement transition period, so the client can focus on “what’s next”, not personal finances. Entering retirement with a thoughtful financial plan and the right portfolio helps a client to build a life in retirement that is every bit as rich and rewarding as when they were raising a family and working professionally.
Stay tuned to the many exciting events on the calendar for 2017, and consider joining our newsletters below, if you haven’t already!
Reading Time: 3 minutes
In earlier blogs, I talked about the Fear of Losing the Business and the Fear of Being Embarrassed. In this third and final blog, I will talk about Patrick Lencioni’s Fear of Feeling Inferior in his book, Getting Naked.
When I was dating my then-girlfriend-now-wife in college, I went to see her parents for the first time over Christmas break. As you know, it is a good idea to be on your best behavior when you are meeting your potential in-laws. It was Christmas time 2003, and things were going pretty well. I liked her parents, and they seemed to be liking me…
Well one evening when we were playing card games in the kitchen, I dismissed myself to use their guest bathroom. I didn’t realize it at the time, but this was to be a defining moment in my relationship with Amanda and her parents. After using the restroom, facing a potentially embarrassing moment and feeling quite inferior, I sheepishly whispered to Amanda that I needed a plunger.
Amanda started laughing uncontrollably, making a much larger scene than I wanted. I couldn’t believe she was betraying me and making a laughing stock out of me before her parents. My face turned four shades of red with embarrassment. What I didn’t know at the time was this same guest bathroom toilet had been the source of many issues over the years and had trouble flushing–embarrassing other guests and family members. After we all had a side-splitting time of laughter, I realized I had nothing to fear, and there was no need to put up pretenses and feel inferior to my future in-laws.
Fear of Feeling Inferior
In Patrick Lencioni’s book, he mentions a third fear–the fear of feeling inferior. To avoid feeling inferior or being irrelevant or overlooked, we often try to achieve and maintain a high level of importance in clients’ minds. At some point, we all have made the mistake of projecting an image of ourselves that is much better than our true self. Whether it is holding our breath while taking a photograph to look thinner or covering up that acne before our first date, we all have been there.
The Intelligent Investing SolutionPeople don't care how much you know until they know how much you care. Click To Tweet
The reality is clients are more interested in honesty and transparency than they are in confidence and perfection. One of our core values is truth. Intelligent Investing believes speaking the truth in love is better than making an “empty promise” the client may want to hear, but will hurt them in the long-run.
Competence is still relevant, and clients need to know that we have the knowledge and experience to help them. However, competence is not enough. My dad always said, “People don’t care how much you know until they know how much you care.” Let your clients know when you don’t have the answer to their complex question. It’s ok to be transparent and let them know you’ve been in their shoes.The best way to differentiate ourselves from competition...is to be vulnerable with them. ~Lencioni Click To Tweet
Happily Ever After
Well, by God’s grace, Amanda and I have been married for 11 years now. We’ve had our embarrassing moments, but we have tried to be more vulnerable with each other. It still is a challenge, but we have grown closer through the years by letting our hair down and loving each other for who we are. I encourage you to give it a try and see what happens…you may be surprised.
Buy the Book
To continue learning more about getting naked with your clients, consider purchasing the book.
Intelligent Investing is able to stress-test your existing portfolio to determine what raising rates may do to your portfolio. We’d be happy to let you know what hidden risks may be lurking in your portfolios, and whether you are in an appropriate portfolio based on your risk tolerance. See the article below for what rising rates could mean for your money.
Reading Time: 2 minutes
In my earlier post, I mentioned that we must get vulnerable with our clients in order to build trust. This post focuses on the second step that hinders trust which is fear of being embarrassed.
When I was in the final week of kindergarten preparing for graduation, my teacher, Mrs. Depew, sternly warned us to hold up our gowns as we went up the stairs in the auditorium so we wouldn’t trip on graduation night. I didn’t really pay attention during rehearsals, but (surprise, surprise) was constantly talking to my friends around me. Trying to win friends and influence people, I guess.
Well, the big day arrived and the auditorium filled up with parents, siblings, and grandparents who were excited about seeing their little one get that diploma that required knowing letters, shapes, and numbers. I remember waving excitedly to my family as I walked down the aisle, and they waved back. I was beaming from ear to ear with my blue graduation cap and bow tie and white gown. Unfortunately as I went up the steps, I tripped on my gown, and my bow tie untied.
Well, I held my fragile emotions together until I reached the church’s choir loft, and then I started crying. The girl next to me offered to fix my bow tie, and I turned four shades of red from embarrassment. I then recalled Mrs. Depew’s warnings about holding up our robes. How could I ever face the public again?
Most of the time, our embarrassment is blown way out of proportion, and we feel as though everyone is looking at us and laughing at us. This phenomenon is called the spotlight effect which says we think that others are paying more attention to us then they actually are. Research also shows that people who become embarrassed are more likeable. I hope that’s the case.
Fear of Embarrassment
Nobody wants to be embarrassed, but in order to get vulnerable with our clients, we must face this fear of embarrassment. I’m not talking about the fear of walking into a meeting with your fly down or having toilet paper stuck to the bottom of your shoe, I’m talking about a fear of embarrassment by not having all the right answers. I’m talking about the fear of being proven wrong in public.To prevent embarrassment, leaders play their cards close to the vest, don’t share information with others, and don’t allow participation in decision-making. Click To Tweet
To prevent embarrassment, leaders play their cards close to the vest, don’t share information with others, and don’t allow participation in decision-making. Unfortunately, this causes more work for the leader, as they are afraid to delegate, and employees don’t want to share their ideas. Arrogance breeds a fear of embarrassment.
Creating a culture where mistakes are celebrated as learning opportunities, risk taking is encouraged, and stupid or obvious questions encouraged will help mitigate this fear and lead to higher levels of trust in leaders’ relationships. This “nakedness” lets your clients know that you are just as human as they are, and no question is too dumb to ask.
Buy the Book
Reading Time: 2 minutes
In the fall of 2005, I was sent by my accounting firm to Birmingham, Alabama on a mission to help reinstate the fraudulent Accounts Receivables for HealthSouth’s financial statements. To burn off some energy from sitting at a computer most of the day, I ran semi-faithfully on the Hilton treadmills in the evening. In order to pass the time, I would turn on the television mounted in the corner, and was entertained by this guy named Jim Cramer on CNBC’s “Mad Money” which launched in March, 2005.
Jim would burn more calories than I did by running around his studio with his shirt sleeves rolled up, while yelling, “Sell, sell, sell!” or “Buy, buy, buy!” He would hit certain buttons which would make all sorts of sound effects, and he distracted me from the pain of getting through those first couple of miles. Like watching a car wreck on the side of the highway, I had a hard time turning the channel, and continued to listen to his passionate yelling.
After a few months of this entertainment, it became obvious to me that Jim Cramer was an entertainer, and not necessarily a financial expert. He had the same message, but interchanged stock names and tickers. I often wondered if anyone took his stock tips seriously, and what would be the results if they did.
Well, I found out there is a paper from two researchers at the University of Pennsylvania’s Wharton School that finds that Cramer’s picks have been less than scintillating.
On its website, TheStreet compares the return of the Action Alerts PLUS Portfolio to the S&P 500 plus dividends received but not reinvested. That’s because the portfolio donates the dividends to charity rather than reinvesting them. Launched in August 2001, Action Alerts PLUS Portfolio has been a centerpiece of the financial advice offered by TheStreet.com. PLUS Portfolio subscribers, who pay $15 a month, always get the recommendations before Cramer buys them for the portfolio. Likewise, subscribers get Cramer’s picks before he airs them on “Mad Money.”
When someone is screaming at you to buy anything, hold tight to your wallet Click To Tweet
The lesson is that good investing is usually pretty boring, and when someone is screaming at you to buy anything, hold tight to your wallet. ~Jonathan S. Hartley, Matthew Olson, The Wharton School, University of Pennsylvania
Intelligent Investing believes that having a long-term investment philosophy is best.
Do not wear yourself out to get rich; do not trust your own cleverness. Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle. ~Proverbs 23:4-5
All hard works brings a profit, but mere talk leads only to poverty. ~Proverbs 14:23
White Paper: White Paper