Financial Planning

Your Retirement Journey- How It Compares To Climbing Mount Everest (Part 4 of 4)

May 27, 2020 by Tom Theodore, CFP®

Choice

Reading Time: 4 minutes

How to Choose Your Sherpa- A Retirement Guide Can Be Helpful

As a reminder from our previous blog, climbing Mount Everest successfully has been a goal of many people. Few have attempted it, and fewer still have done so successfully. Mt. Everest was first conquered by Sir Edmund Hillary and Nepalese Sherpa mountaineer Tenzig Norgay in 1953. Even though Nepal issued a record 381 permits in 2019, last year’s climbing season had a limited number of good weather days, leading many people to set out at once when the skies cleared and the winds seemed calm. Unfortunately, this caused crowding, and at least 11 people died last May, even though most were experienced trekkers.

After last year’s record deaths on Everest, people seem more aware of the importance of Norgay these days and that is entirely appropriate. Sherpa people are one of the ethnic groups native to the most mountainous regions of Nepal and the Himalayas. Many Sherpa are highly regarded as elite mountaineers and experts in their local area. They were immeasurably valuable to early explorers of the Himalayan region, serving as guides at the extreme altitudes of the peaks and passes in the region, particularly for expeditions to climb Mount Everest. Sherpas are renowned in the international climbing and mountaineering community for their hardiness, expertise, and experience at very high altitudes. It has been proven that part of the Sherpas’ climbing ability is the result of a genetic adaptation to living in high altitudes.

We believe the best Sherpas in the financial world are 100% fee-only fiduciary firms. Unlike brokers who make money based on commissions, fee-only fiduciary firms must act in clients’ best interest at all times and are paid only by their clients. Fee-only means they don’t sell products and are paid based on the assets that they manage. We believe this removes potential conflicts of interest and places them on the same side of the table as their clients. The Sherpas’ job is the explorer’s safety and well-being on the trek, not to sell you trekking gear.

For decades, Sherpas have guided explorers to the top of Mount Everest successfully, and they are responsible for safety, equipment, packing, and the camp. They not only have expertise but also circulatory systems which allow them to physically endure high altitude much easier than normal humans. Having a guide who can provide advice and recommendations can be the difference between life and death. Since climbers burn up to 15,000 calories and lose as much as 20% of their body weight, if a climber suffers unexpected equipment failure, then it is even more important to be extremely prepared. A combination of inexperienced climber and inexperienced guides is a formula for disaster. Bodies are seldom recovered….

There are those who would rather not have a guide as they climb Mount Everest. As of the date of this blog, four people have attempted to summit Mount Everest solo. Two were successful. Two died on Everest. With 50/50 odds, we think it best to have an experienced guide on the journey. We also think that do-it-yourself retirement is similarly foolish. Having an expert that prevents you from slipping and making a costly mistake that affects your entire retirement is worth having.

Just as successfully climbing Everest takes a lot of preparation, the same is true for retirement. Choosing the right guide and the right firm is key. The cheapest guide could end up as the most costly. Our ascent was building our careers, accumulating wealth, and perhaps raising a family. A slip can destroy all of this. Our descent is equally important and potentially equally treacherous. We need to safely finish this round trip adventure so we can start another ascent of our own choosing…

So we need a good plan, to choose the right route and the right guide. Preparedness is key, but the right sherpa is one who has helped others make that round trip successfully, so we have both a successful ascent AND descent.

For many years now, the DALBAR survey has proven that good advisors can add great value for investors. As your guide, or sherpa, we add value in a lot of different ways:

Portfolio Excellence. We locally manage all our portfolios with portfolio management expertise by an in-house Chartered Financial Analyst.
Planning Excellence. We custom design your financial plan along side you. We listen to your personal goals, risk tolerances, and time horizon(s).
Maximizing Time. We use real-time integration of your financial plan, your portfolio, and your risk tolerances.
Minimizing Fees. As an independent advisor, we strive to minimize all fees, including taxes.
Tax and Estate Planning. We have CPA backgrounds and CFP® experience that help us coordinate with your attorney or CPA.
Behavioral Coaching. We guide you through major life decisions and the inevitable emotional periods of bull and bear markets.

At this point in our lives, we can choose the peaks we want to climb. Let’s be sure and make a safe round trip so we can decide what to do in retirement, and not be required to do things we don’t want to do. Here are some of the topics we help our clients solve:

Social Security, retirement plans, pension options and choices;
Income planning and nest-egg distribution (how to not run out of money, income replacement, and budgeting);
Life and long-term care insurance;
Health and wellness;
Tax management and required minimum distributions (RMDs);
Managing debt (if you have it);
Lifestyle decisions;
Aging parents and other dependents;
Estate planning (How much is enough? How much should we leave our heirs? How do we decide who should get what?);
Housing decisions (Should we downsize?).

Intelligent Investing is an independent, fee-only registered investment adviser (RIA) with a fiduciary responsibility to act in your best interest at all times. We are paid only one way–by our clients. Fee-only means we don’t sell any products and are paid based on the assets that we steward. This removes potential conflicts of interest in our advice and places us on the same side of the table as you. We put ourselves in your shoes for every decision we make.

We hope you have enjoyed our mini-blog series on the parallels between climbing Mount Everest and transitioning into Retirement.

To read our other blogs, click below: (NEED TO ADD HYPERLINKS)

The Slippery Slope of COVID-19 (Navigating the Bear Market)- Part 1 of 4
The Slippery Slope of COVID-19 (Beware: Avalanches Lie Ahead)- Part 2 of 4
The Slippery Slope of COVID-19 (The Incredible Cost to Climb Mount Everest)- Part 3 of 4

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Your Retirement Journey- How It Compares To Climbing Mount Everest (Part 3 of 4)

May 20, 2020 by Tom Theodore, CFP®

Reading Time: 2 minutes

The Incredible Cost to Climb Mount Everest- Retirement is Very Expensive

Climbing Everest is expensive. The price range for a standard supported climb ranges from $28,000 to $85,000, and a fully custom climb will run over $115,000 Lots of companies offer climbs of Everest. At the lower end, extreme risk-takers can skimp by spending well under $20,000. When corners are cut when it comes to safety and preparedness, a herd mentality and overcrowded conditions have resulted.

Retirees often take many shortcuts, turning their retirement into a period of regrets. Why do incredibly disciplined professionals make bad decisions? After all, their successful career was not built on shortcuts. The answer is simple. Retirement calls for many one-time life decisions that few are qualified to be making. How do we get good at making decisions? Education and repetitive experience. The problem is, retirees have never gone through retirement before, so they can’t become experienced with making good decisions through repetition. At the same time, these retirees have salespeople pushing financial products (such as annuities) on them.

One shortcut we often see people make is to purchase an annuity they think will “guarantee” them income and remove their fears from market volatility. Unfortunately, the client may not understand the terms of the contract, and this can cost them dearly as there are often surrender periods and hidden fees inside these confusing products. At Intelligent Investing we may be able to provide an “annuity rescue” and would be happy to sit down with you to discuss your options.

There are two sides of Mt Everest, one in Nepal, one in Tibet. The southern route via Nepal is warmer, safer, and Nepal doesn’t limit the number of climbers. The alternate northern route via Tibet is cheaper, more dangerous, and Tibet limits the number of climbers. As in all choices, there are pros and cons.

When it comes to retirement, there are many paths to choose from. Some retirees think it best to “do-it-themselves” because it appears to be cheaper on the surface. Others think it best to purchase an annuity because it appears safer on the surface. However, cheaper and purchasing a murky product may not necessarily be in your best interests. Have you ever gone through retirement before? Have you ever advised other retirees through a successful retirement transition and pathway? Are you an expert when it comes to tax planning and the distribution phase of retirement?

In our next blog, we will cover the next parallel between climbing Mount Everest and transitioning into Retirement. To read about “How to Choose Your Sherpa,” click here.

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Your Retirement Journey- How It Compares To Climbing Mount Everest (Part 2 of 4)

May 13, 2020 by Tom Theodore, CFP®

Reading Time: 2 minutes

Beware: Avalanches Lie Ahead- Retirement Income Planning is Vital

Everest is approximately 29,029 feet, and above 26,000 is known as the “death zone.” Sudden weather changes and avalanches are common. Bad weather and overcrowding can create very short windows of opportunity to summit, and climbers race to finish when caution is more advisable. Many things can cause deaths on these climbs but poor physical conditioning and crowded conditions are prominent. Some climbers wait 24 hours at a lower altitude to better acclimate to the climate and also have extra oxygen brought up. Those who are impatient put themselves in danger. The phrase, “Haste makes waste” comes to mind. The bottom line…extreme mental and physical endurance are necessary to climb Mt. Everest successfully.

When it comes to investing, avalanches are the unforeseen crises or bear markets that come out of the blue. When a crisis hits, many people want to abandon their portfolio because they didn’t have a plan in place. During such crises, having a sherpa can help. Sherpas are the indispensable native guides successful climbers use. Their special knowledge and experience save lives every year. During those bear markets, the right thing may be to not react, rebalance your diversified portfolio, stay on the path to your goals, and maintain your commitment to follow your sherpa.

Adrian Ballinger of Alpenglow Expeditions says “meticulous preparation” is necessary. He is one of approximately 100 successful climbers who have done so without oxygen. It took him several years preparing, and the attempt almost cost him his life. He says if Everest was 15 feet higher, he would have likely failed.

If professionals can barely make it to the top, what chance would amateur or basic climbers even have?

As retirement sherpas, we believe that meticulous preparation is vital for a successful retirement. As your guides, we provide planning strategies and recommendations to help ensure you are mentally, socially, and financially prepared for a smooth and successful spend-down phase of your life.

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Your Retirement Journey- How It Compares To Climbing Mount Everest (Part 1 of 4)

May 6, 2020 by Tom Theodore, CFP®

Avalanche

Reading Time: 3 minutes

The Slippery Slope of COVID-19- Navigating the Bear Market

Sadly, for many retirees, the slippery slope of retirement transition just got a lot more dangerous.

Unfortunately, as the world scrambles to deal with this pandemic medically, the economic fallout is also beginning to be felt. For those senior employees just a few short years away from retirement, it may be necessary to plan for an early exit. Most of us don’t work for companies making masks or vaccines and job security has become a real concern. While our thoughts and prayers are with patients, families, doctors, nurses and first responders, the medical crisis will certainly cause financial hardship for many. What we thought to be a walk in the park or a short hike has just become mountaineering. Retiring during a bear market or recession is something we can plan for, but it is quite different than planning to retire during a bull market.

We founded Intelligent Investing to minimize financial stress to maximize our clients’ lives, especially during these current stressful times. We combine world-class credentials and experience in both financial planning and investment management, along with over thirty different technology integrations to help our clients cope with their major life events.

Climbing Mount Everest successfully has been a goal of many people. Few have attempted it, and fewer still have done so successfully. Mt. Everest was first conquered by Sir Edmund Hillary and Nepalese Sherpa mountaineer Tenzig Norgay in 1953, and Hillary still features prominently on the New Zealand five-dollar bill. Even though Nepal issued a record 381 permits in 2019, last year’s climbing season had a limited number of good weather days, leading many people to set out at once when the skies cleared and the winds seemed calm. Unfortunately, this caused crowding, and at least 11 people died last May, even though most were experienced trekkers.

What caused those deaths, and what lessons can we apply to retirement and investing? There are many parallels between the climbers of Everest and retirees making a retirement transition. We will be covering additional parallels in future blogs, but to start, here’s the first one we observe.

The Descent Is Riskier Than the Ascent

One of the interesting things about Everest is that many deaths occur on the descent, not the ascent. In fact, depending on the years measured, over half of deaths are on the descent, and almost 20% occur to climbers who turn back.

Climbers spend their energy getting to the peak and are tired and less focused on the descent. Many die because they become careless once they reach the summit. After all, the goal is not just to climb to the top, but to make it down the mountain to be able to tell about it.

When it comes to careers and investing, many people have successfully climbed the corporate ladder and have a sizable nest egg. They faithfully contributed regularly to their retirement plan, or perhaps they were fortunate enough to have a pension plan. The natural compounding of their investments over their careers has produced a decent nest egg. Now they have reached the time to successfully spend down their nest egg in retirement or preserve it for the next generation.

Often, these successful executives and pre-retirees come to the realization that they aren’t sure what their next step should be as they perhaps planned more for their European cruise, than their actual retirement goals. When they step back or are forced to exit corporate America, they haven’t thought about how their nest egg will produce their retirement income and whether it will be enough. They haven’t thought about how expensive retirement can be, how many years they will be in retirement, and if their portfolio will be sufficient.

Successfully descending the other side of the retirement mountain and spending down our assets is often riskier than the accumulation phase of our lives. If we slip (go through a bear market or have an emergency need) while we are young, we can recoup the loss through our earning potential and our financial investments have more time to bounce back. In retirement, our income potential has fallen and our time horizon is shorter. The thought of running out of money while in retirement can be scary, and you don’t want to be forced to reclimb the mountain by getting another job, or worse going into debt.

Running out of money in retirement can be disastrous and affects our finances, our lifestyle, our health, and our loved ones. Many people work by choice in retirement, but working out of necessity or going into debt are not great options. The retirement transition is a slippery slope indeed.

Therefore, having a plan for both your ascent and descent is critical to success.

In our next blog, we will cover the next parallel between climbing Mount Everest and transitioning into Retirement.

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Remarriage Can Be a Tough Conversation

March 4, 2020 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Kathleen Rehl on how remarriage can be a tough conversation. Kathleen gives advice on how to have the conversation of remarriage with your widowed clients. Speaking from personal example, she shares the process of becoming ready to remarry. She also sheds light on the types of conversations she and her new husband have had. Of top priority was the communication with and among their children. Also of importance was discussing their finances (i.e. estate plans, housing, prenuptial agreements, etc.) Maximizing communication with family and a new spouse is imperative because of the deep emotions that can be involved. A helpful article for having this conversation with your client can be found here.

As Kathleen mentioned, money can be a topic that can divide spouses and family members. At Intelligent Investing, one of our unique factors that makes us different is how we strive to unify families in financial communication. We’d love to be the bridge between spouses and multiple generations to make sure everyone is on the same page when it comes to money. To learn more about our unique factors visit What Makes Us Different.

On upcoming podcasts, Kathleen will talk about the three stages of widowhood- Grief, Growth, and Grace, so be sure to subscribe by clicking here.

Kathleen Rehl Bio

Kathleen M. Rehl, Ph.D., CFP®, CeFT® wrote the multi-award-winning book, Moving Forward on Your Own: A Financial Guidebook for Widows. Experiencing widowhood herself, Dr. Rehl empowers widows financially™ and inspires their advisors. Her work has been featured in the New York Times, Wall Street Journal, AARP Bulletin, CNBC, USA Today, U.S. News & World Report, Journal of Financial Service Professionals, Journal of Financial Planning, and other publications. Rehl owned a financial planning firm for 17 years before retiring to her “encore” career. She walks an hour daily, practices yoga, enjoys art and music festivals, writes poetry and makes art, loves her grandsons . . . and continues to evolve on her journey.

Common Mistakes by Pre-Retirees

February 26, 2020 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on common mistakes made by pre-retirees. Larry discusses several mistakes he has noticed made by pre-retirees. To begin, he states the well-known phrase, “Those who fail to plan, plan to fail.” Though a pre-retiree may have a well-thought-out investment plan, a plan must be made for a successful life after retirement. This can create a complex problem because necessary “ingredients” are left out. Important issues to consider are estate planning, long-term care, and elder abuse. Most noted is the need for a good wealth advisor or quarterback. A good wealth advisor incorporates all of the issues and creates a comprehensive plan. In conclusion, the financial advisor should coordinate with all involved: the tax advisor, the estate planning attorney, the family members, and, most importantly, the client.

We know you’ve worked hard over the years to accumulate wealth, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends, and the causes that are important to you. But to ensure that your legacy reaches your heirs as you intend, you must make the proper arrangements now. We’d love to grab a coffee to see how we may best serve you and your family.

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We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives and ETF.com.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.

Three Things You Must Share with Your Financial Advisor

February 11, 2020 by Hans Blake, CFA, CPA

Reading Time: 4 minutes

I recently had the opportunity of being invited back to the South Carolina Business Review on South Carolina Public Radio to discuss this topic. Mike Switzer interviewed me on the importance of core values in investing. You can hear the interview by clicking here.

You’ve probably heard it said, “You’re the average of the five people you spend most of your time with.” The people around you matter. Especially the ones you are entrusting with your wealth and family.

We generally share common beliefs with those who are closest to us. If you’re married, think about where you met your spouse. Most of the time it isn’t random. Typically, there was a common bond, a shared activity, or a mutual friend who introduced you to each other.

Now, think about who you ask for recommendations. Typically, I start with my family, and then I may ask some friends on Facebook or some other social media platform.

Have you ever stopped to wonder, why we ask them for recommendations? It is likely that we know them, and we trust them.

What if your car mechanic gives you some recommendations, or perhaps your dentist or doctor? Depending on your relationship with such person and whether you trust them or not will determine whether you act upon their recommendation.

What about when it comes to money and working with a financial advisor who has recommendations. In order for the relationship to work best, there must be a common bond, but we think it goes beyond that. In fact, we think if you are going to work with a financial advisor, you must share three things with them.

You should share common values with your financial advisor.

We don’t mean that if the client is Presbyterian, they shouldn’t work with a Baptist financial advisor. Nor do we mean that you must line up exactly on the political spectrum with your advisor. However, we believe that the client’s core values should closely align with the one who is managing their wealth. Talking about money and families, and sometimes faith can be a very intimate conversation. We believe it best that the client and advisor align.

Simon Sinek says you should start by answering the question, “Why?” People like Martin Luther King Jr., Steve Jobs, and the Wright Brothers had little in common, but they all started with WHY. They realized that people won’t truly buy into a product, service, movement, or idea until they understand the WHY behind it.

I don’t have time to go into each one of them in this blog, but our core values are an acronym for the word, “CLIENT.” They are Compassion, Legacy, Integrity, Excellence, Nimbleness, and Truth. They answer the question of “Why we are in business.”

How to Know If You Share Common Values?

When we interview prospects to see if they would be a good fit, we are constantly processing whether we can trust them and if they are understanding the basic tenants of our investment philosophy. At the same time, we are hoping they are listening and asking good questions to decide whether they can trust us with their wealth and whether our process makes sense. If we get any sense the prospect isn’t going to be a good fit in the long run, we’ll probably walk away. We think of this interview process as the dating phase. If you aren’t careful, and just focus on the assets the prospect has, you could end up needing a “financial divorce” down the road, which could prove inefficient and costly.

Intelligent Investing has found that the clients we most enjoy working with are those who:

Share our core values and investment philosophy.
Understand our process and how we integrate their financial goals, plan, and risk.
Have wealth we can manage. We are after all a boutique wealth management firm.

Notice the order of those three. Sharing our core values and philosophy is much more important than whether the client has a lot of assets we can manage.

You should share an unbreakable trust with your financial advisor.

If you see headlines about fraud or a financial institution being sued because of misappropriation of funds, and you say to yourself, “I wonder if my financial advisor would ever do something like this” it is time to pull the plug.

At Intelligent Investing, speaking the truth in love is one of our core values. Speaking the truth in love means that sometimes we have to have a difficult conversation with a client. Perhaps they are spending too much…perhaps they are being taken advantage of by their children. Whatever the issue, we must have the ability to communicate with them…even though at the time they may not want to hear it.

Wars and divorces begin with a lack of trust. If you aren’t comfortable with your dentist or doctor, then pick another one. If you aren’t sure your financial advisor has your best interests in mind as they manage your wealth, then pick another advisor. Life’s too short to miss out on a great experience you could be getting from another professional.

We believe that technique and technology are important, but trust is of utmost importance.

You should share a common financial interest with your financial advisor.

I chose this profession because it afforded me the opportunity to build my own family’s wealth by helping other people build (and protect) theirs.

Intelligent Investing’s fee is based on a percentage of the assets we manage. We are an independent 100% fee-only fiduciaries who must always act in the best interest of our clients. Intelligent Investing never sells any products (such as annuities or insurance), nor makes any money off of commissions, nor are paid by anyone other than our clients. We believe this creates perfect alignment of interests between us and our clients. When our clients prosper, then we prosper. When our client’s suffer due to inevitable and temporary declines, then we suffer.

Last Thoughts…

So, in conclusion, the three things we think clients should share with their financial advisor are:

Common Values
Unbreakable Trust
Financial Interests

If you aren’t working with a financial advisor who shares these three things with you, we’d love to have a quick coffee and introduce ourselves. We’d be happy to have a short conversation with you to see if we can serve you and your family. The families we can serve best have between $500k to $5M of investable assets. Click here to learn more about our firm, or click the link below to schedule a stress-free call or meeting.

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Why Widows Are Hot

February 6, 2020 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Kathleen Rehl on why widows are hot. During this episode, Kathleen explains why widows are hot and how the future is female. First, she states several statistics concerning the high percentage of widowed/singled women at death. Compared to men, significantly more women are widowed or single when they die. Kathleen also mentions that most of the world’s wealth is being controlled by women today. This is due to many women being beneficiaries of an inheritance. Lastly, Kathleen remarks on the number of women today in higher education. Investors, and professionals alike, should plan on working with women due to the rise in widowhood.

At Intelligent Investing, we understand there is a current shift and the statistics are clear that there will be a rise in widows and widowhood. Here is a link to the book Kathleen mentioned- The Longevity Economy on our blog page. We also have a page dedicated to widows at investedwithyou.com, where you can find information and content geared towards widows and women.

On upcoming podcasts, Kathleen will talk about the three stages of widowhood- Grief, Growth, and Grace, so be sure to subscribe by clicking here.