Archive for January, 2012
Our Comment by J. David Lewis – When I read this tonight, I was struck by how timely it is. Late in 2011, we prepared a relatively complex Recommendations Report for a couple interested in retiring a few years from now. Less than six months later, we learn the retirement date may be very soon, due to changes by the employer. No one could have predicted this change of expectation when we were working on the project. I am convinced the decisions were sound when they were made. Now, we are deciding what needs to be reconsidered. In our world, this sort of thing is not exceptionally unusual.
By Carl Richards
“Whether we like it or not, life is not static. We don’t live in bubbles. And even though one day may look very much like another, life is rarely the exact same every week let alone from year to year. Perhaps the basics stay the same — work, school, relationships — but little things change, and we learn to adapt to those changes.
We need to think the same way about money. Even after we make smart decisions life will continue to happen.
The decision to save money each month may need to change if someone loses a job. The decision to have another child may mean that you need to buy a new car sooner than planned. The decision to retire early may be put on hold after a health emergency. In each example, no one did anything wrong; life happened.”
Read Carl Richard’s article via There Is No Perfect or Permanent Financial Plan – NYTimes.com.
Contact J. David Lewis directly with david.lewis@resourceadv.com or share your thoughts on this topic below. He founded Resource Advisory Services in 1985. National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986. He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family. 57375
January 23rd, 2012
Our Comment by J. David Lewis – If you believe you do not have enough to find a good fee-only, fiduciary financial advisor, this is the article for you. It gives good research tips.
by Mark Miller, Morningstar
“Resolved for the New Year: I will not make a financial plan for my future in 2012.
Thats the disturbing finding of a survey showing that 80% of Americans wont focus on financial planning this year–the highest percentage found since Allianz Life Insurance of North America started asking about this three years ago in an annual New Years resolution survey.
Why? The largest group of nonplanners–35%–said they “dont make enough to worry about it.”
Read the steps via 6 Crucial Steps To Take When Hiring A Financial Planner.
After you read this article and followed its advice, talk with us. We do not have minimum investment accounts for new clients. We do expect serious commitment to improving your financial strength. There is more to money than money®. With that commitment, we will quote fee arrangements that should make sense for your particular situation.
Contact J. David Lewis directly with david.lewis@resourceadv.com or share your thoughts on this topic below. He founded Resource Advisory Services in 1985. National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986. He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family. 57279
January 16th, 2012
We feel very fortunate Mary Davis has joined us to assume Kyries role. With East Tennessee roots, her 1986 entry into financial services was with brokerage firm operation departments, leading to a Charles Schwab & Company retail client service position in Birmingham, Alabama. Yes, for some reason she is an Alabama fan. Those brokerage firm positions required significant testing for several securities licenses. More recently, Mary was Chief Compliance Officer at Sovereign Wealth Management in Memphis. This means she was their liaison with the Securities and Exchange Commission for regulatory matters. To prepare for these responsibilities, Mary earned the IACCPsm designation, awarded by National Regulatory Services.
Now, Mary’s position is Client Services/Administrative Assistant with us at Resource Advisory Services. Much of her work at Sovereign was astonishingly similar to Kyrie’s at Resource Advisory Services. In a nutshell it involves three complex software and electronic communication systems, plus extensive direct communications with other financial institutions. These functions make our personally written Quarterly Reports feasible. When you are in contact with Mary, take a few minutes to get acquainted. Her father was an Air Force dentist, which had Mary living in Alaska for many years. She has also lived in a number of other interesting places.
Read more via Mary K. Davis Has Joined Resource Advisory Services.
January 13th, 2012
It was great to find my quote published this morning. —- J. David Lewis
How Financial Advisers Get Clients to Take Action – WSJ.com by Jaime Levy Pessin
“Writing It Down
David Lewis, president of Resource Advisory Services, a money-management firm in Knoxville, Tenn., has taken the opposite approach—he has eliminated regular meetings with clients.
Mr. Lewis says he initially built his practice by working with doctors, who “legitimately didnt have time to set aside for meetings unless we really had something significant to discuss.” Eventually, he realized that instead of quarterly meetings, he could write a “net-worth letter” explaining the changes in a clients account. Mr. Lewis staggers the reports, so he doesnt have to write to all his clients at once; when a clients report is coming up, his office emails the client to see if theres anything specific he or she would like addressed.”
I can be much more thoughtful, much more thorough [in writing] than if the issue comes up and I have to talk about it,” he says.
If clients have a question stemming from or unrelated to their quarterly letter, they are encouraged to call and either discuss it on the phone or come in for a meeting, Mr. Lewis says. Letting the clients come in on their own terms makes for more productive meetings, he says.
Mr. Lewis is a planner who has discretion over his clients……”
Read the article via How Financial Advisers Get Clients to Take Action – WSJ.com.
January 9th, 2012
by J. David Lewis
The time around each New Year has become very special for me. Of course, the news media fills its commentary with events of the last twelve months. We take a longer view; to consider events in each client relationship since we began our journeys together. I must say the letters we write with this season’s Quarterly Reports are among the most personally rewarding for me. Several of our clients have been with us more than twenty years. Even the much shorter relationships have personal stories. They all provide many memories I savor. There is more to money than money®. Life as an adventure is exciting. A new year is starting, with more in store for all of these relationships.
We use graphs, with annual columns to represent each client’s history of Total Assets – not just investment accounts. While increasing investments is important for future security, we also think it is important to have appropriate increases in those things that make life better now. Adjacent columns represent Total Liabilities. The distances between the tops of these columns graphically display net worth progress, which is the most comprehensive measure of financial strength. At a glance this measure of success – or lack thereof – is clear. These reports are not about how well we managed investments. They are about how well our clients managed their financial strength with our help.
The text of these reports compares each client’s financial strength now to several recognized events. These histories are important tools. If you cannot compare your current total assets and debts to your past, I encourage you to document them now, so you can make this comparison at the end of 2012 and at least once a year thereafter. I am finished with mine for 2011. The “Once a Year Task” doesn’t take that long and the information is amazingly useful.
Even if progress is less than you intuitively believe, you can actually feel more secure. Facts, even disappointing facts, help guide confidence in managing resources. In our experience, the exercise of measuring results regularly reveals that most people are in better shape than they imagined. Whether you are doing better than you believe or worse, knowing facts is better than not knowing.
Let’s say your change in net worth is positive. Was that because you have more assets than a year ago or did you reduced debts? We like to see net worth increased by both these components.
What assets increased or decreased? Do you have more investments, a nicer home or a new car? We have seen several situations where people displayed great distress over publicized market events, when their net worth was relatively stable. Investments were just not that big a factor relative to other issues for them.
The significance of maintaining these annual Net Worth Statements takes on more meaning with just three years of history. At the end of 2008, markets had been particularly brutal for several months. At the time, knowing how much that bear market effected net worth could make the events of the time more bearable. Not all the components of net worth are affected by the ups and downs of stocks.
Since December 31, 2008, investment returns for those who “weathered that storm” should be a contributor to net worth growth. The S&P 500 Index return from December 31, 2008 to 2011 was 14.11% per year. For many people, personal debts have also been reduced significantly in these years. With records of your historical net worth, you could expect to see encouraging improvement. Your view can be more comprehensive than just the last twelve months.
Five years ago, markets were approaching their highest level ever. The peak was reached in the third calendar quarter of 2007. Except for rare circumstances, investment performance has probably not contributed a great deal of personal net worth growth, with a five-year S&P 500 Index return of -0.25%. However, for those who continued systematic contributions to 401(k)s and other investments, alongside debt reductions, net worth growth should be respectable.
Ten years ago, December 31, 2001, it was about 3 ½ months after 9/11 and about 15 months before markets reached that low point in the spring of 2003. In 2001, we did not know when the bottom would come. It was painful, after two years of decline from the robust 1990’s. Now, the ten-year S&P 500 Index return is 2.92%, which has increased through 2011. This ten-year return is very low relative to the vast majority of ten-year S&P returns. Yet, we know that many people have managed to increase net worth through these years. Consider how knowing your progress might help you face the future now.
There is more to money than money®. Investment performance is only one of many factors that influence growing financial strength. Investment contributions, withdrawal management and debt management are the keys to building and maintaining resources, whether the markets are performing well or poorly. Returns cannot come close to these factors – particularly since the year 2000. Knowing the reasons for your unique results is important. So, now is the time to start building your documented history. The knowledge will make a difference in your enjoyment of life. Start this New Year with at least 2011 data in hand. This is a core service we provide clients and will be glad to help you.
Contact J. David Lewis directly with david.lewis@resourceadv.com or share your thoughts on this topic below. He founded Resource Advisory Services in 1985. National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986. He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family. 56975
January 4th, 2012
