All Things Financial Planning Blog


The 5 Biggest Changes in Personal Finance over the Last 20 Years

Personal-DebtMy son recently turned twenty and it inspired me to reflect on all of the changes in his life as well as in my professional life. My son’s progression has gone from being a baby, to a toddler, to a growing child, to a teenager, and finally to a young adult. He is now trying to figure out his professional place in life as he just finished his first year of college. During that same timeframe, I’ve seen personal-finance go through its own five stages of maturity. Twenty years ago it was more about buying a product, being transaction focused, little reliance on technology, running massive volume plans, and focusing just on the money aspects, not health and psychological aspects.

  1. Let’s face it, our culture must sell products and we’re pretty darn good at it. The problem is that the marketing and slick ads of all the things we buy in America today, don’t always match the quality and integrity. I think the biggest move that our industry has made in the last 20 years was to go from selling a product to following a process. The process includes a comprehensive financial plan. The financial plan not only talks about investments but also about understanding debt, figuring out a budget, understanding human capital (what we think of as our skills to make money for ourselves), reviewing your insurance for the major risks in life, and understanding that all of these things are linked together in order to get us all to the finish line.
  2. The transaction focus over the years has ebbed and flowed in terms of the hyperactivity in order to get better performance. Back in the olden days, it was about transactions because that’s how many advisers were paid. It was said that advisers are not in the storage business they’re in the moving business. Today the focus is on asset management for a fee, retainers, hourly fees, and project fees rather than commissions. Although I see a bit of a backlash happening in the last few years where it appears technology is getting ahead of the small investor. The advent of massive millisecond transactions have caused us to doubt the integrity of the system which the world of investments is built upon. We had multiple occasions like the “flash crash” and the search for algorithms giving institutions a major-league advantage over the average investor.
  3. For those who need help with their finances, the place to start your search is to ask a friend if they know somebody that’s good. Yet the next step is to get on the Internet and search for someone that appears to fit your standards. Even though it’s like trying to take a sip out of a fire hose every time you do a Google search people are finding most of their initial information on the internet. Today, I feel it’s much more of a collaborative effort between the adviser and the client. The adviser gathers the information needed to better help assist the client in making decisions. The best advisers these days are more of a librarian than a master of many disciplines.
  4. The financial plans that we put together over the years can be extremely comprehensive and lengthy. The problem with that is that planning by the pound doesn’t always get things done because most people are very busy these days and just want to get down to a summary version. I know that because I do a daily radio show commentary and 14 years ago I had 3 minutes to talk, today I have a minute and 10 seconds. A more modular approach works better because it talks about your specific problem at the moment and how you fix it. I feel that the best plan these days is to have one page versus 100.
  5. Probably the most important change that I’ve seen over the last 20 years is that financial planning has gotten much more holistic. It is about looking at the big picture and trying to incorporate wisdom, along with emotions, as we see the springing up of behavioral economics and why we do what we do. Reading a book like Daniel Kahneman’s Thinking, Fast and Slow (he was the first psychologist to win a Nobel Economic prize) should be mandatory for anybody who’s going to invest or put together a financial plan. It’s really critical to try and take health, wellness, happiness, human capital, emotions, relations, and wealth together as they are all part of the playing field.

The world of financial planning and investment advisory has moved steadily in the right direction over the last 20 years and I hope that it will continue to do so. There is certainly a lot of room for improvement yet I feel that some of the breakthroughs that we’ve seen in healthcare and technology over the last two decades are going to find their way into a simpler, more comprehensive blend of our money and life connections. Robbers used to say, “Your money or your life.” The next phase of financial planning is going to be “Your money and your life!”

Dave Caruso, CFP®
Certified Financial Planner™
Coastal Capital Group
Danvers, MA


We’re Married. Now What?

With six wedding ceremonies to attend this year, 2012 has been the year of marriage celebrations for me. It’s an exciting time in many of my friend’s lives and I couldn’t be happier for them! However, as the months after the ceremony roll on, questions have been popping up as to the best way to merge finances, what debt to pay down first, what steps to take to change names, and what else is out there that they haven’t even considered. In hopes of assisting my friends along with the many other newlywed couples out there, below are some items to consider in the days and weeks after your marriage:

Name Change: Post wedding, make sure you obtain at least 3 copies of your official marriage certificate from the county clerk, which is where your name change will be indicated. You’ll begin the name change process by first obtaining a new social security card (visit for more information). From there, visit the DMV to update your driver’s license and then move on to your passport, employer, voter registration, bills, bank accounts, etc. It may be helpful to make a list of all the accounts you’ll need to update.

Taxes: You and your spouse may begin to file your taxes as “Married Filing Jointly” in the year that you are married. Be sure to check in with your accountant as to if that is the best route for you two and update your withholding elections through your Human Resources department if appropriate.

Money Mergers: Hopefully you and your spouse had more than just one conversation about money pre-nuptials. Some things to consider in the days ahead are whether or not to open a joint account. If you decide to go this route, also discuss if you will maintain separate accounts or if everything going forward will be deposited into your joint account. Work out a detailed spending and savings plan and ensure the two of you are on the same page with how your money is being managed and spent.

Assets & Liabilities: Create a list of all of your accounts, including Roth IRAs, 401(k)s, checking, savings, and any other personal cash or investment accounts. Decide if any accounts (aside from retirement) should be consolidated and if you’d like to add each other to titles of cars, property, or any other assets. In addition, review your investments and take some time to adjust your allocations so that it is appropriate based on your combined goals. Also create a list of any outstanding debts such as: credit cards, student loans, mortgages, and car loans. Prioritize your debt re-payment plan by focusing on those balances with the highest interest rates first – likely your credit cards.

Insurance Needs: For items like car and health insurance, evaluate each of your plans and pick the better of the two. Your car insurance should provide the best coverage for the most reasonable price. For health insurance, ensure that your current doctors are available under your spouse’s plan or that you’re okay with making a change if necessary. With life insurance, first determine the amount of coverage needed by considering outstanding debt and the loss of household income that would occur should something happen to either you or your spouse. For young couples just starting out, look into term coverage, which should provide coverage at the most reasonable rate.

Beneficiary Update: An item that is commonly overlooked by newlyweds is the updating of beneficiary information. If you and your spouse determine that you’d like to name each other as beneficiaries, be sure to contact your HR department at work and any companies that hold a life insurance policy or retirement account for you to make necessary updates.

Estate Planning: In the months ahead, consider establishing Durable Power of Attorneys for finances and health care and creating a Will that addresses your combined assets and wishes.

The list above won’t address all of your financial concerns as newlyweds, but by taking the time to go through each item together and consulting your accountant, financial planner, or attorney, you will start your new marriage on a financially healthy road to success.

Mary Beth Storjohann, CFP®, CDFA
Senior Financial Planner
San Diego, CA

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Time for Your Free Upgrade

It is time for a new phone. 

It is? I have not learned to use many of the features my current phone. This phone still works fine. I will have to spend time learning the features and operations of a new phone — that is time I could spend with my family or reading a good book or catching up on social media.

You mean if I get the new I-Phone 4S it will be free? No.

You mean I can get rid of my BlackBerry and stop having the cool kids laugh at me? Humm…. (Actually, the cool kids would still laugh at me; they would just have one fewer thing to point out when they laugh at me.)

So it is time to get a new telephone because the telephone company will provide a discount on an upgrade. But I am not ready for a new phone.

I see how it is difficult to stay within a budget. In fact, I am not particularly good at budgeting per se. I am cheap in some areas of my finances and generous in other areas without a strictly rational basis for the behaviors. Most of my good behaviors come from avoiding things that get me in trouble; for instance, I never look at whether I have a discount for a new phone until I think I need it. (Unfortunately, some family members look for me.) Another example from early in my adulthood, was putting more money in 401(k) plans than savings accounts because I tended to withdraw and spend the money in a savings account but I could not get to the 401(k) money.

How can you create obstacles to avoid your financial foibles? Perhaps you could avoid impulse purchases if you left your credit cards at home. Maybe you could substitute a walk in the woods for a walk at the mall. Maybe you could visit the library instead of the bookstore.

When I wanted to quit smoking, one of my techniques was to tell myself over and over that it was a vile and disgusting habit. After 20 years of smoking, I had to convince myself that not smoking was better than smoking. Maybe buying a new car every two years is a vile and disgusting habit for you. Maybe going into debt for your family vacation is your vile and disgusting habit. I succeeded in quitting smoking and I bet you can quit going into debt.

It may be that you want more positive approaches to encourage you to control your finances. Visualize your goal in exquisite detail and spend time in your mind’s eye living that goal. The goal may be starting a business or going to college or achieving financial independence. Think about exactly how things will be better once your goal is met. Explore a day in the life in detail so you can visualize it again and again for motivation. Go over the details each morning for a month to implant those ideas firmly in your mind.

Another way to control your finances is to reduce the amount of your fixed expenses. If your rent consumes 50% of your monthly income and you have an unexpected expense, it is hard to recover. If your rent is 20% of your monthly income and you have an unexpected expense, it is easier to get back on track. When you are making major changes to your lifestyle, think about how much you commit to your fixed expenses. (Generally, a guideline for rent or mortgage payments is 25% of your monthly income.)

I think I have managed to avoid learning a new phone for little while. My son lost his and we are going to use my upgrade to get him a new one.

John Comer, CFP®
Comer Consulting, LLC
Plymouth, MN

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A New, More Powerful Engine

Like many of you this summer, my wife’s family had a reunion at the lake last month. We had hamburgers and hot dogs and, since it was in Wisconsin, we also had brats. The weather mostly cooperative, although we had exciting gusts of wind along with rain for a few minutes. It added a topic of conversation for a group that did not see each other as often as they would like.

The most popular water sport was tubing. Pete brought the boat and talked about going tubing as a child. It seems he and his brother used to “try to kill each other”: gunning the boat, taking sharp turns, slamming the tube into the wake. The boat had a 50-horse engine and the brothers would push it to its limits trying to throw each other from the tube. It was all great fun.

One day, their father got a new boat with a 150-horse engine. This one had more than enough power to throw them from their tube. Peter and his brother realized they might be able to kill each other with this boat and the boys quickly learned that the rules had to change. They were no longer testing the limits of the engine, but the limits of their bodies.

Some of us have realized that the engines available for our personal finances are more powerful than the old engines also. Passbook savings accounts are not as powerful as money market funds. Cash transactions are not as powerful as credit transactions. In many ways, defined benefit plans are not as powerful as 401(k) plans. These engines will allow us to accomplish much more than previous generations and provide the potential for us to get in much more trouble.

Unlike Pete and his brother, we are not changing the rules very quickly. Some are calling for new rules in the form of financial regulations; others are calling for more education; still others see the difficulties individuals face as a character flaw of one form or another.

When I started my career, I applied for a credit card from my employer, a bank. They told me that I did not make enough to qualify. Years later, I started my own company and, as I opened a checking account for the company, the banker asked me if I wanted a credit card for the company. They gave my new company, with no income, a $5,000 credit line. The rules for credit card issuance had changed. Of course, I had earned a strong credit history over the years that helped me get the business credit card. However, I would contend that the college students being offered credit cards with little income do not have a similarly strong credit history. Today, individuals have the ability and the responsibility to control their own use of credit—the banks will give you enough financial power to throw you far from the tube.

A pension is a powerful source of lifetime income, but employees do not have much control over its value; a 401(k) provides a lot more control over contributions and a greater potential for growth. Contributing generously and early combined with taking some investment risk allows employees to accumulate a significant nest egg over their career. Postponing contributions, stingy contributions and stable investments could constrain your retirement lifestyle. With the 401(k), individuals have the ability and the responsibility to control their own retirement funds.

Education will be a key to managing these more powerful financial engines. Some of that education might come from parents, if they really know more than their children. Many parents grew up with cash transactions and were offered credit after their spending habits were ingrained. They may struggle to find life lessons that apply to young people who are given credit lines before they have income. Parents may not know just how valuable time is when you are saving for a goal.

Some say there may be a need for more regulation. There may be some need to improve the character of our citizenry as well. But I believe that it is not necessary to add a governor to our 150-horse financial engine. We do not have to prevent our financial engine from providing more than 50 horses of power. If we add that regulation we may prevent people who are able to save and those who know how to use credit responsibly from maximizing their wealth.

We need to prepare more people to save and use credit responsibly. We need to help people realize that some lessons have too high a price to learn from experience. If you travel too fast in a tube and are thrown, you could die.  If you take on too much debt, you may not be able to pay it off.  If you turn too quickly, at too high a speed, you can fly from the tube.  If you wait too long to save for your retirement, you can be tied to some form of income for much longer than you intended. You need to learn not to jump out of a speeding boat from instruction, not experience. You need to learn to start saving early and to stay out of debt from instruction, not experience.

John Comer, CFP®
Comer Consulting, LLC
Plymouth, MN

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Harry Potter and the Deathly Hallows of Finance

Okay, unless you have been living under a rock, you’ve heard of Harry Potter and the final installment in the movie series. As I write this on the eve of opening weekend, I’ll go out on a limb and wager that by the time you are reading this the movie will be the blockbuster hit of the summer. (I’m a big risk taker, right?) Anyway, aside from the fact that J. K. Rowling is a billionaire, what does Harry Potter have to do with finances? Honestly, I’m not real sure but let’s dive in anyway.

Let me start by saying that I am not a Harry Potter aficionado. My Sherpa on this journey through Hogwarts School of Witchcraft and Wizardry is in fact my ten year old daughter Janae, who read every book as soon as she could get her little hands on it. My first question to her was, “what in the heck is a deathly hallow?” Now that I’m a little more educated on the subject, I’ll tell you that they are magical objects that hold different powers. There is the elder wand, the cloak of invisibility and the resurrection stone. Through out the series Harry comes in contact with all of these objects at some point or another. Of course the major villain, Lord Voldemort, can’t wait to get his hands on some of the goods as well. In true fantasy world style there’s a big battle at the end and the good guy prevails but not with out a lot of angst.

Voldemort manages to get inside of Harry’s head and make him see things that aren’t really there. Harry has to learn and train to keep Voldemort out of his head. Tell me, is there a financial Voldemort trying to get inside of your head? Perhaps it is that friend who always wants to go shopping and by the latest designer handbag as soon as it comes out. Maybe, it is your buddy who seems bound and determined to play every golf course east of the Mississippi. Or maybe it’s those dang late night infomercials selling everything from egg scramblers to light clappers. If spending is after you, perhaps you can use the elder wand of budgeting to keep you on the right path. Using the wand at first is rarely easy, but with a little practice you eventually get the hang of it.

How many times have you seen a magazine at the check out counter that shouted the merits of “The Five Best Stocks” only to see the same magazine extolling the virtues of “The Ten Best Investments You Can’t Afford Not to Buy” a month later? Maybe it was your cousin who told you about a can’t miss opportunity over Thanksgiving dinner. If these type of incident causes you trouble, you should seek out the twin cloaks of invisibility, asset allocation and diversification. Take the time to develop a solid investment portfolio based on sound research and professional help if you need it. This will help you shroud your investments from spells cast upon you by well meaning family and friends.

Study after study points to the fact that the biggest fear of those in or nearing retirement, is the possibility of running out of money before running out of breath. The best antidote for this evil spell is the resurrection stone of income distribution planning. While not perfect, the stone has tremendous reliability when used properly and with care. Taking the time to assess your living expenses during retirement and matching them up properly with the right mix of “guaranteed” sources of income like pensions and social security (no jokes from the peanut gallery!) with a well protected portfolio as discussed earlier greatly increases the likelihood that your money will outlast your breathing. There may even be a little something left to pass on to future generations. 

Hogwarts, I mean life, can be scary at times. But using the right tools can make things a little easier to manage. See you at the movies!


Lee Baker, CFP®
Apex Financial Services
Tucker, GA

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A Soldier’s Story: Helping Wounded Warrior’s Manage Their Money

A Soldier’s Story: Helping Wounded Warriors Manage Their MoneyOctober 4, 1942. That was the date that a young man named Henry was inducted into the United States Army. Born before the Depression, he grew up in the backwoods of North Florida. (In all honesty, most everything was backwoods in that day.) He had been married only a few months before getting the call. He reported to duty at Camp Blanding. He went on to serve his country admirably in campaigns across Italy, including Naples, Foggia, Rome, Po Valley and others. After serving his country he returned to his wife, a cute little thing named Alice. He became a minister. They even raised a couple of boys that turned out half decent.

Henry had managed to come home from World War II in one piece. I’m sure there were some mental and emotional scars but physically, he was intact. He didn’t like to talk about his time in the service much but never dealt with nightmares and some of the other problems you hear about from time to time. Recently, I’ve had the opportunity to work with some of our modern day veterans. Some of them were not as fortunate as Henry. One of them in particular was a young man named Derrick.

I liked Derrick the instant we met. He looked up at me from his wheelchair with a steady gaze and extended his hand with firm grip. As we spent time getting to know each other, I learned a lot about Derrick. He has a wide array of musical tastes. It’s not often that I talk about Tupac, Frank Sinatra and Charlie Daniels in the same conversation. As we got a little further in to our interaction, I learned that Derrick had the misfortune of stepping on an Improvised Explosive Device or IED. As a result Derrick lost part of his right leg, right shoulder and has a plate in his skull. We talked about the nightmares that he has and the way that his hopes and dreams have been changed forever.

One of his biggest problems is getting his arms around his finances. That’s where I came in to the picture. We spent time looking at all of his bills. We pulled a copy of his credit report. Working with his therapists, Derrick set up some of his accounts on automatic pay. Derrick still has a lot of work to do to get his financial house in order but he has come a long way. The smile on his face and the hearty slap on my back as we finished up one of the sessions is a memory that I’ll carry forever.

Through a program at the Shepherd Spinal Center sponsored by the Foundation for Financial Planning, members of FPA of Georgia have been working with Wounded Warriors to improve their financial situation through Pro Bono services. Unlike my father, Henry, I never served our country in the military. Programs like this give me an opportunity to help out in a small way.

As we observe Armed Forces Day, Memorial Day and look toward the celebration of our country’s independence, consider lending a helping hand. Join me and others in giving some of your time, talent or treasure. It can be a truly rewarding experience. The benefits of helping those who gave so much and risked their very lives can have a ripple effect throughout the Nation. Those who served our country most certainly appreciate the effort.


Lee Baker, CFP®
Apex Financial Services
Tucker, GA