Why Perspective and Time Matters

Our goal as a firm is to provide our clients with a greater sense of comfort and security. Each client defines this differently, but to most, this means having financial independence and adequate resources to be able to do the things in life that are most important to them.

Today, information and news moves ever faster, which causes society’s perception and time frame to become much shorter. For an investor, this is not a good perspective. To be a successful investor, patience and a long time frame are very important. We discuss and stress this with our clients.

Last week, my son graduated from high school. For the fun of it, I looked up what the S & P 500 was when he was born, in late 1994. At that time, the S & P 500 was 469.

The day he graduated from high school, the S & P closed at 1,329.

Review those figures again:

October, 1994…………………………….469

June 2012………………………………..1,329

Many significant events occurred during these 17 years. There is never a period of time without uncertainty, or crisis of some form.  It is our role as financial advisors to work with our clients, to develop an appropriate financial portfolio, so that you and your family can benefit from the long term financial gains of owning stocks.

How long will you save, to fund your children or grandchildrens’ education?  How long will you save for retirement?  How long will you live, during your retirement?

A long time.

Be patient. Have the proper time perspective.

Develop a globally diversified portfolio, and the time perspective to allow yourself to reach your financial goals. It will be worth it.

Note:   Other time periods may show different results, but the trend over long time periods are positive. The S & P 500 is an unmanaged index of US Large company stocks. Our firm generally structures stock portfolios to include globally diversified asset classes, which will include US and non-US stocks, of both large and small, growth and value companies.

A Valuable Conversation Worth Having

Extended families gather for many occasions. Celebrations. Holidays. Life cycle events. Family vacations. The discussions at these events and gatherings are generally the same: updates on kids and relatives, grandchildren, health, politics, sports, food, etc.

Between the generations of most families, however, the topic of money is rarely discussed. These types of discussions should be happening. Sometime. Anytime. And sooner rather than later.

We all have unique and different family backgrounds and situations. I did not get my education in money, investing and estate planning from my parents. We grew up as a lower-middle income family. I know that my mom struggled financially and worked very hard to support me and my three sisters. Investing was not a relevant topic. How I would pay for my college education, how much I had to work and save money for college education was a very relevant topic.

Fast forward 30+ years… and now I advise people professionally about their money. We have many discussions about their finances, their goals and how to deal with the volatility of the world and financial markets. These discussions are critical, and the educational aspect of these conversations makes our clients better and more successful investors.

I now want my firm to emphasize an additional type of conversation. This is a conversation between generations. These can be difficult discussions, which is why they are generally avoided. But if these discussions take place, tremendous value and important long term benefits can result. Clients can have these conversations (or “family meetings”), or we can assist in facilitating them.

Many couples deal with estate planning. Most view it like going to the dentist; painful, put it off, but they eventually get it done. Once an estate plan is completed, it usually becomes a set of documents that remain locked in a cabinet. One aspect of the discussion that I’m addressing is to make the estate plan real. Make it a living and breathing document and set of plans. Talk about your intents and wishes. Now, while you are healthy and able to have the discussion.

I’m suggesting that parents and grandparents sit down with their next generation, or generations, and talk about their “family” finances. For example, my extended family is going on vacation later in June. My siblings and my parents will be together for a week. We should set aside some time to have a discussion of what will happen when each of them passes away. What is their intent? How will we handle things?

We have actually had this discussion, but it was many years ago. It should happen again. But most families have never had a multi-generational discussion. The topics can vary, depending on the financial assets (small, large or very wealthy), and the ages of the different generations.

At family events, the telling of family stories is how family histories are remembered. The discussion of money, both positive and negative, can be important as well. Parents and grandparents can share their financial and investment lessons, both good and bad, with their next generations. This would be very valuable.

Note: I would like to thank Nathan Dungan, for the valuable session he led on this topic at a seminar I attended in May, as well as Susan Weiner (@susanweiner), who wrote an excellent blog post encouraging financial advisors to write in a more personal manner, which inspired this post. Thanks to both of you.

Graduation, my son and his impact

My second son, Scott, is graduating from high school next week. While I am obviously very proud of him and his many accomplishments, I have also thought about his impact on me and my firm (and thus, my current and future clients).

Parents teach their children. Children also teach their parents. Scott has taught me many things, and we have learned some things together.

Five years ago, no one would have thought of me as a techie or an early adopter of technology. That is very different today. Thank you Scott, for pushing and encouraging me.

At Scott’s insistence, I was one of the first to get an iPhone, when they were initially introduced. That enabled me to “consume” information in a new and better manner. As a voracious reader of business and news, I could then begin to read the NY Times and Wall Street Journal, whenever and wherever I wanted. Years later, I got an iPad. Now, Instapaper and Good Reader are indispensable apps.

Scott encouraged me to use Twitter years ago. I am not a follower of celebrities. I have used Twitter primarily as a learning tool, to connect with thought leaders in various fields and professions, and well as to meet and establish relationships with people I otherwise would have never met. I have made great business and personal connections, and some very close friends. Also, through “following” these people, I read articles and blog posts they refer and “link” to. This has been invaluable for my personal growth and learning, and it has benefited my firm in numerous intangible ways.

Through Twitter, I connected with individuals, like @michealport and @bobburg. As a result, in 2011, I attended a 3 day seminar with Michael Port. Within weeks of this seminar, my firm implemented a Client Relationship Management (CRM) program. This helps us maintain better information about current and future clients. This is generally an area of weakness in most professional services firm, which we have resolved.

Earlier this spring, I attended a conference sponsored by Bob Burg, another great friend and source of inspiration I met on Twitter. I wrote about this conference in a previous post, dated April 24, 2012: Remarkable Experience. Worthy of an Encore. At this event, I met a number of national speakers, who I now follow and continue to learn from.

Scott and I have also developed a wonderful relationship with @jasonwomack, a thought leader in personal development and time management. Jason Womack is one of the most positive, inspiring people anyone could meet (and I strongly recommend you meet him!). Scott has provided Jason with technology assistance for the past few years. While doing this, Scott has learned business and life lessons that few adults ever learn and absorb, let alone a 17 year old. Scott and I have enjoyed many great and important discussions, initiated by Jason’s podcasts, blog posts and book.

It is important to note that Scott’s relationship with Jason started because Scott was willing to help Jason with a tech question, via Twitter, late one Sunday evening. As Bob Burg would say, Scott is a “Go Giver.” Others would say you are a “mensch.”

Scott, you are very talented and have pursued your technology passion. Along the way, you have helped so many others in your school and community. I look forward to seeing where this passion leads you, as well as your continuing to encourage me to try, and adopt, new technology. Because of you, our family is stronger, I have developed great business and personal relationships, and my clients and my firm have benefited. Thank you!