General Financial Planning

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Passing on Wealth & Money Values to the Next Generation

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Contributed by: Matthew E. Chope, CFP® Matt Chope

I work with a lot of moms and dads who want their kids to know what they think is important. Since I’m their financial planner, these values are often tied to money. In an ideal situation, parents want to give their children and grandchildren the freedom to choose for themselves when wealth is passed on to them. But oftentimes, I’ve seen an inheritance turn into guilt, bring out greed, or even sprout into remorse…when all the parents wanted was for their kids to be okay.

Discussing Inheritance + Values

I recently spoke at The Private Wealth Midwest Forum in Chicago to other professional advisors regarding multigenerational family wealth issues. I shared how to help families manage wealth across the generations, covering the successes and challenges I’ve witnessed with families. A major part of the equation is communicating across the generations. The conversation is different when you’re talking to a tween than a college grad. By taking maturity level into consideration, you can tailor the conversation to focus on what brings meaning to money for them. I generally try to have parents or grandparents lead this discussion and share their values, how their wealth was conceived, and their ongoing intentions. Involving children in the conversation and encouraging them to share fosters deeper understanding.

Are My Kids too Young for this Conversation?

I had a meeting with an 11 year old and his father recently – he’s my youngest new client! We started chatting about what money means and providing an early education about stocks vs. bonds, working for the family business, and his wages vs. the company’s profits.  I was amazed at how much the 11 year old could understand. He was quicker with all of the math in his head than I was! Parents often assume their children are too young for serious conversations about wealth and inheritance. I feel the time is right as soon as the parents are ready and I always encourage my clients not to wait until it’s too late!

Knowing How to Give and How to Receive

Once your family has the conversation and develops an understanding of what is sacred, there are other ways to link money with meaning. I hear from clients that, “Our tax guy said gifting money is a smart thing to do.” But simply dropping checks into a bank account can be like a meteor strike if your family hasn’t invested time and effort in the money and in a meaningful conversation. I encourage parents and grandparents to accompany monetary gifts with a note about the value and meaning of the gift. Your goal is likely to help your children on their journey, but not provide for entropy … so tell them that. The act of transferring wealth may not change, but the values associated with the inheritance can provide valuable perspective for both the givers and the receivers. Is it time for you to begin the family conversation? I’m here to help.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Matt Chope and not necessarily those of Raymond James.

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10 Ways to Raise Money Smart Kids—A Webinar in Review

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Contributed by: Center for Financial Planning, Inc. The Center

For those busy parents out there who couldn’t attend the “10 Ways to Raise Money Smart Kids” webinar, presented by Melissa Joy, CFP ®, here is a quick recap on the different methods parents can use to teach their kids about financial responsibility.

First of all, we have to mention how important it is to start talking to children about money early. Lynsey Romo, an assistant professor of communication at North Carolina State University says, “Even now, parents talk more about sex with their children than they do about money.” Money can seem like a taboo or troublesome topic to broach with children of all ages, but your kids will observe money behavior and patterns from somewhere, and it’s better to teach your child what they should know before they get different information elsewhere. Be intentional and consistent with your teachings to reinforce desired habits.

Now let’s get to the tips!

1. Talk about money earlier than you might assume.

Research shows that preschoolers can understand basic money concepts like spending and saving, and by the age of 7 children can understand what it means to earn an income. By waiting, parents can miss out on opportunities to teach their children valuable money lessons during formative years. A quick tip is to bring money out of the theoretical and into the physical and practical world to elicit better comprehension through examples with physical money.

2. Start with the basics and then be specific.

Kids are a blank slate, whatever they know is through observation and your specific instruction. Don’t forget to teach the little things, like protecting your money, because to a child, it’s not an innate habit quite yet.

*You are your child’s money role model.* This isn’t a tip so much as a reminder. Modeling smart money behavior can help your child reflect that same behavior.

3. Get your children comfortable with numbers.

Shawn Cole of Harvard Business School says it best: “a lot of decisions in finance are just easier if you’re more comfortable with numbers and making numeric comparisons.”

4. Use the Bucket approach.

Physically separate whatever money your child earns into three different buckets labeled: Spend, Save, and Share. Not only will this help your child understand the principles of saving money and using money for charity, but the visual will give practical context to their learning.

5. Disconnect allowance and chores.

There are a couple schools of thought here. Ron Lieber, author of the book The Opposite of Spoiled, suggests that parents disconnect allowance and chores all together. The allowance has the purpose of teaching kids the value of money and the chores are family work that needs to be done regardless of a monetary reward.

6. Try a family 401(k).

Leverage a matching dollar-to-dollar system, or act like the “Family Bank” and give interest to every dollar you child has saved in order to teach and encourage money lessons about the importance of saving and long term planning.

7. Understand that education really pays off.

It’s always good to remind your children how the higher the education an employee has the higher their salary is. The data is astounding at how much of a difference a college degree can make.

8. Encourage mini-entrepreneurs.

Encouraging your kids to be mini-entrepreneurs can not only teach lessons of innovation or the correlation between hard work and money, but it can also encourage charitable giving, like using “start-up money” to create a business where the profits go to a local nonprofit. It’s never too early for your kids to learn good business practices or the power of giving.

9. Have up-front communication re: financial commitment.

Hold your children responsible and accountable…give them ideas of what you expect and how they should plan to take on financial responsibilities so there’s no guessing game.

10. Share your family stories.

Your story, the story of your parents, and the story of their parents are important. They hold valuable lessons and are the history that impacts your child’s future. Share with them past success as well as struggles.

Wondering how you and your parenting partner(s) can implement these strategies? Discuss and develop your parenting philosophy with your partner and anyone who helps raise your children and come to a consensus for how you’ll teach your children how to be smart with money, then write it down and sign it. This will help create a consistent plan with intention. Write down specific action items you would like to cover within the year, and/or goals you and your partner(s) would like to reach, then review and amend the “money contract” annually to track your progress and to revaluate your strategies.

Lastly, we understand that parents can spend more of their time worrying about their children and their relationship with money, and less time worrying about their own financial future. It’s important to keep a balance between your kids’ needs and planning for your own life. Here at Center for Financial Planning, we are available to discuss the hard topics involving money and want to plan for your financial future, as well as your children’s.

If you were intrigued by any of the tips and want to hear more, below is the full 30-minute webinar.

Raymond James is not affiliated with and does not endorse the opinions of Melissa Joy or the Center for Financial Planning. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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Impact of the 2016 Medicare Part B Premium Increase

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Contributed by: Matt Trujillo, CFP® Matt Trujillo

You may have heard of the pending Medicare part B premium increase for 2016.  If this is news to you, the most recent Medicare Trustees Report is estimating the baseline premium to increase from $104.90 to $159.30 beginning in 2016 (approximately a 52% increase). The reason why premiums are estimated to increase so much next year is mainly attributable to the way the program is currently structured.

Hold Harmless Clause May Protect You

Currently, the law does not allow higher premiums for all participants. In fact, if you are currently receiving social security benefits, have an adjusted gross income under $170,000 (or $85,000 if single), and are having your Medicare part B premiums taken directly from your social security benefit, then you probably won’t see any increase in your Medicare part B premiums for 2016. This is due to the “hold harmless” clause that protects current Medicare recipients from large rate hikes.

Ordinarily the increase in Medicare premiums is pegged to the annual cost of living adjustment from the social security administration. However, next year the administration says there will be no cost of living adjustment, which has left the Medicare Trustees unable to raise the premiums on 70% of current Medicare recipients.

Am I at Risk for a Medicare Part B Rate Hike?

So how will the Medicare Trustees keep up with the rising cost of healthcare? Simple: they will pass along the costs to future recipients. If you’re not currently receiving social security benefits, but are slated to start soon, you might be in for an unpleasant surprise.

You might be a candidate for a rate hike if:

  • You pay your Medicare Premiums directly and don’t have them deducted from your social security benefit.

  • You have filed for social security benefits but have suspended payment to take advantage of delayed retirement credits (i.e. file and suspend strategy).

  • You have an adjusted gross income higher than $170,000 filing a joint tax return or higher than $85,000 as a single filer.

Talk to your financial advisor to find out more about this pending rate hike, and whether or not you will be affected.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

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Part 9 – A Year of Lessons on Money Matters for your Children and Grandchildren

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Contributed by: Matthew E. Chope, CFP® Matt Chope

When it comes to teaching the next generation about money, it’s as important to talk about what NOT to do as it is to teach the right things to do. After working with clients for 25 years I’ve built a list of Things to avoid at all costs!!!  The 8 steps below are never a guarantee, but from experience, they are good financial lessons:

8 Things to Avoid:

  1. Avoid expensive bad debt. Know what something costs and don’t pay for things with expensive interest.  Reasonable interest rates in 2015 are 2-4% for a car loan (some are even less!), 3-4% for a mortgage, and 3-6% for school loans (depending on your situation). Credit cards should be used only as a last resort and make sure the rates are less than 10%.

  2. Don’t take on more debt than necessary. In the case of college loans, you’re likely to be offered more money on loan than you truly need. While it may be tempting to take out money for living expenses and books, finding ways to pay for as much as possible immediately can save you years of repaying debt.

  3. Don’t be lazy or cheap. Do it now! Make a decision and do it – stop putting things off and being lazy. Also know what the value of things are and pay for them when needed and be reasonable.  Share and try to do more for others than yourself at all stages of your life it comes back to you.

  4. Avoid negative modes of thought. Sentiments like envy, resentment, revenge and self-pity are not productive.  These modes of thought will sap the life out of you and derail you from what you should be focused on.  If you worry about what someone else has or getting back at someone, you lost already and you’re wasting precious resources that could be better used on yourself and personal improvement.  I strongly recommend asking your mentor for help with breaking this cycle.

  5. Don’t be rude. Though it seems pretty self-explanatory, I once had a business meeting with a colleague at a restaurant and he was very short and rude to the waiter because of the slightest error.  After that, I never wanted to do business with him again.  Treat people the way you want to be treated.

  6. Avoid investing in anything that you don't understand.  Buy what you know.  Invest in products and services that you use and feel work for you in your life because you will feel more confident with your investment.  Or break down an investment in a mutual fund to understand what it’s made up of so that when it goes south, you have staying power during the market downturns that will eventually come.

  7. Don’t cosign for a loan. Should be self-explanatory, but you’re putting your credit on the line if the person you are cosigning for falls short or has any type of trouble.

  8. Avoid taking a loan from your 401k at all costs. This is silly to do under most circumstances.  You actually pay extra tax in this process and rob the forward momentum of the retirement goal to fund another short term want.  The equation does not work out well for most people when it comes to wealth building.

While some of these “what not to do” suggestions seem obvious, I’ve seen them played out time and again.  Hopefully, the list will provide you with some insight on what to stay away from … or at least know when you are walking on thin ice! If you have questions, we are always here to help find answers.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Matthew Chope and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. You should discuss any tax matters with the appropriate professional.

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Smart Money Tips for College Students

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Contributed by: Sandra Adams, CFP® Sandy Adams

Earlier this fall I packed my daughter off to college.  The experience of stepping back on to a college campus at the beginning of a new school year certainly brought back memories…buying books and spirit wear, free t-shirts for completing credit card applications, and ordering pizza to my dorm room. It also brought back memories of lots and lots of college students making lots and lots of bad money decisions.

If you are like me, no matter whether your child is a freshman or a senior in college, you want to make sure that your child is learning some important financial life lessons while they are enjoying their time at school.  And if you are like me, your child might sometimes tune you out if you are trying to teach them lessons based on your college days. “Mom, that was so long ago; things are different now!”  I wanted to make sure I could pass on some tips here that were relevant and timely, so I took the opportunity to talk to our younger team members at The Center, who have more recent college experience. Here are the tips straight from the mouths of our young professionals at The Center:

Top 5 Smart Money Tips for College Students:

  1. Don’t spend loan money on things outside of tuition, books and room and board. Take as little out in loans as possible; your future you will appreciate it!

  2. If you can, arrange your class schedule to allow yourself to hold a part time job – even a few hours a week – to help with expenses.

  3. Open a credit card with a small limit early to build some credit. Consider using it only for specific expenses (i.e. gas) and pay it off monthly!!!

  4. Actively search out scholarships and grants year-round – they are out there for everyone.

  5. Start early when it comes to exploring internships and jobs for summer and after graduation.  The more experience you have from internships and jobs, the more marketable you are. The earlier you can lock in positions, the less stress you have at the end of the school year.

Please feel free to share these tips with your students, with the hope that they start their college career building good financial habits.  If we can be of assistance with additional tips, or with your education planning needs, please contact us.

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Sandy Adams and not necessarily those of Raymond James.

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Importance of a Net Worth Statement

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

As summer comes to an end and school starts back up, I’ve been reminded yet again of the power a list can have.  Chances are your son or daughter was given a list of school supplies he or she was expected to purchase prior to school starting. Probably a much longer list than you would have liked!  On top of that, I’m sure you had to do some back-to-school clothes shopping, make a hefty grocery trip to account for lunches each day, plan your calendar with your work schedule and finish last minute things around the house before the craziness of the new school year started.  Can you imagine not having a list for any of these tasks or items?  Pure chaos!  Even with a list, I bet you still felt overwhelmed!  Studies have proven time and time again that lists help us reduce stress and dramatically increase the likelihood of getting the things done we want to accomplish.  With that being said, the significance of a list is no exception when it comes to your personal finances!

What’s in a Net Worth Statement?

One of the “cornerstone” documents we utilize with clients is a personal net worth statement.  Simply put, your personal net worth statement is an organized list of your assets and liabilities that helps you determine where you’re at, where you want to be, and things that can be done now and in the future to help you get there.  We start with the assets you own and break them out as cash accounts (checking/savings), investment accounts (after-tax brokerage accounts), retirement accounts (IRA, Roth IRA, 401k) and hard assets (real estate, automobiles, jewelry, art, etc.).  We then itemize any outstanding liabilities (mortgage, auto loans, student loans, credit cards, etc.) to see what your total debt load looks like.  When you take the difference between your assets and liabilities, we arrive at your net worth. 

How Can my Net Worth Statement Help?

It’s truly amazing how powerful such a simple, working document can be and how big of an impact it can have in a client’s life.  We track your net worth statement each and every year to look at the progress you’ve made and help us identify certain areas that need attention.  For example, we may notice that 100% of the assets you’ve earmarked for retirement are held within your Traditional 401k.  With 10 years prior to retirement, we may recommend that you start saving additional dollars into an after-tax brokerage account that will be used to help fund your retirement goals so the money isn’t taxed as heavily when withdrawn.  This is just one example of many that we can identify by reviewing your personal net worth statement each year together. 

If you have never taken the time to make even a rough draft of your own personal net worth statement, I would highly encourage you to do so.  I think many of us are hesitant to do this because deep down, we know we won’t like what we’ll see.  Even if this is true, how can you make a change if you don’t start somewhere?  A personal net worth statement is, in my opinion, one of your most important “lists” you will make and is a document everyone should have.  Don’t hesitate to reach out to us if we can help you get started or analyze your own net worth statement!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. You should discuss any tax matters with the appropriate professional.

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Family and Finances: How to Help Aging Parents Stay in Control

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Contributed by: Sandra Adams, CFP® Sandy Adams

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I recently attended my daughter’s college orientation.  During one of the presentations to parents, the speaker said something that struck a chord with me:

“As hard as it may be, it is time for you as parents to let go of the reigns and give your children control of their own lives. Let them take care of things for themselves and make their own decisions. This may mean that they make some mistakes, but this is the time for them to learn.” 

Wow!  Did that hit home!  How hard is it as a parent to let go and let your child start doing things for themselves when you have been doing things for them for the last 17 – 18 years?  But isn’t this what your child has been waiting for?  To be an adult and to have control over his or her own life?  Isn’t that what we all wait for?

Why Control Matters at Any Age

As I sat and thought about the issue of control a bit more, I began to think about the older adult clients that I work with and about how hard they fight to keep control over their lives as they age.  I thought about the adult children of those clients who often feel as if, at some point, they may have to take away that control if the older adult losses the capacity to maintain control for themselves.  It can be particularly stressful for adult children to be put in a situation of needing to take over “control” for their aging parents without having a clear idea of their parents’ desires for their lives as they age.  So, what can be done to avoid this potential situation?

  • Have open and honest conversations about the older adult’s plans for their future aging life; this may include a family meeting (tips here on having your own) that is led by your financial planner to include conversations about financial assets and how longer term care planning and future housing options might be funded.

  • Make sure that all of the proper estate planning documents are up-to-date and that they are accessible (consider keeping copies on file with your financial planner’s office, as well).  Particularly important are Durable Power of Attorney Documents for General/Financial and Health Care/Patient Advocate.

  • Ensure that all wishes and plans for the future are documented in writing.  Also make sure to have your financial affairs organized and documented.  Our Personal Financial Record Keeping System & Letter of Last Instruction is one helpful tool you can use.

Control is something we all want to have over our own lives … and something we fight to keep.  As parents of young adults, we struggle to let go of the control for fear that our children might take a few falls.  At the same time, we might be struggling with the thought of having to take control from aging parents who might be struggling with capacity issues as they age.  But, if you’ve planned ahead and helped your parents communicate their wishes, you won’t have taken their control from them at all. Instead, you will be assisting them in carrying out their own well-designed future.

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any legal matters with the appropriate professional.

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Rising College Costs Make Early Savings Crucial

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Contributed by: Melissa Parkins Melissa Parkins

If you have school-aged kids, what will a college education cost by the time they get there? According to J.P. Morgan Asset Management, if the cost of college continues to increase 5% each year, the cost will be more than double what it is today by 2032.  Colleges are spending more to attract students, hiring more to reduce student-to-faculty ratios, and receiving less financial support from the states.  Add these factors up and costs go up too. And with the rapidly increasing costs, we hear people asking more and more, “Is a college education worth it anymore?” The short answer is: Yes! The value of a college education is growing faster than the cost to attend. A college diploma opens the door to career opportunities, increased earnings potential, and job security.

Graph Source: JPMorgan Asset Management College Planning Essentials

Graph Source: JPMorgan Asset Management College Planning Essentials

Where do you Start Saving for College Costs?

Wondering how to begin saving for this huge financial goal? Well, you have to start somewhere, and it’s never too early. By starting to save early, you can take advantage of not only potential investment returns, but the power of compounding. Choosing the right savings plan and investment mix can help you maximize growth potential and also help on taxes (and who doesn’t want to reduce taxes?!). You may not make the goal of saving enough to cover all the costs, but check out this chart to compare the investment in college savings vs. taking out loans:

Source: JPMorgan Asset Management College Planning Essentials. This is a hypothetical example for illustration purpose only and does not represent an actual investment. Actual investor results will vary.

Source: JPMorgan Asset Management College Planning Essentials. This is a hypothetical example for illustration purpose only and does not represent an actual investment. Actual investor results will vary.

What are my College Savings Plan Choices?

There are many ways to set aside money for college expenses. Some families use traditional savings accounts while others use tax-advantaged accounts, like 529 plans. These give you the opportunity to grow your contributions faster than using a taxable investment account earning the same exact returns. Not only can you withdraw money for qualified expenses tax free, but many 529 plans offer state tax deductions as well. This chart illustrates the impact of investing in a tax efficient way for college:

Source: JPMorgan Asset Management College Planning Essentials. This is a hypothetical example for illustration purpose only and does not represent an actual investment. Actual investor results will vary.

Source: JPMorgan Asset Management College Planning Essentials. This is a hypothetical example for illustration purpose only and does not represent an actual investment. Actual investor results will vary.

What about other Ways to Pay for College?

Perhaps you’re hoping to rely on financial aid, grants, or scholarships? Remember, not all aid is free and not everyone qualifies. According to www.finaid.com, only 0.3% of college students receive enough grants and scholarships to cover all costs. And loans? Well, it costs more to borrow and pay interest than to save and earn interest. Not to mention the burden it causes not only to the student, but their family as well.

Source: JPMorgan Asset Management College Planning Essentials

Source: JPMorgan Asset Management College Planning Essentials

Need help getting started on saving for college costs? We can work with you to find a plan that fits your family. Also, look for details to come out soon for our September webinar on Ways to Raise Money Smart Kids.

Melissa Parkins is a Registered Client Service Associate at Center for Financial Planning, Inc.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss.

Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.

As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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3 Things a Widow can do to Gain Financial Control

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Contributed by: Sandra Adams, CFP® Sandy Adams

Typical of most couples, my clients “Mike and Sue” split the household chores evenly.  She handled the house – decorating, cleaning, meals, etc.  He handled the cars, and the finances, including paying the bills.  He was a retired engineer – he loved cars and he loved numbers and details.  She hated all of that numbers stuff – so much so that for the most part she didn’t even attend annual meetings with their financial advisor -- until the last few years that I offered to go out to their home to meet so she would be involved in the annual meeting. I felt like it was important that Sue at least have a basic understanding of what was going on.

Mike was killed unexpectedly in a car accident; a man taken way too young in his mid-70’s.   Sue was taken completely by surprise and was unprepared, as most of us are, to be alone.  Her children live nearby, so that was comforting.  From a financial perspective, she was at least knowledgeable about what she had to work with and knew who to call, and we were able to speak immediately.

In the coming months, Sue gave herself time, as we recommended, not to make any big decisions; to find her new normal without Mike.  This involved figuring out what her new cash flow looked like; she got rid of some services and added some others, etc.  Sue also worked her way through Mike’s bill paying system.  It was very detail oriented and complicated – way too rigorous for her tastes.  But she felt, somehow, like she needed to stick to his system because it had always worked for them.  My advice to Sue (and to any widow) as they take control of their own financial affairs after the death of a loved one is this:

  1. Take the time to figure out what your new normal is and what changes can be made to fit your new lifestyle;

  2. Use a system that makes things easy for you, don’t stick to a system that makes you crazy just because it’s the one that your deceased spouse used for years;

  3. Use your financial advisor as a partner/coach to help guide you through the process as you take control of your financial life.  If this is new to you, it could take a year or two for you to feel comfortable with the process.  And that’s okay.

Becoming a widow at any age is challenging enough, without facing the additional hurdles of handling things you weren’t responsible for in the past.  Use your resources and give yourself permission to design your financial life to fit your new normal. 

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James.

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Part 8 – A Year of Lessons on Money Matters for your Children and Grandchildren

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Contributed by: Matthew E. Chope, CFP® Matt Chope

What motivates you? You might get out of bed in the morning and go to work because you want shelter, nutrition and safety. You might do it because you love your job and can’t wait to get to the office. Understanding what incentivizes you can help you accomplish what is most important and help you prioritize to do the hardest things first.  These are important – yet sometimes overlooked – lessons to share with your children, whether they are tackling tough assignments in school or facing obstacles at the beginning of their career.

Rewards = Results

Try figuring out how to motivate yourself to get results suggests Charlie Munger, Vice Chairman of Warren Buffett’s Berkshire Hathaway Corporation. He calls it the “reward and punishment super response tendency” in his book On Success.  Great employers have managed this for their key employees; but you can do this for yourself.  When you achieve the results you want, reward yourself.

Early in my career, at age 25 I needed to make calls to people I did not know and ask them to considering doing financial planning with me.  This was a difficult task, but I knew it was necessary to build a business.  At the time I enjoyed coffee so it became my reward. If I made my calls each day and achieved the results I needed to succeed, the next morning I treated myself to a coffee.  At the end of the week, if I meet my weekly goal, I bought myself a Twix candy bar to enjoy. Your personal rewards may be different, but they should be motivating. And expect them to evolve over time. Maybe that Twix becomes a vacation if you reach your quarterly goal or new car if you meet your annual goal.

Setting Your Priorities

If you have 5 projects or jobs and one is going to be the most difficult (but also the most important), where do you begin? I suggest if you are having a difficult time in a certain aspect of your business, begin by tackling a portion of the problem first.  Then go to something that’s easier and come back to the subject that is troubling before ending your day. Back to me at age 25, I didn’t like making calls to people I didn’t know but needed to make 20 a day.  I found if I started by doing the difficult part – I wasn’t looking at that list all day. 

If you can determine what motivates you to accomplish your daily tasks, you can reach your work goals. As a bonus, linking incentives to challenging tasks and prioritizing your time can also lead to personal growth and accomplishment.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Matthew Chope, CFP® and not necessarily those of Raymond James.

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