Inspiration from “A Poetic Life”

Contributed by: Timothy Wyman, CFP®, JD

How will you live your life, now and in retirement? Will you live each day to the fullest – regardless of circumstances? Do you take the long way home in order to enjoy the sights, even if the GPS says there is a faster way?  I am fortunate to have so many interesting clients that inspire me to continuously think about and plan for an intentionally lived life. In that spirit, and with permission from the authors, long-term clients of mine, I share “A Poetic Life”.  I hope you enjoy it as much as I did.

A Poetic Life

We live a poetic life. It’s not at all that we are poets. But our lives together are frequently “two cats in the yard” easy but it is always “til death do us part” solid. We live on two acres in an older home filled with the daily rhythms of dappled tree and leaf shadows.   We have some lovely habits: coffee and clipboard plans, well-paced errands, walking, wine time, and evening talk time. We have other not so lovely habits too but we discuss and curb and respect. A poetic life was never meant to be flawless.

Like many of you we had very busy professional lives. Dan as a long-term parish minister of a large congregation and Cathy as pediatric chaplain and hospital department manager in Detroit. We encouraged. We witnessed incredible suffering.  We did all we knew how to do.

In wedding ceremonies Dan included the phrase “may your home be an island where the pressures of a cluttered world can be sorted out and brought into focus; where accumulated tensions can be released and understood; where personal needs do not tower over concern for others; where the immediate does not blur more distant goals; where the warmth of humor and love puts both crisis and dullness into perspective.” It is the heart and soul of our poetic life.

We live love consciously. We give thanks for incredible beauty. We do not turn from sorrow. We intentionally notice the unexpected. We allow for honest contrasts. We make hard decisions. We embrace enoughness. We acknowledge unfinishedness. Poetic enough for us.

We had always known that we’d retire early, though we hadn’t decided exactly when.  Then one day the mail brought a copy of the UUMA News and a copy of Cook’s Illustrated.  Dan sat down with Cook’s.  The time had come for us. Time for others to make their mark. Since retirement, we get great joy from the slower pace.  We savor.  We reflect.  We appreciate.  We live a poetic life.

That doesn’t insulate us from life’s trouble, pain and suffering: a cerebral hemorrhage, cancer, family disappointments, making difficult decisions.  The poetic life, to paraphrase Picasso, washes the dust off the daily life of your soul.

 “time is a tree (this life one leaf)

but love is the sky and I am for you just so long

and long enough.”

e.e. cummings

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

Reaching the Right Amount at my “Plan End”

Contributed by: Nick Defenthaler, CFP®

You’ve probably heard someone (morbidly) joke, “When I die, I want my last check to bounce.”  For some, spending your last dollar on your last day would be considered a success. However, in the world of financial planning, we would consider it playing with fire.  This mantra might seem like the ideal situation in a perfect world, but the reality is simple – we do not live in a perfect world!  I believe having “excess” at the end of your financial plan is a product of thoughtful, prudent planning by the client and advisor.

The goal of the vast majority of our clients is simple: Don’t run out of money in retirement.  So how do we help clients make that happen?  When building a new plan or updating a client’s existing retirement analysis, we use a combination of sophisticated technology and good, old-fashioned human knowledge and expertise.  When you put the two together and have a client who is realistic with their goals, it’s typically a recipe for success. 

Tapping into Technology

Our financial planning software takes a look at many different factors (age, life expectancy, income, savings rate, retirement income sources, portfolio value and allocation, etc.) when testing the probability of success of the sustainability of a client’s financial plan.  As with anything, there has to be a balance.  We see some who are spending far too much in retirement and the software puts up red flags. We also have some families who live well below their means in retirement and could actually spend a lot more than they do.  The key, as with anything in life, is finding the appropriate balance. 

Can’t We Spend More?

When I’m walking a client through their retirement analysis, looking at a plan we consider to be in good shape, they often get a perplexed look. It happens when they see an estimate of the value of their investable assets at age 95 or “plan end”.  For example, I recently met with a couple in their early sixties. At age 95 (in the year 2048!) they had an estimated $1.2M left at their “plan end”.  The couple had a goal to spend approximately $70,000/yr in retirement (including Social Security) and had a child who they felt did not need the $1.2M the software program was telling them they would have left upon death.  However, when we dug into the numbers, we showed them that the $1.2M in 2048 (33 years from now) is really the equivalent of just over $450,000 in today’s dollars if we factor in the negative effect inflation (3% assumption) has over your purchasing power.  However, in their minds, it was still a good chunk of change to leave as an inheritance.  They were still stuck on that $1.2M – couldn’t they spend more?!  While this was an extremely fair and logical question, my answer was yes. But next I explained that the likelihood of having to adjust their current spending habits downward at some point in the future would increase.  The reason for this is because we want your plan to have a “cushion” or “buffer zone” for the unknowns we haven’t fully factored into your plan.  Things like unexpected medical events, long-term care needs, helping out family, extended periods of negative market returns, etc. can all eat into that “cushion” or “buffer zone” pretty quickly even though on paper, it looks like a large amount today. 

The bottom line is this – financial planning is an ongoing process.  Meeting annually, tracking progress, making adjustments when necessary and being consistent is planning done right. This approach has helped thousands of our clients feel confident during their 20+ years after working. While spending your last dollar on your last day might seem like the Holy Grail, it isn’t something we strive to do for our clients.  Life is full of unknowns. That is why we plan and work together with you to make sure when those unknowns eventually do occur, you will be properly prepared.

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.

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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, 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. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Any examples provided in this material are for illustrative purposes only. Actual investor results will vary.

We’d Really Like Our Clients to Know ….

Contributed by: Center for Financial Planning, Inc.

Some might say the snack drawer is the best part of the job, but there’s so much more. In this video we made for Center for Financial Planning’s 30th anniversary celebration, we asked each and every team member about the perks of working here. From getting to help clients achieve dreams and goals to having fun on the job, it’s pretty clear we value our workplace. Here’s our take on our 30-year history and what’s yet to come:

Opinions expressed in the video are those of the speakers and are not necessarily those of Raymond James.  Investing involves risk and investors may incur a profit or a loss. 

Center for Financial Planning, Inc. Named to 2015 Financial Times 300 Top Registered Investment Advisers

Contributed by: Center for Financial Planning, Inc.

The Center for Financial Planning, Inc. is pleased to announce that we have been named to the Financial Times 300 Top Registered Investment Advisers, as of June 18, 2015. The list recognizes top independent RIA firms from across the U.S, and we are proud to be one of eight firms listed from Michigan.

This is the second annual FT 300 list, produced independently by the FT in collaboration with Ignites Research, a subsidiary of the FT that provides business intelligence on the investment management industry. More than 2,000 elite RIA firms were invited to apply for consideration, based on their assets under management (AUM). The 630 RIA firms that applied were then graded on six criteria: AUM; AUM growth rate; years in existence; advanced industry credentials; online accessibility; and compliance records.  

The “average” FT 300 firm has been in existence for 23 years and manages $2.6 billion in assets. The 300 top RIAs hail from 34 states and Washington, D.C., and, on average, saw their total AUM rise by 18% in 2014.

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The 2015 Financial Times Top 300 Registered Investment Advisors is an independent listing produced by the Financial Times (June, 2015). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT’s research. As identified by the FT, the listing reflected each practice’s performance in six primary areas, including assets under management, asset growth, compliance record, years in existence, credentials and accessibility. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300.

Leadership Oakland Day of Service Experience is Truly Humbling

Contributed by: Sandra Adams, CFP®

Imagine decorating six houses all in one day! On Saturday, May 16th, I joined my 25 fellow Leadership Oakland classmates, former Leadership Oakland Alumni, and friends, along with employees and volunteers from Humble Design, a Pontiac-based 501c3 nonprofit organization. Together we helped fully furnish and decorate 6 existing homes for Grace Centers of Hope. The day was filled with home decorating, spring lawn clean up, and ended with a park celebration with volunteers and the families that were moved into the homes from former homelessness.  The day was particularly special as we helped Humble Designs move their 500th family into a home!

Humble Design started in 2009 and assists families in need who are transitioning out of homeless and domestic abuse shelters by providing furnishings and design services in their new place of residence.  They use donated furniture and in kind goods to turn bare rooms into a fully furnished and decorated home.  Many of their clients leave the shelter with just the clothes on their back and do not have the means to furnish their new space.  That’s where Humble Design steps in, turning the house into a livable, comfortable home.

Grace Centers of Hope is a non-profit Christian organization committed to positively changing the lives of the homeless, addicted, and unwanted through the Gospel of Jesus Christ, personal accountability, life skills education, and work-related programs. The foundation of change is the local church which encourages residents to become strong in faith and independence while it lovingly promotes a sense of belonging within a community that truly can be called “home”.

The day was filled with hard work, camaraderie, emotion and deep fulfillment as we witnessed the true joy and gratefulness of the families seeing the homes designed just for them for the first time. It was truly a HUMBLING experience!

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.

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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.

Raymond James is not affiliated with any of the organizations/charities mentioned. 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.

Aging in America: Financial Planning’s New Frontier

Contributed by: Amanda Toia

I had the opportunity to attend the Raymond James National Conference in April. It is a time when colleagues from all across the country gather to share ideas, host seminars, and learn new and exciting information to take back to their practices. One of the experts on a panel on aging happened to be our resident gerontology expert, Sandra Adams (she did a fantastic job).  When it comes to degenerative disease that accompany aging like dementia, the statistics are staggering.  

The Impact of Alzheimer’s

There are over five million people affected with some form of dementia in America today.  While there are various diseases that fall under the umbrella of dementia, Alzheimer’s disease is the most common.  In fact, 80% of dementia is related to Alzheimer’s disease. While we are seeing a decline in other diseases across the board (breast and prostate cancers, heart disease/strokes and HIV), Alzheimer’s is rapidly increasing. 

As we begin to age, our mental effective power begins to slow down.  This slow down starts in our early thirties and continues to decline through our aging process.

Every 67 seconds, one person in America is diagnosed
with Alzheimer’s disease.

An alarming 1 in 9 Americans (aged 65+) has this progressive disease (and there are 10,000 people turning the age of 65 each day).  Americans over the age of 85 will have a 1 in 3 chance of living with this form of dementia.

Dementia and Financial Planning

As our aging population is rising, so are some of the issues in financial planning. Statistics show that by 2050, we could have 16 million people living in America with Alzheimer’s disease (Alzheimer’s Association). The expected costs related to the diagnosis, treatment, and societal factors of dementia could be as high as 1.2 trillion in today’s dollars. (Yes, I wrote “trillion.”) Today, average nursing care is running around $75,000 and this is for basic, skilled care – not a lavish facility. With healthcare and long term care costs on the rise, it is necessary for clients and planners to begin the long term care plan early in life taking into account the rising risk factors of dementia as they can strike earlier in life.

Sandra Adams and the other panelists discussed engaging and educating ourselves and our clients on the issues of aging and the effects on the financial planning landscape.  While aging has been a part of the financial planning process for some time, it has become somewhat of a new frontier as the aging population, health care, and long-term care costs increase by leaps and bounds.  Creating a financial plan no longer includes just assets and insurances for your long term goals.  Your intentions for your health care and mode of living beyond retirement are now viewed as appropriate topics to broach with you planner and other professionals alike.  Building a care management team will ease the burden should the time come when your health begins to decline.  Making sure members of your inner circle are aware of your wishes as they relate to treatment options, modes of living, and end of life care are also very helpful. 

Aging and the concerns surrounding it can be a tough subject to tackle as no one really knows what the future will hold.  We are fortunate to have a specialist in our office who keeps us up to date on all matters of aging and we are here to help do the same for you providing financial guidance as you move through your life.

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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 Amanda Toia and not necessarily those of Raymond James.

Aging Investors: Top 3 Reasons Why Do-It-Yourself May Not Be The Answer

Contributed by: Sandra Adams, CFP®

The demographic shift is underway.  A whopping 10,000 Americans are turning 65 each day – a trend that will continue for the next 15 years.  And Americans are living longer than ever. At the same time, the chance of being affected by dementia doubles every 5 years after age 60. Even those without dementia have a 30% of being affected by cognitive impairment without dementia by the time they are in their 80s.  And on top of all that, fluid intelligence – our ability to analyze new information and concepts (especially numbers and financial concepts) – begins to decline after our peak years between ages 30 and 40. (American Association of Individual Investors Journal September 2011).  

Particularly in the area of investment management, there are a number of risks to aging investors.  Here are some of the top risks and why it makes sense to consider working with a financial planning partner in the investment area to avoid these risks.

Reasons to Consider Working with a Financial Planner

1. Fraud/Undue Influence – one of the biggest risk factors as you age is that becoming a primary target of financial frauds and scams.  Someone may want to steal your identity, sell you inappropriate financial products, or family members or others my attempt to steal from you.
2. Diminished Ability to Make Decisions or Understand Concepts - this occurs when you -- whether due to dementia, cognitive impairment, or normal aging -- begin to struggle with understanding numbers or financial concepts.  Now, more than ever, you need a professional fiduciary to watch out for your financial best interests rather than trying to handle investments on your own.
3. Primary Decision Maker becomes incapacitated and spouse has no game plan or is caregiver and cannot handle another task – generally, there is one partner in a marriage that primarily handles the investments.  If that person becomes incapacitated and the spouse is not up to speed, and doesn’t know “the plan,” it is important that there is a professional financial planner involved. With a financial planner working as your partner, they can help you keep things running smoothly and make sure that the investments are handled appropriately to meet your long term care and retirement needs. This is especially important if you are also the primary caregiver for your spouse and already dealing with added responsibility.

For many reasons, it is important to work with a financial planner.  Particularly as an aging investor, it is crucial to have a financial planning partner to help protect you and your family against financial predators, to make sure appropriate decisions are made, and to help relieve the burden of yet another responsibility that you might have in the aging process.  Make sure a CERTIFIED FINANCIAL PLANNER® professional is part of your professional planning team. 

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.

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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. Investing involves risk and investors may incur a profit or a loss.

The Secret to Our 30-year Success

Contributed by: Timothy Wyman, CFP®, JD

So where were you in 1985? You may have been in high school or college. You may not have even been born yet. Like our Center founders, you may have been starting your own business or career and sought out a financial planner to help in financing higher education for your kids and planning for a successful retirement. It was in the mid-80s that Center for Financial Planning got started.

Our 3 Secrets to Success

A professional services firm can’t survive, let alone thrive, over 30 years without at least three key ingredients:

1. The loyalty and support of clients. Many of The Center’s clients have been with us from the start. Our success is based of their continued relationships and the introductions they’ve made to others we can help.
2. The loyalty and hard work of our staff. It has been said that great performance can never come without great people and culture.  Our current staff is filled with a deep bench of top-notch technicians.
3. The hard work, vision and generosity of founding partners Estelle Wade (retired 2003), Marilyn Gunther (retired 2014), and Dan Boyce (retiring at the end of 2015).

Building a sustainable business requires lots of hours. Not 9-5 and no weekends kind of hours. There were sacrifices, and rewards, and I am sure our founders would agree that their success was in large part due to the support of at least 3 special people - their spouses: Gene Wade, Ron Gunther, and Sue Boyce.

Building a Foundation

Estelle, Marilyn and Dan didn’t set out to create a company. Financial planning was more like a calling. You see, in 1985, much like today, financial advice was often the pretense to selling a high commissioned investment or insurance product.  Our founders saw a new & better way to help people achieve their financial goals. The new (back then) process was called financial planning – and they quickly experienced that the financial planning process had the power to improve lives and make a difference for people. So, The Center really started with a purpose – a calling – to make a difference in people’s lives.

Estelle, Marilyn and Dan also lead by example. They always put clients’ interests first. They were always first to lend a hand around the office, no matter the task. And they were always committed to lifetime learning and personal growth. Our founders also invested in people and relationships – both clients and team members. The three are some of the most generous folks I have ever met with their time, talent, and financially. Over the years they have mentored folks both inside The Center as well as outside.  They had the foresight to begin transitioning leadership to others such as current partners Matt Chope, Sandy Adams, Laurie Renchik, Melissa Joy and me as long as 10 years ago. The foundation they provided has given our current team a platform to take The Center to new heights and further strengthen the firm for the next 30 years.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

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Any opinions are those of Timothy Wyman, CFP® and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. Past performance is not a guarantee of future results.

The “One Per Year” Saving Strategy

Contributed by: Nick Defenthaler, CFP®

This is obviously a very common question people will ask and the typical response you will get from most financial professionals is 10%.  While this is certainly a good number to shoot for, many clients, especially younger ones, simply do not have the capacity to currently hit this figure.  This can become frustrating for some because they may feel like the target of 10% is so far off that it can be deflating and can actually deter retirement savings all together because they feel as if saving a number much lower simply won’t make a difference.  More and more recently, I have been recommending a slightly different approach that many clients have been very receptive to and find it far more realistic to implement – the “one per year” strategy. 

When a 25 year old is just starting their career, saving 10% of their income most likely isn’t feasible.  Between student loans, housing, transportation, utilities, groceries and other discretionary spending, someone in this age group might be lucky to contribute 3% - 5%.  My suggestion for these younger professionals is to start saving 5% into a retirement plan (typically around the most you need to contribute to get the full company match if your employer offers one) and increase the percentage by 1% each and every year until you hit 25%.  By age 30, retirement savings would be at 10%, 15% by age 35, 20% by age 40 and eventually hitting 25% by age 45.  Does this mean you shouldn’t save more than 25% once you get there?  Of course not!  If you have the available cash flow, we will almost never discourage our clients from saving more but most clients find it tough to save beyond this percentage.  If you’re getting a later start on retirement savings, this doesn’t mean you can’t use “one per year” strategy.  The key is to make progress and if you can eventually be saving between 20% - 25% of your income in your fifties (when most are typically in their peak earning years) you are putting yourself in a fantastic position in those crucial years leading up to retirement.

By increasing savings gradually, it makes retirement savings far more manageable and realistic for many.  Think about it, if you’re trying to lose 100 pounds and you become fixated on that large number, chances are you’ll become overwhelmed and give up on your weight loss goal.  The people who have the most success are the ones who focus on small victories.  Losing a few pounds per week until that goal is met– the same goes for retirement savings.  

I personally use the “one per year” approach and have found it extremely helpful and motivating.  More and more 401k plans are now offering the option to enroll in an “auto increase” where this 1% bump occurs automatically so you don’t even have to worry about remembering to make the change online each year.  This is the ideal so ask your HR department if your plan offers this option.  When you increase your savings by 1% each year, you honestly don’t even notice the difference, especially if you’ve received a modest pay raise.  Often times that miniscule annual increase is the equivalent of one less Latté or lunch out per week – something I think we can all manage!  Keeping it simple and being consistent is my advice, which is what the “one per year” strategy is all about!

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.

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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, 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. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Gas Prices Went Down But Where Did the Money Go?

Contributed by: Angela Palacios, CFP®

After oil and thus gas prices sharply declined late in 2014, many were expecting consumers to run right out and spend what they’d saved.  What has surpised everyone is that isn’t happening.  The chart below shows the direct correlation between the decrease in what consumers are spending at the pump (the light blue line) and the increase in their savings account dollars (the dark blue line).  As consumers are spending less, they are saving more.

There are a number of reasons contributing to these increased savings rather than spending:

• Most did not expect the temporary reprieve in gas prices to last

• Prices of many other goods are perceived to be increasing

• People are starting to recognize the importance of having a few months of living expenses set aside in the bank as a safety cushion

While all of these are probably contributing factors causing this “savings” to not be spent, I would hope the main reason for the pattern is the last bullet point -- people recognizing the importance of having some money set aside for a rainy day!

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.

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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 Angela Palacios, 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.