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Green Money: Tracking the Socially Responsible Investing Trend

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The concept of using investment dollars to support environmental and societal initiatives is not a new idea.  For decades socially responsible investing, also called SRI, has been recognized as a broad investment category spurred on by religious values, social movements and concerns about health and the environment. Today the SRI landscape is changing.  There are new strategies that fall under the responsible investing umbrella with differing objectives, more exposure to a wider range of asset classes and a growing number of investment dollars being put to work.  This is good news for investors who have personal and financial goals to incorporate responsible investment strategies into their portfolios.

Navigating this emerging landscape is nuanced because there is no single term that describes the multiple approaches evolving from the original concept of responsible investing. Socially responsible investing (SRI), ESG investing (environmental, social and governance) and Impact investing make up three main categories. There are some distinct differences between the three.

At the most basic level, here are the philosophical guideposts:

SRI Investing:  Creating a portfolio that attempts to avoid investments in certain stocks or industries through negative screening according to defined ethical guidelines.

ESG Investing:  Integrating environmental, social and governance factors into fundamental investment analysis to the extent they are material to investment performance.

Impact Investing:  Investing in projects or companies with the express goal of effecting mission-related social or environmental change.

What does responsible investing mean to you? 

Incorporating responsible investment strategies into your portfolio is not a one-size-fits-all solution.  Your goals are specific to you and your objectives for the future.  Talk with your financial planner to better understand the opportunities available today to integrate responsible investment strategies in your portfolio.    

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

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 Laurie Renchik and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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The Best $115 I’ve Spent This Year

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

As some of you may have seen on past blog or social media posts, my wife Robin and I are expecting our first child in August.  Since we found out the amazing news in December, we have both been beyond excited to become parents and meet our bundle of joy.  A few weeks ago, we had the opportunity to have a 4D ultrasound. I have to say it was one of the coolest things I’ve ever experienced!  For us guys, it can be tough to fully appreciate what’s really happening when the woman you love is carrying your child.  We aren’t going through the physical changes and it’s sometimes hard for us to even fathom that we’re going to be a dad in a few short months. 

When my wife suggested we have a 4D ultrasound completed, I was all about it.  I’ve seen those incredible pictures and videos from people I know.  As cool as I thought they were, nothing could have prepared me for the amazement I felt when Robin and I could clearly see our little man’s face for the first time.  Sure, we had an ultrasound when we found out the baby’s gender, but the clarity, as most know, was very poor and muffled.  For about 20 minutes, the ultra sound tech was able to show us multiple angles of our son and she got some incredible pictures and video.  Needless to say, I lost the battle of fighting off the tears.  When we left, I had a completely different mindset and feeling.  The struggle of actually feeling like this was “real” dissipated and I felt like a father immediately. 

As time progresses and his due date gets closer and closer I’ve come to realize how much of a miracle having a child truly is.  The journey we have been on the past 7 months has forever changed my life and I can’t imagine the joy I’ll feel when he arrives.  If you or anyone you love and care about are expecting, I would highly recommend the 4D ultrasound, especially for the guys out there.  Although not covered by insurance, it was hands down the best $115 I’ve spent this year. 

The next few months will be very exciting and Robin and I are so ready to meet our son.  Stay tuned for Baby Defenthaler’s arrival and debut as the newest Center team member!

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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Part 6: 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 keeping track of finances, my advice for the young is to keep it simple and straightforward and get qualified help if needed. That starts by finding a way to track your money without making it an obsession. Begin by tracking your finances at least once a month.  To do this, simply add up what’s coming in and then look at where it’s going. Once you’ve established that you are indeed living within your means, it is time to establish two kinds of savings accounts that you contribute to each month:

1. Build a “Save to Spend” account

2. Build a long-term financial security account (i.e. 401k or IRA)    

The Save to Spend account is where you park money for the short term to be spent on things that lead you toward the 100 things you want to accomplish in life (read this blog if you don’t have your 100 things list yet).  The long-term security account is for financial independence, which will eventually allow you to work because you want to not because you have to.

Investing does not need to be overly complicated either. For some good reading to help you build knowledge about investing, here are a few books I recommend:

Once you understand the basic principles -- like diversification, pay yourself first, don’t miss a match, maximizing deductions and credits, and dollar costs averaging -- and if you have the interest to follow those principles, then do it on your own but keep it simple.  Remember to review my previous blog about using time to your advantage (start early – start now!). It might make sense though, to consider getting qualified help managing your money, especially if this is something you’re not interested in doing. If you’re looking for help, here are 7 key components to help you find the right person.

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

Dan Boyce Offers Insight Ted Talk-Style

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

Dan Boyce, founding partner of Center for Financial Planning, has a passion for doing things the right way. And often doing things the right way comes down to doing them in the right order, he told the audience at the Raymond James National Conference. He was asked to deliver an insightful Ted Talk-style speech of things he’d learned in his 28 years with Raymond James. For instance, is it a successful business that makes for a successful life or does living a successful life open the doors for a more successful business? In the late 1980s, when Dan had been in the business about eight years, he met a fellow advisor who managed to take three months off each summer to spend time traveling or camping with his wife and kids. It was then Dan decided he would design the kind of business strong enough to serve him, instead of him simply serving the business. So he planned ahead to make it a possibility – and determined that there were three principles to get him from where he was to where he wanted to be.

Dan’s Key Takeaways: 3 Principles to Help You Succeed in Life (and in Business)

1. Strive to grow; strive to know.

Seek and embrace honest feedback – Dan sets aside two hours a week to meet with his partners and have honest discussions. Their commitments to each other are inviolate and as important as their commitments to their clients.

Develop intellectual curiosity – At one time, Dan hired the wrong people. He now realizes his staff must be as curious about best practices, best research, best ways to do things as he is, and he won’t hire them unless they demonstrate that curiosity.

Become a better person – It is the only way to become a better advisor. Reflect each day to see if you lived up to your values or fell short. Study your experience – it can lead you to be better.

2. Focus on the inputs – don’t focus on success as a goal, focus on the behaviors, attitudes that make for success.

Dan is a big-picture guy. He realized 15 years ago that he wanted a team that gelled in order to generate growth, so he put in writing how he would approach professional development – from support staff to partner. He oriented incentive compensation around behaviors that lead to outcomes – not simply the outcomes themselves. And he began tracking the activities that drove results – e.g., public speaking, contact with centers of influence, client contacts, print exposure and social media. His team also tracked outcomes such as new clients, added revenue and greater profits, but incentivized based on the activities – they focused on the inputs.

3. Be yourself and be true to yourself – be awake to feelings, talents, strengths and weaknesses – know what you want and who you are.

Dan believes it is very important to be true to yourself – to know your core values and to act on them. He encouraged the audience to take the values of “have,” “do,” “be” and turn them around to “be,” “do,” “have.” Determine who you want to be. Then figure out what you need to do. Then decide what you can have.

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Why Age Matters with Michigan’s Pension Tax: 2015 Update

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In the three years since Michigan’s Pension Tax was enacted, many more baby boomers have reached retirement age and started to tap into their pensions. It’s no secret that tax law is complex and we are not surprised that Michigan retirees have plenty of questions when it comes to the MI pension tax rules.  Even though the pension tax for Michigan retirees was enacted back in 2012, the subject continues to generate interest from retirees and pre-retirees alike. 

The rules for retirees vary based on age:

  • Tier 1:  You were born before 1946

  • Tier 2:  You were born between 1946 and 1952

  • Tier 3:  You were born after 1952

Special Note:  For joint returns, the age of the oldest spouse determines the age category that will apply to the pension and retirement benefits of both spouses, regardless of the age of the younger spouse. 

Taxpayers born before 1946

If you were born before 1946, there is no change in the income taxes for your pension income.  This means your social security income is exempt and so is income from public pensions.  You don’t pay taxes on the first $49,027 ($98,054 if you’re married and filing jointly) from private pensions.  You also get a senior citizen (over age 69) subtraction for interest, dividends and capital gains.

Taxpayers born between 1946 and 1952

 If you were born between 1946 and 1952, your social security income is exempt and so is income from railroad and military pensions.  You don’t get a senior citizen subtraction for interest, dividends and capital gains.  Before age 67, you don’t pay taxes on the first $20,000 ($40,000 if you’re married and filing jointly) from private or public pensions.  After age 67, you can subtract $20,000 ($40,000 if you’re married and filing jointly) from the amount you’ll pay taxes on unless you take the income tax exemption on military or railroad pensions. 

Taxpayers born after 1952

 If you were born after 1952, your social security income is exempt and so is income from railroad and military pensions.  You don’t get a senior citizen subtraction for interest, dividends and capital gains.  Before age 67, you are not eligible for any subtractions from your income from private or public pensions.  After age 67, you can choose to continue to have social security and railroad or military income exempt or you can choose to subtract $20,000 ($40,000 if married and filing jointly) from the amount you’ll pay taxes on. If you choose to keep your social security and railroad or military income exempt, then you can claim a personal exemption.

If you need help sorting through the pension guidelines, please give us a call or email me at laurie.renchik@centerfinplan.com.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

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 Laurie Renchik, 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. Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax matters. You should discuss tax matters with the appropriate professional.

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Inspiration from “A Poetic Life”

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Contributed by: Timothy Wyman, CFP®, JD Tim Wyman

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.

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Reaching the Right Amount at my “Plan End”

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

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.

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.

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We’d Really Like Our Clients to Know ….

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

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

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.

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.

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Leadership Oakland Day of Service Experience is Truly Humbling

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Contributed by: Sandra Adams, CFP® Sandy Adams

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.

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.

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