Challenge Detroit – An Update Half Way Through

Contributed by: Clare Lilek Clare Lilek

Let me paint a picture for you: imagine you’re a 32 year old single mother, whose husband recently left her, with a 17 year old son who’s dropped out of high and a 14 year old daughter who’s already disinterested in school, with only $10 in your pocket and no job. This was the card I received when I participated in a poverty simulation with Challenge Detroit. Throughout the entire day, I was physically nervous. The overwhelming anxiety and never ending list of “must do now or you’ll lose your home” tasks had broken down my normally chatty personality till all that remained was a shell of who I really am. Let me clarify that the poverty simulation was only one hour long. One hour of role-playing made me stress to the point of losing myself. I know that you’re probably judging me right now, but the whole point of the simulation was to create a deeper understanding and install a greater empathy in all of the fellows - and mission accomplished! As fellows we participate in challenges that center around underserved, and a lot of the time, impoverished populations, and empathy is the key to designing solutions that are sustainable, practical, and implementable. To be completely honest, this was just an average Friday for me.

The whole reason for my presence at The Center is because of Challenge Detroit. For those of you who need a quick refresher, Challenge Detroit is a yearlong fellowship that aims to attract and retain young professionals and innovative thinkers to the city of Detroit in order to aid in the revitalization through intellectual giving. This intellectual giving manifests itself in what we refer to as “challenges.” Each Friday I am not physically at The Center, but working with my fellow fellows on these challenges; we partner with other non-profits with the intention of focusing on a broad topic. We help these organizations by providing man and brain power to their mission for five weeks at a time. This usually results in innovative strategies for the organization to implement over time that will incrementally impact Detroit in a positive manner and help that non-profit’s overall mission.

I am halfway through my fellowship—time sure flies—and we’ve completed three challenges already. Below is a brief overview of the work that we have done up to this point.

Challenge #1: Working with Mayor Duggan’s office and the City of Detroit

As fellows, we had an amazing opportunity to partner with the Mayor of Detroit and facilitate the development of the first small business directory for the city. It’s called Dream It, Do It, Detroit and the directory is available online and in a book format. In the online directory you can look for different restaurants, businesses, and enterprises located in the seven different districts of the city. Take some time and check out all that Detroit and its entrepreneurs have to offer, I guarantee you will learn something new!

Challenge #2: Working with Detroit Public Schools

We split off into six groups and partnered with six different schools to focus on how to improve parental engagement and empowerment. It was and remains a poignant challenge in light of the current struggle with DPS. It was a good lesson in empathy and reminded us all the importance of putting children and their education as a first priority, without forgetting to educate and support the “whole student,” which includes their parents.

Challenge # 3: Working with Goodwill Industries and the Coalition on Temporary Shelter (COTS)

The fellows spilt up into two groups to partner with our two different nonprofits on workforce development. I had the pleasure of working with COTS to create an engagement strategy for potential and existing corporate partners. COTS needs partners to help make their Passport to Self Sufficiency TM framework advantageous for their participants in order to foster poverty resistant families. The Goodwill and COTS teams both created innovative strategies and campaigns for the organizations to use to improve and maximize their current efforts as it pertains to workforce development in underserved populations.

At the end of the day, The Center is making a huge impact in Detroit and the metro area by participating in Challenge Detroit. They have made it possible for me and the rest of the fellows to do the work we get to do every week. Over time, The Center’s impact will grow and the community around us will be better for their support. I am grateful that one of The Center’s missions is to partner with the community and create positive change. That is why I’m here and, in part, why Challenge Detroit is able to have the impact it has around Detroit and the metro area. 

Clare Lilek is a Challenge Detroit Fellow / Client Service Associate at Center for Financial Planning, Inc.

Social Security Filing Alert: Sometimes “No” just isn’t good enough

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

I recently had the opportunity to work with a long time client to maneuver the new Social Security filing rules; and if they would have taken the first “no” answer from the local SSA office the results would not have been good, to say the least.  As we have shared in the past, there have been significant changes to some of the Social Security filing rules, and specifically to the “file & suspend” strategy that we have worked hard to incorporate into many clients’ financial plans. Check out this blog by Nick Defenthaler, CFP®, for more information.

The most egregious part of this recent experience is that our client went to the SSA office with a copy of instructions specifically outlining “what” and “why,” and they still were turned away.

Here's part of the story:

Timothy Wyman, an adviser in Southfield, Mich., described a similar situation. His clients, a 67-year-old husband and 64-year-old wife, wanted to file and suspend the husband's benefits before April 30 to trigger spousal benefits for his wife. The wife plans to claim spousal benefits only when she turns 66.

The claims representative told the couple the husband only needed to file and suspend if the wife was planning on claiming her benefit now. Otherwise, they had nothing to lose by waiting.

Wrong! They would have a lot to lose. Miss the deadline and this couple would forfeit the opportunity to trigger benefits for the wife while his own benefit continues to grow until it is worth the maximum amount at age 70. It's an excellent strategy for married couples since it will also create a maximum survivor benefit for whichever spouse is left behind.

Anyone who is full retirement age has the right to request to suspend his or her retirement benefits that can trigger benefits for a spouse. The spouse does not have to be full retirement age at that time. -Mary Beth Franklin, Contributing Editor at InvestmentNews

Fortunately, our client knew better than to accept the “no” and emailed over the weekend for additional clarification. In the end, our client filed online and has preserved their right and benefit of filing and suspending. Please feel free to reach out if we can help you maneuver and maximize your Social Security benefits.

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.

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 Timothy Wyman 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.

Insurance Basics: The Ins and Outs of Life Insurance

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

In my blog a few weeks back on Insurance Basics, I explained the importance of carrying coverage, even though it can be a tough check to cut when your premiums are due. Now, we’re going to look closely at the different forms of life insurance and discuss its importance in a well-rounded financial plan. 

Permanent Insurance

As the name implies, permanent insurance is a type of coverage designed to last your lifetime. Because the coverage is permanent, premiums are typically costly depending on age, health status, and type of permanent coverage (whole life, variable life, universal life, variable universal life). Each type of permanent coverage has two components: a death benefit and a savings component, known as the policy’s “cash value.” Although part of your premium each year is going to build up the policy’s cash value, in many cases there are more efficient and cost effective ways to save for retirement first, such as a 401(k) or an IRA. If these are being maximized, then utilizing life insurance for retirement savings could potentially make sense because a policy’s cash value offers tax-deferred growth. Some of the more common situations we recommend utilizing a permanent life insurance policy for include those who want to leave a guaranteed legacy to family or charity. They are also often used for estate planning purposes if you have significant assets as a mechanism to pay for estate tax. 

Term Insurance

A term life insurance policy contains a specified term of coverage, typically ranging between 10 – 30 years where premiums are fixed and there is a guaranteed death benefit. Unlike permanent insurance, there is no savings component or cash value, so your premium dollars are going to purchase insurance and insurance only – just like your auto or homeowners coverage. In most cases, the younger you are, the cheaper annual premiums will be so it usually makes the most sense to buy this type of policy early so you’re guaranteed insurability if your health situation changes, keeping your premiums reasonably priced. This does not mean that if you’re a little older you can’t buy term insurance; it just means it will be more expensive because the likelihood of a thirty year old passing away within the specified term is much lower from an actuarial standpoint than someone in their mid-forties or fifties. 

Group Coverage

Group life insurance is a type of coverage that is offered by your employer through an insurance company. In many cases, employees receive a “complimentary” amount of coverage—typically for the same amount as your annual salary—as part of their benefits package. You may have the option to purchase additional coverage as well, up to certain limits, at a low cost. Another perk of group coverage is that there is typically no formal medical underwriting so it’s a good option for those who aren’t in the best of health. A lot of clients I’ve spoken to believe their group coverage they have at work is sufficient. In most cases, however, it isn’t even close to being enough. Often times, clients are surprised to know that more than likely, if they leave their employer, they can’t take the coverage with them because it’s a benefit offered by the company (non-portable like an individual term or permanent policy). Typically we recommend pairing group coverage with an individual policy, to not solely rely on it as your only source of life insurance coverage.

As you can probably see, we’re just scratching the surface of the complex topic of life insurance, and there are many things to consider when purchasing coverage and deciding on what type of vehicle to protect yourself and your family. Life insurance is something all planners at The Center are licensed in but as you’re probably aware of, it’s not our main focus. Our goal is to take a look at your entire situation and identify which type of coverage makes the most sense for YOUR specific situation. When’s the last time you reviewed your coverage? Do you have enough? What’s changed in your life that makes the case for adding or removing coverage? These are the questions you should be asking yourself at each stage of life and it is something we can help guide you through to make sure you, your family, and your financial plan are protected.

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.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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 we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

A Webinar in Review: Utilizing FAFSA in your College Financial Planning

Contributed by: Clare Lilek Clare Lilek

Thinking about financing a college education may seem more daunting than the actual education itself. If you or a loved one is applying to college, utilizing the full potential of the FAFSA (Free Application for Financial Student Aid) can make a huge difference in how you or your student manages the stress of a financial future after a degree. In a recent webinar hosted by Nick Defenthaler, CFP® with guest presenter Carrie Gilchrist, Ph.D., the Senior Financial Aid Outreach Advisor at Oakland University, participants got some tips for college planning. Carrie went through basic elements of financial aid, outlined the uses of filling out a FAFSA for everyone, and covered some special circumstances. Throughout the webinar Carrie answered some of the following key questions:

What are the different elements of Financial Aid?

Where can financial aid come from?

Financial Aid can come from federal, state, institutional, and private resources.

How is FAFSA calculated? How does contribute to your overall Financial Aid?

FAFSA collects information on your demographic, taxed income, untaxed income, and assets and comes up with the Expected Family Contribution (EFC). Based on what university you or your student attends, each school will have their own Cost of Attendance (COA). Financial Aid is then determined by subtracting your personal EFC from the COA of the university.

When do we file a FAFSA and where?

Start filling out your FAFSA anytime soon after January 1st while the student is still a senior in high school, but before March 1st. This can all be done online and it is encouraged to use the secure federal website, it can save time and hassle.

What if I’m a high income earner?

Still fill out financial aid! It can be used for so much more, including your eligibility for federal loans. You could also qualify for a school grant, which can’t happen without the FAFSA.

These are just a few of the main concerns that Carrie covered throughout the webinar. Take a moment to listen to the whole recording below, there is more in-depth information covered, along with good advice and helpful resources to use when filling out your FAFSA or getting your Financial Aid package in order. At the end of the day, Carrie stressed that making this a collaborative process with your student is key, and Nick stressed that if you have questions, your friendly financial planners here at The Center are always willing and able to help guide you through this process.

Clare Lilek is a Challenge Detroit Fellow / 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 Clare Lilek 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. Raymond James is not affiliated with and does not endorse the opinions or services of Carrie Gilchrist or Oakland University.

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Economic and Investment Update for 2016

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Contributed by: Angela Palacios, CFP® Angela Palacios

In early February, Melissa Joy, CFP®, Partner and Director of Wealth Management at The Center, was joined by David Lebowitz, Vice President and Global Market Strategist for J.P. Morgan, to discuss timely economic and market updates.

David kicked off the presentation by answering 3 questions:

  1. Where are we in the (current economic) cycle?

  2. What should we watch out for?

  3. Where are the opportunities?

J.P. Morgan built a strong case for the U.S. Economy sitting at positive GDP growth (Gross Domestic Product), the improving job market, as well as, corporate profits, and subdued inflation for the foreseeable future.

David also pointed out items to watch out for, such as low oil having a positive effect on consumer’s wallets, the continued higher volatility we are currently experiencing is more in line with history rather than the low volatility environment we have become accustomed to, and being careful of investment biases sneaking into your portfolio causing undue risk.

Opportunities are still out there for investment growth but David stressed that the ride is as important as the destination. A balanced portfolio is like a sword and a shield for investors. Your sword, or equities, has the potential to give you the long term growth needed to help reach goals but your shield, or fixed income can help give you the defense to make your investment journey more comfortable.

Melissa continued with several history lessons stressing the importance of patience and that it often pays off when investing. She discussed top headlines in the news such as the elections and interest rate hikes and how these items will affect investors over the coming year.

Below is a link to the presentation slides referenced throughout that emphasize the key points Melissa and David discussed. As well, there is the recording of the webinar that Melissa and David held, that has further information and discussion.

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 as investment updates at The Center.

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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Diversity in Financial Services and The Center – What Does it Mean to You?

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Contributed by: Sandra Adams, CFP® Sandy Adams

February is Black History Month and we, at The Center, have been celebrating by sharing some of our favorite quotes from famous African American leaders. However, we thought it was also the perfect time to address the topic of diversity and the role it plays in our industry. Throughout our 30 years, we have paid special attention to the topic of diversity and what it means to our teams, committees, and ultimately to you – our clients.

Where do we stand on the topic of diversity in our industry? 

Interest in personal financial advice has never been greater and as more Americans assume responsibility for managing their financial futures, there is increasing demand for financial advice. According to recent research conducted by CFP® Board, 40 percent of Americans now work with financial advisors, compared to 28 percent in 2010.  The rising need for financial advice presents an opportunity for the financial planning profession to diversify its workforce to better match the population we serve. For example:

  • African Americans represent only 8.1 percent of financial advisors, yet comprise more than 13 percent of the U.S. population. 

  • Hispanics represent only 7.1 percent of financial advisors, yet comprise more than 17 percent of the U.S. population.

  • Only 23 percent of CFP® professionals are women, even as women control more than a third of wealth in the U.S.  

Why do we think it is important to have people with diverse backgrounds and experience working in teams at The Center on behalf of our clients? 

Working in a committee or team structure is not something that comes natural to us as human beings. Working with a diverse group of people in a committee can be even more difficult, but is of utmost importance when making investment or financial decisions. However, a diverse committee is less likely to have a blind spot, will have a broader set of experiences to draw from and offers checks and balances. We believe building a committee of diverse individuals is one of the first and most important steps to successful outcomes.

At The Center we have recognized this importance when deciding who should sit on the investment committee. These members drive the decisions and diversity helps avoid groupthink. Groupthink happens when group pressures lead to a deterioration of mental efficiency, reality testing, and moral judgement. It’s rewarding to see change coming and equally as rewarding to be part of it.

The Center has also seen the value of diversity as it has developed other teams within the firm to work on behalf of clients, like the financial planning department, or the weekly meeting of the financial planners. Each of these diverse groups is made up of people coming from different backgrounds, possibly having slightly different educations, and various certifications or specialties. Because of this, we have the opportunity to bring different insights and perspectives to client cases that wouldn’t exist if we all came from the same background and had the same frame of thought – what an advantage for our clients!!

As you celebrate Black History Month along with us at The Center, know that diversity is important to how we do things and how we serve you each and every day.

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 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.

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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Reinventing Retirement

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Contributed by: Sandra Adams, CFP® Sandy Adams

The definition of reinvention is to bring back or to revive. Retirement to most clients is less about the ending of a past life or career and more about the beginning of a new life. Our planning and conversations center around how we can make the most of the next segment or our clients’ lives – how can they “reinvent” themselves.

Gone are the days of retirement spent in rocking chairs on the porch or in front of the television set. Today’s retirees are younger (at least at heart) and focused on staying healthy, active, and engaged. They are finding opportunities to travel, to volunteer, to take personal development classes, and even to go back to work in a second career.

I recently had the opportunity to watch a wonderfully refreshing movie that illustrated retirement reinvention in a most interesting way. The Intern, starring Robert De Niro and Anne Hathaway, tells the story of Ben Whittaker (Robert De Niro), a 70-year-old retired widower who takes the opportunity to become a senior intern at an online start up fashion site. Ben soon becomes popular with his younger co-workers, including Jules Ostin (Anne Hathaway) who’s the boss and founder of the company. Whittaker's charm, wisdom, and sense of humor help him develop a special bond and growing friendship with Jules. Ben proves to himself and to everyone else that he encounters that work ethic, strength of character, and experience never go out of style. 

Retirement is a time to redefine and reinvent yourself – use the next segment of your life to do things you never had time to do, to learn something new, or to use your years of experience and knowledge to add value in different areas, like Ben Whittaker did in The Intern. As you plan for the financial transition into retirement, work with your financial planner to make sure that you also plan for your retirement reinvention. To have a successful “retirement,” it is important that while you feel financially confident, you also continue to feel emotionally and socially fulfilled and valued. When you retire, your life is not over—Ben Whittaker said it best: “I still have music in me, absolutely positive about that!”

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 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.

Any opinions are those of Sandy Adams and not necessarily those of Raymond James.

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The Center is taking on a 21 Day Challenge

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Contributed by: Gerri Harmer Gerri Harmer

Not all of us have the same goals in health and wellness. So when it comes to putting together a work place program, we try to keep everyone in mind. It’s been said to permanently change a habit, you need to do it for 21 days. So starting on January 19th, The Center staff committed to making at least one new healthy habit for 21 days. Each person’s individual goal had to be a bit of a stretch but ultimately doable, with some effort! If we miss a day, we start again. We found quite a few were similar, a few very unique and some had more than one.

Our goals were gathered and posted in the kitchen. 

  • Drink 64 oz. of water a day

  • At least 15 minutes of exercise /workout at least 3x per week

  • Listen to relaxing music in the car on the way in

  • No bread products

  • No snacking between work and dinner

  • No stress eating

  • No candy/reducing sugar

  • Take vitamins

  • Pack a lunch

  • Eat less than 1,000 calories for lunch

  • Meditate 5 minutes a day

  • Make someone laugh

Maybe you can identify with one of these, or maybe they’ll inspire you to come up with your own challenge. We are having so much fun keeping each other on track or calling each other out; we’d love for you to join in, too. What habit do you want to work on for 21 days?

Gerri Harmer is a Client Service Manager at Center for Financial Planning, Inc.

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