Takeaways from Nashville

Contributed by: Jennie Bauder Jennie Bauder

Music City, USA (aka Nashville, TN) hosted the Raymond James National Conference during the last week of April. We have made it a point the last few year to get as many Center team members to this conference as possible, and this year was no exception -- all but one Center team member made the trip for at least a portion of the event to take part in the unique learning, networking and team building opportunities. We find it to be a great use of resources for everyone to brush up on new technology, get new ideas and sharpen our skills to continue to do the best job we can to serve our clients.

There were so many great sessions and takeaways from our time at the RJ National Conference that it would take pages to write them all down. 

Here is a summary of our top takeaways from this year’s conference:

  • We were proud to be represented by Melissa Joy, CFP®, who served on a panel of top advisors speaking on how to maintain clients during market ups and downs. The panel turned into a high level discussion for best practices and was a great experience to see one of our own planners leading the discussion.
  • We learned about new technology called Client Onboarding – a process that will help to simplify processes, streamline documentation, and improve the experience we provide our clients. We are very excited to implement this technology to better serve all of you!
  • Many of our team attended sessions on leadership and teambuilding. Such sessions were focused on helping us work more efficiently, get more out of our work days, etc., all in an effort to serve our internal and external clients (and ourselves) better.
  • We heard from Sally Hogshead, author of Fascinate, who spoke on the power of fascination. Sally emphasized focused on finding your fascination factor and that being different is better than being better. Being back in the office, we’ve all taken part in fascination quizzes and workshops and have begun to implement our personal  advantages that emphasize what makes us unique.

The conference was a lot of long days and a lot of intense learning, but we did take some time for some fun and bonding as well. Each night, for those who didn’t have other obligations, it was an opportunity to gather together, to meet new people or hang out with one another, and see some of the sites around the Nashville area. 

Overall, the conference was filled with opportunities to expand our connections and networks, to learn not only about technology to better serve our clients but also about ourselves, and most importantly, an opportunity to connect with our fellow Center employees and enjoy each other’s company outside of the office. We’re grateful to be able to participate in the Raymond James National Conference each year and, I speak for the staff as a whole when I say, we’re refueled and ready to continue to serve our clients in the best manner possible.

Jennie Bauder is the Client Service Manager at Center for Financial Planning, Inc.

Raymond James is not affiliated with and does not endorse the opinions or services of Sally Hogshead.

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Political Parties and their Impact on Your Portfolio

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Contributed by: Jaclyn Jackson Jaclyn Jackson

Primary season could be worrisome for some investors as they try to figure out who will become our next president, how that person’s political ideologies will influence stock markets, and ultimately how that may impact their investment portfolio performance. I’ve explored the most common myth about political parties and its effect on the US stock market - the result is pleasantly surprising. 

Myth:  Big government ideologies held by Democrats make them worse for the stock markets while small government and small business driven ideologies make Republicans best for the stock markets. 

Bust:  Whether a Democrat or Republican is elected, historical data indicates that it has no statistically significant bearing on US equity markets. Illustrated below, both parties have experienced a similar amount of presidential terms with positive equity returns based on the Dow Jones Industrial Average from 1900-2012. 

Sources: Bloomberg, Oppenheimer Funds. As of 12/31/14.

Sources: Bloomberg, Oppenheimer Funds. As of 12/31/14.

 

Even though Democrats edge out Republicans by return percentage, there really isn’t much difference once you adjust for the normal variation in stock market returns. The results are reassuring; markets aren’t largely swayed by the president’s political party. 

Tips for Politic-Proofing Your Portfolio

While political parties don’t necessarily dictate market performance, they do generate policy plays that influence the economy. Divergent policy priorities around issues like individual taxes, the environment, healthcare, financial regulation, Fed policy, etc. could affect specific market sectors (i.e. healthcare, energy, utilities, and financials). 

Yet, investors can be confident in deploying two key strategies to help armor their portfolios against sector specific market fluctuations: diversification and long term investing. Diversification works to improve portfolio risk return characteristics by spreading investment exposure across different asset classes. In other words, it can assist in buffering your portfolio from concentrated portfolio swings to help achieve better risk-adjusted returns. Likewise, long term investing generally guards against short term sector movements by providing those who stick to their investment strategy less volatile returns over time. When you have a well suited, diversified long term investment strategy, you don’t have to fall into the trap of investing based on the political climate.

For more information of the benefits of diversified investing, click here.

Jaclyn Jackson is an Investment Research Associate at Center for Financial Planning, Inc. and an Investment Representative with Raymond James Financial Services.

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 Jaclyn Jackson 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. Past performance is not a guarantee of future results. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Diversification does not ensure a profit or guarantee against a loss. Holding investments for the long term does not insure a profitable outcome.

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How is Retirement Planning Relevant to me?

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Contributed by: Matt Trujillo, CFP® Matt Trujillo

Lately I have been meeting with younger clients, and have been hearing a recurring theme: “Retirement is 20-30 years away and I don’t know that I care too much about how the numbers look at this time.” The first time I heard this, I was a little taken aback…I had always assumed that one of our core jobs was to make sure people were on a good track for retirement.

However, the more I thought about it, this line of thinking isn’t that out of the box. Consider how much the world around us has changed over the last 20-30 years. It is reasonable to think that another 20-30 years from today the world could change dramatically again?

Hearing these clients voice concerns about planning for an event so far into the future, I decided to take a different approach. I decided to focus clients’ attention, instead, on the next five to ten years and what they want their net worth statements to say then. For instance, if you have a negative net worth due to student loan debt, saving for retirement might seem out of the question; but if you come up with a goal to have a specific positive net worth amount ten years from today, it helps refocus your financial plan to something more tangible and meaningful for you and your family. This type of thinking can be very powerful and motivating for clients. The clients I have engaged in this exercise have told me that they get the sense they are working towards something tangible and each year they come in they can really see the benefits of working with a planner.

So if you are under the age of 45, and retirement seems like a lifetime away, consider putting a different spin on the old fashion retirement goal. Approach the problem a little differently. I think you will find that planning in five to ten year chunks can be more manageable and very motivating.

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

Opinions expressed are those of Matthew Trujillo and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.

Millennials Matter: An Intro

Contributed by: Melissa Parkins, CFP® Melissa Parkins

The generation known as Millennials is made up of those born between 1980 and 2000, currently putting us between the ages of 16 and 36. I happen to sit dead middle of this range, making me a true Millennial, I guess! We are savvy, independent, and a little skeptical. I’ve even heard we are overconfident and self-entitled (I may or may not find that hard to believe!). Some of you may be surprised to also hear that research suggests we are way more conservative than you might think.

The Millennial generation is the biggest in US history thus far, even bigger than the Baby Boomers. There are currently over 92 million Millennials, says Goldman Sachs Investment Research. According to The Brookings Institution, by 2025, Millennials will make up 75% of the workforce and will account for 46% of the nation’s income. This means that we are going to have huge impact – so watch out! Growing up with technology has armed us with information and the ability to research, communicate, and compare before making decisions. With our fluent use of social media, we have the ability to capture a large audience for whatever it is that we are trying to communicate. We have grown up in a time of rapid change, giving us a set of priorities and expectations very different from previous generations.

Millennials should not be overlooked. We are currently or soon will be entering the prime of our careers. We want to build credit and savings. We want to travel, buy nice houses, and have nice things. Sure, we may have a ton of student loan debt, but these are things that we as financial planners can help with now, and start lifelong relationships embarking on the journey to financial achievement together.

So how do new millennial investors fit into the “traditional” financial planning relationship? We have different interests, needs, goals, and ideas. That is why The Center has started a new Wealth Builder program geared specifically towards servicing these new financial planning clients! With my new blog series, I hope to engage my fellow Millennials with topics that are important to us – student loans, saving for weddings or children’s educations, purchasing homes, starting new jobs, budgeting, building safety nets… whatever it may be. We may not fit the traditional financial planning client mold at this point in time, but we will soon, and for the time being, we have different needs to be serviced. We have the desire to be financially successful and we are oriented toward the future, so I have no doubt that these goals will be achieved. So shoot me an email, a LinkedIn message, or a Tweet and let me know what you would like to hear about. In the meantime, stay tuned for my next blog!

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.

Any opinions are those of Melissa Parkins 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.

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Care Agreements Document for Families

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Contributed by: Sandra Adams, CFP® Sandy Adams

Last month I wrote about using a Care Agreements Document between couples as a way to communicate preferences for future care, in order to help alleviate future stress for the caregiver spouse and to make certain the ill spouse’s wishes for care and for the future quality of life of their caregiver spouse were able to be communicated and honored. The Care Agreements Document can also be used for entire families to plan for the care of a loved one (or loved ones) – usually older adult parents. Let me explain how the agreement might be used in this context.

 In the case of families, I find that anxiety and tension arises when (1) They are unclear of their parent’s wishes for their care or (2) there is conflict amongst siblings regarding division of caregiving duties and/or disagreement about the care in general.  A Family Care Agreements, especially if drafted with the parents involved in advance of a care need, would clear up both of these major sources of tension. As with the Care Agreements for Couples, the Care Agreements Document for Families is a wonderful way to begin a family conversation about future care for older adult parents; it helps to provide the older adults the opportunity to express their future desires for care and to clear up any misconceptions about their wishes. It allows adult children to hear—from the mouths of their parents—how they wish their children to be involved in their care, how they wish to be cared for and by whom, and where they wish to be cared for (as long as finances support these wishes). As siblings divide the future caregiving duties, keeping in mind those that make most sense based on location, availability and talents, they can keep in mind their parents words, wishes, and resources.  

The Care Agreements for Families can also serve as a way to provide protection to the individuals serving in caregiving roles; for example, if future stressful situations during a parent’s care may cause their position to become unpopular. The family will be able to reference the agreement to recall that the agreement to act and serve the parents as caregivers in a particular manner was agreed upon – it can help protect feelings and calm emotions in times of heightened tensions. 

Again, I propose that when we are writing all of our other estate planning documents—our Wills, Patient Advocates, and Durable Power of Attorney Documents—that we consider writing a Care Agreements Document with our older adult parents and siblings.

What would this agreement include?

  • If our older adult parents get ill and need to be cared for, how do they wish to be cared for?

  • How do they want us, as adult children, to be involved in the caregiving?

  • Do they want us to provide care or would they prefer to have professional caregivers (if they can afford to have them)?

  • Where do they wish to have care provided (home, assisted living, etc.)?

Having a Care Agreements Document amongst family members in advance of an illness does a couple of things:

  1. It helps family members/adult children make clearer decisions in times of stress if/when the time comes.

  2. It also helps take away any feelings of guilt or resentment because agreements about the plan have been made in advance; helping to preserve relationships.

A Care Agreements Document, whether for Couples or Families, is something that should be added to your future planning toolkit as you plan ahead for the future aging – for you and for your loved ones. If you have questions about how to get started, feel free to reach out to me to find out how!

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.

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 Sandy Adams and not necessarily those of Raymond James. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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Center Stories: Sandy Adams CFP®

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Contributed by: Sandra Adams, CFP® Sandy Adams

Here at Center for Financial Planning, we like to make personal connections…with each other, with our clients, and with all of the individuals that we come into contact with.  In our work as financial planners, we need to get to know our clients on an individual basis – to get to know their personal situations and goals – in order to design a personal financial plan for them.  I know a lot about my clients on a personal level, but you might not know quite as much about me. Rather than just writing a bio and having you attempt to get to know me in words on paper, I am hoping my bio video will help you connect with me on a more personal level – help you get to know more about me, my work as a planner, and how I work with clients.  Check out my video here:   

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.

Insurance Basics: Adding Long Term Care to your Coverage

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

I can almost guarantee that if you’re reading this blog post, you know at least one friend or family member who unfortunately, at one point in their life, required some form of assisted living or nursing care. As our population grows and lives longer, the threat of a long-term care (LTC) event is becoming more real and more expensive! Just check out the chart below JP Morgan put together from the research New York Life conducted in 2014, showing the annual cost depending on what state you live in: 

Insurance, especially when it’s expensive like LTC, is a difficult thing for clients to get on board with. Let’s look at the various forms of coverage to have a better understanding of the mechanics of the policies.

Traditional

This is the most common type of LTC coverage because in almost all cases, it will offer the highest benefit payment. This of course, comes at a cost. For a healthy 60 year old couple, it’s not uncommon to see the annual cost (from both policies) be between $7,000 and $10,000, depending on coverage. In most cases, we recommend a more basic policy that does not have all the “bells and whistles” but can still be a great safety net if claim is required. Similar to a disability policy, there is a waiting period before benefits will kick in, which typically 90 days. For benefits to be paid, certain activities of daily living (ADLs for short) must be impossible for the insured to do on their own. This must also be verified in writing by a licensed physician. One of the most important aspects of a LTC policy is the cost of living adjustment (COLA) rider. In the majority of cases, this is something we almost always recommend so the benefit you’re paying for will increase each and every year to (somewhat) keep up with the rising cost of care. Similar to college tuition, the inflation rate for long-term care coverage is rather high in comparison to normal inflation for the rest of our economy. Unfortunately, traditional LTC coverage is almost always “use it or lose it” – similar to your car and homeowner’s insurance, if you never need it; you don’t get reimbursed for premiums paid.

Hybrid and Life Insurance

One of the gripes most of us have with LTC coverage is that they lose all of their premium dollars if they never need to actually use the coverage. Different products have emerged in the LTC world to accommodate those who may not purchase LTC insurance for this reason, known as “hybrid” policies.  Without digging too deep into the weeds, these policies offer additional flexibility on receiving a portion of premiums back if you never use the coverage. It’s important to note, however,  that the leverage you receive in regards to your overall benefits if you did actually need to go on claim are typically far less than a traditional LTC policy.  

Life Insurance

Life insurance may also be considered as a form of LTC protection. The average length of stay in a nursing home is approximately two and a half years which, depending on the level of care, could easily exceed $250,000 without LTC coverage. In many cases, this means that the now surviving spouse is truly the one who is facing the financial hardship because they had to pay such a large amount, out of pocket, for care which could have easily erased the majority of their once plentiful nest egg. Using life insurance in this case would guarantee a death benefit on the spouse who required care but has since passed, which would essentially “replenish” the assets that were spent down to cover the cost of care. As with hybrid policies, in most cases, the benefit you’d receive using life insurance isn’t comparable to a traditional LTC policy but it certainly has its place in certain situations.  

When you’re working and accumulating assets, your two greatest financial perils are typically a pre-mature death or a disability – which is why we purchase life insurance  and disability insurance to protect us during this stage of life. As you transition into retirement, however, those perils typically disappear and a new one emerges – the threat of a long-term care event. Just like we purchase insurance to cover the cost of an unforeseen event such as a pre-mature death or disability, LTC coverage is obtained to help cover a portion of the cost to potentially help avoid a financial catastrophe. This form of coverage does not make sense for everyone but there are many out there who should seriously consider it. Risk management is a key component of a well-rounded financial plan, and having a formal game plan on how you’ll pay for a potential LTC event is a must.

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. 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 information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Long Term Care Insurance or Asset Based Long Term Care Insurance Products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 ½, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. These policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company. Please consult with a licensed financial professional when considering your insurance options.

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Sell in May and Go Away, Revisited

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Contributed by: Angela Palacios, CFP® Angela Palacios

Questions arising during this election year have prompted me to revisit an old topic. This election year seems anything but average (or at the very least entertaining), but what happens when you layer in the old debate of whether it is a good idea to, “Sell in May and go away.” Will this election year be different? 

Markets tend to have their stronger performance between October and May, which, despite a major bump in the road during January and February this year, has certainly held true in the past year. 

This chart is for illustration purposes only.

This chart is for illustration purposes only.

There are many theories as to why this could be true:

  • Investors tend to fund their IRA accounts either early or later in the year.
  • There could be lower summer productivity for business.
  • And the most obvious, people prefer to be outside rather than inside investing their money (especially in Michigan).

However, this year could be different. If you look at monthly returns in Election years the above picture is contradicted.

This chart is for illustration purposes only

This chart is for illustration purposes only

Strategies involving the short-term timing of the markets usually end up hurting investors rather than preserving or boosting returns, so take caution.

I am often asked if investing should be held off until after the election during years like this. However, I believe experience teaches us that we are better off if we keep our voting and investing decisions separate.

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 The Center blog.

Source: The Big Picturehttp://www.ritholtz.com/blog/

Any opinions are those of Angela Palacios and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.

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The Team behind the Team

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Contributed by: Clare Lilek Clare Lilek

Have you ever wondered how our website always looks so organized or how our graphics are so cohesive? What about how we have so many professional videos with succinct content and consistent messaging? How about how creative our digital and social media is? All the while providing top financial service to our many clients! Well that doesn’t happen by accident; it occurs due to hard work, planning, and an array of talented professionals. We have a Creative Team that supports our Center Team every step of the way: Laura Garfield and Sharon Golutta of Idea Decanter, and Kimberly Wyman, our brand agent + graphic designer.

Idea Decanter provides a sounding board for new and intriguing ways to get pressing financial information, upcoming deadlines, and the daily activities of The Center out to our clients. The Center is a family and we want our clients to stay informed so they feel a part of the family, too. Creating fun videos, sharing pictures, and starting social media campaigns helps us do just that. In addition to Idea Decanter’s role, Kimberly Wyman coordinates and curates our brand aesthetics, website and all the fun graphics you see throughout social media, our monthly newsletter, CenterView, and reminders via social media. Together they help us cultivate and maintain our brand, communication tactics, and creative sanity!

Why utilize a Creative Team? Like all good plans, The Center must have its own personal strategy for our growing business, communicating with clients, and providing an overall engaging experience for our current and potential clients. Having a Creative Team whose time is dedicated to crafting our particular Center brand, breathes new life into our business and our company culture. We believe in the importance of digital communication and the transformative power of creativity. If we can get our message across in a manner that not only enlightens but engages our clients, then we have done our job. The Center staff focuses on making sure our clients can live their plan, and our Creative Team helps make sure The Center stays on mark with their own plan, while staying current with the changing times. 

Just like we are your supporting team, accomplishing financial tasks to make your life easier, our Creative Teams keeps The Center on track with branding and digital communication. This allows The Center Team to better focus on our clients financially, all while providing an engaging and cohesive experience for them digitally. We thank our Creative Team that allows us to better showcase the work we do and get helpful information to keep our clients informed and entertained.  

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

Raymond James is not affiliated with and does not endorse the opinions or services of Laura Garfield, Sharon Gottula, Idea Decanter or Kimberly Wyman. 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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