Your Goals for 2019

Welcome to 2019! A new year brings a fresh chance to accomplish your goals. Maybe you’re dreaming that this will be the year you buy your first home. Maybe you’ve realized that your kids are one year closer to college and it’s time you start preparing. Maybe this is the year you want to exit from your current job so you can spend more time doing the things you love.

Even if your goals are further out than 2019, by December 31 of this year, you can either be several steps closer to achieving those goals, or you can sit right where you are today and risk that they will remain forever out of reach. Time stands still for no one. This is the only chance to do 2019 before it is gone forever.

Many of your goals have a financial component. Whether it is becoming a home owner, paying off your student loans, getting married, saving for a college education, planning for your retirement, or supporting your favorite charity, we can help you achieve your goals. The objective of our financial planning is not to own a bunch of stocks and bonds or get a nice tax break, it is about finding an effective, efficient, and logical way to help you accomplish your life’s goals.

We love when someone has a concrete, specific objective. When you truly embrace an important goal, there is ample reason to find the discipline for whatever steps are needed to achieve your objectives. I can tell you all about the benefits of a Roth IRA or a 529 College Savings Plan, but if that doesn’t fit into your needs, all my words are worthless. The “why” has to be there first, before we can get excited about “how” we are going to do it.

If you have goals that you want to accomplish in 2019 – or 2020 or 2029 – I’d like to invite you to join us and become a client of Good Life Wealth Management today. We serve smart investors who value personalized advice centered on their goals.

I’d welcome the opportunity to share our approach and allow you to consider whether it would be a good fit for you and your family. 

  • Our process focuses on planning first – we want to fully understand your goals and needs before we make any kind of recommendation. You would think this would be universal, but believe me, most of the financial industry has a product that they want to sell you before they have even met you. (Read our 13 Guiding Beliefs.)
  • We have no investment minimums. Younger professionals have financial goals and complex, competing objectives (hello, student loans!) even if they haven’t started investing or only have a small balance in a 401(k). We think helping young professionals build a strong financial foundation is important work. This is our Wealth Builder Program.
  • I’ve been a financial planner for 15 years and hold the Certified Financial Planner and Chartered Financial Analyst designations. Professional expertise and deep investment experience should be a given if you’re seeking financial advice. (More about Scott.)
  • Having your own plan means that you have taken an objective measure of where you are today, that we have created specific goals and objectives, and that we identify and implement steps to achieve those goals. While this is often savings and investment based, we’re going to evaluate your whole financial picture, from taxes and employee benefits to estate planning and life insurance. Bringing in a professional delivers accountability to a plan and protects you from what you don’t know you don’t know. (Financial Planning Services)
  • We are a Fiduciary, legally required to place client interests ahead of our own. Our fees are easy to understand and transparent. We aim to eliminate conflicts of interest wherever possible and if not possible, reduce and disclose. I invest in our Growth 70/30 model right along with our clients; if I thought there was a better way to invest, we would do that instead. (Skin in the Game)

Successful people – in any field – seek out the help and expertise of others. They surround themselves with knowledgeable professionals, not to abdicate responsibility, but to improve their understanding through asking the right questions. I became a financial planner to help others achieve their goals, and I love my job. For me, it is endlessly interesting and personally rewarding.

You could make a New Year’s resolution about your finances, but I genuinely believe you are more like to have a good outcome if you hire the right advisor who can help guide your journey. If you want 2019 to be the year when you turned your dreams into goals and a plan, then let’s talk about how we can work together.

The Cost of Waiting from 25 to 35

I am on a mission to get people in their twenties saving and investing. Why? Because an early start on good financial habits creates an exponential difference later. The solution to the next generation’s retirement crisis of a bankrupt Social Security, underfunded pensions, and increased longevity will require people get an early start.

Let’s compare two investors, both of whom will earn an 8% return over time. Smart Sally starts a Roth IRA at age 25 and contributes $5,000 a year through age 35 (11 years). Then she makes no further contributions.

Late Larry starts his Roth at age 35, also contributes $5,000 a year, and makes this contributions all the way through age 60. He will end up contributing for more than twice as long as Sally.

At age 61, both Sally and Larry retire. Who has more money in their Roth IRA? Sally has $615,580. Larry, although he contributed for longer, never caught up to Sally’s early start. He has only $431,754.

Of course, if Sally had contributed all the way through age 60, which is what I hope she would do, she would have the sum of both amounts: $1,047,334. If you can start a Roth IRA at age 25, you could have a million dollars by retirement. But if you wait just a decade, until age 35, you will likely lose more than $600,000 from your retirement.

It’s that first decade of investing that is so important. At an 8% hypothetical return, you are doubling your money every nine years. The early bird will likely finish with at least twice as much money as someone who starts a decade later.

If you are a recent college grad, please sign up for your 401(k) and put in at least 10%, preferably more if you can afford it. Most of your friends will only contribute up to the company match. Do better, contribute more. If you don’t have a 401(k), determine if you are eligible for a Roth IRA, a Traditional IRA, or a SEP IRA.

But most of all, just do it now and don’t wait. Because when you wait one year, one year has a way of turning into 10 years, and then you are the 35 year old with no retirement savings. I know you have student loans, are saving for a car, house, wedding, etc. You may have kids of your own. No excuses, you just have to find a way to get started. Even if you can only start with $100 a month, get going, and then increase your contributions when you can afford it.

The truth is that there is never an easy time to save and invest. It will always require planning and maybe even a little sacrifice. At 25, you have student loans and credit card bills. At 35, you may have a big mortgage and young kids. At 45, you might be trying to figure out how you are going to pay for your own kids’ college. So don’t think that it will be easy to save later. That day may never come!

For the parents, grandparents, aunts, and uncles reading this, you have the opportunity to help your twenty-something young adults get a leg up and make a positive impact on their whole life, even after you are long gone.

  • Talk about investing and the importance of starting early. Ask about their 401(k) and IRAs. Forward this article. Kids are NOT taught to be financially savvy in school. If parents don’t teach this, young adults are likely to miss the opportunity of an early start. (And thank you to my Mom and Dad for their wisdom.)
  • Send them this book: The Elements of Investing. It’s short and an easy read, but contains essential information for becoming wealthy.
  • Hire me to be their financial advisor. I love helping young investors, to teach them the ropes and help establish their financial foundation at an early age. See our $99/month Wealth Builder Program.
  • Instead of leaving a lump-sum inheritance when your children are middle aged, you might establish better money habits by funding their Roth IRA at an early age and involving them in the process. If a 16-year old has earned income, they can contribute to an IRA, or you can let them save their money and make the contribution for them. (Note that a student’s IRA is not reportable on the FAFSA, although some colleges will count the account as a part of their expected contribution.)

Good habits last a lifetime. While it is never too late to invest, there is an enormous cost to waiting from age 25 until age 35. It’s potentially the difference between having a million dollars or $431,000. You can’t control what the market is going to do, but the real game changer could be getting an early start. Of all the levers we can control, an early start is going to make a bigger difference in your lifetime outcome than anything else.

Helping HENRY

On Thursday, the CFP Board published the results of a consumer survey they undertook this spring. Based on interviews of 1000 adults over age 25, they identified four groups: Concerned Strivers, Stretched Worriers, Confident Savers, and Tentative Savers. At 27% of the respondents, Concerned Strivers could benefit tremendously from financial planning, but many investment firms are not equipped to help them because they may have little or even zero in investment assets today outside of their 401(k).

“The Concerned Striver has many day-to-day challenges that make it hard for them to save with any regularity,” said CFP Board Consumer Advocate Eleanor Blayney, CFP®. “Concerned Strivers feel like they can deal with the immediate needs of their families, but may neglect saving for their own future. They have good intentions, adequate resources and employer-sponsored retirement plans, yet they feel they are unable to capitalize on these financial strengths.”

We have an acronym for Concerned Strivers: HENRY, High Earners Not Rich Yet. There are so many families and professionals here in Dallas who are in their twenties, thirties, and forties and have incomes of $100,000 to $500,000 and yet have little or no investment assets. Between mortgages, car loans, credit cards, and student debt, they may have a negative net worth with no relief in sight.

While some HENRYs are “not rich yet”, many will be not rich ever, based on their current trajectory. You can change this. If you are are a Concerned Striver, you need the guidance of a Fiduciary – an expert whose legal and sole obligation is to put your needs first – and not someone who gets paid a commission to sell you investments and then give you a “free” plan.

Many people assume that they don’t have enough assets to be a client of Good Life Wealth Management. I am a former educator and it’s in my blood to want to help people get started. I want to make a difference in people’s lives. That’s why we offer two distinct programs.

Our Premier Wealth Management program is for investors with over $250,000 and focuses on holistic financial planning, retirement preparation, and investment management. For our clients with under $250,000 – even $0 – we created our Wealth Builder Program to build a strong financial foundation and put you on the path to your first million.

With our Wealth Builder Program, we will help you accomplish your goals and priorities:

  • Get out of debt: managing loan repayments and cash flow priorities.
  • Invest monthly – however much or little you can afford – to build your wealth.
  • Track your net worth annually to measure your assets and liabilities. Awareness creates behavior to increase assets and reduce liabilities. It’s like knowing you have to step on the bathroom scale Monday morning.
  • Select employee benefits and advise on 401(k) decisions.
  • Term Life Insurance, if you have a spouse or children. (The only life insurance a Concerned Striver needs).
  • College planning for your children that considers all your other financial goals.
  • Bring a “neutral” coach to improve communication about money with your spouse. A financial planner is still cheaper than a divorce!

The Wealth Builder Program is $99 a month, and is cancellable at any time if you are unsatisfied. That’s probably less than your cell phone bill or how much you spend on coffee. Make an investment in your future. Find out more here.

I know that every fifty-year old millionaire was once a thirty-year old facing these very issues and concerns. Some of those thirty-year old professionals will become financially independent if they make smart decisions. There’s no need to reinvent the wheel, I can show you what works. But it’s not one-sided. You have to be coachable: eager to participate actively and willing to make changes. If that describes you, we could go a long ways together as a team. What are you waiting for, Henry?

Bringing Financial Planning to All

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In my first position as a financial advisor, I worked at a “Broker Dealer”, where we charged commissions on the sale of products.  As an educator in my previous career, the sales aspect of the job was challenging and at odds with my belief that good financial planning encompasses much more than just which funds or securities to buy.  Any investor in a transactional account is bound wonder from time to time if a trade is being suggested to improve their portfolio, or because the broker needs to make a sale.

In order to focus on a more holistic approach, in 2012, I joined a Registered Investment Advisor (RIA), a firm which did not charge commissions on the sale of investments, but charged a management fee based on the assets under management.  I think this is a much better solution for both investors and advisors.  It’s completely transparent and the client pays for on-going service, rather than upfront commissions.  This eliminates feeling like you have to stay on guard to make sure a broker is not placing unnecessary trades to make more revenue for their firm. A fee-based account places investors and advisors on the same side: if the portfolio goes up in value, the advisor will make more, and if the portfolio declines, so will the advisor’s compensation.

While the RIA approach has many advantages over the commission platform, as a business model, it is difficult to spend a great deal of time on a client with limited assets as the revenue is low and it might take years to justify the initial time and costs.  As a result, most RIA firms have minimum account sizes, often $1 million or more; at my previous firm, we did not take any clients under this level.  It was a good business model for the firm, and it gave me the chance to focus extensively on investment research, developing portfolio models, and implementing trades across $375 million in client assets.

However, I found it frustrating to have to turn away friends and family who wanted to use my services.  I believe in the American dream of financial independence.  I want to help others achieve those dreams and not limit my efforts to solely helping those who have already accomplished their financial goals.

That’s why we created a two-part structure at Good Life Wealth Management – to have the ability to help clients of all sizes and ages.  Here’s how it works:

Families with over $250,000 in investable assets will participate in our comprehensive Good Life Wealth Management Program.  This includes creating a financial plan and customized management of your assets in a tax-efficient investment portfolio.  The fee is 1% annually, (charged quarterly).  This approach provides established investors with an ongoing financial plan that addresses your unique needs and changes as your situation requires.

For families below $250,000, we offer our innovative Wealth Builder Program.  We create the financial plan you need today, with a focus on improving both sides of your net worth statement: your assets and your liabilities.  We invest your accounts using no-transaction fee funds or ETFs, and will advise how to allocate your other accounts such as 401(k)s.  Rather than charging as a percentage of your accounts, the Wealth Builder Program costs just $99 a month, which can be paid by credit card or debited directly from your accounts.

Using a monthly retainer is a relatively new approach in the RIA business, but I think is the crucial next step we need to bring the benefits of financial planning to the 90% of Americans currently not being served by the “$1 million and up” firms.

For more information on this approach, check out this article in October’s Think Advisor magazine, which quotes myself and other advisors who are leading and advocating for this change in the industry.  Here’s the link:

http://www.thinkadvisor.com/2014/09/29/experimenting-with-new-compensation-models