Kids?...or a Bentley Flying Spur?

For moms and dads, or those of you considering becoming a mom or dad, have you ever wondered just how much it costs to raise a child today?

A study released recently by the USDA, showed that raising a child is 22% more costly than it was in 1960. Adjusted for 2009 dollars, middle-income parents in 1960 spent a total of $182,857 to raise one child through the age of 17. Today, parents spend $222,360. The bulk of those costs are, not surprisingly, for health care and education.

(The suggested MSRP for a 2010 Bentley Continental Flying Spur Speed Sedan is $202,500.)

As a financial advisor, these figures shouldn’t sound too off the mark. Everyone knows the costs of raising a child are increasing each year, particularly for education. However, most parents spend so much money on the day to day expenses of raising their children, they fall short of being able to afford to pay for college, let alone fund their retirement sufficiently.

What are you doing to help your clients prepare for the financial reality of paying for their children’s expenses until they’re on their own? Effectively managing finances over the course of a child’s early lifetime can significantly impact how much money your clients will end up with in their retirement fund.

How can you help?

• Consider creating a marketing campaign surrounding the USDA’s new study to make your clients aware of the expenses of raising a child. Create a mini campaign for clients who are expecting their first child (or those becoming grandparents) and distribute it a few months before the child arrives to prepare them for what lies ahead. Once they have the baby, they will be too preoccupied with everything that comes with being a new parent to focus on their finances.

• Create a list of popular websites that you can share with your clients that offer good information and advice about health care costs (www.insurekidsnow.gov) and education expenses (www.collegeboard.com ).

• Devise a strategy to help your clients decide where they should put their money and when – is it better to pay off the mortgage, save for college, or fund a retirement account. If there are limited finances, which should be done first? Develop different scenarios with real life examples to share with clients.

• Host a seminar in your office to help clients understand their options. Consider holding it in conjunction with a local university financial aid officer or an estate attorney from your professional advocate network for maximum impact.

The better prepared your clients are for paying for their child rearing expenses, the better prepared they will be to enjoy the lifestyle they dream of having in their retirement. As their trusted financial advisor, you can help them prepare more effectively.

by Theresa Ficazzola

Life's Lessons (at $53,118.00 a year)*

Bob Joss is the insightful, well-spoken, and highly regarded professor of finance and Dean Emeritus of the Stanford Graduate School of Business. In his last lecture as a teacher, he recently summed up his life’s learnings in “Top 10 Life Lessons,” which are 10 lessons that have been important to him throughout his distinguished academic and business career.

#10. Life is like cricket. Don’t know much about cricket, but I think he means that life is a long game, with ebbs and flows. Consequently, it is important to be prepared and stay alert for opportunities and challenges. As a financial advisor, what are you doing to prepare your clients for their life-long game? Are you staying alert for all the opportunities that may come your way from your clients and the prospects in your pipeline?

#9. Life is too short to deal with “bad” people. “Bad” people are bad news. They create negative energy and can ultimately waste your valuable time. For financial advisors, “truer words were never spoken.” Most financial advisors can build a pretty good business by finding 100 good people who they can connect with and serve. Therefore, concentrate on finding those folks who meet your minimum threshold of “good” people.

#8. Run it like you own it. Leadership is about responsibility and our actions matter and are watched. If we run a business like an owner, we set the tone for all others who observe us. Ensure you’re running your practice like you own it, even if you don’t. Treat your team with respect and reward them appropriately.

#7. Don’t forget to manage sideways. We are always a part of some team. Think beyond the immediate. As a busy financial advisor, you have a lot to do each day. As you are managing your big picture, don’t forget to also focus on the details, which in some cases, matter just as much as the larger ones.

#6. Don’t take yourself too seriously. Arrogance deprives a leader of loyalty. Leadership is about earning followers. As Jim Collins has written, Level 5 Leadership is a combination of humility and will. Try to keep your sense of humor, even when you’re having a bad day or dealing with a difficult client.

#5. Without fear, there is no courage. Take intelligent risks. Trust your instincts. Ask for help…asking for help is a sign of independence, not weakness. If you don’t have a mentor or a close friend who understands your business; someone who you can bounce ideas off of; someone whose advice you can trust—find one, or two. Building a close alliance can give you a little extra push when you need it most.

#4. Life is full of “character-building” experiences. When we have a “character-building” experience, it can transform who we are as a person. Don’t stay in your comfort zone; try new things. We learn the most when we learn a skill that is about something important to us. What’s important to you? What’s important to your clients? Ask your clients what keeps them up at night; then devise a plan to help them sleep better.

#3. Find the words. Life is an endless series of conversations. How well do you converse with your clients, your colleagues, your team? Can you speak succinctly, clearly and with conviction? Perhaps you could benefit from taking a public speaking class at a local college. Leaders earn followers by honest communication, i.e. communication that respects, and connects, with their audience.

#2. Use critical thinking throughout your life. Critical thinking leads to great questions, which can uncover the 1 or 2 important kernels of information that may lead to helping you resolve an issue or solve a problem. Don’t forget to ask your clients questions on a regular basis—keep them engaged; you never know what relevant piece of information you can garner from them that could further solidify your relationship with them.

#1. Don’t forget to renew yourself. Remain curious and vital. Self-preoccupation is a prison. Our identity is what we commit to. Periodic self-assessment allows us to learn and grow. When was the last time you took some time out for yourself to do something you really enjoy? Whether you take a solo bike ride or run, immerse yourself in a good book, get a massage, or take a walk on a beach, you’ll be sure to be renewed—at least for a little while.

Ralph Waldo Emerson, the great American literary philosopher summed things up best when he wrote, “Life is journey, not a destination.”

*Tuition at the Stanford Graduate School of Business for 2010/2011 is $51,118.00, not including room & board, books, and other expenses.

by Chris Holman

Know Your Neighbors

The popular assumption is that the internet…mobile phones… texting…and other new technologies…have enabled Americans to become increasingly isolated. Indeed, past sociological research has supported this assumption.

However, some interesting new research by the Pew Internet & American Life Project disputes this belief.

In a recently released report by the Pew Foundation, "Neighbors Online", it was revealed that internet users are more likely to meet their neighbors face-to-face and engage in meaningful discussions of community issues. Also, people’s use of mobile phones and the internet is associated with larger and more diverse discussion networks. When their full personal network is examined…i.e. both strong and weak ties…internet use, in general, and use of social networking services, such as Facebook, in particular, are associated with more diverse social networks.

The Pew findings include:

• Knowing one’s neighbors’ names is a key predictor of how much people chatted in person about community topics. If you know your neighbors’ names, you are 70% likely to be talking to them about various community topics, and if you don’t know their names, you are only 12% likely to do so.
• Internet users are more likely to meet their neighbors face-to-face and engage in community issues, i.e. 50% vs. 35%.
• Speaking face-to-face is still the most common way that people interact regarding issues that affect the community. 46% of Americans talked face-to-face with neighbors about community issues, 21% discussed community issues over the telephone, and 11% read a blog dealing with community issues.
• Having face-to-face interactions with neighbors about community developments is closely linked to factors such as: age, socio-economic status, education, and race.
• Women are slightly more likely than men to know all, or most, of their neighbors, i.e. 44% vs. 40%.
  

For financial advisors, this report reveals interesting implications regarding the importance of connecting with others in their respective communities. The most obvious finding is that simply knowing the names of your neighbors greatly increases the likelihood of engaging them in some form of conversation or dialogue, even if it’s something as basic as the weather.

(Coaching Question: Do you know all your neighbors? Can you name them? How well do you know them? What types of conversations do you have with them? If you don’t know all of them, why not introduce yourself the next time you see them and explain who you are and what you do? Who knows, they may just be in the market for a good (and friendly) financial advisor.)

by Chris Holman

Are you happy?

Some people say that happiness is a state of mind, just like feeling young. Let’s face it, everyone has their good days and bad days, but some people are just happier than others. A new study reported by LiveScience.com says that age is a big factor in determining who’s happy. The study, reported by Rachael Rettner for LiveScience.com, revealed that older people in their mid- to late-50s are generally happier, and experience less stress and worry than younger adults.

The results were based on Gallup phone surveys conducted in 2008 of more than 340,000 Americans. It included measures of both overall happiness (called global well-being) and day-to-day experiences of specific feelings such as stress and happiness (called hedonic well being). It’s more impactful to include both types of happiness in a study such as this because the first provides a more reflective look at life while the second gives a more immediate view of life.

I guess this makes sense. If we were only talking about hedonic well being, I would argue that children and younger people are the happiest people on earth. Have you ever seen a three-year old bite into a cupcake or jump into a pool? Do six-year olds ponder paying the bills? Do 10-year olds worry about paying the mortgage or finding a job? Generally speaking, most kids are happy all the time; they have no worries or fears—their parents do all the worrying for them.

People’s overall satisfaction with their lives showed a U-shaped pattern in the study, dipping down until about the age of 50 before trending upward again. Stress and anger steadily decreased from young adulthood through old age. Worry was fairly constant until age 50, when it declined. Sadness levels rose slightly in the early 40s and declined in the mid 50s, but overall sadness didn’t change much with age.

Study researcher Arthur Stone, a psychologist at Stony Brook University in New York explains several theories that may explain the trend:

• Older people are better at controlling their emotions than younger people,
• Older people remember fewer negative memories; they focus on telling and retelling stories about the “good old days”,
• Older people might focus less on what they have or have not achieved and more on how to get the most out of the rest of their lives.
  

Of course, this is just one study. More research is needed. But is it? Can you really measure true happiness? Should we try? Maybe we should spend less time trying to figure out why people are happy and just spend more time being with people we like, doing the things we enjoy. Certainly that should make us happy.

Are you happy today? Why not send a friend an email and attach a Smiley face to it. It might make you happy (at least for a minute), and you might make your friend happy, too.

According to Wikipedia, Smiley has been a registered trademark in some countries since 1971 when French journalist Franklin Loufrani created "Smiley World" to sell, advertise and license the smiley face image in the United Kingdom and Europe. The Smiley name and logo is registered and used in over 100 countries. Loufrani had created the icon in 1971 to highlight good news in newspaper articles.

Need an even happier pick-me-up, listen to Bobby McFerrin sing his 1988 hit “Don’t Worry, Be Happy” on Youtube. The song was the first a cappella song to reach number one on the Billboard Hot 100 chart, a position it held for two weeks. The song's title is taken from a famous quote by Meher Baba.

The Indian mystic and sage Meher Baba (1894–1969) often used the expression "Don't worry, be happy" when cabling his followers. In 1988, McFerrin saw a poster of Baba with the quote and was inspired by the expression's charm and simplicity; as a result, the song was composed.

Peace of mind, including financial stability, can certainly help to reduce one’s anxiety about living the lifestyle he or she wants in retirement and contribute to one’s overall well being and state of happiness. As a wealth advisor, are you doing everything you can to make your clients as happy as they can be, regardless of their age?

by Theresa Ficazzola