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The Asset Advisory Group

Improving the Planning Process

As mentioned in our July monthly letter, our financial planning software released a new version this week full of exciting updates.  New functionality will improve our planning process by better integrating certain variables and placing a better framework around how we segment goals.  We think it’s a big step forward in The Asset Advisory Group’s mission to enhance our clients’ well-being and help them make smart decisions about money.

From a technology standpoint, the software will now address things such as Social Security not just on it’s own, but really look at how different distribution scenarios impact the overall portfolio.  These are certainly things we’ve evaluated in the past, but having them fully integrated into our planning tool will really help frame the impact and outcomes of various decisions.

When evaluating goals, we will now segment around needs, wants and wishes.  This isn’t a major shift, but an important one.  In the past, the Monte Carlo analysis would put all goals in one pot and then determine a probability of achieving success.  While useful, providing more sound footing around needs like food, water and shelter typically take precedence over travelling first class around the globe.  Going forward, we will be able to segment these three goal categories, putting an emphasis on making sure needs are met, which then allows for more meaningful conversations around how to prioritize the risk needed to meet the wants and wishes. 

For many clients, this will mean revisiting some of the “discovery” phase of our relationship.  The purpose of this is not redundancy, but to ensure that our existing clients go through the same detailed process in defining their goals that a new client would experience.  At the same time, we’re making sure we’re using the most up to date information available from our clients and that we are asking questions specifically designed to maximize the potential of the updated process.

We continue to be committed to creating customized experiences for our clients based on their individual wishes for a financial planning relationship.  Making an investment in the right technologies continues to be an important way of executing on this commitment and in working together to make smart decisions around mitigating tax issues, taking care of heirs and building, protecting and distributing wealth.

Have a great week!

Chip Workman, CFP®

cworkman@taaginc.com
www.taaginc.com

TAAG's New Home

In October 1988, after six years as a CPA and banking officer, I took my newly earned Certified Financial Planner designation and youthful optimism and started The Asset Advisory Group (TAAG).  It wasn’t actually TAAG then, since I was only a single advisor with an administrative assistant brave enough to leave the bank to join me. 

In my exit interview, my well-intentioned boss told me I was crazy to try to start my own business as a 28 year-old female in a conservative town.  He offered to hold my job for me until I came back.

In the fall of 1988, no one really knew what a financial planner was, so I spent most of my time educating people about how I could help them make smarter financial decisions.  To be able to afford an office, I teamed up with an insurance agency that allowed me to rent space to meet with my clients.  After five years my husband and two other employees joined me, and we outgrew the office and the business arrangement.  It was time to establish our own identity.  We incorporated as The Asset Advisory Group and moved into a rented office in Glendale. 

By 2002, we had outgrown our Glendale office as well.  We surveyed all our clients and asked them where they wanted us to be located.  The Montgomery/Blue Ash area won by a wide margin.  We’ve been in our current Blue Ash location for over 10 years now, and change is once again on the horizon.

We use the ups and downs of the market to your advantage by rebalancing your portfolio through different economic conditions.  We follow that same philosophy as we plan for the future of TAAG. As a result, The Asset Advisory Group has acquired a permanent home.

Interest rates are the lowest they have been in decades, commercial real estate has not fully recovered in Cincinnati, and a property we felt was a perfect expression of the culture and client service philosophy we strive to provide was available. 

Our new home, 9200 Montgomery Road, sits at the intersection of Montgomery Road and Ronald Reagan Highway.  It is a professional, but warm and inviting building. We are making renovations to create an environment in which our clients and their professional advisors will enjoy meeting and working together.  We plan to be moved in by October of this year. 

Chip, Chris and I have made the commitment to be owners of the building, as well as the owners of TAAG.  Our investment in a permanent home conveys our commitment and belief in the future of The Asset Advisory Group, and our love of the work we do for you.

October 2013 will mark the 25th year of my great adventure.  I look forward to sharing the next 25 with you in our new home! 

Jeannette A. Jones, CPA, CFP® 

jjones@taaginc.com

www.taaginc.com

What is the Truth About Health Care Reform?

(from Carolyn McClanahan's Forbes' column, 7/3/2012 - click here for the original post. Carolyn is a physician, financial planner, educator and storyteller. For more on Carolyn, visit her Forbes' profile.)

When the Affordable Care Act was originally passed, misinformation and inflammatory lies regarding the law made their rounds on the internet. Great examples from the right – seniors on Medicare would face rationed care, death panels were going to be enacted, or you would have to pay extra taxes on the sale of your home to name a few.  Great examples from the left – the life of “Julia” and the exaggeration of the numbers who would be denied coverage because of preexisting conditions.

The lies and misinformation slowed down a bit over the past few months as everyone waited on the Supreme Court decision with rabid anticipation.   Those against the law thought the case was all locked up to repeal.   Immediately after the Supreme Court decision was released the misinformation started again.  What a surprise (not really.)   On Facebook, what showed up?  The oldie but false picture of a van with the following painted on the side – “President OBAMA – If the Health Care Reform Plan is so Great, Why does it EXEMPT YOU, Michelle Obama, Congress, Senators, and their families?  Page 114 Line 22”

Move up http://i.forbesimg.com tMove down

                   

I’ll debunk this in a minute, but first I want to share my hope for the people of this great country as the election approaches.  My hope?  We take the time to understand the problems in this country from more than our individual perspective and then obtain non-partisan education on solutions from reputable sources.   We should choose our leaders based on truth, understanding, and a desire to improve our greatness instead of basing our decisions on rhetoric and ideology.  When we hold ourselves to a higher standard in our own education on important matters, we can hold our leaders to a higher standard, and maybe they will begin to deliver.  I am an optimist.

To help you focus on issues with health care, I point you to two non-partisan and highly reputable resources. These will help you pick through the bunk and exaggerations from both sides.

Kaiser Family Foundation:
This is the granddaddy of all sites on health care reform. There is a section with the basics, and delves as deep as you want to go into the details of health care and the Affordable Care Act. In addition, the good people at Kaiser Family Foundation provide regular updates and a roundup of the news in health care on The Scan. I also enjoy the regular polls they conduct and share from others on public opinion in numerous facets of health care.

FactCheck.Org:
This site looks at the facts behind statements in the press, chain emails, and other questionable propaganda. Sponsored by the Annenberg Public Policy Center, FactCheck.org goes beyond health care and is a great tool for all matters of fact in our public debates. In their archive, 408 articles are devoted to health care or the health care law. There is an abundance of misinformation out there, and this site helps you sort through the bull. It has an easy search engine if you are looking for a particular topic, like our lovely quote on the van.

So don’t rely on some photo of a van with billboard lies to learn what this law is about. Check out the facts for yourself. Even better, stop the misinformation and lies. As for the van? A waste of paint. Congress, the President, and the First Lady are subject to the law. The van doesn’t even reference the law – it references a draft of a bill not part of the Affordable Care Act. Page 114 of the real law discusses the four different levels of health insurance that would be sold on the exchange – and line 22 focuses on the “gold plan.” FactCheck.org backs me up on this one. In case you are curious, Title I, Section 1312 “Consumer Choice” contains the verbiage that Congress is required to use plans created under the law. You can actually go read it. Go to page 157, starting at Line 16.

Make no mistake about it. The Affordable Care Act has warts, but the majority of the law contains good provisions that will eventually make our country stronger and healthier. Learn what is good in the law, learn about the warts, and demand that our leaders move forward with further solutions.

Lessons from Pa

This time of year, I often think of the carefree summers I enjoyed as a child.  I spent the first 13 years of my life in Newark, Ohio, before moving to Cincinnati.  My father is from Akron and most years my sister and I would spend at least a week at my grandparent’s house visiting our aunts, uncles and cousins that lived in the area.

My grandfather (Pa) passed away in 2010 and would have turned 100 this September.    He is never far from my thoughts and I am forever grateful for the lessons he taught me.

1.     Happy endings aren’t just for the movies

My grandparents were married for 72 years.  My husband, Tom, and I will each have to live to age 99 to accomplish this feat!  They were able to live in their house until the year Pa passed away.  Remaining physically and mentally active and being blessed with good health allowed them to maintain their independence.

2.     The importance of social circles

My grandparents were always active in their church and had a wide circle of friends.  They were fortunate to live close to most of their 8 brothers and sisters and saw them frequently.  After Pa’s death, my grandmother moved to an independent living facility where she remains today.  She just turned 94 in March and continues to spend her days filled with social engagements and family visits.  

3.     Live within your means

My grandfather drove a Frito Lay truck for a living and my grandmother never worked outside the home.  They lived in the same house for 47 years and were diligent savers.  Pa stopped working at age 60 and they were able to enjoy a comfortable retirement which included spending winters in Florida and many rounds of golf.

4.     Have a purpose

Pa started caddying at the age of 13.  Golf was his passion and he played whenever possible.  One of his happiest moments was when he finally got a hole-in-one at age 89.  A retirement lasting over 35 years would not have been nearly as fun if he wasn’t able to do something he enjoyed so much.

When I envision my life after work, my grandparents often come to mind.  Having a fulfilling life, surrounded by the people I love is just as important as making sure I’ve saved enough money.  I hope it is for you too.

Christine Carleton, CFP®

ccarleton@taaginc.com
www.taaginc.com

Pinning All Hopes

In the swing-state hotbed of Southwestern Ohio, election season has already reached fever pitch.  Depending on your view of the coverage, it’s either an exciting or terrifying proposition that there’s still more than four months to go until Election Day. 

Much of the talk surrounds Mssrs. Obama & Romney and how who ends up in the Oval Office will impact fiscal cliffs, tax rates, and future as a nation.  It seems like as worried as we are about the many questions that face us, we are equally certain that they will be handled precisely one way if candidate A wins and precisely another if candidate B prevails. 

In no way do I take lightly the times we live in, the important decisions we face and the impact those decisions will have on generations of Americans.  I do, however, want to put some perspective around the weight we place on the impact one person elected to one office truly has.

When I was in 7^th grade, I ran for student council and it was a two man race (I was in an all-boys school).  The other candidate had his supporters, I had mine.  As with most elections, it came down to the handful of students that neither of us had swayed.  I needed a platform.  I needed something that would cause them to vote for me.  So, I asked my fellow students what they wanted.  Almost to a man, easy access to a pop (soda) machine was an overwhelming favorite.  “It’s the soda, stupid”, could’ve been our campaign mantra.

So, that was it.  In our debate, I announced my plan to put a pop machine on both floors of the building and was victorious in the election.  The student body could taste the cold Coca-Cola waiting for them just down the hall. 

In my first student council meeting, I asked the principal about putting together a fundraiser so that we could install the machines in our building.  The swift and resounding “No” almost knocked me over.  Apparently, over the summer, the school board put a no-soda policy in place.  I had to deliver the bad news to some disappointed constituents.

I tell that story realizing that our current political and economic issues are many degrees of magnitude more critical than an 11 year-olds’ ability to conveniently purchase a soda, but there are some similarities.  Despite what they may say in their campaigns, there are no set tax rates, fiscal solutions or other economic certainties that instantly spring into action based on November’s outcome.  These decisions will face a tough fight, both in Congress and the White House, likely for years to come.  Many a President has made pop machine promises, only to find the bureaucratic process tougher to manage than a Junior High School principal.

This isn’t to say to walk away from the coverage or to stop caring about who wins.  In fact, it’s partially the apathy of the average American voter that helps create political gridlock as both sides only have to deal with the noisy extremes.  Instead, I’m suggesting we don’t pin all our hopes for the market, jobs, and future decisions of Congress, courts and corporations on one vote, on one election.  That will almost always lead to disappointment. 

I propose that we spend that energy better focused on the issues that really matters to us and then remain active in the process even after Election Day has passed.  It’s the only way to shift the incentives of our elected officials away from gridlock and towards making real steps towards solving these difficult issues.

Rant complete.  Have a great week!

Chip Workman, CFP®

cworkman@taaginc.com
www.taaginc.com

The Stuff Weighing You Down

Over Father’s Day weekend, when my dad and I were alone for a few minutes, he brought up a subject that had obviously been weighing on his mind.  He said he realized he and mom live 2 ½ hours away from my brother, sister and I, and if anything were to happen to either of them, it wouldn’t be easy for us to be there to help.  He would like to downsize, and move closer to us.

Dad will turn 78 this August, and he’s a very healthy, active person that looks at least 10 years younger. But the reality of the situation is he has cardio pulmonary obstructive disease, caused by a near-death experience with pneumonia when he was a baby and the ‘bad lungs’ he and his siblings inherited from his father, who also struggled with it.  My grandfather died when he was 87, and my father has taken much better care of himself; but the disease has reduced his ability to breathe freely, saps his energy, and causes more frequent sick days.   As a result, birthdays are causing him to think more and more about his mortality. 

As we talked, he said he didn’t want to wait until problems with his health forced them to move.  Due to her vision, my mother doesn’t drive more than a few miles from home, and that will become more of an issue as Dad’s health deteriorates.  He wants to move to the Cincinnati area so he can be closer to his grandkids and great grandsons.  He wants to be able to attend soccer games, birthday parties and just be more a part of their day-to-day lives.  The problem is their stuff.

My parents are very frugal savers.  Mom still has clothing she wore in college, and my dad still wears a tux he bought to sing in a concert the year I was born.  They were born in the 1930’s, shaped by the Great Depression, and spent their childhood ‘making do’ with whatever they had.  Mom was particularly shaped by her experiences.  She holds onto everything they acquire because “one of you kids might need it someday.”  This need to save things has gotten so bad she recently pulled glassware and furniture out of a bulldozed, burned down house and salvaged them.  I cannot make this up.

In order to move, they will have to let go of things.  Dad knows how difficult it will be, and how long it will take them to do it.  He said if they start now, they might be ready in 2-3 years.  Then he said something else I think is closer to the truth.  “When you’re accumulating stuff, it allows you to focus on the future because you have all these things you might eventually use.  When you downsize, it forces you to acknowledge the reality that you are going to die someday, and you don’t need it all.”

Maybe if we ask ourselves if we really need something before we accumulate it, we’ll have less to weigh us down when we get older, and the transition will be a little less painful. 

Heavy stuff.      

 

Jeannette A. Jones, CPA, CFP®

jjones@taaginc.com

www.taaginc.com