Certified Financial Advisor

April 30, 2010 By Leave a Comment

Certified Financial Advisor

Several hundred thousand times, users have searched Google looking for this phrase – Certified Financial Advisor. I learned this as part of my website strategy development, and it speaks to something very interesting. People who are looking for financial advice are looking for someone they can trust to advise them well.

What’s ironic about this search phrase is that there is technically no such thing as a Certified Financial Advisor. Here’s a better way to identify quality financial advice: experience. If someone just got out of college with an MBA, would you hire him to manage your finances? Probably not – he doesn’t have any experience. If instead of hiring him, you could hire someone with a decade of experience in the industry but no MBA, which would you choose? A lot of MBAs I know tell me that the experience they have is much more valuable to their customers than the fact that they have an MBA.

So what about being a Certified Financial Advisor? Well, there are actually over 100 different designations for financial advisors, each with their own fancy set of initials to put after your name. Some are easy to get; some need you to attend a one-day class. Others charge you a fee, verify that you have any other designation, sign you up for their magazine, and presto! – you’ve got another designation. That’s a little crazy. CFP, Certified Financial Planner is a pretty rigorous certification. More rigorous still is the CFA – Certified Financial Analyst. But those (crazy smart) people usually become money managers, not financial advisors. They deserve it, after the three day long test (!) that they take after all the classroom training they go through.

My emphasis has not to become a certified financial advisor, but to develop my education in ways that allows me to improve my clients’ financial lives. I’ve been targeting tax planning classes lately. Ed Slott’s tax planning courses have been important. I’ve been through Phil Cavish’s IRA college; I’ve studied Robert Keebler’s work in the CPA field. I’ve spent tens of thousands of dollars and lots of time out of my schedule to develop my education to help my clients. None of those programs came with cool initials to put after my name. I could get a bunch of initials too, if only I were willing to waste thousands of dollars of my company’s money to put me through classes that teach ideas that I already have experience in implementing. No thanks.

That said, I am actually pursuing becoming a certified financial advisor. Within the year, I too will have cool initials after my name. I found a program that I can actually benefit from, taught by people with real-world experience who can help me help my clientele.

Does the certified financial advisor you are considering have lots of impressive looking initials after his name? Ask yourself this: how much real-world experience did he have before he got those initials?

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Dallas Seminars

April 26, 2010 By Leave a Comment

Dallas Seminars

I built my business with Dallas seminars. Northern Collin County is where I do most of my business, and one key part of my success here is dinner seminars. I’ve met tons of people through these seminars, and I’ve learned so much about the psychology of my clientele from these events. I’ve already got lots of knowledge about investing psychology, but it’s important to be able to meet informally with my clients and dialogue with them about their decision-making processes. It’s great to learn what my customers need from me, and develop a better understanding of what they need from themselves (though they may not even be aware of it!)

For my customers here in Dallas, seminars provide a way to combine my emphasis on a coaching model with Dave Ramsey’s emphasis on having the heart of a teacher. Anybody can be a salesman, selling a particular investment product all day long, tricking customers into believing that his one product is the best option to meet their unique financial situation. But my seminars are a great opportunity to coach my customers into a better and better understanding of the financial world. I want to give my clients a way to move closer to their financial goals, and give them ammunition to fight the scaremongering on the evening news.

If you come to one of my Dallas seminars, you’ll get to see what I mean. We run three seminars a month: two are workshops that are open to the public every time we run them. If you’re in Dallas, you’re welcome to attend as often as you like. The third seminar I run for the Dallas area is a little different. I call it Investor Peace University; it’s an ongoing series of topics – different each month – to help people move forward with their investing. It’s primarily for my clients, but I do invite potential clients who are just getting to know me to attend that seminar once for free even if they don’t eventually become a client of mine. Every session of Investor Peace University with my clients ends with a discussion of the Twenty Things You Can’t Not Know, a list of questions that you must have an answer for in order to have peace of mind in your investing.

So that’s three Dallas seminars on financial planning each month, and you’re welcome at all of them (at least once). To get the details, click the ‘Where’s John?’ link at the top of this page, and it will give you the dates of the workshops for the general public, and the Financial Peace University sessions for clients and potential clients-to-be. Invite your friends!

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Financial Peace University Part 2

April 16, 2010 By Leave a Comment

Financial Peace University, Part II

Are you ready for part II of my critique of Financial Peace University, by Dave Ramsey? Here we go. Many of you know that I spend a lot of time learning more about the world of financial investing. My friends are exactly right when they observe that I’m always going to some class or seminar to improve my ability to serve my clients. I’m always reading books and literature in the industry; I spent two years going through an IRA tax class. I don’t hesitate to spend money on learning that will help improve my advice to my clients. Frustratingly, in a lot of the classes I take, I’ve got more knowledge than the people teaching the class, and they have more cool initials after their names than me. But if it makes me a more valuable asset to my clients, so be it.

That being said, I’m working on getting some new initials after my name! I found a class that is broad enough to teach me some new material, while giving me a framework to tie together all the knowledge I already possess. It’s called Certified Wealth Strategist. I’ve been calling myself a Tax and Financial Strategist and Coach for years, so this lines up neatly with the way I’ve already oriented my business.

What does this all have to do with Dave Ramsey, and his Financial Peace University, you’re wondering? Let me tell you. Dave focuses his training less on helping wealthy people manage their investments, and more on helping people get out of debt, get on a budget, and save money. So he and I are almost really working in two separate (but related) markets. It’s largely for this reason that I termed my client education project Investor Peace University – I deliberately aped the name of Dave’s Financial Peace University, but put my focus on investors.

Let me point out that Financial Peace University is an excellent program – it’s phenomenal. While I have some disagreements, I’m going through the program myself, I’m taking my son, my wife, and my sister-in-law through the program. I’ve read all of Dave’s books, and I recommend lots of people to go through this program. But let me tell you where I think Dave goes wrong, and how that ties in with my efforts to become a Certified Wealth Strategist in the Dallas area.

Financial Peace University says some things I disagree with about life insurance policies. The wealthy clients I work with frequently have large life insurance policies when I meet them. For some clients, they don’t really even need them; for others, there may be other things to do with the cash value in that policy other than keeping it in the life insurance policy. Dave Ramsey says cash value life insurance is always a bad investment. I agree with him… except when it is a good investment. The rules are different for investment strategies for the very wealthy, and I think while Dave’s advice is exactly right for his target market, the same advice can be damaging for mine. Here’s why. I had a wealthy client in my office the other day. The clients were a life-long farmer and his wife who had just sold off a big piece of property at the top of the real estate market, and became instant millionaires. What was the problem? He wasn’t a sophisticated investor – that wasn’t his strength. So what did he do?

He called his kids, who had just been through Dave Ramsey’s Financial Peace University! I had been advising them to start shifting money out of their estate and into a cash value life insurance policy. We did this very carefully to hold down the costs; we didn’t use whole life or variable life, and held their risk down to a very sensible level. Note something interesting here. This was a tax planning strategy, not an investing strategy. The cost of the insurance was far lower than the taxes they would have to pay by investing that money.

The kids, predictably, told their parents that they read in Financial Peace University that cash value life insurance is always bad! My clients made an impulsive change to their portfolio that is going to hurt them over the long term. I don’t blame Dave Ramsey for this; his advice is just right for the intended audience of the book. My clients sometimes include the one-in-a-million circumstances where you need to step outside the one-size-fits all approach to financial management. Be careful when taking anyone’s advice and applying it broadly – you may be missing out on the targeted advice that only makes sense for your unique situation.

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Nest Egg Retirement Planning

April 14, 2010 By Leave a Comment

Nest Egg Retirement Planning

Are you trying to figure out your nest egg retirement planning? I finally have a solution for you! It’s called The Nest Egg Cookbook. The paperback and hardcover editions of this, my first book, are now available. You can get a copy on Amazon; you can find a link on my website, www.johnpollock.tv that will let you buy a copy. I’ll be selling copies from my office here in Dallas, and if you stop me on the street, odds are good that I’ll have a copy on me – bring cash!

Financial planning is complex – even more so when you are doing nest egg retirement planning. That’s why I wrote the book. This book ties together all of the ideas on financial planning that I’ve discussed in the blog here on my website over the last many months. The book ties all these ideas together and gives you a system to start working towards developing investor peace. Developing the Noble Purpose is in there, along with great information about budgeting and cash flow planning. I go into the detail of my Rules of Financial Gravity, explaining the importance of not breaking the core rules of investing. There’s an important section on the psychology of investing, identifying the vital importance of having the right mindset when preparing to invest in the market. Market segmenting theory is in there – look, this book is just brilliant – if I do say so myself!

Are you looking for a guidebook for your nest egg retirement planning? This is what you have been waiting for. The paperback is only twenty bucks – thirty if you want it in hardcover. And, hey – if you have a Kindle, you can get it on Kindle for only $9.99 – what a bargain! If you’re impatient, this is the solution for you – hop an Amazon, order your copy of The Nest Egg Cookbook, and it will be delivered to your Kindle in less than a minute! Get your copy, and start your nest egg retirement planning today!

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Retirement Planning Programs

April 13, 2010 By Leave a Comment

Retirement Planning Programs

We live in a very technically-enable culture. Ready to file your taxes? Pick up a copy of this year’s edition of a tax-filing program. Need to solve a legal problem while away from home but you’ve got your iPhone handy? Ah – there’s an app for that! It’s so tempting for people to assume that financial investing works the same way – all that’s needed is the right retirement planning programs.

There are retirement planning programs out there – you can buy them at your favorite software store. They may even be a little bit helpful – but there’s a problem. The financial market is enormously broad, and it’s changing all the time. There are thousands of financial products out there, and there are more added every single day. But even if the market was static, no retirement planning programs are able to perfectly understand an individual’s specific financial situation and goals. Even the retirement planning programs we use in my office aren’t perfect tools, and my company spends thousands of dollars per year on them! Some consumers hope to accomplish the same outcome with a twenty dollar piece of software. I think they are kidding themselves.

Here’s an analogy: if I’m not feeling well, there’s a wealth of information out there in the Internet that will help me identify my condition, and evaluate different treatment options for it. There may even be software packages that do this! But if the right solution is surgery, there’s no web site or software program that will teach me how to perform that delicate operation. Some things need experts, and retirement planning is one of them. You can do a lot of work yourself, and of course I urge all of my clients to be well educated about retirement planning, but I don’t expect any of my clients to be experts in tax planning, estate planning, retirement planning, and investment coaching. That’s why they come to me. While software tools can be helpful, those retirement planning programs will never replace the benefits of a real one-on-one relationship with an investment advisor who is looking out for your best interests. Consider retirement planning programs as tools, but don’t look to them as the complete solution to all your financial planning needs.

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Inflation Financial Planning

April 12, 2010 By Leave a Comment

Inflation Financial Planning

Any good financial plan should have elements that protect you against any incoming inflation tsunamis. When you are doing inflation financial planning, there are a number of good strategies we can employ. (Hint: Gold isn’t one of them!) One important strategy is to avoid the temptation to get into a fixed income investment. Annuities are popular right now, riding on marketing campaigns that emphasize the need to protect your principal in a scary market. The problem is their returns don’t adjust with inflation, and if inflation runs ahead of the rate of return of the annuity, you’re going backwards financially. Fixed income products can be an important part of a portfolio, increasingly so as you approach retirement, but they are not a part of good inflation financial planning.

I believe no inflation financial planning is complete without considering two things: real estate and equities. Look at the crippling inflation of the late 70s and early 80s – equities did very well during that time. Why? When a company like Coca-Cola sells a can of Coke, and the price doubles because of inflation, the company’s financial picture shows a rise in revenues – the company looks like it’s worth more than it necessarily is. The stock price goes up because revenues are up, and investors are happy. Equities are boats that ride on the surface of the financial ocean. As inflation waves go up and down, equities ride on top of those waves.

Real estate works the same way. The value of a real estate property is tied to the amount of revenue coming from that property. When inflation is high, expenses are higher, but so are the rents you are collecting. Both equities and real estate are investment classes that compensate for inflation as part of their business.

I don’t know if big inflation is coming or not, and it doesn’t really matter. Good inflation financial planning entails development of a financial plan that has inflation hedges like equities and real estate built in. Inflation financial planning means making sure that your portfolio is diverse enough that inflation in one part of the economy doesn’t cripple your portfolio. I suppose if the whole world melts down at the same time, the portfolios I build will lose money – but that will be the same no matter what your portfolio looks like. Proper inflation financial planning will bring the greatest benefit – investor peace – that delightful feeling you get when you know that you will be financially set for life. It’s a good feeling to have, don’t you think?

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Good Information On An Income Annuity

April 9, 2010 By Leave a Comment

Income Annuity

A potential client asked me other day if I sold income annuities. Let’s take a moment to unpack that idea. An annuity, in the conventional sense of the word, is a lifetime income stream. If you have a pension plan that you are collecting from, that’s an annuity. If you win the lottery, you probably don’t get all that money in a lump sum, but instead as an annuity spread over a number of years. It’s a long-term income stream.

But in recent years, annuities have become commoditized, which is to say that they have become a financial product that investors can put in their portfolios. So that makes it a little difficult to pin down what somebody means by an income annuity – it’s important to make sense of what annuities do, and to differentiate that from what annuities in fact are.

Annuities as a product can do all sorts of things in a portfolio in addition to providing the income stream for which it is named. It could be a straight ‘income annuity’, meaning it just provides an income stream. It could be a product built for growth, it could be a product that is meant to grow now but throw off an income in the future, and there are more options yet beyond that.

Let me digress a moment to reiterate my opposition to variable annuities. Variable annuities are the most dreadful financial products ever invented – check out my other articles dismantling this portfolio-wrecking investment. Stay away from these worthless things – the only voices in the financial industry seriously arguing with me on this point is the salespeople getting big fat commissions for selling variable them.

An income annuity can be a useful part of a portfolio, especially in a scary market where having a sense of security can be very compelling. When people are looking for guaranteed income, an income annuity can promise a 7% or even an 8% guaranteed income from that investment. There are a lot of income annuities out there, so it takes some discernment (or a good advisor) to be able to figure out which one is right for you.

If you are trying to generate income from an annuity, don’t fall victim to the salesmen out there who have just one income annuity (or worse, a variable annuity) to sell you regardless of your financial situation. You can bet that he or she is getting a nice juicy commission each time somebody buys in – this individual is not looking out for you. Picking an income annuity requires experience and judgment. It should be part of a comprehensive income plan that diversifies across a number of different market segments and guards against erosion from inflation.

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Learn About An Inflation Investment

April 8, 2010 By Leave a Comment

Inflation Investment

Are you worried about how government policies are going to be affecting inflation? I spend a lot of time thinking about inflation. It’s reasonable to wonder what kind of investment makes a good inflation investment. In other words, what can you invest in to compensate for inflation in the economy?

First, let’s reflect on the fact that there’s no guarantee that there will be inflation in the future. However, past inflation has correlated with large amounts of money being printed by the government – something that is happening right now. If that goes on long enough, it can degrade the value of the money we already have, and inflation is the result. Inflation investments are designed to help protect against that kind of erosion.

Consider for a moment that there’s really only two ways to make money in investing – you can either do things that grow your assets, or do things that generate income. Weigh that standard against a very popular so-called inflation hedge – gold. I’ve talked a lot about this – check out the other videos on my site. In short, gold doesn’t grow, and it doesn’t make an income – so it’s a lousy investment. Its value has spiked recently, but over history gold has been a dreadfully unsuccessful inflation investment.

The best inflation investment strategy attempts to build a portfolio that is diversified across enough market segments to be sure that losses in one area will be balanced by gains in other areas of the portfolio. If you are worried about inflation in the U.S., then your check against domestic inflation is investment overseas. If you’re expecting overseas inflation, investment in the U.S. market is the way to go.

When building your inflation investment strategy, (and picking inflation investments is big in the news these days), make sure that you’re not just picking individual financial products that hedge against inflation. Make sure that your advisor understands what a real inflation hedge looks like, and is capable of building a comprehensive plan to guard against, and even benefit from, inflation.

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Your Financial Planning Education

April 6, 2010 By Leave a Comment

Financial Planning Education

Financial planning education is a vitally important part of building for your retirement, and it’s an important part of my financial advising business. I’ve written a book on the subject, I post these videos online, and I run a monthly event called “Investor Peace University” at my office for my clients to help them understand their investments better. Education, and specifically financial planning education, is very important for your overall financial peace – that relaxed feeling you get when you know that you are going in the right direction financially.

When people turn money over to me to invest it, they obviously are looking to delegate some level of control to me – they’re saying “You handle it for me.” At the same time, it’s extremely important for them to have a pretty good sense of what kinds of investments I recommend and why I recommend them. Some of that comes from my discussions – on these videos and in person – about my investing philosophy. The rest of it comes from some kind of ongoing financial planning education.

Just handling money should only be one part of the work you do with any financial advisor. Are you working with somebody who takes your money to invest, but neglects to provide you with the financial planning education that you need to understand what’s happening in your account? When you’re shopping for a financial planner, that kind of education is necessary so that you can appreciate what the advisor does, why they do what they do, where they are taking you financially, and how they expect to get you from where you are to where you want to be. Make sure that any advisor you work with appreciates the importance of giving appropriate financial planning education to their clients.

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Dallas Financial Advisor 2 for 1 Book Review

April 5, 2010 By Leave a Comment

Dallas Financial Advisor’s Two For One Financial Book Review

As a Dallas Financial Advisor, I would like to share this special book review, because you’re going to get two books reviewed for the price of one. What a deal! I want to talk about two books today. The first is titled QBQ: The Question Behind the Question and the follow up book is called Flipping the Switch. Both are written by John Miller.

As a Dallas Financial Advisor, I wish I could get my kids to read these books, but that’s probably a doomed effort. But maybe some of you will read it. The Question Behind the Question challenges its readers to discover “what to really ask yourself to eliminate blame, complaining and procrastination.” I’m a terrible procrastinator, so I needed this, but boy, think what a better world if we could cut out a lot of the complaining and blaming in the world! Think of the benefits that this book could have had for that McDonald’s customer who complained and blamed and sued because the hot coffee was hot!

The Question Behind the Question challenges its readers to look for better questions behind the questions we tend to ask and as a Dallas Financial Advisor, I think it is important to challenge ourselves and our thinking. The questions we tend to ask don’t get us anywhere – “Why does this keep happening to me?”, “Who keeps leaving this in the way?”, and “Why do they make this coffee so hot?” This clever book shifts responsibility from everybody out there back to ourselves by asking better questions. “What can I do to get a better outcome?”, “What can I do to minimize the impact of the bad decisions of other people?”, and “What can I do to change the way I handle hot coffee to avoid hurting myself?”

What I love about being a Dallas Financial Advisor is how great it is to take back the power to improve your own life, instead of investing that power in everybody else. Everybody out there is not ready to help you succeed – and some are going to be actively pulling the other way. What should you do about it? Fix the problem by asking yourself smarter questions. The Question Behind the Question and Flipping the Switch – check ‘em out!

Contact us now to find out what makes us different in Dallas Retirement Planning. Let us know what topics you would like for us to cover.

All The Best,

John Pollock.

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