Building Blocks of Wealth

Do you remember the time when your toddler child had a temper tantrum?  Do you remember when your child turned red in anger and lay screaming with arms and leg flailing in the air and everyone around expected you to get the child to quiet down and behave?  Almost every one of us can recall such a moment. It may have been many years ago but memories of those moments of helplessness of the distant past are still sharp.

Emotions ran high and at some point you probably tried using phrases such as “please stop otherwise you will lose your privileges” or “think about what you are doing” or other similar reminders to consequences for bad behavior. You may also recall that such calls to rationality were quite ineffective in a highly emotional situation.

In our adult lives, we may be a lot more adept at controlling and expressing our emotions in socially acceptable ways, but emotions greatly influence our actions.

For example: The recent run up in the stock markets has many of us feeling much better than we did a few months ago.  Higher net worth gives us a greater sense of security, greater freedom and more success and it feels good to be better off than most of your college buddies. Conversely, when the stock markets turn down or our businesses encounter a rough patch, loss of money can trigger feelings of fear and anxiety. 

When the markets turned down last March and you were probably left feeling quite uncomfortable and uncertain, you may have called on the expertise of your financial advisor. It is likely that your financial advisor or investment expert showed you cash flow analyses, historical charts and other sophisticated metrics and asked you to be rational or think long term.  Those calls to rationality may have stopped you from making poor investment choices, however it had little effect on how you felt. 

Those negative feelings however, may have exacted a huge opportunity cost. Feelings of anxiety can cause you to pull back and hunker down and if anxiety is high enough, feel paralyzed and overwhelmed.  Under such circumstances, you may fail to recognize opportunities or even if you spot them, become risk averse and be somewhat uncertain and unwilling to capitalize on them.  You may have even begun to question the quality or profitability of some of your endeavors.

With the help of a GWT advisor, you can re-tool yourself to leverage your emotions to your advantage and convert them into the foundation, the building blocks of your true wealth. This can help recharge and rebuild, and help create a life you desire in ways you may not have considered before.  

If you would like to learn more, please register today to experience of Guided Wealth Transformation™, a innovative one hour interactive workshop designed to help successful individuals like you use your wealth to create the best life possible.  It’s a free, no obligation offer. Please email me at info@gvfinancial.com  to register.

An Unfair Advantage

Many of the leading economic indicators are turning positive. It is likely that the worst is behind us. But it may not be a simple rebound. The weakening dollar and increasing government intervention in capital markets could also mean that we are facing a seismic shift in the economic landscape.

We are all aware of the tumultuous ups and downs of the stock markets of the past two years. For many of us, the reaction to these events is to pause, to re-think and to reassess before making any decisions.

The truth is countless other very intelligent people are wondering the same thing, as these are the logical conclusions based on the same data. No one becomes successful by following the pack. So how do you gain an edge? One way to gain an unfair advantage in a marketplace where many competitors are relying on the same data is to tap into the insight provided by our gut (emotions). Are you surprised and somewhat taken aback? Let me explain. A combination of our unique talents, skills, wisdom gained through experience and the insights of our friends and families is the basis of any gut reaction. When we learn to use all of these resources and not just what our rational mind is trained to tap into, the results can be dramatic.

From my own personal experiences and that of numerous successful people that I have met, I have come to the realization that many of the decisions that have truly set us apart and launched us to greater success are based on our instincts that are reinforced with cold hard data.

Instead of wondering: “Do I need a major course correction? What other disasters have I not accounted for?” Such questions rob you of precious time spent in inaction. You could instead be asking “A changing landscape creates excess capacity in some sectors and places great new demands on others. Can I identify such underserved niches that my business can address? Where are the next major opportunities for growth that I can take advantage of? How can I better leverage my unique genius?”

Did you notice the paradigm shift with the second set of questions? You are not second guessing yourself. You are leveraging all of your resources to uncover hidden dangers and opportunities. You are moving away from confusion to clarity and focused action. When everyone else is frozen in indecision and uncertainty, there are great opportunities for first movers.

In a series of guided conversations, I can help you make just these kinds of paradigm shifts and you can learn to ask the right questions and move forward with confidence.  Please feel free to contact me by email info@gvfinancial.com and we can arrange for a time when you can experience a free, no obligation, introductory thirty minute consultation.

I welcome your thoughts and comments; just click on the comment section below.  If there are any topics that you would like to see addressed, contact me by email and I will endeavor to address them in this section of GV Wealth Insights. <Learn more about the author

Taking Stock of Markets

  The stock market has rebounded with energy and enthusiasm from the lows of last March. The S&P has staged an impressive rally over the last few months. The bond markets have recouped their losses and then some and the international markets are on a tear.  Judging by the market rally, it would appear as if the problems that plagued the markets have been blasted away by the various bailout and stimulus programs.  Is the stock market predicting a return to profitability and growth or is the stock market getting a little ahead of itself?

Our entire modern financial system was threatened with a global meltdown as losses dragged major banks into a solvency crisis by the deflating housing and subprime mortgage bubbles over the last two years. Global government interventions have averted such financial catastrophe from occurring. However, it’s far from clear that the problems created by an overextended consumer are behind us.

 In stark contrast to the optimism exhibited by stock markets, many other indicators continue to predict subdued economic activity ahead.  Consumer sentiment continues to languish. Major retailers are expecting sales to be lower compared to last year during the important holiday season. Unemployment remains high and the economy continues to shed jobs. Though unemployment is typically considered to be a lagging indicator of economic recovery, it erodes consumer confidence and their willingness to spend.  It is hard to envision any kind of sustained recovery without some sense of stability and security on the jobs front.  International trade though improving, is still lower compared to year ago levels. The dollar continues it’s downward slide in part due to high Federal debt burden and expectations of inflation further down the road. On the real estate front, home foreclosures continue to mount as do losses and soured loans on commercial properties.

Stock markets have a tendency to overestimate the actual movement of economic activity both in the up and downward directions. By having a steady, disciplined approach to investing it is possible to benefit from such “overshooting” by systematic periodic rebalancing. The recent run up in stock prices have skewered many portfolios to be over weighted in certain asset classes and under exposed in others. It may be a good time to re-evaluate your portfolio and rebalance by allocating assets in accordance with your tolerance for risk and income needs.  As the year end approaches, it is also a good time to harvest losses to offset any portfolio gains. Please contact your financial advisor who can help you with asset allocation decisions.

 I am very interested in hearing your thoughts and comments; you may share them via the comment box below or email me at  susanm.davis@gvfinancial.com. 

The Cost of Care

Who takes care of my spouse and children when I die?  Many of us have asked ourselves this question at some point in our lives.  However, most of us are less inclined to think about the question. .. what happens when I or my spouse gets sick and needs care either at home or in a facility?  What affect would this have on my children?  What does my family legacy look like?

I hope all of us live long happy lives. But that may not occur for all of us.  Reality is such that many of us will have a need for assistance with everyday functioning as we grow older.  As our bodies age, there is a higher likelihood that we will need professional help at home or in an institution when we recover from illness.

The physical and emotional demands of attending to everyday needs of a family member over extended periods of time are significant. It’s  impact on lifestyles of families can be enormous. It is a prudent choice to have some form of long term coverage in place. With luck, you may never use it, however, should the need arise, your loved ones do not have to bear the additional responsibility of finding financial resources to cover for your care.  Long term care coverage could potentially allow your spouse to access care at home or in a nursing facility if they needed. 

What exactly will long term care insurance provide for you? Long Term Care Insurance is insurance which will pay a daily or monthly benefit amount for care services you receive if you are unable to perform two of the following for an extended period of time: bathing, feeding, dressing, toileting, transferring, and continence.  This care can be provided in your home, in an assisted living facility or a nursing home. 

Long Term Care coverage can become an integral part of your financial planning foundation.  In much the same way life insurance and disability insurance are when done properly and in the context of your overall financial plan.  Long Term Care Insurance is not just about the money it provides or that you may save.  It’s about your peace of mind and that of your family.  It’s about maintaining your ability to stay in your home as long as possible.  It’s about knowing you can get help should you need help.  It’s about maintaining some independence that illness or old age may take away. 

However, not all long term care insurance products available  in the marketplace today are suitable for everyone. There is much confusion on what this type of insurance achieves for you and this has stopped many from exploring the concept altogether. I encourage you to have a conversation with your loved ones on this difficult topic. Your financial advisor can be a great resource in helping you navigate through the myriad options available.  Please feel free to contact me by email cindy.wilson@gvfinancial.com or by leaving your questions in the comment box below and I will be glad to answer them.

Money and Happiness

Imagine for a moment, being stranded in a strange place where you are isolated from all your other resources and given 50 million dollars. How would you react to a scenario where you are devoid of any talent or skill, where your intelligence is questionable and body unable to move or function without help, living in a place where you have no friends or family? Would you describe yourself to be happy and having fun under these circumstances?

 Money is an important tool that helps us build the life we want however, True Wealth is multidimensional, it is more than money. It is the net summation of all the resources that you have to create the life you desire. Your True wealth is a combination of your money, your talents, your wisdom, your time, your body and mind, your network of friends and family.

 For a more complete depiction of our wealth that will help us in our pursuit of happiness, we need to include all the resources – our health, time, talents, wisdom and networks. When re-assessing wealth in this fashion, pause for a moment here and think again – has your wealth grown or shrunk recently?  Many of us will find that we have dramatically grown our wealth in the past two years.  We have increased our wisdom about what really matters in life and what we can and cannot control.  We have sharpened our talents out of necessity.  We have expanded our networks as we look to rebuild our business.  We have focused our time on what matters most to us.  The loss of our financial wealth, for many of us, is likely temporary while the gains in our other areas of wealth are lasting. 

 When we realize how little of our wealth is tied to our balance sheet, we feel better, more centered, we perceive more options, we can regain confidence and start to imagine a better future.

Contemplating a Sale of your Business

You want to sell your business and retire or perhaps you want to explore other interests. Most business owners may have spent a majority of their adult life building the business, but quite often, they have not thought of a coherent business exit strategy. Add the woes of the current market environment where credit is scarce, there are few good buyers and bids presented are appear to be too low, it becomes important that you create a carefully crafted exit plan. There are numerous aspects to an exit plan. Here are the three points that can get you started on the process.

Keys to Successful Exit

Ask yourself the question” Why do I want to sell my business?” It’s important to achieve clarity of purpose. Knowing exactly what you want and need from the sale of your business may define the structure of the sale.  For most business owners, their business represents their single largest financial asset.  The owners connections to the business are both financial and emotional. Most transactional business brokers or investment bankers get paid from the proceeds of the sale and their desire to complete the transaction sometimes interferes with the interests of the business owner. There is an assumption by such brokers that all business owners want to sell their business for the maximum dollar possible.  You may prefer to sell your business to your key employee for less money because you know she will continue your vision for the business. Or perhaps you would like to keep a limited involvement in the business so you can continue to enjoy some revenue or provide the benefit of your wisdom to the continued success of the company.

Next ask the question “When?” Sometimes the right answer is not to sell immediately. Take steps to increase the value of your business before you put it up for sale. Get your books in order is a good place to start. Then there are intangibles to consider. Most often there are hidden strengths and values within your company that have not been fully monetized.  For example: over the years, you may have rejected many revenue generating models and components for your business as it did not fit your vision for the firm. However, once you begin to contemplate sale of your business, this may be a good time to re-consider such decisions. Perhaps you may want to add strategic partnerships and sales channels or perhaps a personnel repositioning that is more in alignment with current industry practices.   A skilled management consultant may be able to identify areas that can be improved upon quickly without substantial investment of resources.

“Getting your team together”: As you position your business for a potential sale, there are obvious participants that will ensure a smooth business transaction – your legal and accounting teams, your investment banker and trusted financial advisor.  However, one should also consider other members as part of their team.  Depending on whether you will continue to play a role in the firms’ activities after the sale, you may want to position the right people such that it will maximize your benefits of the sale and allow you participation in the firms activities without the hassles of everyday running of a company? You may have far less influence in such positioning after the sale is completed. By thinking ahead, you may even negotiate terms of the sale such that key members of your “post-sale” team retain their responsibilities for a fixed time into the future.

When the focus is on the value of the transaction or the sale alone, in my 18 years of experience as a financial advisor, I have noticed that  it is very typical for many business owners to feel bad after the transaction is over. Sometimes it’s a feeling that they could have done a better job; not just monetarily but success in other aspect as well. By thinking and planning ahead of time, the transaction could instead become a very rewarding experience.

Please feel free to share this article with your friends.  We welcome your thoughts and comments; just click on the section below.  If there are any topics that you would like to see addressed, contact me by email (charlie.gray@gvfinancial.com) and I will endeavor to address them in this section of GV Wealth Insights.  Learn more about the author>

Do you know your Financial Advisor?

We are living through one of the worst recessions since  the great Depression. There is more than the just the pain of lowered portfolio value or falling value of our homes. Many are somewhat unnerved and wondering:  “does my financial advisor truly understand?”

The typical financial advisor is an expert who will ask and get to know the various  bank and investment accounts that you have, a count of how many kids and dependents, expenses to anticipate in the near future,   dollars that you will need to retire and an approximate idea of the extent of  financial risk you are willing to take to achieve your financial goals.

However, a true advisor will try to understand not just your goals but also your motivations, your strengths and values that are important to you, your life priorities. Because for many of us, what is of most importance to us in our lives are non financial in nature such as our  health, our families, our network of friends, our ability to pass our values to our children, leaving a lasting legacy or making an impact on the world we live in.  In such circumstances, it becomes equally important that  one is able use one’s wealth to create a life one desires and not just the more readily recognized goals of protecting and growing  wealth.

It becomes important that your financial advisor spend time with you to understand this aspect of your life, help measure progress in these areas. Because these may have significant impact on your financial goals. It is possible that though the general business environment is tough, this may be an opportunity of your lifetime.  This may be the time to set aside your fears and harness Your True Wealth that may lie in the gained wisdom, experience or talents or your exclusive network of family and friends.  It is possible that there are opportunities right now that you should be exploring in what truly matters to you.  Do you know? Does your financial advisor know? Does your advisor know enough about you, that when an opportunity arises for you, they are able to point them out to you?

Many financial advisors are not true advisors, they are experts who possess knowledge about a product or process. What you may want from an advisor is a trusted partner, a guide who apart from providing expertise is also your advocate. When times are tough, they can help you reflect and gain insight, and in the process, identify new and unique options available to you.

Do you have an expert or a true  advisor? Is your advisor more than just an “smart calculator” who can crunch numbers for you? I have put together 25 questions that you could ask when choosing a financial advisor. Should you already have an advisor, are they the right fit for you? I encourage you to ask these questions of your advisor and find out. <recieve a free copy of the questions now >

Build Wealth in New Ways

The past two years are best forgotten for many of us feeling the pain of a difficult business environment, job losses and uncertainty. But it appears that the tide is now turning. The panic of that engulfed the financial markets last year has subsided here and elsewhere in the world. Government stimulus whether its “cash for clunkers” or spending on “shovel ready” projects has had a positive impact on the overall economic activity of our country. Many economists are predicting an end to the recession and the stock markets have bounced off their lows from this past March. On an individual level, it’s time to take stock. What opportunities are available to you today? How can you leverage your Unique Genius to build wealth? Here is an example: Millions of people are using social media to reach out to friends, associates and business partners. This technology did not exist a few years ago. Social media like Facebook have enabled many individuals to reach far and wide, the ability to connect to other people who share your values or passions is now just a few clicks away. Businesses use tools such as Twitter to reach out to their client base. These media empower the clients to interact with their brand and shape and mold it, businesses profit as they are able to react faster to changing needs of their clients and build brand loyalty. As the world reconnects to each other in new and unpredictable ways, this may be a time to rethink how you can position your resources to profit from this new wave of connectivity. Social media is not the only avenue for growth and building wealth. There is creativity and innovation in almost every industry. In financially challenging times, it is typical to hunker down, to become anxious about an uncertain future. However, when we are feeling anxious, we fail to recognize the opportunities that come our way. It is in times like these that we need to garner all our resources, eliminate fear and anxiety and rebuild our confidence. It’s time to tap into your talents and your skills. It is time to reach out to your friends, colleagues and your connections to help each other through these tough times. It’s time to think in new and unconventional ways and move forward with purpose. Building wealth is more than accumulating money, it is really about using all of your resources to create the life you desire.

ReBuilding Wealth

Many people are now in transition and having a hard time putting recent events in perspective. Are you feeling battered and bruised from the recent loss of wealth, and feel like you are behind where you thought that you would be at this stage of life? As a result, do you feel restricted, that you have fewer options, a narrower vision for your future? On the extreme end, some feel that they have lost the game and become despondent. I have observed that negative feelings such as these arise when people define wealth on one dimension (money). Money is important however, True Wealth is multidimensional, it more than money. It is the net summation of all the resources that you have to create the life you desire. Your True wealth is a combination of your talents, your wisdom, your time, your body and mind, your network of friends and family and not just your balance sheet. When we re-assess wealth in this fashion, many of us will find that we have dramatically grown our wealth in the past two years. We have increased our wisdom about what really matters in life and what we can and cannot control. We have sharpened our talents out of necessity. We have expanded our networks as we look to rebuild our business. We have focused our time on what matters most to us. The loss of our financial wealth, for many of us, is likely temporary while the gains in our other areas of wealth are lasting. Most of the time, money and wealth creation are a natural consequence of pursuing what matters most to us: our life priorities. It is helpful to first sort through our life priorities, what we hope to achieve in our lifetime. I recently completed this exercise myself and my top five priorities are (1)physical and emotional health, (2)my relationship with my wife, (3)being a great parent for my children (4)using my Unique Genius, and (5)having fun. I also have other priorities that are relevant to me such as sharing happy and loving relationships with family, friends and an overall comfortable life with fewer commitments which allows me to grow spiritually and with a greater sense of freedom. When I focused on what matters most to me, what I found was that most of them are non-financial. When we focus on what matters most to us and we realize how little of it is tied to our balance sheet, we feel better, more centered, we perceive more options and can start to imagine a better future. We become more aware of opportunities that surround us. Perhaps there are more today than a couple of years ago. As everyone retrenches in poor market conditions, this may be your chance to harness all of your resources and surge forward. Perhaps a time build relationships with people who were too busy before. It’s a time to discover your resilience and resourcefulness and deploy in new and meaningful ways. It’s a time to build, build what truly matters to you.

A Financial Advisor For Me

Your goal when looking for a financial advisor : you would like to find a GREAT financial advisor.

There are certain basic characteristics that one should expect a financial advisor to have – honesty, empathy, competence, experience, being appropriately qualified and one who would be willing to be your advocate at all times. 

How does a person go about finding a financial advisor?  Typically, people start by asking their network of family and friends, peers, colleagues and business partners. Some peruse through listings and advertisements or rely on personal wisdom and knowledge of the financial industry. Based on the gathered information from different sources, research, assessing the reputation of an advisor or firm and finally by interviewing a financial advisor, most people conclude whether a financial advisor can do a great job for them.

However, many people fail to recognize that there is a personal relationship dimension that one should consider when hiring a financial advisor. If one wishes to develop a long term, successful and rewarding partnership with a financial advisor, one needs to delve deeper into the motivations and expectations on both sides.

Depending on your stage in life, your circumstances and level of wealth, a particular type of relationship may be most appealing to you. There are three different financial advisory models today that have fundamental differences in the way the advisor-client relationship is structured (*). The following table can help you decide.

  

What would you like your advisor to do for you? Check on the box that best describes your expectations of your advisor. 

Your ADVISOR	Sales Model	Advice Model	Partner Model
On Investments	Sells you a great product	Informs you about attributes of particular investments	Listens & focuses on your desires and needs before recommending
On The Process	TACTICAL  Provides Buy and Sell recommendations	COMPREHENSIVE Provides planning, investment management services	STRATEGIC Defines priorities and Executes the best fit solution
On Financial Planning	Has a specific Proposition	Has a Planning Process	Has a Turnkey System to Create Opportunities
On Focus	Has a Short Term Focus	Has an Annual Focus	Has a Lifetime Focus
On Style	FEAR BASED Points out the big mistakes you may be making, advise on tactics and tools	OPTIONS BASED Provides you with multiple options to achieve your goals	VISION BASED  Inspires you to define your overarching mission and vision
Insights	Limited insights	Shares personal insights	Helps you gain insights
Compensation	Transaction oriented   -Trades value for commission	Fee Oriented -is paid a fixed amount per plan or work	Relationship oriented  -gets paid for wisdom
The Approach	Is Individualistic	Delegates work to experts	Is a Leader of an integrated Team
Overall relationship	One Dimensional Product oriented	Two Dimensional service & process oriented	Multidimensional and Intimate
Communication	Inform to Solicit sales	Provide Consultation	Promote Reflection & Results

The Sales model is typical of who is commonly called the insurance or stock broker. The advice model is usually the forte’ of smaller independent fee based advisory firms.  However, it is estimated that less than 100 firms fall under the emerging Partner Model in the US today.

If you are looking for a financial advisor in the US, tell us the Advisor Model that is the best fit for you right now and we would be glad to assist you. Contact us by email:  Darren.laporte@gvfinancial.com. On the Subject line, please include:  A Financial Advisor for Me.

*The structure and contents of this article are built upon the foundation of “advisor styles grid”  by T. Fithian & S. Fithian. 2007. “The Right Side of the Table”. Special thanks to Todd Fithian, CEO of The Legacy Companies, Boston who has generously granted permission to use his work for this article.