Category Archives: family

Being There

Anyone who has been in a long-term committed relationship understands what “being there” means.

One of the benefits of a stable relationship is that you have someone you can rely in when you need help.  Couples support each other.  Even as traditional roles have evolved, most families still have a division of labor when it comes to certain chores and tasks.  The fact is that some people are good at one thing and not so good at others.  What’s great about compatible couples is that they complement each other and, as a result, they are stronger, smarter and wiser together.

This is why the loss of a companion is such a traumatic experience.

All of a sudden, the person you have relied on is no longer there.  There is a big void in your life.  You may find yourself wondering what you are going to do.

While we don’t promote ourselves as the substitute spouse, in a financial sense we quite often find ourselves in that role.

When a spouse or long-time companion dies, our surviving clients often call on us to provide financial guidance.  Having dealt with hundreds of these transitions, we know the ins and outs of the estate settlement process.  We know the common pitfalls and things that can go wrong and are there to provide advice and guidance to help lift the burden and take care of things correctly and efficiently.

We relieve people from having to do it themselves.

We’ve written a set of books on this issue to help people plan ahead before their time comes, called BEFORE I GO.  The book and workbook are a wonderful compliment to traditional estate planning documents and help to fill in the missing information that those documents tend to leave out.

For a copy of these guides, you can contact us or you can buy them on Amazon.com.  Click HERE for a link.

Let us know if you have any questions or if you or anyone you’re close to needs an experienced and helpful hand working through one of these situations.

 

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Getting Cookies

Cookies are not really on my diet, but she brings them anyway.  “She” is a very sweet, lovely lady of a certain age who drops by regularly to chat and bring us cookies.

We got to know her when her husband died and a friend referred her to us.   She was a homemaker and her husband handled the finances.  When he died, he left a collection of stocks, bonds and mutual funds scattered among several investment firms.  She was not quite sure where everything was.  There was a funeral to arrange.  Then there were life insurance forms, social security forms, pension forms, and every day bills that needed to be paid.  There was so much paperwork involved in getting it all together that it was overwhelming to her.

That’s where we came in.  This was something we had done many times before.  In fact, we had written a book on preparing for this day: BEFORE I GO.  So we helped her make sense of it all.  And then we offered to help her manage it.

That’s when she started to bring us cookies and stopped to chat, even if there was nothing pressing we had to discuss.  They were nice, friendly visits that allowed us to keep up with her children and friends.  She would tell us about the trips she took and the people she met.  And despite the fact that we shouldn’t be eating them, we loved her cookies.

She stopped driving recently and we don’t see her coming in the door any more.  So today I’m going to the store, buy some cookies and stop at her house.  It’s her turn to get cookies.

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The Trend: Fewer “Self-Directed” and More “Advisor-Reliant” Investors

According to Cerulli Associates more households rely on advisors than ever before.

Since 2010, the households classified as “self-directed” investors had shrunk from 45% to 33%, while households termed by Cerulli as “advisor-reliant” investors — regularly consulting with an advisor — had grown from 34% to 43%.  What drives this trend?

I can think of several reasons.  Two that come readily to mind are:

  • the increasing complexity of financial markets and
  • the number of dramatic financial shocks that people have experienced in the last 15 years.

I can remember a time, back in the 20th Century, when “investing” meant calling a well-know investment firm and buying a stock, like General Motors.  Well, good old GM went bankrupt a few years ago and since then about 25,000 mutual funds have appeared.  In addition there are options, derivatives, structured products, and – of course – ETFs (exchange traded funds).  And that’s just here in the good old USA.  But there’s a whole world out there that people can invest in: foreign stocks, foreign funds, world stock funds, emerging markets, commodities, to say nothing of foreign bonds and currencies.

Few people have the time to study all of these, so the rational thing to do is to find a financial advisor to help you make sense of it.

And then there are the financial disasters that decimated many self-direct portfolios.  In the year 2000 the dot-com bubble collapsed, devastating the portfolios of those riding the tech boom.  And who can forget the housing bubble that led to the financial crash of 2008, wiping out some of the major banks and investment firms and ending the dreams of a comfortable retirement for many people?  Professional advice should be concerned with risk control as their first objective, followed by getting a fair rate of return on your invested assets.

During all this time, financial advisors who were once employees of the major investment firms decided that they could best serve their clients by declaring their independence.  They set up their own firms, becoming Registered Investment Advisors (RIAs) offering fiduciary services.  That is another development that has helped to make financial advice more accessible to individuals and families, the mom and pops of the investment world.

If you’re one of the shrinking do-it-yourself crowd, check us out and see why you may be much more comfortable with us as your advisor.  And if you are one of those with an advisor but wonder if you could do better, feel free to get a second opinion.  We’re a family firm.  We deal with several generations of families that look to us for guidance.  We look forward to hearing from you.

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How well do couples communicate on money? – Part 7

Most happy couples think they communicate well. However, on the subject of finances, studies and experience has shown that they don’t communicate nearly as well as they think.

Many couples don’t know what their partner earns, how much they have invested, what it takes to retire and where their retirement income will come from.

Couples often disagree on the way their money should be invested and in too many cases one partner is in charge of investing and the other is kept in the dark.

Retirement is another issue in which there is a great deal of confusion. Many do not know what it takes to retire, have nebulous goals about retirement and even disagree about when to retire.

The lack of good communication leads to worries about financial disasters. Issues include health care costs, the effect of inflation on buying power, outliving their savings and the possibility that Social Security may not be there for them prey on their minds.

In the face of so much uncertainty, only one-in-five couples have a plan. One of the benefits of having a plan is that it makes it much more certain that they will achieve their goals. And that bring peace of mind.

Of course the earlier that people start to plan, the higher the probability that they will achieve their goals and have a healthy and frank discussion about financial issues. The best time to start is when you are young and it’s an excellent way for newlyweds to begin life together.

Thanks for your interest and we hope you will share this with your friends.

Korving & Company, the 2015 Suffolk Small Business of the Year is a family owned investment management and financial planning firm. We deliver a very personal level of service to guide, empower and assure our clients that their money is carefully managed to meet their long-term life goals.

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How well do couples communicate on money? – Part 5

Most couples think they communicate well, but research indicates otherwise when it comes to finances. Communication on financial issues between couples is especially poor, as we have discovered in previous essays. Despite concerns about medical costs, running out of money, inflation and Social Security, most couples have not created a plan to deal with these worries.

The 20% of couples who have created a plan get the benefit of peace of mind, less stress, and a more cohesive relationship. Uncertainty and doubt around important financial issues creates stress within relationships.

Couples who have a retirement plan in place:

  • Are twice as likely to live a very comfortable retirement.
  • Are 50% more likely to be “completely confident” in assuming responsibility for retirement.
  • Are much more confident that their partner will be OK in retirement.
  • Are twice as likely to know how much they will need in retirement.
  • Are less concerned about unexpected health care costs.
  • Are much less likely to be concerned about outliving their savings.

Having a plan to reach your goals is much like going to the grocery store with a shopping list. You know what you need and are less likely to forget important items, nor are you as likely to buy things you don’t need.

Creating a plan forces couples to be open with each other about their goals, their finances, and the issues that may keep them from achieving those goals. Working with a Certified Financial Planner™ (CFP) to create a plan also brings an important measure of reality to the process. Professional guidance creates realistic assumptions about how much should be saved and the rate at which it should grow. A CFP can also help mediate differences between couples when issues arise.

Our next essay will focus on advice to young couples.

Korving & Company, the 2015 Suffolk Small Business of the Year is a family owned investment management and financial planning firm. We deliver a very personal level of service to guide, empower and assure our clients that their money is carefully managed to meet their long-term life goals.

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How well do couples communicate on money? – Part 2

Most couples think they communicate well, but research indicates otherwise when it comes to finances. Of course, talking about finances can be a minefield. If one partner is frugal and the other spends freely, tensions can be high. Disagreements about money are one of the leading causes of divorce.

More than four out of ten couples (43%) did not know how much their partner makes. Many were off by over $25,000! This can have serious effects. If you don’t know how much income you make as a couple, how do you know how much you can reasonably spend?

Unless couples lead totally separate financial lives, not knowing how much they are earning together can lead to a lack of savings or even debt. This issue could be behind the alarmingly high amount of debt that people carry, often at exorbitant rates.

More than one-third (36%) of couples disagree on the amount of investable money they have. This usually happens when there is a division of labor between couples, where one partner is in charge of the investments.

However, our experience indicates that couples also disagree on the kinds of investments that are appropriate. In general, men tend to prefer riskier investments that women. This can lead to a good deal of stress and disagreement.

Our next essay will take a look at couples in retirement.

Korving & Company, the 2015 Suffolk Small Business of the Year is a family owned investment management and financial planning firm. We deliver a very personal level of service to guide, empower and assure our clients that their money is carefully managed to meet their long-term life goals.

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How well do couples communicate on money? – Part 1

A recent research report by Fidelity Investments studied how well couples communicated. The majority (72%) said they communicated very well. However, the study found that couples don’t communicate very well at all on finances, and many disagree on investing. The study included a wide range of ages. The couples were either married or in committed relationships. They ranged in age from 25 to retired.

Here is what the study showed:

  • 43% didn’t know how much their partner earns. 10% were off by over $25,000.
  • 36% don’t know how much they had in investable assets.
  • Nearly half had no idea how much they should to save for retirement.
  • 60% didn’t have any idea how much Social Security would provide for their retirement.

This proves to us that financial planning is very important; especially for achieving peace of mind and helping couples get on the same page about their finances.

We will be exploring this issue in upcoming essays.

If this sounds like you or someone you know, contact Korving & Company.

Korving & Company, the 2015 Suffolk Small Business of the Year is a family owned investment management and financial planning firm. We deliver a very personal level of service to guide, empower and assure our clients that their money is carefully managed to meet their long-term life goals.

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8 Common Reasons for Retirement Failure

1. Overspending.

-You won’t spend less in retirement.  The old saw that retirees only spend 80% of their pre-retirement income is a myth.

2. Elder Fraud.

-Seniors are becoming the favored victims of swindlers.

3. Health care.

-As we age the cost of medical care goes up.  Medicare is covering less and premiums are going up.

4. Starting a business.

-Investing capital in a business that fails can devastate retirement finances.

5. Adult children.

-Helping your children through a “rough patch” can become is one of the most common ways of ending up broke.

6. Second homes.

-The cost of maintaining that vacation home when you’re no longer working can drain your resources when your income drops.

7. Divorce.

-Couples sometimes wait until the children leave home to divorce.  When assets are split 50/50, retirement becomes a problem for both parties.

8. Investment mistakes.

-Making poor investment choices is one of the most common ways of ruining your retirement lifestyle.

If you are nearing retirement, don’t enter into it without a plan.

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Protecting Elderly Clients

Much has been written about the vulnerability of the elderly to scams that are perpetrated on them. Because seniors are concerned about health care, con artists prey on the elderly to get them to buy fraudulent products or services. Home improvement scammers prey on the elderly by providing shoddy or unnecessary repairs. Stories about unscrupulous financial advisors are frequently in the news. Funeral homes have been known to get the elderly to spend more than they want or need. Some scammers will read the obituaries and pretend that the deceased ordered products or owed a debt to try to get money from the surviving spouse.

Very often the people preying on the elderly are relatives. Because most of us trust our relatives, it gives them an opportunity to take advantage. Children have been known to move back into the family home and physically abuse their elderly parents. They may employ emotional blackmail. They may threaten to stop visiting or calling.  They may tell their parents that not giving them money means that they don’t love them. Often a demand for money is disguised as help with bills, or presents to grandchildren.

Of course parents make gifts to children and grandchildren all the time. But there is a line beyond which it becomes clear that children are looking to get their “inheritance” early. This can lead to an impoverished parent who loses his independence, or even his home.

It can be very difficult for a concerned financial advisor to protect his client from predatory relatives.  Often the parents want give money to their children and may be unaware of the financial consequences.  As fiduciaries we have to keep in mind that our obligation is to our client; not her children, grandchildren or any other relatives. You may have to tell your client “I know you love your son, but you should not give him the house because you may need to sell it so that you can move into a senior living facility.” Of course this can create a conflict with the relatives who will not appreciate what you are doing.

At some point it may be necessary to get an attorney involved, one who specializes in elder care. This is particularly important if the heirs don’t get along. If the elderly become incapable of managing their own affairs they can assign power-of-attorney to a third party.  If the children are not competent, or if there is a conflict, appointing an attorney as the executor of the estate may be preferable to appointing a relative.

Providing financial guidance to the elderly is much more than managing their portfolio. There is often much more going on that is critical to the well-being of the client, and avoid the chance that they run out of money before they run out of time.

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