At the end of the day, what matters most?

November 4, 2011

Image Copyright (c) 2011 J. L. FleckensteinBenjamin Franklin said, “The use of money is all the advantage there is in having it.” Indeed, money is as valuable to you as it assists you in creating your ideal life. Money is not the end goal, it is merely something that helps you reach your real goals.

Over the years, I have discovered that to provide the best service, I have to find out from my clients a piece of information only they possess: what matters most to him or her. My job is to comfortably draw out of my clients what their goals are, and integrate those goals with my own expertise to help them get results.

The simplicity of it is, people have life goals they hope to have the financial resources to achieve. If all I do is ask you about your financial goals, the conversation falls into terminology you might not easily relate to. This would be similar to a travel agent asking you how many times you want to travel instead of asking you where you want to go.

I am committed to taking into account important life circumstances when giving financial advice. I personally believe this is the most relevant, helpful approach and is most valued by my clients. I think of the work I do, the advice I give, as holistic wealthcare.

To accomplish this, I find it is more helpful to ask good questions than it is to find answers to typical, rote financial questions. If I ask you the right questions, it will help you discover your own answers, solutions, and resources. In other words, asking the right questions leads to some great brainstorming and real “a-ha!” moments.

A perfect example of this is a home-bound elderly client of mine. She was at risk of running out of money if she continued gifting too much of it to her adult son. I asked her the right questions that led to a realistic assessment of her resources, needs, and preferences for care, comfort, and peace-of-mind.

Then I asked what she wished most to do for her son. She said she always wanted to help him. So, I asked what she felt would help him the most. She paused to consider, then realized what he really needed was a budget.

Moving from discovery to taking the right actions all I had to do was ask her what it would take to make that happen. She had the answers, I just had to help guide her through the right questions to get there.

Would you like to have a CPA and financial planner who really cares about your goals, listens attentively and knows how to ask the right, thought-provoking questions? Would you like some help in getting to the bottom of what matters most to you? Do you want to work with someone who has a broad range of financial and business expertise to help you best utilize your financial resources and achieve your goals?

If so, call us today at (707) 524-8130 or (415) 353-5680.


Why business owners need trusted business advisers

September 27, 2011

You, as a business owner, know your business. You started it out of a passion to deliver a better product, a better service, and a better idea. Along with this innate passion to be an entrepreneur, is a desire to make money during the process.

Many business owners get caught up in daily happenings within their businesses and end up neglecting the financial management aspect of their business. In order to focus on the daily needs your business demands, you must have a trusted adviser–such as a CPA–for reinforcement.

At this moment you might be thinking to yourself, “Well this guy is a CPA, so why would he say anything different than to have a CPA as a trusted adviser?”

That is a reasonable deduction, so let’s explore the reasons why having a CPA as your trusted financial adviser is a good idea.

A high-quality CPA has many years’ experience in hundreds of different businesses. With many years experience comes many different outcomes within particular businesses. By experiencing the good and the bad, the CPA should be able to foresee potential problems within your business to help you improve upon the good things to make them great things.

In addition, if you find a CPA who has actually started his or her own business (rare), you have someone who not only has knowledge strictly from a CPA stand point, but from a business owner’s stand point as well.

There are many different aspects of running a business efficiently and effectively. With multiple focuses within the business, the business owner can feel overwhelmed. Most end up running themselves thin because they are trying to do too many different things at once. With financial foundational support, you can put all your energy into one aspect of the business and not worry about the financial aspect. You have someone helping you, someone looking out for your best interest, someone who wants to see you succeed. With 100% of your attention on what you do best, your business can grow and prosper.

It is essential to find the best accounting staff and CPA available to you. Not only will you have more money in your checking account, but you will have peace of mind knowing that the numbers on your financial statement actually mean something.

By having the support, experience, and knowledge of a CPA, you are free to focus your attention on seeing that the passion you started your business with continues.

What issues do you find dividing your attention too much in your business or in life?

We are CPAs, but we also have over 50 years combined experience in 26 businesses we started ourselves. That’s why we are the new generation of CPAs. We share the same passion and emotional investment in our clients as our clients do for their own businesses and personal affairs.

Give us a call [(707) 524-8130 or (415) 353-5680] if you need some help regaining your focus. We’re in the Bay Area in California, but we work with clients all over the U.S. as CPAs and Financial Planners.

Have a great day.


Photo Courtesy of J. L. Fleckenstein from the book I, The Wind Copyright © 2010 J. L. Fleckenstein
Photo Copyright © 2011 J. L. Fleckenstein ALL RIGHTS RESERVED
Photo Courtesy of J. L. Fleckenstein from the book “I, The Wind”

How to determine when a company’s strength is correct, so you can buy

August 26, 2011

(This is post features Orlando Antonini.)

What criteria should you look for to determine if a company is a reasonable and secure investment?

There are three main evaluation issues.  It’s like a three-legged stool: if any one of the three legs is missing, it won’t stand up.  Likewise, the stock will not maintain its value.

The first criteria – Does the company have sufficient cash reserves so they can get through a down turn and/or expand when appropriate.  Even more important, for you the investor, does the company have cash funds to buy back its own stock in a down turn of its value, therefore creating more value for you?

The second criteria – Good management.  What does good management mean?  It starts with the Chairman of the Board, the Board, a CEO, a CFO, and goes beyond that to other key employees.  If the Company has a high turnover, or if people retire, it may affect the management team’s effectiveness.   Another important issue to look for, the Chairman of the Board and the Board cannot be controlled by the CEO.

The third criteria – Is the product or service the Company is offering to the public desirable?  Does the public perceive the product as reliable in quality and a necessity for personal or business use?  Will these products or services be needed in the future, as the future will be different from today?

These are the criteria you use to evaluate when to buy the stock and it is the basic bench mark to use for evaluating when to sell.

When you evaluate the stock using the above method, you also have a baseline of the cost or value of the stock.

Most important, there is the ongoing monitoring of all three criteria to see if one has changed, requiring you to sell the stock.

Stocks, on average, held for more than ten years have a return of more than 11%, dividend and growth per year.

Conversely, when you try to time the market and buy and sell, the average return is less than 4%, dividend and growth per year.

If you are repositioning stocks based on the criteria above, it is prudent and a wise decision providing there you are truly monitoring and evaluating changes based on the three criteria.

We can help you with the analysis and ongoing evaluation so you have the knowledge to make the correct choices based on your criteria.


How do you know when to buy back into the market?

August 19, 2011

(Today’s post features Orlando Antonini.)

I am only going to use Dow Jones as my example here.

The first thing you need to do is review the Dow Jones twelve-month average history. The past is easy – all of that historical information is available on the Internet.

But, what are the possibilities over the next twelve months? The future is very difficult to predict, and confusing.

The first thing you have to consider is this: What will the economic picture be over the next twelve months? Second, how will any one individual’s stock and/or the Dow Jones perform in the future environment?

You can use the information you find on the Internet, and do your best to analyze over a period of time and try to get a picture in your mind of what the future might hold. Or, you can turn to experienced advisors (like ourselves) who will help you draw conclusions that you are in peace and harmony with.

Why is it necessary to go through to all this effort when considering the right time to reinvest?

This will give you a better chance of forecasting where the Dow Jones may be at a future date.

The rule is, once you decide what your idea is of where the Dow Jones will bottom out, calculate 105% of that number, and that index value is your starting point.

Please Note: The following is not to be taken as what the Dow Jones may or may not be at some time; it is given only as an example to illustrate my point.

If your prediction is that the Dow Jones Index will bottom out at 9,800, this is what you would look at:

  1. 105% of a 9,800 index equals 10,300. Therefore, a 10,300 index is your starting point to buy/reinvest–that is 5% above bottom index.
  2. If the market continues to fall (Dow Jones Index), you must consider that you may have made an error in your idea of the Dow Jones Index bottom being 9,800. So, 95% of a 9,800 index (or a 5% difference) equals 9,300.
  3. At 9,300, you need to re-exam whether you should leave the Dow Jones or stay with your analytical conclusion.

The most crucial thing to remember is that you have to continually analyze your assumption against new information about changes in the market as it comes in.

This is an example that can help you say when to do something and when not to do it, and have a base line of facts or assumptions that you can analyze with. Or, use professionals (like us) to help you do the analytical work.


You might think this would never happen to you …

August 5, 2011

I have a client in his mid-sixties suffering from the early stages of Alzheimer’s disease. In the beginning it was just the little things that began to fade. He used to complain about feeling slow, but discounted that feeling because he believed it just came with aging.

My client has run his own business for over thirty years and his business has been his family’s main source of income, accounting for about 80% of their total annual income. As his financial advisor, I recommended putting together a succession plan for his business should he become unable to run it himself. Thinking this scenario would and could never happen to him, he did not heed my advice, therefore no plan was in place should he be unable to fulfill the duties of running his business.

Now, his fading memory is becoming more and more obtrusive to the cohesion of running his business, and it is too late to create the best possible succession plan, which would of course provided the greatest retention of resources for his family’s survival and his care.
Lacking a succession plan, he had not identified a person to take over his business nor did he specify who he wanted to sell his business to should he be unable to run it any longer.

Suddenly he finds himself incapable of running his business and has no one to take it over for him. His spouse, with no knowledge of the inner-workings of her husband’s business, shoulders the responsibility of taking over the business that provides their family with the majority of their income.

As a financial advisor and CPA, I see far too many business clients in similar situations. The scary truth is that Alzheimer’s disease will end up affecting 50% percent of the population at some point or another – a staggering statistic. In the interest of protecting yourself and your family’s future, you would be wise to accept the possibility that this could happen to you. My advice is that you empower yourself by confronting that possibility, then take the next step in planning for such a future.

Treat your business like a business; have a succession plan in place, update it periodically and start training someone who would be capable of taking over your business should you no longer be able to run it yourself.

Remember, no one thinks this could happen to them, but it does, and I’ve seen it far too often. Plan now so you can live the way you want through retirement.