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.


Do you think this could happen to you and your business?

October 7, 2011

I have an office in San Francisco and am a huge Giants fan, so when I saw an article about a Giants payroll supervisor stealing $1.5 million from the team in just over one year, it definitely got my attention.

As a multi-million dollar organization, the Giants have the means to hire a first-class accounting firm. So, they hired the best accounting firm. The benefit of hiring a top accounting firm is the assumption they can assist your business in detecting fraud as well as a variety of other money issues.

The detection and prevention of fraud is management’s responsibility (in this case, Giants’ management), and therefore there must have been a weakness in their internal system for this fraud to have happened. This is why they should have had a review of their internal controls to give them the best opportunity to mitigate this type of fraud.

Worse yet, it was fraud that went unnoticed for over a year. In fact, if the perpetrator had not attempted to buy a house in San Diego, and if the lender had not questioned the large deposit in this person’s bank account, it might have gone unnoticed for a much longer period of time.

So, I ask you this: When was the last time you, as a business owner, reviewed your company’s controls to insure this type of fraud is not going on in your business? Have you spoken with your CPA and asked how the internal control is, or what you need to do to improve the controls?

In addition, pay attention to your accounting staff and make sure they are buying things they can afford. We question our clients if we see a member of their accounting staff buying expensive cars or real estate that they can’t afford based on their current salary.

Review your controls on a regular basis, review your accounting staff for unusual behavior, and ask yourself how can someone steal from the company without us knowing about it?

Fraud is more common than you might think, and it can be a real threat. Protect yourself. The best insurance you have is you and your own oversight of the inner workings of your business. Take the initiative and investigate.

If you haven’t done so in a long time (or ever) you should call us. We can review your current controls to identify weaknesses and vulnerability issues, providing safeguards and a system that will detect fraud more quickly if it happens to you.

JRA


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.

OJA


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.

JRA