Kitces.com - Advancing Knowledge in Financial Planning

Do You REALLY Have A PLAN For Dealing With A Decline In The Markets?

December 10, 2010 04:25 pm 4 Comments CATEGORY: Retirement Planning

One of the often-professed virtues of financial planning is that while we cannot necessarily completely prevent market declines from impacting client portfolios, at least when they do happen, “we have a plan.” Yet for too many financial planners, the reality is that the “plan” is nothing more than “we’ll keep doing exactly what we have been doing, and wait and hope for things to get better.” Well, if your only plan for dealing with a market decline is waiting it out in the hopes that things will recover in a timely manner, you don’t really have a plan; you just have a hope. A real plan takes more.

Good (Career) Wellbeing Promotes Good Financial Health – And It Just Makes You Happier, Too!

December 6, 2010 04:08 pm 2 Comments CATEGORY: Human Capital

In the research on Wellbeing, nothing is more important than being able to wake up every morning with something to look forward to doing that day. The impact of having high Career Wellbeing on happiness exceeds even the benefits of having good financial health.

On the other hand, part of the value of having a positive career is its ability to propel your financial wellbeing forward as well! Yet the research is also clear that while career wellbeing promotes financial health, it's not about how much money you make!

Does the Probability of Success Drive Your Retirement Plan?

December 3, 2010 03:27 pm 0 Comments CATEGORY: Retirement Planning

As Monte Carlo analysis becomes increasingly popular in retirement plans, financial planners are talking more and more about the probabilities of a client's success or failure. Yet in the end, most planners evaluate client goals, look at the probability of success (defined usually as not running out of money), and the client makes a decision about whether they like the result or not. Oddly enough, planners rarely take the next logical step: ask the client what probabilities they would like to see, and use that risk/success metric to determine what the other answers - such as retirement spending or the retirement year - could be.

Starting A Financial Planning Career – Think It’s Been Hard In The Past? You Ain’t Seen Nothing Yet!

December 2, 2010 09:47 pm 3 Comments CATEGORY: Practice Management

Most young planners have heard the stories about how difficult it was in the past to start a financial planning firm. The business was all about products, and sales. It was an "eat what you kill" world - and if you couldn't hunt effectively for business, you didn't survive long. Yet the reality is that as the financial planning world changes and evolves, it is actually getting even harder to start a firm now than it was in the past. Because while it may have been difficult to sell products as a 20-something-year-old "kid" in order to survive a decade or two ago, that's nothing compared to the challenge of trying to be a 20-something-year-old comprehensive financial planning expert who can build a deep advisory relationship with a stranger!

Worried About Spending? Focus On What REALLY Matters! (And It’s Not The Small Stuff!)

December 1, 2010 06:18 pm 13 Comments CATEGORY: General Planning

Social Image Average Consumer Annual Expenditure

The personal finance space has no shortage of tips to managing your spending, from bag lunches in lieu of eating out at work to home-brewed coffee instead of the morning Starbucks routine. Yet the reality seems to be that in so many situations, we dig ourselves a tremendous spending hole because of our big purchases, and then worry tremendously about the small stuff trying to make up the difference. If you really want to change your financial reality for the better, though, it's the big stuff you really need to focus on - where you live, and what you drive.

In-Plan Roth 401(k) Rollover Conversion Guidance Issued by IRS

November 30, 2010 03:38 pm 4 Comments CATEGORY: Taxes

The Small Business Jobs Act of 2010, passed earlier this year on September 27th, opened up the possibility of completing an in-plan Roth conversion rollover from a 401(k) or 403(b) to a Roth 401(k) or Roth 403(b). However, the rules are not quite as simple and flexible as typical Roth conversions, due to the fact that the account is still first and foremost a qualified employer retirement plan. Fortunately, the IRS has issued guidance to help individuals understand the details of the new rules - which is fortunate, because there are some significant differences that could otherwise catch clients (and their planners) unaware!