Three Resolutions for the New Year - Jan 2008

By Mike Mills, CFP®, CFS Well it is that time again, the end of one year and the beginning of another.  As you reflect back on last year’s success & failures and you look forward to the coming year I would encourage you to set aside a few minutes to take inventory of your financial life and put your financial house in order.  Experience has taught us that being  financially organized often leads to increased confidence.  Confidence combined with the knowledge of here you are, and what you have, frequently leads to better informed decisions.  Making informed decisions gives all of us a greater likehood of achieving our financial goals sooner and safer.     There are a few simple steps that give us the direction needed to make our goals and dreams a reality.  If we dedicate the time to complete the three resolutions below you will be well on your way to increased wealth and prosperity.   Tom Hopkins, a renowned sales training and goal setting expert, teaches “t he average human being has the ability to achieve almost anything.   Lack of basic capability is rarely the problem, but rather finding out what you want, and are willing to sacrifice, change, and grow to satisfy the want.”     First off, Tom believes that a goal, like a financial plan, must be in writing.  “If it's not in writing, it's not a goal. An unwritten want is a wish, a dream, a never-happen. If it's in writing, it's a commitment.   Furthermore, if it's not specific, it’s not a goal. Broad desires and lofty aims have no effect. It must be concrete. Lastly, goals must be believable. If you don't believe you can achieve a goal, you won't pay the price for it. Use these tips to complete resolution #1.   Resolution #1:  Write down your Financial Dreams Begin with the end in mind and write down your specific financials goals, along with dates, today’s cost, and an estimate of tomorrow’s cost inflated at an applicable rate.  Calculate the savings required to pay for that goal on a monthly and annual basis.  These answers could be as simple as handwritten list or as complex as embedded within a 100 page bounded financial plan.  The real key is communication with your partner about what an ideal life looks like.  It is only then, that you can make commitments to reach your goals & dreams.  If you can’t visualize your ideal life it will be very difficult to achieve.  Have fun with the details, the more the better.  Review your goals often, once you and your partner understand why you are saving and how much your ideal life will cost the sooner your brain can begin to create strategies and relationships to reach your dreams.  Large amounts of wealth can be created quickly, but nothing can occur until you believe that it is possible and begin to search for potential solutions.  To help in this first resolution we have created a list of questions that will spark communication with your partner.  Here is a link to our list of The 15 Financial Questions Every Spouse Should Discuss Together.   Resolution # 2:  Consolidate your financial life with a financial aggregation software A personal webpage housing all of your personal financial information can be created with financial aggregation software (such as E-Money Advisor).  Once completed the software will automatically that will automatically upload the balances and holdings of every financial account you own and do it on a daily basis.  The software will then use this information to create financial statements and give you the tools to make macro based asset allocation decisions easily and quickly.  To utilize this strategy correctly, it takes the time to organize your data with the aggregation software but in the end it will be time well spent in simplifying your life.  Sample versions of the software are available, just email my office.  For a more detailed look at aggregation software you can read past articles on this very subject at http://www.mike-mills.com/resources/reading_keytopics.php.   Resolution #3:  Create a Budget:  Having a detailed estimate of your monthly & annual operating income and expenses is the key to making sure you are operating in the black and paying yourself first.   Every successful business has a budget and so should you.  Complexity can be adjusted based on time, but the more detailed you are, the less money that will be inadvertently spent in a manner inconsistent with your values, goals and dreams.  Visit this link to review (and print) a sample budget template.    Once you complete these resolutions, you will be eons ahead of the rest of America and well on your way to financial independence.  Remember Henry Ford’s famous quote, “Whether you think thatyou can, or thatyou can't, you are usuallyright.”

Can I really Simplify My Financial Life?  - Nov 2007

Have you ever asked yourself this simple question? Finally, technology and financial advice are coming together.  Even expert users of Quicken and Microsoft Money often ask themselves, “Why can’t I easily get all of my financial information consolidated down to one page in one easily accessible location?”  If you are like most affluent Americans such a task is daunting as you may have over 20 accounts spread out over seven or eight different financial institutions including; Banks, Credit Unions, Mortgage Lenders, Discount Brokers, 401k Providers, IRAs, 529 College Accounts and Life Insurance Policies.

Imagine if there really was a piece of magic software that you could buy to aggregate all of these accounts, automatically every night without having to lift a finger.  The magic software would go to each of your various financial institutions and it would gather the balances and current holdings and then create updated financial statements that included not just your assets but also your liabilities.                     

Think how useful this information would be to an independent advisor like a Certified Financial Planner™ or CFP® who was monitoring your assets from the top down with a bird’s eye view of your financial life.  Armed with this relevant and timely information, your advisor could make holistic recommendations and help design financial strategies for all of your assets from a “macro” or big picture perspective.  To top it all off, your advisor could use the real time values to run hypothetical scenarios and create “live” financial planning based on your exact information every time you met.  All without you having to spend hours pouring through statements and websites to gather what was at best, last month’s snapshot of your account information.   (In the past Quicken and Microsoft Money attempted to do some of this, but it required a great deal of data entry and ongoing reconciliation work).  Furthermore, because the data resided on the user’s computer, it could not be easily used to provide advice that would generate additional wealth for the consumer. 

Well, I want to introduce you to a new piece of software that has revolutionized the delivery of financial advice and reporting.  Account Aggregation Software is finally giving consumers what they have been asking for years: Simplified Consolidated Access to their financial life in a safe and secure format.

Account Aggregation Software will allow for:

·         Live financial planning— users will easily update their plans any time their information changes without wasting time gathering data.

·         Sharing of data amongst advisors--Data can be shared on an as needed basis through temporary, password-protected access allowing greater collaboration between your team of advisors.  For example your CPA could be given a temporary “tax time” access to research your exact tax situation in order to pinpoint the best tax saving recommendations for your annual filings.  Such access could save you and your advisors time, frustration and money in preparing your tax return.

·         Alerts—Triggers and alerts can be entered which will notify your advisor when predetermined thresholds have been violated.  For instance, many investors due to their busy schedules let too much money build up in low interest bearing checking accounts.  With pre-determined alerts your advisor will be automatically notified if cash builds up beyond pre-agreed upon levels.  Once alerted your advisor can allocate funds, so that all of your money is working for you and not for the bank.  Without question, this will reduce risk and increase returns.

·         Storage of important documents:   A dedicated place built specifically to store important electronic information in a centralized, secure, and safe vault if you will.  We recommend that clients upload scanned copies of their legal documents (wills/trust /powers of attorney, etc.), important papers, insurance policies & illustrations, specific planning scenarios, important pictures, instructions to trustees & executors, etc.  For our executive clients that travel we often use the vault to upload “what-if” planning scenarios that they can view on their own time, wherever they are. They have reported they like having one place to go for all of their important documents.

A competent wealth manager armed with21^st century account aggregation software can finallydeliver what most of us have wanted, a simple tool that can provide holistic advice on all of your assets, ongoing, as needed, in a safe and secure format, accessible from anywhere anytime.

Michael Mills, CFP^® is a CERTIFIED FINANCIAL PLANNER™ Professional and Managing Principal of Mike Mills Wealth Management, LLC.  Securities & Advisory Services are offered through the BFT Financial Group, LLC, Member NASD/SIPC/MSRB 751 E. Southlake Blvd, Ste 110 Southlake, TX  76092 817-416-7300.