June 2002 Newsletter

Financial Life Planning: Merging Money and Life

I have been hearing from more and more people — clients and colleagues alike — that they are at a point in their lives when they want to do some life planning. One woman is looking at buying some property in Virginia and building a home, saying "I want to get off this treadmill."

Coincidentally, "financial life planning" was one of the main topics at two of the last national conferences for financial planners. Using a financial life planning approach with clients means the advisor conversationally explores life issues as they relate to money, and facilitates a broader dialogue with clients about how to accomplish their life goals. The approach is very client-centered, and the advisor acts more like a coach; it is not about the advisor having all the answers, but primarily about asking the right questions.

Mitch Anthony has written a book called Your Clients for Life where he explores the topic. He says, "Although most individuals understand that money is not the end all, they do perceive money as a means to building the life they want, avoiding a life they will regret. ...To make the life connection, the advisor needs to draw out the intended purpose of [a client's] money, the values that created the assets, and the legacy the client intends to leave."

If you want to try a little financial life planning for yourself, here's a simple exercise. This comes from Ken Rouse, author of Putting Money in its Place. Review this list of values:

Throw away ten of the values on this list, keeping the five most important to you. Then rank those five in order of importance. Now look at your list and answer this question: Are you living your life and using your money in sync with your values?

Obviously, this is just a starting place on the road to financial life planning, because it doesn't give you a solution, only the beginning of a discussion. If you are in a relationship, you may want to have your partner do the same exercise (separately) and then compare results.

From a traditional financial planning standpoint, after working with many clients over the last 16 years, too often a person's stated goals are expressed only in financial terms ("I want to have enough money to retire when I'm 60"). A financial life planning approach attempts to broaden that goal-setting to include non-financial aspects, to merge your money and your life. Pat Green, an attorney at Davis Wright Tremaine, says "I help individuals design their lives." Practitioners believe that the more you can integrate your values with your time and spending patterns, the happier you will be.

Vacation Schedules

Deborah will be out of the office from June 15 through July 21st, and working a limited schedule during August. She will resume taking new client appointments in September. While she is gone, please contact Steve Hewitt, Betsy Blank or Paul Braghero for assistance.

Steve will be out of the office August 26 through September 7th.

Betsy and Paul will also be out at various times over the summer.

We hope you enjoy your summer, too!

"A long life may not be good enough, but a good life is long enough."

New Table for IRA Withdrawals

The Treasury Department released a new Uniform Lifetime Table for Determining Factor Lifetime Distributions, for anyone taking post-70-1/2 required distributions from their IRA or qualified plan. The table actually benefits participants by making the required distributions slightly smaller each year.

For example, under the old table, a person turning 75 would have to use a factor of 21.8 years; under the new table, the factor is 22.9 years. If they had $100,000 in their IRA, the new required distribution would be $220 less. The new table includes factors for individuals up to age 115.

If you are taking distributions and would like a copy of the new schedule, please call the office and leave your name and mailing address.

Boot Camp 2002

We will be setting the fall dates for Investment Boot Camp this summer. Please call or e-mail Mary Barr if you are interested, so we can get you on the waiting list.

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