We are pleased that Dr. Craig Israelsen will be playing a key role in our portfolio design discussion. Prior to our conference event, Dr. Israelsen will be delivering a webinar primer for Garrett Planning Network advisors introducing his 7Twelve Portfolio methodology. Then, on the first full day of our conference, he will be delivering a keynote address that will go into greater detail about his methodology. All attendees will receive a copy of Dr. Israelsen’s book: 7Twelve: A Diversified Investment Portfolio with a Plan.

In addition, following Dr. Israelsen’s presentation at our conference, we will be hosting an interactive discussion to continue the investment portfolio design theme. A diverse group of Garrett Planning Network members will share their processes and strategies, including their favorite investment research, implementation and monitoring tools. We look forward to a robust discussion that will help our advisors streamline and simplify the portfolio design process.

Justin Nichols, CFP^®

Manager of Operations

Some of the sponsors and special guest speakers will be hosting introductory webinars over the next several weeks prior to the Retreat. Among the webinars already scheduled are:

• Craig L. Israelsen, Ph.D., author of 7Twelve: A Diversified Investment Portfolio with a Plan, will be presenting a primer on the 7Twelve Portfolio methodology on June 4th. He will then be expanding on this methodology as a keynote presenter at the Retreat.

• Elliott Lowen from Advisor Software will present a sponsor webinar on June 11^th. Elliott will share information about their services and the goalgamiPro product. He will walk members through a case from start to finish, discuss reviewing the customer reports and communication, as well as answer questions.

• On July 11^th, the Professional Liability Consulting Group will be presenting a sponsor webinar. More details to come regarding that presentation.

Another recent event on the Knowledge Bank that created a lot of buzz was our record breaking attendance on the Code of Ethics webinar presented in May. Peggy Doviak, CEO of D.M. Wealth Management, presented an engaging ethics presentation, which hit an all-time high for attendance on any Garrett webinar. It was the first time we had well over 100 members attend a webinar. Due to its popularity, we will be scheduling Peggy to present that webinar again soon.

Enjoy your summer and we look forward to seeing everyone at Retreat!

Jamie Breeden, CFP^®

Director of Member Services

Do you recognize that ad slogan, circa the 1980’s? Well, that idea also applies to the process of visioning, i.e., creating an image of a desired outcome; it’s not just for financial plans anymore.

For years, I’ve been teaching planners about the importance of tying a client’s goals and resources to a positive vision of their life-well-lived, and have introduced simple visioning methods. (The Addendum presents one such exercise.)

Several years ago, I had an A-Ha Moment; I realized that we can harness the power of a positive vision for any point in time – not just for years in the future.  That spurred me to create the concept of Positive Envisioning (PE), which I define as “creating an image of a desired outcome and keeping that positive image vividly in mind so that we can be guided by it.”

We can apply PE to:

• Our very next question, statement or action;

• Our next appointment or task;

• Our day (week, month, quarter, etc.);

• A project (writing a plan, hiring an associate planner, selecting a CRM system or finally de-cluttering that basement);

• A career or a lifetime;

• A legacy (i.e., an enduring impact beyond our lifetime).

Positive Envisioning can inspire us (as individuals, a team or a family), but its benefits are much broader. Creating and holding a positive image allows us to bring our best self to the next moment (or longer), and stops us from acting impulsively or unskillfully. It creates positive focus, motivation and energy for pursuing that positive outcome; and then it keeps us aligned and on-course.  The twin bottom line for PE: it makes it more likely that we’ll achieve our goals, and ultimately, it enriches our practice, business and life. That’s a very powerful business case for taking whatever time is needed (often, it’s not very much of a time investment) to create that positive vision, rather than “winging” this moment, our practice and/or our life.

Here are some How-To’s for applying Positive Envisioning to various timeframes:

Your next question, statement or action:

Pause, take a breath and ask yourself: “What outcome would I like this question (statement, action) to produce?” (E.g., information? reflection? cooperation? getting off one’s duff and taking action?) How can I bring that outcome about?”

If you’re stumped about how to accomplish it, ask yourself: “When have I successfully achieved this result? How did I do it?” or “Who’s a good role model for producing this result? What would ________ do here?”

Your next appointment or task:

While preparing for a client meeting, ask yourself: “What would be a GREAT outcome of this meeting?” And, of course, “What can I do to help bring about this outcome?”

Notice that this is a different question from “What’s our agenda?” The latter is important; the former questions add depth and “juice.”

I begin all my coaching conversations, and most other conversations, with some version of the “GREAT outcome” question. The answer never fails to inform me, and often leads me to reorient my approach to the session.

Your daily intention:

After listing your tasks for the day, ask yourself:

• Is there an overall theme to the tasks (e.g., is it an “Admin Day” or a “Project Day”)? This might lead you to create an intention “To leave my office in pristine condition for this week’s client meetings” or “To create an overall project plan and a resource list for the _____ Project.”

• Alternatively, is there a mindset that would make the day go better? This could imply an intention “To bring an upbeat attitude to the detail work I need to accomplish today” or “To exert discipline and mindfulness in getting things off my plate today.”

I write my daily intention at the top of the day’s to-do list, and it serves as the background music of my day. In my Positivity Skills for Professionals virtual group, people have been sharing their individual Daily Intentions with each other via email for two months; everyone reports that it’s been very helpful in keeping them aligned and focused on their day’s intention.

Perhaps you already use your own Positive Envisioning methods. If so, I’d love to hear about them. If the PE concept is new to you, I hope this blog has given you some ideas and methods for approaching the moments of your work and life “on purpose.”

Addendum: A Simple Life Visioning Process

Visioning methods for financial planning can get complicated, but they don’t need to be. At their core, they can be reduced to the following simplified method, which can be done conversationally or as a written exercise:

“For this exercise, I want you to dream boldly, and not be concerned with how we will make it happen.

Imagine that it is now five years in the future; the year is 2018, and you are living your ideal life! Take a moment to experience what it is like, what you are doing, where you are, whom you are with.

Please describe your Ideal Day in 2018. (You can also add, “an Ideal Week” or
Ideal Month.”) What are your greatest sources of joy, satisfaction and meaning at that time?”

To get from the positive vision to specific goal areas, ask: “What are three major areas in this ideal 2018 life that we should develop goals for, and incorporate into your financial plan?”

The odds are good that this conversation will be rich and meaningful, and will add value to your financial plans and depth to your client relationship.

Ed Jacobson, Ph.D.

Author of Appreciative Moments

The first step is to understand what goes into your score. The majority of your FICO score is based on your payment history and your balances. Pay your bills on time and avoid carrying credit card balances, and you’re well on your way to an excellent score.

Where Credit Scores Come From

Payments – 35%. Your payment history is the most significant factor in your credit score. A single late payment can stay on your credit report for two years. Collections, bankruptcies and other negative items can remain for even longer.

Debt load – 30%. This portion of your score reflects how much debt you carry. This is where credit cards can really hurt you. The people with the highest scores carry balances equal to no more than 10% of the limit on each card. Don’t charge up or max out any one card.

File age – 15%. The older your accounts, the more points you will receive.

Inquiries and account variety – 10% each. Each time you apply for new credit, you ding your score. (Exception: if you’re shopping for a mortgage, all inquiries within a 45-day time frame will count as a single inquiry.) Also, consumers with the best scores hold a variety of credit accounts – for example, a mortgage, an auto loan and a credit card.

Your Score

Now that you know what goes into a credit score, you need to analyze your own score and determine the reason it isn’t as high as you’d like it to be. Visit AnnualCreditReport.com to obtain free copies of your credit report each year from all three of the credit reporting agencies (Equifax, Experian and TransUnion). First, correct any errors. Next, examine the reports in light of the bullet points above.

For one person, a low score might be due to late payments or collection accounts. For someone else, high balances. Another person may have “thin” credit – that means insufficient information has been reported and FICO is unable to assign a score. Building your credit means addressing the specific issues that affect your score. If you’re unsure what factors are causing your score to dip, contact the reporting agency and talk to a customer service rep.

Strategies for Building Credit

Address the specific reasons your score is low. If you prefer to pay cash and avoid revolving debt, that’s great. Don’t change! Just use that conservative financial attitude to your advantage.

Report your rent. Experian and TransUnion now accept rent payments for inclusion on your credit report. Rent payments must be uploaded by third-party service like RentalKharma (currently free),  RentReporters ($10 per month) or WilliamPaid (free when you pay your rent from your bank account via the site). None of these services depend on landlord participation. Note that although the rent payments will show up on your credit history, they do not yet factor into your FICO score.

Put at least one household bill in your name. In general, utility, internet and phone service providers only show up on your credit report if the account is in collections. This is starting to change, though. Some major providers are experimenting with payment reporting. Find out if yours does.

Don’t ask anyone to co-sign for you. A better way to establish your financial independence and build a healthy score and history is to start with a bank account and a secured credit card.

Maintain a bank account. Bank accounts don’t factor into your credit score, but the relationship you have with your bank might lead to financing opportunities. Consider opening an account at a local credit union. They tend to offer more generous terms (i.e., no fees) on checking and savings accounts. And they might be a good resource for a small car loan or for that credit card you hope to obtain. Or you could apply for a secured loan, using your cash assets as collateral, which will show up as an installment account on your credit report.

Get a credit card. If you can’t get a traditional card, get a secured card (not a prepaid debit card). Before you apply for any card, be sure the card issuer will report your payment behavior to all three credit reporting agencies.

Use the card sparingly. Pay one bill each month – your cell phone, for example – with your credit card, and pay off the credit card balance each month. Set them both up as automatic payments and you won’t have to worry about due dates. Avoid paying for everyday expenses like groceries with a credit card until you establish a proven track record of paying off the balance every month.

Maintain steady employment. Employment is not part of your credit score, but it does show up on your credit history. When the time comes to apply for a mortgage, stable employment for at least two years – in addition to a good score and a clean credit history – is required by most lenders.

Practice great financial habits. Pay all of your bills on time. Your payment is reported by a computer to a computer. While it’s true that in some cases later payments carry worse consequences, ultimately late means late. A payment will be marked as “past due” if it is late at all, even “only” one day late. Also, your credit report cannot explain to a reviewer that you had extenuating circumstances. Only whether your bills were paid, and whether they were paid on time. If you run into financial difficulties, work out a payment plan with your creditors before you miss a payment.

The truth is that it’ll be hard to have a top credit score without using credit cards to some extent. But remember that they are only one small element of your score, and you certainly never have to carry a balance.

Kimberly Rotter

Credit Card Insider

Markel Cambridge Alliance is a unit of Markel, a NYSE listed specialty insurance holding company, symbol MKL. The program is available in all 50 states and is endorsed or referred by several financial associations and custodians. Their experienced staff specializes in individualized service. Additional information is available at www.markelcambridge.com or call 800-691-1515.

New Member Study Groups offer a way to provide even more personal support and community building to our newer members. Study group webinars focus on a different topic each time and new groups can be formed at any time.

7Twelve Portfolio Methodology Webinar, Tuesday, June 4

Craig L. Israelsen, Ph.D., author of 7Twelve: A Diversified Investment Portfolio with a Plan, will be presenting a primer on the 7Twelve Portfolio methodology. He will then be expanding on this methodology as a keynote presenter at the upcoming Garrett Retreat in July.

Marketing Matters Webinar, Wednesday, June 5

Kristin Harad, one of Garrett’s Marketing Coaches, will be presenting this month’s Marketing Matters webinar.

New Member Open Discussion, Monday, June 10

Twice per month Garrett staff and select Member Advisory Board (MAB) members facilitate an open discussion / Q&A open forum call for all new members who want to take advantage of the calls.

goalgamiPro – Advisor Software Sponsor Webinar, Tuesday, June 11

Elliott Lowen from Advisor Software will share information about their services and the goalgamiPro product. He will walk members through a case from start to finish, discuss reviewing the customer reports and communication, as well as answer questions.

Practice Management Webinar, Wednesday, June 12

Garrett member Jim Ludwick will present and explore other payable services hourly planners can provide, including outsourcing some of the components.

New Member Study Groups, Monday, June 17

New Member Study Groups offer a way to provide even more personal support and community building to our newer members. Study group webinars focus on a different topic each time and new groups can be formed at any time.

Business Planning Webinar, Thursday, June 20

Join the Garrett Small Business Coach, Mary Lacey Gibson, to learn business planning and development strategies to make your business the best it can be.

New Member Open Discussion, Monday, June 24

Twice per month Garrett staff and select Member Advisory Board (MAB) members facilitate an open discussion / Q&A open forum call for all new members who want to take advantage of the calls.

Technology Webinar, Tuesday, June 25

Improve your productivity through technology.  Hosted by Garrett staff member, Justin Nichols. This month’s topic: TBD.

Town Hall Meeting Webinar , Wednesday, June 26

Open Discussion. Hear “the latest and the greatest” on these calls. Hosted by Sheryl Garrett.

We are also proud to share that Sheryl Garrett, founder of the Garrett Planning Network, was recently recognized as One of the “30 Most Influential” People in NAPFA’s History.” NAPFA’s 30 Most Influential program recognizes those NAPFA members and staff who have had a profound impact on Fee-Only financial planning, the organization, and their peers, in NAPFA’s first 30 years.

We are pleased to announce two new coaches that have recently joined the Garrett coaching staff. Due to the growing needs of our membership and expanding subject matter, Kristin Harad has joined Marie Swift, our current marketing communications coach, and Cindi Hill has teamed up with Mary Harris-King and Paul King, our current compliance coaches. We are fortunate to have such wonderful coaches!

Happy Spring.

Andrea Hargitt

We recently interviewed Chuck regarding his experiences as a financial planner and Garrett member since June 2004.

Why did you decide to offer planning services on an hourly, as-needed basis and why did you decide to join the Network?

I worked for nearly 20 years for a small institutional money manager in Cambridge, Massachusetts.  We were what would be referred to as an “institutional buy-side” manager.  Late in my tenure there, and for reasons that would be much too convoluted to try to explain here, our business changed and we ended up marketing a group of domestic equity products using a quantitative model that we had developed.  This effort evolved in the late 90s/early 2000s into a group of what would eventually become mutual funds that we were attempting to market through the big wire houses such as Smith Barney, Paine Webber, Merrill Lynch and the like.  After having spent so many years on the institutional buy-side, I found myself on the retail sell-side, and I did not like what I saw.  Each of the wire houses had a group that would vet the quality of the investment product, and if you were approved, you would be introduced to the “financial consultants” who would then be able to recommend your products to their retail clients.

As COO/CFO of the company, I was involved in the various presentations we made to the financial consultants.  After spending some time familiarizing the consultants with our products, their first questions, pretty much without exception, revolved around how they would sell the product and how they would be compensated.  It was usually several questions later that the notion of how the products might fit into a client’s portfolio would emerge.

I met a lot of consultants with excellent golf games (and I got to play some nice courses!), some fine jewelry and very plush cars.  But I was left with an extremely uneasy feeling about their collective prioritization of the clients’ needs.  Also, the fees they were charging clients for their services seemed way too high.  It made me so uncomfortable that this dynamic was one of the prime factors in my leaving this long-term job.

Our biggest client over the years was the retirement plan of a large consulting company that had around 4,500 participants.  In the semiannual reports that went to participants, my name was given as the contact for questions about the investment portfolios that we managed.  The plan membership consisted of two very different populations.  There were the exceptionally intense and smart (way smarter than me) consultants, and then there were the clerical and various support workers that such a large company would employ.  The questions from the consultants were usually focused on various investment decisions we had made and what we could/should be doing to eke a bit more performance out of the portfolios.  Questions from support staff revolved much more around how they should be allocating their assets between the aggressive and conservative funds in the plan, and how these differing funds would fit into their retirement planning.  Working with this latter group resonated much more deeply with me as I felt I was providing feedback that was of far greater value to the participant.

I left this job in the middle of 2002, did some consulting projects off and on for the next year, but kept thinking that I would like to find a way to do financial planning that would include working with people of moderate wealth.  I explored various independent RIAs but it always came back to procuring assets under management.  At the beginning of 2004, I went to the AICPA Personal Financial Planning Technical Conference (kind of rolls off the tongue, doesn’t it) in, of all places, Las Vegas.  One of the panel discussions I attended was a Fee-Only versus commission discussion.  There were four panelists – three from big broker/dealers, and Sheryl Garrett.  When Sheryl spoke, the clouds parted as I heard her describe a business model that I wanted to be a part of.  I introduced myself to Sheryl after the session, and she told me to read her book and get in touch if I was interested.  The rest, as they say, is history.

What are the top 3 reasons that you remain a member of the Garrett Planning Network today?

The Garrett Knowledge Bank is an unparalleled resource to me.  There is no way that a sole practitioner can know everything that he or she will encounter with clients.  I am continually impressed with the knowledge of the other Garrett members and their willingness to share that knowledge.

The Network also provides a huge amount of business support, from practice management to compliance to technology to the annual retreats, etc.  This support is so uniquely focused and on point for what I do that it proves to be a huge resource.

More broadly, I strongly support the cause that drove Sheryl to form the Network – making professional financial advice accessible to all.  There’s an old Groucho Marx line that I usually think applies to me, that being something like, “I wouldn’t want to join any club that would have me as a member.” But this was one club with a cause in which I so much believed that I was willing to look past that concern and join.

Oh yes, one other (I know, that’s more than three).  It’s also nice to get clients who find me on the Garrett website!

What are your current business challenges and how are you overcoming them?

Although I’ve been in the Network for nearly 9 years, I have intentionally kept the business small as my children were growing up and I wanted to maintain a true balance between my personal and work lives.  As of this past fall, my younger child went off to college which means that the nest is getting empty, and my internal debate rages as to how much more time I may want to devote to my business now.  (Another way of putting this is that the excuse to work less just got weaker).  Resolving this issue as I go forward will be my biggest challenge.

I think the other biggest challenge is the constant struggle to keep my knowledge up to the level needed to serve clients as well as I want to.  We work in an industry where current events around the world can at any time potentially impact the advice we give to clients.  News events affect portfolio performance and outlooks.  Theories on so many areas in which we are involved – asset allocation, retirement plan distributions, providing for long term care, to name just a few – are always evolving.  Technical skills continuously need to be updated and upgraded.  Devoting enough time and mental energy to these areas is always a struggle.

What are your short and long term business goals?

Growing the business somewhat and maintaining sufficient competency, as described above, are the main goals.

Chuck has lived in Wayland, Massachusetts for 19 years and has been very involved in the community. He served as president of Wayland Youth Basketball for several years (if you’re ever contemplating heading up a youth sports organization, Chuck says to contact him first) and still serves on its board.  Chuck has been a member of the Wayland Middle School Council for a number of years, and teaches a handful of sessions each year in the high school’s financial literacy class.  Chuck is a big sports fan, and still plays basketball a few times a week, which according to him, is a not-so-smart endeavor when you’re his height, his age, run at his speed and have his jumping ability (referred to by others as a “credit-card jump” because when he jumps, you can slide a credit card under his feet).  He’s also a huge fan of numerous types of music and the arts in general.  He would also like to add that for him, humor makes the world go ‘round.

Chuck is married to a woman of exceptional tolerance and numerous artistic talents.  She teaches ballet and does floral design.  They have two children, both at UMass Amherst (Chuck is a financial planner after all – gotta love the state schools!).  His daughter will have her Masters in Elementary Education in a couple of weeks and is looking for that first professional job, and his son is just finishing up his freshman year.

Need information or help on business planning, marketing, disaster planning, business management, market research, exit strategies and more?  You will find it on SBA.gov.  This comprehensive site offers a vast array of articles, tools, calculators and links to other helpful sights.  Take a look at http://www.sba.gov/category/navigation-structure/starting-managing-business

From time to time, a need arises for business financing.  SBA.gov’s page on financing includes loan and grant information:  http://www.sba.gov/category/navigation-structure/loans-grants

Want a business counselor at no cost or a very low fee? Visit SBA.gov to find links to your local SCORE or Small Business Development Center.  Click here: http://www.sba.gov/local-assistance?ms=fp

Minorities, people with disabilities, military veterans and women business owners will find specialized information just for them. Take a look at the following pages:

• Minority-Owned Businesses:
  http://www.sba.gov/content/minority-owned-businesses
• Businesses Owned by People with Disabilities: http://www.sba.gov/content/people-with-disabilities
• Military Veteran-Owned Businesses:
  http://www.sba.gov/content/veteran-service-disabled-veteran-owned
• Women-Owned Businesses:
  http://www.sba.gov/content/women-owned-businesses

Other business types with spotlighted pages include Green Businesses, Home-Based Businesses, Buying an Existing Firm and Self-Employed and Independent Contractors.

The government is a consumer of most goods and services sold by small businesses, including financial planning.  But, how do you secure a government contract and where should you start looking?  SBA.gov has an entire section devoted to encouraging and educating you on government contracting:  http://www.sba.gov/category/navigation-structure/contracting

One of the newest tools, called SizeUp, provides market research based on your specific industry type and location.  The free tool helps businesses identify new customers and compare their performance against other businesses in their industry with data collected from hundreds of private and public sources.  SizeUp works by analyzing a business in comparison to other similar businesses providing geographic information on the marketplace, areas recommended for advertising, and prospective clients. The SizeUp tool provides data analysis in three key ways:

1. Benchmarking an existing business to see how it sizes up by comparing performance to all other competitors in the same industry;
2. A mapping feature to see where customers and suppliers are located; and
3. Finding the best places to advertise by choosing from pre-set reports to find areas with the highest industry revenue and the most underserved markets. Custom demographic reports can also be created.

So, when you get confused by all of the choices for business information, simply start with the very robust SBA.gov for good, accurate help with starting, running, growing and exiting your business.

Wealthy clients can afford comprehensive private long term care insurance policies (and some argue that the very wealthy can afford to self-insure.)  Low income clients are likely to have to rely on Medicaid, with its requirements to spend down assets to the level of impoverishment in order to qualify.  But what about clients in the lower-middle and middle? If you haven’t researched your state’s Long Term Care Partnership (LTCP) program, you may be surprised at the options available for those who otherwise would be unlikely able to obtain long term care insurance.

Before 2006, when the Deficit Reduction Act (DRA) was enacted, there were just four states (California, Connecticut, Indiana and New York) that had adopted public/private partnerships to encourage middle-income consumers, and those most likely to rely on Medicaid, to buy affordable long term care insurance. In the years since the DRA eliminated the barriers that prevented more states from following suit, almost every state in the country now has a partnership program.

State partnership programs were developed with the support of the Robert Wood Johnson Foundation, the nation’s largest philanthropic organization dedicated exclusively to health care issues. Partnership programs work by offering consumers the ability to protect assets against Medicaid’s spend-down requirements for eligibility.

There are two basic models for accomplishing this: the dollar-for-dollar model and the total asset protection model. In the dollar-for-dollar model, the consumer can protect an amount of assets equal to amount spent on qualified long term care services by his or her long term care partnership-approved policy.  If the policy pays for $100,000 in care, the customer can designate $100,000 worth of assets as being protected from the spend-down requirements. And when the consumer dies, the state cannot file a claim against those protected assets.

Under the total asset protection model, consumers are required to purchase a comprehensive policy, and in exchange, ALL of their assets are protected from the spend-down requirements.

Each model has advantages and disadvantages, and appeals to consumers of different levels of affluence. For this reason, some states have adopted hybrid partnerships that allow consumers to choose either the dollar-for-dollar or the total asset protection approach.  This has the advantage of getting more participation from consumers of modest means who cannot afford a comprehensive plan, as well as those more affluent clients who can afford such a plan and have a lot of assets to protect.

State partnership programs must adhere to a list of requirements, including:

• No agent can sell a partnership policy without first successfully completing an approved eight-hour course that deals with LTC partnerships, Medicaid, suitability and consumer protection, and many other mandatory subjects. Agents also must complete an approved 4-hour LTCP CE course every other year going forward.
• Partnership policies must be tax-qualified under IRC Section 7702B.
• Partnership policies must meet consumer protection requirements spelled out in the National Association of Insurance Commissioners (NAIC) Model Regulation and Model Law, including those regarding
  • Guaranteed renewability,
  • Prohibitions on limitations and exclusions,
  • Coverage in the event of an unintentional lapse,
  • Inflation Protection, and
  • Preexisting Conditions, among many others.

The policies must also provide for coverage in a variety of settings – not just a nursing home.  They must include coverage for services at home, in an assisted living facility, adult day care and other settings.

You can find more information about your state’s long term care partnership program simply by searching for “[State] Long Term Care Partnership” or by visiting http://w2.dehpg.net/LTCPartnership/map.aspx and clicking on your state on the Long Term Care Partnership State Tracking Map.