[Financial Mentor] Five “Must Ask” Due Diligence Questions Before Making Any Investment

Financial Mentor
Five "Must Ask" Due Diligence Questions Before Making Any Investment
An ounce of prevention is worth a pound of cure. Cliche, but true. And nowhere is it more true than investment due diligence. I've saved my coaching clients hundreds of thousands of dollars using the exact techniques taught in this article to easily detect bad deals before a single penny was lost. Use this article to help you avoid then next big investment mistake...   Read more about this article here: - Todd R. Tresidder If problems with the link above check: http://www.financialmentor.com/

 

CreateCorp Business Solutions, Inc.
DBA FinancialMentor.Com
14085 Raider Run Road
Reno, NV 89511, USA

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ric , how to complete your wealth plan by breaking it into simple steps...

Hi ric ,

Designing your wealth plan can be intimidating...

Where do I start? What should I include? In what order?

In this lesson I will break the daunting task of formulating
your wealth plan into bite-sized, actionable, chunks so that you
can actually complete the task.

Here's how to do it step-by-step...

The first thing to remember is that building wealth is really two
steps (but most people mistakenly think in terms of only one). You
must create wealth first then you must invest it wisely. Make sure
both steps are in your plan in the correct order.

Most people fail to plan adequately for the wealth creation half
and only think in terms of investment strategy (traditional
financial planning). This is a mistake. Your wealth plan must focus
first on wealth creation and then it must grow that wealth through
investment second.

Another thing to remember is your wealth plan must include the
essential principles to wealth as taught in previous lessons. If
you exclude the essential principles it likely won't work. That
includes integrating your unique values, skills, and goals so that
you have the best odds of reaching the objective.

Once you've designed your plan it is time to test it with hard
numbers. You will literally engineer your way to wealth using a
calculator so you can see whether or not your plan will really work
and what you must do to reach the objective. Anything less is
guessing.

My Ultimate Retirement Calculator was designed specifically for
this purpose. It allows you to change just one input at a time so
that you can compare various scenarios until you get it right. You
can add multiple income streams, asset sales, and more. I had it
custom programmed for working with my financial coaching clients
and I give you free access to it here...
http://clicks.aweber.com/y/ct/?l=NNrzc&m=1k5jJzM.2yc.MS&b=WNf9KBvTzKjYFHB.0PrYZw

Finally, the best engineered plan is worthless unless it results in
action. When I develop wealth plans with coaching clients the final
step is to convert it into an accountability process with
milestones to mark progress along the way.

The accountability process reduces each major segment of your plan
down to the 2-5 strategic actions you must habitually follow to
reach the goal, and the milestones provide regular feedback letting
you know if you are on track or behind.

Notice how there is no vagary in this process. It is clear and
definitive. This is not pie-in-the-sky wealth building. It is
results driven, actionable planning.

You follow three specific steps: you design the theoretical plan,
then you engineer it with hard numbers, then you convert it into
daily action steps with milestones proving you are on track to your
goal each week and month you work at it.

You are working with an engineered plan and have hard numbers to
back it up. You take daily actions with progressive milestones that
tell you whether or not the process is working. There is zero
guesswork or wishful thinking involved.

You are engineering your way to wealth - literally - by plan. It is
as scientific a process as anything involving money and humans can
be.

I know it works because I developed this process by trial and error
over many years working with financial coaching clients. I proved
it out in the trenches of practical experience (and I'm giving it
to you here for free!).

All you have to do is complete the work by following each of the
steps. Don't leave anything out because there is no fluff in this
process. Every step is essential.

And that is your homework for this lesson. Design your plan, back
it up with hard numbers using the calculator linked above, and
reduce it to an accountability process so that it converts theory
into meaningful action that produces results.

As always, if you are getting value from these lessons the best way
to return the favor is to tell your friends. Spread the word by
blogging about it or sharing it through social media. I
appreciate your support.

In the next lesson I will share how you can be really strategic
with your wealth plan and maximize your competitive advantage. You
won't want to miss it.

See you in a few days...

Todd R. Tresidder - Founder
FinancialMentor.com
CreateCorp Business Solutions, Inc.
DBA FinancialMentor.Com
14085 Raider Run Road
Reno, NV 89511, USA

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Your Weekly Update - US jobless claims at 15 year lows

	Weekly Market Recap This week saw mixed economic news in the US. Employment data, factory orders and economic survey data were all generally strong in our view, as they have been for many months. However, the US trade deficit was weaker than expected. A possible import backlog from the west coast port strikes may have contributed to this, making the weaker number temporary. Internationally, growth forecasts for Europe were revised up slightly by the European Commission, but concerns remain over Greece's negotiations with other members of the Eurozone. In the UK election this week, the right wing Conservative party were returned to power with a majority. We also wanted to take some time this week to touch on how stock picking impacts diversification. It is a question we are often asked and the answer is often misunderstood. Stock picking can present more risks to your savings than you may realize. The most obvious one is that your investments may not be well diversified. Typically, financial models suggest a portfolio needs about 50 stocks to spread out risk reasonably well. However, this is is only a rule of thumb, those 50 stocks need to represent the broader market, and many portfolios have unintentional bias to them. For instance, if you're a doctor, you may have an unintentional bias toward healthcare stocks. Many investors will be biased towards consumer stocks, like Apple, rather than enterprise companies like Cisco. It's also very common to hold more stock in your employer than you should from a diversification standpoint. Finally most US investors hold more stock in US companies than is appropriate as research on home bias would objectively suggest. As a result, even 50 stocks isn't always getting investors where they need to be on the risk/return spectrum. So, even if you have a large number of stocks in your portfolio, you may be unintentionally taking more risk than you realize. Unfortunately that risk may only become obvious during bad markets. A portfolio you thought was diversified offers less downside protection that you might have expected. Also, remember that even though diversification becomes reasonably good at 50 stocks, it continues to improve as more stocks are added. Some of the ETFs we recommend contain thousands of individual securities within them. Why settle for just 50? Another issue with stock picking is simply that the costs add up. The direct costs in commissions and bid/ask spreads, the indirect tax costs of buying and selling too frequently and, of course, the cost of your time. Until fairly recently, selecting stocks was a necessary evil. You had a choice between expensive advisors, high fee mutual funds or the painful process doing it all yourself. However, in the past 20 years, the rapid growth of ETFs has changed the picture, and we believe investors can now diversify cheaply and easily. Our recommended portfolio of 12 asset classes provides access to 20,000 unique stocks and fixed income securities depending on the mix of funds recommended. It's time to both better diversify and invest more efficiently. Disclaimer: The views expressed herein are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. Differences in account size, timing of transactions and market conditions prevailing at the time of investment may lead to different results, and clients may lose money. Past performance is not indicative of future results. Your Portfolio Summary $10,008.08 Your Total Assets B Diversification A+ Fee Efficiency A+ Tax Efficiency Ways To Improve Your Portfolio 0 Accounts with Actions Your portfolio has no recommended actions right now. We'll watch over your investments and alert you with an email when there are actions for you to complete. Sign in to see detailed steps Sign in to see your full dashboard If you wish to change your email settings, visit your Settings.
	FutureAdvisor | 580 Market St., Suite 500, San Francisco, CA 94104 Drop us a note anytime: advisor@futureadvisor.com

How to Craft a Better Client Experience

Walt Disney said it best when he said, "Whatever you do, do it well. Do it so well that when people see you do it they will want to come back and see you do it again and they will want to bring others and show them how well you do what you do." 

Imagine what a financial advisor's practice would look like if Disney was in charge of the marketing.

The mission of Walt Disney in 1955 was simple: We create happiness. Years later, it still holds true. From cast members personally escorting you to a desired location to volunteering to take a picture with your camera so you can be in the picture with your family, everything is focused on the guest experience.

With Disney's hyper-focus on guests as inspiration, here are a few ways advisors can create an even better client experience:

1. Every team member should know the number one job is to make people happy by providing them with a memorable experience. Some ideas for advisors:

• Recognize every important milestone in a client's life -- a birthday phone call, a house warming gift, a wedding present and a celebration of the birth of a new family member. 
• Write letters at Thanksgiving expressing gratitude and appreciation for your clients and your team.
• Make clients feel like family by remembering as many of the "little things" as possible. Look for ways to celebrate that are meaningful to clients.
• Referral etiquette: Both the new client and the referring client should get something unique to say thank you.

2. The complex should be made as simple as possible. A few ideas:

• Estate plans should  be flowcharted, color-coded and presented on one page.
• Diagrams and graphs should accompany text, so the plan can be easily understood.
• Every year remind clients of what they have accomplished because of their work with your firm.

3. Every document put in front clients should be aesthetically pleasing, coordinated and containing the least amount of words as possible but as many as are needed to convey the message.

• The font, colors and layout of every document should always be the same.
• Each document should have an icon in the upper right hand corner that reminds clients which phase of the planning process they are in.
• Every document placed in front of clients should follow a template and every team member should always use these templates. 
• Documents should be scrutinized by a wordsmith until they achieve maximum impact.

4. Knowing we can't control the stock market, look to control anything and everything else.

• Checklists, systems and processes should be put in place for everything that can't be left to chance. Team members shouldn't have to constantly reinvent the wheel. They should be 100% focused on what really matters -- delivering a unique client experience.
• When it comes to transactions, follow up with a call to make sure they've received the check they requested and remind them when a premium is due, emailing them well in advance and helping them move cash around as necessary.
• Remember what drinks they ordered during the last visit and ask if they'd like the same or something different.

Keep the experiences that clients love and stop doing the things that clients don't care about. And remember, what works for my clients may not work for yours.

If we survey our clients and really listen to what they are saying, we should be able to continually improve upon the unique client experience that we are delivering every day.

Imagine what your practice will look like when you combine great financial advice with an amazing and unique client experience.  I am certain that Walt would get excited about a financial advisor marketing plan that provided both.

John Enright and Michael Palumbos are practicing financial advisors and the co-founders ofwww.7figureadvisor.com. They are dedicated to helping advisors and planners create a unique client experience.

ric , the other half of wealth planning advisers don't talk about...

Hi ric ,

In the prior two lessons I explained the two situations where
wealth planning can be accomplished using exclusively paper assets.

The shocker is that most people who want to build wealth don't
fit either of those two situations; yet, traditional financial
advice offers no other tools to help them.

I believe it is one of the main reasons so many people aren't
reaching their retirement goals. It is why I got in this business -
to provide the alternative education you need to understand how
the wealth building game really works.

Too many people are not being served by traditional financial
advice. They can only sell you paper assets (which are fine to
preserve and grow the wealth you already built but don't work
well for building wealth in the first place.)

You may need to consider adding business ownership and real estate
to your wealth plan. These are the two wealth building asset
classes financial advisers typically don't talk about (because they
can't sell them) even though they are essential components to many
wealth plans.

Just to be fair, however, business ownership and real estate aren't
for everyone either. These two asset classes have their own set of
issues (there is no perfect solution) and require far more active
involvement to create excess returns.

You must have entrepreneurial skills and a deep commitment to your
vision to compete. Additionally, the risks are much higher and the
outcome is less certain. Finally, both of these asset classes
require a higher dedication of your scarcest resource - time.

With that said, if you have what it takes you can gain huge
leverage and tax advantages. There is literally no practical limit
to the mathematical return you can make on investment.

Some entrepreneurs and innovative real estate investors have gone
from zero to financial security in under 5 years starting with
little or nothing - something you can't do with paper assets.

With real estate and business ownership you are limited only by
your dedication, abilities, and creativity. It is a higher reward,
higher risk path that can be good if you have entrepreneurial
dreams and skills.

One of my favorite ways to manage the risk (something you will
learn more about in future lessons on risk management) is to work
the two paths simultaneously and hedge your bets.

For example, one of my coaching clients has a passion for real
estate and his spouse has a high earning career she loves. He is
building the real estate portfolio for wealth while she supports
current lifestyle with her earned income. They keep their their
expenses below her earnings and max out retirement plans with paper
assets each year.

With this plan they are working two simultaneous paths to wealth -
one through traditional savings and paper assets, and the other
through real estate. Because of other risk management tools we've
implemented their risk of failure is so small their ultimate goal
is a question of "when"... not "if".

Another client is building his wealth through growing two separate
businesses. He also purchased the real estate that his
companies rent and contributes massive amounts annually to
his wife's and his retirement savings. Each component - his
business, real estate, and paper assets - are individually
sufficient to provide financial security. It is really just a
matter of which one will get there first - not whether he will
reach the goal at all.

Notice how these paths are not mutually exclusive but can be
creatively combined to increase synergy and reduce risk.

You homework is to build these concepts into your wealth plan. Do
you fit one of the two profiles where you can use paper assets
exclusively? If not, how are you going to implement business
ownership with real estate while applying risk management?

Map out your wealth plan. Commit it to writing.

Again, don't worry about perfecting it. Just get something down on
paper and we will continue to improve on it in future lessons. The
main thing is to just get started somewhere.

In the next lesson I will begin to bridge these teachings from
theoretical wealth plan design to practical implementation. We are
close to converting your plan into action so that you produce
concrete results...

Tell your friends about the cool stuff you are learning in these
lessons, and I'll see you in a few days...

Todd R. Tresidder - Founder
FinancialMentor.com
CreateCorp Business Solutions, Inc.
DBA FinancialMentor.Com
14085 Raider Run Road
Reno, NV 89511, USA

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Your Weekly Update - US Q1 Growth Less Than Expected

	Weekly Market Recap This week saw softness in recent US economic data. The latest estimate of growth for the first 3 months of 2015 came in at +0.2%. This was less than many expected and compares unfavorably with Q4's growth of +2.2%. We see several factors driving this. The primary factor is a stronger dollar hurting US exports in our opinion. The Federal Reserve meeting this week viewed this recent weak US growth as "transitory." Internationally, both Sweden and Thailand took measures to spur their economies. Brazil was forced to raise interest rates, in an attempt to tame high inflation. On average, based on our research, we see a negative year in US markets about every 3-4 years looking back over history. Currently, we haven't seen a negative year in the US for over 6 years. It doesn't imply any fall is coming - in fact, the US is in positive territory so far this year. It's important to remember that, downturns are quite normal, and an integral part of the market's average +6.6% real long-term return. If you've started investing since 2010 or more recently, chances are that you've only experienced relatively good times We will see a bear market again. However, we believe a diversified approach should smooth returns through any market turbulence. DALBAR's analysis of investor behavior comes to an interesting conclusion on this topic. They find that the average investor has lagged the broader market by over 4% a year, on average, over two decades. Much of the underperformance comes, perhaps surprisingly, during some of the worst months for stocks. During weak markets, investors can move from stocks to cash and miss out on the subsequent market rebound. It's important to note that these rebounds can occur even within a negative month, sometimes when stocks are generally falling, they can also bounce back quickly and strongly. As the great investor Peter Lynch says "The key to making money in stocks is not to get scared out of them." This insight underpins our approach to portfolio construction and rebalancing. The views expressed herein are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. Differences in account size, timing of transactions and market conditions prevailing at the time of investment may lead to different results, and clients may lose money. Past performance is not indicative of future results. Your Portfolio Summary $9,977.07 Your Total Assets B Diversification A+ Fee Efficiency A+ Tax Efficiency Ways To Improve Your Portfolio 0 Accounts with Actions Your portfolio has no recommended actions right now. We'll watch over your investments and alert you with an email when there are actions for you to complete. Sign in to see detailed steps Sign in to see your full dashboard If you wish to change your email settings, visit your Settings.
	FutureAdvisor | 580 Market St., Suite 500, San Francisco, CA 94104 Drop us a note anytime: advisor@futureadvisor.com

Fwd:

Do Powers of Attorney Need New Gifting Rules?

It is one of the most common of all legal documents: The power of attorney form, in which an individual appoints an agent to handle financial, legal and tax matters. It's typically so routine nothing more than boilerplate is needed.

Yet changes in federal estate-tax laws in recent years mean that an advisor can help many clients by taking a fresh look at the details of their powers of attorney.

At an annual review, an advisor should ask a client to bring in a copy of an existing power of attorney and review the most important tax provision in this document: the right of the client's agent to make gifts. Most powers of attorney include specific provisions giving the agent the right to make annual exclusion gifts. This used to make sense; now, it often does not.

ESTATE-TAX ISSUE

The first consideration is whether a client is subject to the estate tax. When most power of attorney forms were created, the estate-tax exemption was much lower than today. As a result, making annual gifts was vital to reduce estate-tax costs.

Now, only 0.2% of taxpayers will incur a federal estate tax. Therefore, the gift power is at best useless — and in some cases, the gifting power has become a spigot to be exploited. Elder financial abuse has become a growing problem in recent years.

If your client has a net worth of less than $5.43 million in 2015, heirs would face no federal estate tax. Unless your client lives in a state where the state estate tax has been decoupled from the federal tax, it could be advisable to have a power of attorney that expressly prohibits gifts.

Removing an agent's power to make gifts might be the most important financial move those clients ever make.

For very wealthy clients who will be subject to the estate tax, an agent's right to make gifts under the client's power of attorney is vital. Even here, however, a change is probably needed.

Boilerplate language that's almost ubiquitous permits annual gifts of a mere $14,000 per person — which is insignificant from a planning perspective. What might be needed for such clients is a much broader gift provision.

GIFTING MORE

Some wealthy clients, meanwhile, should actually be giving away more. Even extraordinarily prosperous clients may defer large estate planning transfers for fear of running short of funds (even if your projections assure them otherwise). If these clients become incapacitated without making such moves, tremendous opportunities could be lost.

For wealthy clients who have not used much of their $5.43 million estate- tax exemption, an advisor should have a frank discussion about the desirability of authorizing an agent to gift their unused exemption.

Many clients are hesitant to permit such large gifts because they are worried about where the agent might direct those gifts. But for clients who already have irrevocable trusts in place, it is quite simple to direct the agent to make larger gifts to those existing trusts.

There are a couple of significant reasons such large gifts are important. For starters, if your client lives in a state that has decoupled from the federal estate-tax system, making gifts before death may reduce or eliminate any state estate tax. For example, New Jersey has a low estate-tax exemption — $675,000 — but no gift tax. If the agent can gift away significant assets before the client dies, the New Jersey estate tax can be reduced substantially.

A second consideration: While the recent estate-tax law changes made a high exemption amount permanent, they also made permanent a 40% estate-tax rate. For wealthy clients whose estates might exceed the exemption, a larger gift program might avoid any tax.

Let's say your clients have already set up irrevocable grantor trusts — trusts that are outside the estate, but for which the client remains liable for income tax on trust earnings. This is perhaps the most common template for structuring trusts for very wealthy clients.

If the agent makes a large gift to this type of trust, the growth outside the estate and the income tax paid on trust income might suffice to keep the client's taxable estate below the exemption threshold and avoid any tax.

ADJUSTING FOR INFLATION

The estate-tax exemption is also inflation adjusted. Since 2010, when the exemption was raised to $5 million, adjustments have pushed the exemption upward by $430,000. That is a lot of tax benefit to be left on the table by a gift provision that is too narrowly written. If a wealthy client were to become incapacitated, having an agent who may use the annual inflation adjustments to the gift exemption could be vital to reducing overall estate-tax costs.

In 2012, it was feared that the exemption would drop from $5 million to $1 million in 2013. While that drop never happened, many wealthy clients jumped on that planning opportunity. For those clients, permitting the use of the annual inflation adjustments may be especially important.

To identify these clients, check to see which have 2012 irrevocable trusts. Suggest that they return to their estate planning attorney to update the gift provisions in their powers of attorney to permit the agent to make gifts of any unused estate-tax exemption, which will encompass the annual increases.

A quick review of the gift provision of every client's power of attorney is likely to lead to specific, value-added planning recommendations. Advisors should be proactive in looking at client documents and encouraging the many clients who will benefit to update those forms.

Martin M. Shenkman, PFS, CPA, JD, is a Financial Planning contributing writer and an estate planner in Paramus, N.J.