Tuesday, December 22, 2015

"....Planners & Clients Kill Personal Financial Plans & Goals"

Personal Financial Planning Software Doesn’t Kill Personal Financial Plans & Objectives; Planners & Clients Kill Personal Financial Plans & Goals

Guns don’t kill people; people kill people. And the same goes for software and personal financial planning: software doesn’t kill personal financial plans; planners & clients kill personal financial plans.
          Yes, software may misfire, software may be incomplete, and software may not be real time (though it is getting there.) But the real impact on realization and or being on track to personal financial goals from potential problems impacting the goal(s) (other than being realistic to begin with), is contingency planning in the planning process and updates.
          Placing the blame on software is placing the killing on the gun rather than who pulled the trigger.
          Trigger events are critical in contingency planning – be they a decline in a portfolio for an objective by X%, a medium to high probability and high serious potential event on a client’s business, or Obamacare care effecting the (beta- volatility) of an Internist’s flow of income.
          So while software is important, damn important – to play what if, to project, to now be more real time and user friendly, things not worth doing are not worth doing well and better to do the right thing right (contingency planning) then the wrong thing right (great software minimal contingency planning).
Now, it is true one can’t plan for all contingencies (there is always something). And one can get paralysis of analysis at the extreme. Furthermore, the high seriousness and low probability contingencies i.e. a flood, a disability etc causing capital depletion are best handled by risk transference (insurance) unless self insurance is a viable alternative. But the medium to high probability and medium to high seriousness (impact) potential problem analysis is given short shift in personal financial planning – as personal financial planning is minimally personal let alone based in strategic planning techniques used in business but focused on financial techniques applied to personal resources & More, More, More (which to repeat myself has a habit of becoming less, worse, later).
Below are my previous thoughts to a planner relative to ‘is financial planning software’ being incapable and a contingency planning process (potential problem analysis adapted from Kepner Tregoe Decision Analysis) that may be useful. Also, it is suggested that client’s ask their planner to see the planner’s business plan and his or her contingency planning for the practice. This suggestion is not to review their plan – but to see if they actually plan and contingency plan for their business or does the Emperor Planner have no clothes.

…I agree to your indictment  that personal financial planning software is incapable in addressing the ups and downs, uncertainty, and volatility.
Unfortunately, while valid - this indictment puts the software cart before the horse not vetting sufficiently contingency planning techniques which then financial planning software can be applied to....

The first question is contingency planning and triggers. Per Kepner Tregoe potential problems analysis (which I used per objective in copyrighted forms while in practice) the questions become

1- what is the potential problem(s) per objective
2- what would be the cause
3- what is the probability (high, medium, low)
4- what is the seriousness (high, medium, low)
5- how to prevent and if not prevent
6- how to minimize

and I added what is the trigger #7.

Thereafter, one has an action plan on the medium to high probability and medium to high seriousness in most cases as to what, who, when, cost etc... - per each objective within each key result area. (per asset protection/depletion - where there is low probability high seriousness - i.e. flood, hurricane etc one would use risk transference - insurance)

Where software - as a tool comes in - is the what if - in the contingency planning - set off by the criteria.

Thus, the horse is put before the cart so that the planner doesn't become hoarse with assurances and platitudes - but can with the client recall their documented contingency planning – being proactive rather than reactive or in a blame game.. (Even then, there still will be tuchass comforting necessary due to client amnesia(c))

Monday, December 21, 2015

An Example of The Distinction Between MORE-on Personal Financial Planning & ENOUGH Personal Financial Life Planning The Third Ave Focused Credit Failure:

An Example of The Distinction Between MORE-on Personal Financial Planning & ENOUGH Personal Financial Life Planning
The Third Ave Focused Credit Failure:

When Third Ave Focused Credit failed (invoked no redemptions), I am sure many a ‘planner’ heard – complaints and was blamed if it was in a client’s portfolio. The primary focus of the discussion should not have been on Third Ave Focus itself – but – if truly managing goals rather than assets (i.e. really doing personal financial life planning) the initial response by the ‘planner’ (which I guarantee it was not) should be to ask the client to ask himself:

1- Do I still have ENOUGH (or on target)  relative to my withdrawal or accumulation goal
2- Where did Third Ave Focused Credit fit relative into the goal
3- Why Third Ave?

Given the allocations, one's cash position and backups (ssi, and reverse mortgage) - do you still have enough per goal?

The Fit:  Third Ave Credit to begin with - basically would have been at the top of an income portfolio - not for consistent income - but it was a method of takeover using bonds - which would result in income and gains - with a bond base - which has been Marty Whitman's forte for 50+ years i.e Kmart etc

Why Third Ave - because it was under Whitman's supervision who other than Marks at Oak have been two of the if not the preeminent vulture capitalists using bond plays for decades.

Finally, third ave credit isn't alone on the hit it has taken - other funds of this nature are down 40%+ - a lot has to do with oil plays and even some health investments.

But the real question - the first question- is does one still have ENOUGH – or on target to enough. If a person is satisfied he or she has ENOUGH - that takes the blow out. If one only focuses on the day to day - this is a jolt especially given Whitman's background and supervision.

The question again to put things in context - does one still have ENOUGH or on target to ENOUGH per the goal or goals?

Thus analysis - after the fact - is a micro view of an asset not of a goal. Secondly, the analysis is just that - not personal financial planning let alone personalized financial planning. One manages goals not assets.

Follow up
ENOUGH Personal Financial Life Planning Philosophical Discussion

Per the above, I  hope I made the vivid distinction between financial planners (who are really just applying financial techniques to personally held assets) and personal - even personalized financial 'life' planning - managing goals not assets. By and large, so called personal financial planning - especially those on commission, fee and commission and yes even those on a % of assets under management are just asset managers in personal financial planning clothing. Thus, this financial planning is just a Trojan Horse for assets under management.

But the reality is there are no parasites without a host - and the host is client's MOREcondria derived from the Yetzer Hara (derivatively The Yetzer MORE inclination). This is not to exonerate - but rather my observation.

At the bottom is man's identification with his body as 'his sense of sense' and fearing extinction his strategy is acquisition (again in Hebrew acquisition is Cain - yes as in Cain and Abel) in delusion to solve mortality or at best palliate.. The derivative of the acquisition strategy is MORE and the impetus for certainty, permanence & continuity (even though more, better, now has a habit of becoming less, worse, later). Thus, there is never ENOUGH in this heuristic

This so called personal financial planning of managing asset NOT goals - is a logical symptom and why when an asset goes bad the question isn't 'do I still have Enough?' but rather blame, shouldas, couldas etc.

Thursday, December 3, 2015

MORE Hyper Chondria© It’s Worrying Causes Up To 5 Yr Lifespan Reduction

MORE Hyper Chondria©  It’s Worrying Causes Up To 5 Yr Lifespan Reduction

No worries
(Gen X cliché)..
What me worry?
(Alfred E Newman, Mad Magazine)

·         The Yetzer WORRY is a Jewish genetic inclination
·         The Yetzer WORRY (a derivative of the human condition Yetzer MORE  
·         The Yetzer WORRY reinforces  and  geometrically compounds:

The Yetzer MORE
·         Can take 5 years off of one’s life span
·         Once the Yetzer WORRY #1 is solved,  ‘the Yetzer WORRY  #2 is promoted giving rise to in the personal financial realm the following Yetzer MORE excuses:

·         I’m older now
·         That was then, this is now
·         I don’t have the energy
·         It’s a different world
·         China’s impact
·         The demographics have changed
·         Average middle class income is down
·         Jim Cramer says
·         That was then; this is now
·         The economy is artificial with the Federal Reserves low interest rates
·         Social security is a ponzi scheme
·         And the golden oldie that never gets old, ‘you don’t understand…I have to make more to have enough which I can’t tell you what enough is’
·         etc

Per a UK study, worrying - even  small stuff may cause us to worry for up to two hours a day which results in taking up to 5 years off your life not to mention reducing the quality of one’s life & health  with these worrisome preoccupations. Just think about (when not palliating in an altered state) the compounding imperative “never ENOUGH” generating & bolstering the compulsion of MORE MORE MORE beyond ENOUGH aka  MORE Hyper Chondria©.

            When worry and or its stress controls, according to clinical psychologist Dr. Bart Rossi stated ‘it could be a killer.’

Now per the study and subsequent comments in the media, one can treat the symptoms (i.e. talk about your worries and concern), know the facts to prevent escalating catastrophizing as  Albert Ellis termed it, even list the worries attempting to determine the cause and how to prevent or minimize the causes, effects, and discontinue worrying about the past and things one has no control over (easier said than done).

But, one can treat – manage – not eliminate - an underlying cause of Yetzer WORRY and its sub-derivative     MORE Hyper Chondria©  by:

1.      finding/discovering meaning IN one’s own life (their significance and mission) – enough to live for
2.      knowing what is ENOUGH – enough to live on – to enable #1 and thus reduce  the MORE Hyper Chondria©

Given the foundation fear of extinction (which man identifies as the body) and pain -  the total elimination of the Yetzer WORRY is fantasy as worry can also be useful in protection and caution.

He crosses his bridges before he comes to them. He gets it from his father
Mom, Rhea Schwartz on my worry at age 8

            Of course, this essayist writes the above recognizing full well recognizing his own hypocrisy and knowing we teach what we need to learn ourselves. We all self induce and suffer from & to some extent  Yetzer WORRY and MORE hyper Chondriacs© derivative however manifested.
            Finally, the  MORE hyper Chondriac© phenomena is  a dilemma between reduced longevity and the worry of ‘not having ENOUGH’ is illustrated by a Jack Benny comedy skit. When Benny was being held up at gunpoint by a robber, he was given a choice by the bandit who asked,“your money or your life?” Benny responded, responded, “I’m thinking, I’m thinking.” 

Pawnote: If all else fails –get a dog as an AIG study indicates the company of a dog or dogs increases human lifespan/longevity 7 years – which makes one a plus 2 (+2) in hockey terms offsetting the Yetzer WORRY& Yetzer MORE’s 5 year deficit.