Posts Tagged ‘holistic financial planning’

Planning for the Inevitability of Loss

The past year was defined by incomprehensible loss—and for many, the losses were personal. In May, my father-in-law Bernie passed away on his 94th birthday. In the end, he said he was ready to go, but we are mourning the loss of an attentive and engaged family man who was like a second father to me.

In the midst of our grieving, I was thankful that we had done some planning ahead of time for this moment. With this recent experience in mind, here are some steps you can take to prepare in advance for inevitable end-of-life transitions.

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Financial Planning for Dementia

None of us wants to think about the possibility of losing our ability to make sound financial decisions, but many of us eventually will, owing to an accident or illness, especially some form of dementia. What would happen, for example, if in a period of impaired judgment you started taking large amounts of money from your accounts or were enticed to fund a get-rich-quick scheme? Is there anything that can be done to help protect you and your assets?

An easy first-line defense is the NI Sharing of Information Consent Form, which you can file with your advisor. The form gives your advisor and Natural Investments permission to contact designated people if your advisor perceives that a request or behavior is uncharacteristic of you and your goals. An unusual request does not necessarily signal a loss of capacity to make decisions, and in all likelihood the form would never be needed. But should the situation occur, a quick double-check by your adviser with someone whom you trust could prevent a potentially significant mistake. Your advisor can help you choose the best person for this role.

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How to move forward when it feels like too much

We all have some money goals that leave us overwhelmed, drained of energy.  So we push them aside, but the longer we do so, the more this disconnection tends to fuel a feeling that we just don’t know how to tackle them. But it’s important to get past these feelings, and find your way forward into these difficult topics; I’m going to share three “bigger picture” framing ideas that can be applied to many of our inner challenges.

One of the biggest uncertainties for many of us is planning for retirement.  How will we live in our elder years?  What choices will we have? What will our lifestyle be? 

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Fine-tuning your life

By Christopher Peck

Is your life humming along as you’d like it to? Do you whistle while you work? Do you need any fine-tuning? Do you march to the sound of a different drummer? Can you think of another clever auditory-alignment phrase about the quality of your life? If so, I’d love to hear it!

In this article, I’m introducing a new mental model to the basket of tools we use in the strategic insight aspect of Holistic Financial Planning (HFP). As you might recall (and if you don’t, please email me for past articles), in HFP we have several phases, like developing a holistic goal, planning income, planning expenses, planning for profit, and monitoring towards success. The strategic insight mode hovers, in a sense, above all of the others. It’s a collection of tools and mental models that we grab occasionally to help make rapid progress toward our goal. Strategic insight models covered previously in these pages include looking for logjams, evaluating the weak link in your chain of profitability, and using the wheel of life to identify shortcomings.

I call my latest playful process “Fine Tune Your Life,” and it’s based on the idea of an equalizer used by DJs and sound engineers. If you have an audiophile friend you’ve likely seen an equalizer, with its many sliders and dials that precisely tune musical output.

People often think in terms of “on-off,” like a light switch, but in reality the fuzzy details of life are not “on-off” – they move through a range within many possible variables. Take something like health for example; you’re not either healthy or unhealthy. There are many factors to be evaluated to make a diagnosis: weight, resting heart rate, body fat percentage, triglyceride levels, etc, etc. The same is true for financial well-being.

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Get in the STREAM: A new framework for building wealth

By Christopher Peck

I used to work at a native plant nursery in Santa Fe, New Mexico, and folks would come in and ask about grass for their lawn: “it needs to be very drought tolerant, soft for my grandchildren to play on, green year round, not invasive into my garden beds, and did I mentioned really low water use?” My flip but accurate response, depending on how amiable the person appeared, was often, “Have you considered Astroturf?”

Similarly, one of the most frequent calls I get as a financial planner is from a worried soul in their late fifties who tells me “I have almost nothing saved for retirement. I need help saving as much money as possible, as quick as I can, but I have a very low risk tolerance and I’m worried about job security. Can you help me?” My reply: “full STREAM ahead!”

Both situations require humor and unconventional thinking. Speed and simplicity are at the heart of solving this problem. In that spirit, I have a new idea. At least, I think it’s a new idea because I haven’t seen it anywhere else. It won’t change the world, but I think it simplifies retirement planning and wealth building. I call it STREAM.

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How (and why) to manage your career as an asset

By Christopher Peck

Address your weak links first...

What’s your most valuable asset? Your home, your retirement portfolio, your brokerage account? When I talk with clients about their balance sheets and we’re talking about assets, these are the usual answers. My guess is that for most of you it’s actually something you didn’t mention: your career. Yes, your career. Hopefully you have a career; maybe you simply have a job, or worse, and my condolences, you’re out of work.

As a part of my ongoing series on building wealth by focusing on cash flow, let’s focus on one of the prime areas for making a difference in your wealth: managing your career as an asset. Or maybe I could say, “manage your career asset.” Regardless, everyone needs to think more proactively about their earned income, which begins with the work they do and evolves into the job they have and the career path they’re on.

Here’s my premise: your career is the biggest asset you have. Thinking like a financial planner, if you assume a 5% return on investment, every $10,000 per year of income is like having $200,000 invested. If you’re earning $50,000 a year that’s like having $1,000,000 stashed away. Yes, I just made you a millionaire! Of course, you have to get up and work; you can’t just spend all your time at the beach hitting the pina coladas. But the flow of income that you receive from work, from earned income, is the largest and most easily influenced source of cash flow you have. Since your career represents your largest asset, treat it with the same respect you’d treat a million dollar portfolio: preserve it, grow it, and align it with your values.

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Show me the money! Finding your way to increasing your income

By Christopher Peck

I’ve been writing about using less energy, saving money, and reducing expenses. It’s time to switch strategies, time to punch the gas, not just tap the brake. From a holistic financial planning perspective reducing expenses is crucial, as it’s the primary place to make an immediate difference in your bottom line. But reducing expenses can only do so much; if you take it too far your quality of life suffers, until you’re wearing frayed sweaters and eating Hamburger Helper.

The time comes when the best strategy is earning more, increasing your bottom line by boosting the top line. It’s time to turn your attention to some “show me the money!”

Remember Cuba Gooding Jr. playing an aspiring athlete in Jerry Maguire, making Tom Cruise shout into the phone “SHOW ME THE MONEY! SHOW ME THE MONEY!” I’m not suggesting that we need more greed, but I’ve been feeling that we are each due for a personal economic rebound. This is good for us, and good for the economy; the macroeconomic downturn will be reversed by a million micro-economic upturns. Asin, let’s punch the gas, let’s start focusing our attention less on reducing expenses and more on adding value and bringing in more money.

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Defining the Whole: All Together Now!

By Christopher Peck

The fall has always seemed like a time for coming home and getting settled. In the annual holistic financial planning calendar, we are ready to begin a new cycle. As we take stock of our lives after an active summer, it’s a good time to look at where we are, to see how we’re doing, and to begin the small steps of planning for the next year, including considering new potential income sources and other portfolio adjustments before the New Year. In that fall spirit I’d like to go back to the beginning of the holistic financial planning process, to the first step of assessing our situation: what we call “Defining the Whole.”

When I was a permaculture landscape designer, sometimes I would show up at a new client’s property, a piece of land I had never seen before, home to people I didn’t know, and I would have a moment of terror: “Holy #%!*, I have no idea what to do here. What if they realize I know nothing?!?” We’ve all experienced this moment of insecurity, but what I realized is that terror is exactly why we have a planning process. A good process can be a safety net, a way of grounding yourself in the midst of complexity; at least it gives you a starting point. In those moments of terror looking at a new client and a new piece of land, what I did know was that the first step is always assessment: what is here? What are the existing conditions and factors to work with? And that is where the holistic financial planning process begins: at the beginning, with assessment, defining the whole situation we are working with.

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Taking an Annual Retreat

By Christopher Peck

This piece first appeared in the Winter 2009 issue of the Natural Investing newsletter

Cabin in the woods winter

One of the fundamental first steps in holistic financial planning is figuring out what you want to do with your life. How do you want to live, and contribute, and add value? What is the primary orientation of your life? What is the best right livelihood for you? Investing the time up front to answer these questions is often the best investment anyone can make; but then the question arises, how do I figure all of that out? Enter the annual retreat.

What’s an Annual Retreat and why should I do one?

An Annual Retreat is a several day break from routine, an opportunity to step out of your day-to-day life and reflect on purpose and meaning, clarify direction, and fine tune sup- port processes. It’s also an excellent opportunity to do financial planning and budgeting. It creates the psychological space to do your best thinking, and to take the high level view that can change or confirm the direction of your life. If you want to exert some control over your life, and over your finances, an annual retreat is an invaluable investment of your time and attention.

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Scenario Planning, or How not to fall for “The sky is falling!” Part 3

By Christopher Peck

In the last two newsletters I’ve discussed the wonder solution to all our problems: scenario planning. I brilliantly summarized my argument this way: we cannot predict the future, trends don’t help us much, knowing which one possible future will occur is impossible, horrible predicted scenarios grab all of our attention. Given all of that, we still need rational planning. We need some way to make decisions in a meaningful way that can guide our actions now, to best position ourselves for whatever future may come about. Scenario planning to the rescue! I went on to explain what scenarios are, and outlined six that I’ve been working with, from dystopia to utopia: Mad Max, 12 Monkeys, The Long Decline, The Long Boom, Ecotopia, Star Trek. (If you missed the first two halves, email me and I’ll send you the complete article.)

In this the third half, I’ll discuss how you could develop scenarios for you and your community. I’ve mentioned some of the benefits of using scenarios: it helps us maintain a sense of possibility, keeps creativity engaged, keeps us rational and not too emotionally reactive, and fights despair without being too Pollyanna. Sounds good, and it’s not hard to do either!


Begin by determining the question you want to consider. In my example I took two trends as a given: rising energy costs brought on by peak oil and global climate change. Those two trends are a virtual certainty, and huge! We can’t wish our way out of them. When you work your own scenario planning you can choose other factors, such as technology changes in your industry or the emergence of a new competitor or

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