Financial Planning

Another Downside of Aging: Elder Abuse

Yet Another Downside of Aging

If you're reading this hoping for a guide to abusing the elderly, such as Elder Abuse for Dummies, you're (A) out of luck and (B) a monster. 

On the other hand, if you're looking for some tools to help fight elder abuse, then this post may be helpful.

Elder Abuse In The News

In case you didn't know it, I'm a big fan of all things Marvel. That's why I was sad to see reports of elder abuse against Marvel founder Stan Lee, who died in November of 2018.

Recently, a former business partner and caretaker of Mr. Lee's was charged with three felonies, including false imprisonment, grand theft (possibly $5 million!), and a misdemeanor charge of elder abuse.

Surprisingly, these crimes seem relatively normal when compared to the one perpetrated by another ex-manager of Mr. Lee's. In that case, the ex-manager was sued for having "a nurse inject Lee with a syringe and collect many containers of blood", which were then sold by a fictitious charity for thousands of dollars.

How low do you have to be to steal and sell your employer's blood? Perhaps the better questions are who bought the blood and what did they do with it? Unless it's some genius who is attempting to clone Stan Lee, these questions are better left unanswered.

Elder Abuse Facts

Mr. Lee was a celebrity, so his case makes for interesting reading and generates headlines. Unfortunately, most cases of elder abuse don't make the news. Here are some statistics from the National Council on Aging:

  • Approximately 1 in 10 Americans age 60+ have experienced some form of elder abuse

  • It's possible only 1 in 14 cases of abuse are reported authorities

  • Two-thirds of abusers are adult children or spouses*

*I'll be keeping an eye on you, Heidi Kotzian

What You Can Do

If you suspect an older adult is being mistreated please contact your local Adult Protective Services office. Residents of Washington, D.C. can contact the Adult Protective Services 24-hour hotline at 202-541-3950.

Mom & Dad: If you're reading this, don't be alarmed when I show up for a visit with a syringe and many containers.

Stay Calm And Focus On Your Plan

Volatility and Anxiety

As of today, December 7, 2018, the US market (as measured by the S&P 500 Index) has fallen about 6% over the last three months, resulting in many investors wondering what the future holds and if they should make changes to their portfolios. While the S&P 500 Index may still be in positive territory for the year-to-date, it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing. Additionally, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself.

Reacting Impacts Performance

If one was to try and time the market in order to avoid the potential losses associated with periods of increased volatility, would this help or hinder long-term performance? If current market prices aggregate the information and expectations of market participants, stock mispricing cannot be systematically exploited through market timing.

Translation: It is unlikely that investors can successfully time the market, and if they do manage it, it may be a result of luck rather than skill.

Further complicating the prospect of market timing being additive to portfolio performance is the fact that a substantial proportion of the total return of stocks over long periods comes from just a handful of days. Since investors are unlikely to be able to identify in advance which days will have strong returns and which will not, the prudent course is likely to remain invested during periods of volatility rather than jump in and out of stocks. Otherwise, an investor runs the risk of being on the sidelines on days when returns happen to be strongly positive.

The following chart helps illustrate this point. It shows the annualized compound return of the S&P 500 Index going back to 1990 and illustrates the impact of missing out on just a few days of strong returns. The bars represent the hypothetical growth of $1,000 over the period and show what happened if you missed the best single day during the period and what happened if you missed a handful of the best single days. The data shows that being on the sidelines for only a few of the best single days in the market would have resulted in substantially lower returns than the total period had to offer.

Market Declines and Volatility - Unbranded.jpg

The Takeaway

While market volatility can be nerve-racking for investors, reacting emotionally and changing long-term investment strategies in response to short-term declines could prove more harmful than helpful. By adhering to a well-thought-out investment plan, ideally agreed upon in advance of periods of volatility, investors may be better able to remain calm during periods of short-term uncertainty.

In other words, stay calm and stick to your plan.

Mr. Market's Wild Ride

The Short Version

Greetings! I know you're busy, so I'm going to summarize this post for you:

  1. Calm down.
  2. Markets go up and down. It's normal.
  3. Stop watching and/or listening to what passes for financial news on networks such as Bloomberg, CNBC, Fox Business, etc.
  4. No one knows why markets rise and fall. Anyone who claims to know is a liar.
  5. Stick to your financial plan. Don't have one? Get one. You don't have to be rich to work with a financial planner.

The Parable of Mr. Market

The recent ups and downs in financial markets have seriously rattled investors. Well, the downs rattled investors because no one likes the downs. It's not fun watching one's retirement savings or other investments drop in value. Unfortunately, we're stuck with declines because markets don't always go up. Markets are made by people and people are irrational, greedy, and prone to panic.

The market fluctuations and the subsequent flurry of news, analyses, and pundit-speak made me recall the parable of Mr. Market, which Waren Buffett shared with investors in his 1987 letter to shareholders of Berkshire Hathaway. Below, you'll find an excerpt of that letter, which includes the parable of Mr. Market. I used bold text to emphasize what I believe to be the most important takeaway of Mr. Buffet's story. Have at it.

"Ben Graham, my friend, and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions, he will name a very low price, since he is terrified that you will unload your interest in him.

Mr. Market has another endearing characteristic: He doesn't mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game. As they say in poker, “If you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy.”

Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging, and betas. Their interest in such matters is understandable since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising “Take two aspirins”?

The value of market esoterica to the consumer of investment advice is a different story. In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. In my own efforts to stay insulated, I have found it highly useful to keep Ben's Mr. Market concept firmly in mind."


Last week, after the markets started bouncing around, I shared a chart of the Dow Jones Industrial Average index on my personal Facebook feed. I believe it's worth sharing again.

Dow Jones 10 Year.png

The Dow Jones Industrial Average index over the last 10 years.

I don't want to come across as cold and uncaring. Fluctuations in markets can have serious financial consequences depending on how much you have saved as well as the stage of life you're in. The best thing you can do is create - and stick to - a financial plan because no one can predict why or when markets will rise and fall.

Listening / Playing / Reading / Watching

Here's what has my attention right now:

  1. Neverwhere, by Neil Gaiman. In a previous post, I mentioned how much I enjoyed listening to Gaiman's American Gods. I highly recommend Neverwhere, too. Bonus: Gaiman narrates the audiobook edition and his performance is fantastic. I would listen to him narrate the phone book. If phone books were still a thing.
  2. Morning Star, by Pierce Brown. I'm pretty sure Brown's series is considered YA (young adult) literature and I don't care. Morning Star, which is book three in the Red Rising trilogy, is just plain fun. If Greek mythology, The Hunger Games, the Harry Potter series, and Game of Thrones had a baby, it would be the Red Rising trilogy.

You Know You Need a Financial Advisor When...

There are a few sure-fire signs that you need a financial advisor in your life. Whether you are just starting out in your first job or on the other side of retirement, there are financial considerations at each stage of life that a financial advisor can help you understand and navigate.

If you haven’t hired a financial advisor, but are wondering if now is the right time, there are a few signs that may indicate now may be the right time to start.

·      You’re not sure you’re saving enough for retirement. Even if you are saving for retirement, it may not be enough to support your needs and lifestyle in retirement. You don’t want to be in retirement and then find out that you didn’t save enough. Better to consult with a financial advisor earlier in your life to put you on a plan that will provide you with enough income to support your retirement lifestyle.

·      You don’t know where all your money is going. If you wind up scratching your head every month wondering where all your hard earned income has gone, it’s time to work with a financial advisor. A financial advisor can help you understand your current spending habits and even help you adjust them to better align with your values and your goals.

·      You’re not sure how to make a big financial decision. Whether you’re getting married, buying a home, or considering long-term health care options, a financial advisor can help you navigate large financial decisions. There are large financial decisions we face at every stage of our life and you don’t need to make them in a vacuum. A financial advisor will help you understand your financial options so that you can make the best possible decision for you and your specific situation.

·      You don’t know what your finances are working toward. A financial advisor is going to help you set financial goals for your present and your future. He or she works with you so that you can align your money with your values and help you create the life you want to live.

·      You live beyond your means. Financial advisors are not just for people with a ton of investible assets anymore. Besides, even the highest wage earners can find themselves living beyond their means, too. If you find that you are regularly outspending your income each month, even when you have plenty of income coming in, it’s time to hire a financial advisor.

If you identified with any of these signs, I encourage you to consider working with a financial advisor. There is a lot of value a financial advisor can bring to your financial life beyond retirement planning and investment management. 

My Answers to the 19 Questions You Should Ask Every Financial Advisor

In case you missed it, The Wall Street Journal's Jason Zweig recently wrote an article titled "The 19 Questions to Ask Your Financial Advisor". Zweig, who writes a fantastic weekly column titled "The Intelligent Investor", wants consumers to receive good financial advice. To him, that means financial advisors, stockbrokers, and insurance agents should always act as fiduciaries, which means they should act in their clients' best interests.

I wholeheartedly agree. Honestly, I can't believe this is even up for debate.

Some background: Last year, the U.S. Department of Labor released a rule which, once implemented, will require all financial professionals who provide retirement planning advice to act as fiduciaries for their clients. In addition, financial professionals must disclose all conflicts of interest and clearly disclose all fees and commissions paid by the client. Financial professionals who work on commission, primarily brokers and insurance agents, will be impacted the most. In general, these are the professionals unhappy with the rule. Unfortunately, the deadline for compliance has been delayed from January 1, 2018 to July 1, 2019. In the meantime, changes to the rule may severely weaken the rule or kill it entirely.

So how do you determine whether or not a financial planner will act in your best interest? Ask an advisor the right questions and listen for the best answers. Below, you'll find 19 questions to ask an advisor. You'll also find the answers, in parenthesis, Jason Zweig suggests you listen for. I've also included my answers to the questions, which are in bold.

Use these questions when interviewing an advisor - and interview at least three. Good luck with your search!

1. Are you always a fiduciary, and will you state that in writing? (Yes.)


2. Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services? (No.)


3. Do you participate in any sales contests or award programs creating incentives to favor particular vendors? (No.)


4. Will you itemize all your fees and expenses in writing? (Yes.)


5. Are your fees negotiable? (Yes.)


6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets? (Yes.)


7. Can you tell me about your conflicts of interest, orally and in writing? (Yes, and no adviser should deny having any conflicts.)


8. Do you earn fees as adviser to a private fund or other investments that you may recommend to clients? (No.)


9. Do you pay referral fees to generate new clients? (No.)


10. Do you focus solely on investment management, or do you also advise on taxes, estates and retirement, budgeting and debt management, and insurance? (Here the best answer depends on your needs as a client.)

Investment management is important, but I believe true financial planning means looking at all aspects of a client's financial life.

11. Do you earn fees for referring clients to specialists like estate attorneys or insurance agents? (No.)


12. What is your investment philosophy?

I believe it is impossible to consistently beat the market. Therefore, I use passive investments, such as low-cost index funds, in client portfolios.

13. Do you believe in technical analysis or market timing? (No.)


14. Do you believe you can beat the market? (No.)


15. How often do you trade? (As seldom as possible, ideally once or twice a year at most.)

As seldom as possible, typically less than twice a year.

16. How do you report investment performance? (After all expenses, compared to an average of highly similar assets that includes dividends or interest income, over the short and long term.)

After all expenses on a quarterly, 1-year, 3-year, and 5-year basis. I can compare performance to a benchmark, such as the S&P 500 Index, but I prefer not to because it's not an apples-to-apples comparison.

17. Which professional credentials do you have, and what are their requirements? (Among the best are CFA [Chartered Financial Analyst], CPA [Certified Public Accountant] and CFP, which all require rigorous study, continuing education and adherence to high ethical standards. Many other financial certifications are marketing tools masquerading as fancy diplomas on an adviser’s wall.)

I hold the Certified Financial Planner designation (CFP®).

18. After inflation, taxes and fees, what is a reasonable estimated return on my portfolio over the long term? (If I told you anything over 3% to 4% annually, I’d be either naive or deceptive.)

I cannot guarantee a rate of return. Conservatively, 3% to 4% is realistic, but markets have their ups and downs.

19. Who manages your money? (I do, and I invest in the same assets I recommend to clients.)

I do and I use the same investments I recommend to my clients.

Practicing What I Preach

This week, while having lunch with a friend and mentor, I questioned whether or not I really need to join a gym (and thus pay a monthly membership fee). Could I not continue my DIY approach? After all, I trained for and competed in triathlons for 10 years, so I'm pretty sure I know what I'm doing.

Thanks to an astute observation from my mentor, I had an epiphany: Although I consistently encourage people to invest in themselves, I wasn't following my own advice.

I believe it's almost always worth the expense to invest in, among other things, education, fitness, and of course financial planning. Okay, I'm definitely biased when it comes to financial planning because that's how I make a living. But it's worth it, I swear!

Sure, You Can Do It Yourself. But Will You?

With few exceptions, there's very little we can't do ourselves. For example, I had no idea how to perform maintenance on the commercial-grade plumbing hardware in our house, but after watching a few videos on YouTube I was ready to tackle the job. Unfortunately, I don't think I should try that if I need surgery.

I certainly could continue to workout on my own and save the cost of the monthly gym membership, but I know I'll work harder and have better results if I actually go to a gym. I believe the same thing applies to financial planning. Sure, you can do it yourself. But will you?

My point is that sometimes we can't do it ourselves. Sometimes the outcome is better when we have help. Clint Eastwood (as Dirty Harry) once said, "A man's got to know his limitations." Know your limitations and don't be afraid to invest in help when you need it.

Listening / Reading / Watching

Here's what has my attention right now:

  • Alien: Covenant. As a major sci-fi nerd and superfan of most installments in the Alien series, I can't wait to see this tonight.
  • Quiet: The Power of Introverts in a World That Can't Stop Talking, by Susan Cain. As an introvert, I think it's fitting that I listen to this with earbuds firmly planted in my ears. That way I can keep to myself and not risk having someone try to talk to me.
  • Master of None, season two on Netflix. If you haven't watched season one, do it now. Comedian Aziz Ansari's series is excellent.

Despite My Best Efforts, I Ended Up Writing About New Year's Resolutions

A Topic No One Has Ever Written About

I hope you had a nice Holiday Season! For my first post of 2017, I decided to write about something new, something fascinating.

Then I decided to save that topic for another week.

On to the New Year's resolutions!


In previous years I've done a reasonably good job of sticking with my New Year's resolutions. I believe it's important to set some goals for yourself. Even better, share your resolutions with family or friends so there's someone that can hold you accountable. Okay, here are my resolutions for 2017:

  1. Hold monthly financial check-ins with my wife. Okay, maybe this isn't the most exciting or romantic goal, but we've done this in previous years and it's been instrumental to our financial success as well as the health of our marriage.
  2. Slowly increase my exercise regimen now that my lower back injury has healed. At this time, I have no desire to resume the punishing routine required to participate in triathlons. Ten years of that was enough. Now I'll settle for keeping off excess weight and remaining healthy.
  3. Ditch my phone/tablet/laptop when the girls get home from school. Recently, my brother-in-law helped set up a charging station in our house. I'd like to drop my tech gear there for the few short hours I have with the girls before they have to go to bed. Out of sight, out of mind. Email and work can wait until after they're asleep.


So what are your New Year's resolutions? If you're a client, I'd love it if you shared yours with me. Feel free to share even if you're not a client!

I hope you have a great year. Good luck sticking with your resolutions!

Listening / Reading / Watching

Here's what has my attention right now:

Post-Election Thoughts

What Happens Next?

I know many of my friends and clients were surprised by the results of last night's election. Adding fuel to the fire, it didn't help that markets fell sharply as reactions to a Trump presidency spread across the world. The Dow was off over 800 points, more than a 5% decline, and futures trading on the S&P 500 temporarily halted.

The results of the election and its impact on financial markets will be discussed ad
nauseum in the coming days (well, probably weeks). The topic of incorrect polls is likely to come up, which is understandable because, in addition to the US election, polls for the Colombia-FARC peace deal and Brexit were wrong. Just remember that markets calmed down quickly after the Brexit vote rocked financial markets. In fact, it's now about 11:30AM EST and US markets have already stabilized - and are in positive territory.

I cannot predict what will happen over the next four years. No one can. In addition, it's questionable just how much any president can affect the economy. Markets will go up and down, but there's nothing you can do about it.

Final Thought

I coach my nine-year-old daughter's soccer team. The kids often complain the actions of the opposing team or calls made by the referee aren't fair. My response is always the same.

I ask them the following question: "Who can you control?"

They eventually respond with something along the lines of "No one" or, the answer I'm really looking for, "I can only control myself".

Don't worry about the financial markets because you can't control them. Instead, focus on the things you can control. I know that's easier said than done, especially if you're nearing retirement or already retired. What I do know is that my investment strategy hasn't changed since yesterday.

Lemonade Stands, Autonomous Cars, and the Future of America

The Future

As a planner, financial and otherwise, I spend a lot of time thinking about the future. I have to if I want to help my clients achieve their goals. More importantly, at least to me, I think about the future because I want to ensure my daughters are prepared for the world they are inheriting.

This painful, OMG-will-it-ever-end election has many Americans thinking about the future, too. No matter which candidate you support for President, it's safe to say the winner will have to grapple with some extremely difficult problems, such as technology's impact on work, unemployment and underemployment, and the high cost of education.

The following articles address some of these issues and are definitely worth your time.

"The American Dream is Killing Us"

This article was written by author and blogger Mark Manson. He is by no means an expert on any one subject, but I think he really nails the problems facing America today. It's a long article*, so expect to spend about 23 minutes reading it.

* A client once asked if I ever read anything that's short. I do!

"The Unintended Ways Self-Driving Cars Will Change Our World"

If you're a regular reader, you know that I'm a big fan of Elon Musk. Maybe one day I'll even be able to afford one of his cars. Until then, I'll settle for some shares of Tesla.

This article references Musk, but it isn't about him. Instead, this article focuses on how autonomous cars will change the world. Driverless cars will be here faster than people realize and people don't yet grasp the enormous impact autonomous cars will have on, among other things, jobs, transportation, and the auto industry. Expect to take about 9 minutes to read this article.


I'd like to highlight the following problems from my October 31st Dispatch:

  • The subject of the email was incorrect. I initially planned to write an article about how the zombie apocalypse provides a way for us to better understand the concept of diversification. I changed the topic and neglected to update the subject line in MailChimp. Apologies for the confusion.
  • Not all 403(b) plans are terrible. I shared an article about 403(b) retirement plans and wrote a harsh critique of why I think they're terrible. A client reminded me that not all 403(b) plans are terrible. While I still dislike that insurance products are woven into 403(b) plans, she had a good point. The plan offered by TIAA is one of the better ones available to consumers. Thanks, Jean!

Listening / Reading / Watching

Here are the terrifying things that had my attention this week:

  • Back Mechanic by Dr. Stuart McGill. I've developed a problem in my lower back, possibly after years of triathlon training. This book came highly recommended by a trainer that dealt with the same issue. I hope to learn more so I can resume my regular exercise regimen.
  • The Three-Body Problem by Cixin Liu. I'm finally getting around to reading this sci-fi book, which was highly recommended by Facebook CEO Mark Zuckerberg on his reading project "A Year of Books". So far, it's great - especially if you want to learn more about China's Cultural Revolution.

Adventures in Home-Buying

Adventures in Homebuying

The opening credits for House of Cards features our street in the Bloomingdale neighborhood of Washington, D.C.

Sadly, Kevin Spacey AKA Frank Underwood is not running for president.

An Eye-Opening Experience

My wife and I have lived in the wonderful Bloomingdale neighborhood of Washington, D.C. for 12 years. While we love our house and the neighborhood, we recently embarked on a search for another house. Our two bedroom row house is cramped for two adults and two growing children.

It was exciting to start our search. We made a checklist of all the must-have features the next house should have. Then we added some nice-to-have features to our list. Finally, we agreed on a price range for the search. My wife was happy, the children were happy, and all was well.

Then our real estate agent started sending us listings and showing us houses. It quickly became clear the D.C. real estate market is insane. D.C. isn't the only city dealing with a tough spring market; a recent article in Bloomberg Business suggests a nationwide problem.

After losing two houses to other buyers and still searching, I've learned a few things that I'd like to share with you.

Tips For Your Home Search

We've seen quite a bit of shoddy construction during our search. I'm pretty sure we saw a load-bearing poster in one of the gems we saw.

1. Figure Out What You Want

Make a list of the must-have and nice-to-have features you want in a home. You might even consider prioritizing the features just in case you are forced to make some tough decisions before buying.

2. Location, Location, Location

You need to decide where you want to live. Remember, you can change the house but you can't change its location.

3. Tour Multiple Properties

I found this tip particularly helpful when starting our search. Initially, our agent took us on a quick tour of several properties of differing conditions in the neighborhoods we expressed interest in. The cross-section of properties helped narrow our search.

Shout out to Chris Chambers of A-K Real Estate. Thanks for being awesome!

4. Speak With a Lender

Submit a loan application to a lender before going to look at houses. You'll want to know how much house you can afford so you don't waste your time or your agent's.

5. Seek Advice From a Professional

Find a house you really like? Great! In a hot market, it's helpful to have a contractor do a walkthrough of the house. A pre-inspection may help you pinpoint problems with the house or confirm that you're making an offer on a good property.

In addition, I suggest checking whether or not the developer obtained the necessary permits to renovate a house. There have been horror stories about shady developers in the D.C. region. If you're buying in DC, you can check permits using this link to the D.C. Department of Consumer and Regulatory Affairs.

6. Set Your Price - And Stick To It!

You're probably going to be excited by the time you're ready to make an offer. It's easy to get carried away when you're bidding in a competitive market. Set your maximum price, make your best offer, and let it go.

7. Be Patient

Okay, even I have a difficult time with this step. Buying a home in a hot real estate market isn't always easy. You might not be successful the first time (or two!) you make an offer. Be patient and will eventually find success.

Switching Topics...

Recently, I was interviewed for the Bloomingdale Buzz section of Capital Community NewsHere's a link to the article!