Archives for March 2014

Life Insurance: How Much Do You Really Need?

The fear of death follows from the fear of life. A man who lives fully is prepared to die at any time.   Mark Twain

There is a great deal to take away from this quote by Mark Twain. I concur with his sentiment. However, dying at any time presents an unacceptable financial risk to survivors unless the deceased is fully insured for life insurance.

The risk of a pre-mature death is a catastrophic failure of one’s dreams and goals. In today’s society, individuals ‘mortgage’ [French word meaning payable unto death] their futures by borrowing against their potential wages. The result of an untimely death is that the bills all come due at a most inopportune time. [Read more…]

Risk Management: Considering Statistics

The trouble ain’t that there is too many fools, but that the lightning ain’t distributed right.

This quote by Mark Twain is a wonderful starting point in a discussion about managing risk in a personal financial plan. One of the areas which needs to be addressed is the statistical odds of an event occurring. Fools (which I make it a point to never call anyone) and lightning provide a wonderful opportunity to discuss some math concepts and risk management.

Everyone has heard the statistical odds of being struck by lightning are approximately one in a million. This statistic is based on the average of reported lightning strikes in the U.S. The math works this way: 310,000,000 (U.S. Population) / 280 (Average annual lightning deaths and injuries) = 1 in 1,107,143. Which is approximately, give or take, one in a million (U.S. National Weather Service).

Now here is where an individual can play and have some fun with statistics. The state within which you live has a tremendous impact on one’s odds of being struck by lightning, which many mean that ‘fools’ are smarter than for which Mr. Twain gives them credit. Those who live in Montana (the Big Sky State!) have a greater statistical chance of being struck by lightning – roughly 1 in 249,550. On the other end of the continuum is California. Residents of that state have the lowest statistical odds of being struck by lightning. So the lesson for each of us is that risk can be managed. Fools do not live in Montana in order to increase their chances of ‘not’ being struck by lightning. [Read more…]

Family-focused advisors offer personal touch

Editor’s note: President and co-founder of Paraklete ® Financial, Inc., Susan Tillery CPA, PFS, CFP, was recently interviewed by Reuters concerning the rising demand for financial services.

(Reuters) – Baltimore financial adviser Lyle Benson describes his work as that of “Personal CFO” or chief financial officer.

His boutique financial planning firm manages money, but it also does everything from bill paying to estate planning, even assisting clients’ adult children negotiate terms for their first automobile purchase or mortgage.

“We coordinate and work with all of our clients’ advisers” including attorneys, accountants and insurance agents, says Benson. “We make sure everyone is on the same page and working together.”

The services necessary to quarterback a client’s complete financial life, often referred to as family office services, are not just for the ultra-rich. Benson says anyone with investable assets of more than $2 million can benefit from such comprehensive oversight. At his firm, those services are used by more than 30 percent of clients. Please click here to continue reading

Risk Transfer in the Financial Planning Process

No man is worth his salt who is not ready at all times to risk his well-being, to risk his body, to risk his life, in a great cause. —Teddy Roosevelt

I have been looking for an opportunity to use this wonderful quote by Teddy Roosevelt. It is from an article in the New York Times (12/08/1915). The article is a summary of his remarks for the Harvard Advocate in which he promotes the need for military curriculum at schools of higher learning.

The purpose of today’s posting is not to advocate for military curriculum, which I do support, but to discuss risk management in the personal financial planning process. It is human nature to seek security. Security may be defined as the absence of risk. Once the basic needs of food, clothing, and shelter are met, the next need on the list for most of us is a sense of safety/security. [Read more…]