If your financial advisor is not using Account Aggregation, then you might want to consider a change. What is Account Aggregation? It is something that you are probably already using but may not realize it. If you use Quicken, Mint, or your own bank's web site to keep up with all your myriad of accounts, then this is Account Aggregation.
Account Aggregation has been around for a while, but clients are sometimes a bit hesitant to use it. They fear that they are putting their information "out there" for hackers to steal. However, the reality is that if you log into any bank, credit union, brokerage firm or other financial institution, then you are already putting your information "out there" for hackers to steal. But, each of these firms have security protocols to protect you and most protect you against hackers. If your bank account was hacked for example, then in all likelihood, the bank will reimburse you if a hacker found a loophole in their system. So, the risk is really close to nil.
Financial planning software can now utilize Account Aggregation to your advantage. You have to follow my logic here. If I am a hacker, am I going to go after a financial planning web site with a limited number of clients, or am I going to go after a bank web site with millions of clients? Where is their more opportunity to make money from a hacker's standpoint? The bank. Most hackers do not even know what a financial planning software firm does, much less that they have Account Aggregation. Plus add to the fact that a bank has a ton more customers than a financial planning software firm, then you can see the stark contrast.
I use Right Capital's financial planning program. How it works is you link your accounts by putting in your login and password for your bank, for example, one time, then it remembers it from that point forward. When the information comes across to Right Capital, the accounts numbers are hidden. So, your accounts numbers cannot be hacked if they are not in the Right Capital system! In addition, I can do this without a need for your Social Security number. At First Coast Planning, LLC, it is optional to open an account for most clients. I would only need your Social Security number if you were to open a brokerage account. If you don't then, I don't need it.
I have been a Certified Financial Planner for over 25 years, and I have to let you in on a little secret. Most people do not have financial plans. Although, I am a big believer in them, it has been a struggle to get clients to taken advantage of this service. Primarily, it has been a struggle because of the old way of doing things. The old way is to make copies of all your statements, bring them to your financial planner and then he or she looks them over and determines that you brought old statements and he or she needs more up-to-date statements. This causes delays with incomplete information. It is not a very good process.
Fast forward to today, there is no need to copy anything. All you need to do is log into your financial planning site and link your accounts to it, one by one. You link your bank, your mortgage, your credit cards, your student loans, personal loans, investments and retirement accounts. Once linked, then your financial planner has everything they need to work on your financial plan without delays. The beauty of Account Aggregation and financial planning software together is everything is in one place after everything is linked up.
Look at the alternative. How much do you owe on your mortgage, or home equity loan? How do you find out? How much is in your 401k today? What do you have to do to find out? How much is in your checking account? Savings account? IRA? Roth? The only way to find out is to do what? Log into all the financial institutions holding these accounts. How much time does that take? Let me tell you. A lot. Don't you see how inefficient this process of keeping up with your entire financial picture is?
Financial planning software with Account Aggregation is a huge time saver for you. It is one place where you can log on and see everything you own and owe in one place. How powerful is that?
Can your financial advisor do that? If not, then you might want to take a gander at www.firstcoastplanning.com and scroll down to the Keynote Presentation. It will make more sense to you if you do this. Or, you could just continue to use a financial advisor without Account Aggregation and log onto a myriad of web sites each month and probably build an Excel or Numbers spreadsheet to try and keep up with it all. It is not that tough of a decision once you think about it critically.
Tuesday, August 21, 2018
Monday, August 13, 2018
Turkey - Another Reason to be Diversified
Do you try and time the markets? Do you make sector bets? Do you buy the U.S. Dollar or sell it? What about country specific investing? Do you try and pick countries that you think will outperform like Turkey? What about bonds in a rising interest rate environment? Or, in a declining interest rate environment? What do you do?
How about what the President is doing? How do you invest around that?
Of course, do not forget the Federal Reserve and what they decide to do with interest rates. Where are you investing when they are raising rates?
This is just a very small tidbit of questions that you should ask yourself, if you are one of the people out there who thinks they can manage money on their own. You have to know what to do in all of the above situations and be right about it more times than not. Have you been consistently right? Because, one wrong decision can cost you plenty.
Doesn't it make a whole lot more sense to hire a professional money manager who shoulders the burden for you? We are all on this earth for a limited time, so why on earth do you want to spend it doing your own money management? It just doesn't make any sense to me.
What is your time worth? Take your salary or your last salary and divide it up by 365 days per year. Break it down to an hourly rate. After you have done that, then take an honest assessment of the hours you spend watching CNBC, Bloomberg, or Fox Business. Then, keep going and assess how much time you spend on the Internet researching investments. Of course, do not forget the Wall Street Journal, Barron's and the investment newsletters that you subscribe to either. Take on some more time with reviewing emails and statements from your brokerage firm. Don't forget about taking the time to trade, because you have to slow down and make sure you do not make any mistakes when you trade. Also, you need to factor in your conversations with friends, or going to free lunch seminars with other financial advisors to see if you can get some free advice.
All in all, how many hours are you spending managing your own money? When you put the pencil to it, if you are honest with yourself, then the amount of time spent or wasted on these activities will probably surprise you. Don't forget about the fact that you are a rank amateur either. When you make the wrong decision, then it can cost you plenty.
Did you go to cash in 2008, or just ride it out? If you went to cash, then when did you get back in? You see, there are two decisions when you go to cash. One to get out and the other to get back in. It is easy to get out, but much harder to know when to strategically get back into the market. Keeping in mind of course, that you may need a whole new portfolio at that point. After all, the one that you got out of obviously wasn't working or you would not have gotten out of it in the first place. This means that you will need to do a whole lot more research, doesn't it? Not really, because researching investments is something that you can constantly do and it will probably will not make a hill of beans in your performance. You see, the asset classes that you choose to invest in will be what really matters.
Investing is challenging, even for professionals. Professionals have a whole lot more tools at their disposal than you ever will have. Think about computer algorithms, for example. Do you really think your decision making skills is going to out fox a computer algorithm that can make trades in a split second?
The best thing you can do as an investor is hire a professional money manager. Spend time doing the things that you love to do and with those who you care about. You will be much better off. There is a light at the end of the tunnel for all of us. It is best to spend your time wisely.
How about what the President is doing? How do you invest around that?
Of course, do not forget the Federal Reserve and what they decide to do with interest rates. Where are you investing when they are raising rates?
This is just a very small tidbit of questions that you should ask yourself, if you are one of the people out there who thinks they can manage money on their own. You have to know what to do in all of the above situations and be right about it more times than not. Have you been consistently right? Because, one wrong decision can cost you plenty.
Doesn't it make a whole lot more sense to hire a professional money manager who shoulders the burden for you? We are all on this earth for a limited time, so why on earth do you want to spend it doing your own money management? It just doesn't make any sense to me.
What is your time worth? Take your salary or your last salary and divide it up by 365 days per year. Break it down to an hourly rate. After you have done that, then take an honest assessment of the hours you spend watching CNBC, Bloomberg, or Fox Business. Then, keep going and assess how much time you spend on the Internet researching investments. Of course, do not forget the Wall Street Journal, Barron's and the investment newsletters that you subscribe to either. Take on some more time with reviewing emails and statements from your brokerage firm. Don't forget about taking the time to trade, because you have to slow down and make sure you do not make any mistakes when you trade. Also, you need to factor in your conversations with friends, or going to free lunch seminars with other financial advisors to see if you can get some free advice.
All in all, how many hours are you spending managing your own money? When you put the pencil to it, if you are honest with yourself, then the amount of time spent or wasted on these activities will probably surprise you. Don't forget about the fact that you are a rank amateur either. When you make the wrong decision, then it can cost you plenty.
Did you go to cash in 2008, or just ride it out? If you went to cash, then when did you get back in? You see, there are two decisions when you go to cash. One to get out and the other to get back in. It is easy to get out, but much harder to know when to strategically get back into the market. Keeping in mind of course, that you may need a whole new portfolio at that point. After all, the one that you got out of obviously wasn't working or you would not have gotten out of it in the first place. This means that you will need to do a whole lot more research, doesn't it? Not really, because researching investments is something that you can constantly do and it will probably will not make a hill of beans in your performance. You see, the asset classes that you choose to invest in will be what really matters.
Investing is challenging, even for professionals. Professionals have a whole lot more tools at their disposal than you ever will have. Think about computer algorithms, for example. Do you really think your decision making skills is going to out fox a computer algorithm that can make trades in a split second?
The best thing you can do as an investor is hire a professional money manager. Spend time doing the things that you love to do and with those who you care about. You will be much better off. There is a light at the end of the tunnel for all of us. It is best to spend your time wisely.
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