One More Time...Let's Understand This Economy Now

Written by Hank Brock, CPA, MBA, CLU, ChFC
Friday, 29 August 2008 08:15

Last post, titled What You Should Know About Today's Economy, I shared an email conversation with my daughter, Andrea (this was originally written in March 2008).  In it I referred to some of the problems in today’s economy, and posed the question if we are in 1977 all over again.  Every one of you for whom we have prepared a written Retirement, Tax, and Estate Plan during the past four years have read a section discussing our current “socio-economic environment.”  Within that section we made some generic observations about interest rates, the deficit, the falling dollar, international trade, each of the investment markets including real estate, and many other topics. But, throughout those four years we have included in every engagement the following observation:

“Corporate and Personal borrowing is at an all-time high. This is the major chink in the armor of the economy. Rising interest rates may force defaults, causing a domino effect on defaults – on corporate debt and home mortgages….The severity of massive debt keeps the economy in a more precarious condition that it otherwise would be; more critically, it keeps families with debt more precarious, while families with minimal debt will be cushioned against economic volatility...” Do you remember reading this in your plan? It’s been there for four years.

We may not be able to change the economic problems of our nation, but we can do things to insulate ourselves against them.  I will say it again: the last time we saw these economic indicators was 1977-1979.  Do you remember 1979-1981?  Let me remind you: falling dollar (this is the one to watch), 13% inflation rate, 13% unemployment rate, 21% Prime, 18% money market funds, 17% mortgages, $850 gold, $50 silver (remember the Hunt brothers trying to corner the silver market?), skyrocketing deficits, skyrocketing oil and food prices, money supply growing far faster than the economy, plummeting stock market, plummeting real estate, zero building, “stagflation,” and on and on.

We ask ourselves why?  The discussion of indicators is too exhaustive to make meaningful mention here, except to say that the world has changed since then.  Some of the similar signs are the falling dollar, which has fallen almost 50% against the Euro during the past few years. That suggests a terrible 10-15% inflation rate; after all, inflation is ultimately defined as “the value of the dollar.”

Some might ask, “Why has America been able to spend and spend and run such large deficits without inflation?  Without a day of reckoning?”  I’ll just mention two reasons we’ve been spared: (1) Free trade has allowed us to buy goods and services while keeping our costs down and enjoy a higher standard of living (incidentally, free-trade is also the #1 foreign policy to prevent war—people don’t go to war with people with whom they trade), and (2) Foreigners have been willing to finance our government deficit, allowing us to spend and spend without a day of reckoning.  More on this in a moment.

Who can veto Congress?  Who can veto the President?  The Fed?  No. Who can veto the Fed?  Hint: Many are not even U.S. citizens. Those that are buying U.S. Government Bonds—China, Saudi Arabia, and Japan, in that order, because they are the one’s financing our budget deficit.  They are why we have not had a day of reckoning. People can hate them all they want, but they pay for our Medicare, entitlement programs, and wars.

Now, what’s the problem with all this?  The problem is that, with the falling dollar, U.S. interest rate must, I repeat must, rise!  Those nations will not continue to finance our deficits if they can’t get their money returned to them, adjusted for the currency exchange rate!  They’d rather go finance the deficits of Western Europe!  Are our friends in Western Europe financing our deficits? No! They’ve got their own deficits.  And will the U.S. Government pay the higher rates, even if it breaks the economy as it did in 1981? Or worse?  Of course, because who would finance America’s deficit if it defaulted on its debt?

The Fed can lower short-term rates, but it has no control over long-term rates. That’s determined by the free market.  Inflation is, and interest rates will, rise dramatically!  What does this do to a debt-ridden nation?  See 1979-1981. BUT, perhaps worse this time.  Far worse.

A very wise and astute businessman made some quiet but urgent observations about our economy.  Members of the predominate faith here in Utah refer to him as “the Prophet.” Whether you are of the faith or not, he was a mature adult at the time of the Great Depression, and he has managed the business of a large multinational organization. He passed away a couple months ago.  He commented, “the economy is a fragile thing…there is a portent of stormy weather ahead.” (Gordon B. Hinckley, CR, 10/1998)  Later he again stressed the importance of getting out of debt and the shocks our economy could see (CR, 10/2001). And again recently (CR, 4/2007). Why don’t we listen to those that have been down the path before?

Why far worse?  In 1991 then Governor Bangerter appointed me along with two others to serve as three members of the Utah Thrift Panel to arbitrate claims brought by depositors against five failed thrift institutions.  Do you remember the S&L debacle of the late 1980s? And how it broke the FSLIC, needing a congressional bail-out? And caused a real estate collapse of 50% in CA, AZ, and elsewhere?  Now the banks are into mortgages, and the FDIC is no stronger, and the problem is many, many times larger. Unlike then, today the consuming public have been cannibalizing their net worth under the stupidity of home equity loans, living high, going to Tahiti, on equity that sometimes took generations to grow. The growth of the 1990’s was phony growth, spurred by spending that we did not have, and which is exhausted now.

Why far worse?  Maybe this is the clincher: Derivatives. Ever heard of them? Originally Fed Chairman Greenspan was against regulating them because they were a means to “reduce risk.” Derivatives are basically “bets” that some risk will or will not happen. Derivatives do not “reduce risk,” they “transfer risk,” in a zero-sum manner. What’s the problem?  Greedy bankers figured they could get rich off trading derivatives.  And they could do this without regulation, without reporting it to their shareholders on their financial statements, and by being highly leveraged, based on the bank’s credit rating.  Maybe they only had to put-up $1 for every $20 dollar bet, thus leveraging themselves 20 to 1, and as much as 100 to 1.

Get this.  Every major financial collapse in the past 20 years has been the result of derivatives, starting with Black Monday in 1987. Then the S&Ls. Remember the 223-year-old British Barings Bank brought down by a reckless hotshot 27-year-old trader?  Remember Orange County going bankrupt due to $1.5B loss in derivatives? Remember the collapse of the Asian markets in 1997?  Remember Enron getting caught in the squeeze, too leveraged to hide any longer? The collapse of Argentina? Remember the LTCM hedge fund collapse when the Fed organized a $3.5B bailout? And now the collapse of Bear-Stearns.  Why?  Derivatives on their mortgage portfolio multiplying the impact of the basic problem (sub-prime loans) many-fold.  It isn’t the sub-prime loans—it’s the derivatives.

How does all this happen?  And how does it affect you?  This happens when the bet is made, and a financially strong institution only has to put up, say, 2¢ on the dollar as collateral. But, if their financial rating gets downgraded, as happened to Ford & GM a while back, those holding the contract have to increase their collateral to double or triple. What assets do they sell to cover their bet?  Their bad assets? The derivatives?  No. They have to sell their good assets, their stocks. This puts selling pressure on the market, things worsen, and downward spiral begins. So, this isn’t just about derivatives.  It is about the banking industry, the stock market, and real estate. (Bonds would likely increase in value, which is the major asset backing the insurance industry.)

Two weeks ago, for the first time in history, the Fed pumped money into the ailing securities markets to save the investment bankers and brokerage houses from collapse, to the tune of $200 billion.  Now the Fed says they want to regulate not only banking, but also the securities industry, and virtually replace the SEC.  Will it happen?  Of course it will. “Them that’s got the money make the rules.”  The Fed’s got to “protect their investment.” And the Fed can buy/dictate anything because it’s got the printing press (at the cost of our inflation). 

How big is this phantom economy where no real goods or services are produced?  The U.S. economy is almost $14 Trillion in total output.  The world economy is about $50 Trillion in total output. Current derivative “bets” out there total $516 Trillion dollars—that’s 10 times the size of the entire global economy!  And 37 times the size of the entire U.S. economy!  And one-third of it is held by three banks: JP Morgan Chase, Bank of America, and Citigroup ($158T as of 3Q07, John Pugsley, Sovereign Individual, 3/08).  “J.P. Morgan Chase’s dabbling in derivatives makes it too big for even the Federal Reserve to bail out.” (John Crudele, New York Post.)

“Derivatives the new ‘ticking bomb’ … Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen.” (Market Watch, 3/10/08)  As Warren Buffett said at his last Berkshire Hathaway annual meeting: “A world where huge amounts of leverage have been brought into the system is a dangerous world.”

Banks and securities/brokerage firms are into derivatives, hence the $100 billion and $200 billion bail-outs, respectively, two weeks ago. This isn’t pocket change. We will all pay for it in a higher inflation-tax.  Same with the mortgage industry.  The only financial industry that has stayed away from derivatives is the insurance industry, which primarily holds 90%+ in bonds to back its obligations.

I am not a doomsayer.  I simply say that we live in a precarious economy with unknown risks. I suggest we go conservative by staying/getting out of debt, and putting our dollars into safe vehicles that will weather most any financial storm.  I suggest that if we prepare right, we have nothing to fear. I believe the prices of wheat and other commodities will continue to rise, so get your year-supply of food.  And there is a whole list of other actions someone can take to protect their families against days of increasing commotion and volatility ahead.  I am not saying anyone needs to panic and run out and live off nature, or sell everything and buy gold.  I am suggesting that we be forewarned, forearmed, prepared, and informed about what’s going on in the world about us.

If you are already a client, we invite you to call for a periodic review. If you are not already a client, we invite you to talk with us. You can start by attending one of our public workshops.  If not us, then talk with somebody that understands more than just a few annuity products, but also a little bit about tax strategies, and the world economy.   My sincerest best wishes to you. 

Hank Brock is president of Brock and Associates, LLC, a financial planning firm specializing in retirement, estate, and tax planning.  Hank Brock can be reached at 435-673-9599.

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What You Should Know About Today's Economy

Written by Hank Brock

The following excerpt is taken from a conversation between Hank Brock, President of Brock and Associates, LLC and his daughter Andrea in February of 2008.   It is in question/ answer format, and will be followed in the next posting by an in-depth commentary on current economic conditions, and how to prepare for the future.

Q.    Dad, if it is good for one family to save money against misfortune, why is it not then good for a nation to save money?
A.    Depends:  In your question does "nation" mean government? If so, then no, a government should be neutral, and not taxing us to a surplus and then saving our money for us.  But neutral also doesn't mean spending us into debt, especially if it becomes too much of GDP (% of total economy).  If "nation" means the people, then yes, you are right--the people should save.  Some would argue this slows the consuming economy, but only short-term.  It provides capital for investment, some of which is going to be deployed in R&D, increased efficiency & productivity, lower inflation, and expansion long-term.  But, which politico, or stock analyst, is interested in the long-term?

Q.    It seems a little bit like Pharaoh and Joseph in Egypt.  Why is the government letting the grain out of the store house when the famine has yet to hit?  (These rebates are intended for people to consume, NOT save, pay bills, etc…).
A.    Yes, exactly.  Get your seven-year supply of wheat.  (The spending will mean very little). 

Q.    I just read an AP article that said this will add 117 billion dollars to our national deficit.  So much for good economic sense.
A.    And $117 billion is a tiny impact on a $14 trillion economy (approximate).  Worse, it is inflationary.  Incidentally, a $10 increase in the cost of oil has the same drag on the economy as a $200 billion tax increase.  Both are bad on jobs, inflation, lowering tax revenues in the long-term, and increasing the long-term deficit. 

Incidentally, cost of oil, adjusted for inflation, today’s prices = 1988, the last time we had shortages.  Oil & utilities have been the two dog sectors of stock market from 1989-2004. The companies are just catching-up.  The increased cost is due to (1) China/India’s 25% annual increase in demand to produce cheap goods for us, and (2) refinery capacity at 100% - no refineries built since 1970's, one generation ago.  Refinery cost = so great not even Exxon builds one alone, but only joint ventures with other oil companies.  Remember: profits = money to build refineries.  Building a refinery cannot be taken as an expense against income.  It must be capitalized and then depreciated/expensed over decades.

Q.    What is the deal with the government buying people out of their bad decisions when it comes to mortgages?
A.    You may not remember the 1989-1991 mortgage crisis when congress had to borrow to bail out the FSLIC (Federal Savings and Loan Insurance Corp).  S&L's failing, Frank Keating, etc.  This time, it is the FDIC, the banks, that are in trouble, many, many multiples the size. 

Q.    Everyone knew the day would come when these mortgages would be due. Everyone knew there would be problems. I think the banks were counting on this and factored it into their loan approval process. But now, great, like a parent, the government is bailing people out of their bad decisions.
A.    Yes.  "Compassion" delivered en masse is just more government welfare. 

Q.    I guess I'm just a little bitter because we didn't take advantage of the bad loans that were available four or five years ago . . . we recognized them for what they were, and didn't get ourselves into the situation. If we did, we'd have 3x's the house and the government would essentially take away the consequences of a bad mortgage decision and let us stay in our home that we never could legitimately afford.  So what about the rest of the country?
A.    We will pay for it in higher taxes or higher inflation (which is another tax engineered by the government so it can pay off its debts with pennies on the dollar.) 

Q.    Does this smell a little of socialism?
A.    Not just a little.

Q.    So, without the clarity of actual conversation to sort out my thoughts - aren't these two acts basically yet another step of big government to push us into socialism (from which we will never be able to revert due to the complacency of technology--but that's another conversation all together).
A.    It was all put into place under Franklin Roosevelt’s "New Deal,"  expanded under Lyndon Johnson’s "War on Poverty," and maintained by both parties ever since. Goes back to Thomas Jefferson’s comment about the demise of the Republic as soon as the people discover they can vote themselves largesse from the government treasury.  Really started with the 16th Amendment to the Constitution when the people & States voted on the government's ability to tax income, and the 17th Amendment when Senators began getting elected by the people instead of the state legislatures--until then they represented the states, were accountable to state legislators, we had federalism, and we would not have the concentration of power and government programs/solutions in Washington.  The Founding Fathers don't get enough credit for their genius/ inspiration.

Q.    If you can explain the economic sense (or in my opinion nonsense) that drove these bills to pass, let me know.
A.    Sorry, I can't explain it.  But, even though the fed is "lowering" interest rates, actual long-term rates are (or must very shortly) skyrocketing, hence the falling stock market. We are living in 1977, maybe 1978.  To understand that, you need to look at 1979-1981 just before Ronald Reagan took office: inflation rate (13%), unemployment rate (13%), interest rates (21% prime), mortgages (17%), gold ($800), silver ($50), money market funds (18%), new construction or home selling (0%), etc.  The Jimmy Carter years--one generation ago--the last time the Democrats had control of all 3: House, Senate, and Presidency.  Democrats had House & Presidency for the first 2 years of Bill Clinton’s Presidency in '92--'94.  November '08 has: Senate, current Democratic majority 51 to 49.  Seats up for re-election in Senate: 9 Democrats and 23 Republicans-- guess who'll lose seats?  House: currently 31 more Democrats--seats up for re-election in house: all but 28 Republicans are retiring.  Problem = House, Senate, President in same party.  People don't like gridlock?  Wall street/economy likes gridlock.  Polls may say McCain over Hillary or Obama 47% to 45%. Percentages don't elect.  Twice as many Democrats are showing up at their primaries as Republicans.

Q.    I’ll ask you: Who are those that can veto the laws passed by congress?  Veto the President's policies?  Veto the Fed's policies and actions?  And make them null & of no effect?  Are many of those with veto power even U.S. Citizens?
A.    The freely-traded bond market-- those that finance the deficit, and allow us to spend and spend without a day of reckoning.  And those voters have been the Chinese, the Saudis, and the Japanese, in that order.  With the plummeting dollar (down 50% in past 2-3 years), they want much higher interest if they are going to continue to use their surpluses to finance our deficits instead of Euro deficits, because they want their dollars returned to them adjusted for the currency exchange rate.  Ultimately, inflation = value of the dollar, hence current gold & silver prices.  No matter what, government will not default on its T-bonds, even if it means 13% or 15% unemployment and deep, deep recession, because then it couldn't borrow any more.  So it must (no choice about it) raise interest rates, which will slow economic activity even more.  When Bush Sr. was voted out of office in 1991, the recession had unemployment at 7%, which is 2% above "full employment" (5% of pop are changing jobs at any given time anyway.  13% is 8% above full employment, or 4x as much as the 2% that lost Bush Sr. the election of ‘91.)

In about 1995 Sweden’s parliament (socialist) passed a bill and within days free-market interest rates on their government bonds jumped to 200%.  No government can survive on 200% interest rates.  Parliament reversed itself within few days.  No-one has to buy our U.S. Government bonds. They'll only buy at what price they decide.  So, the Fed is band-aid short-term stuff.  Watch the bond market especially & stock market to predict what's going on.

"The economy is resilient."  --Bush, January 31, 2008.  "The economy is a fragile thing." --Hinckley, October 3, 1998.  (In credit to Bush, his responsibility is to say that, because he cannot contribute to a market- public panic.)

Well, just a few thoughts on your questions…

--Dad (Hank Brock)

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The Measurable Benefits of Having a Financial Plan in Place

Last Updated (Tuesday, 19 August 2008 09:10)
Written by Hank Brock

You hire a planner. You pay a fee. What do you get in return? You get two very different kinds of benefits. You get psychological benefits, and you get monetary benefits.

The psychological benefits are yours. You keep them. They include things like increased peace of mind, progress toward reaching your goals, without worry about unfinished business.

What about the monetary benefits? This is how most planners must justify their existence, their employment. For now, don't even consider the long-term strategic benefits of having a plan. For now, look at just the first couple of years. The typical client will usually see a cash-an-cash measurable, identifiable return of anywhere from eight to 30 times the fee. In other words, if your fee is $1,000, you will see anywhere from $8,000 to $30,000 in identifiable returns within the first 24 months. What kinds of returns? Income tax savings. Improved returns on investments. Savings on legal fees. Savings on insurance premiums. Increased cash flow.

Can your planner guarantee that return? No, of course not! That would be most unprofessional. But a good planner can guarantee that, regardless of what you see during the first few years, you will absolutely benefit in the long term from a solid, well-thought out financial plan designed by a professional planner.

And a good planner should be busy enough with an already active clientele that he will guarantee that, if at the conclusion of the exhaustive data-gathering interview, he doesn't feel he can accomplish something for you that will be very meaningful, then he will bow out of the engagement.

No planner worth his salt wants to do busy work. You don't want to hire him to do busy work, and he doesn't want to do it. He is in his career because he loves what he does. He knows that his clientele only grows when he has satisfied clients, and they refer him to their colleagues and neighbors. To do that, he's got to have meaningful long-term client relationships, where they get ahead financially.

Only then, do all prosper. Only then, does your planner stay employed by his employer: you. Only then, do you introduce him to neighbors and colleagues.

And that is as it should be, because like all laws governing money happiness, everyone benefits from complying.

Hank Brock is president of Brock and Associates, LLC, a St. George, Utah based financial consulting firm.  To learn more about the benefits of having a financial plan, please schedule a time to meet with Brock and Associates.

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What You Should Know About Tax Advantaged Investments

Last Updated (Tuesday, 07 October 2008 15:21)

People often misinterpret the meaning of tax advantaged investments.  Some are concerned that tax advantaged investments indicate a strategy that is devious or unlawful.  What you need to understand is that the only money you will ever have to spend, lose or invest is what the government allows you to keep.  Many taxpayers do not realize that they do have a choice as to whether they will pay a small or large amount of income tax.  Why pay the IRS investable funds you are allowed to keep?

Tax advantaged investments are not “loopholes” in the Tax Law that the IRS is out to close up.  They are not morally wrong, as some would have you believe.  A common fallacy is to confuse tax evasion with tax avoidance.  Tax evasion is illegal and punishable.  Tax avoidance, however, is legal and is encouraged by the lawmakers.  The United States Congress promotes the shifting of funds from the taxable sectors of the economy to areas of public need or good by passing laws which create tax deferred; tax sheltered and even tax free investments.

Many, uninformed of the nature of the tax advantaged investments, would have you believe that you are “robbing” the economy of tax dollars by not giving your taxes to the government to spend in their great wisdom.  Such advocates are ignorant of the fact that tax advantaged investments are put into housing, energy, food, strategic metals, research and development, medical needs and transportation.  These tax advantaged investments are actually a boon to the economy.

Rather than being filtered through bureaucratic mazes to the economy, these otherwise diverted tax dollars are being applied directly to where there is a need - creating new jobs, expanding specific industries and adding to the growth of the country.  The famous jurist, Judge Learned Hand, remarked that, "There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible."

In another famous quote, Judge Hand wrote: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes" Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

It is important to note that understanding tax advantaged investments should be a prerequisite to becoming involved in them.  Many tax advantaged investments carry only minimal risk to the investor.  Allocating funds into municipal bonds, life insurance, IRAs, etc. can provide excellent tax incentives.

On the other hand, some tax advantaged investments, such as oil and gas limited partnerships or real estate limited partnerships, can be and often are risky (note: this is not a comprehensive list of risky tax advantaged investments).  Although there is the possibility of substantial returns with such endeavors, many have and many will continue to chance the loss of their investment.  Yet when compared with the alternative, a 100% chance of loss when paying tax, such investments can look quite attractive to some investors.  After all, which investment will offer the greater possibility of providing you income in your golden years or at any other time?

Individuals also need to remember that Congress has passed tax incentives because such investments are risky.  Tax advantages are provided to encourage investing in high-risk areas that further the social good of the country.

Being involved with a tax advantage investment requires a proper frame of mind.  Peace of mind is what you have to lose if you are uncomfortable with such an investment.  Tax advantaged investments can be complex -- particularly with the ever-changing tax laws.  Working with a knowledgeable and licensed investment advisor will help you avoid many of the pitfalls and help you keep more of your hard-earned dollars from taking a one-way trip to the IRS.

Brock and Associates, LLC is a fee-based financial planning firm that specializes in retirement, estate, and tax planning.  For more information regarding tax planning strategies, please contact our office.

The Financial Planning Process: 5 Essential Steps

Last Updated (Wednesday, 13 August 2008 09:30)
Written by Hank Brock

The financial planning process involves five basic steps.  After the initial meeting with your financial planner, the five steps to the financial planning process include: data gathering, plan preparation, plan presentation, plan implementation, and on-going monitoring.

Financial Planning Process: Data gathering.

Data gathering is a marathon. It usually takes place at your home. It may take two hours or all day. Your planner will need to examine all your documents: Tax returns. Balance sheets. Income statements. Employee benefit plan booklets. Retirement plan documents. Wills. Trusts. Insurance policies. Investment statements. Brokerage house statements. Bank statements. These are the tangible bits of information.

But there's also subjective information, such as: What are your lifestyle goals? How do you want to distribute your estate? At what age do you want to retire? How much income do you want during retirement? Then there are the assumptions that need to be figured into the whole process. What's going to happen to interest rates? Where is the economy headed? How much inflation will occur? Your planner will want your feelings on these things to see if expectations are realistic.

Finally, your planner will consider your personal attitudes -- toward risk tolerance, toward tax aggressiveness, toward simplicity in your financial affairs. By the time all the data is gathered, your planner has a very good idea of where you are now and where you want to be. 

The next step in the financial planning process is plan preparation.

Financial Planning Process: Plan preparation.

Preparing your plan typically takes three to four weeks, as the planner does an analysis -- the diagnostic work. The planner knows where you are, and where you want to be. Now he needs to figure out the most efficient way to get you there.

For example, maybe it's a family partnership. Or a family corporation. Or a family trust. He'll look at all the pros and cons -- then prepare written recommendations. Some will be major strategic recommendations. Others will be minor tactical recommendations. They will all fit together. 

The next step in the financial planning process is plan presentation.

Financial Planning Process: Plan presentation.

After all the recommendations are in writing, your planner will present them to you. During the first interview, he'll present the plan to you and review the major areas. Then you'll take the plan home. Read it. Study it. Go over it with your spouse. Jot down any questions you may have about it.

When you get back together with your planner, you'll go over the plan in detail. He'll answer your questions. Clarify details. As you agree on each recommendation, your planner will prioritize them into an "Implementation Check List." It's simply a "To Do" list for you and your planner.

The next step in the financial planning process is plan implementation.

Financial Planning Process: Plan implementation.

The first three steps move quite quickly. In fact, you will probably get through them in about a month.

Step four, implementing the plan, takes a lot longer-usually about five or six months. During that time, you'll meet with your planner to go over tax planning, retirement planning, estate planning, and insurance issues. Your planner may bring in other experts -- such as attorneys to help resolve certain issues.

In the end, your plan might have as many as 25 recommendations. A few recommendations will be major, broad, strategic recommendations, each worth thousands of dollars to you. The remainder will be fine-tuning recommendations -- crossing the T's, dotting the I's, and making sure your financial affairs are really in order.

The last step in the financial planning process is on-going monitoring and maintenance.

Financial Planning Process: On-going monitoring and maintenance.

Here the planner should be retained to provide periodic updates and on-going advice. Perhaps there are a couple of tax-planning sessions each year, portfolio reviews, insurance updates, etc. Perhaps you need some questions answered about whether you should refinance your mortgage, lease or buy a car, etc.  Your planner should alert you to changes in conditions that directly affect your plan.

Hank Brock is president of Brock and Associates, LLC.  He has helped thousands of clients meet their goals through the financial planning process.

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