The Register by IARFC

Volume 21 No 4 Fall 2020

IN THIS ISSUE Budget Advice from the Professionals Family + IARFC = Success International News! NEW - Ethics Exam Requirement

Money Management

IARFC INTERNATIONAL ASSOCIATION OF REGISTERED FINANCIAL CONSULTANTS

A P P ROV E D

ETHICS EthiEthic

Page 1

Brand Yourself Above Other Consultants • • • •

Adherence to IARFC Code of Ethics Clear record for past 5 years Successful completion of Ethics Exam Verified through FINRA, State Licensing records, and internet searches

www.iarfc.org The Register | Fall 2020

In This ISSUE Register Profile

Columns Trustees’ Chair Desk

Gamalielh Ariel Benavides, RFC® 9 Leading the IARFC Philippines

Features Helping Clients Set and Manage Budgets 11 By Michael Tove

Creating a Financial Roadmap

5 Family + IARFC = Success By Dr. H. Stephen Bailey

IARFC® News 7 2021 Editorial Calendar 8 From the IARFC COO 13 Fall Issue - Journal of Personal Finance 16 New Ethics Exam Requirement 23 Founder’s Award 29 New Member Benefit 30 Refer Your Associates 31 Sponsorship Form National Financial Plan Competition

MRFC® News

15 By Bradley K. Maples Sr.

26 New Blueprint Adopted 39 Application

Consultants Can Help Consumers and Thrive Using Marketing Discoveries Made During Covid19

International News

21 By Jorge Villar

17 Update International Chapters

Help Clients to Be Better Money Managers

Consumer Focus

25 By Jeremy B. Nason

35 Budget Cash Management System By Jamie Bosse

Setting Clients’ Budgets That Work 27 By Bryan Slovon

Guess What Doesn’t Decline in Volatile Markets 33 By Bryce M. Sanders

What I Learned From My Mistake 37 By Barry Dayley

The Register | Fall 2020

Departments 3 IARFC Trustees, US, & International Directors

4 New IARFC Members, Designees, & Credential Holders

6 From the Editor

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www.iarfc.org/publications/register 146 N. Breiel Boulevard PO Box 506 Middletown, OH 45042-0506 (800) 532-9060

BOARD OF TRUSTEES

MRFC CERTIFICATION BOARD

Chair and CEO, H. Stephen Bailey, MRFC®

Chair, Craig Lemoine, MRFC®

Vice Chair, Nicholas A. Royer, MRFC

Vice Chair, Robert Lawson, MRFC®

Treasurer, Michael Jay Markey Jr., MRFC®

Secretary, Julie Friend, Public Member

Secretary, Michelle K. Blair, RFC®

Director, Barry L. Dayley, MRFC®

Chief Operating Officer, Charlotte Isbell

Director, Mickey Jordan, MRFC®

US BOARD OF DIRECTORS

PHILIPPINES BOARD OF DIRECTORS

President, Rick Stanzione, RFC

President, Gamalielh Ariel O. Benavides, RFC®

Exec. Vice President, Frederick C. Ostermeyer, MRFC®

Exec. Vice President, Grace De Vera Escobar, RFC®

Vice President, Lisa Ford, MRFC

Vice President, Ismael Melendres, Jr., RFC®

Treasurer, Bradley K. Maples Sr., MRFC®

Treasurer, Ma Arlene M. Baguyo, RFC®

Secretary, Lemuel W. Kornegay III, RFC

Secretary, Atty. Nicasio C. Cabaneiro, RFC®

Director, Robert Laraia, RFC®

Director, Cynthia Rimando, RFC®

Director, Robert Miller, RFC

Director, Allan Tamayo, RFC®

INTERNATIONAL CHAPTERS

IARFC OFFICE ASSOCIATE TEAM

Greater China Chair (China, Hong Kong, Macau, & Taiwan) Liang Tien Lung, RFC®

Chief Operating Officer, Charlotte Isbell

China Development Center CEO Kai Yuan Tu, RFC®

Membership Services, Vicki Caplinger

Hong Kong and Macau Honorary Chair Samuel W. K. Yung, RFC®

Information Technology, Randy Kriner

Hong Kong and Macau, Chair Teresa So, RFC®

WEBSITES

Hong Kong and Macau, Executive Director Allan Wan, RFC®

United States — www.iarfc.org

Taiwan Chair Kai Yuan Tu, RFC®

Editorial Coordinator/Public Relations, Susan M. Cappa Membership Services, Judi Nelson

China — www.iarfc.cn Hong Kong — www.iarfc-hk.org

Editorial Coordinator Susan M. Cappa editor@iarfc.org Editorial Advisory Committee Michelle Blair, RFC® Lemuel W. Kornegay III, RFC®

The Register is published by the International Association of Registered Financial Consultants® 2020 and circulated around the world. It includes articles and advice on technical subjects, economic events, regulatory actions, and practice management. The facts and opinions in the IARFC’s Register articles represent the author’s views and are not endorsed by the publisher. The IARFC makes no claim as to accuracy and does not guarantee or endorse any product or service that may be advertised or featured. The IARFC makes no claim to the current status of any designation or credential that issued in the titles of contributors listed in the Register other than those issued by the IARFC® (RFA®, RFC®, MRFC®, etc.).

Indonesia — www.iarfcindonesia.com Philippines — www.iarfc.org/about/philippines Taiwan — www.iarfc.org.tw

Article Submission The average reader has more than four years of experience in financial services and possesses at least one professional designation/credential. Articles benefit the reader by providing specific planning techniques, practice management suggestions, or educational content about financial services which might include advisory professional responsibilities, industry news, insurance, investment, software, or compliance. For the entire Register General Article and Editorial Policy, visit www.iarfc.org/register. Page 3

Articles, comments, and letters are welcomed via email to: Susan M. Cappa, editor@iarfc.org

The Register | Fall 2020

IARFC INTERNATIONAL ASSOCIATION OF REGISTERED FINANCIAL CONSULTANTS

Events Calendar 2020 Trustees Board Meetings December 8, 2020 US Chapter Board Meetings November 4, 2020

2021 Annual Trustee, US Chapter Board In Person Meetings April 2021 National Financial Plan Competition Virtual Finals April 2021

N e w M R F C ® s, R F C ® s, R FA ® s, and Association Members RFC®, RFA®, Association Members

MRFC®

John J. Barada, RFC®, MO Kenneth A. Baumbach, RFC®, TX Rudolph Corrales, RFA®, CA Roxanne H. DeJesus, RFC®, CA Joshua Disney, RFA®, Mandie J. Dodgson, RFC®, MI David L. Fowler, RFC®, FL Clyde Goldberg, RFC®, NY Ksenija Gramajo, RFC®, FL Daniel R. Harriman, RFC®, TX Edward Herrera, RFC®, FL Albert J. Jang, RFC®, CA Ernest L. Jordan, RFC®, AL Jacob D. Kinsley, RFC®, OH Brett W. Millsap, RFC®, IA Fred Jay Nauta, RFC®, GA Michael Norris, RFC®, LA Rayna A. Reyer, RFC®, FL Richard A. Reyes, RFC®, FL Ronald E. Rogers, RFC®, PA Dontay L. Stevenson, RFC®, NJ Michelle Stroble, RFC®, NJ Richard L. Stubblefield, RFC®, MI Caroline C. Sweitzer, RFC®, CT Kenneth B. Sweitzer, RFC®, CT Renee W. Whitaker, RFC®, FL James S. Winokur, RFC®, UT Michael P. Zaino, RFC®, NC

Jaime Rochelle Ragins, MRFC®, IA Mark T. Wade, RFC®, TN

Members Who Recommended Members

H. Stephen Bailey, M R FC ®, NC Lori P. Crilley, R FC ®, AZ Lynn Kaloian, R FC ®, CA Rayna Reyes, RFC®, FL Michael Zaino, RFC®, NC

Announcing.... NEW Ethics Exam Requirement Complete Details Page 16

The Register | Fall 2020

Page 4

From the

Trustee’s Chair Family + IARFC = Success Hopefully you all realize by now that I am a proponent of family values and making sure our employees can enjoy their family life and are happy coming to work. This year COVID challenged our staff work/family obligations just like the rest of the world. Members of our staff have young children and the responsibility for grandchildren. All of a sudden remote leaning threw a wrench in routines that confronted our employees on how to maintain both jobs and families. I was very happy to see on my recent trip to the Home Office in September how these stressful situations were addressed. Our contingent of 4 IARFC staff children consists of 9, 10 and 12 year olds. Since we have spare offices in the building, the kids have dedicated rooms to work at their laptops and do their school work. Mom and Grandma are able to work knowing where the kids are and that they are continuing their education. In my mind, this is incredibly important support. I am pleased that the IARFC Home Team is all on board with the classroom/office situation. We are fortunate to have the room to make it feasible. Hopefully, things will get back to “school normal” but in the meantime, all is well at Classroom IARFC! Ethics Exam In stepping up our oblication to the public and to our own membership, starting in January, the IARFC will require new members and those who are renewing to take an Ethics Exam. Personally I don’t think there can be enough attention paid to the subject. You have to let the public know that their consultants have been vetted. This has been done in the past but we felt there was more that we could do. Sometimes ethics go awry. That is why we continually check FINRA to maintain that there are no red flags on our members’ records. Sometime it is not the consultant’s fault they are charged with an ethics problem - that is why we have have an Ethics Committee. The exam is based on the IARFC Code of Ethics, available in print or download from the IARFC website. Everyone should be aware of the Principles and Rules contained in the document and abide by them as IARFC members. Passing this exam will now be a component of the “Ethics Approved” status. This is another way that the IARFC is engaged providing the public with ethical Financial Consultants (more info on page 16). Philippines Chapter I must give credit to the IARFC Philippines. This was a situation where we found that the Chapter was not progressing and could be run more efficiently. With the help of a dedicated Philippines Board and our two team members in the Home Office, their newly established Chapter has turned out to be a shining star, operating through the pandemic with ease and determination. Their goals are to increase awareness of the IARFC, not just in the major metropolitan cities, but in outlying areas. They are utilizing virtual education in the form of CE webinars, class trainings, and egraduations. Awesome Job Everyone! One Year Plan I am on the move and aggressively promoting a one year plan for 2021. I have submitted a detailed list to work on which will definitely promote membership. Being the impatient type, I have to remember that the Association went through a major restructuring and the leadership is Page 5

The IARFC School Team with Trustee Chair Steve Bailey. L.-R: Aliyah, Steve, Ryder, Tionna, Brycen (at desk).

getting used to their new positions and responsibilities. I also submit that COVID19 has presented challenges that were not on my radar. Both Boards and the Home Team have met these turning points and are ready to dive into 2021 with a vengance. Look for major changes. Speaking of Changes Occuring right now is a major national election scenario. I think we all need to remember that the President of the US and other elected officials are there for a certain period of time and we will go on about our business. If someone asks me if I supported the Presidents and did I vote for them - well sometimes I did and sometimes I didn’t. Whoever wins or loses, we can put 2020 behind us, move on and adjust.

Steve Bailey started HB Financial almost 30 years ago after already having a life insurance career. Steve is the Chair and CEO of the IARFC Board of Trustees. He is also the 2010 recipient of the Loren Dunton Memorial Award and 2019 Founder’s Award.

H. Stephen Bailey, Ph.D., MRFC®

Contact: (704) 563-6844 chairman@iarfc.org www.iarfc.org

The Register | Fall 2020

From the EDITOR It’s a Tried and True Formula

Member Benefit

Susan M. Cappa, Editorial Coordinator Coming into the end of the year, it was time to plan an Editorial Calendar for 2021. As a fairly new editor for the IARFC publication, I am constantly looking for ways to improve the Register. Perhaps there should be more research or facts and figures in the publication, or articles geared toward market trends etc. My thoughts were brought up to my editorial committee and the Board of Trustees at their recent meeting. I was reminded that while looking for improvement is positive, the Register had always been a magazine geared toward consultants in the field, working their practices on a daily basis. Our articles trend towards more simplified, practical ways to improve - relative concepts, tried and true methods, and easily enacted procedures. The authors write from experience and share what has worked or bombed. In short, it is a more pragmatic application, so...don’t mess with the formula. If academic research and statistics are of more interest, we have the Journal of Personal Finance that present papers on financial research and statistics. After thinking about it, I more fully understood the intention and will continue to promote the empirical mission of the Register. Where we all concurred is that we need to have different consultants write. So, I will be doubling my efforts to engage other for their opinions and commentary.

Build Better Plans, Clients, Practice Here’s what we mean:

Getting back to the 2021 Editorial Calendar, the first issue of 2021 is dedicated to promoting the MRFC Credential. My goal is to have an entire issue written by MRFCs explaining their reasons for taking the exam and becoming an MRFC. If you want to get your opinions in print but feel you lack the writing skills, I would be happy to help through personal interviews.

•

Better plans: Plans based on your clients’ expectations, concerns and goals, not just a number

Signing off for 2020, thanks to all your contributions for our readers. We will continue to offer the practice oriented articles you enjoy reading. Additionally, we highlight news of the Association and how we are expanding our services and improving operations at the Home Office. Have a great Holiday Season. Let’s cheer in 2021, embrace change, and regroup!

•

Better clients: Committed to planning as a habit because they see a plan that adapts to whereever they want to go. AND committed to you as a consultant.

•

Better practice: Collaborative client conversations build on goals, dreams, and the steps to get there.

Advertising Opportunities The Register reaches 4,000 financial professionals every issue. Register advertising is an easy and cost-effective way to promote your company’s products and services to this dedicated audience.

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Please contact us with questions, for a media kit or for assistance in developing your customized advertising, exhibit, and sponsorship packages.

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The Register | Fall 2020

Members $300 Off Retail Price

Contact: (513) 424-3481 advertise@iarfc.org Page 6

2021 Editorial Calendar Issue

Theme

Possible Topics to be Covered

Volume 22, No 1 February

BE THE DIFFERENCE™ (MRFCs only)

Why is the MRFC Credential Different What will the MRFC mean to you in 5 Years MRFC - Stand Out from the Crowd MRFC Exam - Refreshing Your Skills MRFC Paves Way to More Respected Practice The M Stands for Master Upping Your Status

Volume 22, No 2 May

Niche Markets

Broad and Shallow vs. Narrow and Deep Does Niche Marketing Lead to Organic Growth? An if you Niche Market Goes Through Significant Change (Covid)? Does Focusing on a Niche Market Narrow Your Practice? Becoming an Expert in a Niche Market Specializing and Marketing Yourself When Did You Discover You Were in a Niche Market

Volume 22, No 3 August

When Opportunity Knocks

New Client Acquisition Getting That Much Sought After Promotion Blogging for Lead Generation Building a Comprehensive Practice Virtual Networking and Growing Your Business The Importance of Making a Good First Impression High Quality Referrals - the Strategy to Earning Them

Volume 22, No 4 November

Importance of Education

Keeping up with Industry Rules and Regulations How Does Underwriting Work? Offering Financial Literacy Classes to my Clients Social Media and Identity Theft Compliance and Marketing Is the Next Generation Financially Responsible Continuing Education - a “Must in Keeping Current”

Advertise in the

Issue Volume 21, No 1, February Volume 21, No 2, May Volume 21, No 3, August Volume 21, No 4, November Page 7

Copy Deadline November 1 February 1 May 1 August 1

Advertise in the Register, published by the IARFC since 1999 and circulated around the world. Susan M. Cappa P: (513) 424-1589 F: (513) 345-9479 advertise@iarfc.org The Register | Fall 2020

We Are Just Normal Now

Member Benefit

From the IARFC COO Charlotte Isbell, IARFC COO coordinates the team and runs the internal operations of the Association. She also works on the accounting, assisting the Ethics Committee, and is the Staff Liaison for the MRFC Certification Program. Charlotte enjoys talking with members and prospects about products and services available through the IARFC and has many years of experience and knowledge to share.

It did not take long for the “New Normal” to become just “Normal”. My last report about the home office in May addressed the disruptions of COVID and speculated on the future. Since then, the office has opened back up and we are figuring out our schedules determined to make the best of the situation. Like most other businesses, we are keeping tabs on temperatures and illnesses. We are a small office so it is not a huge worry, but we still tend to mask up when a group of us get together. Like most other offices, we have employees who are struggling with keeping their kids home from school while bringing in the paycheck. We are grateful that our Chair and CEO, Steve Bailey is family focused and has supported setting up an office/school situation. The IARFC Team Members have been adapting to the situation graciously and we all enjoy seeing the kids in the office, knowing they are being supervised. At rare times we have to shut our own office doors to keep out mild disturbances, but mostly we go on business as usual. It’s working and quickly becoming just another day at the IARFC. As for the Team individuals, I try to keep a balance of health and efficiency. There are a few members with potential health issues that can be of concern. Allowing them to work from home at certain times and minimize interactions takes some planning, but since our experience in being shut down remotely for almost three months, we are used to and set up for transitioning back and forth. It has brought a new definition for me regarding scheduling, but we are fortunate for the flexibility that keeps us all working.

The Register | Fall 2020

So... IARFC business has not stopped nor even slowed down a bit. Like all leaders of companies, our Chair and CEO is out strategizing and enacting programs to improve the Association. That is his forte and he is continually initiating projects that have to be detailed out. While his thoughts are a done deal in his mind, we are still figuring out the what, when, where, and how. That fills our days with minutiae in getting these programs ready.

The IARFC has discount programs through our partnership with Buying Power. Receive discounts with AT&T, Hertz, YRC Freight, Office Depot and Sprint

As you will read in this issue, the latest project involves an Ethics Exam related to the IARFC Code of Ethics. What seems to be a simple concept on paper turns out to be hours and hours of first planning, then developing the exam, then figuring out how to distribute it involving our Ethics Committee, Membership Services Team, Web Developer, IT person, and now Marketing Department to bring this to the membership. The Board of Trustees and US Board were involved too by taking the exam first before it hits the members. All in all, the concept of improving our Ethics requirements is a solid concept. It can only enhance the consultant’s reputation with clients and prospects. I, like most, am looking to put 2020 behind us and hope that next year relieves some of the stress that everyone is dealing with in one way or another. Meanwhile, Steve is working on a very robust One Year Plan that will require more attention. I am grateful for the experienced and helpful Team that I work with and have confidence we will meet each challenge one task at a time. As always, any questions or comments are welcome. We seek to improve the Association on every level. I wish everyone great health and safety for the upcoming year.

Member Link

www2.jmbp.com/IARFC Page 8

Member Profile

Gamalielh Ariel “Boyet” Benavides, RFC® Philippines Chapter

Emerging from the reorganization of the Philippines Chapter is Gamalielh Ariel Benavides or known to the IARFC Team as “Boyet”. He is the president of the Chapter Board of Directors and has been leading his dedicated RFC associates in reinventing the IARFC in the Philippines. The IARFC Board of Trustees and Home Office share in his enthusiasm for promoting the RFC designation in his country and support the Chapter’s efforts to uphold the IARFC Mission.

When President Ralph Liew retired from IARFC, together with several RFC lecturers and members, we decided to form a renewed RFC local chapter. During the few years preceding 2019, we noticed that the following had waned and membership was on the decline.

Register: First, explain how and why you became a Registered Financial Consultant? Boyet: In 2003, when the RFC designation was first introduced in the Philippines, I joined a handful of representatives from my firm to evaluate the RFC Conversion Course. I actually sat in during the first three sessions and made my recommendation to enroll participants from our firm in the second session. Register: Why did you and your team decide to take responsibility for the Chapter? How did forming a new group evolve? Boyet: We were originally part of the RFC Club Manila, assisting the then local office of IARFC in its continuing education seminars and annual gathering of RFC members. I was then invited as a lecturer for Investment Planning in 2015, and started to get more involved in the activities of the Philippine Chapter. Page 9

Register: Nationwide, what is the future of Financial Consulting Services in general? Boyet: It is a growing practice, and is now seriously being considered by the general public. The IARFC has increased the public’s awareness in engaging trained and ethical financial professionals to assist them in creating dynamic and living financial plans to ensure their future and those of their loved ones.

membership and strict compliance to the IARFC Code of Ethics to maintain the credibility and reputation of RFCs in the Philippines. We also seek to improve awareness and accessibility of the general public to RFCs in major cities throughout the Philippines. Register: Explain the interaction between the Philippines and the IARFC Home Office. How do you see them working together? Boyet: We see an active collaboration in the exchange and adoption of global best practices and success stories through the IARFC Home Office.

Register: What is the need for the IARFC Association and its mission in the Philippines? Boyet: Although awareness on financial planning and the IARFC has grown over the years, there is a need to further increase its visibility.

Register: How does the IARFC Philippines support Continuing Education and what is the involvement of the RFC Alumni Group? Boyet: We hold IARFCPH-organized CE sessions at least once every quarter on topics and themes of major or pressing concern for the local RFCs. The topics and themes are selected based on continuous surveys and feedback sessions we conduct with active members.

We seek to further professionalize the financial consulting profession through education, networking of RFC subject matter experts through continuing education programs, and active exchange of challenges and success stories. We also need to ensure active

The RFC Alumni Group is a key component to the success of the activities and programs of IARFCPH. Since its creation 5 years ago, the pool of talent, passion and expertise has been the driving force in the success of CEs and the Philippines’ Annual Financial Forum. The Register | Fall 2020

“We need to put on a more public persona, educate regulators, customers, and the general public on what and who are RFCs; not just the IARFCPH Board which is based in Metro Manila, but successful RFC professionals outside of Manila as well.”

Register: How has COVID19 changed the plans for the Chapter? How would you define your “New Normal”? Boyet: The new normal has given IARFCPH a new challenge in engaging with its members and prospective financial consultants. In the absence of frequent face-to-face interaction, we now rely heavily on video communications, webinars, social media, group messaging/ forums to promote and conduct our activities. This has given opportunities for RFC members who have expertise in social media platforms, graphics/animation, learning/ teaching methodologies, to come forward and contribute to the execution of IARFCPH’s marketing and education programs. We are building more visibility for IARFC now, unlike in the past. Register: What other challenges do you see in developing the RFC designation in your country? Boyet: There are other local accreditation programs being offered in the Philippines; but IARFCPH puts forward a different value proposition. It’s not just the one-time title; RFC is a global designation, earned though continuous learning and interaction with subject matter expert RFCs. Reach may also be a challenge. The Philippines has over 7,100 islands. Our major coverage areas are Manila and Cebu. But we already see the need up far north and down south in Luzon and in the Mindanao islands. At present, we have a sprinkling of RFCs in these areas. Our goal is to develop and support these cells and create vibrant teams that can later spin off as regional chapters. Register: As President of the IARFC Chapter, any insights on Chapter development for 2021? Boyet: We need to reactivate RFC graduates into engaged members who will continue the path of upgrading themselves, as well The Register | Fall 2020

as interacting with fellow RFCs. For quite some time, there was no focus on continuing education; we have to make sure that RFC members are well aware of the needs of Filipinos, and have the network of fellow RFCs to execute the financial plans they create for their clients. We need to put on a more public persona, educate regulators, customers, general public on what and who are RFCs; not just the IARFCPH Board which is based in Metro Manila, but successful RFC professionals outside of Manila as well. Register: On a personal level, tell us about your family, your commitment to your career and how you manage your spare time? Boyet: On weekdays, I serve as the Chief Trust Officer of a commercial bank in the Philippines. As Chief Trust Officer, I administer and manage a team of trust marketing professionals, an investment portfolio team, and the back-office support team. The majority of my time is spent with the marketing and the portfolio team, providing guidance and support as they engage with customers for solutions requiring trust or investment management services.

requires the financial consultant to have the knowledge and to be conversant with different kinds of financial services – with expertise in one field. A strong network of RFCs in other financial services fields is necessary to bring the solution to the client. A good financial consultant should be able to harness all these resources towards serving their client. You can’t do it alone; you will need your fellow RFCs to help you out. This is the IARFC, a community of professional financial consultants subscribing to the same set of ethical standards, committed to continuous learning, and helping each other to achieve their clients’ aspirations and dreams.

On weekends, family takes priority. Time is spent with my nephews and nieces catching up on what happened during the school week, bonding time out of town for a quick swim, or picnic in the park. It’s a challenge during these times, so we usually binge on Netflix, YouTube and story-telling at home with my Mom. Register: Finally, what encouragement would you give an individual who is seeking a career in financial services? Boyet: Financial services is a very technical field, but you have to have the passion to engage with individuals; draw out their aspirations and dreams, and create the roadmap to achieving financial freedom in the near or far future. The convergence of industries within the financial services sector

Gamalielh Ariel “Boyet” Benavides, RFC® Page 10

Helping Clients Set and Manage Budgets A quick Google search of “How to make and keep a budget” returned over 1.3 Billion responses. With such a volume of different suggestions, not all in agreement, expecting clients to know how to make sense of it all, may be unrealistic. To begin with, some people are ardent do-it-them-selfers – you know the type. These are the folks who believe they know more than anyone else, regardless of training, credentials, expertise, or licensing. Generally, they’re not clients. At the opposite end are people who, for lack of a better description, are so laissez faire, or naïve, they neither plan nor seek planning. They’re not commonly clients either. In between lies the majority of people. These are people who want help and who we want as clients. Before continuing, I must emphasize that this need for professional advice demands we as consultants must function as true fiduciaries. Not only must we advise without regard to bias for or against any product, company or industry, the completeness and quality of our advice must be held to a higher standard. Planning is far more than recommending a basket of “good” financial products. It’s about making an in-depth assessment of the needs and wants of each client individually, then specifically customizing the advice accordingly. It’s okay if the same (or similar) plan is offered to more than one client, just so long as each plan was determined separately from any other and made without regard to anything other than what best serves the client’s needs. I routinely tell clients that there are only three

Page 11

and recreation, personal convenience choices, etc. Lifestyle Income differs from Required in that missing payments may be inconvenient but won’t likely cause serious harm.

absolute universal truths in all of financial planning: Absolute Universal Truth #1 Money is either for you or not you. Money not spent is for someone else, usually after death. “You can’t take it with you.”

Discretionary Capital. This is a potential resource to cover infrequent big-ticket needs. Such needs may be for wants (vacations, new cars, vacation homes, etc.) or needs (medical care, etc.). Failure to plan adequate Discretionary Capital could place your client at risk jeopardizing not only Lifestyle but also Required Income needs should an unexpected financial event occur.

“Fun Money.” Some people want money to “play” with in the markets, for a “rainy day” (that never comes) or simply to have for peace of mind. In a planning sequence, “Fun Money” is allocated only after the previous three are suitably secured. The conceptual difference between “Discretionary” and “Fun” money is that the former is financially essential; the latter is not.

Gifting and Inheritance. Remember Absolute Truth #1, that money is either for you or not you, but the sequence of those two choices is precisely as listed. It’s the same thing as when you fly and they say “Put your own O2 mask on first.”

Absolute Universal Truth #2 No product, company or financial industry is right for everyone and no product, company or financial industry is right for anyone’s every dollar. Absolute Universal Truth #3 Except for #1 and #2, there are no absolute universal truths in financial planning. Since the purpose of this article is to explore budget-planning, I believe it’s instructive to start by thinking about money as belonging to a series of categories, each considered and planned differently: 1.

“Required Income” refers to the money needed to pay essential bills due every month such as: rent or mortgage, food, gas, utilities, taxes, insurance. Missing these payments can have serious consequences. “Lifestyle Income” refers to the money needed in excess of the “Required Income” to maintain a preferred standard of living including eating out, hobbies,

The Register | Fall 2020

While budgeting primarily focuses on income needs, it also requires consideration and balance with the others. Using most or all of available resources to create an income budget not only deprives the client of the other components, but also greatly increases the likelihood the budget will be short-lived. Budgets that don’t satisfy or don’t work, won’t likely last very long. Of course, this also raises the possibility that a client’s wants and needs are greater than the resources available; an “eyes too big for the stomach” phenomenon. To help a client create a budget, a consultant should: 1.

Perform a complete inventory of the client’s assets wants and needs; recognizing that “want” and “need” may not be the same.

Gently educate the client that if the “want” or even “need” is more than practical, an adjustment of personal spending habits may be required. One of the more difficult tasks a consultant has is getting clients to fully accept limitations based on their economic situation. People may intuitively know they’re not in great shape but refuse to acknowledge that because they don’t want to face the bad news.

To the best extent possible, parcel out different buckets of money to apply to different use categories. But within this, it is also important to consider that not all “kinds” of money are equal, especially where tax consequences are concerned. For example, pre-tax qualified (IRA, 401(k), etc.) accounts are poor candidates for discretionary or “fun” money and do not inherit particularly well. This latter issue just got worse with passage of the SECURE Act. As such, they may be the best choice for income; especially required income since they must eventually be liquidated. However, short of using an annuity which may avoid the 10% tax penalty for distributions prior to age 59½, pre-tax qualified funds should be reserved for retirement income. Conversely, Roth IRAs may offer the most desirable form of money for discretionary or emergency needs, but generally after age 59½. Not only are Roth’s tax-exempt but are one of the few “tax-free” income sources that does not impact taxation on Social Security. Non-qualified (“regular”) money is well suited for discretionary needs or pre-retirement supplemental income. Gains, when spent, are (generally) reported as long-term capital gains which are taxed at preferable brackets.

The Register | Fall 2020

Reverse engineer for “Required Income” first. If the income need is long-term (e.g., more than 10 years), or permanent, consider using an income annuity. Nothing else can guarantee a fixed amount of income for a specified period of time, including life. Don’t forget to factor inflation into that equation. Some annuities offer inflation-adjusted income adjustment riders. Otherwise, annuities can be laddered so income can be stepped up if future needs arise. Do not use non-guaranteed sources when income guarantees are essential.

Once “Required Income” is set, then work on “Lifestyle Income.” Depending on client needs and dispositions, this income might be generated from an annuity, from income-generating investments, or a combination of both. The greater the need for certainty and regularity of monthly income, the more desirable the annuity option. The greater the need for flexible liquidity, the more desirable the investment option.

Once all sources of monthly income are established, then focus on the discretionary and fun buckets. Depending on the client’s risk tolerance and other factors, these may include a combination of investments, annuities or interestbearing accounts. In addition to reasonable investment diversification, be sure that some accounts permit additions or withdrawals at a moment’s notice, that some are relatively low risk or even norisk, and above all, that recommendations are consistent with the client’s personal desires and risk tolerance.

A personal technique for determining monthly income needs is to create a simple income chart. The X-Axis (bottom), is time (in years, or by age) and Y-Axis (left side) the amount of income generated. I use different colored

blocks to represent different segments from different sources. Recognize that through time, some items will appear and remain permanently: Social Security, Pensions, Required Minimum Distributions, etc. The amounts, and sources for different daterelevant needs will change. This creates a visual image of the present and what future is projected to be. It also offers the client a concrete plan that is easy to refer to and a reminder what to do next and when to do it. Because planning is never “One and Done,” having a simple, concrete plan chart facilitates regular reviews including a way to gauge if the plan is on track or needs to be adapted.

Michael Tove, Ph.D., CEP, RFC® Michael Tove, Ph.D., CEP, RFC® is both insurance and securities licensed, a Certified Estate Planner, Registered Financial Consultant and an Investment Advisor Representative with CoreCap Advisors, LLC, a Registered Investment Advisor. He is Founder and President of AIN Services, an independent insurance and financial planning firm located near Raleigh, NC for nearly 25 years. He is past co-host of the TV Show “Money Secrets with Bill and Mike” and has authored numerous articles plus three books on financial planning. For more information, or to contact Dr. Tove, visit www.AIN-Services.com. Michael Tove, AIN Services 107 Kilmayne Drive, Suite D. Cary, NC 27511 (800) 363-2296 mtove@ain-services.com

Update Your IARFC Profile

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Volume 19 www.jour

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nts l Consulta al Financia Profession d an s or s, Educat Consumer search for es and Re gi te ra St s, Technique

New Fall Journal

Benjamin Cummings, Ph.D., RFC® The Fall edition of the Journal of Personal Finance brings an end to my time as Editor of the publication. It has been a journey of personal growth and professional networking through my interactions with the JPF authors and reviewers. As an editor of an academic journal, one relies on the quality of the manuscript submissions from authors as well as the timeliness and thoroughness of the reviewers. I greatly appreciated both groups: those who spent considerable time and effort writing, researching, and revising their manuscripts as well as those who devoted concentrated time and effort critically reviewing that work.

In this Issue... •

Does Working with a Financial Advisor Reduce Financial Anxiety and Increase Investment Confidence

•

Financial Anxiety in the Orthodox Jewish Community

•

Antecedents of Financial Practices among Latina/o University Students

•

Finding the Next Major Donor: The Relationship between Financial Planning Horizon and Charitable Giving

•

Determining a Portfolio’s Range of Probable Wealth Without Monte Carlo Simulations

•

IARFC National Financial Plan Competition Winning Entry

These individuals are exceptional practitioners, teachers, and researchers who dedicated time thinking about, analyzing, and wrestling with complex issues related to personal finance and household financial management. The result of this peer-review process is a much stronger final product that helps advance a more in depth understanding of personal finance. I thank them for their dedication. Working together for the future of the Journal of Personal Finance, the IARFC will continue to meet their mission in helping the financial professional serve their clients. I am grateful for the opportunity to have been associated with the Association through the Journal and wish continued success to the new Editor. It has been an honor to serve... Dr. Benjamin Cummings

CE QUIZ Register for the Journal of Personal Finance Online CE quizzes and receive both the Spring and Fall 2020 quizzes for $20. Read the articles in the Journal and then take the quiz online. The questions are provided in the back of the Journal for reference. Once you have registered, you will receive an email with a link to access the quiz. Two (2) units of IARFC CE will be awarded to anyone who achieves a score of 70% or higher per quiz. Only one quiz submission per IARFC member is allowed. IARFC CE Guidelines for Professional Self-Study Up to five (5) units may be claimed for reading academic journals maximum ten 10 units.

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The Register | Fall 2020

New JPF Editor

Member Benefit

Craig Lemoine, Ph.D., MRFC®, CFP®

Starting in 2021 with the Spring Edition of the Journal of Personal Finance, Dr. Craig Lemoine, MRFC®, CFP® will assume the role of Editor. Craig has worked with the IARFC over the past two years serving on and now chairing the MRFC® Board. He currently is the Director of the Financial Planning Program at the University of Illinois, Urbana-Champaign where he serves as an Associate Clinical Professor; teaching courses in risk management, retirement and financial planning. Craig earned both his Ph.D. and Undergraduate degrees from the Texas Tech University College of Human Science. Craig’s earned his Ph.D. in Personal Financial Planning in 2013 and undergraduate in Family Financial Planning in 1998. Craig also serves as the Executive Director of the Academy for Home Equity in Financial Planning. The Academy studies the role of home equity in consumer retirement decisions. As well as teaching courses at the University of Illinois Craig is working with a team of experts to create a financial planning certification focusing on professionals who work with agribusiness and farming clients. Previously, Craig served on and chaired the CFP® Council of Examination (2009-2014) and was the Executive Director of the Northwestern Mutual Granum Center. Before joining the University of Illinois in the fall of 2017, Craig championed CFP® education at The American College and helped develop financial planning, retirement and risk management curriculum across certificate, undergraduate and graduate programs. While at The American College (2008-2017), Craig had the opportunity to help create and teach in the RICP®, CHF®, CLU® and WMCP®designations. His research in annuitization and the value of financial designations has been published in The Journal of Financial Planning and Journal of Financial Service Professionals. Craig was a founding partner of Lone Star Financial Education (2012-2019), a CFP® Review Company which is now part of Dalton Education. He continues to speak and consult within the financial services industry in areas The Register | Fall 2020

of risk management, planning in the LGBT+ community, fiduciary standards of care and technological disruption. Craig currently lives in Champaign, Illinois and his primary focus is building a world-class financial planning program. He enjoys spending time with his family, reading science fiction, running and gardening.

Website Solutions Marketing Content Sales Tools

His Plans for the Journal As far as the Journal is concerned, he is working with the outgoing Editor, Dr. Benjamin Cummings and the IARFC Home Office for a seamless transfer of responsibilities. One of the first areas of concentration will be on the Journal’s Editorial Board. These peer reviewers are instrumental in reviewing the articles, recommending acceptance, suggesting changes, and/or rejecting submissions. He will be looking for additional qualified academicians from diverse backgrounds to join the Board. Another goal is to broaden the reach of the Journal. As one of the highly rated financial academic publications, he will look for different avenues of visibility, thus increasing the national awareness of the Journal and its writers.

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Behind the scenes, the IARFC Team will coordinate with Craig in the areas of administrative logistics, layout, marketing and distribution.

“We look forward to working with Dr. Lemoine as the new Editor of the Journal. This new role adds to his involvement with the IARFC in which he provides outstanding leadership in whatever role he undertakes. The Journal represents cutting edge research and studies. With Dr. Lemoine as the key influencer, we will continue to bring our members a quality and informative review.” H. Stephen Bailey, Ph.D., MRFC® IARFC Trustee Chair & CEO

Members 10% Discount Page 14

IARFC 2021 Creating a Financial Roadmap One of the ways that I approach creating a financial plan for a client or clients is to look at it like a roadmap. Where we are, is a starting point, and then we have a location that we want to reach. I need to evaluate the situation and first ask “Do we have the financial resources to get where we want to go?” and “Do we have the time necessary to get us to where we want to go?” If there is not enough time, capital, earnings, and savings potential, we might need to adjust the destination (financial goal) or look at other non-conventional avenues to achieve goals. Modifying a client’s goal(s) to make it realistic and achievable is never a pleasant or easy task, but is necessary to a solid plan.

Pictured above, historic Tyler Davis fountain located on Fountain Square in Downtown Cincinnati right across form the Westin Hotel.

The Board of Trustees have announced their plans for their 2021 Board Meetings and National Financial Plan Finals. The Trustee Board and US Chapter Board will be meeting in person in April of next year in Downtown Cincinnati, OH at the Westin Hotel. At this point in time, the Westin is contracting COVID-ready meeting spaces within the Ohio state mandates. Because of the uncertainty and potential for plans to change, the IARFC National Financial Plan Competition will be held virtually. The final three teams will be utilizing technology to present their plans. This is familiar territory for students and professors as many of their current curriculum is virtually focused.

IARFC INTERNATIONAL ASSOCIATION OF REGISTERED FINANCIAL CONSULTANTS

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If the destination is achievable, then we can look at different ways to achieve the goal. Sometimes a straight line to the destination may be the only alternative and not only do we have to be careful, we may need to economize further. Instead of carefree spending on the trip we may need economy lodging along the way and careful refueling to take advantage of fuel economies as we travel. This may mean cautioning a client on taking on debt, extravagant purchases, and helping in the formation of a reasonable budget. Much as a deviation on a journey can cause time delays, extra expenses, or even the inability to reach our intended destination, the same can be said for a deviation from our financial roadmap. Sometimes the destination is not only easily within grasp, but allows for several, if not many options. We can choose a more scenic route or enjoy excursions and dalliances along the way. This is where a client has done a great job of preparing, saving, and earning up to this point. Spending a little more in the present and near future is not a problem and many avenues and options are open for investing and positioning assets. A more personalized and individualized trip (investment/retirement plan) can be afforded. There are many investments, products, services, and choices to help a client reach their goals and objectives and choosing the most appropriate options is integral to creating the financial roadmap.

Just as no two families have the same circumstances or preferences when it comes to vacationing, traveling and recreation, clients come to us in the same way, with different starting points, planned destinations, and resources to achieve those goals. Not everyone gets to go to Europe or Hawaii in their lives, much less every year even if they would like to. Not everyone can achieve financial independence on the scale that they would prefer. But with careful planning, a vacation or a financial goal can be accomplished with much better results and success by setting proper goals and objectives. You can be the client’s trusted financial travel agent, if you help them with their roadmap to achieve their financial goals and objectives. By carefully evaluating their current location and desired destination, you can find the roads, avenues, highways, byways, and vistas that will lead and guide them safely to their destinations. Just as an airplane that deviates by one small degree over a great distance can miss their target destination by a wide margin, the same goes for a financial plan missing the mark for an extended period. It can fall well short of expectations and leave clients stranded, so to speak, on their financial journey. An excellent consultant will also follow up to make sure that everything is going well and assist if for some reason the trip isn’t going according to plans. Isn’t this what we have trained, studied, and prepared to do? Then do it, and do it well!

Bradley K. Maples Sr., MRFC®, CFP®, RICP®, MBA, MSML In addition to being an Investment Adviser Representative®, Brad holds the FINRA series 7, 63, and 65 licenses as well as insurance licenses for Life, Property and Casualty, Life Consultant and Variable. The Register | Fall 2020

NEW IARFC Ethics Exam Requirement The Rules serve as a description of bestpractices or IARFC Standards and outline how the Principles must be implemented in specific circumstances.

The IARFC continues to take the lead in promoting ethical behavior of its members. To address the public concern of ethics up front, the IARFC has developed an Ethics Exam that will be a requirement for its member consultants. It is centered on the IARFC Code of Ethics which can be found right on the IARFC website. It involves reading and understanding the different parts of the Code which is the basis of ethical behavior supported by the IARFC Association. The Code consists of three parts: The Canons, The Principles, and The Rules. The Principles embody the ethical and professional standards expected of IARFC designees, and credential holders. These Principles address the “substance” and not merely the “form” of service to the clients and the employers. The Principles are the guidelines of professional conduct; the same conduct that any client would expect of any professional on whom they rely — an attorney, a CPA, or a physician.

New Members Any designee or credential holder becoming a member will be required to take the exam upon application. Renewals Those who are renewing will need to take the exam every other year. Three easy steps to GET STARTED: 1. Download the Code of Ethics from the IARFC Website. 2. Log into your membership profile on the website. There will be an icon (a justice scale system) that will take you to the Ethics Exam site.

Ethic Exams Facts Each IARFC designee or credential holder must take the Ethics Exam every two years upon renewal. 25 questions based on the IARFC Code of Ethics: Passing Score: 72%

3. Click “Take the Ethics Exam Today”. It is an open book test. You have three chances to pass within a year with a day interval in between. Not passing or taking the exam will hold up your Ethics Approved Status. Results are available right away with an option to print a certificate.

Cost: N/C Study Material: IARFC Code of Ethics Starting with those whose invoice come due by January 2021.

Five Principles 1.Competency 2. Confidentiality 3. Professionalism 4. Diligence 5. Objectivity

How to Take the Ethics Exam Log into your profile (you will see your designation or credential) Click on the Ethics Status and Exam Icon Click on the “Take the Ethics Exam Today” ®

The Register | Fall 2020

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International News IARFC Greater China 2020 is a challenge year for the Greater China Chapter â&#x20AC;&#x201C; Taiwan, Hong Kong & Macau, China. The 5th Greater China Regional IARFC Conference in Singapore was postponed till 2021. In addition all the RFC programs in China & HK have being delayed; only a few courses in Taiwan were conducted as planned. Nevertheless, the member promotion and training is back on track in the second half of the year. We can foresee more industry elites becoming members of the IARFC. 100 new RFCs of Taiwan Shin Kong Life Insurance Company attended the designation award ceremony on September 16, 2020. The VP of Shin Kong Life, Ms. Yang (front row in the center) was the honorable guest who presented the RFC credential.

Ms. Yang. VP of Shin Kong Life Insurance Company.

More than 100 RFCs received their professional designation with joy on September 17, 2020, in Taichuang, Taiwan.

The first group joined the IARFC after months of quarantine in China on September 23, from Liaoning Province, China. This course started on July 4th, each student had to attend 14 days of courses (conducted on weekends for 7 weeks) and complete a financial plan to qualify.

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IARFC Taiwan & China Chapter Chairman Kai Tu (far right) pictured with RFC agency leader with his wife and team members. The Register | Fall 2020 The Register | Fall 2020

IARFC Philippines 2020 Conferment of RFC Designees This year’s Conferment of the RFC Designation to candidates who have successfully passed the qualification requirements was held online on 19 September 2020 and live-cast on the FB Page of IARFC Philippines. From the total number of forty-three (43) participants in the RFC Conversion Courses held in 2019, twenty-three (23) were able to complete the requirements for their designation. Five (5) finished with the distinction of Cum Laude. Of the new RFCs, nineteen (19) were from Rizal Commercial Banking Corporation (RCBC) and four (4) were from Manulife Bacolod City. The program started with the opening remarks of IARFCPH President Gamalielh Ariel “Boyet” Benavides; where he challenged the new RFCs to be candles that light and charm their fellow Filipinos with their knowledge, skills, and above all, professionalism as financial consultants. His speech was followed by the presentation and oath taking of the IARFCPH Board of Directors and Committee Members. The parade of the pictures of the newly designated RFCs donned in their togas followed, and IARFCPH President Boyet Benavides officially conferred the designation of Registered Financial Consultant to the graduates.

Congratulatory Video Message to the Graduation Class from IARFC Trustee Chair & CEO, Dr. H. Stephen Bailey, MRFC®.

The momentous event was graced by no less than the President and CEO of Rizal Commercial Banking Corporation (RCBC), Mr. Eugene S. Acevedo, who required his wealth management team to undergo and pass the RFC Conversion Course. He expressed his faith in IARFCPH to train the wealth management team of RCBC on how they can guide their clients, secure their future in this life, and the future of their loved ones in the succeeding generations. He is overjoyed knowing that IARFCPH is now led by Boyet Benavides whom he trained during their days at Citibank, and that Boyet has brought IARFCPH to a high level of distinction, thus raising the bar for the Philippine financial consulting sector. Testimonials on the RFC Conversion Course and how it has affected their personal and professional lives were shared by Cum Laude graduates: Ronald Veneracion (ManulifeBacolod), Rochelle Gopez (RCBC), Ludy Ho (Manulife-Bacolod) and Jane Manago (RCBC). An inspiring message to IARFCPH and the newly conferred RFCs was delivered by this

year’s valedictorian, Atty. Guia Margarita Santos, Division Head of Business Development – RCBC Wealth Management. Finally, a message from IARFC Trustee Chair and CEO, Dr. H. Steven Bailey to the new RFCs was delivered via recorded video. Chairman Bailey emphasized that our practice is centered and focused on the clients, what they aspire to, and how to realize the future they desire for themselves and their loved ones. Being an RFC is to abide by high standards in dealing with clients, with peers, and the community. His message was received by the new RFCs enthusiastically – challenge accepted! Each new RFC will receive their RFC diploma, their picture in toga and the RFC lapel pin. The event ended with a high note exchanging congratulatory messages within the live session, and also from the FB live-stream event. Even in the midst of a pandemic, RFCs thrive and remain to be relevant to the public they serve.

Salutatorian Ms. Jane N. Manago, of RCBC, lead the graduates in their oath, reciting the RFC Code of Ethics.

The Register | Fall 2020 The Register | Fall 2020

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International News IARFC Hong Kong and Macau First Physical Classroom-taught Program since Hong Kong Reopened

Event - Inaugural Class of the Certificate in Financial Consulting (Executive Program) IARFC Hong Kong and Macau is pleased to make known that the inaugural class of the Certificate in Financial Consulting (Executive Program) with Lingnan Institute of Further Education (LIFE) was held on 17, 18, 24 and 25 September. At the class kick-off, Dr. Frank Lam, Program Head of LIFE, commented: “LIFE is the lifelong learning arm of Lingnan University, one of the longest established tertiary education institutes in Hong Kong. On behalf of LIFE, fellow students, I welcome you to this very first physically classroom-taught program reopened in Hong Kong at the recent slowdown of COVID19.” The 30-hour Executive Program consists of essential elements of Financial Planning: “Finance and Investment”, “Economics”, “Law and Tax” and “Practical Aspects of Financial Consulting and Case Studies”. It is IARFC-accredited. Graduates are eligible to apply for the RFC professional designation. Qualified students are entitled to government subsidies. Dr. Frank Lam, Program Head of Lingnan Institute of Further Education - kicked off the class.

Curriculum:

Mr. Allan Wan, RFC® Executive Director, IARFC Hong Kong and Macau Centre - presented on IARFC Ms. Zipp Lee - Finance and Investment, Economic Dr. Theresa So, Chairman IARFC Hong Kong and Macau - Practical Aspects of Financial Consulting and Case Studies Mr. Antony Sin, Barrister-at-Law - Law and Tax Mr. Alex Shum, Chairman IARFC Member Development Committee, Hong Kong and Macau - case sharing Mr. Alan Chan, Lecturer - case sharing

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The Register | Fall 2020 The Register | Fall 2020

International News

IARFC Hong Kong and Macau

articles, events, and photos, may be submitted to editor@iarfc.org for publication

Remote Event - Opportunities and Prospects for Financial Planners Under COVID19 The IARFC Continuing Professional Development Workshop theme “Opportunities and Prospects for Financial Planners under COVID19” was held at 14:30 – 16:30 on Wednesday, 23 September 2020 by video broadcast. This member-only activity attracted nearly 100 participants, who applauded the professional sharing of Mr. Walter Lau, a qualified accountant, corporate trainer and lecturer in Financial Services for post-secondary education institutes. During the two-hour session, he gave a picture on the current global economic conditions and elaborated on how Financial Planners should prepare for opportunities at the world’s economic recovery from COVID19. At the Workshop, Mr. David Lai, RFC®, Vice-chairman, IARFC Member Development Committee, Hong Kong and Macau warmly delivered his Opening and Closing remarks. Mr. Kenny Lai, RFC®, offered his dedicated service as the Host.

Top photo – Mr. Walter. Lau, Speaker Lower photo - Mr. David Lai, RFC®, Vice-chairman, IARFC Member Development Committee, Hong Kong and Macau

IARFC Indonesia Meeting of Financial Consultants, Life Planners and Insurance Consultants that are all RFC designation holders. Marriot Putrajaya, Malaysia

The Register Register || Fall Fall 2020 2020 The

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Consultants Can Help Consumers and Thrive Using Marketing Discoveries Made During COVID19 In mid-March, the entire world got a tremendous shove into a new and unprecedented reality. Millions of people were asked to stay home to help prevent the spread of the coronavirus. Many lost their jobs, provided care for sick relatives, and worried over the risks of going out. There are, in my mind, three stages to this pandemic: •

HEALTH Everyone was initially concerned about being infected by the coronavirus.

•

PSYCHOLOGICAL They wondered how long the pandemic would last, and how they and their families would cope with the distancing requirements.

•

FINANCIAL They became concerned about what might happen to their life savings and investments.

During each of these stages, people became very emotional. They also started reviewing and analyzing their financial plans and statements, as well as their legal documents. Procrastinators suddenly realized if they did not seek professional advice, they were in danger of losing assets. This was driven in part by the media, which continuously reported on the downturn of the economy and the possibility of a recession. Discoveries that we’ve made Since this all began, we have held over 420 virtual webinar campaigns across the country, for consultants targeting audiences age 50 and up with assets in the $300,000 to $750,000

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range. Before, a webinar presentation (or anything virtual) was not considered a viable way of communicating, especially to prospective clients. Everyone considered it generic and impersonal. Yes, that age group had conducted business online and via video chats, or occasionally used the technology with family. But to employ it as a tool to present prospects with information about investments, insurance, and legal affairs? No way! Well, guess what happened. That “shove” I mentioned? It pushed all the way into people’s homes, cell phones, tablets, and computers. If someone wanted financial advice, they now had to turn to a screen ranging from 4 inches in size up to 27 inches to learn about possible solutions to their concerns. Responses that we’ve seen Millions responded, and registered to attend webinars nationwide. Typically, presentations lasted about 45 minutes, and most consultants used 13 to 35 PowerPoint slides to get their message across. The consultants hosting the webinars understood the law of reciprocity laid out by Dr. Robert Cialdini. They offered attendees a gift card that generated the best responses. As a result, these consultants ended up with the best appointment conversion outcomes. Registrations to virtual webinars hovered around 30 to 40 per campaign and show rates around 50%, mostly using popular local restaurants and Amazon gift cards as the incentive.

Prospective clients like options It was obvious from the beginning we had to offer three choices when someone was interested in moving forward with a one-onone, private appointment after the webinar. We asked how they preferred to commit to that first meeting, and let them book a phone session, book an online session, or schedule an in-person appointment at the consultant’s office. By a wide margin, responders preferred a phone session. People cooped up for months in their homes responded very favorably to the webinar approach, because they had lots of time to ponder important financial decisions they knew they had to make. They felt a sense of urgency to get advice or explore options. Estate planning, wills, and trusts, became a relevant presentation topic because of the number of deaths from COVID19. Sadly, some who lost their lives left loved ones with a financial burden. Eventually, businesses, hotels, stores, and local restaurants began opening in some states, with safety protocols in place. That cleared the way for consultants who have had great success with dinner/social seminars, along with consultants holding educational workshops at libraries and colleges, to resume hosting them. Some will prefer face-to-face And people are starting to respond to these campaigns again. They just want to get out of their homes, and return to some sense of normalcy. They also would prefer to receive in person the financial advice and answers they are looking for. The Register | Fall 2020

Like I mentioned before, results are promising, though due to distancing rules and limited seating capacity at restaurants, consultants are typically scheduling two to three event dates. Hybrid events have been very popular, where you let your audience choose whether to attend the dinner event or make a private one-on-one appointment via a phone session; make the appointment virtually online; or meet face-to-face in your office. Right now, consultant dinner events are averaging 30 to 50 attendees, with higher show rates than webinars. So, you can now begin to get in front of those who would enjoy a relaxed, evening-out social experience. Show empathy and compassion As always, you must be likeable to gain trust and connect with prospective clients. It’s critical to understand your prospects are most likely more concerned than ever about their financial status and motivated to do something about it. They have seen or heard the stories of those who were not prepared financially for this crisis, or failed to have their affairs in order. Some have witnessed this with their own friends and family members, so show genuine empathy when presenting to these folks. Keep in mind professionals from other industries are also vying for their attention. Your message must resonate and feel like a priority. They’re searching for a local go-to person, who can calm their anxieties and address their concerns. What they’re after is peace of mind. That requires a plan that makes themselves and their family feel secure. Consultants have a unique opportunity during the COVID19 pandemic to make a big difference in many people’s lives. Get your message out there. Use our marketing discoveries to stabilize your businesses and emerge even stronger than before.

MEMBERSHIP SERVICES Vicki Caplinger, Membership Services Team Member provides support and assistance to members and prospects of the IARFC. She manages all billing and receiving of renewals and applications, and performs many tasks such as shipping and handling store orders, mailing marketing material, and performing CE audits. As coordinator for the National Financial Plan Competition she enjoys seeing the next generation of financial consultants network with the experienced Association members. LinkedIn Frenzy Memberships Services is about to get really busy. We have a new Linkedin Marketing Program that is connecting daily with financial consultants in specific geographic areas. This results in back and forth conversations with prospective members. I am set up as the Linkedin Liaison and will be fielding questions from these connections. It is an exciting new endeavor which I hope will affect the membership totals in the months to come. Just a word of encouragement, if you have not signed up for the IARFC Linkedin Group, please request an invitation and you will be included in Association news especially targeted to members. Ethics Exam Much is being written in this issue about our new Ethics Exam. From my perspective and the first line of feedback, I know this will be an appreciated addition to our Ethics Approved Status. In Membership Services, we diligently check Members’ records to keep their Ethical Status in check. The exam will cover the IARFC Code of Ethics. The material is easily accessible and it is a good refresher to what you signed up for when you became a member of the Association. It adds meaning and credibility to your designation and credential. It’s a new process for us too, so I ask for your patience in advance as we roll out this new requirement. Personally, I am proud of the number of our members who received their Ethics Approved Status and feel it is an accomplishment for our Association. Successful completion of the exam awards Ethics Continuing Education Units. Continuing Education The end of the year brings continuing education tallies. If you need a reminder of what qualifies as CE units, you can find the documentation on the IARFC website. A quick reminder: MRFC® CE Requirements • 40 units of professional continuing education (CE) each calendar year • 2 units related to ethics and the ethical practices of a professional financial consultant • 38 units from one or more of the accepted subject topics RFA®/RFC® CE Requirements • • •

40 units of professional continuing education (CE) every two calendar years 4 units related to ethics and the ethical practices of a professional financial consultant 36 units from one or more of the accepted subject topics

Join IAR on Li FC Group nked in Jorge Villar Jorge Villar is a Senior Consultant at Leading Response. He is also a highly respected and sought after guest speaker. Contact: (813) 885-8231 jorgev@leadingresponse.com www.leadingresponse.com The Register | Fall 2020

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Founder’s Award 2021

The IARFC Founder’s Award This Award is made in honor of the founder of the IARFC® John J. Gargan. It is presented to persons who have delivered significant service to the operation and growth of the International Association of Registered Financial Consultants.

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The Register | Fall 2020

IARFC Founder’s Award 2021 Criteria for Founder’s Award • • • • • •

Past or present Board Director, Officer, or Committee Member Professional designation or credential awarded by the IARFC Clean regulatory record Member of good standing for a minimum of 5 years Adherence to IARFC Code of Ethics Most importantly, must have contributed to the growth of the IARFC membership by referring members and by holding or attending events that additionally help expand (above and beyond) the visibility of the Association

Nominations Accepted From: IARFC members: RFA®, RFC®, RFC®-Retired, or MRFC®. Nominations Procedure: Fill out this form and on a separate sheet of paper and explain why the nominee should be considered for the Founder’s Award.

Submissions are due by November 30, 2020 Nominee: (print or type information below) ____________________________________ _____________________________________________________________________________ First Name Last Name ___________________________________________________________________________________________________________________ Firm or B/D ____________________________________________________________________________________________________________________ Street Address __________________________________________________________________ ____________________ ___________________________ City State Zip ________________________________ __________________________________________________________________________________ Phone Email

Nominator: (print or type information below) ____________________________________ First Name

_____________________________________________________________________________ Last Name

________________________________ __________________________________________________________________________________ Phone Email

Ways to send in a Nomination for the Founder’s Award Mail this from to: IARFC Founder’s Award P.O. Box 506, Middletown, OH 45042 Fax: (513) 345-9479 Founded in 1984, the IARFC fosters and enhances the growth of our Email: awards@iarfc.org Association for the benefit of the members and the clients we serve by providing a continuing source of information, education and networking. Questions: (800) 532-9060 The IARFC will strengthen the financial services profession through adherence to and promotion of ethical behavior by our members and focus on their continuing professional education.

IARFC INTERNATIONAL ASSOCIATION OF REGISTERED FINANCIAL CONSULTANTS

The Register | Fall 2020

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Help Clients To Be Better Money Managers Ideas To Reduce Debt Do you really care about your clients? Then isn’t one of the first things you should do... is to help your clients to find the money to reduce or eliminate their debt? Today, too many consultants tend to just focus on how to help their clients to earn more on the money that they invest! But is that how you really do what is best for your clients? Is there a lot more that you can do and should do to help them to be financially secure? Isn’t a big part of your job, as a consultant, to help your clients to be better money managers? The IARFC Mission.... Is to recognize world class financial consultants and empower them to make a transformational difference in the financial lives of the families and communities they serve. If your focus is just on (or mostly on) investing, then are you following the IARFC mission and making a real difference in the financial lives of the families and communities that you serve? There are a lot of families out there that struggle because they have too much debt! It is a big problem, even with many of the higher income families. So, they have a problem finding the money they need to save for their children’s education. Or, to save the money that they will need for their retirement. And is it keeping them from getting all of the insurances that they need to protect their family?

Does it make any sense for your clients to have credit card debt when they are paying 16%, 17%, 18% or more in interest? When they have money that is only earning 5%-10%. Are they losing money every month or do they have some equity in their home? Could they take out an equity line of credit for 3-5% and then use that money to pay off all or most of their debt? How much money would that save them every month? They could put some of that money in a safe emergency fund, so that they would have access to it for future purchases. What else can you do to help your clients to get rid of their debt? Are they spending money unnecessarily, and in the wrong places? How much do they spend on car and homeowner’s insurance? What do you recommend that they do, so that they can reduce that cost? Do they have any unneeded policies or unneeded riders that they can cancel to save money? Do they need to reduce their spending overall? Are they going out to restaurants too often? Making too many trips? Buying coffee every morning on the way to work? Do they need to put themselves on a budget?

They all waste money, is where they are spending the money more important than their future?

Key To Helping Your Clients This is where you will earn your money. If you want to help your clients to make the needed changes, then it must be their idea. You need to ask questions, listen and then ask more question so that you can get them to talk about what they want for their future. The more that you get them to talk about what they want, then the more important it will be for them to make it happen. You cannot tell them that they need to have a budget. They need to tell you and then ask for your help. Do you want to make a positive difference in the financial lives of the families and communities that you serve? Then help your clients to be much better managers of their money! Help your clients… to ‘find the money’ to spend, save, invest, insure, and plan wisely for the future so that they can “Live Debt Free and Truly Wealthy!“ Help families to find the money to get all of the insurance they need to protect their family. And help families to have a safe and secure emergency fund that will be there when they need it the most.

Jeremy B. Nason, RFC® Jeremy B. Nason, RFC® is the cofounder of the Insurance Pro Shop™ – The first affordable, full-service Insurance Marketing and Sales Resource Center for today’s Financial Pro, and Found Money Management™, a life insurance sales training system dedicated to helping Middle-Income Families to ‘Live Debt Free and Truly Wealthy!’ Contact: (877) 297-4608 jeremy@insuranceproshop.com www.insuranceproshop.com

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The Register | Fall 2020

MRFC® 2020 Update New Blueprint Adopted for MRFC Exam As reported in previous Registers, the MRFC Certification Program is in the midst of a Blueprint change - a requirement of the NCCA Accreditation Body who grants the credential. The Psychometrician has finished analyzing the results and presented recommendations of change of the content percentages on the exam. At its latest Board Meeting, the MRFC Certification Board approved those changes and voted to keep the requirements for the credential the same. The next step is to incorporate those changes into the MRFC Exam and into the Study Guide that is in development. That will mean looking to confirm that the number of questions on the exam correspond to the new percentages. The most change occured in the Insurance Section in connection to annuities. There was also a percentage increase in the area of Regulations and Compliance and the Ongoing Monitoring Sections. These changes will be in effect for 6 years unless there is a major shift in the industry that warrants updating at the 3 year mark.

3&4

1 2

New Blueprint Changes #

Blueprint Section

Old % 2014

New % 2020

% Change

Client Engagement Process

-2%

Retirement Planning

15%

Insurance Planning

16%

14%

-2%

Education Planning

Estate Planning

18%

16%

-2%

Professional Conduct

Plan Development

Data Gathering

Ongoing Monitoring

Tax Planning

-1%

Investment Planning

17%

Regulations and Compliance

Practice Management

100%

Phase 1: Current Review & Focus Group Input: (Completed) JTA Focus Group (virtual meetings, January-March 2020) Updated Exam Blueprint (domains & tasks) Reviewed demographics to collect and rating scales to use in Phase 2 Phase 2: Survey: to Members (Completed) Validation Survey (May-July 2020) Sent survey to professionals for feedback on results from Phase 1 Sent to 1,534 professionals, ratings from 127 (8.3%) Analyzed results of survey, calculated preliminary exam percentages Phase 3: Psychometric Evaluation (Completed) Exam Blueprint Focus Group (virtual meeting on August 13, 2020) Reviewed results of survey (demographics, ratings, percentages) Finalized content outline & recommended exam percentages Phase 4: Approval (Completed) MRFC Certification Board reviewed & approved exam percentages & exam specifications Reviewed credential requirements (no changes) Final Phase: New Blueprint to be published online Tasks to be adjusted on exam and new questions written if needed Reports are sent to NCCA to document JTA process

MRFC® Marketing Updates - BE THE DIFFERENCE™ The MRFC Certification Board has initiated a Marketing Push for 2021 to get the information out about the MRFC Credential and how it can put you in the forefront of your clients and prospects as an elite financial professional. You can contribute to this effort by sharing with others your involvement with the Master Registered Financial Consultant Certification Program. Look for ways you can BE THE DIFFERENCE™. Care to let others know about your STORY about becoming an MRFC®? Contact editor@iarfc.org. We need your story and video! The Register | Fall 2020

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Setting Clients’ Budgets That Work For clients, budgets are a simple yet overwhelming task. Those in the retirement red zone may not be accustomed to budgeting. Their income is often substantial for their lifestyle, without the worry of their monthly cash flow. Because of this, clients may be reluctant to set one, assuming it will restrict their retirement. Assisting the clients in preparing and maintaining a budget will transform their perception of their long-term finances, for the better. 1. Reassure: Budgets sustain, not restrict, clients’ monthly income in retirement. Communicate the flexibility of it and that it will be reviewed yearly, during their annual review, to make sure they are receiving the needed cash flow. The budget constructed for them is a draft and never the final version. Relay to clients that they can reach their retirement dreams with an implemented budget. 2. Define Goals: Identifying clients’ wants and needs in retirement allows them to grasp the bigger picture. They need to understand their general finances and target the necessary amount for monthly bills. Recognizing how much they want to spend on vacations and entertainment is also vital. Clients have their own aspirations with personal finance. Cater their budget to the destination. 3. Take the Process Step-by-Step: Although budgets are relatively uncomplicated, detailing and managing a successful one is a step-by-step method. After analyzing clients’ retirement goals, determine a figure that works best for them. A successful budget is a work in Page 27

progress, so beginning their budget four months before they retire is ideal. Assess each bill, no matter the amount. A credit card statement is just as important as a monthly mortgage payment. Clients will begin to recognize the required cash flow for their retirement dreams. Best case scenario, extra income is leftover for investments or wealth transfer tools. 4. Improve Cash Flow: Establishing clients’ budget are inconsequential if it does not improve their cash flow. Restructure their debt, while also demonstrating how clients can view their debt differently. Examine their total balance due to gain a better comprehension of their future financial situation. Also, ensure clients have an ample rainy-day fund of $50,000, or 6 months to a year of expenses. Having this emergency fund can significantly protect their budget in a crisis. Review with clients, around six months after implementing their budget, that there is sufficient cash flow. Again, setting a budget that works is a process and needs to be reconstructed if inadequate. A budget is never a one-time thing. 5.

Set a Deadline: Like any intimidating task, people may procrastinate if there is not an appropriate deadline. Set a time-limit for when the budget is due, which is usually a month. The individual needs ample time to prepare their statements but it’s necessary that they coordinate their financial information promptly. Notify them that there will be some back-and-forth and emphasize the importance of organizing

their monthly bills from the past year. They also need to consider their incidentals throughout the year and any additional family expenses. 6. Simplicity is Key: Setting a budget can be a time-consuming activity. By streamlining the process, it allows the clients to focus on other priorities. Ask your clients if they would prefer their budget as a PDF or an Excel document. Often, the individual will prefer one over the other. Filling out the information directly on the spreadsheet is easiest for both clients and the financial consultant. For each segment, as well as the grand total, the sum should automatically add up in the document. Allow clients to edit the columns and sections so they can cater the budget to their lifestyle. Creating a miscellaneous section, for any extra expenses without a category, will also simplify the process. 7. Compartmentalize: A well-presented design promotes readability. For example, the budget on next page allows clients to follow their financial decisions and understand the big picture. Each section is compartmentalized and labeled, allowing the individual to analyze each section without confusion. The data is all on one page, so the viewer can efficiently check the allocation of their monthly income. Establishing a budget is not the clients’ most critical financial decision, but it is a process that takes planning and commitment. Improving their long-term living situation not only solidifies but enhances the trust they have placed with their financial consultant. The Register | Fall 2020

STORE Insignia Items

Bryan Slovon, MRFCÂŽ Bryan S. Slovon, Managing Partner and CEO of Stuart Financial Group, an independent financial planning firm exclusively serving retirees and soon-to be retirees in the DC Metro area. He is a financial planner specializing in retirement planning and wealth preservation to a select group of clients for over 30 years. Contact: (301) 345-1635 www.stuartfg.com The Register | Fall 2020

www.store.iarfc.org/#InsigniaItems

Page 28

COMMITTEE FOCUS S T R AT E G I C A L L I A N C E S Randy Kriner, Information Technologies Team Member for the IARFC, additionally coordinates the Strategic Alliance Committee for the Association. The purpose of the Committee is to oversee the development of strategic alliances with other associations and institutions. It also ensures the relationships with other alliance partners do not violate the IARFC Code of Ethics or construe a conflict of interest.

Randy Kriner, IARFC Team

New Member Benefit

Once again, the Strategic Alliance Committee announces a new member benefit. Our most recent offering is Advisor Controls. The Company joins an ever growing list of robust benefits provided by the IARFC members. Are you utilizing your Membership Benefits - specifically the Strategic Alliances? These practice tools have been recommended by Association Members, the Committee, and by correspondence with the actual companies. Specific details of these benefits are available to members who have logged into their online account. If you have any questions or need help finding specific information, you can contact me at randy@iarfc.org.

The International Association of Registered Financial Consultants (IARFC®) announces a Strategic Partnership with Advisor Controls for its Retirement Plan Simulator (RPS), an easy to use solution for understanding and advancing clients’ retirement income stories. Members will receive a benefit offering of $20 off per month of their subscription fees. In just minutes consultants can input data and walk their client through the retirement planning process using their Retirement Plan Simulator, engaging clients in every step of the way through setting retirement goals, presenting portfolio strengths, reviewing proposals, and running simulations.

“

We are continually looking for additional tools for our consultants. If anyone has a product or company to suggest, please contact me... Randy Kriner

The Simulator uses innovative Retirement Income Cash flow Hierarchy technology (RICH technology) to create solutions that: •

Accurately solve for target income needs

•

Incorporate time segmentation (income phasing) appropriate asset mixes, and annuity income riders

•

Identify variability in each product return

•

Create statistically supported (Monte Carlo Simulation-tested) planning outcomes

•

Enhance the sustainability of a portfolio’s income distributions

This innovative technology creates the statistical evidence that a client, consultant, and supervising firm need to optimize retirement planning outcomes. It naturally aligns with fiduciary standards by helping consultants engage with their clients as they move through a step-by-step storyboard.

“

https://advisorcontrols.com/iarfc/ Page 29

The Register | Fall 2020

IARFC

Refer Your Associates

INTERNATIONAL ASSOCIATION OF REGISTERED FINANCIAL CONSULTANTS

Enhance the Designation The value of your own designation/credential continues to grow by increasing members of highly qualified consultants using and displaying their RFA®, RFC® or MRFC®.

An Ongoing Opportunity The IARFC® is looking to enrich the careers of your professional peers with the same membership benefits you enjoy. By referring potential IARFC members, you offer them an opportunity to tap into the premier network of members who share best practices, strategies expand businesses, and techniques for better practice management.

Referring a member is easy! Take a few minutes to increase our network of Association Members, RFAs, RFCs, and MRFCs. Enter the names, addresses and emails of your most qualified colleagues in the fields below and return the form by fax or mail to the IARFC. This program is not available in conjunction with any other referral campaign and applies to US members only. The qualifying first place winner will receive a trip to the Annual Banquet. Details available on www.IARFC.org (Please print or type the information below. Program subject to change) _________________________ ____________________________ ________________________________ First Name Middle Name Last Name Prefix:

Mr.

Ms.

Mrs.

__________________________________________________________________________________________ Address ______________________________________ City

________________________ State

_______________________ Zip Code

_________________________________ _______________________________________________________ Phone Email

_________________________ ____________________________ ________________________________ First Name Middle Name Last Name Prefix:

Mr.

Ms.

Mrs.

__________________________________________________________________________________________ Address ______________________________________ City

________________________ State

_______________________ Zip Code

_________________________________ _______________________________________________________ Phone Email

The Register | Fall 2020

______________________________________ Referred by:

______________________________________ Phone

______________________________________ Email

International Association of Registered Financial Consultants (IARFC®) Attn: Membership Services P.O. Box 506 Middletown, OH 45042 Email: Phone: Website: Fax:

info@IARFC.org (800) 532-9060 IARFC.org (513) 345-9479 Page 30

Call for Corporate Sponsors

2021 IARFC

National Financial Plan Competition The International Association of Registered Financial Consultants (IARFC®) is reaching out to corporate entities in the financial services industry to support their 2021 National Financial Plan Competition. It challenges undergraduate university students to craft a financial plan, the core of a consultant’s practice, and submit the recommendations for judging.

Encourage the Future

Corporate Involvement

The shrinking number of financial consultants equates to a shortage of up and coming professionals. A job outlook statistic from the Bureau of Labor Statistics sees a 7% faster than average growth in job outlook for 2018 through 2028. This becomes an important statistic when attracting the next generation to a career in financial services. What better way to support the industry than to encourage students at the collegiate level to compete in the Competition.

Corporate Sponsorship gains positive visibility and advertizing. Through the Plan Competition levels of Sponsorship, the IARFC offers multiple avenues of increasing company involvement. Review the Corporate levels of Sponsorship information to find out how the IARFC can promote your company brand.

To Request an Information Webinar IARFC Public Relations susan@iarfc.org (513) 424-1589 www.iarfc.org

“Coming from a consultant who has enjoyed a successful and lucrative career in financial services, we have got to reach out to young people and instill in them the benefits of helping others obtain financial independence. Your corporate sponsorship means the continuation of the out-of-classroom education for these future consultants who need to understand fiduciary due diligence.” IARFC Trustee Chair and CEO H. Stephen Bailey, MRFC®

Page 31

The Register | Fall 2020

IARFC INTERNATIONAL ASSOCIATION OF REGISTERED FINANCIAL CONSULTANTS

NATIONAL FINANCIAL PLAN COMPETITION Spring 2021

Corporate Sponsorship Opportunities Take part in the IARFC National Financial Plan Competition as a Corporate Sponsor. This is a give back opportunity to help the NEXT GEN of collegiate undergraduates to develop the skills they need to perform in the Financial Services industry.

SPONSOR LEVELS VISIBILITY AND PROMOTIONS

Diamond

Plan Competition Sponsor Award recognition during banquet

√

Banner Advertisement on Plan Competition web page provided by sponsor (600 pixel x 110 pixel)

√

Recognition during Plan Competition

√

Email Advertisement as Sponsor, campaign(s) Logo recognition featured on Plan Competition web page and Competition live promotion

Gold

Silver

√

full page

1/2 page

1/3 page

Logo recognition, in the Register magazine, during run duration of Plan Competition promotion

√

Advertisement recognition, in the Journal of Personal Finance, 1 time

full page

1/2 page

1/3 page

√

Individual

General

$25,000

$15,000

$10,000

$5,000

Advertisement recognition, in the Register magazine, 1 time

Logo recognition in Journal of Personal Finance, during run duration of Plan Competition promotion Media Release, Individual (personalized), General (pre-event release) Cost

Platinum

√

A percentage of Plan Competition Sponsorship proceeds are directly donated as monetary prize awards to the winning teams at the Awards Banquet. Sponsorship opportunity promotions run duration: 12 months from the date payments are received. Promotions follow the IARFC advertising guidelines.

International Association of Registered Financial Consultants 146 N Breiel Blvd., P.O. Box 506, Middletown, OH 45042 Phone: (800) 532-9060, Fax: (513) 345-9479, Email: susan@iarfc.org

The Register | Fall 2020

Page 32

Guess What Doesn’t Decline in Volatile Markets

them into losing weight. You would try to get them to join you in positive activities, like exercise classes or giving up alcohol for a month. You might ask how their annual physical went. You would be supportive and tactful. Let’s get back to clients and debt. As their consultant you need to exercise this same tact when talking with your clients about debt. The consultant must be direct. The clients need to understand they must take action. The clients and consultant need to make a plan together. This was part of the initial financial planning process and should be discussed during the periodic plan reviews. Clients Need a 12 Step Program But wait! This isn’t getting any insurance or investments sold. As their consultant I’m not ringing the cash register. Why should I bother? This is a clients’ problem that will only get worse. Bringing this problem front and center will help the clients, bonding them to the consultant. It should bring in more assets and referrals, because this clients can see their consultant is looking after their best interests.

What a surprise! Financial consultants who entered the business within the last ten years have discovered the stock market can go down! Many clients have benefited from the 10+ year bull market. Clients saw statement values rise almost every month. Some of these same clients started living large, spending more than they earn. They took on debt assuming this was the “new normal” and the good times will last forever. Early into 2020 these clients discovered “paper profits,” better known as unrealized capital gains, can vanish almost instantly. There is a lesson these clients missed: credit card debt seems to stick around forever. It’s time for you, their consultant to have a talk with these clients about debt. Why Do I Owe So Much? How did clients with assets suddenly get into the quagmire of debt? There are lots of ways. Some clients are paid with an annual salary plus a year end bonus. They assumed these bonuses would come in forever., enabling them to pay off their accumulated credit card Page 33

debt with that annual bonus check. In my early days of production as a financial consultant in Brooklyn, NY many Eastern Europeans arrived in the US to start a new life. Some new arrivals came from countries with rampant inflation. Back in their home country, it made sense to buy today if the commodity would cost more next week. They transferred this logic to the stock market, assuming everything went up, just at different speeds. Sound ridiculous? After a 10+ year Bull market, many investors thought stocks only went in one direction. Other people got caught up in “keeping up with the Joneses”, leveraging their investments to buy luxury goods and buying on margin in the hopes of profiting by using OPM or “Other People’s Money.” That home equity line of credit (HELOC) looked so tempting. Your Friend Is Overweight. You are concerned. What Do You Say? Let’s leave our discussion about debt for a moment. If someone was overweight, as their friend you certainly would not try shaming

1. Start by gathering the facts. As their consultant, you should delicately ascertain how much debt they are carrying. This includes credit card debt, the outstanding balance on their home equity line the outstanding margin balance on security accounts held with you along with those held away. The list the consultant is preparing should also include car loans and mortgages on real estate. The consultant should not show any alarm or surprise. This will be a difficult exercise for the clients. 2. Learn about the interest rate on the clients’ different debts. It’s not unusual to be paying 15%+ on revolving charge card balances. The rate on the clients’ home equity line might be pretty low by comparison. The exercise of organizing balances and interest rates may be eye opening for your clients. 3. What is the interest rate the clients are earning on free cash balances and savings? These cash reserves might be held at the consultant’s firm. The clients might maintain accounts at a bank or competitor. Learn how much cash the clients have on hand and the interest rates paid. The rate might be in the 1% range. That 1% is usually a taxable rate of interest. 4. Do your clients know how they can earn a 15% return? The easiest way for your The Register | Fall 2020

clients to get a 15% rate of return is to stop paying 15% to their credit card company. If it’s practical, the consultant should suggest the clients use some cash to clear those credit card balances. 5. Is this a time when balance transfers make sense? Your firm might offer credit cards. (especially if it’s a bank.) If your clients have multiple cards, you might learn card #1, charging 15% will give them a rate on a balance transfer of 0% for a six-month introductory period if they transfer the amount they owe from credit card #2, currently charging them 15%. The clients should be aware, credit card #2 will likely have some penalty charge for making this move. 6. Have your clients shopped around, comparing credit card rates? Not all cards charge 15%. The clients should do some research to learn if other credit card providers are offering lower rates. It might make sense for your clients to get a new card and transfer balances over, assuming the credit limit on the new card will accommodate that amount. 7. Clients need to learn the pay yourself first strategy. These steps should have reduced the clients’ monthly outlay for credit card interest payments. This means the clients should have extra money in their budget. The clients should use that money to make principal payments, reducing outstanding charge card balances. The best place for your clients to start is to direct extra cash to those cards charging the highest interest rates. 8. Your clients must hide those cards! Most members of the middle class can get through life with one Mastercard and one Visa card. Your client should lock the rest of their charge cards in a drawer. If your

clients carry multiple cards, they run the risk running up balances everywhere. 9. The clients should pay down their charged expenses every month. American Express cards have been popular for years. The rationale is the cardholder makes purchases during the month, settling up the entire bill at the end of the month. Generally speaking, this type of Amex card isn’t charging any interest. A good strategy for your clients is to make this type of card their primary card for monthly spending, paying in full when the bill arrives. 10. Do your clients understand the expression “cash is king?” It has several meanings, but the consultant is focusing the clients’ attention to their spending. When the clients go out for drinks after work, settling up their proportionate share of the bill in cash keeps them aware of how much they are spending. It also prompts them to leave the table, because your clients know how far the cash in their wallet will stretch. 11. Here’s a good habit: Keep a journal. Every night, the clients should write down where they spent money that day and how much. The little voice in the clients’ head will say “Did I really need to buy that?” or “What were you thinking?” Weight loss programs often work because counting or weighing keeps the program participant accountable. 12. The consultant should confirm the clients understand how margin works. This may be the most important lesson for your clients. People have heard the expression “Money talks. It says goodbye.” When clients buys stock on margin in a brokerage account, they are asking the firm to loan them money to buy more shares than that clients could otherwise afford. If the stock moves up, that’s great!

It’s catastrophic if the stock moves down because the losses all come from the clients’ side of the equation. The loan only goes down when the clients add fresh money or pays off the margin balance entirely. If the stock declines too much, the firm will ask the clients for more money (margin or maintenance calls). If the clients don’t have it, stock must be sold. This often happens at the worst time. People who are overweight sometimes take extreme steps like liposuction. It’s healthier to lose weight gradually. That’s the strategy the consultant is recommending to the clients concerning debt reduction. Get the interest rate under control. Help the clients get their spending under control or at least the clients should be aware of how much they are spending. The clients should use money saved to pay down debt.

Bryce M. Sanders Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book “Captivating the Wealthy Investor” is available on Amazon. Contact: (215) 862-3607 brycesanders@msn.com www.perceptivebusiness.com

Member Benefit www.iarfc-jobs.careerwebsite.com/

The Register | Fall 2020

Page 34

Consumer Focus Bucket Cash Management System Jamie Bosse, CFP®, RFC®

Financial Planner for Aspyre Wealth Partners Author of Milton the Money Savvy Pup. www.aspyrewealth.com

Managing cash flow tends to be an issue for most people regardless of income level. On one hand, you have known expenses, but there are always some that catch you off guard. My husband and I have done a few iterations of cash flow management and have found one that works for us. It is the “bucket” or “envelope” system illustrated below. We use five “buckets” (bank accounts), each with a different purpose. Using five accounts may sound complicated, but it may help you eliminate confusion and cut down on surprise expenses. Here is the run-down: We each bring home a paycheck twice per month. On a pre-tax basis, our 401(k) contributions, flexible spending accounts for healthcare, and dependent care come out automatically. After taxes, the net dollars are split up as follows: Page 35

The Register | Fall 2020

Bucket Cash Management System... Bucket #1 – Online Bank This is our emergency fund. We use an online bank to keep these funds “out of sight, out of mind” by not keeping them in the accounts we use for monthly expenses. We also benefit by using an online bank that pays a higher interest rate than brick and mortar banks. This account is linked to our regular checking accounts so that we can transfer funds as needed. We have a direct deposit from our paychecks set up until we get to a balance that we are comfortable with. The target is to have 3-6 months’ worth of fixed expenses in this account that are available and liquid in the event of an emergency. What counts as an emergency? A loss of income, hospitalization, issues with the home that need to be fixed quickly (think flooding, broken windows, freezer breaks, etc.). We basically try to ignore this account and let it grow so it will be there when we need it. Bucket #2 – Checking Account 1 This bucket is for our fixed expenses that happen regularly. They are known bills and we set them all up on auto-pay if possible. These are expenses like the mortgage, cell phone bills, trash service, daycare tuition, cable, and even regular expenses like our Amazon Prime items that are the same each month. This account also pays for expenses that happen once a year in known amounts like life insurance premiums, membership fees, and real estate taxes. We calculate how much these cost each year and divide by twelve. We have that amount deposited each month into this account, so the annual amount will be available when each bill is due. Bucket #3 – Savings Account 1 This is for known expenses that vary in amount and timing. For instance, vacation and travel, tickets to sporting events, Christmas gifts, and larger purchases like furniture or electronics. We simply estimate how much we’ll need for the year for these items and divide by 12 to determine how much we want to allocate each month. When we need the funds to book a trip or make a purchase, we simply transfer the funds to Checking Account 1 (above) and pay for it. Bucket #4 – Savings Account 2 This bucket is our house project fund. We have identified home improvement and maintenance items that will need to be done eventually like replacing the roof. We build this bucket up with monthly deposits and when it reaches a certain amount we decide if we want to start on a project. When we are ready to use it, we simply transfer the funds to the Checking Account 2 (below) and start cracking! The Register | Fall 2020

Member Benefit

Bucket #5 – Checking Account 2 This is the “2-Week” account that is a catch-all for basically everything else. These are weekly expenditures for gas, groceries, restaurants, personal care, coffee runs, Uber/Lyft rides, etc. Since all of our other goals are being funded, this account can go to $0 each pay cycle. This is the account we use most often, in the form of a debit card. It also forces some communication between my husband and I about the expenses we expect for the next two weeks. If we know we’re going on a Costco run that will cost a few hundred dollars, we know to spend less in other areas and may skip restaurants or getting a manicure during that timeframe. If you are struggling with cash flow management, give this “bucket” approach a try! You may need more or less buckets depending on the expenses you have and want to fund, but having funds earmarked for specific goals and expenses has really helped my family and clients manage monthly finances. It does take a while to adjust to the new system, so be patient with yourself as you adapt. A good time to start the system is when you have extra cash from a bonus or a tax refund to get the buckets started before your direct deposits are set up. Cash flow can be tricky, but if you can plan for what’s coming, you’ll set yourself up for success.

About Jamie...Jamie holds a Bachelor’s Degree in Personal Financial Planning from Kansas State University (2004) with a minor in Business Administration. She has been an RFC® since 2004 and obtained the Certified Financial Planner™ certification in 2008. Jamie is an active member of the Financial Planning Association and International Association of Registered Financial Consultants and has served as a past board member and President of the FPA of Oregon and SW Washington. She is currently on the board for the Greater Kansas City chapter of the Financial Planning Association.

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Lessons Learned from stories within the financial consulting confines. While not life threatening, they can certainly be life altering and relatable to many financial consultants.

What I Learned From My Mistake... Major life lessons come at a young age when you are the least confident and experienced in your career. You might hesitate when you should be aggressive. You try not to come across as the plaid pants, loud coat, high pressure salesman. Or maybe you just don’t know what you should know. For me starting out, it came down to life insurance — I didn’t want to be perceived as a pushy agent. I learned quickly however, that the actual benefit of what I was selling was indeed a “proper” proposition for my client – and the responsible one. I mean, it was pretty bad when clients had to almost force me to recommend life insurance options during our meetings. Such was the case when I was doing financial planning for a couple residing in Las Vegas. The husband pressed me to look at their current life insurance, something I should have insisted upon myself — immediately. So, I realized I had better do an analysis and get back with them. Yes, they did need more. Still, I was not offering them the answers. What I should have said is YES, you do need more and here is the solution. My prospective client had to inquire further…well, where do we get it? Can we get it from you? At that point, I realized the ball was in my court and I eventually wrote a policy for 5 or 6 times more insurance than what they currently had. A short time later, the wife in her early 30s, was taking their son to a dental appointment. After buckling the child into the car seat, she walked around the car and before even getting in, had a fatal heart aneurism. I received that call from the husband a couple hours after it happened, which was devastating news. As with many of us, this client couple had become my friends. We all know that everyone comes out of the woodwork wanting money for expenses when a sudden death like this occurs. I had my hand out also, but in my hand was a check.

full service financial planning and the power of what life insurance could do for the family and survivors. I never hesitated again to address ALL aspects of financial planning and find ways to protect my clients from financial devastation. And what about my responsibility to myself? If I am presenting as a financial consultant, I must address client financial needs in a wholistic manner. Ignoring important components such as the need for adequate life insurance can open up a liability scenario that brings all sorts of problems. Relating this one impressionable story and of course other life lessons along the way, I now make certain in my training classes and thoses new to the profession have the confidence and knowledge to bring ALL the financial planning solutions to the forefront. If I, as the financial consultant, do not address the overall needs of the clients, it’s not true, comprehensive financial planning. Fortunately, I was forced into covering the clients’ needs. I felt legally and morally lucky that I was able to offer some kind of relief in such a tragic situation. Had I not been pushed to make the sale, I would have carried that remorse with me for a long time as… a mistake tragically learned.

Barry L. Dayley, CFP®, MRFC® Money Concepts (307) 885-7282

The implications of the situation were not lost on this young consultant. Had my clients not pressed the issue and pushed me to do what I should have done in the first place, things could have been much worse. Many times over the years, I felt relieved that the situation worked out as it did. The insurance settlement provided for full time daycare, mortgage and college funds.

Barry is the Executive Vice President of Money Concepts with national and international responsibilities. Barry Dayley has worked in the financial planning and wealth management business since 1981. In 1985 he received a request from Jack Walsh, the founder of Money Concepts, to serve as a consultant for Money Concepts and CUNA Mutual to develop a financial planning program for credit unions nationwide. Barry serves on the MRFC Certification Board.

This “mistake” in underestimating my ability to determine outcomes significantly altered my future approach. I became a complete believer in

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______________________________________________________________________________________ Please provide your name only on the line below as you want it to appear on your Certificate.

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