Life is too long to plan poorly for Retirement!

Posted on November 14, 2011 by Steve Gaito, CFP

The fact is that people are living much longer to day then they were 20 years ago. This creates additional importance on how much you save for retirement and the decisions you make on the specific investments to grow your retirement. Most people’s largest investment is in their employer’s retirement plan. These are 401(k), 403(b) and defined contributions plans offered by an employer. The challenge is that creating an efficient portfolio within these plans is very difficult. While it may be relatively easy to choose the best performance based on historical data, the challenge is evaluating how much risk the specific investment had to take to achieve the performance. A key component to building an efficient portfolio is to have a lower standard deviation with as high a return as possible. Let me illustrate this with 2 portfolios:

Portfolio A
Return
50%, -25%, 10%
$100,000 Investment
$150,000 , 112,000 , $123,200
Investment Return
Percentage 11.67%, Dollars $23,200

Portfolio B
Return
10%, 10%, 10%
$100,000 Investment
$110,000 , $121,000 , $133,100
Investment Return
Percentage 10.00% , Dollars $33,100

This illustration shows how using a lower standard deviation can actually put more money in your account. Isn’t that your goal?

The second challenge is that most employers select investment choices based on the percentage of return and so do most participants. After all why wouldn’t you want to have the best return? Hopefully you now understand why this way of selecting investments is flawed. By actually comparing all of the choices available in your plan on a risk adjusted basis we create custom efficient portfolios for our clients. This is based on what is available and the risk tolerance of the client. Matching your risk tolerance to your goals is very important to feeling comfortable about your progress. A great example is the story of the tortoise and the hare. We all know who wins in the end. It is very important to understand that an efficient portfolio does not guarantee you will not lose money, nor does it mean that you will have a better return. To use a baseball analogy one home run can win a game but your chances of success rise with the more singles you hit on a consistent basis.

Getting started is easy. We already have the models set up for NC State University 403(b) plans, The University of North Carolina Optional Retirement Plans for all campuses, Meredith College, Wake County Public Schools and several small businesses. All of these models are developed without any bias that comes from the company servicing the investments. So our clients get a truly unbiased portfolio that offers the most efficient portfolio based on the limited investments in the plan. We can also integrate in your personal holdings to develop a comprehensive summary of all of your investments. At Fee Only Planning NC we do not sell any commissioned product or gather assets under management for an asset based fee.

This is one of three core services that Fee Only Planning NC provides. The other two areas are hourly only financial planning and portfolio monitoring. If you have any questions about any of our services please contact us at (919) 341-0277 or info@feeonlyplanningnc.com.

Thank you,

Steven W Gaito CFP®
Founder and President

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How to build a better portfolio

Posted on October 20, 2011 by Steve Gaito, CFP


You want the most return for your money? You don’t want to see it all disappear in one day. How do you balance the need for return with the risk associated with your goals? This is done through the implementation of an efficient portfolio. I have been in the financial services industries for over 18 years and there are many terms used that simply confuse people. The bottom line is by using a few measurements you can create a portfolio that historically has less risk and more return. It is important to note that I said historically. This is because there is no guarantee of future results and portfolios are created based upon past results. But you have to start somewhere. A few of the measurements that I utilize when I evaluate or create portfolios are, Alpha, Beta, Standard Deviation, Excess Returns, Upside and Downside capture ratios and correlation.
To help let me define these terms.
• Alpha is a measurement of additional value a manager provides above an established benchmark. Positive alpha indicates more value and negative alpha indicates less value over the index.
• Beta measures the volatility of the fund compared to the index. For example if the beta was 1.3 it would be 30% more volatile than the benchmark. If it was .8 it would be 20% less volatile than the benchmark.
• Standard Deviation is used to measure the volatility of the investment.
• Excess Returns usually measures the returns above or below the index.
• Upside and Downside Capture Ratios measure how much a fund participates in the market. For example if a fund has an upside capture ration of 110 it would expect to produce 10% more return than the market. If the downside capture ratio was 50 than it would expect to have half of the loss of the market. So you want to find higher upside ratios with low downside ratios.
• Correlation. This is how similar the investments are to each other. High correlation leads to greater volatility in a portfolio. You do not want a basket of apples or even a basket of fruit; you want a well balanced meal with meat, vegetables, bread, and dairy from all over the world.

For most people is gathering all these statistics and creating the portfolios. As a Certified Financial Planner TM Practitioner I have tools that provide this information on a daily basis. And quite honestly you are probably better off understanding the need for an efficient portfolio than building one yourself. I compare this to working on a car. I am perfectly happy getting in my car turning the key and going where I want. I understand that from time to time the car will need maintenance and I am happy to pay for it to keep the car running well.

A big challenge we have is with our employer 401(k) or 403(b) plans. Most employees do not have input into the choices, so they are limited in how efficient they can make their portfolio. But the goal is to move towards an efficient portfolio that has less historical risk and more historical return.

As a service I have done some analysis on the UNC System Optional Retirement Plan (ORP) as well as the 403(b) options for NCSU. If you would like to discuss how to utilize an efficient portfolio in these plans just give us a call in the office (919) 341-0277 or send us an e-mail info@feeonlyplanningnc.com. If you would like us to evaluate your employer’s options we are happy to discuss this too. One of the main goals of Fee Only Planning NC is to help people make wise decisions about their finances. We believe that education is part of that process.
Thanks
Steve

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Problem Solved

Posted on August 30, 2011 by Steve Gaito, CFP

Well with all the hoopla about the debt ceiling and the potential collapse of the world. It is comforting to know that our leaders in Washington can come together and create a Public Relations event that helps them get reelected. After all isn’t that the reason we send them to Washington.
Well enough of this, we all know there are problems in Washington. Last approval rating for congress was seventeen percent. What does it all mean? They gave themselves more money to spend. In the end this may have been their only option because the two options for addressing the debt ceiling is reducing spending and/or increasing taxes. In my opinion both would have a severe negative impact on our economy. The time to deal with this was in good times, but since we did not do this congress in essence rolled all their credit card debt into their mortgage and left the house to the kids. Our federal budget process is all messed up. The cuts are in expected increases to future budgets, so basically they increase spending by billions and take some of it back and call it a cut. As a financial planner it is hard to wrap my head around this method. Every day I have to explain to clients that the best way to get out of debt is to stop spending and save. Not go out and get another credit card. This problem in Washington did not start this year. It has taken many years and both parties to build such an enormous debt. It will take many years to work our way out of this. It will require changes to sacred cows commonly known as entitlement programs. I am not for taking grandma’s social security check or short changing our military, but I have to believe that since mortality tables (how long people are expected to live) have changed so should the age that people can start receiving benefits. Corporations figured out that defined benefit plans are too expensive to fund and one day it will become apparent to congress that the same applies to social security.
I believe that the best way to address the problem is to grow economy. This is really not a difficult task, but for a politician it seems to be that way. Goal one should be to make the United States the best place in the world to do business. Cut the corporate tax rate to zero. Basically we are not getting these taxes anyway from large corporations. They have headquarters in other countries or use tax loopholes to avoid a majority of taxes. This leaves paying corporate taxes to small and midsize businesses. Ironically they are the ones that create real growth in our economy. This will create more jobs and more jobs mean more revenue for the government. The key is that like helping get a person out of debt the excess revenue needs to go towards debt reduction not additional spending.
The next area is our tax system. I have for a long time been a proponent for the “Fair Tax” Having read several options this tax system is the fairest to all and should create a windfall for the country. Best of all it allows each person to control the amount of taxes they pay. This is because the taxes are collected on purchases. If you have not read the book, I encourage you to read it before you judge it. It changed my mind and I think if you read it you will agree that this is the best way to increase revenue and solve some of our complicated tax issues.
I am glad that congress thinks that they have solved the problem, but it may have been their intent from the beginning. Never let a good crisis go to waste.
If you need help with your own finances please let us know. We would be honored to help.
Steve

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Press Release

Posted on August 30, 2011 by Steve Gaito, CFP

Hourly Only Financial Planning comes to Raleigh.
Providing clients with Sound Advice at a Reasonable Price

Raleigh,NC August 3, 2011 Fee Only Planning NC, LLC has opened to offer clients hourly only financial planning. Our hourly financial planning provides competent, transparent and affordable answers to client’s financial questions

Conflicts of interest, slick sales presentations and complicated products mark today’s financial services industry. It is difficult for people to know what is needed and what is being sold. For this reason Fee Only Planning NC has chosen to provide hourly only financial planning as a way for clients to get clear, unbiased and objective advice for their financial needs.

Many Financial Services companies call themselves “Fee Only” but use it as a way to gather assets under management. We do not sell commissioned products or gather assets under management. Our sole source of income is the hourly fee we charge to assist clients in making sound decisions about their finances.

Only a small percentage of Certified Financial Planner TM Practitioners work exclusively on an hourly basis. We believe that this compensation model provides the best value to the client and the most transparency of the cost of the advice they receive. This model also allows clients to control the cost of their financial planning. We work at their pace and within their budget. So whether it is a complex or simple issue you can get your questions answered. Also since we are independent if we feel there is a better source to answer your questions we will gladly refer you to another qualified professional.

Fee Only Planning NC also offers a portfolio monitoring service that is designed to monitor current assets for significant changes that might impact your portfolio. We monitor for management changes, performance compared to peers, style drift, and negative news about companies that manage their assets. When identified we work with clients to understand impact on portfolio and suitable alternatives. We review on a preset timeframe monthly, quarterly, semiannually, or annually depending on client’s needs and budget.

About Fee Only Planning NC
Fee Only Planning NC, LLC was created by Steve Gaito a Certified Financial Planner tm Practitioner to primarily provide qualified financial planning free from any conflicts of interest at an affordable price. The secondary goal for the company is to provide services to companies to assist employees in understanding their benefits and how they can integrate them with their personal plan.

Contact
Steve Gaito President
Fee Only Planning NC, LLC
(919) 341-0277
steve@feeonlyplanningnc.com

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An Unexpected Storm

Posted on January 28, 2011 by Steve Gaito, CFP

Recently I was along the coast of North Carolina at a historic duck hunting lodge. Now this place is not the Hilton by any stretch of the imagination, but is comfortable with a big pot bellied stove for heat and an adequate kitchen to prepare food. It is on an island with no power, and the only way to and from the island is by boat. We arrived Thursday afternoon with all the provisions necessary for the next couple of days. After we had transported the supplies over by boat we started a fire in the wood stove to take the chill off the air. So far it was perfect. After setting up the kitchen we returned to the mainland to pick up the others who would be hunting for the next couple of days. Later, a small group went out to set up a duck blind on one of the shores. Once everyone was settled in the lodge, we enjoyed a great meal and sat around sharing stories. Since we had to be awake at 4a.m., we turned out the lights at 10 p.m. So far so good.

The next morning was clear and calm. It was still dark outside, but the moon acted like a big nightlight. This would be beautiful for a stroll, but we were fathers and sons there for duck hunting, some for the first time, a great start. While we had limited success, it was a great experience. We returned for lunch and some skeet shooting (one way or another we were going to knock something out of the sky). Around 2 p.m. we sent the groups back out to the blinds. The wind was picking up, so optimism was in the air (as a non hunter this is a good thing) there were several good opportunities, but most of the ducks escaped without any harm. After another great meal and more stories about the difficulty of shooting ducks, it was time for bed. We checked the weather forecast for the next day. Winds 10-20 MPH. Seas one to three feet. Temperature around 40 degrees with a chance of snow flurries. These are ideal weather conditions for duck hunting. What happened next was an unexpected storm.

Since the island blocks the wind, it gave the appearance that the previous night’s forecast was correct; however, when the first boat rounded the island it was met with a fierce storm. Winds 40 -50 MPH and waves four to six feet. When the boat tried to turn around, the back of it was swamped by a wave and the momentum and wind on the cabin caused it to capsize in 38 degree water. Fortunately the water was not that deep and everyone escaped just being cold and wet. The next challenge was to get everyone back to the main land. By now the snow has started and it was blowing a full gale. This was a challenge for a 17-foot boat even if it was unsinkable. We made one run to get supplies off the island before the storm intensified. When we tried to get the first group of people off the island, the engine quit in the middle of the sound. We called for the other boat to come pick up the passengers, and I waited on the boat for them to return.

It was there that I started to think about unplanned storms in life. There are many storms that can have a long lasting effect on our lives. The recent market correction, a death in the family, the loss of a job or a divorce are just a few examples. Most occur without any warning and some without preparations. We were fortunate that we had another boat in the area, that the water was shallow and that there was a warm fire in the lodge. I was fortunate that I had a cell phone, marine radio and an anchor. None of these experiences were pleasant, nor were they planned, but because there was preparation they were not catastrophic. Yes after going through them, I learned there are areas that need improvement. I will always make sure that I have more anchor line and extra foul weather gear.

So how does all this relate to financial planning? There will be storms in life—some you will be prepared for and some you will not. It is much easier to plan and not need than to not plan and be in need. Chances are that after the recent market correction you wish you had done something different. You should evaluate what went well and what needs improvement. Then the hard part is to implement the updated plan. If you are going through a crisis now, get help. When I was in the middle of the storm and called for help, it was great to hear another person on the other end of the line. To know you are not alone and that there is someone willing to help brings great comfort. In the end there will be great stories and we will be better prepared for the next storm, but in the mean time there is a new plan to put in place. I bet there is one for you too.

Glad to be home safe and sound.

Steve

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Fall and Football

Posted on October 28, 2010 by Steve Gaito, CFP

My favorite time of the year begins when the temperature begins to drop and you can sleep with the windows wide open. I love everything about the fall. The crispness of the air, apples, bonfires, the colors of the leaves all create a feeling of comfort. It also means that football season is here. I know that basketball is the sport of choice here in ACC country, but to me there is something special about football. Usually it is played outside where the elements affect the game. There is also a progression of the variables in weather that require each team to make adjustments. The season begins with hotter temperatures which usually results in many of the athletes getting cramps from dehydration. Throughout the next few months comes the rain and finally toward the end of the season the cold temperatures might even bring snow. It is this rain and cold that causes great teams to seem average. Holding on to the ball or making an easy catch is sometimes difficult even for the best of players. Often games are won and lost based on who can manage the elements the best. In the end I have to admit that as loud as I yell, I have no input on the outcome of the game and I have to accept the fact that when the clock reads 0:00 the game is over. You shake hands and look forward to the next game.

As I was thinking about football season, I realized that it is similar to life. We all go through seasons in our lives. Football teams do not come out on opening day and start playing football. There are many practices, and coaches create plays first on paper then implement them on the field. Some plays work and others do not. Some of these plays look so good on paper that they seem impossible to stop. These are the “sure thing” plays, at least on paper. This is true with our financial life. We can draw up plans on paper that look great, but sometimes we have to implement them in a climate that is not favorable for our goals. Sometimes we get close to the goal only to fumble and give the ball away. This is life, and the lesson we learn from our coaches is that the game goes on. I have never seen a great coach dwell on a play from the past. Sure they are upset that the play did not work out as planned, but they also realize that their team has to be ready for what is before them and the challenges that remain in the game. The mark of a great coach is the ability to make adjustments. If a play does not work they will scrap it for the rest of the game. It may be used in a future game, perhaps when the players are better able to implement the play; however, a great coach will run the plays they think give them the best chance of success.

This is where we are today. In this season for our nation, clients have questions about what impact this economy will have on their retirement or their children. What does this debt mean for their future opportunities? My response is that we do not get to choose the type of weather we play in. We need to see what is working for us and what is not and then make adjustments as needed to give us the best chance for success. The key is being willing to make the changes and finish the game. There are no guarantees, but teams that prepare well often do much better than those that do not.

At Fee Only Planning NC we help you see what you are doing well, what you may have missed and what you can possibly improve, all for a fixed fee. We would love to help you develop a game plan for your future, so call us in our office to schedule a time to put your plays on paper.

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Roth Conversion

Posted on May 17, 2010 by Steve Gaito, CFP

Roth Conversion

To convert or not to convert that is the question. If it was only that simple. Recently I have had several people come into my office asking the question. It seems that Roth Conversion is the mother lode of marketing lately. If you don’t convert now it may never happen again. There is only one thing worse than a bad decision and that is a bad decision made in haste. There is a lot to consider when making this choice. The advantage of this year is that there is not a limit on the income that has previously limited conversion of Roth IRA’s for some people. First lets examine the difference between a Traditional IRA (which for simplicities sake will include Rollover IRAs and SEP IRAs), Inherited IRAs, and ROTH IRAs. This is important to understand the difference between each of these three types of IRAs.

First the Traditional IRA

This IRA can contain both after tax and pre tax contributions based on the deductibility of the individual in a given tax year. (The deduction phases out as income reaches certain levels). This is important to know and document this because it will establish the basis for the IRA. You don’t want to pay taxes on money you have already paid taxes on, but it you cannot document it you will lose the tax savings on the money taxes have already been paid on. The bottom line is keeping good records regardless of whether you convert or not. Here are the basics of a traditional IRA. The money in the IRA will grow tax deferred until withdrawn. You will have to start taking out a required minimum distribution (RMD) April 1 following the year you turn 70 ½ and if you wait to take it in April you will have to take another distribution by December 31st of that year. This money is taxed as regular income and the more you take out the more you will pay in taxes. The RMD is the government’s way of saying it is time for us to get some of our money. You can’t have too much of a good thing. So the older you get the more you will be required to withdraw. When you die it can be passed to your spouse via a spousal IRA and they have the option of consolidating it with their own IRA. If there is not a spouse and you name a person you can stretch the IRA distributions out over that person’s lifetime. They will then have the distributions added to their taxable income. So basically the IRA is taxed to death of the second person.

The Inherited IRA

This is a special IRA that has been left to a person upon the death of the primary IRA owner. This may be a child or grandchild or a special friend. The new owner of the Inherited IRA has three options. The first is to cash it out and pay the taxes. This may be the most expensive option, but one that is frequently selected. The second is to take it out over a 5 year period. Finally is to stretch it out based on the RMD tables. This is the best option because it allows the money to grow tax deferred and delays the payment of taxes as long as possible. This is assuming that you will have no need for the money in the IRA, either before or after retirement, or you will take the least money possible from the IRA, at the latest allowable time. There can also be some special provisions to mandate that only the RMD can be withdrawn thus making it like a trust with income coming out each year. You need to have the documents in place and be clear as to your intent.

 Roth IRA

A Roth IRA is a very different retirement account. First taxes have to be paid on the money before you can deposit them into the account, but after they are in the account they are never taxed again. The Roth IRA offers tax deferral on earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions apply. This tax free growth is a big benefit. The Roth IRA is also exempt from the RMD requirements for the owner or spouse. Note they do apply to non spouse beneficiaries, but distributions are based on the RMD tables. This can be a great source of tax free income for the next generation.

Now that we hopefully understand the difference between the types of IRAs let’s get back to the original question. When does converting make sense? First as a rule you only want to convert if you can pay the taxes on the conversion with after tax funds. That’s right you have to pay the taxes when you convert, well actually you have 3 years to pay them. For this year it is ½ in 2011 and ½ in 2012. The risk is that taxes will go up if you add this to your tax bill in the future. It makes sense if by splitting it you will be in a lower tax bracket for both years. If you pay it in one year large conversions may need to expect to pay at least the maximum tax rate of 35% plus state income taxes. It is best to have a CPA review this decision prior to making any decisions. They know the tax code best. The conversion also makes sense if you plan on leaving the money to your children. Think of this as tax free income for most of their life. What a benefit for your children. Many people are hesitant about converting because it will impact their net worth. The reality is that all your IRA money is not yours. A portion of it is the governments and as your account grows so does their part. Also if at the end you make a bad decision then it is lottery time for the government. They get a bigger slice of your IRA just because you failed to plan properly.  Now when does it not make sense? If you cannot pay the taxes with after tax funds let it stand. If you do not have anyone to leave the money to or you want to leave it to a charity, then leave it in your traditional IRA. The charity will generally not have to pay the income taxes. Finally the other reason is you hate paperwork and do not want to be bothered with the headache. Uncle Sam loves this one.  One other scenario is possible and that is to partially convert your IRA. As long as your income qualifies you can convert all or part of the traditional IRAs. I would use the same logic regarding partial as complete conversions.

In conclusion to convert or not is a big decision. I would not attempt this without counsel. At a minimum I would have a Certified Financial Planner TM, a Certified Public Accountant, and an Attorney review the situation to make sure it makes sense. Know what you want to do with the money and who ultimately receives it. The taxes you pay will be large, but it will remove the government from that part of your income forever. If the market drops you can move it back by October 1st and do it all again next year maybe.

If you would like to discuss this in person please give my office a call (919) 341-0277

Steve Gaito CFP ®

Limitations and Restrictions apply to IRAs and other retirement plans

Future Tax laws can change at any time and may impact the benefits of Roth IRAs.

Their tax treatment may change.

No strategy guarantees against loss nor ensures a profit.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

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I Was Wrong

Posted on February 27, 2010 by Steve Gaito, CFP

These are perhaps three of the hardest words to come out of our mouths. Many times in my life I have tried everything to avoid admitting that I was wrong. It has led to a difficult time, fractured relationships, and many a difficult night’s sleep. Recently after the Super Bowl we started watching the show “Undercover Boss”. I did not know what to expect except that it was a new “Reality TV” show. The show was about Waste Industries, for lack of a better word a trash company. The premise of the show is that a CEO takes entry level positions to better learn how the operation works in the field. It was eye-opening to see a leader truly see the impact of the decisions that are made with best intentions actually played out in real life. Too often what seems like a great idea at the time does not work when it is put into practice. After seeing what the policies looked like in action the company that was willing to admit that the policies the developed did not have the intended response. This is the sign of a great company by the fact that they were willing to admit that they were wrong. It is not easy, it is uncomfortable, but in the end the company benefits because the employees feel valued. For people in management it is critical that we peel back the policies and see how they truly impact our employees.

As a Financial Planner I see both the good and bad that people have experienced in life. Like the CEO we have to admit that the choices while well intended where wrong. The choice of a stock or life insurance policy may have seemed like a good option when it was purchased, but now you can’t figure out how it fits into your current life and goals. Dealing with the facts rather than the emotion will allow you to move forward and build a foundation that will meet your needs now and in the future? This is why it is important to have an unbiased checkup of your investments, insurance and financial plans. Best case scenario you are in great shape, worse case you have to admit that there were some bad choices and you can correct them and move forward. My experience is like the CEO, once the problem has been identified it is easy to fix. That is once we get past those three words “I Was Wrong”.

As always if I can be of any help give me a call or send me an e-mail

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Olympics

Posted on February 19, 2010 by Steve Gaito, CFP

I love to watch the Olympics. Well at least most of them. I remember when I worked for Alpine Ski Center in Banner Elk we would have demo days. This was when the different manufacturers would bring next year’s line of skis to a mountain for us to try and give our input. I specifically remember two of these events.

One was when the Mahre brothers came with some K2 reps ( a ski manufacturer) and brought their slalom skis that they had used in the Olympics. They did not look like anything we had in the store. Being a confident 20 something male I thought it would be easy to just step in and ski down the mountain and let the skis make me a better skier. Boy was I wrong. Yes I went fast, but turning these skis turned out to be very difficult. Let’s just say that it was not a pretty ending. The fact was that these skis were custom designed for a world class skier to enable him to compete at the highest level of competition. They were not designed for an above average recreational skier. They were useless to me other than the pride of saying I have skied on Olympic skis. What I learned is that equipment needs to match skill level.

The second demo day, and this will date me some, was for Burton Snow Boards. This was a time when most mountains would not allow snow boards on the mountain because they were too dangerous. After the first demo day I was inclined to agree. Never had I known that snow could come to your face so quickly. I struggled to get off the bunny slope, but after practice I was able to move up to an intermediate slope and finally to the top. Unlike the specialty skis this was a case of learning something new. I had to unlearn all that I had learned about skiing and learn how to handle the snow board. By the end of the day I was tired, but could honestly say that I could snowboard. I still prefer to ski, but do not think snowboarding is any more dangerous than skiing.

How does this apply to financial planning? Well, often we face the same challenges. I see the ads on TV saying it is easy to trade stocks or this computer program will make it easy to manage your investments. The reality is that investing is difficult. Like the skis that were designed for Olympic skiers it takes a certain level of skill and training to be able to use them. On the other hand like learning how to snowboard we all can learn more and what we once thought was dangerous may be just getting comfortable with something new.

The challenge comes from knowing when you are out of your league. I definitely was with the Mahre Brothers skis, but when I see how far snowboarding has come I am glad that it was not declared too dangerous. If you are going to use the tools practice first and consult a professional to check up or teach you as you learn. For myself I leave the actual investing to professionals and I will check up on them. I think they are like the finely trained athlete and will be better able to use the tools of the trade.

But for now I will sit back and enjoy the Olympics and remember my connection.

Go USA!

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Bulls Eye

Posted on January 29, 2010 by Steve Gaito, CFP

Why do some tasks seem so hard even though they are simple? Why are some difficult tasks easy for some and impossible for others? For several years I have had discussions with people about what they want to do with their life. The counsel I provided is based on time with the YMCA and the sales training I have received throughout my career. I do not remember who first presented this example to me, but I do know it makes sense.

The idea is pretty basic, but it explains a lot about why people are not satisfied with life. For some people life is frustrating because they spend way too much time in the outer two circles. I have found that those who are most satisfied with life live in the center circle. When you are working in the center of your target you feel a great sense of purpose and time and money pressure seem to disappear. There is excitement and energy that is evident in everything they do regarding the center of the target. I believe that it is there where we are using our God given talents to their maximum potential.

The frustrating part of life is when we move into the outer rings of the target. Often in life we are asked to do tasks that we do well, but do not enjoy. An example from my life is when I first graduated from college and worked for a company that sold life insurance. I was one of the top sales people for the company, but I hated what I was doing. I left in 9 months to take a job that paid 1/5 of what I was making with the insurance company. Further out in the spectrum are the tasks that you do not like to do and don’t do well. An example of this for me would be trying to teach foreign literature. I have a hard time with English literature. I am certain that the end results would be very poor.

After applying this approach to in my life I found that what I like to do is work with people identify and solve areas of concern in their financial life. I enjoy figuring out what is missing and where it can be improved. I love the discussions of what people want to do in life. I also like to help people figure out what they love to do and do well. I have spent the last two months developing a company that does that. The company is Fee Only Planning NC. The purpose of the company is to provide unbiased financial planning. The unique process is part coach and part counselor. Basically people were coming into my office and saying can you look at this and see what I am missing, or does this make sense to you. I realized right then and there that there was a need for someone to provide a review without any prejudice of products. What they wanted was truly unbiased advice from someone they trusted and was not making a commission on the sale. The next part, and this is what makes it unique, is together we work through the financial planning process and evaluate each step to see what needs the most attention and create action steps to address them, then we do not move forward until the first task is completed. You keep your existing professional relationships to implement the action items and when the action item is completed we work on the next issue. Since we charge only for our time you only incur expenses as you move forward.

I have found that this is when I am in my inner circle and feel most fulfilled. I plan on expanding the company across the state with additional CERTIFIED FINANCIAL PLANNER ™ practitioners. In the end the goal is to give each client a comprehensive plan for life.

As always feel free to give me a call.

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