Rick Kahler's Financial Awakenings

Our next teleclass will give KFG clients important information on our updated disclosure notice.  That notice is technically referred to as our ADV – Part II, which is filed annually with the SEC. The ADV – Part II provides you with all the information you need to know about how we do business, including disclosures of potential conflicts of interest. We send this out annually to KFG clients, which is an SEC requirement.

Unlike brokerage firms, who are regulated by the NASD because they sell products and receive commissions, we are regulated by the SEC, as we only sell advice and receive a set fee.  Therefore, when you do business with a major brokerage firm, you are a customer.  When you employ KFG as your financial planner, you are a client.  As you know, there is a big difference between a customer relationship and a client relationship. When it comes to me and my money, I would much prefer to be a client!

I will go over our updated ADV – Part II during our next monthly teleclass on March 16 at 4:00 pm, MST. Please email clientservices@kahlerfinancial.com or call 605-343-1400 to register for this teleclass. A day or two prior to the teleclass, you will receive an email with all the details to participate in either the phone call or both the phone call and the webex presentation, where you can also see Rick’s visuals "live" on your computer. If you cannot make the call "live," the recorded version, along with any handouts, will be available on the KFG Clients Only section of the website, under “Workshops, Teleclasses, and Events.”

LISTEN TO RICK’S WEEKLY COLUMN:  Download school_shopping.mp3

When I was a kid, “school shopping” meant buying notebooks, pencils, and erasers. It certainly didn’t mean “shopping for a school.” Such an idea was not part of our vocabulary, it wasn’t thought of, and it was certainly not an option. Growing up in Rapid City, you attended the school that was closest to your house. Period. End of story.

Times have changed.

My wife and I recently went school shopping for our daughter, London, who will enter 4th grade next year. Beginning with preschool, she has only known one school, Children’s House Montessori. The Montessori system has worked wonders, but we knew the day would come when London would need to make the switch to a more conventional school. That day arrived a bit sooner than we were hoping.

Our first surprise was that if we were going to send London to a private school next fall, the deadline for applying was as early as Jan 31. This caught us a bit by surprise in mid-January, meaning we had two weeks to make our decision. The serious shopping was on!

We visited five possible schools and compared curriculums, facilities, and staff. We also requested from each school the results of the Stanford Test which is given every March. There are certainly flaws with just basing a decision on the test results. (For example, one school can teach to the test, while another may not.) Still, we felt it would give us the best “apples to apples” comparison of the academic program of each school.

Our second surprise was how close four of the five schools ranked in the Stanford tests. I’ve had a belief that private schools academically outshine public schools. While I believe that is true when comparing the averages of all public schools, it certainly wasn’t the case here. There was very little discernable difference between the one public school and three of the four private schools.

Because the elementary schools were so similar, we decided to compare middle schools and base our choice on the middle school we would choose for London. Once again, we were surprised at how close the one public middle school’s scores were in comparison with the two private schools. Using the Stanford Test scores of the middle schools to break our elementary dilemma didn’t work.

But, to be complete, our next step was to look at high schools. Here there was a wider margin in test scores, but the gap was still not enough to make those scores a deciding factor.

After all our comparisons, we finally made a decision based on a wide range of factors. We gathered as much information as we could about such exterior factors as test scores, programs, class sizes, and tuition costs. We also found out as much as possible about the less tangible aspects of each school: its relationship with students and parents, its philosophy, and its overall “feel.”

What this process ultimately came down to was choosing a school with a philosophy and approach we thought would best meet our daughter’s needs. Expanding our search beyond the elementary level to middle and high schools gave us some crucial information. We realized we were selecting, not just an elementary school, but a school system. We also, in all probability, were selecting a school for our son as well as our daughter.

Will this prove to be the “perfect” school? Only time will tell. We do know that we made our decision as carefully and consciously as we could. Because of that, we’re satisfied that we made a choice that will be a good one for our family.

From Kathleen Fox, co-author of Conscious Finance

I participated in the Feb. 22 Wealth Builders workshop, and I’m glad I did. That’s not just because of the food, either, though the breakfast alone was worth showing up for.

After we had enjoyed Dee’s wonderful culinary creations, we settled in with second cups or tea or coffee to listen to attorney Tom Simmons tell us about South Dakota’s new laws on Domestic Asset Protection Trusts. This is a complex topic that could have been drier than yesterday’s scones without clotted cream. However, he did an excellent job of presenting it clearly and making it interesting.

During the second half of the workshop, Rick and Laura Longville led us through some written exercises on life aspirations and goals. I’ve done these before, but going through them again was valuable and gave me some new and useful insights. This process is one of those things we should all probably do annually. When somebody will guide you through it and feed you well at the same time, that’s too good an opportunity to pass up.

This workshop is being offered again on March 29, over lunch rather than breakfast. 
If you have a chance to participate, it would be well worth your time.

British Broadcasting Corporation (BBC) Seeks Millionaires and Billionaires for new prime-time program to be aired on major network.

Kahler Financial Group President Rick Kahler to Serve as Consulting Producer for Show.

(Rapid City, S.D.and London, England UK – 21 February 2006). The British Broadcasting Corporation (BBC) is seeking to cast five successful entrepreneurs, (millionaires or billionaires) for a major original network series. The series will match these high-net-worth individuals with non-millionaire contestants to develop a new business during the run of the program. All aspects of the endeavor will be taped for airing during the program season.

Rapid City, South Dakota-based Certified Financial Planner Richard Kahler, president of Kahler Financial Group (www.kahlerfinancial.com), is consulting producer on the project and is assisting the BBC in locating and screening individuals to participate. According to Kahler, “This will be an exciting and unique opportunity for established millionaires and billionaires to demonstrate their survivability and business acumen while working with limited resources and starting from scratch.”

Kahler and the BBC request that anyone of significant high net worth, who feels qualified and interested in participating in this nationally broadcast television program to be broadcast in the United States over one of the major television networks, please call Rick Kahler at 605-343-1400 (MT) or by e-mail to rick@kahlerfinancial.com for more information.  All preliminary conversations are treated confidentially. The selection process and taping is scheduled to begin shortly. Serious inquiries only, please. (Media contact information is below.)

ADDITIONAL INFORMATION ON RICK KAHLER:
Rick Kahler, CFP, ChFC, CCIM, is President of Kahler Financial Group (www.kahlerfinancial.com) and one of the first fee-only financial planners in South Dakota. Bloomberg Wealth Manager Magazine (Aug 2005) recognized Kahler Financial Group as the largest wealth manager in a five state area. Kahler was also appointed to manage the State of South Dakota’s six billion dollar retirement portfolio from 1998-2003.

Kahler is also the co-founder of the Klontz-Kahler Institute (www.klontzkahler.com), dedicated to training financial planners and counselors the art of financial integration.

He has been published or cited in USA Today, Wall Street Journal, Journal of Financial Planning, Consumer Reports, Money Magazine, Bloomberg Wealth Manager, Counselor Magazine, Registered Representative, and Solutions. He has co-authored “The Financial Wisdom of Ebenezer Scrooge,” (Health Communications, Inc., 2005) with psychologists Ted Klontz, PhD and Brad Klontz, PhD; and “Conscious Finance” (FoxCraft, Inc., 2005) with Kathleen Fox. Further information about Rick Kahler can be found at www.kahlerfinancial.com.

Media Inquiries:

Mike Szimanski

BuzzRoad Communications

202.558.8005 (EST)

mike@buzzroad.com

# # #

Join us this Thursday, February 23 from 4:00 p.m. to 5:00 p.m. MST, for a special webinar on how to use the exciting Internet tools and information offered by Kahler Financial Group.

We will show you our new "KFG Clients Only" password protected section where we will post all of our forms and documents for easy downloading, and audio explanations of each.  There, too, you will find a complete library of our monthly teleclasses and webinars and our quarterly workshops.  We will take you through the other KFG website and the Financial Awakenings (web)blog, showing you how to use the power of these new KFG tools to enhance your finances.

This amazing technology moved quickly, and now you can, too. All you need is a phone, an e-mail address, and your computer. Contact us at clientservices@kahlerfinancial.com, or 605.343.1400 for further information or to register for this informative event. All experience levels welcome.

I have recently negotiated an interesting new opportunity that not only seems to play to some of my strengths but also gives me a rather unexpected brush with pop culture. After what I am told was a rather exhaustive nationwide search, The British Broadcasting Corporation (BBC) is looking for my help in finding and casting five successful entrepreneurs, (millionaires or billionaires) for a major network series. The series, "Millionaires’ Challenge," will match high-net-worth individuals with non-millionaire contestants to develop a new business during the run of the program. All aspects of the endeavor will be taped for airing during the program season.

It’s hard to imagine that this Rapid City, South Dakota-based Certified Financial Planner is the consulting producer on the project, but here I am. A key part of my role will be seeking individuals to participate. This will be an exciting and unique opportunity for established millionaires and billionaires to publicize their company, gain national recognition for a new business idea, and demonstrate their survivability and business acumen while working with limited resources and starting from scratch. (Contestants are given a limited start up budget and per diem.)

Since even I am not fully aware of how far reaching the Financial Awakenings blog is, I will mention it here in the event any readers feel they know someone or have a client, friend, or colleague who may have what it takes to participate in this nationally broadcast television program to be broadcast in the United States over one of the major television networks. If you do, or you have any ideas, please contact me directly at 605-343-1400 or by e-mail at rick@kahlerfinancial.com for more information.  All preliminary conversations are treated confidentially. The selection process and taping is scheduled to begin shortly.

Welcome to the exciting world of podcasting. If you’ve never listened to podcasts before or are little intimidated, you shouldn’t be. A podcast is simply an audio computer file that is posted here for you to listen to or save. It’s very similar to any Word or photographic document you probably open, save, and look at every day. Podcasts are in a file format called MP3.

The podcasts here are of Kahler Financial Group’s articles, book chapters, radio shows, and seminars and webinars. We’re all busy today, so you can download the podcast or podcasts that look interesting to you for later. And you may download them onto your computer or your portable MP3 player such as an iPod. And, you can e-mail them to friends, family, advisers, or colleagues.

Please enjoy them, and check back here often. We will be adding new podcasts regularly.

CLICK HERE TO LISTEN TO RICK’S WEEKLY COLUMN: Download 022106_are_you_a_client_or_a_customer.mp3

Take this simple test: What is the difference between a financial planner and a broker who works for a major financial institution?

If you answered, “Nothing,” you are wrong. Don’t feel bad, though; eight out of ten people would agree with you.

There are two major differences, and they are important. First, a stockbroker is a sales person, registered with the NASD. A financial planner is an advisor, registered with the SEC. Stockbrokers make their living selling you financial products. Financial planners make their living disbursing unbiased advice. Stockbrokers get commissions; financial planners charge fees.

To a stockbroker, you are a customer. To a financial planner, you are a client. This is much more than a semantic distinction. If you are a customer, the broker who sells you goods or services works for the company you’re buying from. If you are a client, the financial planner works for you.

Regardless of what the TV ads and brochures say, to stockbrokers working for one of the major financial firms, you are simply a customer or a prospect. The law requires they treat you fairly. The law also requires they put their firm’s interests above yours. Their loyalty is to the company.

Conversely, financial planners are duty-bound to put your interests above their own or their firm’s. This is called a fiduciary responsibility to you. It is the same relationship you have with your attorney or accountant.

Secondly, a stock broker typically sells only investments or insurance. A financial planner will advise you on those areas and many more, including asset and income protection, tax strategies, cash flow management, legacy planning, retirement planning, life aspiration coaching, and improving your relationship with money.

Beginning January 31, 2006, the SEC has a new rule aimed at clearing up the confusion. This rule requires stockbrokers to disclose whether they are acting as a salesperson (where you are the customer) or a financial planner (where you are the client). In the latter case, they and their firms will need to register with the SEC and provide all the conflict-of-interest disclosures required by law, something the big brokerage firms loathe and have fought hard to avoid.

For many years, large firms like Merrill Lynch, Dean Witter, A.G. Edwards, Edward Jones, Piper Jaffrey, and others have spun their advertising and communications to leave the illusion that they were doing financial planning. This illusion is one of the primary reasons the public assumes investment advisors and financial planners are the same.

To add to the confusion, the representatives who work for these firms have titles like “account executive,” “certified senior advisor,” or “financial advisor,” when the bottom line is that they are salespeople. They don’t make a cent unless you buy something from them that pays them a commission. Even products that you are told don’t have a commission unless you sell them prior to a stipulated number of years, really have commissions.

On the other hand, a true financial planner is registered with the SEC and has a fiduciary interest to place your interests first. The financial planner must disclose any conflicts of interest by providing you something called an ADV. If you want to know whether your financial advisor is a salesperson in financial planner’s clothing, you can go to the SEC’s homepage here.   Put in the name of your broker or financial planner. If he or she is registered, you will be able to view the ADV. You can also do a search by state of financial planners registered with the SEC.

Given the choice, most people would rather be clients than customers. Finally, the SEC has provided a way to find out whether that’s really what you are.

(For a more detailed discussion of this topic, see the “Money and Investing” section of The Wall Street Journal for January 28th, 2006.)

For more than 10 years Joanne and Gary have relied on Rick to keep the cash flow available so they can travel extensively and maintain their lifestyle in the beautiful Black Hills. Here is Joanne’s description of their most recent travels.

We realize daily that "Life is Good," and we appreciate what we have: three daughters, four granddaughters, one grandson and two great-grandchildren. We also have a 50-year marriage we’ll celebrate March 17, 2006, at Disneyland, followed by a Mexican cruise with our 17 immediate family members. Since we lived in Southern California and visited Disneyland the year it opened, we are returning to help them celebrate! 

Gary was a handsome Marine from South Dakota and I was just out of high school in California when we met in January and married nine weeks later in March! In 1972 we returned to South Dakota to live. We are both retired: Gary from Homestake Mine and Joanne from teaching.

Our travels are compromises: I get a few winter months in the southern United States, and Gary gets enough snow in South Dakota to plow with his Bobcat.

Our daughters and families have all been in the Army and now are either retired or active reservists. We spend a lot of time traveling to visit them: Hawai’i, Germany, Texas, Colorado, Georgia—and the list goes on.

We also volunteer at National Parks and/or National Forests. So far we’ve volunteered at Mojave National Preserve in California, Hawai’i Volcano Park and five times at the Coronado National Forest in Arizona.

Our most recent odyssey took place from December 2005 through February 2006. One highlight was a 14-day bus tour to Northern Mexico/Copper Canyon. The trip began and ended in Tucson. The daily schedule included craft demonstrations, plus home-hosted dinners and lunches. We also took a train trip from El Fuerte to Divisadero to be awed by Copper Canyon. The Spanish name is Barrancas del Cobre, and the canyon is larger (some places a mile deep and others a mile wide) and 1500 feet deeper than our Grand Canyon.

This was a Grand Circle trip, and because we toured in mid-December and didn’t have to fly to Tucson, the price was $1195 each. This was also our fourth trip with GCT (previous trips to Scandinavia, Peru and Egypt) so we had become “Inner Circle” members.

We soon realized what a boon this royal treatment was. We had welcome notes and gifts at most hotels, better rooms, travel gifts from GCT, and other special amenities. It almost became a joke with other, less-traveled guests. They’d find out we had a room 20 feet from the canyon edge while theirs overlooked a railroad track. It certainly made us want to book another trip to see what more the company will offer in the future.

Basically, we toured the coastal area of the Sea of Cortez. (We were on the opposite seaside during our Baja bus trip in 2000.) We visited Chihuahua, a very large, historic city where Anthony Quinn, a native, is honored with a bronze statue. Quinn returned many times and was a generous friend to his hometown. 

We visited old mining towns, including a Mormon settlement in the heart of peach and apple orchards. Former Michigan governor George Romney was born there in Nuevo Casas Grandes. The town has been there since the 1800’s, and most of the residents have dual citizenship and are bilingual.

We also toured the ruins of Paquime and experienced Mexican and Indian (Tarahumara and Maya) cultures through dances, craft demonstrations and home-hosted meals. We learned about pearl culture at the Monterrey Institute, experienced the Sonoran desert, and climbed a ladder to see a cliff dweller’s home at Copper Canyon.

Everywhere we went we had opportunities to buy crafts, but my mantra is, “I don’t buy if I have to dust it or can’t eat it or wear it.” Of course, we gave in a few times and bought a black pottery piece (by trading my Christmas wristwatch), a tiny doll and a pine needle basket. Gary succumbed at the ironwood demonstration (in someone’s back yard where we saw a demonstration from the raw wood to finished products) and bought a chili pepper crusher shaped like a cactus. And I did buy a t-shirt at a mission gift shop. (I’ve made a quilt with other tourist t-shirts from the past.)

We never thought we’d get tired of Mexican food but we did! In Chihuahua we found a Domino’s Pizza for a change. Gary also escorted me and a fellow quilter/traveler as we searched tela (fabric) shops for fabric. I bought two pieces for my “stash” which looked Mexican.

We needed a doctor for flu and cold symptoms about the fourth day and he came to the hotel, checked us both and wrote out what we needed. The doctor had very little English and I had my 35-year-old halting Spanish, but we managed to communicate fairly well.  In Mexico and most of Central America you don’t need a prescription. You just take the paper to the farmacia and buy the medicine.

We found clear vanilla at the last border town—a special request of our daughter Chris—and the store took VISA!! 

Our tour guide, Pedro Palma, a native of Mexico, took us to many places we’d never have seen alone. He seemed to know someone in every town we visited. Pedro jokingly told us about his travels when he was a “tourist” (translate illegal immigrant) before he became a tour guide. Our bus driver, Jack, was unfailingly polite and helpful.

You can go online to GCT.com or the sister company OAT.com (we went to Peru with OAT and Egypt and Scandinavia with GCT) to view the entire trip itinerary. If you don’t have Internet, the phone numbers are: GCT 800-221-2610; OAT 800-955-1925. There is also a sister company, VBT, which offers bicycle/barge tours. If you’d like to dream, get on their list, and you’ll get catalogs and brochures galore!

We haven’t decided our next destination yet, but Sicily, Italy and Ireland are all in close contention.

At trip’s end, we began our fifth time caretaking at Kentucky Camp, an old mining site in the Coronado National Forest south of Tucson. This really was idyllic. The temperatures ranged from the high 60’s to the mid 70’s, but it did get below freezing most nights. This area of Arizona is having a severe drought and future worries about forest fires, but we loved the weather.

Visitors to the old mining site need to drive five miles in on a dirt road then walk about ¼ mile down a hill to get to the visitor’s area and entrance to the Arizona Trail (think Mickelson Trail). We keep the area clean and neat, check and clean the vault toilets, greet visitors and answer questions.

We have cyclists, backpackers, hikers, and horseback riders from all over the world so it’s fun to read the guest book to see the various home towns. Various clubs and groups of five to 30 people show up weekdays as well as weekends. One weekend we had several Boy Scout and Cub Scout troops camping outside the visitor gate areas.

There is also a cabin named the Bed and NO Breakfast (sleeps 5) which the Forest Service rents for $75/night. It’s amazing how often this cabin is rented. It boasts electricity and heat inside, but the water is outside on a patio and the vault toilet is down a path about 100 feet away. I guess tenants like the solitude, quiet and awesome night sky as well as the opportunity to walk the trail and learn about the area.

We hunker down and only go to “town” (Sierra Vista) once a week or so. We pick up mail at Sonoita and check email at the little town library. We aren’t bound by a schedule but try to stay onsite when traffic is heaviest. There’s a terrific little winery just outside Nogales, Arizona where we stock up each time we’re in the area. We didn’t even walk into Mexico this time.

You can check out the volunteer opportunity by going online at passportintime.com and clicking on Arizona, then new projects where you’ll see the description of Kentucky Camp and the duties involved. I think August and December of 2006 are still open. We are slotted in again for November 2006. 

I mentioned on January 27, that our book, The Financial Wisdom of Ebenezer Scrooge: 5 Principles to Transform Your Relationship with Money, had been chosen by Dr. Laura Schlessinger to be a part of her book club, “The Reading Corner,” on her national syndicated radio show.  I have recently received confirmation that the Scrooge segment is scheduled to be aired on Monday, February 27^th. Dr. Laura’s website, www.drlaura.com, has all the listing of airtimes for affiliates around the country.  Also, a live broadcast can be heard on the website between 12:00 p.m. and 3:00 p.m. She will also have an area on her webpage www.drlaura.com/reading for listeners to purchase a copy. We are honored and flattered to be a part of so few books to receive such high praise from a respected nationally syndicated talk show host.