Culture is “The stories you tell yourself about how things ought to be, usually at a very young age.” This definition came from social anthropologist Dr. Jennifer James as she spoke to several hundred financial planners at the Financial Planning Association’s annual Retreat in Palm Springs, CA.

James’s definition of culture is similar to the idea of “money scripts,” the beliefs about money and how it works that a person typically develops during childhood. We assimilate our money scripts from a number of sources, including our parents, caretakers, siblings, teachers, and our society’s culture.

One example of a cultural money script, which James said is primarily found in the United States, is “anyone can be a millionaire.” Whether this is a realistic belief or not, she pointed out that “culture is more powerful than common sense.” Continue Reading »

During a recent interview with a reporter, I mentioned the importance of living on what you earn. To me, this is a no-brainer. It’s the most basic of financial precepts and the foundation of financial health.

Her response was both fascinating and frightening. She said something along these lines: “Our popular culture no longer supports the idea of living within your means. At least among celebrities, sports stars, TV shows, and music intended to appeal to the younger generations, living on what you spend isn’t something to admire. It’s geeky.”

In one way, I suppose, this attitude makes a certain amount of sense. “Living large” may seem to be one way of expressing a sense of optimism about your future. Go ahead, put it on your credit card. You’re on the way up; you can afford it—or at least you expect to be able to afford it next month or next year. Yet all too often, living large for a season can set the stage for subsisting small for the rest of your life.

I suspect this kind of pseudo-optimism is based as much on fear as on genuine confidence. Many of us have probably had the experience of feeling pressured to spend more than we could afford. Continue Reading »

The Paladin Registry announced this week that Rick has been awarded the its Five Star quality designation. The Paladin Registry is an independent firm that provides free education, search, and documentation services to investors who use the services of financial planners and advisors. The Registry awards its Five Star quality designation to professionals who meet its high minimum standards for credentials, ethics, and business practices. Less than 10% of practicing planners and advisors meet the Registry’s minimum standards.

Jack Waymire, Paladin founder and author of the highly regarded book Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor (Wiley, 2003) said, “Registry services solve three major problems for investors who rely on planners and advisors to achieve their financial goals. First, it’s not easy for investors to find high quality advisors. Second, when they find advisors they may not know the right questions to ask to determine their quality. And third, they may not know good answers from bad ones. Consequently, millions of investors hire the wrong advisors for the wrong reasons and fire them within two years.” Continue Reading »

Rick had the honor of being part of a panel discussion at National American University’s Alumni event on Saturday, May 16th, in Rapid City. The panel directed their remarks to the causes and cures of the current recession. Also serving on the panel were Linda Rabe, president and CEO of the Rapid City Chamber of Commerce, Lloyd Sohl, president of Great Western Bank in Rapid City, and Dr. John Quinn, CEO of the Rapid City NAU campus.

Rick said, “I’ve served on a lot of panels and have probably never been on one that flowed so well. One might have thought we had met a few times and assigned roles! I thought every presentation and subsequent remarks were timely, insightful, and thoughtful. It was too bad it wasn’t recorded. Congratulations to Guy Tillett for putting on such an interesting forum.”

The above headline would have certainly been more in line with the informative story by Davis Janowski that appeared today in InvestmentNews. The article featured a number of financial advisors who use the electronic media to better communicate and educate their clients. In the interview, I noted that a secondary benefit of being “high tech” to serve clients is that the number of new clients KFG receives from the Internet is second to word of mouth. It was the only comment in the entire article that pertained to marketing in any sense, yet the headline writer chose “Advisers enter blogosphere to lure prospects.”

“Lure” was a poor choice of words, in my opinion. The word means to entice, a come-on (qualities that attract by seeming to promise some kind of reward), to hook, a sweetener (anything that serves as an enticement). In South Dakota, lures are artificial bait (empty promises) used to catch unsuspecting fish and fry them up for dinner. Maybe the Bernie Madoffs of the world do that. Maybe even the average reader of InvestmentNews does that…….but most advisors I know don’t.

As a columnist for various newspapers for over 18 years, I understand that writers rarely write the headline of an article or story. In this case, the headline says more about the money script of the copy writer than the content of the article, which was well written. To read the article, click here.

If some of my clients insist on responding to the current recession by getting completely out of the markets, buying gold, or stuffing their mattresses with cash, what is my responsibility as their financial planner?

I recently participated in an online discussion of that issue with some professional peers. One of them raised an important question. How far should planners go to try to keep people from making what the planner views as a serious mistake? It’s important to respect someone’s competence and ability to make their own life decisions. On the other hand, should a planner stand idly by and watch someone walk off what the planner perceives as the edge of a financial cliff?

Part of the answer to this dilemma is to understand a planner’s legal obligation. This obligation depends on whether you are a client or a customer. If your planner is a fee-only independent planner, you are a client. If your planner works for a major investment bank, you are probably a customer, which means the planner has no obligation to put your interests first. Continue Reading »

Try to imagine the enormous range of possible financial conditions in which human beings can live. At the lowest end is bare subsistence—those with the minimum food and shelter possible to sustain life. At the highest end is unlimited wealth—multi-billionaires who have more than they, their children, and their grandchildren could possibly spend.

Most of us, of course, live in relatively narrow bands somewhere in between these extremes. In our book Wired for Wealth, co-authors Brad Klontz, Ted Klontz, and I describe these bands as “financial comfort zones.” Continue Reading »

Kahler Financial Group clients now have some new options on how you receive information from TD Ameritrade. Here are your new options:

1. You have the choice of receiving your trade confirmations on a calendar quarterly basis, in either electronic or paper format, instead of receiving a confirmation each time we trade.

2. You can have electronic access to all the accounts in your household, with one username and password.

3. If you are receiving all your statements by mail, you can have them delivered in one mailer if they have the same address.

If you are interested in any of these options, please call or email Darla at our office, 605-343-1400 or Darla@kahlerfinancial.com, to complete the appropriate paperwork.

This is an interesting post, titled “In Short, We Are Doomed” and I would add, “To Repeat the Mistakes of the Past.” V. Anantha Nageswaran writes that, “to succeed in investing, investors need less of these and more of analytical and problem-solving skills. In other words, reflection is more important than reflexes. But it is our reflexes that both come to our rescue when we are in danger in normal circumstances and push us into danger and follies when it comes to investing. Normal people are not only overconfident, but also overconfident of their ability to overcome overconfidence.” You can read more by clicking here.

According to a survey by the University of Michigan, the number of people concerned that we are headed into another Great Depression is actually less than during four other periods in history. Those periods where more people were concerned about another depression were 1974 to 1975, 1978 to 1982, and 1990 to 1992. You can read more here.