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? (more…)

One of the most heavily reported economic stories of recent weeks was the widespread anger over bonuses paid to AIG executives. What isn’t making the news, but is probably far more significant, is a different type of anger that I am hearing from friends and clients.

Suppose, like most of my clients, you have worked hard all your life. You educated yourself and found a good job. You showed up daily and did everything you were asked and more. If you went into business, you took risks. You learned to live on less than you made and saved as much as you could.

It wasn’t easy. You went without some of the luxuries that others enjoyed. Instead, you plowed the extra back into your business or put the maximum into your IRA and 401(k) plans every year. You paid your debts and your taxes on time.

For years you have been responsible and “done the right thing.” Today, you are mostly debt free. Your retirement account has grown. You don’t consider yourself rich, but you are doing okay financially.

If this describes you, I have a hunch that you are mad as hell. And it’s no wonder. Continue reading on FinancialAwakenings.com

One of my clients was blessed early in 2008 with two new grandchildren. As he had done for his previous three grandkids, he opened 529 college savings accounts for the two newest family members, with initial deposits of $500.

At the end of the year each new account was valued at $336.36. He told me, “They would have been better off if I had bought them each a piggy bank and put five hundred-dollar bills in it.” He was right, at least for this year.

Each January, this man adds $500 to each grandchild’s 529 account. This year, he’s hesitating to send in the new deposits. He can’t help but wonder if it would be wiser, just this once, to put the money into CD’s at his local credit union instead. True, the return isn’t much-only three percent-but at least it would be a gain instead of a loss. He’s questioning whether it might be a good idea to get that three percent gain, and then put the money back into the 529 plans a year from now. By then, he hopes, the accounts will have started to recover. Continue Reading at FinancialAwakenings.com »

The Chileans are perplexed with us. On a recent visit to Santiago, Chile, I was talking with a colleague who said, “You were the ones that taught us about the free markets, and now here you are abandoning those principles and moving toward socialism.”

He has a point. I get the growing sense that we are witnessing the transition of our economy from a “market economy” to a “political economy.”

While I’ve been pleased with President Obama’s cabinet selections to date, his January 9 speech at George Mason University was unsettling. Continue Reading at FinancialAwakenings.com»

I’ve done a lot of pioneering work in the field of uniting traditional financial planning with psychology. I am convinced that ten or twenty years from now, the best financial planning firms will offer an integrated service consisting of traditional financial planning, financial coaching, and financial therapy.

Right now, that is a pipe dream. Very few universities or colleges offer degrees where there is exposure to both disciplines. Click here to read more on FinancialAwakenings.com…

Rick’s advice on giving up on credit cards was picked up by the Associated Press in an article that talks about retirement resolutions for 2009. Read the entire article by clicking here.

Financial New Year’s resolutions are a common phenomenon this time of year—especially for anyone who overdid the holiday spending and who knows the new year is going to bring a new batch of credit card bills. Probably one of the most common financial resolutions is: “I’m going to make a budget and stick to it.”

In light of the current economy, making a fresh financial start is likely to be a wise move. Here are my suggestions for five financial New Year’s resolutions to help you manage well in the coming year: Continue Reading at FinancialAwakenings.com»

This time of year, family budgets are already strained by holiday giving, travel, and entertaining. The last thing anyone needs is an extra bill for the furnace going out, a big car repair, or an expensive trip to the emergency room. Payments like these are common budget-busters. They come under the category we usually think of as “unforeseen,” “one-time,” or “unexpected” expenses. We tend to be surprised by them. I hear clients say things like, “These are the expenses I feel are out of my control.” Continue Reading »

The ancient ethical will is a beautiful tool for those who don’t want their legal will to be their only “last words.” Updated for a modern audience, the ethical will is a non-binding personal legacy letter (or recording) that is attached as a side document to legal documents. With roots in medieval Jewish wisdom tradition, the ethical will has been rediscovered by people of all ages and faiths as a lovely and sensible instrument for timeless communication of the messages and information too important to go unsaid or fall between the cracks of generations. In short, ethical wills are love letters. They are created in the midst of life, works in progress by their nature, deeply satisfying for those who write them and treasured by all who are lucky enough to receive them.   Continue Reading

When we pass from this life, we will each leave a legacy. Regardless of our preparation-or lack thereof-for the end of life, we will indisputably leave something behind. That legacy will be both tangible and intangible.

Most of us know that the purpose of a will or living trust is to pass on the material things we want people to have. However, few of us have ever given much thought to how we wish to pass on our knowledge and beliefs.

That is where an old medieval tradition, something once called an ethical will, is gaining new ground. In those days, an ethical will passed on to descendants wisdom on how to live a life worth living. Continue Reading »

© 2008 Rick Kahler.  Reprinted with permission.