If you have a financial planner, get your plan!

If you’ve been monitoring my FP columns and Wealthy Boomer columns the last week (see scrolling lists to the right of this blog), you’ll see a recent focus on financial planning. My Saturday column in the Financial Post simply reported on the annual symposium held last Wednesday by the Financial Planning Standards Council.

Even so, readers and even certified financial planners (CFPs) themselves seem to be surprised by the revelation by the cream of the FPSC’s own membership that many clients of financial planners don’t automatically receive a comprehensive financial plan at the start of the relationship. My blog on Monday shows some of the reaction, including from one RFP or Registered Financial Planner (who regard themselves as an advanced form of CFP). See IAFP.ca.

Financial planning is key element of The Findependence Day Model

Let me make it clear, as anyone who has read the book and this web site devoted to it, that I’m fully in favor of most investors engaging a financial planner, ideally a fee-only or at least a fee-based one, as opposed to one paid by commissions on product sales. I’ve argued that the heart of what I call The Findependence Day Model is a self-directed investor who buys ETFs or individual securities through a discount brokerage but ALSO receives guidance through a fee-only or fee-based advisor or financial planner.

In the book, there are not one but TWO characters who are CFPs: Theo, the grizzled veteran who has achieved his own Findependence Day and charges a low annual fee for clients who want to mimic his personal portfolio; and Bernie, the frugal financial planner who moonlights as a record store owner.

It should be obvious that if you’re paying someone to be your financial planner, then you should be getting a financial plan. If you’re paying on a fee-based model (i.e. asset-based), then the comprehensive financial plan should be included. If you’re paying on a fee-only basis, then it’s quite acceptable for the financial planner to invoice you for the preparation of this detailed plan prepared at or near the onset of the relationship.

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Improvements to this site

While this site was only launched in early September, this week we’ve made several changes, hopefully all for the better.

At the bottom right corner you can now see rolling feeds from my Twitter and Facebook accounts. This is in addition to the latest columns I write at the Financial Post and current entries at the Wealthy Boomer blog, which is housed at FinancialPost.com.

While we’ve not yet added feeds from the other two social media I participate in, you can also find me at Linked In and Google Plus (which I described here).

Cosmetically, we’ve added a bigger more visible button for those who want to order the book via PayPal. We’ve added some links under the Reviews & Media tab, including a fabulous new endorsement from none other than the Wealthy Barber himself: David Chilton.

We’ve also revised and expanded the entry describing the book: never easy in this hybrid category of financial primer/ fictional novel. (yes, the “financial novel” genre pioneered by the same David Chilton but see this entry for how Findependence Day has pushed the envelope on this genre.)

For those who have enjoyed the book but have trouble summarizing it to friends you think may be interested, my shorthand description is “a financial love story.” That’s how it’s described in one set of targeted Facebook ads that are currently running.

Findependence Day and Financial Literacy

With Financial Literacy Month coming up and then Christmas, I’d hope those who have enjoyed the book will spread the word.  Tell friends, neighbours and even local libraries about this unique book that helps raise the financial literacy of young people who are just entering the workforce and starting to form their own families.

Cartons of 36 are available at greatly reduced prices and you’d be surprised at who are buying entire cases: NOT the giants of the financial industry but everyday working people and parents. One dentist bought a case for his patients in British Columbia. Real estate agents are buying them, credit counselling groups, even business people from church.

Of course, the full-carton deal is also popular with individual fee-only and fee-based financial advisors: those I naturally consider the “good guys.” (and gals: the first to buy a case was a top-knotch Oakville advisor I first “met” on Twitter!) With Christmas coming, I’d remind financial professionals that if purchased in quantity, the book makes a less-costly client gift than a box of chocolates but will be timelier and longer-lasting.

U.S. e-book edition coming

One exciting development is that Findependence Day will soon be available as an e-book or tablet edition in a brand new U.S. edition. For now, the existing North American edition will be available only in the “dead-tree” edition sold on this site. As those who have read it know, the original edition provides both U.S. and Canadian financial content and is set in both countries. The new e-book is set only in the U.S. and provides a lot more information about IRAs, Roth plans, Social Security and other topics.

In response to reader feedback, the new edition will also feature a glossary and an end-of-chapter summary of what Jamie and Sheena learned. I have mixed feelings about this. I didn’t go that route initially because I didn’t want to break the “fictive dream.” On the other hand, since this book IS primarily a tool for raising financial literacy, once you’ve read it it’s useful to have a chapter summary at the end in straight prose.

There will be a few other surprises, so stay tuned. Remember, while I may only update this particular blog twice a week or so, the site as a whole is constantly changing because of the continual new content from my day job and social media activity.

As they say on 680 News radio, “the news is constantly changing, so check back three, four, five times a day.” Just kidding but hopefully there’s enough here to merit a bookmark and a look once or twice a week.

See you next time!

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How fee-only financial planners can help take the emotion out of DIY investing

Unlike the United States, where fee-only financial planners are ubiquitous (See NAPFA’s site here), they are a rare breed in Canada.

In fact, according to one of them, Jason Heath of Markham-based EES Financial, there are only about 150 true fee-only financial planners in all of Canada. Compare that to 75,000 who sell financial products of some kind, or to the 25,000 who call themselves financial planners, or the 18,000 who are CFPs or Certified Financial Planners.

Jason was the second half of my presentation at the MoneyShow in September. As I noted in this blog then — here — I view fee-only financial planning as one of three key strategic components underlying what I call The Findependence Day Model: the other two being use of an online discount brokerage and making exchange-traded funds or ETFs the core of a portfolio.

How DIY investors can avoid doing it TO themselves

Earlier this week in my Wealthy Boomer blog — here — I described a TD Waterhouse survey on discount brokerage use and emotions. I noted that while DIY (Do It Yourself) investors may think they can go it alone, at least in bull markets, in these kinds of violently volatile markets, it’s as likely they will do it TO themselves. A fee-only or even fee-based advisor will likely more than pay for themselves just by acting as a sober second opinion and restraining the self-directed investor from succumbing to emotion-laden decisions at what may ultimately prove to be the worst possible time.

But fee-only planners do a lot more than just pick investment funds. Heath’s list includes tax planning and preparation, insurance needs analysis, estate planning and settlement, retirement planning  and negotiating or advocating on behalf of clients.

In short, fee-only planners can help reduce both investment costs and taxes.  As I argue in the other blog, no matter how knowledgeable a self-directed or DIY investor is, it’s extremely hard to overcome the emotions inherent in participating in today’s financial markets.

Fee-only is not an interchangeable term with fee-based

I think we’re in for several years of turbulent or sideways markets. If you can’t find a fee-only planner it shouldn’t be difficult to find at least a fee-based one. Remember, the latter charge a percentage of portfolio assets, typically between 0.75% and 1.5% a year. By contrast, a fee-only planner or advisor charges by the hour, monthly or year, or by the project: such as designing a financial plan or conducting a comprehensive portfolio analysis.

Scrutinize this web site as the months go by and you should be able to identify some of the country’s better fee-only planners with whom I’m familiar. Heath is certainly one of them. You may be able to find a video interview I conducted with him when we originally launched Findependence Day.

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Evelyn Jacks recommends Findependence Day

I missed this when it came out a few weeks ago but tax guru Evelyn Jacks recently recommended Findependence Day in a recent roundup of financial books and online resources in a story entitled The Truth is Out There for Online Investors.

Here’s what the article said:

Evelyn Jacks is a fan of Jonathan Chevreau, who writes The Wealthy Boomer blog and Financial Post column, an informative look at finance, tax, wealth creation and investing issues. She also recommends Chevreau’s 2008 Findependence Day book, and works by author Gordon Pape (website, blog and extensive archives at www.buildingwealth.ca).

This shouldn’t have come as too much of a surprise, given that Jacks is on the federal Task Force for Financial Literacy. Findependence Day is also one of several books (including her own!) sold through The Knowledge Bureau. Click here to buy various titles online.

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Time to add your 4th Social Network: Google Plus

Most visitors to this web site are no doubt well familiar with social networking sites like Twitter and Facebook. Off to the right of this blog you can click on either to check out my activity on those two sites. I’m also active on Linked-In and for the past three years have been content to leave it at that. It’s a big time and energy commitment to get involved in these sites and I find they chew up a lot of time nights and weekends.

For that reason, I’ve been reluctant to jump on board every new social network that comes out. I didn’t join My Space and I only briefly tried out FriendFeed until it was acquired by Facebook. I didn’t join Google’s first attempt at social networking but have made the decision in the past week to join Google’s second try: Google Plus. I’m active there as Jonathan Chevreau.

Here’s my logic for “starting all over again,” despite a significant commitment to the other three sites, which I’ll continue to be active on. I always viewed Facebook as primarily for Friends and Family, although the Facebook account linked from this site is a newer account used for broader business and investment purposes. I view Linked In as essentially a rolodex of business contacts: the same people you’d normally exchange business cards with over the course of a working day.

Twitter I’ve viewed as a sort of free-for-all, open to the serendipity of random encounters. Of course, Twitter’s List feature allows you to drill down on very specific types of Tweeters. Since my focus is personal finance and financial independence, I maintain Twitter lists on everything from stocks to retirement to insurance and annuities to economics and politics, hedging and options.

So how is there room for Google Plus? Well, first of all, Google is a web powerhouse we all use anyway. Second, by being late to the market, Google seems to have figured out a way to leverage the experience of all who preceded it in social networking.

All my life’s a circle

The key concept with Google+ is Circles. The first “Circle” is your immediate family. The second is Friends: people you’ve actually met and with whom you have some kind of positive relationship. These two circles I view as equivalent to how I originally used Facebook:  a way to keep up with the family, to see what photos Daughter has posted while at college, etc.

The third Google+ circle is Acquaintances: people you’ve met that aren’t strangers, but nor are they bosom buddies. Probably, many people you know at work would be classified initially as Acquaintances, and hopefully after time some become real friends. But at least they’re real people who you’ve met.

The fourth circle at Google+ is “Following.”  These are people you’ve never met and with whom you have no relationship: many are celebrities or gurus of some sort who don’t know you from Adam. You’ve heard of them but not vice versa. So you “follow” them in the same way you’d follow someone on Twitter, fully expecting to be able to monitor whatever they’re putting out on their “public” feed. They may also be putting out more intimate content to their inner circles but alas, it is unlikely that we ordinary followers will be privy to those feeds. Such is the nature of the beast.

Finally, you can create and label additional circles, just as you might use Twitter lists to sort Tweeters into various categories. Since you’re currently reading a web site devoted to Financial Independence, you can be sure I’ll create at least one circle devoted to that topic.

It’s a big commitment to “start all over” with yet another social networking site. It’s still early innings for Google+. Through much of the summer, there was a three-month “by invitation only” trial but Google just threw it open to the rest of us a few weeks ago.

If you’ve not jumped aboard the earlier social networking sites, you might be comfortable starting now with Google + since almost everybody but the early-adopter stars are just getting up to speed and learning about it, building their circles from scratch. For those already active on the other sites, it remains to be seen how much Google+ displaces them. Personally, I expect to be a tad less active on Twitter and I was never hyperactive on Facebook to begin with.

Hope to see many readers of this blog over at Google +, in whatever circle makes sense.

And enjoy the rest of this beautiful Thanksgiving weekend!

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2nd Masters of Money blog: Guerrilla Frugality

The second edition of my new blog at InvestorEd.ca’s new Masters of Money series has just been posted here. This is a phrase I originated in an FP column some years ago and incorporated into the novel. If Findependence [Financial Indeptendence] is the end, then ultra frugality is the means to that end.

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Boomers for Business author tips Findependence Day

On Wednesday my Wealthy Boomer blog focused on a new book by Lisa Orrell, Boomers for Business. Its theme is all about what a boomer friend of mine, Norman Evans, has long predicted: that it’s time the boomers got paid for what they know, not what they do.

I was pleasantly surprised to see that Lisa mentioned my own book today on her Facebook page.  She says this:

It’s a love story, a novel, that is actually a financial planning & education book that follows a couple’s ups & downs with their money struggles and what they learned to be better off financially

Here is the full post.

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Why Findependence Day isn’t just another knockoff of The Wealthy Barber

Back in 2008, when Findependence Day was originally launched, I conducted an “Interview with Myself” posted on the Wealthy Boomer blog. This is a little trick I learned from British writer Malcolm Muggeridge when he was the writer in residence at Western’s Journalism School in 1978-1979.

I’d planned simply to repost that interview here but couldn’t find it on the web. Then I thought it was probably time for a followup interview anyway. So here goes:

Interviewer Jon [IJ henceforth]. So, Jon, isn’t it a bit late to launch a web site three years after the book was originally published?

Author Jon [AJ henceforth]. Always with the muckraking, aren’t you journalists?

IJ: It seems a logical question.

AJ: There was a web site associated with the then-publisher, Power Publishers, which was also available as part of FinancialPost.com. But it was a static site and not much changed from month to month. This one is much more dynamic and of course you can buy books from it directly via PayPal, which means most major credit cards.

IJ: That’s about the only way you can get it now?

AJ: Almost. It used to be in Chapters, its web site and Amazon.com. You may still be able to get used copies via those sites but not new ones like this site is making available. The other way is a special offer from the Financial Post, which is giving the book to new and lapsed subscribers if they sign up for a certain period of time.

IJ: What happened to Power Publishers?

AJ: They withdrew from book publishing around February of this year. That’s when I bought the remaining inventory.

IJ: How many?

AJ: Enough to make a decent dent in the financial literacy of our children and young adults if they were all sold and distributed across the country. Want to buy a case?

IJ: I was about to ask you the same thing! I notice on the back cover of David Chilton’s The Wealthy Barber Returns that you say it’s the kind of book the Task Force on Financial Literacy should distribute. Did you mean his book specifically, or yours?

AJ: Well, both. I don’t view sales of competing financial books as a zero-sum game. Take a look at the Reviews elsewhere on this site and you’ll see several comparisons to The Wealthy Barber.

IJ: Except his sequel is non-fiction.

AJ: Right, but he really started something with the financial fiction format of the original. It’s been widely imitated.

IJ: Including by you.

AJ: I don’t consider Findependence Day yet another Barber knockoff. I tried to advance the art in a way that’s never really been done before, to my knowledge.

IJ: How so?

AJ: Take a look at Jim Daw’s review flagged in the review section here or in the book itself. He talked about the “twig of literature” of the personal finance novel.

IJ: Twig, as opposed to branch?

AJ: Right, that was very witty on Jim’s part and almost went over my head the first time I read it. But his point was that all those Chilton knock0ffs had what he termed “an aggravating sameness” to them. Most were “financial dumps” with a thin storyline and characterization. I agree with Jim: those kind of books are still coming out and I really had no intention of adding to them.

IJ: But you did.

AJ: With a significant new twist. I’d come up with the title and for a year was considering making it non-fiction. But like many journalists, there’s part of me that always wanted to try what I’d call a “real novel.” I’d written a practice novel right to the end and know more or less how it works: protagonists and villains, constant setbacks along the path to an overarching goal, setting, description, all of that. So I tried to weave the financial information into what I call “classic fictional structure.”

IJ: So you’d term Findependence Day a “real” novel?

AJ: I wouldn’t go that far. It’s a hybrid of a real novel and a financial primer.  In effect, it’s a financial love story. There’s conflict between the saver, Jamie, and his spender wife, Sheena. They disagree about having a monster home in the burbs or an affordable one downtown. Sheena wants investment real estate, Jamie wants to build a business. Eventually Sheena serves Jamie with divorce papers and he’s challenged with trying to reconcile these conflicting goals and desperately trying to save their marriage.

IJ: Does he?

AJ: If I told you, I’d have to kill us.

IJ: You feel that financial conflict is a major cause of marital breakups?

AJ: Sadly, yes, as Patricia Lovett Reid writes in the foreword.

IJ: It must have been challenging mixing genres.

AJ: Yes, which is why most traditional publishers avoid it. In fact, David Chilton himself told me he thought my story was “too good” in the sense that it took away from the financial content. But he’s been very supportive, as he generally is with other authors.

IJ: What do you mean by “classic fiction structure?”

AJ:  Conflict is what keeps readers reading a regular novel. You have a protagonist, in this case Jamie, who has a long-range goal: his Findependence Day which is 22 years away when the book begins.

IJ: That’s a long time horizon for a novel.

AJ: Yes, which is why one reviewer called it a “Financial Pilgrim’s Progress.” But instead of being weighed down by sin like Bunyan’s character, Christian, Jamie and Sheena are weighed down by debt.

IJ: And you have a bad guy, Al Peters.

AJ: That too is demanded by traditional fiction structure. Because the hero can’t just get what he wants every time a scene opens or the reader would stop reading. So Al frequently thwarts Jamie, especially when they become business partners. When you break down the book, you’ll find maybe 60 sections. In each one, someone has to have a goal and — here’s the key — he or she must FAIL to achieve that mini-goal by the end of the section. Then they have to have a new goal in the next section.

IJ:  Give us an example.

AJ: Sure. Early in the book, right after the TV show where the host badgers Sheena into tearing up her credit cards, there’s a scene where Jamie goes down the elevator with the financial advisor he met during the show, Theo. Jamie’s goal in that scene is to convince Theo to help him by becoming their financial advisor. But the fiction format demands that Theo refuse his request, which is what he does. He says “come back in a few years when you’ve eliminated your debt.”

IJ: And so his next goal is to find someone else who will be his advisor while he’s still in debt.

AJ: Right, which is how he comes upon the old hippie in the vinyl record store, which ultimately sets the plot moving in a new direction.

IJ: All this while trying to insert financial tips.

AJ: Yes, which is why the financial bits are always short: the moment I feel the reader may get bored, or myself as the writer, it’s time to move away from the financial instruction and on to the next aspect of the story. The result is that even if you’re already pretty financially literate, you may keep reading. Check the review from financial blogger Michael James, who could probably write all the financial bits himself in his blog. But even he admits the story got him “hooked” after the first third, and then he read the last two thirds all at one sitting some lazy Sunday morning.

IJ: There’s room for a sequel?

AJ: Maybe. I’d thought of following the daughter, Michaela, by doing a “next generation” followup. But I won’t attempt it while I’m still working full time.

IJ: So when you reach your own Findependence Day?

AJ: Precisely.

IJ: Guess that’s all the time and space we have, Jon.

AJ: I know the drill, JC. Always a pleasure.

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