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Greetings!
2011 may well be remembered for activists taking to the streets. They did so in the Arab world toppling governments while fighting for new leadership, in Greece and Europe over turmoil and austerity cuts, and here in America as the Occupy Wall Street movement raised questions of political and economic injustice. We will look at the latter movement and its demands in this issue and my friend, Tim Maurer will look at how we take these issues into our lives (or not). We also have a thought on how marriage can be nurtured in a complex world.
As always, we encourage your feedback on issues
you would like to see in this forum and feel free to along to your friends and family.
We thank you for your continued patronage to Dowley & Company.
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Money and Marriage
Several times in recent months, my wife has greeted me as I returned from work with the statement, "You will never guess who is getting divorced!" Sometimes there is little surprise and I can see the parting as though it were an easy afterthought. The struggle was apparent and the result is accepted. But every so often, the news comes as a shock so poignant that it makes me feel as though no marriage is sacred; no relationship sacrosanct. The truth is, none of them are. In two recent cases, I could not possibly have imagined the outcome beforehand. It has me thinking about relationships and their apparent fragility. Why do some last and others languish?
Relationships can be compared to a well-kept garden; the best ones are given constant care. They are pampered to keep out the weeds and pruned to keep them healthy. There is usually some diversity in the plant life and plenty of color to render it pleasing to the eye. Sometimes one part is in bloom while others conceal their blossoms and still others hideout under the cover of snow. Some plants weather the winter well, and others need replanting each spring. There are insects, animals, and foul weather to contend. All the while the gardener who expects good results must be patient. Yet sadly, some plants and even some gardens, don't survive.
The effects of divorce are profound and are well documented. They can be devastating both emotionally and financially. This is especially true where young children are involved. Three major areas provide the strain on the modern marriage: money, sex, and children. Add in the hectic pace of today's modern life, and you have an easy recipe for a 50% divorce rate. The pressures are enormous and the answers can be hard to find. Any committed relationship, whether anointed by marriage vows or not, requires the same treatment as our garden. The techniques can be more subtle but the results are no less profound.
The best-designed financial plans rarely survive the effects of dividing them in half. Supporting couples in maintaining healthy relationships, then, is arguably as important for a financial advisor as handling a stock portfolio or managing cash flow. Keeping relationships sound requires both. One without the other is problematic.
So what to do?
The first step in any effort to strengthen a marriage or other relationship is consciousness. What do we get out of the relationships? What do we put into them? What would our lives be like without them? Think of this as an inventory of our relationship as it stands. What most of us value in this world is to be heard and understood, respected, and, ultimately, appreciated and loved for who we are. Once we have the value of the relationship firmly in mind and we realize that its longevity and care cannot be taken for granted, we can explore the process of nurturing it.
In this search, perfection is elusive. One partner's efforts to "cultivate" what has previously gone "untended" may surprise or confuse the other partner. If those efforts are subtle, the partner may even seem to ignore or not notice them. Be prepared for setbacks. Be persistent. Sooner or later, even the most distracted of us will catch on.
Keep it simple
I try to imagine what needs to be done to win my wife's love every day. What could I do to remind her of her importance to me? Delivering unexpected flower arrangements for no good reason works well. A single red rose left where she will find it can have amazing powers. Date nights are a must. A simple phrase that reminds her of how beautiful she is can have the desired effect of making what, Harville Hendix describes as deposits in her emotional bank account (hopefully big ones). Creativity often wins out over massive expenditures. I believe this is where many people get it wrong.
Many people confuse the power of money with love. The belief persists that we can "buy" our way to great relationships. The truth is money may buy the trappings, but they are not love. Love is not for sale and cannot be purchased at any price. Many confuse sex with love. Sex may be an expression of love, but it is not enough to sustain any relationship any more than money can. The ongoing parade of failed relationships in the tabloid press is proof enough of this.
Love, at its best, requires intentional effort and time just like the best gardens. Tended well, it will be the foundation of a magnificent life and the basis of all other endeavors involving money, sex, and the raising of children. Try it and I believe you will have nothing to lose and everything to gain. Love ferociously and unequivocally knowing that what you put into it will come back to you many times over.
Chris Dowley
December 2011
Chris Dowley has spent the last 25 years as a financial advisor helping individuals and their families organize themselves financially and realize dreams. He has spent the last 14 years as the managing principal of Dowley & Company, Inc. in Marblehead, MA where he practices financial life planning and lives with his wife and son.
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Occupy All Streets
On a recent trip to a midsize city, I had the fortune to come across an "Occupy" encampment on the capital city's plaza. I took some time to mingle with the protesters and talk with them about their motives and hopes for their movement. I came away with the feeling that many of them were unclear about the goals they hoped to accomplish. They seemed to see the symptoms of the fiscal unrest that grips our world (foreclosures, unemployment, student debt) but were unable to come up with answers other than redistribution of wealth. It left me looking for something more.
At a meeting of advisors from around the world, I suggested the "Occupy" message needed to be better articulated. The following is what we came up with:
- Congress should pass HR 1489 ("Return to Prudent Banking Act"). This bill would reinstate many of the provisions of the Glass-Steagall Act of 1933. For those of you who don't know it, the repeal of provisions of the Glass-Steagall Act of 1933 by the Gramm-Leach-Bliley Act in 1999 effectively removed the separation that previously existed between investment banking (Wall Street banks that issued securities, engaged in mergers and acquisitions, etc.) and commercial banks which accepted deposits (checking, savings, CD's, home mortgages, auto loans). The deregulation also removed conflict of interest prohibitions on investment bankers serving as officers of commercial banks. The effect of this was to open the coffers of FDIC-insured deposits to the high leverage world of the largest Wall Street banks. It allowed them to engage in their risk-taking ventures at the expense of the US taxpayers who had to bail them out when their bets went sour. Do the math. We had the Glass-Steagall Act in place for 66 years with very few banking problems. In less than 10 years without it, the system came to its knees with record numbers of FDIC institutions being taken over or recapitalized with TARP money (thank you, taxpayer). This is a no-brainer.
- Use whatever federal authority is appropriate-Congress, Justice Department, FBI, or bring back Elliot Spitzer-to prosecute any and all Wall Street insiders who clearly broke the law and propagated the worst financial disaster since the Great Depression. If politicians really want to restore faith in America, start with restoring our faith in justice and give a sense of catharsis for millions. Some of these guys make Bernard Madoff look like a Cub Scout. If you have any doubts, check out the award-winning documentary film "Inside Job." Without this, how can any of us trust the financial systems we have come to depend on?
- Congress needs to reverse the Supreme Court decision which allows corporations to spend as much as they want on elections. This legislation might also allow political candidates equal air time in campaign season on television and radio, thus leveling the playing field for those wishing to hold higher office. Without this kind of legislation, corporations will continue to buy any and all elections at their convenience.
- Congress needs to reverse the Supreme Court decision giving legal status as "persons" to corporations. Why is this important? Corporate lawyers have used or abused the 14th Amendment in order to give corporations power they were never intended to have. The amendment made it unlawful to "deprive any person of life, liberty or property without due process of law." While this was originally intended to protect the interests of freed slaves after the Civil War, it has been used increasingly to preserve the rights of corporations at the expense of our citizenry. If you have doubts about this, please consult the documentary "The Corporation" on the website www.thecorporation.com. I maintain the strong conviction that corporations are not persons and should not be treated as such.
- Congress should revise the tax code by passing the so-called "Buffet rule." The effect of this would be to increase taxes on corporations and close tax loopholes. It would also increase tax revenues by prohibiting corporations from hiding revenues in foreign banks or as it is called, "offshore." Corporations are in a unique position to engage in business transactions around the world and as such, are able to keep finances on the books of their foreign subsidiaries. Using these entities has allowed them to avoid billions of dollars of taxation that would flow into the US tax system. Enough of this nonsense-it's time they paid their fair share of taxation in a country that enables their profits.
- Assuming we prosecute Wall Street criminals, it is time to revamp and fully fund the oversight function of the Securities and Exchange Commission. If we are going to restore faith in democracy and capitalism, it needs to be a system we can all believe in. Given the abuse of trust that large corporations and their CEOs have engaged in in the past 10 years, there can be no doubt that we cannot move forward as a democracy without extensive and rigorous oversight of our financial system and its entities. I consider this another no-brainer.
- If Congress is going to be effective, it would seem obvious that the power lobbyists have exercised must be curtailed. The stories of lobbyists writing legislation favorable to their constituents must be a thing of the past. It is simply unacceptable in any democracy that they be allowed to continue. No-brainer? You bet! I can't imagine voting in the next election with any conviction without this change.
- Congress also needs to pass what has come to be known as "Revolving Door Legislation." This would prohibit former government regulators from going to work for the very entities (corporations) that they once regulated. That means if you worked at the Food and Drug Administration for the last 10 years, you don't get to go to work in the pharmaceutical industry, making quadruple the salary, until a suitable waiting period has elapsed.
There were other suggestions our group put forth. Some involved environmental components and others involved the reinvestigation of the attacks of 9/11. My suggestion would be that if we could start with the list above, much of what would follow could solve many past transgressions.
What is at stake here?
Much of the criticism of the Occupy Movement has surrounded the call for the redistribution of wealth from the 1% who supposedly has it to the 99% who supposedly don't. I am not in favor of redistribution, but I would suggest that the 99% would be content with a system that is deemed to be fair. One need not look beyond the corporate malfeasance of the early 2000s (Enron, Global Crossing, WorldCom), the mutual fund trading irregularities of the mid-2000s (Putnam Funds, Janus Funds-thank you Eliot Spitzer), and the demise of Lehman Brothers, Bear Stearns and Bernard Madoff to realize that as long as the American dream is all about chasing big money at any cost, with no regard for ethics, it may be time to start looking for another dream in another part of the world. This democracy is doomed. Can we blame them for taking to the streets? When is enough ...well, enough?
I have never been a big fan of politicians nor of the political system. I confess I have little faith that any of the current crop of political "wannabes" will get any of this enacted. It does give me hope to watch the "Occupy " movement and the courage it takes to withstand the criticism, ridicule, police harassment, and brutally cold weather to stand for what you believe in. Whether we agree with them or not, inarticulate as they may be, their conviction is enough to make any true patriot smile. It reminds me of the kind of people who harassed Redcoats and dumped tea into Boston Harbor. I think somewhere Sam Adams is smiling.
Chris Dowley
December 2011
Chris Dowley has spent the last 25 years as a financial advisor helping individuals and their families organize themselves financially and realize dreams. He has spent the last 14 years as the managing principal of Dowley & Company, Inc. in Marblehead, MA, where he practices financial life planning and lives with his wife and son.
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Occupation Preoccupation
While many of the headlines dominating today's news are very important and financial in nature-a collapsing union in Europe and corporate greed in the U.S.-a disproportionate focus on them, considering our relative lack of control over their outcomes, does little more than increase our stress level. This increased stress level only leads to lower productivity in those parts of our lives we can control. It's important, therefore, to ensure you're addressing all of those things you CAN control in your money and life as a pre-requisite to the occupation of any given street. The following exercises are designed to decrease your stress level, increase your financial health and make you a better occupier of whatever cause you pursue:
1. Tune-out. We live in an age in which news is not just pervasive, it's invasive! As a financial planner, I'd even fooled myself into believing that it was a vocational requirement that I take in as much news as is humanly possible. Sadly, I must confess I have failed in my more important duties as a husband and father at times, barking out nonsense like, "Do you have any idea what's going on in the market right now??" as justification for being emotionally missing on the home front because of my preoccupation with volatility on Wall Street.
Last week, I took some advice to tune out and reaped the benefits. Instead of defaulting to the radio in my car, I defaulted to silence. What an incredible exercise! Instead of fretting over fresh news of the devaluation of my home, rising unemployment in my community and riots in Greece over calls for fiscal discipline, I was able to breathe at a more normal pace and appreciate the changing leaves for the first time this fall. It was as if time slowed down. The benefit? I walked into my office, my meetings and, at most importantly, my home, with a refreshed spirit and clearer mind.
2. Name your worries. With greater clarity from your tune-out session, you'll be able to better identify those things currently weighing on you. If you're like me, though, one of those primary worries is that you simply don't have enough time (our most valuable commodity) to complete everything you need to do that day; so begin one of your days with silence on your drive into the office and before you turn your computer on, write a list of those things that are currently worrying you. Many will be financial in nature: Your real estate losses, concern over a job loss or income reduction, frustration with market volatility, confusion regarding your 401k elections, increases in your health insurance costs and inequity in household cash flow.
After you've completed your list, you'll notice that simply writing your worries down and looking at them will be impactful. You may realize quickly that this-and-that are just silly, not worthy of worry. But I also encourage you to take notice of how many of them you lack control over. Draw a line through them, and begin disciplining yourself to cast off your worry for those things over which you have no control.
3. Control what you can. Regardless of whether or not you could've been wiser about your last home purchase, you don't have any more control over the depressed housing market today than the boom we all enjoyed in the early- and mid-2000's. You do have control, however, over your ability to refinance your loan at historically low interest rates, thereby reducing your monthly housing costs. If your loan-to-value ratio won't allow a standard refinance, look into a loan modification. You don't have control over the increasing cost of food, but you still decide what to put in the grocery basket.
The number one way to relieve your financial worry is through better cash flow management. Regardless of whether you're a struggling graduate making $20,000 per year or a business owner making $2 million, the health of every financial household is dictated by your discipline in the management of income and expenses. It's not easy to budget, because of the tedium and time required, but it is simple.
Many mistake budgeting as a chore for the financially desperate or destitute, but nothing could be further from the truth. If you were the CFO of a company and were presenting your annual plan to the board, they'd ask to see your budget. Can you imagine if you said, "Ah, money comes in and money goes out-it just always seems to work"? You'd be hunting for a new job, and the logic is no different on the home front. You're the CFO. Budget.
The protest movements across the U.S. that have gained steam in recent days and years are centered on economic issues, from the Tea Party to the Occupy movement. I seek in no way to condemn or ridicule anyone choosing to spend time engaged in a lawful occupation of whatever street for whatever cause near and dear. But before you occupy Wall Street, please occupy your street. You'll have less stress and be better financially prepared for whatever occupation you undertake.
Tim Maurer is vice president of The Financial Consulate in Hunt Valley, Maryland and teaches at Towson University, near Baltimore, Maryland. Tim is the co-author of the book, The Ultimate Financial Plan and can be read on the blogs Forbes.com and TimMaurer.com. He is a frequent speaker on personal finance topics. |
About Us
Dowley & Company is an independent Financial Advisory Firm started in 1997 motivated by the idea of making full service financial planning available to individuals and families. We pride ourselves in helping independent minded clients break through limitations and get to a place of greater affluence they might not achieve on their own. |
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