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Planning For Life

March 2011

In This Letter:

Preparing for Chronic Illness

Does it pay to be active?What We're Doing
Other News
Parting Thoughts 

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Change is constantly happening.   Embracing and preparing for change is one smart way to create a great life.  One of the best parts of my job is helping clients identify goals, and then help them create inner resiliency so they can stay on track for their goals when change occurs.


One way to prepare for change is to be appropriately insured.  This quarter, we are diligently preparing the yearly insurance reviews.  Expect these to be shared with you at the end of this month.  If any changes in your coverage need to occur, we act as your advocate to help you shop for the appropriate coverage.  Being fee only, and not selling any products or taking referral fees, you can be assured we are always in your corner.


Other ways we are doing good things...

We strongly believe in giving back to our community.  Last year, we sponsored The Money Bus to help provide free financial planning to many who cannot afford access to services.  This year, we are sponsoring two events to help people plan for the change that chronic illness can bring.  Please see the article below outlining these two events.  We hope you'll share this with others.


Finally, many of you know about my "hobby" of health care reform and the great opportunity I've had educating other planners in a non-partisan way about the contents of the reform law.  For those of you who are interested, I am speaking in Jacksonville for the Professional Women's Council of the Jacksonville Chamber of Commerce from 9 am until noon on Wednesday, March 9th.  I have a few complimentary tickets, so please contact me at 904-448-5158 if you are interested in attending.  See the link below for further details.


Have a great spring!

Carolyn McClanahan, M.D., CFP


"As Health Care Reform Turns"


Preparing For Chronic Illness


Chronic illness affects nearly 120 million Americans.  As a physician and financial planner, I deal with  many of the challenges people with chronic illness face.  In 2006, chronic illness hit home for Martin Shenkman, CPA, MBA, PFS, JD.  His wife, Patti Klein, was diagnosed with multiple sclerosis.  As a well known author on tax and estate planning issues, he quickly learned the landscape of planning for chronic illness and realized the need to educate others about this important topic.  He is my "go to" resource on planning for chronic illness. To spread the message, Marty and Patti are now traveling throughout the country providing advice to individuals and professionals on how to financially plan for chronic illness. 


Because traveling has become so difficult for Patti, the Shenkman's now travel utilizing their RV. They are making a trip down the east coast this spring, and we are fortunate they have chosen Jacksonville as a stop.


In conjunction with the NE Florida MS Society and the Michael J. Fox Foundation, Life Planning Partners, Inc. is proud to sponsor two educational sessions by Marty in Jacksonville.


Thursday, March 31, 6 pm until 8 pm. 

Hyatt Regency Jacksonville Riverfront

This session is for attorneys, accountants, and other professionals who wish to learn more about planning for chronic illness.  We have applied for one hour CLE, CFP, and CPE credit.  Registration will begin at 6:00, along with light appetizers and beverages.  The program is from 6:45 until 7:45 pm.  There is no cost to attend.  Please call 448-5158 to reserve your spot or email [email protected].  Seating is limited


Friday, April 1, 10 am until 11 am.

University of North Florida, University Center

12000 Alumni Drive

This session is open to the public - anyone interested in learning what they need to do to plan for chronic illness from a financial planning and estate planning point of view should attend.  Representatives from the Northeast Florida MS Society and the Michael J. Fox Foundation will be present.  In addition to Marty's informative talk, we will provide a list of local resources for those dealing with chronic illness.  Please call 448-5158 or email [email protected].  There is no cost to attend.  We want as many people as possible to attend this event, so please share it with your friends.


To learn more about Marty and Patti's adventure, go to


Does it pay to be active?

by Tim Utecht, CFA

A popular TV ad campaign features a talking baby who credits his financial success to the tools of a particular online brokerage firm (rhymes with "B-Trade").  This stock trading tyke is a prime example of an "active" investor - someone trying to identify the best securities to buy, when to buy them, and subsequently when to replace them with better choices.  This is the approach taken by most mutual funds attempting to "beat the market" (albeit, generally using fewer diapers). 


The alternative to this active approach is passive investing.  The passive method eschews forecasting, stock picking or market timing, and instead focuses on minimizing costs to capture as much return as possible from a broad representation of the market. 


Certainly active investing is more exciting, but is it the right approach? 


Active investing involves higher costs.  Trading, research and management expenses create a significant performance drag.  Nobel Prize-winning economist William Sharpe explained this brilliantly in an article twenty years ago entitled "The Arithmetic of Active Management."  Through simple mathematics, he demonstrated that the average actively managed dollar must under-perform the average passively invested dollar, due to higher costs.  As Mr. Sharpe explained, this will hold true for any time period, and data appearing to refute this principle is "guilty of improper measurement."     


Implicit in the active approach is an assumption that the future can somehow be better anticipated by a select few.  Investments are impacted by many unknowable future events, whether it's the next uprising in the Middle East, the next terrorist attack or the next natural disaster.  Long-term success arguably requires either consistently anticipating how future events will unfold, or simple luck.


Unfortunately, some things can be the result of sheer chance, including good investment performance, and it is difficult to differentiate skill from luck for a "winning" fund.  (Think of all the office football pools that are won by someone picking games based on the prettiest uniform color...)  Extensive research shows that there is little, if any, persistence in performance for top mutual funds.  In other words, top funds don't tend to repeat - at least no more often than would be expected to occur by simple chance. 


Certainly, some actively managed funds can (and will) beat the market, and therein lies the appeal of active investing.  In fact, due to the number of participants, the top performers will always be actively managed funds.  The difficulty lies in identifying these winners ahead of time.  And unfortunately, the excess return of "winning" funds doesn't come close to making up for the large shortfall of the losing funds. 


In any given time period, the majority of actively managed funds will fail to keep pace with a low-cost passive approach, and the longer the time frame, the worse things look for the active side.  Our goal is to help you reach your goal, and in this situation, not being "active" is the best way to accomplish that. 



Upcoming Calendar
for Life Planning Partners, Inc.
(what we're doing for you)

End of March - insurance reports completed

April - quarterly reports released

May - begin investment reviews

Other News: 

Tim was recently quoted in the Wall Street Journal regarding prepaid tuition plans.

Prepaid College-Savings Plans Take Another Hit


Carolyn will be speaking on Health Care Reform at the following events:

Florida Academy of Family Physicians - May 1st 

NAPFA National Conference - May 20th

NorCal FPA - June 1st


Talk about change - our website has undergone a complete redesign.  Take a look and share your thoughts -


We hope you continue to enjoy our newsletter.  We look forward to feedback and suggestions for the future.  


Carolyn and Tim
Life Planning Partners