The Descent from Independence to Dependence

by Frank Fantozzi on April 19, 2012

Most people love going to the local zoo. We get to see exotic animals from places we may never have a chance to visit. Zoos help protect many endangered species due to society’s relentless push to expand what we refer to as civilization. Animals born in captivity, know no other life. Living behind bars, being told when to exercise, when and what to eat and even who to mate with is their norm.

However, taking an animal from its wild habitat and bringing it to a captive environment is a harsh and difficult transition. Over time their will to live free and independent is broken as they resign themselves to a captive environment where they are told how to live their lives. If we later take that same animal and try to turn them back into the wild they will most likely perish, no longer able to provide for itself or adequately defend against predators.

The current debate in our Nations’ Supreme Court regarding the constitutionality of national health care has the nation at odds. While there may be economic sense it flies in the face on what this country was founded on and why. Allowing the government to control more creates the same perception of safety that a zoo provides its captive animals.

People immigrate to theUnited Statesfor religious and economic freedom. They want to strike out on their own as individuals and bring a clear understanding of the risks and rewards that entails. Regardless of the outcome they embrace their ability to choose their own path and not have it dictated to them.

The more we empower government to control our lives, the more freedom we give up. Once we start, it becomes a slippery slope where precedents are set and government has leverage to take more away.

Nature is interest efficient and effective. In their natural environment, animals survive quite effectively on their own without outside help. In most cases, the real threat to wildlife is the impact of civilization on their habitats. It is easy to cry foul and ask the government for help all the time. But if we begin to take certain freedoms away, no matter how small they may seem today, we begin conditioning people to become reliant and not provide for themselves. This puts a damper on innovation,  productivity and progress.  When that tipping point occurs we will stop being the greatest nation. Just look atEuropetoday. Right before WWII they were the leading economic power in the world. Where are they today?  Fading only to bask in their history. They are strapped with high unemployment, low growth and burgeoning debt. Is this what we want?

We need to think hard about what we are asking our government to do for us that we need to be doing for ourselves. I am not suggesting that there does not need to be reform in the Health Industry—that’s a given. But it needs to be returned to a system of accountability with costs assigned where they need to be. The consumer needs to drive the process, not the insurance companies, and the medical providers who in essence have fixed the system to work the way they want, not the way consumers want.

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If You Were a Multi-Millionaire What Would You Do?

by Frank Fantozzi on April 3, 2012

With the Mega Millions lottery recently hitting $640 million, the lotto was a major topic of conversation from the water cooler to social media and news outlets across the country. Even people who never buy lottery tickets were venturing in and purchasing a ticket. After all, at that level, even if you were one of a hundred winners you would have walked away with a gross check of $6 million dollars. Not a bad return on a buck.

That enormous pot of gold left many of us wondering—if just for a moment—what would we do with all that money if we won? How much would we keep? How much would we give away to charities and causes important to us?

Unfortunately history has not been kind to lotto winners. Many end up squandering their money due to lack of planning and poor financial decisions. And many fall victim to predators and scams that materialize overnight.

Why does this occur?  People are not prepared for the tremendous responsibility that comes with significant wealth. Everything changes from how people think to how they are viewed by friends and family. One major assumption that catches most people is: I will never run out of money.

For many decades, athletes and entertainers have dealt with this same paradigm. Coming into sudden and significant wealth can be a tremendous challenge both financially and psychologically. Knowing who to trust can make or break a fortune, as we’ve seen time and again. Many well-known athletes, entertainers and successful business entrepreneurs have left a trail of bankruptcy, each with their own unique story of how they went from wealthy to broke. But it doesn’t have to happen that way.

Being a good and responsible steward of wealth doesn’t mean you have to learn how to manage money and your finances on your own. However, it does mean that you need to obtain competent guidance from advisors you can trust to place your best interests first.

Below are some thoughts on how to win rich and stay wealthy:

  1. Remember that approximately 50% of lottery or other winning go to Uncle Sam, so don’t begin spending the gross amount in your mind.
  2. Interview and surround yourself with a team of experts (attorney, CPA and a certified financial advisor).
  3. Plan first, spend later. With the help of your advisors, take the time to think of what you want your life to be like going forward. What do you want to stay the same? What do you want to change?  Remember, not everything is about what money can buy.
  4. Be prepared for friends (and in some cases family) you never knew you had.  People will want handouts. Be prepared so say “no” if that is how you feel.
  5. Money can run out – no matter how much you begin with. Spend some time writing down or scripting out what you plan to spend money on and the cost of your new life style. Your financial advisor can model different scenarios for you based on your net proceeds (winnings less taxes), showing you how long your money will last under each scenario.
  6. Talk to your attorney about protecting you legally so you are hard to be sued. In addition your attorney can help you create privacy for you and your family as well as lay out an estate plan that minimizes your estate taxes when you pass on.
  7. Your CPA can play a vital role in helping minimizing your income taxes. Working closely with your financial advisor, your advisors can determine your monthly cash flow requirements to help you keep more of what you have.
  8. No crazy investments please! With all that money your financial advisor should be structuring a sound and prudent investment plan that can stand the stress of market changes, designed to meet your ongoing lifestyle needs.
  9. You are the decision maker so stay in control and involved. While there are a lot of smart people out there that want to help you, common sense trumps smarts all the time. Take the time to obtain multiple references for anyone involved in advising you. There’s no shortage of individuals and families who have lost entire fortunes simply by working with unscrupulous attorneys, accountants or financial advisors.
  10. Lastly, we find the happiest winners of the lottery are the ones that change their lifestyle the least. They maintain their friends, support system and even their jobs, proving that our identity and self-worth are a result of our life experiences and relationships with family and friends—not our personal balance sheet.

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Give a Man a Fish

by Frank Fantozzi on February 28, 2012

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

There is timelessness about this Chinese Proverb that rings true today…

The Park Service, part of the Department of Agriculture, embraces this same philosophy when they ask us “please do not feed” wild birds, animals and fish because they may grow dependent and unable to care for themselves. However, our food stamp program, which is also administered by the Department of Agriculture, is currently distributing the greatest number of food stamps ever and a large percentage of recipients are not new recipients as a result of the current economic climate.

While I think it is vital to our country’s fabric that an infrastructure is created to help those who have fallen on hard times, this can be a slippery slope that all too often results in dependency, hurting the very people we’re trying to help.

Essentially all of us have been helped along the way, whether through our education system, churches or religious affiliations, coaches or mentors, in our business relationships and in our friendships. Reciprocating by returning the favor or adopting the attitude that one good turn deserves another is not only the right thing to do, but helps to further us as individuals and as a nation. This would not be the America we know if we did not lend a helping hand to those in need.

However, the slippery slope comes into play when we move from lending a hand to creating hand-outs. And there is a big difference between the two. First, I should clarify that I’m not referring to the segment of the population that will always be dependent due to mental or physical illness. These people require ongoing assistance through no fault of their own. Instead, I am referring to those who are able bodied but have made a livelihood out of government dependence. In some cases, multiple generations have relied on government social programs, never becoming free of them to live life on their terms.

Often when we hear politicians or civic leaders criticize our welfare system we jump to the conclusion that this criticism is unfeeling, uncompassionate and harsh. But if we can get beyond knee-jerk reactions and look at the intent of those who advocate system reforms, we see that they have the best interests of society as whole in mind. In a free society, being fully dependent on government is not an exercise of liberty; it is an exile from personal liberty.

However, our state and federal governments and the American public in general have empowered these programs and the dependency they create for generations. We need to find a solution that leads to the betterment of all individuals and society as a whole by creating a program that lifts people up out of dependency to enjoy the freedoms that can only be attained through taking responsibility for self, contributing to community and society, and gaining the self-esteem that accompanies personal accomplishment. The components of such a program include:

1. Workforce training programs
2. Educational programs
3. Day Care so people can begin to work
4. Business credits to hire and train unskilled workers

Our modern welfare system has migrated a long way from its original intent. The welfare system in the United States began in the 1930s during the Great Depression. It was intended as a “bridge” between unemployment and employment – a way to help Americans get back on their feet again. It was never intended as a long-term subsistence program – a virtual bridge to nowhere. However, with the Great Society legislation introduced in the 1960s, a person who was not elderly or disabled could receive aid from the American government. Aid could include general welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers, and federal and state housing benefits. The impact this has had on our society and national debt is enormous.

And while this is a big and very complex problem to solve, I can point to one organization that has a long history of helping people climb out of the welfare trap, stand on their own two feet, and capture the self-esteem and true freedom that comes with it. I am talking about Habitat for Humanity. Most of us are familiar with the work that Habitat performs, helping to build homes from the ground up and renovate foreclosed homes for recipients seeking the physical, spiritual and financial rewards of home ownership.

What makes the Habitat approach different from government housing is that it’s not a hand-out. It’s a helping hand. Habitat embraces the concept of teaching a man to fish so he can feed himself for a lifetime. Program participants are required to put extensive sweat equity into the building of a home. They must be employed and meet stringent requirements throughout the process to be considered for a home and a low-interest mortgage. Many applicants fail to meet these requirements and drop out of the program. But those who are determined and stick it out are provided the help – not the handout – they have earned. In the end, it is not Habitat who benefits – they are a not-for-profit. It is the homeowner who benefits by triumphing over a system that has held them down. It is the homeowner who gains the knowledge and self-esteem that comes with being a productive, self-sufficient, and responsible member of society.

If we can reform our welfare system to actively focus on providing the services, tools, infrastructure, and mandate to help people move forward, we will all benefit. But none will reap greater benefits than those who are taught how to fish and feed themselves for a lifetime.

 

 

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Governor Kasich Addresses Republican Finance Committee

by Frank Fantozzi on January 19, 2012

Ohio Governor John R. Kasich recently spoke to the Republican Finance Committee at Landerhaven. It was my first time hearing him live. I gained a new and better understanding of our Governor. It is very easy to come away with a wrong impression of any politician if all you can rely on are campaign ads, media sound bites and the like.

While it is clear that Governor Kasich has a strong personality which some have construed as arrogant, my take is that he has strong convictions about what he believes in and what he believes is right for Ohio’s future. He is not concerned about making friends by bending to other’s wishes and saying what they want to hear. I respect that. While it is hard to find any political figure with whom you can agree on everything they do or stand for, I appreciate someone like Governor Kasich because everyone should know where they stand. We may not always agree but I can respect the fact that he is following through on what he believes is right.

Some of the highlights from the nearly one hour speech that he gave without any notes include the following 2011 accomplishments:

  1. Added approximately 65,000 new jobs
  2. Common Sense Initiative has begun to eliminate excessive and duplicative rules
  3. Balanced the Budget
  4. Eliminated the Estate Tax
  5. Began to make Ohio more business friendly

To listen to the speech, click here. You may need to adjust your volume settings.

He will continue to make the economy his biggest priority because when the economy is healthy and vibrant that resolves many other problems.

Among Governor Kasich’s Initiatives for 2012 are:

  1. Creating a University Systems vs. a System of Universities…public universities are asking for state funding and using it to compete with one another versus complement each other. For example the University Hospital System is known for their cancer research. Why would the Cleveland Clinic try and invest millions of dollars to compete? Likewise, the Cleveland Clinic is known for cardiac care. The same premise applies to the University Hospitals.
  2. Improving K-12 education. The Governor stated that 41% of high school graduates going to college have to take remedial high school programs in college to catch up. This is a waste of taxpayer dollars.
  3. Move our health care system in a direction that  rewards preventative care practices designed  to keep people healthy vs. as system that rewards for filling hospital beds.
  4. To better retain businesses and attract new ones, the Governor wants to focus on improving on job’s training at the college, community, college, HS and trade schools in response to businesses staying they are looking for properly educated and trained employees

I’d love to hear your thoughts on the Governor and these initiatives. Please post your comments below.

 

 

 

 

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Replacing December’s Delerium with Down Home Happiness

by Frank Fantozzi on December 2, 2011

As we make the sharp turn from Thanksgiving (my favorite holiday since it only involves family and food), surviving Black Friday and Cyber Monday, we find ourselves face-to-face once again with December Delirium. It is easy to get sucked into the commercialization of the season, figuring out everyone’s Christmas Lists (order forms), Holiday Party overload (carbs), working frantically to close out the year, and running kids around as they wrap up school before the holidays. As a nation that appears obsessed with excess – always wanting more money, more toys, more of everything – what is it that what we really want in the end? In reality, the “rich” person is not the one who has the most, but the one who needs the least to be happy.

In the midst of December Delirium, whether or not you celebrate Christmas, take a moment to reflect on what you really want from your life. When we clear away the clutter imposed by others (the media and retailers telling us what we should want), deep down don’t most of us just want more from our relationships and to give thanks for the many aspects of our lives that we cannot place a price tag on?

There is an old saying: “the more you give the more you get back.”  Maybe this is the best time of year to slow down instead of speeding up to accommodate more. Take time to reflect and put more effort into giving of ourselves to the important relationships in our lives – friendships, marriages and children. Lastly, we can’t forget to take care of our health because we are not like the proverbial cat with nine lives. In giving more in love and more to the important relationships in life, you may be surprised at how much richer life becomes and how little you really do need to find what makes you happy.

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Is a Family CFO the Right Solution for Your Complex Wealth Management Needs?

by Frank Fantozzi on November 21, 2011

Do you find that you never seem to have all  of the information and advice you want, when you want it? Is your financial  information in multiple locations and never easily accessible to you?

Do you feel there is no single firm that as a complete grasp of your entire financial picture? Is your family’s  planning taking place in a vacuum, with no coordination among your advisors?

Are you receiving adequate information to make clear and confident decisions? Are decisions made on a reactive versus a  proactive basis?

Do you and family members work and play  hard with little time left for dealing with important financial matters?

Most importantly, do you feel that your needs and those of family members are really understood by your current advisors?

Everyone seems to have someone  they refer to as their financial advisor. Yet many describe their relationship with this individual as “okay” or “good” instead of an impassioned: “I’d be lost without my advisor’s guidance!” Often, the problem is simple. They do not have the right advisor or team in place to handle the complex needs of their family.

The financial planning world has low barriers to entry so many who call themselves financial advisors often lack required qualifications and credentials, or don’t possess the economic and business experience to truly help families navigate today’s interwoven world of investments, tax planning, insurance, estate planning, banking and everyday financial management. And that is just the easy part. The real trick is
integrating all these technical areas to generate important intangible benefits
that lead to happiness, fulfillment and creating memories with the people you
value most in your life.

A Personal CFO is an advisor who  coordinates and manages family finances or a “Family Office.” While a  Personal CFO can help orchestrate the financial well-being of your entire family, how do you know if a Personal CFO is right for you?

What Can a Family CFO Do for You?

  1. Coordinate all financial management under one roof
  2. Reduce the ambiguity that is found in most financial plans
  3. Help ensure that all members of the financial team are working in unison
  4. Improve the timeliness and effectiveness of your planning advice Create a roadmap that provides all family members with clarity around their vision
  5. Take the mystique out of financial management so it is understandable while reducing surprises and worries
  6. Keep the family on task so goals are met
  7. Educate the next generation on how to deal with  money
  8. Develop a plan for the type of legacy the family  wants
  9. Provide an environment where families remain in control with full knowledge of the options available to them, providing more time to focus on other important concerns like relationships, leisure activities or the family business

While deciding to hire a Family CFO may at first seem intimidating, it is not unlike hiring an attorney or CPA firm. Family CFOs are typically compensated on a retainer basis for their financial management services. If they are also responsible for investment  management functions, an additional fixed fee or asset fee will be charged.

Questions to Ask When Interviewing a Family Office Advisory Firm or Family CFO:

  1. What is the scope of  your services?
  2. What is your professional background…education, professional credentials, areas of  expertise and affiliations?
  3. How are you compensated?
  4. Are you an investment  sales representative or an investment fiduciary? Do you accept fiduciary liability for your advice?
  5. Do you provide an engagement letter in advance, outlining the full scope of services and fees?
  6. How do you achieve full transparency as it applies to fees, services, advice, account access and reporting?
  7. Can you provide examples of reporting, use of technology and communications?
  8. Can I meet all of the team members I will be interacting with in advance?
  9. Can you provide references?
  10. How do you plan to make a measurable difference for me and my family?

It’s also a good idea to check with the Better Business Bureau, FINRA, SEC and appropriate state securities  regulators for any complaints or legal actions against the advisor or firm. Most of this information can easily be found by checking the appropriate agency or regulatory websites.

For busy, affluent families, especially those juggling the multiple competing priorities that come with  running a family business, a Family CFO or Family Office advisor can be a good  solution.  A Family CFO can organize and coordinate your financial life and help ensure you remain on track toward your goals.

Consider the benefits to you and your family along with the sense of control and clarity this solution can bring. And remember, greater peace of mind extends well beyond your financial goals into other important aspects of your life and relationships. That’s reason enough to take steps now to reduce stress, gain clarity and begin to improve your overall sense of well-being.

Frank Fantozzi is President and CEO of Planned Financial Services.  Frank is an accredited Personal Financial Specialist, a CPA with a Masters in Taxation, accredited Investment Fiduciary and a Certified Divorce Financial Analyst. Frank believes that achieving your goals and dreams does not happen by simply handing over control of your assets and your future, but in part by ensuring your unique voice is heard and your vision reflected in every decision. This philosophy helps to shape your unique Return on LifeTM, an individually-defined measure of  success that goes well beyond investment performance.  Frank can be reached at 440-740-0130.

Securities offered through LPL Financial. Member FINRA/SIPC.

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A Labor of Love and a Sweet Victory

by Frank Fantozzi on September 16, 2011

As part of Planned Financial Services’ ongoing belief in giving back to the community, I enjoy donating my time as Director and coach to the Brecksville Broadview Heights Soccer Organization which I founded in 2006.

Over Labor Day weekend, the U-12 boys division won the Bay Cup by defeating the Worthington Crew, 2-1 in the championship.  A great group of boys…I couldn’t be more proud of them!

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A Browns’s Training Camp Memory

by Frank Fantozzi on August 31, 2011

I wanted to personally thank Joe Thomas, Josh Cribbs, Joe Haden and Colt McCoy of the Cleveland Browns for making a great memory for my daughters and me. On the last day of open training camp amongst 1,600 screaming fans, they like many of the Brown’s players stayed until everyone who wanted autographs received one. 

Kudos to the Browns and thank you!

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Déjà Vu….Summer Economic Soft Spot

by Frank Fantozzi on June 29, 2011

For the second year in a row, we have experienced an early summer economic soft spot with Europe at the epicenter. Last year, the S&P 500 market posted gains through late spring when concerns about Europe’s debt and an environmental catastrophe (oil leak in the Gulf) started a summer of volatility and uneven economic data. Sound familiar? This year, the S&P 500 market had an 8% gain through May before falling prey to concerns about Europe and global growth impacts resulting from an environmental catastrophe—the earthquake in Japan.

The result is yet another summer soft spot for the global economy, which like a bruise on an apple is unsightly but does not render the rest of the fruit rotten. For the global economic “apple,” there remain many signals that the recovery from the worst recession since the Great Depression continues. Business and consumer spending remain solid, jobs are being created (albeit at a slow pace), and some companies are in line for record profits by the end of the year.

That said, the global economic “apple” still faces a significant bruise, which happens to be the same pesky soft spot that the markets had to deal with last year—namely Southern Europe, and more specifically, Greece. Saddled with debts that it cannot repay and austerity measures that are not fully embraced, Greece appears headed for a showdown with creditors and a potential default on its loans. The real question is why does the market care so much about Greece? Can Greece really cause enough disruption to halt the global recovery in its tracks? The truth of the matter is that the market does not really care about Greece; it cares about the potential contagion of Greece’s troubles to the rest of the world.

Here is a possible scenario: should Greece not make good on its debt burdens, significant impacts could ripple through the markets. Investors in Greek bonds, which are largely other banks and financial institutions, would lose significant money on their investments. More importantly, the default could cause banks to not trust other borrowers. These banks could be “once bitten, twice shy”, which would create a reduction in global lending and worst case, a freeze-up of capital markets.

While these outcomes are certainly possible, it is a huge stretch for the market to be making comparisons of Greece to Lehman Brothers, which was the “poster child” for the financial crisis that resulted in the Great Recession of 2008-2009. Greece is not new news and investors, particularly the banks that own Greek debt, have taken great steps over the last year to mitigate the potential negative effects of that ownership.

More importantly, Greece and Lehman Brothers are as different as is cause and effect. Lehman and its huge bets on sub-prime housing debt was a cause of the financial crisis. Greece’s poor fiscal management, on the other hand, is merely an effect. Stated more appropriately, Greece’s situation is a consequence of what happens when a country has too much debt and not enough growth–one causes a financial crisis (Lehman Brothers), the other is just a by-product of a financial crisis (Greece). This is also at the center of what is happening in our own country with the debt ceiling debate and potentially where the U.S. will head if we do not control our debt and move towards a balanced budget.

With respect to Greece, the market is being realistic and does not require a solution, but simply a resolution. Greece is not “too big to fail,” but the financial institutions that own the Greek debt are. Once the Greece situation is under control, or at least the market gains comfort that the impact will not result in a contagion that could weaken the global recovery, it is likely that the economic data and corresponding market performance will improve. The collective global efforts to coax a resolution are underway and I anticipate a resolution, maybe not a solution, to be forthcoming in the next few weeks.
 
In the meantime, current conditions support a cautious stance through this economic soft spot. However, we expect this soft spot to be transitory. As the summer unfolds, we anticipate that investors will realize that the economic growth “apple” is just bruised, not rotten, which will transform volatility and fear into investment opportunities.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing may involve risk including loss of principal.

Past performance is no guarantee of future results.

Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit Member FINRA/SIPC

Securities offered through LPL Financial, Member FINRA/SIPC

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Turning Over Responsibility

by Frank Fantozzi on June 6, 2011

How can we improve our society?  It won’t happen until we STOP: 

  1. Handing over the  responsibility of parenting to our teachers
  2.  Passing the responsibility of spiritual development to the churches 
  3. Abandoning civic leadership to our politicians  
  4. Turning over responsibility for a better tomorrow to the government.

In a day and age where we want our lives to be easier, expect technology to do more, and adopt a hotel mentality to be served, are we not simply handing over responsibilities that we need to maintain if we are to grow as a society? Being a part of the solution is hard work. There’s no easy way around it. It requires time and effort to remain involved in the lives of our children, our churches and communities, and our governance.

How can we develop better leaders, encourage ethical decision making, and promote family values if we stop doing for ourselves and advocating for our values?

I invite you to share your thoughts. What do you think the solutions are to helping people across all walks of society embrace greater responsibility for the benefit of the whole? How can we work collectively to improve society as we know it today?

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