Financial Planning: What’s Your Process?

I’ve been in the business for a while at this point. I’ve heard many stories from financial advisors about how they lead initial consultations and what the different methods are which they use to extract vital information from clients. The problem we often face as advisors is that clients offer us a decent amount of ‘hard’ information such as income and expenses but we have a more difficult time getting through to the ‘soft’ information such as a true tolerance for risk, attitudes about money and spending, attitudes about charity and legacy planning, etc. At the end of the day, it’s a relationship that involves trust; the more an advisor understands about the client’s truest feelings, the more they can think through ideas and come up with the best possible solutions for handling one’s financial life. So what’s the solution?

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What’s the Real Story with Inflation Lately?

Part of what is allowing the Federal Reserve to continue promising an endless period of low interest rates is the fact that – or at least they claim – we aren’t yet experiencing any inflation here in the US. I get the logic: the big pitfall of keeping rates so low for so long is inflation but with an economy that is barely growing, we can ignore inflation for now (or even cry deflation) and continue the path to devaluing the dollar for greater short-term economic benefits. Perhaps the reason why Bernanke isn’t so concerned is that if banks actually start deploying capital at some point the Fed should be able to drain liquidity fast enough to cut inflation before it became a serious problem. However, whether or not the Fed can actually do that is a much bigger question mark than some people realize.

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