The Problem with Legacy

I am annoyed.  Often I hear people discuss their legacy as the money and assets they will someday pass on.  Yes, that is a legacy as defined.  But is that all a legacy is?

Okay, bear with me…I have to pull out the dictionary on this one.  Merriam-Webster states that a Legacy “is a gift by will especially of money or other personal property”.   So at “first blush” people are using it correctly but isn’t there much more than money to a legacy?  In my opinion, heck yes!  Absolutely.

I had a recent estate planning discussion with a couple.   As we chatted and began to draw up some ideas, repeatedly their comments went back to how much life changing money would be left to their children.  Along with some other gifts to church, mission work and charities, the plan was typical and completely reasonable.  What struck me was that the focus was entirely on the money as their legacy.  This is not the couples fault but the error of the larger “finance community” and our culture for this interpretation.  I am annoyed that we often think legacy only begins at death when the money is passed on.

There is much more to Legacy than money

If we go back to the dictionary, the other definition of legacy is;

While money can certainly help our children and others, I think we often miss the big picture, which entails a much more important discussion.  This other kind of legacy is a healthy, soul searching discussion based on what you value and how you really want to be remembered.  Personally, I would like to be remembered for much more than the father, uncle or friend that left money behind.  Again I will admit, money is helpful and a blessing…but it is temporary, can be lost and sometimes not really helpful to others in the end.  However, the memories, wisdom and time with my wife, kids, friends and clients are the deep and lasting legacy I hope will encourage for years beyond my life.  I want to be a good steward of my legacy now.  Do you?  

And that is the interesting part.

Most legacies are overly focused on “after I am gone”….  While that is true, it is only half of the discussion.  The legacy I desire starts now; to impact and imprint itself on others today, tomorrow and then continue as a legacy after me.  I challenge myself first in this and my clients as well to think and plan this way.

So let’s change the focus of the conversation to say that legacy is both the money to pass on responsibly AND the lasting impact you have on your loved ones that happens today, tomorrow and for generations to come.

To the Stewardship of Your Legacy,

Luke Fields, CFP®

The "Santa Claus Rally"

What is the “Santa Claus Rally”?

Santa is readying himself to visit many children and adults alike worldwide.  It is an exciting time for all.  My youngest child and last to write a letter to Santa eagerly awaits.  I am sad to think that this may be our last year for the magic of “Santa Claus” in our household.  It has been fun.  Our full attention however can rightly be focused on the true joy of Christ’s birth for us all.

Santa Claus is Coming to...Wall Street?!

Wall Street also has a soft spot for Santa Claus.  You may have heard of what is called the “Santa Claus Rally”.  It refers to a seasonally higher stock market around this time of year, typically the week after Christmas as we head into the New Year.  Historically, December is the one of the best months for the S&P 500.  Since 1928 the S&P 500 has risen in December about 75% of the time.  Why you ask?  Good question; no one knows the definitive reason.  The most likely reason in my belief is that year-end bonuses for most Wall Street traders and investors are dependent on their performance being positive come December 31st.  So as you can imagine, they are incentivized in large dollar ways to encourage $anta to be good to them.  This results in more cash being invested in stocks and bonds to increase values.  Other potential reasons for the Santa Rally are the upbeat joy of the season, the optimistic outlook that most people hold turning the calendar over into a new year (which is called the “January Effect”) or simply the pessimists (aka “bears”) are on vacation.

“News and Noise” doesn’t Dictate Allocation

The name “Santa Claus Rally” is a great “sound bite” for the media and an amusing discussion topic.  So, will Santa visit Wall Street and the stock market?  No one knows, it is not a sure-thing.  The key is to see it for what it is, as more “noise” that simply distracts from a solid, diversified portfolio with a longer term perspective.  Don’t get caught up in the noise and enjoy Christmas and the holidays with your family.
I can guarantee that Santa will be visiting our house this year; my kids take very good care of Santa and his reindeer!  Here is a picture from 2014.  He loves M&M cookies.

From all of us here at Foley and Foley Wealth Strategies, have a Merry Christmas and a Blessed New Year!

Luke Fields, CFP®

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Any information herein is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James.  Diversification and asset allocation do not ensure a profit or protect against a loss. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance does not guarantee future results.

Have you had “THE TALK” with your parents?

Have you had "THE TALK" with your parents?  Nope, not the birds and the bees... I am not about to help you with that talk.  Our daughter is asking enough questions on that.  I am talking about the discussion regarding your parents' finances.  Both of these talks can be awkward for many.  Well, if you haven't yet had the money talk, you are not alone.  The majority of adult children have little to no idea of their parent's true financial situation.  Like the sex talk, parents' sharing their financial situation with their adult children is often a conversation avoided.

Why is that?

Here are some common reasons why parents don't talk with their adult children about money...
Do any of these apply to your family?

1.) "We have never talked about money"
When kids are young it is thought to be a good idea to avoid discussing money so the child doesn't worry and feels secure.  While good intentioned, it doesn't help that child become financially wise themselves and never discussing money can make very important future discussions awkward to approach for both parent and kid alike.

2.) "It's none of their business"
This mentality sometimes comes from embarrassment of past mistakes, the idea that I don't want my kids to worry about me now (similar to when kids were young) or the parent simply feels it is a private matter, essentially that "it is none of their business."  Parents may have given off an image of wealth or success and are reluctant to share the reality that things are not as good as they look.   And for some parents, if wealthy, they may feel their kids may try to take advantage of them.

3.) "I don't want to talk about my death"
Mortality is not a fun discussion for the parent or the child.  Obviously, it can stir many emotions- but like taxes, death is certain.  Everyone has specific desires and requests in regards to their estate, whatever the size and more importantly, their legacy.  Often discussing money is just the initial conversation that leads to great discussions on deeper family matters.  How does a parent want to be remembered?  Are their specific belongings that they want to go to a particular child or family member?  Is there a church or charity that they want to gift money to?  Even discussions on how a funeral service should be constructed.  The list goes on and on.

4.) "I am afraid it will change their motivation"
This seems like a reasonable excuse but the truth is, by the time a parent is in their retirement years and their kids are correspondingly in their late 30s or 40s+... if that child is not already motivated in their career and to provide for their family, little is likely going to change in their attitude if they find out the parents are going to leave them a "pile of money."  They will continue to be motivated.  In fact, if a parent shares that things aren't great for them and share the things the wish they would have done differently... financially smart kids will probably get wiser and those children that are not motivated may actually get stirred to improve their own situation (especially knowing not to expect a large inheritance).

Breaking the Ice

If you find yourself in this situation as a parent who hasn't talked to your adult children or as the child trying to consider how to bridge this discussion, here are some tips.  The idea is to just get the conversation started.  It typically continues once the ice is broken.

Bring the topic up from your own perspective.

Start with your personal situation as the bridge.  Being vulnerable is always a good way to encourage others to open up.  "Dad (or Mom) recently I (we) have been making some plans on our estate (will/trust) and it made me curious about your desired plans?"

Ask for whom to reach out to.

Often the most honest and straightforward approach works best.  Simply ask, "Mom, Dad who should I call if something happens to you suddenly" or "where are your documents that I should know about?" Let your parent know you want to be ready to help if they need somebody to step in for them to pay bills or talk to their doctor.  This is where a power or attorney (POA) is a critical legal document.

Use a possession known to the whole family as a concern.

This can be a tricky option but effective in opening the door to conversations because everyone will know it needs to be addressed.  "I am worried that it's not clear what you want us to do with dad's autograph collection (the vacation home, mom's jewelry, etc) if something were to happen to you.  I want to make sure that your wishes are fulfilled and there is no possible confusion among my siblings as to what to do."   Pick an item that is important to them to discuss or a decision that is important such as funeral arrangements, burial, etc.

Use your financial advisor as the impetus for the discussion.

Financial planning is my passion and I am more than willing to be the "scapegoat" to help a family discuss such important matters.  "Our advisor suggested we find out how we can assist you with your plans.  He wants us to know your expectations and be prepared to help you."   It is common that children are named as a trustee or executor of an estate.  Sometimes they don't even know it until a parent passes or is incapacitated and needs them to step in to assist.  Talk about shock and being unprepared to help at a tough time, while dealing with the stress and emotions of a death or illness of a parent.

The REALITY like it or not

The reality is whether you are comfortable talking about money or not, money is an important part of everyone's life.  Yes, for some parents their financial situation can be a taboo topic and a personal matter.  But it cannot be ignored!  If it is disregarded, it will likely cause larger and more complex problems later in life and especially upon a parent's death.  Most parents when made aware of possible issues would rather not leave a mess for their kids to figure out.  Talking sooner than later will open up communication, help children know how to assist their parents, get parents desired plans in place legally and set their children's expectations.

We regularly encourage and assist our clients in starting the conversation about family finances.  This is what comprehensive financial planning involves.  The advisor you use should be thinking in these terms to be truly effective for your family's financial life plan.  If you need some additional ideas or help, please feel free to reach out to me.

Luke Fields, CFP®

Who Taught You About Money?

Who Taught You About Money?

My grandfather was a great man.  He taught me many things such as work ethic, the importance of family, taking pride in my work and financial responsibility.  His work ethic was tremendous.  He retired after 30 years with Ohio Bell on a typical Friday and on Monday morning, started his new full time career as a stock broker.  Although he meant well in his money savings, he didn't always strike a healthy balance.  There are numerous family stories of his "unhealthy" frugality.  My favorites involve him at age 75 roofing his house and at 77 black-topping his long driveway.  His roofing project gathered the attention and aide of the younger men in the family.  The driveway he had completed by himself before we even knew he did it.

My point in sharing about my grandfather is that he taught me invaluable lessons through his words and actions.  I am very grateful.  As parents and grandparents, we are responsible to teach wisely through our behavior and discussions with our kids and grandkids.  A recent survey (by Capital One) revealed that only 20% of High School students reported regularly discussing financial topics with their parents.  A whopping 34% said they have NEVER talked about money with their parents....34%!  The average credit score High School students reported as a "good score" was 500.  Oops (If you don't know, 500 is a bad score, good starts at 700 and excellent at 750+).  Our kids need our help and it is never too late to start or change a behavior.

Some children will ask about finances on their own, however most will not.

Here are some ideas and resources to use for a variety of ages.

Teaching our kids to save is a must.  The key is to find what works for your family.  Maybe it is a glass jar or a container with their favorite cartoon character.  It is then important to discuss choices with their money-- Here is what my family uses to encourage a choice after money is earned.

Choices:  1.) Share (church)  2.) Save3.) Spend Then at some point the "piggy-bank" turns into a wallet/purse.  Mint.com is a great free app to track and review spending habits.   Or try AllowanceManager.com to track allowance.

The Value of a Dollar.  There are different views on this.  Key is to teach work ethic, responsibility and that nothing is free.  Some say allowance should be earned, some say it should just be given.  In our family, our kids have set things they must do (chores).  Once those are completed for the whole week- they get a pay day.  They have the opportunity to do extra chores or be thoughtful helping around the house to even earn extra money (a bonus).

Teach in the Moment.   For example, at the grocery store as I swipe my credit card, I ask Kaitlyn, my nine year old, "Am I paying cash for our food?"  The first time I asked this she was confused but since then, we have had many discussions why I am using credit- as a convenience and ONLY because I have the actual dollars in the bank to pay off my bill each month.  Or try this- when that cool new car commercial comes on... pause the TV (right when all the fine print pops up).  Ask them "Would you rather pay for the car and own it or pay for the car for 3 years and then give it back to the dealership?"  I am not saying a lease is always a bad idea, but it is a money choice that has to made and understood.

Get a Job.  The responsibility and duties of a job are extremely valuable.  Think back to your first job- what did you learn?  I bet similar learnings will be for your child.

Open a bank account.   The simple balancing of a check book or using a debit card can be a big learning experience along with talking to a banker about their money.  It is an important process to learn.

Seek out financial learning.  Personal financial courses are sometimes offered in Middle School and typically in High School for your child.  As well, ask your financial planner to meet with you and your child to share some ideas/tips.  Any advisor worth something will love to do this to help educate and as a service to you as their client.

Start a Roth IRA.  With a job, even if it is mowing lawns in the neighborhood- there is earned income, which is eligible for a Roth IRA contribution.  Picking a suitable investment to watch encourages healthy retirement saving habits.  Starting at age 15 and contributing a one-time $5,000 investment (with no additional investments) for 50 years, averaging 7% return will yield about $147,000 tax free at age 65.

Some Resources to check out, I mean it...

Money AS You Grow  This site shares guidelines and talking points for specific age ranges with activities to complete from money basics, avoiding identity theft, credit cards to college loans.

Warren Buffett has created a great resource to teach kids about money using short animated episodes and a variety of other tools and family activities.

Teaching kids about money is not an easy task, but it is so necessary.  Find what works for your child and family.  Grandparents, come alongside your kids in teaching this to your grandkids; just like my grandfather.  Fight to be consistent in allowance, chores, discussing topics and share from your money experiences- both the good and the bad.  It will likely stretch you to also improve your current financial behavior.

To Your Child's and Grandchild's Financial Success,

Luke A. Fields, CFP®

All examples are hypothetical illustrations and are not intended to reflect the actual performance of any particular security. Future performance cannot be guaranteed and investment yields will fluctuate with market conditions.  Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of Raymond James.  The companies and their opinions are not affiliated with Raymond James.  Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. 

About Stewardship Cents

Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it.  Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have.  Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981.  A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses.  He resides in Columbus, OH with his high school sweetheart, Beth and their three children.  Luke is an active member of his church, serving in leadership and finances.

Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

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