Paul Ferraresi

As the end of June approaches, that means summer is here and we are halfway through the year – so putting it in sporting terms: It’s Halftime! Yes, on January 1st you set your goals for the new year with zest and zeal.

In a sporting event, the players are given a break at the half in order to refresh themselves, look at how they played in the first half, and set strategy for the second half. So as you approach halftime, here are some thoughts. Do you have a vacation planned in the next two months that will give you the needed break and refreshment? If not, schedule one this week! How did you “play” in the first half of this year? Have you met your goals that you established at the beginning of the year? Here are a few ideas to evaluate where you are at with your goals as you approach the halfway mark.

Take some time to sit down alone and review your goals. How many are you on mark to make? How many have you not even begun on? How many have you achieved?

For those you haven’t even begun, my suggestion would be to reset your goal at 10 percent of the original goal. Obviously this goal hasn’t been a priority, for whatever reason, and most likely won’t suddenly become so. But you can make some ground. Set a small increase for the remaining six months and get ahead a little in these areas.

For the goals you are on pace to achieve, try to stretch about 10 percent. So, to give it a numerical value, if your original goal was 10 and you have already reached 5 after halfway, stretch yourself to try to achieve 11 by the end of the year. This will give you a good reason to kick into high gear as the year progresses.

For those goals you are on pace to break strongly through, try an increase of 50 percent.

And finally, for the goals you have already reached, try to set the new goal at 100 percent of the original goal.

In all of these remember that it is better to try hard, and even fail at a higher goal, than to take the easy route and attain nothing at all!

Best of luck as you re-evaluate your goals!

Goals are things you may want to do or have. Purpose is using your money to fulfill your core values. It is our job, here at Founders Group, Inc., to help our clients align those values with their decisions about money. Achieving this balance will greatly enhance your likelihood of experiencing happiness and peace of mind. As Olivia Mellon, Ph. D., author and psychologist says, “If your relationship with money is not in balance, no amount of money will help you. It is our job (as financial planners) to help our clients find balance around money”.

I have asked all of my clients what their goals are, get a response like, “I want to accumulate $3 million by the time I am 60 years old.” Of course, this may be a goal, but it certainly isn’t a purpose. What is the underlying value behind that statement? It could be several things. Perhaps $3 million represents security, or freedom, or power, or peace of mind. When I get a response like that, I probe much deeper to discover what it is the client really wants.

If I were to ask this hypothetical client who wants to accumulate $3 million how he would want to be remembered, it is doubtful that he would say “as a person who accumulated $3 million.” Understanding the core value that is driving the goal will help me to better provide you with better advice.

When was the last time you read an obituary that said, “Frank will be remember most for his large home, his Mercedes and his bank account.” By asking clients how they want to be remembered will facilitate a discussion about their core values. From there you can live those values by aligning your decisions about money with those values.

While we all know that money is a means to an end, it seems that we need reminding from time to time. An article written on the Web site www.MoneyInstructor.com tells us the following story about a financial advisor who was working with an 85-year-old man to finalize his estate plan:

“The man had built what began as a small estate up to the sizeable sum of $8 million. Unfortunately, the man had also recently lost his wife of 40 years. It was during the discussion of how the money was to be dispersed that the man had the sudden realization that the money he has spent his entire life stockpiling would never be used for his or his wife’s enjoyment or benefit and therefore it was essentially worthless. The old model does not work because the old model gets the fundamentals wrong. Understanding the purpose of money is the starting point to offering good money management advice and to making good money management decisions.”

In order to understand a client’s values and help them identify a purpose for their money, I need to ask the appropriate questions. For every goal or desire expressed by our clients, we ask whether it represents a core value for them. Or is it just something they would like to do, or something they feel obligated to do. One example is asking them how they feel about philanthropy. Perhaps they classify that as a core value, but they have made no provisions in their estate plans for charitable giving. Instead, they feel an obligation to leave all of their money to their children. Of course, giving money to charity may be a goal, but shouldn’t we probe further to determine what the underlying value is? If that value is “making a difference” and they understand that, philanthropy would be one way to live in alignment with that value, and they may decide to use some of their assets to help fund causes that are important to them.

Peter Vadia, Ph. D., co-founder of SpiritHealth, wrote, “ When one comes from one’s core values, one’s inner sense of what is important in life and living … is at the heart of a life well lived, at work, at home and at play … and is at the heart of creativity, self management, self-responsibility, healthy behavior (mental, physical, emotional, spiritual, social, financial). Money, in this sense, has a different emotional and psychological energy around it, a softer energy, not unlike the energy reflected in one who says, “I love my work and I can’t believe I get paid for doing this.”

Our firm’s mission is a simple one: “To improve the quality of our client’s lives.” Helping them to find a purpose for their money is a key to fulfilling that mission.

I hope this article has helped in your understanding of “you”. As always let me know your thoughts.

I constantly work with clients helping them define their goals. You need to do the same thing. If you do not have a “mission statement”, then, the driving force to your goal is missing.

This “mission statement” is a guide to preserving a family’s wealth, maintaining intergenerational family unity, and encouraging ongoing philanthropic gifts. Family mission statements are the “construction” for your family’s wealth planning. To start the “mission statement” your financial advisor will discuss what makes up your core values. Here are some questions that I use to start the process:

• Will your current plan successfully transition both family values and family wealth to the next generation?
• How are you preparing your heirs so that wealth is a force for good in their lives and not a burden?
• What should your heirs be doing to prepare for wealth and responsibility?

Centerpiecing Core Values

A family wealth mission statement outlines what the family wants to be and do, and the values and principles on which those goals are based. The statement is a testament to a family’s core values. Creating a family wealth mission statement can help a family to determine those values. Through a discussion about wealth and how to best use it, family members can learn from and about each others’ priorities and principles. It can be a “roadmap” to help identify and achieve financial goals and objectives, such as educating children and grandchildren or leaving a legacy for future generations and a charity through philanthropic gifts. It can also provide meaning and context to a family’s wealth in terms of how that wealth could be used to benefit both the family and the community.

Creating a family mission statement can open a dialogue about money and wealth among family members and, in particular, teach the younger generations the meaning of wealth and the responsibility that accompanies it. Often, parents do not know how to approach the topic of money with their children and some may be concerned that children who know about the family’s wealth may lose their ambitions or aspirations. A family mission statement created through conversations about the meaning of the wealth can provide a child with important perspective and offer a financial knowledge base. (See the www.familybusinessconsulting.com article, “Raising Healthy, Wealthy Kids: Improving Your Chances”, by Jane Hilburt-Davis, and the “Educating Your Clients…” sidebar.)

Here are a few questions you should ask yourself and family members to begin:

• What are our family’s priorities and values?
• Are there any goals that we want to achieve as a family?
• What are our family’s individual (e.g., college) and collective (e.g., wealth transfer) needs?
• How can we serve our community?
• If someone were to write an article about our family in 20, 50, or 100 years, what would we want it to say?

There are three basic sections of core values:

• Wealth Values: To what end will the family build and manage its wealth
• Philanthropic Values: What is the role of the family in the community? What should members of the family do to ensure the community remains healthy?
• Interpersonal Values: How should family members behave toward each other? How should disputes among family members be resolved?
• A fourth section may be added if your client is involved in a family business. For simplicity’s sake, this could be called “Business Values” where you would want to ask how the family business should operate, and in what industries, and for what purposes?

Put it in writing

A discussion is fine, but, putting the mission statement in writing gives it credibility and emphasizes its importance. The mission statement need not conform to one specific structure. The statements can be as short or long as the family wants. The length can range from two sentences to one full page (this could include information on the family’s history and how its wealth was created). Here are some examples of family mission statements:

• “To use our resources to strengthen our family and to support causes in which we believe;
• To strengthen our family and use its assets wisely; to enable our family and others to realize their fullest potential; to value and encourage love, work, self-sufficiency, and cooperation within the family and the larger community;
• To live with integrity and make a difference in the lives of others.”

Whatever the length and the goals of the family wealth mission statement, it is imperative that each family member be committed to the statement’s goals and purpose. You should realize that a family wealth mission statement cannot be decided by the senior generation alone if it is expected to be followed by all family members. Studies have shown that, for the mission statement to be effective, it must incorporate a joint sense of purpose versus one dictated by the patriarch or matriarch.

The statement should be reviewed regularly to ensure that the goals are still relevant. Review their mission statements every three to five years, as well as after any major family event occurs, such as the birth of a new generation, the entrance of the younger generation into the workforce or the death of a grandparent.

Comments by Paul Ferraresi:

The Social Security Administration says that 20 percent of the nation’s population will be disabled for a year or longer before reaching age 65. Surprisingly, only 13 percent of American adults believe it’s “somewhat” or “very likely” they’ll be disabled.

This is according to research by the National Association of Insurance Commissioners:

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Dear Friends,

Clocks and watches all over the world have the same number of hours in each day – 24. And that’s what we get each day. I have 24, Bill Gates has 24 and Warren Buffett has 24. And you do, too. It’s up to you to determine how to spend every minute.

You can waste your days sleeping late, watching television, hating your job and wishing you had a better life. Or, you can spend your time creating a better life – a world devoted to improving yourself and the lives of others. So what are you going to do with each day’s 24 hours?

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