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A Brush With Death Leads to a New Career

April 26, 2018 By Scotty

A brush with death leads to a new career

Written by Morey Stettner at MarketWatch.com

Some advisers spend decades in other careers before pursuing financial planning. Dentists, military veterans or even pastors may decide to dive into advising to help people manage money and live fuller lives.

Scotty Wallace thrived in two careers before becoming a financial planner. First, he worked as a news and sports reporter at local television stations around the U.S. Then he became a helicopter pilot who flew sick or injured patients to the hospital.

A serious accident led him to his third profession—as an adviser.

In September 2012, Wallace worked for CareFlite, a Texas-based nonprofit that provides air medical transportation services. On a trip to pick up a patient, a malfunction in the helicopter’s electrical system led to an emergency landing in rough terrain in Ranger, Texas.

Then 58, Wallace suffered a traumatic brain injury along with a broken neck, back, pelvis, leg and spinal cord. The helicopter’s other two occupants, a paramedic and flight nurse, also sustained significant injuries but recovered.

During his three-year rehabilitation, Wallace needed to reinvent himself after losing his job with CareFlite. An online career aptitude test identified financial planning as an ideal profession for him.

“I was in the 99th percentile to be a CFP [certified financial planner],” Wallace said. “I thought, ‘Yes, that makes sense!’ So I went through the financial planning program at the University of Texas at Austin.”

Wallace began his new career in 2014. After stints at Charles Schwab SCHW, +1.92% and Ameriprise AMP, +0.52% , he launched his Round Rock, Texas-based firm, Thrifty Scotty Financial, in February 2018.

“The accident gave me increased emotional and cognitive empathy,” he said. “Having gone through disability, I can cry with others facing similar challenges. And I understand the pain people go through and can respond in a cerebral, problem-solving way.”

Wallace calls upon his harrowing experience to prod clients to stay the course. After the crash, he spent 10 days in the hospital’s trauma intensive care unit before undergoing over two weeks of inpatient rehab and spending a month in a wheelchair. The next three years of physical therapy tested his fortitude.

“It taught me the value of sticking with a plan,” he said. “Now part of my job is making sure clients stick with a plan.”

Now 64, Wallace has a heightened appreciation for long-term disability insurance. Sharing his story motivates clients to purchase the disability protection they need.

He cites the example of a new client, a high-income engineer with a stay-at-home wife and five young children, who lacked disability coverage.

“You can’t go another day without this,” Wallace told the client. “If you had a serious injury, you couldn’t work in your current job. Your employer doesn’t offer disability insurance, so you need to buy it on the open market.”

The client readily agreed, and Wallace helped connect him with the appropriate coverage.

Reflecting on the moments before the helicopter’s emergency landing, Wallace draws another valuable life lesson. As he struggled to regain control in the cockpit during his descent, avoiding power lines amid limited visibility due to stormy weather, calm washed over him.

“As a flight instructor, I had taught students not to panic,” he said. “If you panic, all is lost. You need to focus on mindfulness in the moment, to use the analytical part of the brain to assess what to do and the lizard-like instinctive part of the brain to guide you.”

 

MOREY STETTNER
Morey Stettner is a writer in Portsmouth, N.H. He’s the author of five business books, including ”Skills for New Managers,” published by McGraw Hill.

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Retirement Income Planning

April 13, 2018 By Scotty

This Time Really is Different… (Retirement Spending V. Retirement Saving)

If you think of Retirement Saving as climbing a Mountain…Retirement Spending is hiking down that Mountain…

Accumulation Phase

We call the Trek up that Mountain the Retirement Accumulation Phase. We build our Investment Portfolios to maximize how much we Accumulate. Time is our Friend…The Earlier we begin Saving & Investing the Better!  Every time the Market Hiccups, We get to Buy more Shares on Sale!

Decumulation Phase

The Hike down that Retirement Mountain’s Backside is called the Decumulation Phase. Time is your Enemy. Every time the Market Hiccups, Your Precious Nest Egg Shrinks…and You must Spend a Greater Share of it to maintain your Lifestyle. It’s Scary… You want to make Darn Sure you don’t make it to the Bottom of the Mountain before you Pass Away!

Retirement Paycheck

During your Decumulation Phase, You need a Portfolio Strategy that delivers a Reliable Monthly Paycheck. We use a Scientifically-based, Proven Retirement Income Planning Approach to Build You a Customized Plan.

One-Size Does Not Fit All

It’s like Building you a Custom Home. We Identify the Proper Strategy for an “Income Floor” from Guaranteed or Low-Risk Sources. We Carefully Construct the Remainder of the Income Plan to Deliver Your Retirement Paycheck from your other Assets.

We Manage your Assets, Liabilities, and Cash Flows with an Eye toward minimizing a Broad Range of Retirement Risks.

Our Goal

Our Goal is to Make Sure You Don’t Run Out of Money Before You Run Out of Life…But, at the Same Time, Making Sure You can Spend Your Money with Confidence and Without Life Regrets!

After All…Wouldn’t You Rather Just Enjoy that Beautiful Mountain Scenery on Your Hike?

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How Do You Make a Small Fortune Day Trading Stocks? Start With a Large Fortune…

December 9, 2016 By Scotty

How Do You Make a Small Fortune Day Trading Stocks? Start With a Large Fortune…

Most of the clients I dealt with as a Stockbroker had Reasonable Expectations about the Performance of their Securities Accounts. But, Occasionally, I had to deal with Day Traders. They Bragged about their Results….However, I could see their Account History…I could see how they Exaggerated their Wins and Forgot to Mention their Huge Losses…

The Only Investment Return that Counts is Your “Real Return.”

1. After Taxes

2. After Inflation

3. After Expenses

Day Traders must pay Taxes on any Profits at Short-Term Capital Gain Rates. Their Tax Cost is Much Greater than Buy and Hold Investors who Pay at Much Lower Long-Term Capital Gain Rates.

Day Traders pay Transaction Costs when they Buy and again when they Sell. At my Former Firm they paid $8.95 to Buy a Stock Online. Another $8.95 to Sell It. Plus, an Extra $25 Each Time they needed a Stockbroker to Execute a Trade.

Transaction Costs Example

$ 8.95 Buy Commission
$25.00 Broker Assistance
$ 8.95 Sell Commission
$25.00 Broker Assistance

$67.90. Total Per Transaction

Most Day Traders Place Multiple Trades when the Stock Market is Open. One of my Former Firm’s Clients placed Thousands of Stock Trades Each Year!

Day Trading Firms will Try to Sell You Their Expensive Proprietary Trading Software. They Tout Impressive-Looking Performance Records designed to make Traders Think they are sure to make “Guaranteed Profits.” Those Records are Typically Derived by “Back-Testing” the Program against Past Data. In Other Words…the Promoters Go Back through Old Trading Records and see what would have worked in the Past!

Day Trading Firms let Prospects “Practice” with “Dummy Accounts.” But, “Dummy Accounts” can Breed False Confidence. It’s One Thing to Trade with Play Money…It’s Totally Different to Wave Goodbye to a Big Chunk of Cash You Used to Own! After All, Crashing in a Flight Simulator is Much Different than Crashing a Real Airplane!

The Day Trader Must Live Off His Profits from Trading as well as Risk His Own Capital and Borrowed Money Everyday to Make Those Profits…This Combination of High Risk, High Transaction Costs, and High Taxes prompted a Warning From the U.S. Securities and Exchange Commission:

“Most Individual Investors Do Not Have the Wealth, the Time, or the Temperament to Make Money and to Sustain the Devastating Losses that Day Trading Can Bring.”  

https://www.sec.gov/investor/pubs/daytips.htm

The People Who Make the Most Money from Day Trading are those Running Day Trading Firms. The One Thing They Will Be Able to Teach You:

“How Do You Make a Small Fortune Trading Stocks? Start With a Large Fortune…”

So What Do You Think? Do You Know Someone Who Has Had a Good or Bad Experience Day Trading? I Would Like to Hear From You.  Feel Free to Share my Blog Posts on Your Social Networks!

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Lessons I Learned From an Old Cat

September 29, 2016 By Scotty

Lessons I Learned From an Old Cat

“If you hold a cat by the tail you learn things you cannot learn any other way.” Mark Twain

I said Goodbye to Zeus this week. My Furry Friend had lived during parts of 3 decades. That’s a Long Time…Especially in Cat Years.

Zeus was a Tuxedo. Black on Top. White on the Bottom. With a Black Mask any Bank Robber would Envy.

He was a Gentle Soul. Never Bit Anybody. He even left the Mice Alone…But, He was a Great Teacher.

Cat Lessons

He Taught Me How to Age Gracefully…In a World that Sometimes Doesn’t Value the Wisdom of Elders.

He Taught Me How to Love Unconditionally…In a World that Frequently Rewards Power over Passion.

He Taught Me How to Die with Dignity…In a World that Too Often Puts People in Sterile Surroundings For Their Final Moments on this Earth.

Zeus’s Song

Zeus Helped Me Through Some Tough Times in My Life…A Friend’s Cancer Diagnosis. The Loss of a Grandson.

My Kitty Hung Around a Long Time. Perhaps Longer Than He Needed To. Maybe, Just Long Enough for Me to Adjust to His Mortality…Long Enough For Me to Write Him a Goodbye Song.

So, I Did What any Good Celtic Musician Would Do..I Wrote “Kitty Lullaby” and Sang it for Zeus to the Melody of an Old Irish Tune…Watch it here..

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Why Most Investors Should Hope For a Big Market Decline

September 12, 2016 By Scotty

Why Most Investors Should Hope For a Big Market Decline

In 2010 I was an Emergency Medical Services Pilot flying for a Texas company. Between Medical Missions I had the chance to discuss Finance with our Flight Nurses and Paramedics. One Flight Nurse who had a successful side business told me he wished that the Stock Market would Always Go Up. I used the opportunity to explain to him why Most Retirement Savers should hope for a Big Stock Market Decline.

Why Most Investors Get it Wrong

The Best Way to Make Money in Investing is to buy Stocks and Bonds at Low Prices and to Sell them at High Prices…But, most Investors do the Opposite…They Buy High and Sell Low. Why is that? Because, they Buy and Sell at the Wrong Time!

What did You do during the last Bear Market? Did you Panic and Sell your Investments for Less than You Paid for Them? Did You Hold On to What you Had? Did You Buy More Because Everything Was On Sale?

What You Did Last Time is a Good Predictor of What You Will Do Next Time. If You Sold in a Panic…Don’t Feel Bad…You Had a Lot of Company! After All, It’s No Fun to Say Goodbye to a Large Chunk of Money You Used to Own…

The Problem was You Misjudged Your Risk Tolerance. Like my Flight Nurse Friend, You Thought the Stock Market Would Rise Forever. You Did Not Realize that Losing Money Hurt So Much. You Did Not Think the Mix of Fear and Pain Would Convince You to Sell Your Investments After Your 401k Became a 201k.

How to Get it Right

Most Investors Overestimate their Risk Tolerance. How Much Money would you Feel Comfortable Losing if Your Retirement Investments had a Bad Series of Years? When Will You Need the Money? Do You have Other Assets or Income, like Social Security? Here are some Suggestions to Help Figure out Your Risk Tolerance.

1. Take a Test – Vanguard has a Free online Risk Tolerance Questionnaire. Fill it out Honestly. Have Someone You Trust Review Your Answers.

2. Talk to a Fiduciary – A Fiduciary is a Person Who is Required by Law or Regulation to Put Your Needs Before Their Own. A CFP® Professional or Registered investment Advisor can Help You determine Your Risk Tolerance. Most Stockbrokers and Insurance Agents are Not Required to Act as Fiduciaries.

3. Think About Last Time – Did you Panic Sell Your Investments during the last Recession? If so, It’s Time to Become More Conservative with Your Asset Allocation.

4. Get Some Sleep – Your Investments should not keep you Awake at Night…If they do, You Need to Reassess Your Risk Tolerance.

New Investors

What if You have Never Experienced a Big Market Decline? Then, You should Tilt Toward the Conservative Side when setting up Your Asset Allocation. Short-Term Losses can Scare an Inexperienced Investor Out of the Market.

As Mark Twain said, “The Cat, having sat upon a hot stove lid, will not sit upon a hot stove lid again. But, he won’t sit upon a cold stove lid, either.”

I Watched a Relative Lose a Fortune on “Black Monday” October 19, 1987 when the Dow Jones Industrial Average had its Largest One-Day Decline in History. My Relative Sold his Investment Portfolio and Locked in His Losses. He Missed Out on the Stock Markets’ Quick Rebound Later that Year. It was Decades before he Invested in Financial Markets Again.

What About Retirees?

Even for Retirees, Short-Term Corrections would only be Painful if they were Forced to Sell Part of their Investments to cover Expenses. Retirees should keep enough Cash to Cover at least a Year’s Worth of Expenses so they Won’t have to sell Assets in a Declining Market.

Cash Cushion

The Key is to keep some “Dry Powder” to allow You to Profit Next Time Stocks Go On Sale. It takes Courage to Buy Equities when Everyone Else is Selling Them…But, That is How You Buy Low and Sell High!

“Look at Market Fluctuations as Your Friend rather than Your Enemy…Profit from Folly, Rather than Participate in it.” Warren Buffett

So, What Do You Think? Have you Sold Investments Because of Fear? Have You had the Courage to Buy when Everyone Else was Selling? Do You Have some “Dry Powder?”

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In Baseball, Good Pitching Beats Good Hitting

September 1, 2016 By Scotty

In Baseball, Good Pitching Beats Good Hitting

In Baseball, Good Pitching Beats Good Hitting. That’s the Conventional Wisdom. The Theory is that a Good Pitcher’s Team will only have to Score a few Runs to Win. They just have to Score More Runs than the Other Guys.

In Retirement Planning, is it more important to Earn More or to Spend Less? The Answer is…It Depends. You need Both Good Defense and Good Offense to Win!

Everyone should take a close look at their Spending. You don’t have to live like a Monk to enjoy a Thrifty Lifestyle. At the same time, Some People would Spend More Than They Earn No Matter How Much They Made!

The Reality is that for someone just beginning a career, the Goal should be to Earn More so they can Save More.

Earn More

1. Improve your Career Skills
2. Start a Side Business
3. Ask for a Raise

Save More

Then, as your Income Rises, you Can Save More. The Key here is Managing your Spending Behavior and making the Conscious Choice to Save More.

Grow More

As your Savings Accumulate, you will notice that your Annual Contributions account for a smaller and smaller Fraction of your Portfolio’s Balance. At this point, Growth becomes a Bigger Factor than Contributions. Managing your Investments has a Greater Effect on your Retirement Nest Egg. You can Maximize Growth a couple of ways.

1. Optimizing Asset Allocation for Growth. (Greater Stock Exposure.)
2. Minimizing Portfolio Costs

Preserve More

As you near Retirement, your focus should shift to Preserving your Portfolio. A Bear Market close to your Projected Retirement Date could wreck your plans. At this Point, It’s Best to shift your Assets away from Riskier Investments to Less Risky Investments. Your Goal should be to Maximize the chance of living a Comfortable Retirement and to Minimize the Odds of Dying Poor.

1. Optimizing Asset Allocation for Preservation. (Lesser Stock Exposure.)
2. Possible Annutization.

Your Ideal Retirement Game Plan should be to Earn More and Spend Less. Yes, Good Pitching May Beat Good Hitting…But, Great Hitting Beats Good Pitching…Be Sure to Work your Financial Life from Both Sides of the Plate.

So, What Do You Think? Is it More Important to Earn More or to Spend Less? Can you Give an Example?

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