A Guide to Starting Family Financial Conversations

A Guide to Starting Family Financial Conversations

By Jeff Johnson I’ve been a close observer of the way families make, communicate and implement financial decisions for most of the last four decades. In that time, I have learned that many individuals and couples make family wealth and lifestyle planning decisions privately, then avoid discussing them with other family members because it’s an uncomfortable conversation. The family leader or leaders usually know it would be better, in many cases, to explain details, discuss issues, and secure commitments to and acceptance for the family’s financial direction. Clarity equals confidence, and being financially confident empowers a fuller life for all involved. Yet many, if not most, family leaders struggle to share the intimate specifics, fail to collaborate on decisions, or neglect to have reasonable and open conversations about a range of family wealth and life planning matters. In my experience, the reason for this is twofold. First, as I previously mentioned, it’s just plain uncomfortable (or, at least initially, easier to do nothing at all). Second, few people are trained to hold money discussions and just don’t know where to start or how to do it. So, you may ask, what exactly is involved in starting a constructive dialogue about your family finances and the decisions that affect them? Having worked with hundreds of families to meet their life and long-term financial goals, and based on my unscientific observations, here is where and how you might want to start your family’s next important conversation about money: 1. The late Stephen Covey, a legendary author and speaker, advocated planning by “starting with the end at the beginning.” Before sitting down for...
Credit Premium: Fact(or) Fiction

Credit Premium: Fact(or) Fiction

By Jared Kizer The above title may well end up being my most significant marketing achievement. Yet, it is a good descriptor of a research topic I’ve tackled, and I continue to be surprised by how little attention has been paid to whether there’s any historical justification that the credit premium — the difference in return between corporate bonds and comparable maturity government bonds — is additive to portfolios that already own stocks and government bonds. Based upon work I’ve previously done and the working paper I posted in March, I’m convinced that it isn’t, at least in the form it takes in most investment-grade corporate bond indexes and many investment-grade corporate bond funds. Here, in the spirit of AQR’s pieces on various premia, I’ll detail what I believe are some facts and fiction related to the investment-grade credit premium that investors should understand. Fiction: Early 20th century data on the credit premium is reliable and good quality. I’m as much of a fan as anyone of using the longest-run data possible for research purposes. However, a close inspection of the primary series typically used for long-run analysis of the credit premium — Ibbotson and Sinquefield’s default premium series — reveals that its early history is highly suspect. In the piece I first linked to above, I find that the series had a Sharpe Ratio in excess of 1.30 (!?!?!?) during the 1930s and that the credit premium’s annual returns exhibited positive correlation with Moody’s annual measure of corporate bond defaults. This directional correlation relationship, of course, makes no sense since one would expect to see years with larger numbers...
Five Ways to Become More Financially Engaged

Five Ways to Become More Financially Engaged

Becoming more engaged with your finances can be a daunting task — the decisions you make are important and the amount of information can be overwhelming. In this video, however, Katie Keary shares five ways you can become more involved with your money. The best news is you can start at your own pace, and you don’t have to go it alone. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. The opinions expressed by myself and other featured authors are their own and may not accurately reflect those of Lifeguard Wealth. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. © 2018, Lifeguard Wealth As always, if you have any questions please contact Lifeguard...