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The Art and Science of Getting and Staying “On a Roll”

 I love adapting engineering and physics concepts to solve common financial problems many people, even financially savvy people, encounter all the time. That’s why I’m so excited about my latest invention, the Wealth Allocation Wheel.

Illustration 1

The challenge, in simple terms, is “staying on a roll.” There is an art and science to staying on a roll with your wealth. This means having enough inertia with your wealth to successfully navigate the Stages of Financial Freedom (see Illustration 1). The clear aim I have written about extensively is how to achieve controlled growth while avoiding short or long periods of stagnation or depletion.

Lifelong learning.  It’s a core belief here at our firm, and we regularly read across a variety of topics.  I recently asked the team to share any of their favorite books from the past year, business or otherwise.  Below is what we’d offer up as our recommendations from 2017, and if you have any good book recommendations from the last year, please let us know!

Brady Siegrist

As my clients know, planning for the future eventually includes a conversation about mortality.

While the S&P 500 remained near its all-time high, the recent massive selloff in the technology sector went mostly unnoticed. But for investors who follow the so-called “FANG” stocks (Facebook, Amazon, Netflix, Google) the hit was painful: About $60 billion in value was wiped out in just one afternoon, representing the largest selloff in nearly 2 years.

The wipeout was a function of just how big these companies have become and the position they are in with new tax reform looming. Tech companies are expected to receive little benefit given its already-low average tax rate of 18.5% (below the 20% proposed rate).

This has caused investors to rotate out of the tech stocks and into the financial services sector, which stands to benefit more from a corporate tax rate that would drop from the current 35% to 20%.

Interestingly, the S&P 500 was relatively unaffected while this rotation into financials and out of tech ensued.  The index’s volatility actually remained low, as did correlations among the S&P 500’s member stocks.

In other words, the diversity offered by the S&P 500 Index allowed for the index too remain relatively unscathed by the trading within the tech and financial sectors, a key reminder to investors that having proper exposure across the markets continues to be important with the S&P 500 near its all-time high.

 

What Are Your Own Possibilities?

You can't take it with youSometimes, the pursuit of wealth can leave a void in our lives—a place left empty because we lacked the energy or time to pursue a dream. There is a saying: “Wealth is not an end, it is a means to an end.” The problem is that the complexity of creating wealth and the subsequent financial planning often gets in the way of seeing and pursuing an end truly aligned with your highest purpose in life.

My life’s work has been focused on this critical unmet need. I hope to help people see the possibilities that open up once you escape from the chaos and confusion that characterize so much of the wealth management field today. I absolutely know it is possible to put a large portion of wealth management on automatic; I have built the system, structure, support and discipline to achieve this; and I’ve seen how using these benefits helps people define and achieve their highest ambitions. This approach is both effective and rewarding.

Clients are surprised sometimes when I ask them about their higher purpose and possibilities. It is not that they feel I’m prying; they just don’t expect an advisor to be concerned with such matters. I tell them that these are the most important questions for them to consider when it comes to financial planning.

For the fourth year in a row Janiczek Wealth Management has been named to Barron’s Top Financial Advisor list*, now for 2017, 2016, 2015 and 2014!

 

Barrons 2017Mr. Janiczek was named one of America’s top financial advisors* in the March 4th, 2017 Barron’s issue.  The prestigious list of top investment advisors was also published in The Wall Street Journal by Dow Jones & Company, a division of News Corp on March 9, 2017.

The rankings are based on data provided by over 4,000 of the nation’s most productive advisors. Barron’s draws from all 50 states, plus the District of Columbia. It includes a cross-section of private-wealth advisors—from independents who own and operate their own practices to advisors from the large Wall Street firms.  Barron’s states, “This special report lists the top advisors in each state, with the number of ranking spots determined by each state’s population and wealth.

The rankings are based on assets under management, revenues generated by advisors for their firms, and the quality of the advisors’ practices. In evaluating advisors, we examine regulatory records, internal company documents, and 100-plus points of data provided by the advisors themselves.” 

Gold Medal 08.15As we have watched the 2016 Olympics in Rio, it’s truly impressive to see the athletes from all over the world compete at such a high level and demonstrate their true dedication to their chosen sport.  The athletes and their families have spent years devoted to hard work, incredible amounts of focused energy to training, exhibit world class discipline and dedication in order to be the very best in the world.  Their ascension to the Olympics of course has not been linear, as each of the athlete’s had to overcome many obstacles and adversity in their paths to reach the pinnacle of their respective sport.  The Olympian athletes’ training efforts, focus, and discipline are primarily behind the scenes with many hours working with their coach and trainers, with never a promise to compete or let alone win an Olympic medal.  Their hard work and tireless effort’s provides them the best chance to execute their lifetime goals.

When it comes to financial planning, I have found that a systematic approach is needed to make important decisions, focus on what matters most, and evaluate options. In previous posts I introduced the guiding principles of wealth management:

  1.  Make your balance sheet, cash flow, and portfolio your friend
  2. Compare your finances to standards of excellence
  3. Stress-test your financial plan
  4. Know what is holding you back and spurring you forward
  5. Be specific and proactive to make permanent changes

To achieve the desired consistency, I find that people need a well-designed structure. I strive to provide this structure in my role as a financial advisor.

In my previous four posts I introduced my guiding principles of wealth management, along with the first four principles (links to one, twothree and four). Today I will discuss the fifth and last guiding principle:

Be specific and proactive by identifying and implementing the actions that will result in the best permanent changes

PrintOver the years, I have had the privilege of observing how clients meet challenges and tackle opportunities. Some have a knack for succeeding in any task they take on, while others seem to struggle more than they need to. Eventually, I saw a key distinction between these two groups: Successful people are usually very specific and proactive, while those who struggle tend to be vague and reactive. They set goals, but they do not follow through with a plan of specific actions aimed at meeting those goals. Consequently, instead of controlling events, they wind up responding to events. Getting stuck in reactive mode is another example of the 85% Trap.

By contrast, when successful people see a need or set a goal for themselves, they develop a specific plan of action. In keeping with the concept of the Essential 15%, they strive to find a permanent solution to every challenge, as opposed to a solution that requires ongoing effort.

In my last few posts I have discussed my first few guiding principles for wealth management: make your balance sheet your friend and compare your financial plan to standards of excellence. Today I will discuss the third principle:

Back-test and stress-test your financial plan under various scenarios to further reveal strengths, weaknesses, and possibilities.

Checklist

The “Elastic Limit” is a term I’ve borrowed from engineering because it has tremendous relevance in wealth management and financial planning. It refers to the amount of stress a material can withstand before undergoing permanent deformation. For example, if you stand on a wooden bench, the wood may sag a bit and bounce back when you jump off. However, if several NFL linemen stand on the same bench, the wood will probably warp, crack, or break.

Matt - close upJaniczek is excited to announce that Matthew Gray has joined the firm’s Wealth Optimization Team to enhance Janiczek’s disciplined Evidence Based Investing (EBI) and Strength Based Wealth Management™ platform.  


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