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Lauren’s blog covers topics that impact your finances, your family, and your future. Is there a topic you’d like Lauren to tackle? We’d love your suggestions and feedback.

In Your Best Interest: Our Fall 2017 Newsletter

Click here to view the full newsletter, including recent news, important dates, financial tips & tools, and more.


MARKET HIGHLIGHTS: Q3 2017

Thinking back over the quarter— and the entire year to date—I feel… breathless. Amid the whirlwind of global events, at least the economic and market news remains a bright spot, so let’s start the quarter review with some good news: 

In Q3, equity markets experienced gains, fueled by a late-August rally that pushed security prices upward. As the quarter came to an end, the benchmark indexes continued to rise. The Nasdaq and the Russell 2000 posted gains of more than 5.0%, followed closely by the Global Dow and the Dow. The S&P 500 trailed the other indexes listed here, yet still managed to increase by almost 4.0% since the end of Q2.

In September, the Federal Open Market Committee (FOMC) decided to hold the benchmark interest rate between 1 and 1.25% while setting expectations for an increase next quarter. The Fed noted that the labor market is continuing to strengthen, economic activity has been rising, job gains have remained solid, and unemployment rates are low. At the same time, household spending has expanded moderately, growth in business fixed investment has picked up, and inflation is running below 2%. 

In the rest of the news, the world is a mess. Donald Trump remains in the White House amid an accelerating Russia investigation, a frightening standoff with North Korea, and another failed attempt by Republicans to repeal the ACA. The Equifax data breach and the company’s inadequate response had everyone scrambling to secure their personal information. Protesters clashed in Charlottesville, Colin Kaepernick triggered a national debate, terrorist attacks escalated across Europe, and the US witnessed another mass shooting. Nature, too, was ill-tempered, with hurricanes devastating the Southern US, Cuba, Puerto Rico, and other regions; earthquakes in Mexico killing hundreds, and flooding causing record deaths around the globe. It’s been a year for the record books, and not in a good way. 

As we enter the final three months of 2017, it’s important to stay focused on what truly matters: love, health, and happiness. Know that our team will be doing our part by continuing to monitor your plan and your portfolio closely. For your part, do what you can to focus on what you can control… and to finally, hopefully, catch your breath.

 
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Now more than ever, focus on your Circle of Influence

Now more than ever, focus on your Circle of Influence

When I walked into my early morning Pilates class on Monday, I couldn’t decipher the expression on my instructor’s face. Was it compassion? Pain? Despair? “What’s wrong?” I asked. Her answer: “Las Vegas.”

I was fortunate that I’d had a more peaceful Monday morning than is typical for me. My iPad had gone missing, so I hadn’t checked my news feed or social media at all. Blissfully unaware of the tragic events of Sunday night, I spent my pre-workout hour reading an old standby: Stephen Covey’s The 7 Habits of Highly Effective People. As I sipped my coffee, Covey had been introducing the idea that being proactive means focusing on the things we can control—even in what seem to be dire circumstances. It’s amazing how things seem to come along at just the right time, even when you least expect it.

I was rereading the book to help manage my own “Post-Election Stress Disorder,” but Covey’s words hold some wisdom for all of us when the headlines are filled with news of one catastrophe after another. In just the past few weeks we’ve seen nine million children lose health insurance when Congress let the Children’s Health Insurance Program (CHIP) expire, protesters clash in Charlottesville, hurricanes and floods devastate communities in the southern US, Cuba, and Puerto Rico, and earthquakes kill scores of people in Mexico. Then Las Vegas happened, and we seem to drown in the negative…again.

But there is an alternative.

If you haven’t already discovered Covey’s The 7 Habits of Highly Effective People, let me introduce you to the first of the seven habits. It is an important one, especially after this “September to Remember.”

Habit #1: Be Proactive

According to Covey, being proactive means taking action, but it also means taking responsibility for your own life by actively choosing where to focus your attention. He stresses that our ability to be self-aware—to consciously stand apart from ourselves to observe what we’re doing and why, and to examine the way we see ourselves—is uniquely human. Unlike animals that simply react to stimulus in the world around them, we have a choice.

What a wonderful realization.

He also talks about “reactive people” who are driven by feelings, circumstances, conditions, and environment; and “proactive people” who are driven by carefully considered, selected and internalized values. To become more proactive, look where you focus your time and energy. All the things you care about—Las Vegas, Puerto Rico, the flag, politics, your children, money, health, and more—lie within what he calls your Circle of Concern. Next, look at each of those things and identify the ones that you can actively affect, or what Covey calls your Circle of Influence.

Stephen Covey quotes Viktor Frankl who said, “Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.” On Monday morning, many people were paralyzed by the tragic events in the news. Others chose to be proactive and act within their Circle of Influence. They got in line to donate blood for the victims. They offered transportation and housing to anyone and everyone affected by the shooting. Even during the shooting, people risked their own lives to save others. What an inspiration to us all.

There will always be tragedies in our world, but I wonder how things would change if every one of us could be more proactive—if, as Covey suggests, we each took responsibility for how we reacted to the world around us and focused on driving change within our Circles of Influence. I expect we’d all be more effective. And the world would be a better place.

This concept is also true when it comes to effectively managing your finances. While many events lie within your Circle of Concern—market corrections, inflation, gas prices, black swan events—you cannot influence their outcome. Know what you can control and strive to focus on your Circle of Influence: keep your fixed costs low, maintain sufficient emergency funds, select an appropriate risk profile, and have a solid financial plan in place.

By focusing our positive energy in the right place and acting wisely, each one of us has the power to be more proactive, more effective, and drive positive change in our own lives and in the world around us. Now is the time.

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Ready to shift your relationship with money? It’s time for some BRAVING

Ready to shift your relationship with money? It’s time for some BRAVING

I joke that I discovered Brené Brown in much the same way Columbus discovered America: I simply stumbled into the right place at the right time. And boy, am I glad I did. In just one Ted Talk and as much of her newest book as I’ve had the time to read (I’m not quite through, but I’m cherishing every word), this researcher and storyteller has me thinking deeply about vulnerability and bravery and how to build the courage to be “enough” for myself and others in order to live the fullest life possible.

What’s fascinating to me as a financial advisor is how much all of these ideas play into what I see every day with my clients—and how vulnerability, bravery, and courage impact each person’s sense of financial “success.”

If you’ve never heard of Brené Brown, I highly recommend taking some time out of your day to check her out. A social science researcher, she is a stickler for data and a mid-life convert to the power of vulnerability (listen to her Ted Talk for more on her journey). Through her research, Brown has studied people—mostly women—who experience love and belonging in their lives and those who don’t. What’s the difference? It’s shockingly simple. People who have love and belonging believe they are worthy of it. Those who don’t, don’t. Even more, it seems that what empowers people to achieve that state of worthiness—of believing they can be and deserve to be loved—is the courage to be vulnerable.

Courage and vulnerability resonate with me. In my life, I’ve observed that many of us seem to have lost our ability to be vulnerable. Perhaps it’s because we spend too much time in our bubbles. Alone and watching other people’s lives on social media or television. Alone commuting in our cars. Alone walking in a crowd with headphones in our ears, shutting out the world around us. Being alone has become our safe place where we are not judged or confronted or questioned. And it’s where we can choose specifically not to feel.

I think Brown hits the crux of it when she speculates that the reason we’re the most in debt, obese, and medicated adult population in history is because we’ve become completely uncomfortable with our vulnerability. When we feel exposed or conflicted or anxious, we choose to numb our feelings through food, alcohol or Facebook. Further, her research shows that there’s another way we numb our vulnerability, and that is to make everything in our lives certain. We no longer leave room in our public and private lives for reflection or uncertainty about our faith, our politics, and our preferences. It’s created an unsavory divisiveness in which everything is black or white. We’re labeled, and we label others in all-too-certain terms. We blame others as a way of discharging our fears. We use certainty as just one more tool to numb our vulnerability. As a result, we feel more judged, and, indeed, more vulnerable.

Perhaps the most important idea Brown presents is that numbing our feelings of vulnerability has an unintended consequence. Because we’re not capable of being selective about which feelings we numb, when we numb our vulnerability, we also numb joy, happiness, love—all of the feelings that make us happy and content as human beings. If there’s ever been a reason to nurture our vulnerability, this is certainly it!

As these ideas are all swimming around in my head, I keep coming back to how important it is to invite vulnerability into the financial planning process. If vulnerability is the key to more fulfilling relationships, it follows that it can have a dramatic impact on our relationships with money which, just like every other relationship, can come with a whole lot of baggage. Love. Fear. Anxiety. Shame. Obsession. The list goes on.

In Brown’s new book Braving the Wilderness: The Quest for True Belonging and the Courage to Stand Alone, she uses the word “BRAVING” as an acronym for the seven rules for building more connected relationships rooted in trust and vulnerability. It’s amazing to me how each of these statements can relate directly to every relationship—including our relationship with money:

  • Boundaries: I trust you if you are clear about your boundaries and you hold them, and I am clear about my boundaries, and you respect them.
     
  • Reliability: I trust you if you do what you say you are going to do. Not once, but over and over again.
     
  • Accountability: I trust you if, when you make a mistake, you are willing to own it, apologize for it, and make amends. And when I make a mistake I am allowed to do the same.
     
  • VaultWhat I share with you, you will hold in confidence, and what you share with me, I will hold in confidence.
     
  • Integrity: Choosing courage over comfort, choosing what is right over what is fun, fast, and easy. And practicing your morals, not just preaching them.
     
  • Non-judgement: You can fall apart and ask for help and not be judged by me.
     
  • Generosity: If I mess up, say something, or forget something, you will make the most generous assumption and check in with me.

I have strived to foster and live up to each of these values when I work with clients, but Brown has brought some valuable clarity to my thinking. I wonder if BRAVING may just be the key to help shift not just how we interact with each other, but also how we look at and feel about money. Brown says that when we are vulnerable, “We feel the deepest connection to our true self and to what matters most.” What a wonderful foundation on which to create a Brave New Financial Plan.

 

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When grandma fights back: the challenge of caring for combative dementia patients

When grandma fights back: the challenge of caring for combative dementia patients

It’s a treasured image: the loving grandparent with a soft smile, offering unconditional love and cookies to a bevy of grandchildren… until eventually she forgets their names and gently fades away. This scene of the aging grandparent often does happen, but sometimes there’s a dramatically different scenario that many of us may face at some point. Today, one in 10 people age 65 and older suffers from Alzheimer's dementia, and the number of new cases of Alzheimer's and other dementias is projected to soar[1]. On top of that, an unknown number of the nearly 6 million men and women with dementia will become violent at some point. When that happens, finding care can be incredibly challenging—whether it is for a grandparent, a parent, or a spouse.

Unfortunately, when a dementia patient becomes aggressive, combative, or otherwise non-compliant, their condition crosses into mental health territory. Similar to other mental health concerns, our health system is ill-equipped to handle the challenges. Despite the fact that as many as 1 in 10 Alzheimer’s patients lashes out physically, very few people talk about this issue. Perhaps it is the stigma of mental illness. Maybe we don’t want to admit to ourselves (much less our neighbors) that the people we love could become a physical threat, but the lack of care options for combative dementia patients seems to be the “dirty little secret” of elder care.


RELATED: Mental health, money, and breaking the silence


If you assume the issue is rare, think again. Here are just a few examples, and they paint a bleak picture:

  • When Randy’s wife Jean was diagnosed with dementia, he kept her condition a secret for almost two full years. He was embarrassed by the stigma of a mental health problem, but when Jean’s behavior changed, he couldn’t keep up the façade any longer. She refused to allow him to bathe her, fought him off when he tried to help her use the bathroom, and he couldn’t even coax her to bed at night. He had to get help. Sadly, Jean was just as uncooperative and aggressive with professional healthcare providers as she was with Randy. After three nights in a local nursing home, the facility called to tell him his wife would have to leave because she was “not manageable.” The next facility found her so difficult that they transferred her to a geriatric psych hospital where things got even worse. Two different memory care facilities refused her, and every time she was forced to leave another home, Randy was given a list of other facilities, a hasty “good luck!”, and little guidance.
     
  • Mia and Jon faced similar challenges.Jon had always been the decision-maker in the family, so when it was clear he could no longer keep up with the bills or manage their money, Mia didn’t know what to do. Even when Jon’s physician confirmed the early-stage dementia diagnosis, she felt stuck. Mia asked her adult son to help her talk to Jon about the necessary changes (beginning with taking away the car keys), but when they approached him about the issue, Jon was threatened, upset, and angry. Less than a year later, Mia and Jon moved into a continuing care community, but the transition proved too stressful. Within a week he was moved to the skilled nursing unit. When he became combative, he was transferred to the psych holding unit of the local ER for 24 hours. When he was released, Mia and her son were given a list of recommended facilities, but none of them would even consider accepting Jon because of his history of aggression. Four facilities later, an elder care placement worker urged Mia to consider a board-and-care home that specializes in combative dementia. It was there, says Mia, that Jon was saved by a caregiver who understood how to calm him and was able to give him the best quality of life he could have.
     
  • When my husband, Ed, suffered a debilitating strokeand became permanently disabled, he was only in his 50s, but we faced similar challenges. After a bad fall, Ed was placed in a medically induced coma to allow his body to heal. When he woke up, he was confused, angry, and combative. That didn’t change when he was placed in the best facility I could find—one where I knew they would not tie him to his bed. But after one violent episode, they transferred him to UCI without my permission, despite the fact that I had Power of Attorney at the time. Because there were no beds available in the psych unit, my husband was placed in the ER hallway (perhaps the worst possible place for someone suffering a psychotic break!) for more than a day. Finding any place that would accept him with that history was nearly impossible. The whole scenario was horrific.

Finding quality care for dementia patients who become non-compliant can be a nightmare for everyone involved. I wonder if the challenge lies not with the patients themselves, but with our society’s inability to accept mental illness—to give it a name, anticipate the possibility that this may become a reality in our own lives, and identify creative ways to help our aging population through the trauma and confusion of dementia.

To learn more, I recommend Esther Heerema’s article How to Respond to Combative Behavior in People with Dementia that looks at the daily challenges from the dementia patient’s point of view. She helps the reader understand what drives some of the anger and frustration that can result in combative behavior. If you do find yourself facing the challenges of caring for a combative family member, remember that dementia can take a devastating toll on caregivers. Find a local support group, join an online forum like Caring.com or the Alzheimer’s Association’s ALZconnected.com—get help wherever you can find it.

According to the Alzheimer’s Association, someone in the United States develops Alzheimer's dementia every 66 seconds. By 2050, that statistic is expected to jump to one new case every 33 seconds. By doing all we can now to help end the stigma of mental illness, perhaps we can help change the future for tomorrow’s dementia patients—ourselves and our families included—even when they become “non-manageable.”


Do you have an Incapacity Agreement?

To help our advisory clients anticipate dementia, we ask everyone 65 or older to sign an Incapacity Agreement. This agreement permits us to reach out to designated individuals if our client asks us to make changes to their investments or make withdrawal requests that are seriously inconsistent with their previously-stated life goals—something that we believe is an out-of-character request that could be due to physical or mental illness. Ask your advisor if he or she offers a similar agreement to help protect you and your assets in the case of age-related dementia.


 

[1]Source: Alzheimer’s Association Fact Sheet.

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Security vs. Freedom (and the magnificent merits of flying business class)

Security vs. Freedom (and the magnificent merits of flying business class)

I’m writing today swimming in jet lag after a week spent (literally) swimming with the fish in Fiji. And while it may be true that every vacation creates a mental shift of sorts (if for no other reason than that it takes us away from our daily routines), this particular trip was unprecedented in the impact of that shift. What was this dramatic change? After decades of helping others as a financial advisor, I’ve finally found my own internal abundance. I’ve finally been able to rise above the very basic need for financial security and embrace the ultimate goal: financial freedom.

Before you jump ahead and think I won the lottery during my travels (I didn’t!), let me take a step back to clarify.

Whenever I sit down with a client to begin the financial planning process, one of the first questions I ask is this: “What is important about money, to you?” In most cases, I receive one of two responses. The majority of people, regardless of income level or accumulated wealth, will begin with “security.” A small percentage (who admittedly tend to seem unusually at ease) will name “freedom” as their fundamental goal. For all the years I’ve been asking this question, I’ve always understood the need for security more. After all, who in her right mind wants to end up being a bag lady with no resources and no financial security to save her from the abyss?

I come to this scarcity perspective honestly. Raised by depression-era parents who saved everything from used tin foil to pennies, the fear of “not enough” was drilled into me from day one. Our family was frugal to a fault. Then, after becoming a single mother in my 20s, saving my pennies mattered more than ever. The responsibility to have enough to give my children was a heavy weight to bear. I expect this is why I was drawn to my career when I was. After all, the more I knew about money, the more security I could control, right? And though I’ve worked hard to have the skills and knowledge to help my clients plan for their financial security, I realize that I was never completely at ease with money myself. Did I have enough? Certainly. But whenever I saw friends spending on what seemed to be frivolous purchases, I caught myself asking, “How can you spend that money today when you might need it tomorrow?”

Fast-forward to two weeks ago when I boarded my flight to Fiji. For the first time, I had allowed myself to splurge on the luxury of a business-class ticket. Even as I walked onto the plane, I questioned what prompted me to spend a big chunk of my budget on a bit more leg room, a personal sleep kit (as if I don’t already have eye shades), and real food and drinks. But when I settled into my relatively monstrous seat, I had to confess it felt pretty darned good! When the flight attendant handed me a warm scented towel and invited me to “sit back, relax, and enjoy your flight,” I thought that, for once, I might actually do just that.

And I did. When we landed in Fiji more than 11 hours later, I was refreshed and ready to go. While I am sometimes apprehensive about meeting new people, especially an assigned roommate on a dive trip (Will I like her? Will she like me?), this time I felt light and almost giddy. More than anything, at the end of that flight, I felt empowered.

Once I settled in at the hotel, I learned that out of a group of ten, only three of us were planning to dive. The rest of our group were there to snorkel and enjoy the sights above sea level. So our band of three became fast and close friends, and in everything we did together, I felt more buoyant than ever—physically, mentally, and even spiritually—both in and out of the water. When we were diving, my buoyancy was amazing. I was breathing easily (not gulping air in fear of not having enough) and in my relaxed state, I found myself just hanging in the water—not sinking to the bottom or floating to the surface, but balanced and at ease. I was more present, more observant, and more at peace than I can remember. I felt completely free.

As I boarded my flight home on Saturday, I felt something that, until then, I’d only seen in others and never really understood. After years of careful planning and fearing scarcity, I was finally giving myself the freedom to overfill my glass a little. It felt fantastic.

The best part about financial freedom is that anyone can get it. Yes, as Jonathan Clements says, “Growing wealthy is embarrassingly simple: We save as much as we reasonably can, take on debt cautiously, limit our exposure to major financial risks, and try not to be too clever with our investing.” (Read my blog Money really can buy happiness for more on that great topic.) That’s why having a solid financial plan is vital for anyone. There’s no doubt that there’s a fine balance between knowing that you’ve planned to achieve abundance and trusting your plan will deliver what you need for the future. But achieving financial freedom—that buoyancy that enables you to trust in your own abundance—is as much about a mindset as it is about finance.

For years I’ve preached the value of striving for financial freedom to anyone who would listen. Today I can say I finally have that freedom myself. In the ocean, I now trust that I have enough air to sustain me for the duration of my dive. Back on land (or up in the air in business-class!), I now trust that I have enough resources to sustain me for the rest of my life—even if I allow myself to overfill my glass now and then. That is true financial freedom. I hope you can meet me there!

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Index

09 November 2016

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Disclosure

All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >