Financial Advisory Services

How To Break The Ice Around The Family Finances

Money is one of the trickiest topics to discuss. But avoiding the conversation can lead to problems. Learn how to start the dialogue with your family
What’s the hardest thing to talk about? Death, religion, politics? Would it surprise you to know that one of the most difficult things to discuss is money? When polled, 44% of Americans claimed that personal finance was the hardest to discuss – beating out politics and even death.

Perhaps this is because money represents more than a topic – it can represent control, power, embarrassment, insecurity, fear. For some people, the hesitation stems from a natural reluctance to confront their own mortality or their potential for future disability. For others, avoiding the topic is caused by the perception that planning is associated with complicated—and expensive—legal and tax issues. Avoiding these sometimes difficult conversations can have detrimental outcomes and unexpected consequences for your family, such as:

Passing On Bad Habits – Talking to your children about money now can help them avoid mistakes in the future. The key is to talk about what money means to you and why you worked hard to achieve your success. It involves being open about the challenges and responsibilities that accompany wealth – including what you might have wished you’d done differently when younger. And, most important, it’s about your values and what you wish for yourself and your children to accomplish with your privilege. The conversation can serve as an empowering first step to forming a healthy relationship with wealth.

Lost Opportunities – It’s never too early for your children to understand the value of creating a wealth plan that takes family members’ needs into account. Family members may not be aligned on priorities, such as long-term health care needs, charitable giving and generational gifting strategies, and taking the time to establish common goals is the first step in understanding how all members can participate in achieving them.
The reality is that 70% of families lose their wealth by the second generation. Lack of communication can ultimately lead to misunderstandings and divergent objectives that could jeopardize your legacy and work against your values.

Costly Procrastination – Perhaps the hardest of conversations to have as an adult is with your aging parents. This is where the danger of putting it off grows exponentially. According to the U.S. Department of Health and Human services, 70% of people over 65 will require some long-term care at some point in their lives. Once a crisis hits, it’s often too late. Now is the time to determine if sufficient long-term health care plans have been made, as well as who will make financial decisions on your parents’ behalf if they lose the ability to safely handle their money. Proper planning gives you time to discuss your decisions with family members. This open communication can help to reduce, if not eliminate, the risk of family discord, resentment or conflict.

Having a hard time starting a conversation about family finances? Here are a few questions that can make it easy for you.

  1. At what age do you hope to retire?
  2. When is it okay to borrow money?
  3. Is it important to talk about money as a family?
  4. What is your charitable cause and why?
  5. How is your generation different from the generations before you?
  6. Should children give to charity?

Why Having A Goal Is Key To Investment

With a clear goal in mind, investors can create a realistic plan for achieving their objectives within a certain time frame. Here’s how.


One of the biggest mistakes I see investors make is confusing investing with stock picking. Ask many people how their money is invested and they might quickly jump to tell you the latest hot stock they’ve purchased and the investment thesis that explains why they think it’s going to take off.

What is their goal? Probably just to make some quick, easy money, which neuroscience has shown makes us feel good.
Unfortunately, behavioral economics tells us that acting on such impulses tends not to end well. To be true to the term, investing must start with a specific goal corresponding to a specific time horizon. The goal itself could be anything: buying a new car in two years; purchasing your first home in five years; or retiring in 40 years. What’s most important is to have the goal be the focus of your approach.

Once you’ve identified a goal, an investment plan can take shape. How much savings can you devote to it? How much time do you have? How realistic is the goal given the first two questions and the amount of risk you feel comfortable taking? By answering these questions, you will have gone a long way to devising an investment strategy that can help you achieve that goal.

How to Handle Volatility

Saving For Retirement

Let’s consider someone saving for retirement. After all, that is typically the focal point around which other financial goals orbit. A plan for that goal could include a desired amount of spending needed to fund your lifestyle in retirement, an intended amount of savings each year that would be needed to achieve that goal, and a suggested asset allocation. There are a lot of moving parts, with adjustments that need to be made along the way. However, many tools now exist that can help you connect the dots and track moving targets in changing markets.

Since equities are more volatile, but usually return more than bonds over a market cycle (around seven years, on average), investors may need a higher percentage of their portfolio in stocks to reach their long-term goal. For example, 35-year-olds could have 80% of their portfolio in stocks, and possibly more depending on their circumstances and the market environment. That age group could likely withstand the higher volatility of stocks.

If the goal is less than a full market cycle away, the investor should probably take less market risk to avoid the possibility that stocks could suffer a substantial decline close to when he or she would need to convert that equity into cash. An equity allocation of 30%, for example, may be appropriate for someone later in retirement who relies on her portfolio for a substantial portion of living expenses.
Once the asset allocation is set, careful security or fund selection techniques can improve performance, reduce risk and lower costs.
What if a retirement plan is off track? At that point, investors can use other levers to help fulfill their goals—things like increasing savings, pushing back retirement a year or two or coming up with a plan to work part-time in retirement (for more ideas, see “What to do if You’re Off Track on Your Goals”). While these kinds of trade-offs may not be desirable, they may be the best way to manage the risk of more serious shortfalls in your finances.

Goal-Setting and Tracking Matters

What I hope you’ll see in these examples is the importance of setting a goal and tracking your progress against it when investing. If you don’t have a plan, you may lack perspective on how chasing a hot stock in the short-term can damage your long-term finances. More to the point, you may not realize how positive the impact of compounded returns from sound strategies can be over time. You also may not realize that you need to make adjustments along the way to stay on track.

There is no magic stock-picking formula that will make your most ambitious desires a cake walk. In fact, while security selection is important, research shows that what matters most in investing success is asset allocation—the decisions you make to invest your money across different sectors of the stock market and different types of securities, including bonds and cash.

When you have a goal in mind, your time horizon and risk tolerance will inform your decisions. Setting up your asset allocation in the context of a realistic plan that can be adjusted for life and market uncertainties should put you well on your way to achieving your financial objectives.

Wealth Management

5 Tips for Talking to Kids About Money.
The State of Your Parents’ Estate.
Align Your Goals with Strategies for Reaching Them.
AJ & Partners goals-based wealth planning framework strives to guard against more than just market volatility. We believe that a successful planning strategy must meet the following criteria:

  1. Your plan should be customized to reflect what you care about most. It should address both the goals you hope to achieve and the risk of outliving your assets.
  2. Your plan should address the shifting nature of issues and unknowns you face at different stages of your life and consider risks beyond market volatility, like inflation.
  3. Your plan should seek to mitigate judgment and behavioral risks such as panic selling in difficult markets or overspending.
Smash The Taboo

We know it’s hard. Sitting down to discuss your parents’ long-term health needs or checking in with your siblings to see if you are all on the same page relating to any inheritance isn’t easy. What about your children; do they value the same causes that have moved you all your life? Is your spouse prepared should something happen to you?

The tough part is getting started, and that’s where bringing in an objective financial professional can help. We understand that wealth is about much more than just money, and can guide the conversation down those difficult paths to uncover the things that matter most to you and your family. We don’t believe in having a single conversation, but rather a series of talks that shift as your life changes. It’s a road. And you don’t have to travel it alone.

It starts with family, but doesn’t have to end there. We are ready to provide the guidance, tools and information that can help you tackle these difficult topics and transform them into meaningful discussions for your future. Uncover what matters most to you and find an AJ & Partners Advisor to help guide the conversation. Because the road starts here.

Investing In The New Leisure Economy

Technology is changing the nature of entertainment and leisure activities, creating new opportunities for investors.
The leisure and entertainment sector represents a large, growing chunk of the economy and is poised to get much bigger. The Dow Jones Travel and Leisure Index has grown at twice the pace of the S&P 500 in the past 25 years. Add up travel, television and film, gaming, restaurants, fitness, pets and social media industries and total leisure spending is at more than $1 trillion globally.

Growth in this sector may be just getting started. I expect it to continue to grow at a much faster rate than the overall economy with U.S entertainment and dining growing at 4.9% between 2014 and 2016, driven by three secular tailwinds that are converging.
Exciting new technology is leading to innovation. We are most excited about tremendous potential growth in segments like virtual reality and e-sports (watching people play video games competitively). Multiplayer gaming, streaming video, social networking and augmented reality are also fast-growing industries.

Automation is allowing people to work less, play more. Of late, people may feel busier than ever, but the time spent working has actually declined in aggregate. Automation, which makes work more efficient, is a big reason why. Statistics on working hours show that in developed countries, people have more spare time than they did in the 1970s, working an average of 4.8 less hours per year. At that rate, the population could have 12 million years of additional leisure time by 2030.

Multitasking is expanding hours per day spent engaging in leisure activities. People are increasingly doing two kinds of leisure activities at once—watching TV and posting on social media, or exercising and watching a movie, to name just two examples. One study of millennials found that only 5% watch TV without engaging in another activity. Existing statistical work on leisure has ignored multitasking instead pushing people to identify a single activity at each point in the day. This potentially understates actual time that can be monetized. Multitasking increases hours spent in leisure activities and is a primary driver for our interest in the sector.

Investing in Artificial Intelligence and Automation

The downside of all this growth in leisure activities is that competition for our leisure time and dollar is increasing. Consumers have more choices and some experiences will lose share. The fastest growing industries might not have much pricing power.

Fully immersive experiences, like virtual reality could have more pricing power than activities that require less attention, like posting on social media. However, activities that can be multitasked may grow much faster. Some activities, like social media, are hybrids and can be active or passive, depending on the context.

We recommend investing across active and passive leisure. Ultimately, the best investments may turn out to be what we refer to as multiline leisure companies. These are firms that offer both immersive and passive leisure experiences. They grant investors the potential to participate in both fast growth and higher margins as demand for leisure activities grows.


Our Partners

Through building strong partnerships, truly understanding your needs and working together to impact performance, we know we can assist you in positively shaping the future of your people and your organization.