I admit, I watch this show religiously.  It’s the psychology that fascinates me the most.  It’s easy to see the results they achieve week after week, and the “before” and “after” pictures are graphic proof of the success of the program.  Since so many struggle with weight issues, it’s also a source of hope and encouragement for those who aspire to lose weight.

Much like the success principles in the 7 Steps to Your Lasting Wealth program, I see 3 core strategies at work.

First, accountability is one key.  These participants are accountable to their trainer, their team, and the scale.  There’s nothing like knowing others have a stake in your success, to keep you motivated. 

 Let’s face it—no one likes to look bad in front of others!  You can easily have accountability with someone who cares about your financial success as well.  I have an accountability business partner with whom I meet weekly, and knowing I owe her a dollar if I don’t complete the goals I’ve set, adds to my incentive.

Second, a method of measurement.  For the program, it’s the ever-honest scale.  I can’t imagine weighing myself in front of thousands, but that moment of reckoning is another great incentive for those participants to avoid cheating on their regimen. 

What measurement can you use for your finances?  In my program, there are checklists and charts.  A great general tool is your net worth statement.  There are plenty of free sources to create your current net worth, and you can easily update your report as needed.  I like the net worth statement, since you increase your net worth by growing your investments AND by reducing your debt.  

The third key is professional guidance.  The program participants are examined and monitored by health professionals throughout the program.  The trainers are experienced, educated professionals that ensure the contestants use the right equipment with the right methods and at the right time. 

When it comes to your finances, you need experienced, certified financial professionals that will put your best interests first.  I know that’s easier said than done, and there are key questions you should be asking your financial advisor.  They’re listed on my website under the “More/Pet Peeves” section in my website.  

What are the primary roadblocks to your financial fitness?

As I was recently doing my fast sort after I picked up the mail, a 4-page flyer that had been sent to me caught my eye.  I’ve seen these before, and they’re appealing because the “Educational Course” is offered through a local high school.  Valuable information may be presented, but let’s look “behind the curtain” for a minute.  A quick search on the internet revealed the course is a seminar package purchased for use in marketing financial services.  But the content is only half the story.  More importantly, I immediately searched the flyer for information revealing the credentials and business of the presenter.

I found the following:  “CLU” and “xxx is a Registered Representative & Investment Advisory Representative of…”

 What did I immediately discover with my x-ray vision?  The “CLU” designation is for life insurance agents. I know his primary training and focus is related to life insurance, and that’s a product he will have in his back pocket to sell to attendees that subsequently meet with him after his workshops have ended.   

 What else did I immediately know?  The section that reads:  “Registered Representative” tells me he is paid a commission to sell investment products as well.  He may also have sales quotas to meet, and have a production goal in mind.

Could there be a conflict of interest between putting his interests ahead of the best interests of the attendees?  Absolutely.  Will he act on his best interests ahead of the attendees?  Hard to know for sure. 

 What would be better to see?  Nothing.  In other words, NO wording like that shown above.  Look for firms that are Registered Investment Advisors. By law, these investment advisors have a fiduciary duty to their clients, which means that they have a fundamental obligation to provide suitable investment advice and always act in the clients’ best interests.  The advisor, or any party in which the advisor has a financial interest, does not receive any compensation or other remuneration that is contingent on any client’s purchase or sale of a financial product. The advisor does not receive a fee or other compensation from another party based on the referral of a client or the client’s business.

My warning to you:  keep your eyes open and do your “homework” before you invest the time and energy—and possibly future trust—in an individual with this resume from these sorts of workshops.

One of the questions I had to answer was who to select as the person(s) to make decisions for my health care in the form of the health care power of attorney.  This can include some tough choices regarding my quality of life in a serious medical situation.  I had assumed my sister and her husband would be those I would choose.  However, I told my two adult children about this decision, and they unanimously stated they wanted to be the ones in that role.  I was touched and gratified to know they wanted to assume that responsibility in their early adult lives.  That difficult conversation was a real gift to me.

Mistake #1:  No updated will—or worse yet, NO will!

When meeting with couples through the years, the question that caused them to squirm the most was:  “How is your estate planning?”  Most often, they had completed their estate documents when their children were young, but through the years this document continued to collect dust.   You worry about making mistakes, so you procrastinate. Does that sound familiar?

Remember, you can change your documents as often as you wish.  It’s more important to have one than to ensure it’s perfect the first time.

Also, I DO NOT recommend do-it-yourself wills.  I’ve talked to too many estate planning attorneys who shared countless stories of the painful mistakes made by those who had tried to cut corners.  You don’t know what you don’t know, and mistakes can cost lost money to heirs, not to mention painful experiences you would never want them to endure.  Consider the money spent as a wise investment in your legacy for them to remember you with peace and gratitude.

Mistake #2:  Failing to talk to your heirs about your plan.

As shared above, my conversation with my children, albeit uncomfortable for me, brought us closer together.   It’s better to explain your plan to your heirs so they’re not shocked later by any unpleasant surprises.  This includes the “little” things, such as treasured heirlooms, furniture, and any other items that have sentimental value.  Those “little” things can easily cause the biggest problems when settling an estate.

Mistake #3:  Forgetting insurance, IRA and retirement plan designations.

A will does NOT control how the money in these plans passes to heirs.  Separate beneficiary forms control the distribution after your death.  Be sure to complete the forms designating BOTH primary and contingent beneficiaries.  Update these as needed, and be sure they’re coordinated with your will.

That pressure, which is alive and well 15 years later, is why I left the traditional side of the industry. So, the question YOU need to answer is: “Does my financial advisor wear a white hat or black hat?”

The white hats have the following

• Ability to show you ONLY what is in your best interests with NO pressure

• Will easily tell you how they are paid and show you in writing

• Willingly show you any and ALL fees-internal and external- for all investment or insurance products

The black hats do the following:

• Pressure you to move your current investments or insurance into their alternatives with only hazy reasons to support their recommendation

• Dance around your questions about how they’re paid—nothing in writing

• Never call you again after you’ve purchased something from them

How do you ensure you’re on the white-hat team?

Ask the right questions. Here are some great ones to start:

1. What credentials, NOT sales licenses, do you have?

2. How many years have you been in the business? (look for at least five years or longer, to understand the ups & downs of the markets)

3. Why are you affiliated with this firm?

4. How do you make investment decisions on my behalf?

5. How often do you meet with me during the year?

6. If you were to leave this firm, do you have a non-compete that would prevent you from working with me in the future?

7. Do you use an overall financial plan as the “blueprint” for your recommendations? Why or why not?

The best analogy is the medical profession. When you choose a doctor, you trust they have the proper credentials, training and experience to give objective medical advice. They must complete rigorous requirements to become a physician.

In the financial services industry, there’s no such standard. All it takes is the time and effort to pass a couple tests for financial advisors to get their sales licenses for investment or insurance products. In fact, I remember years ago when I worked at a bank, meeting another advisor who had been running a grocery store the prior year. Getting their license just makes it legal for them to receive commissions or fees.

Just as you trust your health to that doctor, you trust your financial health and therefore the quality of your future to that financial advisor.

What has been your experience seeking qualified financial help?

Taking small steps is what kaizen is all about. I’ll start with the definition of kaizen: a Japanese term meaning to take small steps for continual improvement. I was fascinated when I read about the powerful effect this simple strategy can have for your future success. Why does it work? We’re wired with a fight or flight response when we’re faced with any kind of change or challenge. All changes, even positive ones, evoke this response. The small steps of kaizen disarm your brain’s negative response and keep you moving ahead with rational thoughts and ideas. Any action you take will keep you feeling good about making progress.

Is retirement a daunting challenge for you? Then let’s break it down to smaller steps. One creative, fun way to get you on track is to ask you questions. (Your brain loves to play with questions!) Let’s keep them small, such as:

What small step can you take today towards your retirement? What tool can you use to help with your retirement? What chapter in a book can you read to help your retirement?

I recently read a blog where the writer said the problem with financial sites is there is a lot of information, but you don’t know where to start or what questions to ask. You need a system that gives you the tools showing you where to start, step by step. As far as the questions to ask, you need a system with an expert eye to help you see what you can’t from your limited perspective. You can meet with a local advisor if there’s someone you can trust or you can consider the resources I provide.

As a native Hoosier, John Wooden is someone I’ve seen and read about with pride. To quote him: “When you improve a little each day, eventually big things occur…Don’t look for the big, quick improvement. Seek the small improvement one day at a time. That’s the only way it happens—and when it happens, it lasts.”

What small step can you take for your retirement?

• First, as a baseline, they can note any changes from a prior visit.
• Second, based on healthy individuals similar to you, they know what should be expected.
• Finally, they can track your progress if this is an ongoing issue for which you have had repeated visits.

Your financial health is no different. An important baseline to establish is your financial “blood pressure,” or net worth. This essential snapshot will show you in a heartbeat the type of progress you’re making as you focus on your important personal and financial goals.

In a nutshell, your net worth is simply what you own less what you owe, or in more technical terms, your assets less your liabilities.

Plan to update this figure at least once a year or more often if you wish. One great aspect of watching your net worth “grow” is: Whether you’re saving and investing more money, or paying down debt, all these actions increase your net worth.

You need this basic fact-filled snapshot to chart your progress. There are several free calculators you can find on the internet to help you. If you’re not ready to develop a long-term retirement plan or see your circumstances changing fairly quickly over the next few years, this is a great alternative to help give you a realistic picture and keep you feeling in control of your finances and future. Set up a regular schedule to update your net worth, and use an accountability partner that cares about your progress to keep you on track.

Since I have the watchdog theme to my website and love dogs, I can’t help but use a dog story. One Christmas, my cairn terrier named Misty received a bag of small bones. Of course, we didn’t give her the bones all at once, but portioned them out to her over the following weeks. She always excitedly wagged her tail and jumped around in anticipation of the event, then would trot off with head held high and treat in her mouth. It was a few weeks later that I was cleaning my son’s bedroom underneath the bed, and lo and behold! There was her neat “stash” of partially chewed bones, which I’m sure she checked regularly.

Her “net worth” was as valuable to her as any amount of money would have been to me.

So put a plan in place to get your “teeth” into your net worth and you’ll be enjoying the results almost as much as Misty!

How often do you check your net worth?

What’s worse than no goals at all? Vague, ill-conceived targets that you can’t measure or track. Napoleon Hill, the author of the famous book Think and Grow Rich, wrote that “knowledge will not attract money, unless it is organized and intelligently directed, through practical plans of action, to the definite end of accumulation of money.”

The key word here is action. Success is all about saying and writing what you are going to do, and then actually doing it. Unfortunately, people often fail to plan in the first place, and when they do, most don’t follow through. Consider that:

 90% of books purchased never get read past the first chapter.

 50% of heart-attack victims don’t follow their doctor’s exercise and diet recommendations.

 92% of participants in weight-loss programs drop out before they reach their goal.

Although your retirement may be years away, the steps you regularly take month after month are critical. For you to have any success in your retirement you need to break your goals into small steps.

Any goals I’ve personally achieved that called on me to get out of my comfort zone were achieved with the valuable help of an accountability partner. That person for me has been a business coach, or a business partner, or a business associate with whom I meet regularly.

Who could qualify as your accountability partner?

 They must unequivocally support you, and display no negative attitude or comments toward your goals (i.e. “That’s ridiculous!)

 They should preferably not only believe in accountability but also practice this step as well.

Your objective is to share your goals and the steps you continue taking to meet them. Will you be out of your comfort zone? Very likely. But I’ve discovered that good things can happen when we’re uncomfortable. So look at this as one unending adventure, take a deep breath, and go!

Remember: Change is inevitable. You can’t avoid it, but to some degree you can control it—by setting goals and taking the actions necessary to meet those goals. We’re all riding in our car of life, and failing to set goals is the same as taking your hands off the steering wheel and assuming your car will stay on course. As my driving instructor insisted years ago, “Keep your eyes on the road and your hands on the wheel!”

How are you steering your car for retirement?

1. Be Intentional

2. Include others

3. Incorporate your plans

What are you doing to give back? What legacy are you creating? What unspoken messages have influenced you through the years that go beyond the dollars and cents?

The first key is to be INTENTIONAL. Intention means to be done with purpose.

Because of the effects of alcoholism in my family, I’m now involved in Alanon. My intentional action of walking through the door for that first meeting was one of the hardest steps I had ever taken, but one of the most rewarding. In learning to share my experience, strength and hope with those in the room, I received immeasurably more than I could ever imagine. Getting out of my comfort zone and dealing with life’s realities has been a true blessing.

Be intentional by writing down the top three memories that you want to remember, that highlight a specific value that’s important to you.

A lot of collectibles have a story with them, and you want that story to stay connected. For me, it’s a dining room table from my mother. I remember eating meals at my grandmother’s house as a grandchild and then as an adult child around that same table at my mother’s house. The memories remind me of sharing happy times with family. It’s all about the stories with the collectibles.

By writing these down you can then use the second key: INCLUDE OTHERS. Share your memories with those you love and keep them in a safe place that they know.

Including others can also involve charitable work and giving back to others.

The third key, INCORPORATE your plans, is also used when taking the above steps. By writing and sharing, you can have these as a valuable piece in your retirement puzzle.

The holidays embody these lasting wealth principles, and we all can share stories to that end. For me, Christmas holds the greatest meaning and is the best example in a nutshell.

I have so many memories, from riding the toboggans down the hills in the apple orchards behind my house when I was young, to the smell of turkey baking and spiced apple cider. The giving of gifts to family and friends, and giving to those less fortunate. The relaxation around the crackling fire in the fireplace as the snow falls outside, laughing with family and friends and enjoying a break from the hustle and bustle of everyday life.

I’m sure you can all write a list longer than mine, of examples that fit into those categories I shared earlier. To sum it all up:

It is not length of life, but depth of life.

~ Ralph Waldo Emerson

What are you doing to be intentional for your lasting legacy?

I met with a local magician, and he conjured a couple tricks for me to use in my presentations, with great success.

One of them involves using the Rule of 72. If you want to see how fast your money can grow, just take the interest rate at which you expect the money to grow, and divide the number “72” by the interest rate. In rough terms, you’ll now know how quickly your money will double in value. For example, if you pick an 8% annual rate of return, 72 divided by eight equals nine. You would then expect your money to double in roughly nine years. Pretty simple, right?

There’s an old phrase: “The devil is in the details” and whoever said this was dead on.

When assuming even a 1% difference in the rate of return for your investments, or the rate of inflation, the 1% can grow from a little acorn to a might oak through the years.

 What I would suggest is running more than one scenario for your retirement assumptions, or taking the conservative route from the beginning. By conservative, I mean assuming a lower return than you might hope. If that forces you to build more money for your retirement than you might otherwise have done, you’re putting the stacking the odds even more in your favor. Here are three positives for you to anticipate:

1. Be prepared for unexpected medical expenses. Even though general inflation may run closer to 3%, medical expenses can easily run closer to 7%, not to mention unexpected one-time expenses.

2. Be ready to enjoy unexpected longevity. You may be so darn healthy later in life that you or your partner last longer than you thought! All the more reason to make sure you don’t run out of money. You don’t want to burden your children with unexpected expenses, if at all possible.

3. Ability to leave a legacy. Since you can’t take it with you, the next best thing is to have the money carry on your name and values once you’ve exited. How about your children or grandchildren, or a favorite charity? The great bonus of setting up a way to help others, is your sense of fulfillment now rather than later.

Use smart planning and time, and feel good about staying on top of your game. It’s all about choices—just make sure you’re picking the best ones by looking beyond today.  There’s magic in that 1%!

What’s been your experience with creating a retirement plan?

1) Use asset allocation funds. The investment characteristics necessary for investor success point to a simple solution. Let’s summarize those characteristics:

1. Tolerable risk level as measured by standard deviation (measure of volatility) (less than 10).
2. Diversification across different asset classes.
3. Overall total investment return focusing only on the big picture:  Allows mixing of higher return, higher standard deviation (volatility) investments that could not be tolerated separately.
4. Keeps your attention away from lower performing investment classes that you would be tempted to sell in order to chase winners

The investment that has all these characteristics is a diversified mutual fund that invests in multiple asset classes. These funds are commonly referred to as Blended or Balanced funds. You may also see the term: “Asset Allocation Models.” Here are the current Morningstar classifications for these funds.

Conservative-Allocation funds seek to provide both growth and income by investing in three major areas: stocks, bonds, and cash. These funds typically have 20% to 50% of assets in stocks and 50% to 80% of assets in fixed income and cash.

Moderate-Allocation funds seek to provide both growth and income by investing in three major areas: stocks, bonds, and cash. They typically have 50% to 70% of assets in stocks and the remainder in fixed income and cash.

World Allocation funds seek to provide both growth and income by investing in three major areas: stocks, bonds, and cash. While these funds do explore the whole world, most of them focus on the U.S., Canada, Japan, and the larger markets in Europe. It’s rare for such funds to invest more than 10% of their assets in emerging markets.

Target-Date Portfolios: These provide a diversified exposure to stocks, bonds, and cash for those investors who have a specific date for retirement or another goal. Over time, management adjusts the allocation among asset classes to more conservative mixes as the target date approaches.

The potential for increased market volatility will continue to push plans out of “one size fits all” target-date funds and into customized asset allocation models that more accurately reflect plan and participant needs, according to a recent study.

Target-date funds had a shaky year in 2011, with the average fund four years ahead of its retirement target date.

In addition to the advantages listed earlier, let’s add one more benefit. Because cash, bond, and stock returns don’t always move in the same direction, adding higher volatility stocks to your investment portfolio may not increase the overall volatility. In fact, it might even lower the volatility.

• If you have an allocation fund and the EAFE (International) stocks are -23 but long term bonds are +16, the combined standard deviation (the measure of volatility) is -7, which you can tolerate. Since both investments are part of an asset allocation fund, the -7 is all you see and you won’t panic and sell at the wrong time.

• Sometimes all investments do go down at the same time. I hope when that occurs, you have goal setting exercises and investment fundamentals in place such as those in my 7 Steps to Your Lasting Wealth program to carry you through!

What steps do you take to keep calm during tough markets?