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The Meaning of "Failure" in Retirement Planning

Financial advisors are often asked:  "How much money do I need to retire?" Today, advisors are more apt to prepare a financial plan that determines the probability of your retirement success or failure, not a fixed dollar amount. In either case, the result of a complex analysis is articulated as a single number. We often attach great faith in this one number even though the underlying concepts may be misunderstood. We should be cautious as to how much emphasis we place on this number.

This does not mean that we should avoid engaging in retirement planning. Far from it. We must be careful, however, how we interpret the results. Properly understood, retirement planning can help us determine if we're on the right track. [Editor's note: The link is worth clicking, especially for Broadway fans.]

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The Illusion of Certainty

When it comes to investments, we often crave the comfort of certainty.  But the typical cost of known investment results is lower returns over time.  There is a need to embrace some level of uncertainty to obtain the reward of higher returns.  We  must, however, allow for sufficient time for the market to reward us for taking on this risk.

We should also be aware that "obvious" areas of potential return are not necessarily a sure thing.  Humility in making predictions is helpful.  Making big bets has its dangers.  Taking on too much risk may lead to undesired results.

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Protecting You from Email Fraud

We are all aware of the many email scams out there—the Nigerian prince seeking to reclaim his fortune; the relative stuck in London needing money to get home; and, the poorly-spelled, urgent alert from "Banc of Amerika." You should be aware, however, of a new fraud that you won't even know is happening to you. It turns out that we stopped one such scam artist ourselves.

My assistant Jessica received an email, allegedly from a client, asking for the balance of his account and requesting us to wire the money to a bank in North Carolina. My client claimed to be unable to speak to us because he was heading out to a funeral. Even though the email address was accurate, the ever-vigilant (and skeptical) Jessica thought something was up and called the client, who said this was a scam—somebody had hijacked his email address. We quickly got Schwab's fraud unit involved.

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Hanging on to the Fiscal Cliff

At the annual Schwab conference a couple of weeks ago, many of the expert speakers and panelists offered a similar take on our precarious financial situation. The good news is that, while a number of difficult decisions have to be made, a political consensus can lead us to a reasonable fix of what ails us. The bad news, of course, is that we are reliant on politicians to make the necessary hard choices. We are also reliant upon a public willing to accept them.

The most impressive presentation came from Alan Simpson and Erskine Bowles, who warned of the dangers of our country's tremendous deficit. While you may not agree with their plan for fiscal responsibility, they do offer a sobering perspective.

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Business Coaches — Addressing the Myths

In an interview with Jeff Miller, a business coach at Action Coach, we discuss how business owners and executives can benefit from independent guidance.  Click the video to hear a discussion that busts some of the myths surrounding coaches.

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