Woodward Financial Advisors to Teach Retirement Planning Class: October/November, 2017

Woodward Financial Advisors will once again teach a retirement planning class on the UNC-Chapel Hill campus. Several clients and blog readers are graduates of this course, and reviews have been consistently positive.

Our next course offering will be in October/November, 2017. If you know someone who might be interested in the course, please forward this on to them.

(Please note that this course is not intended for current clients of Woodward Financial Advisors since the material covered is already part of the advice given to current clients.)

Classes will be held on Wednesdays (October 25, November 1 and November 8) from 7 PM – 9 PM

Location: UNC-Chapel Hill Friday Center (100 Friday Center Drive, Chapel Hill, NC  27517)

Course Description: Retirement Planning Today Course Description

Instructor: Benjamin Birken, CFP®

Tuition is $49, which includes the 224-page textbook.

To register, please complete the online registration form  and use Course ID: 5955421, or call our registration hotline at (984) 960-1985

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Trust the Process

Flow Chart

Over the last 4 years, the NBA’s Philadelphia 76ers have consistently lost in historic fashion. Strange as it might sound, this was intentional: the worst team each year has the highest odds of winning an early pick in the next year’s draft, which is usually where the better players can be found. Philadelphia’s management believed that this was their best path to getting better. And by some metrics, the plan worked. Those four years of epic and calculated losing resulted in lots of high draft picks, and Philadelphia is now formidable.  Along the way – despite much ridicule and public pressure – the 76ers clung to a simple mantra: Trust the Process.

We’re not building a basketball team at Woodward Financial Advisors (yet), and we certainly don’t advocate losing on purpose. But we wholeheartedly subscribe to the importance of processes. While the 76ers have been busy losing, we’ve been building, tweaking and formalizing the processes and workflows that make our firm run.

There’s a tendency to avoid talking about what goes on behind the scenes at advisory firms, with the belief that folks don’t want to “see how the sausage is made.” That’s understandable in some circumstances. But if I was on the outside looking in, I would draw tremendous comfort from learning that an organization that I trusted to manage my life’s savings went to great lengths to formalize and institutionalize all the tasks that go into accomplishing that.

Our business processes range from the mundane (e.g., changing a client’s address) to the series of steps and tasks that go into preparing for and holding a client meeting. One of the more frequently used processes is for when clients call to request cash from their portfolios, a simplified version of which is laid out below:

Cash Distribution Flow Chart


Each box represents a separate task in this process. As each task is completed, the subsequent task is triggered and shows up on the next person’s to-do list. Some steps are only kicked off if certain criteria are met. For example, if a client account has enough cash such that any scheduled distributions won’t be compromised by the request, we might not suggest or make any trades. In other business processes, some tasks consist of instructions to refer to a separate checklist that contains items to review, like with our annual Tax Return Review.

So far, we’ve got 55 active business processes, and we’re constantly tinkering. We have a standing Process Committee whose job it is to solicit feedback, develop new processes and refine existing ones.

Why do we spend so much time thinking about and improving our processes?

  1. Consistency – we want to make sure that all clients enjoy the same client experience. Processes ensure that we all do things the same way for each client.
  2. Accountability – each step in a business process is assigned to someone. That way, we can see where we are in each process, as well as where any bottlenecks might be.
  3. Risk Management – if only one person knows how to do perform some action and that person goes on vacation or gets hit by a bus, we’re in trouble. By documenting our processes, we make ourselves a lot less vulnerable to losing institutional knowledge.
  4. Training – it’s a lot easier to bring a new WFA team member up to speed on how we do things if everything is documented.

We can’t control every outcome. But we can certainly control the steps in the process. In future blog posts, we’ll talk about how this idea is infused into many of the planning and investment-related things we do.

We know that our process-oriented culture results in long-term success for our clients. If you think we might be able to help you, let us know.

Posted in Financial Planning, Firm News

A Day in the Life – Part 2

41236520 - piggybank with eyeglasses and calculator on wooden table

I previously shared an eye into a “typical” day in the life of a Senior Financial Planner at Woodward Financial Advisors in Part 1.  Since it was so well received and no day is actually “typical,” here is another sampling. It turns out this day doesn’t involve client meetings but instead a lot of behind the scenes research.

9:00 – 10:00 am – Analysis of client I-bond holdings

Mr. and Mrs. Adams emailed us last night to let us know they have some paper I-bond certificates and aren’t sure what to do with them. I do some research to confirm my understanding of these bonds, including taxation and interest rate details as well as how our client can convert these paper bonds to an electronic version.  That’s step one.  The next step will be to slowly divest of these bonds based on my knowledge of this client’s specific situation.

10:00 – 11:00 am – Cost basis analysis

Ms. Jefferson has asked for our help sorting out the cost basis for the numerous stock holdings that she accumulated over the years. Some of the holdings were inherited, some were gifted and some she purchased. We break out the spreadsheet and stock-split history to make progress on this initiative, which will take some time to complete.

11:00 am – 1:30 pm – Rebalancing of client portfolios

I’ve got several portfolios to rebalance today and a lot of information goes into the rebalancing thought process. I’m balancing in my mind a client’s tax situation, their cash flow needs, their target asset allocation and what the trading costs will be. I’ll follow our firm’s process to recommend trades, get them approved and execute.

1:30pm – 2:00pm – Lunch

I’m having lunch in the office today with my colleague, Allison. She and I are both senior planners here at Woodward so it’s great to chat and to share ideas about common client challenges we’ve encountered and solutions we’re currently implementing.

2:00 – 2:30 pm – Discuss Social Security claiming strategy with client

I have a phone call with Mrs. Washington to review the claiming strategy she and her husband will use when applying for their Social Security benefits. Every client is different – some clients will be waiting until they turn 70 to turn on their benefits while others will be collecting benefits earlier and potentially taking advantage of some advanced strategies like filing a Restricted Application.

2:30 – 3:30 pm Summarize Insurance quotes for client

Mr. and Mrs. Madison asked us to obtain some price quotes for both disability insurance and long-term care insurance. As fee-only advisors we don’t sell insurance, but we certainly help our client shop for policies. Once designed these policies will likely cost several thousand dollars per year. While expensive, the financial protection the policies provide is worth the cost.  I’ll write up a summary and send to our clients to see if they have any questions or if they’d like to move forward with obtaining either of these policies.

3:30 – 4:30 pm Long Term Care hybrid analysis

Mr. and Mrs. Monroe had some whole life insurance policies that they weren’t actively using to meet any of their goals. They didn’t particularly need the policies but the premiums were reasonable and the policies were paying a decent participating dividend. The Monroes wanted some long-term care insurance but didn’t want to buy traditional long-term care insurance. Instead they asked us to investigate some ways that they could obtain additional long-term care insurance but still retain some of the benefits of traditional life insurance. We looked at a few different options and were able to help them obtain a hybrid life-LTC policy that met their needs.

4:30 – 5:00 pm Annuity Analysis

Mrs. Jackson purchased an annuity from her previous financial advisor with various guaranteed income benefit riders.  We put in a call to that insurance company and spent some time understanding how the annuity works and what income options are available to the her. It turns out that since the annuity was purchased before the 2008 market downturn, taking advantage of the GMIB (guaranteed monthly income benefit) annuity riders is probably going to be in the best interest of the client.  I call Mrs. Jackson to deliver my analysis and make recommendations on how she should proceed.  Since this is a very confusing product, she was thankful to have this analysis performed.

5:00 – 5:30 pm Wrap-Up

I look over my inbox to see if there are any more follow up emails that need to go out today, then I look at my calendar for the following day and the rest of the week to see what’s on the docket. I can see upcoming meetings, more analysis work and investment related projects. The biggest things I see are more opportunities to help serve our clients and help them simplify their financial lives.



Disclosure:  All names of individuals used in this post are fictitious.  Any resemblance to actual clients is purely coincidental.


Posted in Uncategorized

Portfolio Lifeboat Drill

52137692 - safety lifeboat on deck of a cruise ship

Photo Credit: Hellen Sergeyeva via http://www.123rf.com

Ahoy there!  Most of us are familiar with a lifeboat or “muster” drill.  It’s an exercise that is conducted by the crew of a ship prior to embarking on a voyage.  The purpose of the drill is to prepare passengers for a safe evacuation in case of an emergency, such as bad weather, fire, equipment malfunction, a collision, or some other catastrophic event.  During the lifeboat drill the passengers become familiar with the emergency escape route, most efficient path to board the lifeboats, location of the life vests, plan once disembarked, and many other important safety measures.

The key to a successful lifeboat drill is that it’s done under calm conditions, before the ship leaves port.  The crew, passengers, and ship aren’t in peril.  The weather is fine, the ship is docked, and everything is functioning properly.  If a crew were to attempt a lifeboat drill while out to sea and under duress, it would be too late.  Less than desirable outcomes would likely occur. It’s much easier to hold these drills when everyone is “of sound mind.”

At Woodward Financial Advisors, the timing seems almost perfect for our latest “financial lifeboat drill.”  Apart from a few recent instances of increased volatility, the stock market has been quite calm.  The market has shrugged off seemingly volatile world events such as the US Presidential election, Syrian War, Brexit, terrorism in Europe, and the North Korean nuclear threat.  While volatility has been low even in these very uncertain times, we know that over time the market will experience periods of heavy volatility.  Just like maritime history points to rough seas as being part of the risk of sailing, down markets are part of the trade-off to being a long-term investor.  Dealing with down markets is the compensation we must pay to achieve the meaningful expected returns of these same markets.  Just as the lifeboat drill educates us so that we’re not caught off guard when nautical danger approaches, good investor education teaches us that neither the reason, nor timing, nor length, nor depth of the next market downturn will be known ahead of time.  History has shown that volatility spikes and market downturns happen unexpectedly.

The continual process of setting expectations is important to us here at Woodward.  It’s an ongoing exercise.  Just because one was able to weather a market downturn in the past doesn’t mean she or he is prepared for the next one.  Amazingly, it has already been over eight years since the bottom of the market in March 2009 during the Great Recession.  While the market hasn’t gone straight up from there, it certainly has been a long time since we’ve had a substantial protracted downturn.  It’s easy to get complacent when things are humming along nicely.  While we’re here in port under sunny skies, let’s go over some things to keep in mind when the seas start to get choppy:

  1. Your goals have been well thought out. Your goals, carefully communicated in the comfort of our conference room, over the phone, and via email drive how we invest your resources for the long term.  Short-term market volatility should not impact your long-term goals.
  2. Your risk tolerance has been assessed and reassessed. Through our process, we have had conversations together about risk, you’ve taken analytical risk tolerance assessments, and we’ve touched on the portfolio risk virtually each time we have a review.  We have a high degree of confidence that you are in the right portfolio mix for this stage of your life.
  3. Your plan has been stress tested. We periodically update your Financial Independence Analysis to make sure you are still on track to be able to reasonably achieve your goals.  When we feel that you aren’t as comfortably in the “confidence zone” as we’d like, we let you know.  In those cases, it’s possible that adjustments to goals,  spending, or other things may be necessary down the road, and we’re here to help you through those decisions.

Uncertainty and market declines are part of the nature of investing.  It’s not pleasant, but embracing their inevitability is important to a less stressful investing experience.  If investing outcomes were certain, like money markets and savings accounts, we wouldn’t expect much of a return.  When the next downturn occurs, it may be protracted, it may be sudden, and it may accompany some very scary world events.  Just know that it’s not permanent and that you are prepared to weather it.

Your crew at Woodward is here to help, whether the seas are rough or calm.  Bon voyage!


Posted in Uncategorized