From CFP Board's Consumer Advocate, Eleanor Blayney, CFP^®

The roads and public transit systems were crowded on the day after Labor Day, but most Americans would agree, they were not crowded enough. Fourteen million people are “officially” out of work in this country. Add in those who are not counted in the unemployment tally because they are no longer looking for work and the number of jobless is much greater.

Economists are concerned because job growth in the US is not sufficient to absorb new entrants to the work force, let alone re-employ those who have lost jobs. The situation looks pretty grim. President Obama delivered a jobs speech to Congress, thus elevating it to the status of a “State of the Union” address. His proposal included a number of measures – New Deal-style construction projects, continuation of reduced payroll taxes, business tax credit incentives for hiring new employees and veterans. Whether any or all of these programs will reignite the economy may be moot if the President and the Congress cannot earn back the confidence of the American public and businesses in our political process.

But are we, as consumers, missing the job boat by looking in the wrong direction? Should the government be responsible for putting us back to work, leaving us only to get in line for these top-down jobs? Or should we start thinking bottom-up about the new economic reality and what this means for the workplace , not just now in a near-recessionary environment, but for the duration of our working lives?

Each of us, employed, under-employed, or out of work, needs our own lifetime job program. Given the pace of technological change plus our longer lives, the reality is that we will have not one, but several, careers in our lifetime. Flexibility and versatility are necessary attributes for job success, as is the realization that to remain competitive we have to be “looking for work” for the rest of our productive lives.

Here’s what the new workplace reality requires of us:

• We know that diversification is an important strategy for our investment portfolio, but the same principle holds true for our portfolio of “human capital.” This capital consists of our experience, skills, education, training, and professional networks, all of which are important investments we make to produce wages. Developing more than one skill, speaking more than one language, or having had a variety of workplace responsibilities, can substantially reduce our risk of being unemployable.


• A shift in our thinking about the relationship between our financial situation and our jobs: We usually think that our financial security depend on our earnings. While this is certainly true, it also works the other way around: our jobs depend, in turn, on our financial situation. Many employers, for example, will not hire workers who do not have good credit. Without an adequate emergency fund, those out of work or stuck in low-paying work may be unable to fund relocation or retraining to get the right job.


• Less dependence on our employers to provide for our financial needs. Jobs are being crowded out by the obligations of employers to provide comprehensive benefits to their workers. Like it or not, employees will need to do more to take financial care of themselves, saving more on their own, and downsizing their housing and budgets, to be able to “afford” what the workplace is paying.


• Thinking like an entrepreneur, as well as becoming one. We need to revive our American traits of resourcefulness and ingenuity, and focus on new ideas for products and services, rather than trying to revive old ones. We can look for jobs, but better still would be making one up. What can we do well that is needed by other people? Yes, starting a new business is risky, but current low interest rates make this much more financially viable.

When it comes to employment, each of us must become the boss of our own productivity. We simply cannot wait for jobs and the resulting financial security, to come to us – we have to make our own opportunities. It’s time to get Americans to work.

Financial Planning Days

Personal financial planning is essential, regardless of age or income, and it is vital to meeting life goals, such as buying a home, paying for college or achieving a secure retirement. There are millions of Americans with pressing financial questions that need answers, and unfortunately, many have not had the opportunity to discuss those questions with competent and ethical financial planners.

With a shared vision in mind, four national non-profit organizations – Certified Financial Planner Board of Standards, Inc., Financial Planning Association^®, the Foundation for Financial Planning, and the U.S. Conference of Mayors – have joined forces to offer the Financial Planning Days initiative. This ground-breaking program is designed to unite the collective resources of the financial planning community and city governments nationwide to assist Americans in need of financial guidance through a series of free Financial Planning Day events.

Each local Financial Planning Day features experts from the Financial Planning Association^® and highly qualified CERTIFIED FINANCIAL PLANNER™ professionals, all volunteering their time and expertise to provide free one-on-one counseling and classroom-style educational presentations addressing key personal finance topics. Best of all, there are no strings attached – volunteer financial planners will not sell products or services, give out business cards or take down names.

We believe that with our collaborative resources, we can provide the financial planning knowledge and guidance to people who need it most and empower them to achieve their life goals.

Upcoming Events:

Atlanta, GA
Saturday, Oct. 8, 2011
ATL Workforce Development Agency

Baltimore, MD
Saturday, Oct. 29, 2011
Frederick Douglass High

Chicago, IL
Saturday, Oct. 22, 2011
Harold Washington Library

Columbus, OH
Saturday, Oct. 8, 2011
Columbus Metropolitan Library

Denver, CO
Saturday, Oct. 22, 2011
North High School

Elizabeth, NJ
Saturday, Oct. 22, 2011
Union County College

Eugene, OR
Saturday, Oct. 22, 2011
Willamette High School

Green Bay, WI
Saturday, Oct. 22, 2011
Joan Kroc Corps Comm. Center

Houston, TX
Saturday, Oct. 1, 2011
Berry Center

Indianapolis, IN
Saturday, Oct. 15, 2011
University of Indianapolis

Las Vegas, NV
Saturday, Oct. 1, 2011
Kalagian Downtown Senior Center

Los Angeles, CA
Saturday, Oct. 15, 2011
Magnolia Place

Louisville, KY
Saturday, Oct. 8, 2011
Spalding Univ - Egan Center

Mesa, AZ
Saturday, Oct. 22, 2011
City of Mesa Main Library

Newark, NJ
Saturday, Oct. 15, 2011
Science Park High School

Oakland, CA
Saturday, Oct. 1, 2011
Oakland City Hall

Omaha, NE
Oct. 15, 2011
MCC - Fort Omaha

Orange County, CA
Saturday, Oct. 8, 2011
Brandman Univ - Irvine Campus

Philadelphia, PA
Saturday, Oct. 1, 2011
Ben Franklin High School

Portland, OR
Saturday, Oct. 22, 2011
The Portland Building

Reno, NV
Saturday, Oct. 1, 2011
Wooster High School

Sacramento, CA - Regional
Saturday, Oct. 8, 2011
West Sacramento City Hall

San Antonio, TX
Saturday, Oct. 22, 2011
George Gervin Academy

San Diego, CA
Saturday, Oct. 8, 2011
Joe & Vi Jacobs Center

San Francisco, CA
Saturday, Oct. 22, 2011
UC-Hastings College of the Law

Seattle, WA
Saturday, Oct. 22, 2011
White Center Heights Elementary

Silicon Valley, CA
Saturday, Oct. 29, 2011
King Library

South Florida
Saturday, Oct. 29, 2011
McArthur High - Hollywood

Twin Cities, MN
Saturday, Oct. 8, 2011
Hennepin County Library

Virginia Beach, VA
Saturday, Oct. 22, 2011
Virginia Beach Convention Center

Washington, DC - Metro Area
Saturday, Oct. 15, 2011
Columbia Heights - Bell High

Financial Planning for Your Life Now

Don't Make These Mistakes!

Investors are more likely to make poor choices when markets are tumultuous and their emotions are stirred, says Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP^®. "Greed and fear often do cause people to act more irrationally," Blayney says. Another investment mistake that catches many off-guard is the Ponzi scheme. Frank Armstrong thought he smelled a fish when a member of his country club said he had exclusive rights to sell Apple iPods in Chile and promised investors a 30 percent return on their investments. Armstrong, founder of Investor Solutions in Miami, saw his suspicions realized: Andres Leonel Pimstein was sentenced in 2009 to 17 years in prison for defrauding 146 victims of $50.6 million. Even in the era of Bernard Madoff, some people put way too much trust in financial advisers. Harold Evensky, president of Evensky & Katz Wealth Management, recalls a time when a "sweet, trusting" mother and her daughter handed him an endorsed check for about $2 million. "In effect they handed me cash," he says. In general, clients should not be writing checks to their advisers at all, but rather to the independent broker or custodian that holds the client's assets. Investors can take sage advice to an extreme, says Sheryl Garrett. One client was updating a monthly spreadsheet to follow 20 brokerage accounts, funds, bank deposits, and other holdings, each with its own fees. "Don't put all your eggs in one basket" was her advice, which Garrett says is a "wonderful concept, wrongly applied. Simplification is actually safer and more secure." Adviser Mark Rylance says people "are just freezing." Clients are coming to him with large amounts of cash and are not wanting to do anything with the money. They are "absolutely scared to death of the market," fearing that both stocks and bonds are overvalued, Rylance says.

Stick With Your 401(k), Even in a Volatile Market

Given the market fluctuations seen recently, workers may be wondering what to do about their retirement funds. The answer may be to sit tight. MarketWatch spoke recently with Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP^®, who says 401(k) participants may be tempted to jump ship and sell. "Certainly for younger workers, they really should just kind of look the other way, focus on their jobs, focus on keeping their job, and leave well enough alone," Blayney says. If people are relatively close to retirement, however, Blayney advises them not to panic or take any large bets. For these workers, "a little bit of rebalancing, or maybe building in a little bit more defensive posture, is in order," she says. The mix of retirement investments is also a matter of timing, even in an unstable market, Blayney says. "Certainly if you're close to retirement, let's just say within six years or whatever, you want to be building up some cash position in anticipation. I think cash right now is a fine thing to be holding, because we don't know. Even treasuries don't offer you very much more. And we could go back to the assault on treasuries that we were thinking was going to happen just a short week ago. So holding some dry powder in cash would not hurt," Blayney advises. In terms of stocks, Blayney suggests higher quality stocks over higher risk stocks; she recommends investing in mutual funds with a higher quality orientation.

Take Control of Your Career in an Unpredictable Job Market

Even when working for someone else, employees must take control of their career path, says Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP^®. "Each of us, employed, under-employed, or out of work, needs our own lifetime job program," Blayney says. "Flexibility and versatility are necessary attributes for job success, as is the realization that to remain competitive we have to be 'looking for work' for the rest of our productive lives." Here are four suggestions from Blayney for seizing control of one's future in this unpredictable job market. First, develop multiple skills, learn another language, or assume a variety of workplace responsibilities to substantially lower the risk of being unemployable. Next, focus on financial stability. Without a sufficient emergency fund, a person may not have the luxury of having enough time or receiving enough training to move into a better position. Third, "job security" is an outdated notion, so a person must figure out how to develop their own personal security. And finally, think like an entrepreneur by figuring out what skills or services another person might pay for. Whether a person works for someone else or starts their own business, bringing knowledge and ability to the table is crucial. "When it comes to employment, each of us must become the boss of our own productivity," Blayney says. "We simply cannot wait for jobs and the resulting financial security, to come to us--we have to make our own opportunities."

Don't Get Scammed--Make Commensense Purchases of Gold

As gold prices rise, scams are becoming more commonplace. Investors should watch out for schemes that have been used in the past as well as new types that are spreading via the Internet. One type of operation involves a person making phone calls to potential customers and claiming they can invest with a down payment as low as $5,000. The caller offers to finance 80 percent of the deal as well as store the gold for the consumer. Marilyn Capelli Dimitroff, CFP^®, says some investors seek to purchase gold as part of their portfolio because they think it is an appreciating asset or are worried about the value of paper money. She recommends that such investors buy an exchange-traded fund where the fund owns the physical asset, such as gold coins or bullion. Dimitroff says the SPDR Gold Trust trades like a stock, so it has liquidity and comparatively low expenses. However, "remember, there is no income on this--strictly a play on the price of gold," she warns, adding that any physical gold pieces should be bought from a reputable dealer and appropriately stored for safekeeping.

If You Should Lose Your Job, Be Sure to Take Care of Your Financial Well-being With the Help of a CERTFIED FINANCIAL PLANNER™ Professional

After losing one’s job, family and friends are an important support system but it is also a good idea to enlist professional help. A career coach can be very helpful, and it is a good idea to shop around and find one that “fits.” Networking is also essential, and a good starting point is to look at one’s own circle of contacts and determine what -- and who -- they know. Even someone like a hairdresser can be beneficial in networking, because they have so many different kinds of clients coming in each day. Telling one’s story to a variety of contacts can often bring in good leads. Other steps to take are to hire a CERTIFIED FINANCIAL PLANNER™ professional, keep current with health insurance no matter how difficult it may be financially, see a therapist, exercise regularly, take online self-assessment tests, make a plan for each day and dress as if going to the office, and read the "Seven Habits of Highly Effective People" and pay particular attention to the "Sharpen Your Saw" chapter. A final helpful tip is to join Toastmasters, no matter how silly it may seem, because it is very important to be able to speak extemporaneously in a job interview.

Financial Planning for Your Retirement

'Will I Have Enough Money to Live Comfortably in Retirement?' and Other Questions to Ask Yourself

Recent Wall Street turmoil has many investors wondering whether they will have enough money to retire as comfortably as they have dreamed, or to retire at all, for that matter. "How you answer that question has very important implications about where you're going to be and what you're going to spend," says Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP^®. "There's so many demands on the dollars we thought we'd be using in our 60s or 70s. Retirement used to be a going away from the workplace. Now it has to be thought of as 'what am I going toward?'" Every investor planning for retirement should ask themselves: How am I going to spend my time and how will I make it count? It is necessary to visualize one's day-to-day retirement life in order to adequately plan for it, Blayney says. Practicing retirement is a good way to begin. Before totally leaving the workforce, Blayney suggests reducing the work schedule incrementally and observing how free time and money are spent. An investor planning for retirement should also ask if they have enough to live comfortably and have fun. While Social Security can be drawn as early as age 65, it cannot fully fund retirement and will require some form of supplement either via an Individual Retirement Account (IRA), pension, or 401(k) plan.

If You're Single, You'll Need to Save More Aggressively for Retirement

Adults who have no spouse to rely on need to take extra precautions as they head into their retirement years. Single adults should save at least 15 percent of their pay for retirement because the cost of living is about 40 percent to 50 percent higher for single retirees than for empty-nest couples, according to financial advisers. And it is especially important for single individuals to protect their nest egg from creditors and the prospects of unemployment or disability. People without a spouse should pay off debt and set aside enough cash to finance living expenses for the amount of time it is likely to take someone in their industry to find a new job. Although singles without dependents may have little need for life insurance, financial advisers say they should carry adequate levels of liability, disability, and long-term-care insurance. Also, singles may need someone to manage their affairs and make medical decisions on their behalf if they can no longer do so, and therefore, should speak to an attorney about giving someone that legal right.

Take Charge of Your Retirement Now

Many Americans are unprepared for retirement--less than half of Americans know how much money they will need to save to have a comfortable retirement, and just 13 percent of workers who had access to a defined contribution plan in 2009 actually took advantage of it. There are several steps one should take to get started on growing a nest egg that will last for the average 20 years Americans spend in retirement. The first is to start saving now, and do it regularly, so there is time for it to grow. It is also important to understand how much is needed for retirement--some experts say one needs 70 percent of pre-retirement income to maintain one’s standard of living, and as much as 90 percent if one has a low income. One should contribute to an employer’s retirement savings plan, and learn as much as possible about a traditional pension plan, if the employer offers one, and if there is no retirement plan offered at all, ask the employer to start one. IRAs offer tax advantages and allow savings of up to $5,000 a year, and it is also a good idea to understand basic investment principles and determine one’s Social Security benefits. Finally, never touch retirement savings, as it could mean large penalties and taxes, and ask lots of questions to stay informed.

Financial Planning for Your Children

Your Child's 529 College Account Can No Longer Be Used to Pay for as Many Items

Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP^®, is warning about a change in the nation's tax laws that could affect parents who have used 529 accounts to save for a child's college education. Before this year, parents could withdraw money from a 529 account tax- and penalty-free in order to use it to purchase electronics, computers, and similar items that are considered to be college expenses. But under changes made to tax legislation for this year, parents can no longer make tax-free and penalty-free withdrawals from a 529 account to purchase these items unless the items are specifically required by the college their child is attending. The change comes as the percentage of parents who say they are saving enough for their child's education is holding at a five-year low of 16 percent, according to Fidelity Investments' Annual College Savings Indicator Study. That is down from 24 percent in 2007. The same study found that half of all families who are working with financial advisers and saving for their children's college education are using plans like 529s, but only 28 percent of families that are saving for college expenses but are not using financial advisers are using 529s and other types of similar plans.

Fixed-rate Student Loans Make It Easier to Budget, But the Interest Rate May Be Higher

An increasing number of lenders are offering fixed-rate loans to students and parents. Instead of carrying variable rates, these private student loans have interest rates that remain fixed for the term of the loan, typically 10 to 15 years. Fixed-rate private student loans usually begin at roughly 6.25 percent and can increase to 14.25 percent based on such things as credit scores, employment status, and assets of the borrower and co-signer. However, the fixed interest rates may be somewhat higher than what a variable rate loan would be. The rates on conventional, variable-rate student loans can be as low as 2.89 percent for parents or students with excellent credit and plans to pay off their loans quickly. At one bank, variable rate loans start at 3.50 percent and go as high as 9.99 percent, while the bank's fixed-rate loans range from 7.75 percent to 14.25 percent. At least 12 lenders currently offer fixed-rate loans, nearly twofold the number of a year ago, according to FinAid.org. Lenders that offer the fixed interest rates say they help families know how much they must pay each month for the life of the loan, making it easier to budget. They also note that loans are one of the few remaining ways for families to pay for college.

Helping Your Child Navigate Their College Loan Payments

Financial expert Renaud Laplanche offers parents advice on how to help their children repay their college loans. The first point of consideration is how much is owed and when payments are due, and Laplanche suggests that parents advise their kids to employ FinAid.org's Student Loan Checklist to organize the information about the loans and get a better grip on the total amount owed, monthly repayment amounts, and due dates. Laplanche notes that student lenders now provide various repayment options, and he recommends that parents check with lenders to determine the available options or make queries at the college financial aid office or FinAid's lost lender page if their children do not recall who the lenders are. There is no universally applicable repayment schedule, and most lenders offer options according to a borrower's graduated repayment plans or extended payment plans, or combinations of all of the above, Laplanche writes. "Depending on the total amount owed, some type of extension is usually a good idea, especially if your son or daughter will be earning a modest starting salary and needs to pay other bills," he says. "It's certainly better to extend payments than default." Laplanche also approves of loan consolidation, and points out that "typically, Stafford loans can be consolidated and private loans can be consolidated, but Stafford and private loans can't -- and shouldn't -- be consolidated together in one bundle." Laplanche writes that both Stafford and private loans offer deferments for graduate school and temporary difficulties, such as medical problems or unemployment. He says the loan may offer a six- to nine-month grace period after graduation or leaving school prior to the start of the repayment period, and should there be a persistent financial problem, then the best course of action is to contact the lender and obtain information about the best way to proceed.

Financial Planning for Women

Women Make Sound Investment Decisions, But They Need to Be More Aggressive

Jacqueline Darien, CFP^®, CMFC, says that women may be better investors than men. Darien pointed to a 2011 study that looked at women and investing and found that 78 percent of women who earned between $50,000 and $74,999 last year joined their employers' retirement plans. That compares with 68 percent of men in the same income bracket. In addition, the study looked at 2.7 million IRA investors during the stock market volatility of 2007-2009, and found that men were 10 percent more likely than women to move their money out of stocks. The study also found that women's retirement accounts generally contained slightly more balanced investment portfolios than men's retirement accounts. Women had 25 percent of their balances invested in balanced funds made up of both stocks and bonds, and 10 percent of their balances in bond funds. Men had 22 percent of their balances invested in balanced funds and 9 percent invested in bond funds. But although women may be better investors than men, they may not necessarily have higher balances in their retirement accounts. Darien notes that women need to plan early and aggressively to achieve a comfortable retirement. This can involve joining an investment club, hiring an investment adviser, creating a sound financial plan, and building a well-balanced investment portfolio, Darien says.

Hiring a CERTIFIED FINANCIAL PLANNER™ Professional

Do Some Homework Before Hiring Your CERTIFIED FINANCIAL PLANNER™ Professional

Diligence should be practiced when shopping for a financial adviser, and among the factors that must be weighed is the adviser's commitment to a fiduciary standard, the adviser's credentials and what they entail, and whether they are fee-only. In terms of credentials, CERTIFIED FINANCIAL PLANNER™ professionals are required to take extensive coursework and pass lengthy exams; many other certifications demand less study and simpler or no exams. Also to be taken into account when adviser-hunting is the adviser's track record, which involves performing background checks, talking to some of the adviser's clients, and determining the adviser's range of service. Prospective clients will want to be sure that the adviser's management strategy fits them, whether that approach involves customizing financial plans to each individual or putting all clients in the same investments. Among the strategies that people shopping for advisers should not follow are choosing the first adviser they meet, leaving all responsibilities to the adviser, and writing investment checks directly to their adviser. The Certified Financial Planner Board of Standards' Web site lists the names of CERTIFIED FINANCIAL PLANNER™ professionals.

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