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- Posted by Stephanie
- 12 April 2012
- Blog, Client Advice Video's
The very public mortgage rate wars may come and go. But you’ve got to keep your eyes open to the whole picture, because sometimes a tempting rate is dangled in front of your face and you don’t notice the consequences that come with it. My latest video blog as some details you may want to consider.
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- Posted by Stephanie
- 09 April 2012
- Blog, Cash Flow, Debt, Financial Behavior
FREE shipping on orders of my book $pent through out the month of April!
Since that will save you some money, while I’m at it I thought I’d give you some more FREE stuff: here is Chapter 2 of $pent. This chapter goes through the full description of each money mindset in detail.
Advisors, you are welcome to share this chapter with any of your clients or anyone else you see fit. You’ll also want to send anyone you send this chapter to the link to the Money Mindset Quiz. Sharing the chapter and the quiz together can be a great conversation starter with clients.
Everyone is welcome to share the FREE chapter and the quiz link. The more we learn about ourselves the more equipped we are to navigate our financial behaviour and get what we want from the money we have!
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- Posted by Stephanie
- 05 April 2012
- Blog, Development, EVENT
In 2010, when on tour with the WCIIC road show, I met an advisor in Edmonton. His name was Tony and he came up and introduced himself after my talk. I am one to try to keep in touch with those who have been so kind as to share their thoughts on my work, and Tony is one of those great folks I’ve kept in touch with.
When I announced that Money Finder Bootcamp qualified for CE Credits, Tony sent a congratulatory email. He then explained that there is a difference between approved and accredited, along with several other nuances I wasn’t aware of. So rather than take the credit and write a post about it, I asked Tony to share his knowledge in this area. So if you really want to know how CE credits work, check out Tony’s guest post!
Stephanie recently announced that her Money Finder BOOTCAMP has been accredited for 6 continuing education (CE) credits through the Institute for Advanced Financial Education (The Institute). This may seem a little off topic for the basic blog stream, but it is information worth sharing, with many readers being financial advisors.
I would like to explain just how important this step is to advisors. While the credit may be used for different purposes, I am directing my comments to requirements for the Chartered Life Underwriter (CLU) and Certified Health Insurance Specialist (CHS) designation holders. The Institute awards these designations, and holders are required to meet their requirements, which include CE. For the CLU, 30 CE Institute-approved credits are needed annually; for the CHS, it is 10. The holder of both only requires 30. Not all education providers get their sessions accredited by The Institute, so such credits are not always easy to find.
There is a distinction between “approved” and “accredited.” First, The Institute has an independent process through which (for a fee) they accredit CE sessions. This means that an accredited CE has been reviewed and accepted for the specified number of CE hours. Assuming the program was delivered and the advisor attended, there should be no worries for audit purposes. The second, which now makes it confusing, is that The Institute only requires that the CE be “approved” by them. An accredited CE is automatically included in this category, so there is no issue. However, what else is approved? This was tricky information to find online, so I rely on what was provided by the associate director of The Institute by phone and in a LinkedIn discussion forum for Advocis, The Financial Advisors Association of Canada, a couple of months ago:
“The Institute, however, will also recognize the successful completion of its designation courses as approved CE as well as the successful completion of courses completed through recognized providers as. For example, the successful completion of any course in pursuit of the CLU, CHS or CFP designations will qualify as ‘approved CE.’”
Carley Desjardins, response to
How will you be getting your CE as a CLU?, undated
The type of courses that can be considered “approved” appears to be very narrow. This is why education providers, including insurance and investment companies, should ensure their sessions are “accredited” if they wish their agents and brokers to maximize use of them for credit. Often submitted to licensing bodies for CE approval (at least the Alberta Insurance Council—AIC—in my province), many providers do not seek accreditation from The Institute. With recent changes to the criteria for product-related sessions, it may be easier for providers that may have not been successful in the past. The best use of my time is often to attend a session where I will receive both Institute and AIC related credit.
I should also point out that The Institute accreditation process extends beyond needs for CLU and CHS holders, as The Institute seeks to have other regulatory boards and organizations recognize them. For example, in British Columbia, a licensed life insurance agent is exempt from provincial CE requirements if a CLU and meeting the CLU requirements. This is not the only designation accepted for exemption.
So, giving credit to Stephanie, what she has done is ensured that CLU and CHS designation holders will have 6 CE credits after taking her program. This provides reassurance to advisors that the time they have spent has educational value and their time is credited toward renewal of their designations.
Do you have an idea for a guest blog post for The Money Finder? Email me at sholmes@themoneyfinder.ca. All ideas may not be a fit, but I am generally an open-minded kind of gal.
CE Credits are just a pleasant side affect of Money Finder Bootcamp. Be sure to join me in Halifax for a full day session April 26th and you’ll get a FREE ticket to Taste of MDRT the following day!
Investment for Money Finder Bootcamp: $999 +HST for the day
- Coffee breaks and lunch provided
- FREE ticket to Taste of MDRT, a value of $150
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- Posted by Stephanie
- 02 April 2012
- Blog, Cash Flow, Financial Behavior
I’m often saying that money is about more than math—it’s really about behaviour. When it comes to spending, staying as aware as possible is very important. However when it comes to saving you are much better off to automate, to not pay attention. Set it and forget it, if you will. What I mean is that you are far more likely to save if you set up your accounts to automatically move 10% of your income away from the account attached to the debit card in your wallet and into a short-term, high-interest savings account, preferably one without a debit card.
It’s not that you are incapable of physically sitting down at your computer and typing in the 10% amount and pressing the transfer button each and every month; it’s that if you have to remember every month, you drastically reduce the chance of saving regularly. Also consider why you would want to manually transfer savings each month? Are you afraid the money won’t be there? Are you trying to micro manage your finances? Does it make you feel more in control? Or do you want just one more month with full access to spend every penny you make?
The most common reason I see for people hesitating to automate savings has everything to do with their human tendency to want to hold on to what they have. The irony is that for many people, leaving it in your chequing account means you are likely to do anything but hold on to it.
So do yourself a favor today. Open a high-interest savings account, or log on to the one you already have, and set up an automatic transfer timed with each pay and equal to 10% of your average pay. Do it now. No thinking about it. No stalling so you can spend this month’s savings and then wonder why you don’t have the financial cushion you need. In the words of Nike, “just do it!”
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- Posted by Stephanie
- 29 March 2012
- Blog, Development, Financial Behavior
One of the number one stumbling blocks I see for advisors doing a full plan is the time lag getting information. This is why I ask for information BEFORE the first meeting. No exceptions, no excuses. If they don’t want to do it, or don’t do it, I will cancel the appointment.
It is an absolute waste of your time, as well as your clients, to watch you record basic facts and figures during their precious hour with you. When you don’t learn how to ask for the information up front, you cost both you and your client. When your clients start their relationship with you this way, it sets the tone. And to those who say, “but they might not make an appointment.” Good; you pre-screened for people who weren’t serious about doing anything anyway and didn’t waste a first appointment with them.
There is nothing that will improve your efficiency like knowing exactly how to ask for information up front and get it. If you try it and it doesn’t work, it’s the way you are asking.
Learning how to get the right information pre-appointment is one of the many skills you learn at Money Finder Bootcamp. Be sure to join me in Halifax for a full day session April 26th and you’ll get a FREE ticket to Taste of MDRT the following day!
Investment for Money Finder Bootcamp: $999 +HST for the day
- Coffee breaks and lunch provided
- FREE ticket to Taste of MDRT, a value of $150
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- Posted by Stephanie
- 26 March 2012
- Blog, Debt, Financial Behavior
Does anyone else find it amusing that according to our finance minister banks are asking the government to create tighter lending criteria, when in reality the banks are the ones approving the loans! They don’t need restrictions to stop lending people enough rope to hang themselves; they can just choose to stop.
I picture this: a four-year old in a very expensive suit [big bank] saying, “I know what I am doing is dangerous and that people might get themselves in big trouble if I keep doing it,” crossing his or her arms and pouting, “but I’m not going to play nice until they do,” pointing abruptly across the playground at the other over-dressed four-year olds [other banks], then following with a full out tantrum.
What? We won’t do the right thing unless everyone else has to? How about if one of these institutions chose to educate their lending professionals and clientele, so they would understand why they are doing the right thing. How about teaching borrowers why they really shouldn’t want to stretch a debt over 30 years rather than 25 instead of waiting for “daddy” to make it illegal.
Hey lenders, want to stand out from the crowd? Don’t wait for the finance mister to make everyone do the same thing—take the opportunity to be better NOW! Learn how to make doing the right thing profitable now. Then you don’t have to wait for anyone’s permission, or direction, and while the rest of them are waiting for someone to give them orders, you’ll have already figured it all out.
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- Posted by Stephanie
- 22 March 2012
- Blog, Debt, Financial Behavior
Ready?…
Generally NO! Why? Many car loans (particularly those from a dealership financing company) charge all of the interest at the beginning of the loan term. So if you borrowed $20,000 over 5 years and the total interest cost is $2500, the first $2500 of your loan payments would pay off the interest portion of the loan. That’s often why, if you are in the second year of a car loan and you call your car loan company and ask for a payout figure it will look like this:
Number of Payments x Months Left = Exact payout figure
No interest left to pay.
To know for sure always ask to see a full amortization schedule before you sign car loan paper work. This will show you how much interest and principal in each car payment, each month. It is possible you may be given some trouble getting a hold of this information; this is because so few people ask for enough detail when purchasing a car.
If you’ve had your car for say 19 months and all of the interest is already paid and then you moved it to your lower rate line of credit, you’ll end up paying more interest not less—because you’ve already paid all the interest you were going to at that higher rate. Now you are essentially refinancing it a lower rate but the interest was already paid off!
Of course 0% loans wouldn’t have this issue, as there never was interest. But you should always ask about fees. If writing a cheque would mean the car costs you less in total, there is a fee there somewhere—so never be afraid to ask!
This is why I like very short-term car loans. Then even though you pay the interest up front, there is very little of it when a car is financed over 36 months or less.
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- Posted by Stephanie
- 19 March 2012
- Blog, Cash Flow, Debt, Financial Behavior
There’s been a lot of kafuffle about the huge mortgage penalties some banks charge based on the Interest Rate Differential (IRD) calculation clause in most mortgage contracts. That’s the part of your mortgage that says, if you want to get out of your mortgage early, you’ll have to pay three-months interest or the IRD, whichever is greater. Except lenders are not required to follow any rules when it comes to how they calculate their IRD. In a low rate environment, where a lender is sure to get less money from the same mortgage today as they would three years ago, lenders use the IRD a lot. Basically they control the penalty at the time you decide you want out. You don’t agree in advance to a maximum penalty. Nor do you have the ability, by knowing how the penalty will be worked out, to predict the consequences.
So when you have a big penalty, is it always better to keep your existing mortgage? It depends. How much does it cost to wait? I had a recent example that I thought was worth sharing:
A couple was quoted a different penalty figure each of the five times they requested it. And it wasn’t because a few days had passed and the penalty had to be recalculated. The difference between the original figure quoted and final penalty was nearly $12,000. They had a mortgage with a 30-year amortization. This makes the penalty much higher, because the interest portion of the payment is so much larger, as the loan is stretched over such a long time. In their case, if they kept their 30-year amortization, in three years when it renews, they will have paid less than $10,000 in principal and a whopping $35,000 in interest and then some. With a penalty so large, could it ever make sense for them to pay it? Yes. Sometimes the mortgage itself is a greater penalty.
When all was said and done, I completed a cash-flow plan, they unified their debt and even WITH that big penalty, in three years they’d be left owing $37,000 less on their total debt—when their original mortgage would have been due to renew. After including, the interest savings those first three years aren’t staggering; but the interest costs reduce sharply as they pay their debt down. It isn’t just the interest we pay over the short term; it’s the balance we are left with when our mortgage renews. If you have a rigid, fixed rate debt structure financed over a very long amortization and no cash-flow plan, the cheapest thing you ever pay may be a big old mortgage penalty. Plotting it out is the only way to know the real costs of either scenario.
I’m not saying it’s always worth paying the penalty, sometimes that makes no sense. What I am saying is don’t assume a large penalty means you should just stay, a large penalty can be evidence of a mortgage that is VERY expensive over time (no matter the rate), and leaves you fully exposed to new rates in a few years with a big balance!
Do the math. Look at the whole picture—what you see can be awe-inspiring.
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- Posted by Stephanie
- 15 March 2012
- Blog, Debt, Financial Behavior
There is a lot of talk about the debt-to-income ratio rising over the last few years. Economists consider this particular ratio to be one of the many indicators of the general population’s financial fitness. So what does it mean to the average person? The average debt-to-income ratio reported in the last quarter of 2011 was nearly 153%. Meaning for every one dollar we earn, we owe one dollar and fifty-three cents. If your personal debt-to-income ratio is over that, are you in trouble?
Well, not necessarily. For example, a young couple who just purchase their first home, have a little bit of student loan debt and pay for full-time child care may easily have a debt-to-income ratio of 300%, which a bank wouldn’t find overly troubling. A couple in this case may be in fine shape and have plenty of time to make that debt history. However, if you are two years from retirement, a debt-to-income ratio of even 50% may be a big problem.
So before you worry about your ratio being too high, or think you are off the hook because yours is better than the average Canadian, don’t! Just put your situation in a little perspective.
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- Posted by Stephanie
- 12 March 2012
- Blog, EVENT, Social Media
Today I’ll keep my post short and sweet. At this very moment I am in Austin, Texas, where I was invited to the amazing SXSW event. I was invited as the guest of some lovely and talented women working in Social Media for Financial Services from all over the world.
While here I’ll have my ear to the ground listening for international trends on the use of Social Media in financial services, so watch my twitter feed for exciting updates and tidbits from the event!
If you haven’t already got a twitter account, remember YOU ARE allowed.
