THE VALUE OF 'VALUE - WHAT IS THE VALUE OF A FINANCIAL ADVISOR'S ADVICE?

THE VALUE OF 'VALUE - WHAT IS THE VALUE OF A FINANCIAL ADVISOR'S ADVICE?
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The word “Value” may likely be among the most misunderstood words in the English Language. We hear it in the news, we hear it in commercials, we hear it every academic discipline from sociology to engineering. The word Value is said to have many definitions, or it can be said to have only one. In any case, the breadth and depth of the term cannot be underestimated.



For most people, value is defined in terms of money. It is familiar to most people that money serves as a way to store and exchange some forms of value. However, for example, when we talk about the value of a bridge connecting two communities, all banks and insurance companies would calculate this to be the replacement cost of the bridge, say, 10 million dollars. But if we talk about the value that the bridge provides to the community, quite a different number arises.


For example, suppose the bridge shaves two hours off the nearest alternate route and suppose 10,000 people cross the bridge every day. The bridge would save 7.3 million hours per year for a financial value of 182 million dollars per year. If the bridge has a 50 year lifespan, this amounts to 9.2 Billion dollars, or roughly 1000 Time more than the replacement cost.


Now suppose that we factor in the value of the exchange of ideas that the community enjoys which leads to innovation, entrepreneurship, productivity, works of art, mentorship, recreation, and education of people in civil society over the course of those 50 years. Next, suppose we factor in the trust that a community builds between their members, their families and their network of friends. We can easily see that the Value of well conceived infrastructure project is immense.


The problem is that money does not articulate any of these forms of value, yet this value exists in communities. This can be demonstrated as follows:
suppose all of the money on Earth were to evaporate tomorrow. Would the bridge, community, and social ties retain their value? The answer is likely to be yes. Suppose the bridge, community, and social ties were to disappear tomorrow, would money retain it’s value? The answer is no.


The Value of Value far exceeds the value of Money. The next wave of innovation will release this value into a storable and tradable form far exceeding the financial system in the capacity to create wealth. It’s all about the Value.


Jay Deragon
The Relationship Economy
05 20 2011

ONLY 16% OF THOSE BORN IN THE 50’s ARE DEBT FREE - MANULIFE BANK SURVEY

According to a recent survey by Manulife Bank only 16% of those surveyed ages 50-59 -very near the age they planned to start retiring- are actually debt free.


The average debt of those in their fifties was over $100,000.


Also nearly three quarters of those in that same age group said they didn’t have any outside advice on day-to-day spending or debt management. What could a properly trained advisor do to help their great quality clients attain a debt free retirement?

Here is the survey


2011 News Releases


For Immediate Release


May 9, 2011


Young homeowners optimistic about when they’ll be debt-free


Years of experience give older homeowners a more realistic perspective on debt


Waterloo- More than four out of 10 Canadian homeowners aged 30-39 expect to be debt-free by the end of their forties and another third expect to be debt-free in their fifties, according to Manulife Bank of Canada’s quarterly Debt Freedom Survey. The reality, though, is that only seven per cent of homeowners aged 40-49 and 16 per cent aged 50-59 have actually paid off all their debts.


“When people buy their first home, they have the best of intentions to pay off their mortgage and other loans, and are optimistic about their financial future,” said Doug Conick, President and CEO of Manulife Bank of Canada. “However, even carefully laid financial plans can be thrown off track by unexpected life expenses, such as home repairs, family illness, or job loss. Debt-freedom is possible, but it requires a commitment to financial discipline, and for many people, some professional advice on how to plan finances for the long term.”


The reality is that paying off a large debt such as a mortgage requires a series of smaller decisions over a lifetime, and people often use their extra cash for things other than debt repayment, even when they know they should pay down that loan. When respondents were asked what they would do with an unexpected windfall, they identified debt repayment as a priority by a significant margin - an average of 51% of the hypothetical windfall was allocated to debt repayment. But when respondents were asked what they actually did with the money the last time they were in that situation, debt repayment remained the top priority, but the amount allocated to debt dropped to 39%, while money allocated to day-to-day expenses rose significantly.


The average homeowner aged 30-39 has $209,200 in debt of all kinds according to the latest quarterly survey results. By comparison, those in their fifties still have $108,500 of debt on average, or just over half as much. The survey data shows that 19 per cent of homeowners in their fifties actually increased their debt in the past 12 months, while only 33 per cent reduced their debt by as much as or more than they had expected. In fact, 20 per cent of homeowners aged 50-59 either couldn’t foresee when they would be debt free, or don’t expect to ever reach that point, while 44 per cent expect to carry debt into their sixties. Nonetheless, homeowners in their fifties are happier with the amount of debt they currently have than those in their thirties and forties, reflecting perhaps both the progress they have made in reducing their debt, and their perceived ability to repay that debt.


Overall, 57 per cent of respondents report reducing their debt over the last 12 month, up 8 points from 49 per cent in November 2010. Additionally, nearly 7 in 10 respondents rank being debt-free among their top financial priorities, a relatively consistent finding over the past five quarterly surveys.


Other findings from the survey:


• 71 per cent of those in their 50s manage their debt and day-to-day finances with no outside advice, compared with 63 per cent for the 40-49 age group and 57 per cent for the 30-39 group


• A third of respondents believe their knowledge of personal debt management to be “above” or “well-above average”, compared with just 10 per cent who characterize their knowledge as “below average” or “well-below average”


• Those 30-39 have 3.8 separate loans outstanding, compared with 3.1 for those in their 40s, and 2.7 for the 50-59-year-olds.


• Among common financial priorities, all groups expressed the lowest level of satisfaction with their level of debt and the highest level of satisfaction with their ability to manage day-to-day expenses.


More detail on these and other data, including a breakout of responses by age category, can be found at manulifebank.ca/debtresearch.


The Manulife Bank of Canada poll surveyed 1,000 Canadian homeowners between ages 30 to 59 with household income of more than $50,000. It was conducted online by Research House between March 22 and April 4, 2011


About Manulife Bank


Established in 1993, Manulife Bank was the first federally regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered bank and a wholly-owned subsidiary of Manulife Financial. As Canada’s first advisor-based bank, it has successfully grown to more than $18 billion in assets and serves clients across Canada.


Manulife Bank believes that effective debt management is a key contributor to financial health and that, by working with a Financial Advisor to create a customized financial plan that incorporates debt and cash flow management, many people could save money, become debt-free sooner and achieve more of their financial goals.


It’s for this reason that Manulife Bank offers its innovative deposit and loan products through independent financial advisors to help individuals make the most of their financial plan. Manulife Bank employs a team of specialists across the country that work with homeowners and financial advisors to design cash flow programs that are more effective, efficient and flexible.

BRAINWASHED - PERCEPTION OR REALITY?

Seven ways to reinvent yourself


by Seth Godin


Years ago, when you were about four years old, the system set out to persuade you of something that isn’t true.


Not just persuade, but drill, practice, reinforce and, yes, brainwash.


The mission: to teach you that you’re average; That compliant work is the best way to a reliable living; That creating average stuff for average people, again and again, is a safe and easy way to get what you want.


Step out of line and the system would nudge (or push) you back to the center.


Show signs of real creativity, originality or even genius, and well-meaning parents, teachers and authority figures would eagerly line up to get you back in line.


Our culture needed compliant workers, people who would contribute without complaint, and we set out to create as many of them as we could.


And so generations of students turned into generations of cogs—factory workers in search of a sinecure. We were brainwashed into fitting in, and then discovered that the economy wanted people who stood out instead.


When exactly were we brainwashed into believing that the best way to earn a living is to have a job?


I think each one of us needs to start with that.


Read entire text..............


http://www.sethgodin.com/sg/docs/brainwash.pdf

OBAMA SIGNS INTO LAW CREDIT CARD REFORM

In the most sweeping changes to the credit card industry in 40 years, President Obama signed into law Friday an act to restrict practices he says contributed to consumers' financial problems during the recession.


"With this bill we are putting in place some common sense reforms designed to protect consumers," Obama said at a signing ceremony at the White House.


"We're not going to be giving people a free pass and we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives," he said.


The new law — which includes restrictions on interest rate increases and credit offered to college students — deals a blow to the banking industry, which has lobbied aggressively against tighter regulation. At the same time, it provides less than a complete win for consumers because it doesn't cap interest rates or fees.


The legislation "is not going to be a hanging for banks, but I think Congress has collared them and are bringing them in," says Robert McKinley, founder of CardTrak.com, which consults with banks. "It's been the Wild West for the card industry for a long time."


Marcia Sullivan, director of government relations for Consumer Bankers Association, a trade group, says banks' biggest concern is that the new restrictions will affect the availability and price of credit.


"I think that every single company that offers a credit card is reassessing its cost," says Sullivan. Issuers will be "reassessing what they do and how they do it."


The law's impact will be felt by most households in America. About 90 million households carry credit cards, with an average debt load of more than $10,500, according to CardTrak.com. The curbs, which mostly take effect in nine months, deal with controversial practices including:


•Interest rate increases. Issuers can generally raise rates on existing credit card debt only if consumers have paid their bill more than 60 days late.


•Penalty fees. Issuers can't charge an over-limit fee unless consumers have asked for this additional credit. Banks also can't impose late fees if they delayed crediting a payment.


•Marketing to college students. Banks can't extend credit cards to people under 21 without verifying their ability to pay or getting their parents' permission.


The law comes on the heels of consumer outcry about increases in credit-card rates and fees during the downturn. Banks have said that higher funding costs, along with surging loan delinquencies and defaults, forced them to reassess card risk.


The problem is, banks' actions have only made it harder for consumers to pay their bills. In the first quarter of 2009, the latest data available, credit card delinquencies hit an all-time high of 6.5%, according to the Federal Reserve. Credit-card defaults reached a near-record 7.5%.


Susanna Montezemolo, a vice president at the Center for Responsible Lending, an advocacy group, says because the law is a "compromise piece of legislation, there are certainly other areas where it could be made stronger." Still, Montezemolo says that consumers groups are generally "thrilled" that borrowers will have new rules of the road for credit cards.

Kathy Chu,
USA TODAY
05 17 2011

Contributing: Reuters

THE 2ND 30 – 40 YEARS – LIFETIME RETIREMENT (55 – 95) - HOW WE GOT FROM THERE TO HERE

Large corporations began to dismantle defined benefit pension plans over 20 years ago.



The first demographic group who were targeted were those in their mid 50's.  Why? Because it is costly to fund a lifetime retirement with 10 years left (i.e. 55 - 65). This left those affected with only one choice - do it on your own. A $100,000 / year retirement income requires $2,000,000 in capital assuming a 5% rate of return on the capital - that's $200,000 / year in retirement funding. That sum speaks for itself. Most corporations did not start the retirement funding early..


Once a corporation removes a guaranteed pension for all intents and purposes an employee becomes self employed. The only advantage anyone has financially in a large institution is the opportunity to receive a pension and retire with peace of mind. Once you are on your own you are acting as an independent entrepreneur and not an employee. Loyalty cuts both ways.


That's the background that has resulted today in 60% of all working Canadians not having a defined benefit pension plan which would allow them to sleep soundly throughout the 30 - 40 years of their retirement (from as early as 55 to as late as 95. - look around you in your own family.)


Ask public servants why they work for the government from a financial point of view - their defined benefit pension.


Financial planning was done by the corporation - not the employee. Employees budgeted – income – expenses – that’s it. The employee traded his or her financial time for a guaranteed lifetime income at retirement.


Employees bought financial products for their individual accumulation purposes but had very little certainty whether they would be able to transition their accumulated savings capital into a sufficient and sustainable lifetime retirement income.


That brings us to 2011 where 14,000,000 boomers in Canada are preparing to retire and are inadequately aware of which professional financial practitioner can replace the corporate financial management team who once upon a time designed and implemented their defined benefit retirement plans…….


That's where we are today.

THE STRESSFUL IMPACT OF HIGH STAKES US POLITICAL LIFE ON FAMILY RELATIONSHIPS

Arnold Schwarzenegger and Maria Shriver separating after 25 years of marriage

 
LOS ANGELES, Calif. - It was a storybook marriage in 1986 on a spring weekend on Cape Cod that united a princess of an American political dynasty, Maria Shriver, and the gap-toothed muscle-clad movie star famous enough to be known by one name, Arnold.


In many ways, it was a pairing of opposites: Her uncle was a U.S. president; his father was an Austrian policeman. She was the rising star of a network TV news show; he was the pot-puffing star of "Pumping Iron." He was a Republican with a soft spot for Richard Nixon; her family was a pillar in the nation's Democratic establishment.


Former California Gov. Arnold Schwarzenegger and Shriver announced their separation late Monday, cleaving a sometimes-turbulent 25-year relationship after "a time of great personal and professional transition for each of us," the couple said in a joint statement.


The breakup comes about four months after Schwarzenegger ended a bumpy, two-term run as California governor, a job his wife never wanted him to pursue. Since then, Schwarzenegger, 63, has been fashioning a role as an international advocate for green energy, giving speeches and lining up work in Hollywood. Shriver, 55, has guested-edited an edition of Oprah Winfrey's magazine but also talked about the stress of changing roles after serving as California's first lady.


The joint statement said the two were working on the future of their relationship while living apart and they would continue to parent their four children — Katherine, 21, Christina, 19, Patrick, 17, and Christopher, 13.


"After a great deal of thought, reflection, discussion, and prayer, we came to this decision together," the statement said.


Shriver moved out of the couple's gated estate in the Los Angeles neighbourhood of Brentwood, but they remain on speaking terms. They had brunch with their children on Mother's Day in a tony restaurant in Santa Monica, and met privately on their wedding anniversary last month.


Prior to the announcement, there were hints of a rift. The former governor tweeted frequently during his recent travels to Brazil, Nigeria and France, but Shriver was not mentioned in his online updates from the road. Shriver, also active on social networks, posted three updates on her Twitter page on the day of their 25th wedding anniversary, April 26, but did not mention the milestone.


About a month before the anniversary, Shriver wrote on her Facebook page that she was going through a transition in her life.


"As you know, transitions are not easy. I'd love to get your advice on how you've handled transitions in your own life," she said in a video posted on YouTube.


"It's so stressful to not know what you're doing next. People ask you what are you doing and then they can't believe that you don't know what you're doing," she said.


Schwarzenegger has often said that Shriver, who is keenly attuned to the risks of a life in politics, initially was very upset about his plan to run for governor. But when Schwarzenegger announced his decision on "The Tonight Show with Jay Leno" in August 2003, he said his wife stood by his decision.


During Schwarzenegger's time in office, Shriver and the couple's children never moved to Sacramento, preferring their secluded estate a few miles from the Pacific Ocean. Schwarzenegger never settled in Sacramento, choosing instead to commute by private jet between his home and the state capitol.


Schwarzenegger and Shriver long presented a gilded partnership that crossed politics, Hollywood and media. They are known for charitable work, and he also founded a committee with New York Mayor Michael Bloomberg and Pennsylvania Gov. Ed Rendell to encourage road, bridge and other infrastructure development.


Shriver, the daughter of the late Eunice Kennedy Shriver, left her job as an NBC News correspondent after Schwarzenegger took office.


In a May 2009 commencement speech at the University of Southern California, Schwarzenegger alluded to the powerful influence Shriver had on his life. He said when people ask him the secret to success, "I say, number one, come to America. Number two, work your butt off. And number three, marry a Kennedy."


As the state's first lady, Shriver ran an annual women's conference that attracted a long list of business, political and entertainment luminaries, along with an audience of thousands. She also was credited with overhauling the California Museum in downtown Sacramento, and, with Schwarzenegger, starting the California Hall of Fame.


In 2007, Shriver said she wouldn't resume a TV news career after the media circus surrounding Anna Nicole Smith's accidental drug overdose.


"It was then that I knew that the TV news business had changed and so had I," she said at the time. In a 2009 interview with The Associated Press, she said "I'm too much of a free spirit" to consider running for elective office.


Shriver stood by her husband during his campaign after the Los Angeles Times reported accusations that he had a history of groping women; Schwarzenegger later said he "behaved badly sometimes."


The breakup comes months after the death of Shriver's father, Peace Corps founder and former vice-presidential candidate Sargent Shriver, in January. 

By Michael R. Blood,
The Associated Press
The Canadian Press
Tue, 10 May, 2011
_


Associated Press writer Daisy Nguyen contributed to this report.

STRONACH STILL A MAGNA FORCE

78-year-old chairman and founder steps down but will pursue electric car and horse racing ventures

Frank Stronach won't stop......building factories......factories mean jobs.

He wonders why financial services industry  managers "get paid more for reducing jobs".

The 78-year-old iconic Canadian entrepreneur stepped down as chairman of auto parts giant Magna International on Wednesday after almost four decades of creating thousands of jobs.


But the restless, fit-looking billionaire told shareholders at their annual meeting that he won't really be slowing down and sitting back on a recent pile of cash from Magna


He will be using his time and money to produce even more jobs.


Stronach, who received a standing ovation after a final 25-minute, free-wheeling speech, said he is focusing hard on an electric car venture under his control in partnership with Magna


"I can see a very substantial business down the road," he'said. " .. .I try to build factories. Factories mean jobs."


Stronach built Magna from a one¬man t60l-and-die shop in west-end Toronto during the late 1950s into one of the biggest auto parts makers in the world.


Magna now employs more than 100,000 workers in 263 factories and 84 research centres in 26 countries. It has about 17,500 employees at 44 plants and 11 research opera¬tions in Canada


A Stronach family trust collected about $863 million in cash and stock last year after selling off the company's control block in a controversial transaction. As part of that exchange, Stronach also received a controlling stake in Magna E-Car Systems, plus multi-million¬dollar consulting contracts during the next few years.


Stronach has been mulling family succession and control of Magna in recent years in view of the declining possibility that his daughter Belinda or son Andrew might take over.


"I have not regrets," he said. "One of these days, I won't be around ... Could I manage Magna from the grave? I came to the conclusion, that's pretty difficult to do so I accepted that proposal (to sell the control block)."


Among the positive points of the deal, Stronach said he will no longer have to deal with restrictions of a public company at Magna that can shackle management and blunt en¬trepreneurship.


"I have a thousand ideas, no strings attached,' said Stronach, who will remain a director, hon¬orarychairman and one of the com¬pany's biggest minority shareholders.


Regarding employment, Stronach said managers should get paid for how many jobs they create.


"For the financial industry, they get paid more for reducing jobs," he said. "It's funny ... I don't think society can go that way."


While Stronach has experienced phenomenal success in building an auto parts empire, numerous other ventures have fizzled. They ranged from a theme park and soccer league in his native Austria to a magazine and energy drink here.

Stronach also suggested earlier he will pump more money into attempts to revitalize the struggling thoroughbred horse racing industry in the U.S. He currently owns several key race tracks including Santa Anita Park in California and Gulfstream Park in Florida.



Tony Van Alphen
Business Reporter
Toronto Star,
05/05.2011