One of the most recognized Seattle sports icons, Ken Griffey, Jr. (The Kid), and a shoo-in for the baseball hall of fame retired last week after a storied career and umpteen records and golden gloves.  As I have been reminiscing since the story broke, I remember the many games I watched him play in the Kingdome (pre-Safeco Field days for you out-of-towners) and cheering on his spectacular catches in centerfield and the numerous home runs.  I’ve also been curious about something….what does the next chapter of Junior’s life look like without baseball?  Was he ready for it?

There’s an old saying in baseball that goes something like this:  The game let’s you know when you’re done.  The message is usually swift and sooner than most expect. 

In Griffey’s case he played longer than most.  He will be remembered as one of the all time greats, but his aging body (even though he’s only 40) was no longer able to play the game the way he always had.  The “game” told him it was time to stop.

What happens when it’s time for you to stop, no matter what the reason?

Fortunately, wealth creators have a lifecycle that can be much longer than a professional athlete and offers more choices and control.  Even so, preparing for the next chapter in life is just as important.  One should address issues such as  leadership transition to the next generation, improving liquidity, reducing responsibility and risk exposure, and finding time for new passions and interests. 

Here are a few things you can do to prepare for the next chapter of your life, no matter how confident you feel about your current situation: 

1. Enjoy today but make plans for tomorrow.  Don’t let denial or busyness hinder you from looking at the reality of your situation and what changes in your future are likely and appropriate.
2. Each year write down your ideal, best future and what is standing in the way and/or contributing to the potential of that being a reality.
3. Talk to your inner circle of close friends, mentor (if you have one), and advisors to see if you have any blind spots so you get a clear and unemotional assessment of your current status.

What else would help you maximize your impact?  Isn’t that what we all want?

I was meeting with a client recently and she asked if there was a listing of wealth management best practices; something to review and use as a tool to enhance her efficiency in managing and thinking about her wealth.  The more I thought about her request I realized that this could be a useful idea for my wealth creating readers.  So, Jodi, this one’s for you…and everyone else too. 

1. Have a “Plan B.”  Significant market changes can create scenarios where your best laid plans no longer work.  Are you ready to deal with that potential?  Stress testing your estate plan and other strategies using contingency planning is critical. 
2. Have a copy of your financial plan where you can find it.  It should include the names and contact information of your key advisors and professionals.
3. Review your cash flow and net worth statements at least annually.  Look for trends, concentrations, liquidity levels, lifestyle costs.
4. Schedule time for a complete review of your estate plan and insurance coverage at least every three years.
5. Review your financial goals every two years. Are they still relevant? Have you accomplished them already? Do you need some new ones?  What do you want your life story to be in the coming months/years?

For the full list of 15 in greater detail, subscribe to the blog, shoot me an email (info@highlandcm.com) and I’ll send you the 15 secrets.  For those of you already subscribing, let me know and I’ll send the list to you as well.  Just our little way of giving back.

Wealthy individuals are increasingly more negative about our global economic situation according to a recent study by Barclays—women more than men, developed countries (like the U.S and the U.K.) more than emerging economies, and as wealth increases so does the pessimism. 

It wasn’t that many years ago that here, in the U.S., we professed a can-do attitude that we could build, accomplish, and thrive regardless of the economic backdrop.  We talked about perseverance, ingenuity, creativity, world leadership, and all with some degree of unbridled optimism.

Notice in the article that the emerging economies are showing less negativity than the developed.  Why?  I would argue that they are seeing the growth and optimism and focus on creating a future that we used to espouse.  Much of this shift strikes me as a reality but it’s also sad.

So, I ask you again to consider…are you too negative?

Every so often the media uncorks some financial scandal that shakes the business world.  Lately, it seems like we’ve had plenty of them.  It started with the Enron scandal in the early 2000s, then the Madoff scandal, and most recently it’s Rhonda Breard, a wealth manager in Seattle’s own backyard, making dubious headlines.  As you may have heard, Breard pleaded guilty in federal court to stealing over $9 million from her clients over the course of several years.

News of such misconduct both angers and saddens us as wealth managers.  Our priority is to help our clients live life without the anxiety and complexity that accompanies wealth.  Unfortunately, scandals like Breard’s can plant seeds of doubt and undermine peace of mind. 

After talking with my team, we think this is an opportune time to remind our readers of a few key safety measures that should be in place to preserve and protect your assets:

Make sure your statements are sent directly to you from the custodian.  Advisor generated reports showing performance, balances, and positions must reconcile to the custodian’s, not replace them.

Separation of duties is a key detriment to fraud occurring.  At least two sets of eyes across departments see all of the activity that occurs in our accounts.  Different people in our office are responsible for executing account activity and for reconciling it. 

Understand the insurance coverage carried by your custodian and advisor.  Your brokerage assets are protected from loss by SIPC, and from both fraud and error by insurance carried by your custodians.  We have also chosen to carry insurance coverage that would help protect our client’s in the unlikely event of a loss.

For more information about consumer protection, please visit our blog video gallery at:  http://www.wealthclarityblog.com/about/video-gallery.

One of the joys of my chosen career is that I get the privilege of learning about the passions of my clients’.  In some cases I get to witness those passions first hand and even share in the experiences.  From my perspective, there is something about spending time at a client’s home, or in doing an activity together that helps build long-term and enduring relationships.  It magically transforms the typical business-type relationship to something much more special.  This was definitely the case with Phil.

Three years ago I was invited to join Phil, a client of mine, at his second home in a small fishing village on the western shore of Vancouver Island.  My son, who was 16 years old at the time, and I headed out on the adventure by seaplane and touched down about two hours later in the bay outside Bamfield.  Phil met us at the dock in his fishing boat “Sea Bear”, and we cruised the short distance to his home, which was only accessible by boat. 

It only took a few moments to understand that fishing, boating, and enjoying nature were the passions that Phil lived for.  I was visiting for three days with the express purpose of fishing, but discovering the rugged beauty of the area and the abundant wildlife including bears, eagles, and whales, while also having the opportunity to hook and catch more salmon than ever before in my lifetime, was a complete thrill. 

Phil was up when I arrived in the kitchen each morning for my first cup of coffee.  He would vigilantly listen to the radio for the wind and swell reports and watch as the lights of the fishing boats headed out in the dark for a day of fishing.  On your first impression, you might say he was a bit tough on the outside, but as you got to know him better, you would find he had a warmth and gentleness that made you want to be around him. 

He lived life fully and loved to share stories about his adventures.  He was inquisitive and a voracious reader, which only added more depth to the wisdom that he dispensed at every meal we shared together. 

Phil knew what he loved to do and where he loved to be, and that is why he spent five months of the year in Bamfield. 

For the last three years, I too have found solace in this small fishing village on the coast of British Columbia.  Phil, thanks for inviting me into your story.  Your bright smile will be missed.  (Phil T. 1936 – 2010) 

This reflection inspired me to evaluate my own life and it reminds me to live life fully while continuing down the path of significance.

Author’s note: Details shared with permission of the family

Just for fun, let’s recap the stock market this year:  fantastic start, up almost 10% through the end of April; four days of losses last week primarily caused by the turmoil in Greece, growing concerns in the Euro area, and fears of tightening economic markets in China; the now infamous trading glitch and the associated historical price swing; and then yesterday’s surprise European Union rescue package valued at almost $1 Trillion that helped push equities higher to the tune of 3 – 7% in most developed countries.

Summation:  Basically your investments are back to even for the year.  Isn’t it easy to get complacent in your investment approach and then suddenly get reminded how quickly things can change.  You definitely don’t want to be figuring out investment process and strategy during times of high volatility and market stress. 

While some experts have suggested that diversification is “dead”, we believe diversification is back and represents one of the key themes we are focused on in 2010.  It was proven in 2008 when we were facing economic collapse, it was proven in 2009 when the financial markets rose from the ashes, and, we believe it will again be the case this year.  It is simply what preserves wealth and provides the best opportunity for increasing portfolio values during extremely uncertain times…like now.

Several of Highland’s other investment themes that are also relevant at this stage are: 

1. Quality is King: Although not as apparent during the first quarter, rising volatility has pushed investors toward quality investments.  For example, the purchase of U.S. Treasury securities that has in part been prompted by concerns about the stability of the Euro. 
2. Where’s the Yield: Yields are low due to this flight to safety, requiring greater diligence to locate reasonable quality income streams, especially with money market rates hovering near zero.  High dividend paying stocks, corporate bonds, and emerging market debt securities are reasonable considerations in this environment. 
3. Limited Visibility: Market movement is based on only the very latest data releases—think last Thursday—and highlights the need to be nimble.  Volatility is peaking and suggests a focus on proven process in investment selection and timing.
4. Developed Markets Owe: The potential for contagion in Europe and spill-over effects on the rest of the world is the reason we have reduced our exposure to Euro denominated debt and equity exposure during the past quarter as this crisis was brewing.  Most of our portfolios have less than 10% total weighting in Euro-denominated investments. 

What worries you about your investments during the second half of the year?