Wealth Management Blog

Negotiating Your Finances When You Divorce

By JJ Burns

March 23, 2017

Whether you have been married for a year, or several years or longer, getting divorced can be difficult—certainly emotionally, but also financially.

With the right mindset and planning, divorce doesn’t have to drain your financial assets. Instead, there can be negotiations that benefit both parties.

For most, divorce is not always easy. There may be property, children, businesses, and debts that need to be addressed. Before the papers are signed, people should know what they want to accomplish when they dissolve a marriage. Is it wealth preservation, child custody, asset protection?

Few people want to think of marriage in business terms. It’s not romantic at all. And when you get married, you hope that it will last forever. For some, relationships can run their course.

Your State of Residence Matters

According to lawyers, the simplest divorces are the ones where it’s simply dividing up property. Nine states are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. This means that whatever you earn, or property that you acquire during the marriage, is subject to a 50-50 split when you divorce.

In all other states, it’s a bit more complicated. Take the hypothetical case of Katie who was married for 16 years, has two kids, and helped build her husband’s dentistry business by introducing him to key people in the community.

Legally, she is entitled to part of the value she put into the business, as well as some of what the couple both earned and saved during their marriage, and a portion of the house and other assets. This all takes time to sort out.

A Formula for Support

Family courts have a formula to determine an amount of support. In New York, if you have one child, you will receive 17 percent of the salary from the non-custodial parent, two children may receive 25 percent, and three children may receive 29 percent of salary.

Even so, if you’ve been a stay-at-home mom like Katie who has put her career on hold to raise kids who attend private school, suddenly getting a high-paying job to support your family can be a bit unrealistic. How is she going to continue her—and the kids’— lifestyles?

It all comes down to a valuation of Katie’s participation in her former husband’s business and family responsibilities, and then strategic negotiation to give her a desirable result.

What it also means is for her to take herself out of the emotional equation of the divorce, and assemble a team of financial specialists, lawyers, and mediators who can work with her best interests in mind. It also gives Katie the resources to communicate “individually” with each team member, “checking and balancing” the advice given to minimize or eliminate conflicts of interest, so she gets the results she desires. 

It’s a smart move for both sides. Depending on the situation, a collaborative team can cost much less than a litigious divorce lawyer.

Getting Wise Counsel

Most of us take out insurance to protect ourselves in case something happens. A review with a financial professional in the case of a divorce is the same thing—protection. To learn more, download our divorce toolkit "Suddenly Single: What to Do When You’re On Your Own Financially" and get the proper guidance on how to protect your assets and financial future.

The One Rule Many Advisors Don’t Follow

By JJ Burns

March 9, 2017

What is the “Fiduciary Rule”?

You might have heard in the news about the new “fiduciary rule.” Although it might seem confusing, basically, the Department of Labor created a new retirement investing rule that’s supposed to go in to effect on April 10, 2017.

“Fiduciary” is defined as the relationship between a trustee and the person or body for whom the trustee acts. In other words, it’s an individual who holds a legal or ethical relationship of trust, and has an obligation to act in the best interest of the beneficiary.

The rule was created after a government report determined that U.S. retirees lose a total of $17 billion each year because of conflicts of interest. Since the Department of Labor oversees regulations for 401(k)s, they decided in step in.

The rule is designed to help average investors save more money for retirement and spend less on commissions and fees.

Using Celebrities as Examples

What about the not-so-average investor? Their stories are fascinating because of the person’s fame.

We can all learn from the high-profile mistakes of a celebrity, such as the recent case of Johnny Depp. He is out of money. Now the courts will decide if it was his fault for living a lavish lifestyle, or if it might have been the fault of those giving him financial advice.

Despite tales of large monthly wine budgets, and purchases of a village in France and islands in the Bahamas, this is yet another celebrity example for everyone. The bottom line: the lesson to learn here is whether your financial advisor is serving your needs or not.

Fiduciaries and You

What does this mean? Right now, although many financial advisors give sound advice, some may recommend investments because of the commission they will get—not what will make the wisest choice for the client.

The new fiduciary rule applies only to 401(k) and retirement investment vehicles. The Department of Labor does not have jurisdiction over other types of investments.

Some of the larger firms have been scrambling to make changes and determine how they can adjust their practices to serve their clients under the new regulation. Plans may be changing. Accounts may be restructured. Clients are being called in for meetings to explain what this means to them.

Fee structures and investment offerings are now being scrutinized and retooled. Portfolios are being rearranged.

Obligation or Choice?

Many people assume their advisor is behaving as a “loyal fiduciary and prudent steward,” as Johnny Depp’s lawsuit describes. Until the Department of Labor started placing the spotlight on “fiduciary,” many clients did not realize the extent of possible conflict of interest.

Celebrities can hire expensive advisors of all kinds to help them understand the myriad of legal disclosures and fine print. But what about ordinary people? No matter who you are and how much money you have, you hire people to help you make decisions and manage your affairs in a beneficial way.

How do you know if your financial advisor is a fiduciary? Ask. Take a look at your statements. Know what you are paying for. You should feel comfortable with the answers you receive.

Who Has Responsibility?

You might be able to do your own taxes, but you hire an accountant to do it for you to save time and leverage their expertise. You even hire someone to take care of your yard, not because you don’t know how to mow the lawn, but because it allows you to do other things.

There is a battle waging over the Fiduciary Rule. One camp says investors should understand where they are putting their money and not blindly take advice from their financial advisors. The other side believes clients don’t always know the full picture. They hire an expert for advice to help save for retirement, not to invest in funds with the highest commissions.

In the movies, everything usually works out. In real life, it’s not always so simple. For the busy professional, and even the seasoned investor, the best path can be terribly confusing. Your advisor should be able to help.

The Future of Fiduciary

The Obama administration began the Fiduciary Rule implementation, but it was very complicated and many details were not ironed out. The Trump administration has voiced opposition to the regulation, ordering a six-month delay in the rule’s implementation.

Despite uncertainty among politicians and firms, JJ Burns & Company has always and will continue to act as a fiduciary for clients. It is one of the reasons our clients trust us. It is one of the qualities setting us apart from other advisors.

We are here to talk with you anytime.

Your Whole Picture

The new rule applies only to retirement investments and 401(k)s, but we feel that your financial advisor should treat your entire portfolio as a fiduciary would. Why should they serve your best interests for retirement accounts, but not your other investments?

JJ Burns has always felt that taking the role of a fiduciary—someone who serves the best interest of the client—is important. We are happy to sit down with our clients to review investments, portfolios and personal financial plans. We always want you to understand where your money is and why it is there.

Exclusive Webinar: Q1 2017 Economic & Market Outlook

By JJ Burns

January 25, 2017

[Update: For those who couldn't attend, you can watch the webinar video here.]

What key themes will shape global markets in 2017?

After a rollercoaster year of geopolitical surprises, the outlook for the global economy remains uncertain with the prospect of fiscal stimulus, trade protectionism, and accelerated interest rates in 2017. How will these risks and opportunities affect your portfolio and business?

Join JJ Burns & Company on Thursday, February 2nd at 1:00 pm EST for a webinar to discuss the Q1 2017 Economic & Market Outlook. During this live presentation, CEO JJ Burns, Managing Director Anthony LaGiglia, and Chief Investment Officer Steven Mula will review our outlook for the coming year.

Bonus: All registrants will receive a link to the on-demand version of the webinar following its completion.

In this 30-minute webinar we'll talk about:

  • The resiliency of 2016 markets to Brexit, China’s transition, and the U.S. presidential election
  • Near-term expectations of growth and inflation
  • Key themes & economic trends to watch for in 2017

Plus we’ll also answer questions from attendees.

Don't miss this informative event! Reserve your spot today.

New Year, New Plan: 9 Ways to Achieve Your Goals

By Anthony LaGiglia

January 10, 2017

New year. New you. As we go into 2017, we’re all fired up to make improvements: diet, exercise, relationships, finances.

What do you want to accomplish this year—and in the future? It all depends…on your goals. Ever wonder why most new year’s resolutions fail? It’s because most people don’t go through the goal engineering process. (Yes, there is a science behind that.)

X person from the evening news suggests you should do this, you read Y in The New York Times, you heard Z on a popular podcast, and who knows what’s going to happen with the incoming administration.

The only thing to do is to take charge of your situation. Again, it’s about what you want to accomplish. It could be spending more time with family, getting up at 5 a.m. to exercise with a buddy or a trainer, learning a new language...or also figuring out what you want to achieve financially this year. Perhaps just pick one to start with.

There’s no time like the present to tackle whatever it is you want to do. Just like you have other advisors to help you in certain areas, begin the new year by taking charge of your finances. Base your future on what is important to you, not by a popular article you read or what you heard from an arbitrary commentator.

Instead, knowledgeable wealth advisors suggest that you take the following steps:

  1. Envision your goals and write them down. It helps you and your financial advisor to have a tangible document of where you want to go this month, the next six months, a year, and going forward. Some people jot things down on a legal pad, others prefer creating an Excel spreadsheet, while others are more visual and like to include pictures of their goals—such as a trip, a new home or their ideal retirement—into their yearly financial plans. It doesn’t matter what your method, only that you take it out of your head and put it on paper, Pinterest, or your iPad.
  2. Anticipate the obstacles. Any worthy goal has obstacles.  Fleshing out the obstacles in advance and writing out how you will move through them will eliminate the excuse of not being able to achieve it.  Think about potential roadblocks, like “impulse purchases” or expenses that you could have anticipated, which will derail a long-term savings plan. 
  3. Enact your written plan. Whether it’s saving a certain amount a month for a vacation, putting money away for retirement, making sure school tuition is paid for, taking care of aging family…it all takes consistent action. Once you’ve envisioned your goals, how are you going to get there?
  4. Take control of your habits. Your habit to regularly save, your habit to maximize your tax advantages, and your habits to invest greatly influence your ability to make your financial plans successful. And, of course, have a habit to direct funds to what makes you happy—whether it’s giving to charity, helping a family member with college tuition, expanding your wine collection, or creating memorable experiences. Great investing and savings strategies are not temporary things you do at the beginning of the year like all those other resolutions. Simple things such as automatic deductions to your designated accounts can help you easily reach your goals without even thinking about them.
  5. Don’t try to time the market. Instead, think about what you want your future to look like. Then go beyond wishing and take action on your future plan. Over the years, financial advisors have found that using consistent asset allocation in your plan may help you to meet or surpass your financial goals.
  6. Create realistic expectations. No matter how thoroughly you plan your financial portfolio, even experienced investors have down years along with profitable years. In some years, you may need to make up for losses in certain investment or 401(k) accounts—and in others you may be experiencing significant growth. By talking with a financial advisor, you can make appropriate adjustments to help meet expectations.
  7. Monitor your goals. Few people have static financial situations. Which is why a quarterly review with your financial advisor can help keep you on track or give you informed guidance to fine-tune your plan.
  8. Be flexible to change. For some people, this is more easily said than done. However, we can’t control everything. Circumstances can alter, goals can adjust, markets can change. Working with a trusted advisor, you can work through uncertainties to keep working toward your goals.
  9. Don’t get discouraged. If one of your goals has been to lose weight, perhaps you’ve reached a plateau at some point; if you’ve ever remodeled or built a house, you’ve definitely run into unexpected delays. The same holds true for investing. There are bound to be highs and lows along the way. We live in a world of immediate gratification so it’s natural to want to give up the minute something doesn’t turn out as anticipated. But sage advice is like a good wine—it works over time and only gets better with age. Working with an experienced advisor can help you navigate your financial and life changes. Your plan is the glue that binds you to your future goals, and it will keep you on track and in a positive frame of mind.

The start of a new year is an excellent time to take stock of what you want to accomplish in 2017, and a big part of that includes financial planning. At JJ Burns & Company, we’re here to help you achieve your goals this year—and for the future. We hope you make 2017 your best year yet.

Angels Do Exist

By JJ Burns

December 30, 2016

This time of year is one of reflection. We go in and out visiting the ghosts of the past, present and future. Just as in the classic story, A Christmas Carol, we all face the decisions we’ve made—but even better, we also have the opportunity to reflect on how to improve ourselves and others.

As the end of the year nears, there’s no better time to take stock of what we want to do now—and what is in store for the future. It’s also a time to recognize the many “angels” we have around us. As much I would like to believe in fairy godmothers, or plump, pink cherubs who fly about on their gossamer, feathered wings granting wishes, there are real angels who live, work and love right here among us.

These angels include Mary*, a JJ Burns client, and her long-time caretaker Sophia*. Mary will be 100 years old in 2017. We have worked with Mary to set up and oversee her life and wealth management plan for almost 20 years.

Mary worked for many years as a college professor in psychology and had a successful private practice. She never married and had no children. Early on she shared with me that she needed a financial partner to help her make choices to give her a life that she can enjoy.

As a philanthropic person, Mary always looked to help others before herself. Whenever she could give and still be able to afford a comfortable life, she did so. She contributed to children’s education programs, religious causes and medical care in less fortunate countries. I’ll always remember when 9-11 occurred, she made a contribution to the local firehouse and they came to her home to acknowledge the gift. It was uncomfortable for her and she felt it was unnecessary. Nonetheless, the fireman showed up at her door and it was they who were honored. Mary taught me that no matter how much or little you have, you should try to help others because every bit makes a difference. She shared many life experiences with me over the years I have known her and I walked out of every meeting with her reflecting on how much I learned.

We mapped out a financial plan that detailed how Mary would enjoy her life, and when she needed care, what her treatment would look like. As time progressed and her health began to deteriorate, Mary needed more care. What became a few hours per week, eventually progressed to a full-time aide. We evaluated each aide together with written expectations of what we wanted them to do.

When we hired Sophia there was a magical connection that occurred. To see her in action and the love she has for Mary is something I have rarely witnessed. Sophia cares for Mary in every way. She shops at natural food stores so Mary can maintain a healthy diet. Her meals are home cooked and made with large doses of love for another human being. If Mary is sick, Sophia researches herbal remedies that have brought her better health.

Over the last couple of years as Mary’s mental and physical health declined, Sophia has been with her every step of the way. She arranges for a yoga instructor, physical therapy and for friends to come by and visit. Getting her hair and nails done, having lunch, going shopping or simply looking at the holiday windows are all part of their weekly activities. Mary has continued to travel to Florida and the west coast to visit family members with Sophia by her side.

I have witnessed how Sophia cares about Mary in every way. And Mary recognized early on what a special person Sophia is. Together we developed a part of Sophia’s compensation that is based on Mary living… not dying. Additionally, without Sophia knowing, Mary established an educational trust for her so that when the day does come of Mary’s passing, Sophia can live her dream of becoming a registered nurse.

As I reflect on the stories of these “angels” I recognize that setting goals and planning were the key to Mary’s success. She knew she wanted to age comfortably at home while having a trusted caretaker help do her shopping, chores, and cooking, while continuing to travel and be the adventurer she always was. Living life on her terms was vital to her.

Of course, everyone’s financial situation is different and you probably have individual goals for how you want to distribute your finances. Investing and minimizing taxes were the original contributors to Mary’s personal and financial success. Sure, she had the past—some well-earned funds to invest. She has the present—the one she enjoys with her caretaker “angel” Sophia. And now she also has a future of income security thanks to good financial planning, which allows Mary to live her life as a centurion to the fullest.

You don’t need to be 100 like Mary to appreciate a generous life. No matter what your age, you also have some “angels” in your midst. At JJ Burns, it’s always been a privilege to help our clients create the lives they wanted for themselves, for their families, for charities and for those closest to their hearts. This is what it really means to be an advisor—to be of service in the best way we know how. In this year and the upcoming ones, take some time to plan the life you want and if you have already, check in for a progress report.

From all of us at JJ Burns, we wish you a Happy and Healthy New Year!

*Not their real names.