Knowles: Talk about money before marriage (Chicago Tribune)

Editor’s Note: Sam McElroy of @financial was recently interviewed for this Chicago Tribune feature article about the importance of discussing financial concerns before marriage. If you have wedding plans in the future and have put off conversations about finances, we invite you to contact us at for a complimentary consultation with Sam McElroy, PsyD, NSSA of @financial.  


IMG_0463Knowles: Talk about money before marriage (Chicago Tribune)

by Francine Knowles
Chicago Tribune | June 4, 2018

Ah, June, when summer weddings kick into gear.

But far too many couples haven’t had the talk — that is, the one about financial matters.

So why is the subject often neglected, even though it’s a top reason for divorce?

“Sometimes it’s shame because people are in debt. They don’t want to share that,” said Certified Financial Planner Gwendolyn Kirkland, the managing principal of Kirkland, Turnbo and Associates in Matteson and an independent broker with SA Stone Wealth Management.

“Sometimes it’s a lack of trust because it’s a sensitive area. . . It’s an intimate area, and sometimes it has a lot to do with a person’s self-worth, how they see themselves as far as their income is concerned or the debt they’ve accumulated or if they have a struggle with credit issues.”

Often, couples are so caught up planning weddings that unless they’ve had premarital counseling, they neglect having conversations about how they’re financial partnership will work, said Kirkland, who also is associate pastor of stewardship at Covenant United Church of Christ in South Holland.

Frequently, people make incorrect financial-related assumptions about their partners, said Sam McElroy, who holds a doctorate in psychology and is a partner at @financial and @financial investments in Chicago, which has clients in the south suburbs and throughout the metropolitan area.

“People assume the way they think about finances is the way others think about finances,” he said. “It’s not until something comes up that kind of shakes them that they realize, ‘Oh, you actually think this way, I didn’t realize that.’ That’s where a lot of conflict comes from.”

Kirkland said she has counseled individuals “who never got married financially, especially if it’s a second marriage where perhaps they did not have a good experience in the first marriage as far as finances are concerned. They’ve been burned. They’ve been hurt. They feel going into their second marriage, ‘No, I’m not going to put myself in that position again.’ ”

She counseled individuals whose spouses died when surviving partners have been “clueless” about household income and finances, she added. “They don’t know what the accounts are, what their partners have. Sometimes people just acquiesce. They figure, well the bills are getting paid, but there’s no accountability, no empowerment as a couple or as a partner to say what’s going on, and then upon the death of the person who was doing the financial accounting in the relationship, it leaves the surviving spouse in a very difficult position because now they are grieving and have a steep learning curve to become acquainted with household finances.”

According to Kirkland, among key questions couples should discuss before marriage are: What are their assets and income? What’s going to be available for household needs and how much will each person contribute?

If one person is paying all bills, both parties should know where payment histories stand, she said. If bill payments, savings and investments are handled online, they should know the user IDs and passwords or where to find them, she added.

For those entering into a second marriage with children from previous relationships, partners need to know about alimony or possible child support payments, Kirkland said.

“One of the key things to talk about is debt including their philosophy on managing or having debt,” McElroy said. “Are credit cards paid off every month? What are they willing to finance verses what they aren’t willing to finance?

According to Kirkland, another thing to consider is how much debt remains, including student loans, credit card debts, mortgages, 401k loans and personal loans and is there a plan to pay it off?

Not discussing debt and credit issues can cause real problems “because it doesn’t allow the other person in the relationship to be your partner,” McElroy said.

“What I’ve found is many spouses are hurt more not by the fact that the debt exists, but that they weren’t trusted enough to help the other individual work through it. It’s like a breach of their relationship.”

When debt issues are brought into the open, couples can discuss how they can work together to tackle it, Kirkland said.

“It’s important to discuss one’s philosophy on money in general,” McElroy said. “Some people come from the mindset that you really have to be a saver, meaning they are going to do everything they can to reduce expenses, so they can save as much as possible because that’s their defense against the unexpected.

“For another, money comes and goes, and you just do the things you want to do and not delay your life. It’s important to talk about their world view of money because if there is misalignment, that can create a lot of conflict.”

As for spending money on children, questions are: Who should pay for college education? Should that be a shared responsibility with the children, or is it the parents’ responsibility alone?

Then there’s the family matter — what’s your attitude on helping relatives with money? Maybe you’re helping your mom by sending her $500 a month, or have a brother who’s often in need. How does that fit into the budget?

It’s important to “start talking and see where you’re at” on financial matters, McElroy said.

“If both of you have agreement that you want to accomplish X, Y and Z and you’re both willing to hold each other accountable… it gives you what I think a marriage is supposed to be, a true partnership.”

Discussions about money should take place in a nonthreatening environment, Kirkland said.

“If you have the in depth financial discussion, prior to marriage, there are no surprises after the fact to startle a person and cause them concern,” she said.


Market Commentary: Times Change, and Financial Strategies Should Change with Them

MarketCommentary2016-croppedAs the stock market roller-coaster ride that began this past winter continues into a third season, we wanted to make this month’s newsletter a brief refresher about why we believe our income-based business model is so appropriate for those in or nearing retirement in this new “era of economic uncertainty.” For years our firm’s unique approach to retirement planning has differentiated us from all those financial advisors who are still mentally stuck in the 1990s and, thus, married to outdated, growth-based business models. That differentiating factor continues to help us educate more people each day about how to achieve their retirement goals in an era of unprecedented challenges and risks.

We have written about those challenges and risks many times in this space, and none of them have diminished or disappeared. We still have an overvalued stock market that is out of touch with economic realities and influenced more by artificial factors. Inevitably, the markets will have to make fundamental sense again, and we believe the most likely way it will happen is with a major and sustained stock market correction on par with those that occurred from 2000 to 2003 and from 2007 to 2009.

Some analysts have suggested that we may be right on the verge of that correction or that it may have already started based on the historic levels of volatility that began in early February. Market volatility more than doubled on February 5 when the Dow experienced its steepest one-day drop in history. Since then, the volatility index, or “fear index,” has experienced six sessions that saw a jump of at least 20 percent.1

Is it possible that the volatility will diminish and that the market will get back to the upward trend it started in March of 2009, a few months after the first round of quantitative easing was launched? Well, anything’s possible—but is it likely with so many potential tipping points for a sustained market downturn in place? There are uncertainties around trade, oil prices, China and North Korea, the European Union, interest rates, inflation, the federal deficit, and—especially—GDP growth, which even the Federal Reserve has forecast will be considerably lower in the next three years than the 4 percent initially promised by Donald Trump.

Generational Challenges

Again, we’re living in a brand-new age of economic uncertainty, one in which many of the old textbook rules and guidelines for investing and retirement planning have become outdated, if not downright obsolete. Adding to the need for new rules and strategies are a host of financial challenges unique to today’s generation of retirees and near-retirees—challenges that our parents and grandparents didn’t face.

We have discussed these issues many times in this space as well. They include the near-disappearance of defined benefit pension plans, the ever-rising cost of healthcare, the fact that many people near retirement age are caring for aging parents and/or grown children, and the fact that life expectancy rates today are higher than ever, meaning that people need to prepare for up to 30 years of reliable retirement income.

So, how does a differentiated business model like ours address these uncertainties and challenges more effectively than the outdated models favored by many advisors? Well, if you’re a client and a regular reader, you already know the answer. Still, we would like to briefly summarize it once again, and encourage you to share the information with friends and relatives you think might also be “mentally stuck in the 90s” and possibly carrying too much risk because of it. It’s possible that in learning more about the income model, the proverbial “lightbulb” might snap on over their heads (as it does for many people), once they understand that investing for income actually requires reducing your investment risk, not increasing it, as is commonly believed.

Total Return = Income + Growth (TRIG, for short)

Again, that’s because total return is a product of both growth (measured in capital appreciation) and income (generated through interest and dividends). Many people are taught that in order to increase your returns you must increase your growth through old-fashioned buy-and-hold investing in the stock market. But, they aren’t taught that this approach doesn’t work in a long-term secular bear market cycle like the one we’re in now. In this kind of market (and especially in the midst of so much unprecedented uncertainty), growth can quickly turn to shrinkage, as investors learned the hard way with those major market downturns that began in 2000 and 2007.

When you focus on increasing your returns by increasing your income, however, it means you’re typically investing in bonds and bond-like instruments and other vehicles designed to decrease volatility and better protect your principal from a major loss. You’re decreasing your risk in order to increase your income, which also puts you in a position to strategically grow your portfolio “the old-fashioned way,” by re-investing in other income-based vehicles.

This is a specialized approach uniquely designed for today’s challenges, but it’s an approach best taken with the help of a qualified advisor who specializes in this kind of differentiated business model. So again, we encourage you to share this information with friends and family, but preferably with the disclaimer: don’t try this at home!

Wall Street slips at open as Italy’s political turmoil weighs (Reuters)

Traders work on the floor of the NYSE in New York

(Reuters) – U.S. stocks opened sharply lower on Tuesday as investors switched cash into perceived safe havens of global financial markets due to a deepening political crisis in Italy.

The Dow Jones Industrial Average .DJI fell 146.50 points, or 0.59 percent, at the open to 24,606.59. The S&P 500 .SPX opened lower by 16.22 points, or 0.60 percent, at 2,705.11. The Nasdaq Composite .IXIC dropped 35.34 points, or 0.48 percent, to 7,398.51 at the opening bell.

Click here to read the full article:

Wall Street climbs on easing U.S.-China trade tensions (Reuters)

Reuters090517(Reuters) – Wall Street indexes rose on Monday, helped by gains in technology stocks after President Donald Trump softened his stance on Chinese technology company ZTE Corp, signaling easing U.S.-China trade tensions.

Trump on Sunday pledged to help ZTE (000063.SZ) “get back into business, fast” nearly a month after the U.S. Commerce Department banned American companies from selling to the firm for violating an agreement.

Trump’s comments came ahead of trade talks between Chinese Vice Premier Liu He and U.S. officials this week to resolve escalating trade disputes and drove big gains in the shares of U.S. suppliers to ZTE.

Click here to read the full article:

Market Commentary: Buckle up as a New Chairman Attempts to Land the Fed’s Experimental Plane

MarketCommentary2016-croppedThe dramatic market volatility we discussed in last month’s newsletter continued throughout April as the yield on the 10-Year Treasury rate topped 3 percent for the first time since 2014. Fears of rising interest rates and inflation helped drive the volatility along with uncertainty about how aggressive the Federal Reserve might be in its efforts to “normalize” monetary policy under new chairman Jerome Powell. We’d like to focus this month on the Fed since they play such a key role in determining how all this uncertainty and instability will play out in the months ahead.

Wall Street knows very well that Powell’s job is a tricky one. In a sense, he’s charged with landing an experimental airplane that was launched nine years ago in response to the Financial Crisis. That’s when the Fed under then-chairman Ben Bernanke embarked on a historically unprecedented effort to jumpstart the economy with artificial stimulus, otherwise known as quantitative easing.

Through these short-sighted experimental policies, the Fed created a situation in which the stock market became addicted to artificial stimulus, and many symptoms of that addiction are still in place as Powell takes over. For example, he knows that a single word from him has the power to spark a market rally or a massive sell-off. That’s why in an April speech to the Economic Club of Chicago, he was careful to make it clear he advocates the same “patient” approach to raising short-term interest rates that his predecessor Janet Yellen had followed. The speech came just two weeks after the Fed approved raising its key rate by another quarter percent. That was the sixth such increase since late 2015, yet the rate remains very low at just 1.5 to 1.75 percent.

A Slow, Delicate Process

This slow, delicate process of raising rates is, as we have explained previously, a result of economic growth lagging well behind all the efforts of quantitative easing and the overzealous stock market. As a result, inflation has mostly remained below the Fed’s target of 2 percent—although Powell has expressed confidence that inflation will hit and stabilize at around 2 percent in the coming months, allowing for two additional rate hikes by the end of the year.

So, why is Wall Street so nervous about inflation? Because many analysts are saying that several factors could push it up much higher than the Fed’s target. Powell has even admitted that if that happens, it could force the Fed to “raise short-term rates too quickly and cause a recession.”

One of the biggest potential inflation drivers being cited is the Trump administration’s new tax code. It represents a $1.5 trillion-dollar fiscal stimulus and is going into effect at a time when the economy is already near full employment. Most economists believe it will add to our record-high federal deficit, despite the Trump administration’s insistence that the tax cuts will pay for themselves with 3 to 4 percent GDP growth.

The Fed, itself, would seem to be skeptical about that level of growth. In a statement following their March meeting, they slightly raised their forecast for 2018 GDP growth from 2.5 to 2.7 percent and increased the 2019 expectation from 2.1 percent to 2.4 percent. However, they projected that growth is likely to cool further after that, with the 2020 forecast holding at 2 percent and the longer-run measure at just 1.8 percent.

Tied to all the inflation worries, of course, are fears over rising long-term interest rates. As mentioned, the 10-Year Treasury rate finally broke above 3 percent in April. That rattled Wall Street even though many experts believe long-term rates are going to have a very tough time notching up much higher than 3 percent for a variety of reasons.

Crucial Point

This is a very crucial point because we believe the stock market will continue to respond dramatically to the mere prospect of high inflation and rising interest rates. Although, some in the industry—ourselves included—believe those fears are largely unwarranted because they overlook important details.

The fear of the new tax code as an inflation driver is a perfect example. It’s based on the assumption that because Americans have more money in their paychecks, they’re automatically going to spend it on goods and services, increasing demand and driving up prices. But, that assumption overlooks one key detail: one of the nation’s largest demographics is the Baby Boomer generation. Ever since getting burned by two major stock market crashes in the last 18 years, they’ve been more focused on saving than spending.

Also, don’t forget that Trump’s promise of 4 percent GDP growth has already been priced into the stock market based on optimism. So, even if he manages to deliver, the best the stock market could probably do is stabilize or notch just slightly higher. And, again, the Fed’s growth projections for the next few years are well below 4 percent, which means if growth doesn’t rise to meet the overpriced market, the market may finally have to shrink to align with growth.

In addition to continued low inflation, we believe there are several other factors that will work to help keep long-term interest rates stabilized at or near 3 percent, as we have explained in previous newsletters. One is that a flight to quality will continue among nervous investors moving from the uncertainty of the stock market toward the relative security of bonds. Another is that foreign investors will continue to favor U.S. Treasuries over foreign bonds that have lower returns and carry higher default risks. A third is that Baby Boomers will continue to favor bonds and bond-like instruments over riskier stocks as they make the switch from investment strategies focused on growth to those focused on income.

The bottom line is that the Wall Street bean counters are looking at the situation only mathematically, and that’s what’s driving all the fears about inflation and interest rates. But, it doesn’t even matter if those fears are overblown because the fear itself will continue to drive market volatility! That’s how emotion has created a real impact in the financial markets; even if enough people only say inflation is a big deal, it becomes a big deal!

In the end, the most important thing to keep in mind as Jerome Powell and the Fed attempt to land their experimental airplane amid this turbulence and uncertainty is that we are all passengers on this plane. In other words, buckle up!

  1. Jim Tankersley, “Powell Touts Economy’s Strength in First Speech as Fed Chief,” The New York Times, last modified on April 6, 2018,
  2. Jeff Cox, “Fed Hikes Rates and Raises GDP Forecast Again,” CNBC, last modified on March 21, 2018,
  3. Dion Rabouin, “Interest Rates Won’t Get Much Higher, Analysts Say,” Yahoo Finance, last modified on April 25, 2018,


@financial eNews – May/June 2018 edition Life Insurance Essentials and Innovative Tax Savings Strategies

saving-money@financial eNews – May/June 2018 edition

Life Insurance Essentials and Innovative Tax Savings Strategies

Now that tax season is behind us, we wanted to spend some time looking at the importance of a properly planned life insurance strategy and how this can translate to immediate tax savings.

In a majority of instances, we find that people have an overly simplified understanding of the topic, believing that life insurance only pays a death benefit.

Everyone wants to take advantage of as many tax benefits as they can. In many ways, insurance products have some of the best tax benefits in general. In fact…  

Life Insurance benefits can translate to substantial future income and meaningful benefits for you and your family.

Here are what many of our clients have been able to accomplish through strategically-planned life insurance policies.

Here are what many of our clients have been able to accomplish through strategically-planned life insurance policies:
  • Tax-free money available for college
    (client average: $168K)
  • Annual tax-free money for retirement income
    (client average: $106K)
  • Tax-free liquid money available at age 55
    (client average: $430K)
  • Money available for Long Term Care at age 80
    (client average: $455K)