Writing: The First Step for Successful Innovation

Forget apps, hacks and shortcuts. Writing takes practice, practice, practice

Last week’s post about The Key to Writing Faster provoked a lot of feedback. In fact, Jeffrey Wyant, serial entrepreneur and co-founder of Coast to Coast Fulfillment, Inc. in West Greenwich, Rhode Island submitted a great guest post that I wanted to share with you.

Guest post: JEFFREY WYANT -- Writing is all about putting one’s thinking and imagination down in a form that can be passed on to other people over time. Without writing, we’d still be living in caves. You need the thought first, but the exercise of writing your thoughts down forces you to develop the thought first and then work out the details so others can understand.

As the old saying goes: “Your thoughts are only as good as your ability to express them.” Here are two more corollaries to that rule:

1. If you want to learn something, teach something.
2. If you want to know about a subject, write a book about it. 

Following these corollaries forces you to clarify your thoughts, to fill in the blanks and to communicate what you know in a form that can be absorbed and acted upon by others.

Einstein’s greatest achievements did not occur in physical laboratories, but in laboratories of the mind. Did you know his renowned theory of relatively came from a “thought experiment,” (a what-if scenario) he conducted in his mind?  Then Einstein had to write it down in order to remember it and to enable others to reflect and act upon it.

Many Eureka moments happen when previously-muddled, but nagging, thoughts coalesce into a new idea, a cogent breakthrough. Some of us experience these moments in the shower. Biochemist Kary Mullins got the idea for the polymerase chain reaction (PCR) while driving through a California forest at late at night. As soon as he could, Mullins wrote down what came to him during that late-night drive so he could test and refine his theory.

Mullins’ “ideation” process led to a Nobel Prize in Chemistry for what became a crucial part of the method enabling the development of the Covid-19 vaccines and many other DNA/RNA-based medical treatments. But none of that would have happened if Mullins didn’t take the time to write down his initial thoughts.

Writer Gabriel García Márquez was struggling for years to convey what he regarded as powerful psychological and philosophical truths in a nascent novel. As with Mullins, inspiration took place in the car for Marquez while he was driving his family to a vacation destination. During the long drive, Marquez finally figured out in his mind how to portray the fictional town of Macondo and the multi-generational lives of the Buendía family. He immediately cancelled the vacation, returned home, and wrote “One Hundred Years of Solitude,” which has sold over 50 million copies in 46 languages. Márquez won the Nobel Prize in literature 1982 But that never would have happened if he hadn’t freed up his mind on a long drive and immediately written down his early thoughts!

Writing as a tool for innovation

I’m not worried about winning Nobel Prizes, but I can’t tell you how empowering it is to get all the random thoughts in my brain, written down and loosely organized and codified. Somehow writing things down make them real. I have taken some writing classes to improve the process, but the big lesson I keep getting is JUST KEEP WRITING…Write…anything. The eye-hand-mind coordination itself helps develop more neural pathways, which become stronger, faster and more resilient over time. Over time, you learn to string the disparate “monkey-mind” thoughts together into a compelling story.

I spend a lot of time in entrepreneurial circles. It’s often said that that business plans are simply dreams put forth for others to read and buy into. One of Elon Musk’s dreams is to colonize Mars. His company, SpaceX, is the path to that dream. But to go on that path Musk had to learn to read Russian books and papers on rockets. Then he had to articulate in writing how his dream could become a reality. 

We all have dreams and great ideas. But the only way to make those dreams and ideas actionable for others is to capture them in writing and then describe for others to take to make them a reality.

Conclusion

I am a firm believer in practice, practice, practice — which is why I am writing this to you. It’s good practice for me, but I hope it contains some nuggets that can add a bright spot to your day.

 
What’s your take? Jeff and I’d like to hear from you.

#practicemanagement, #betterwriting, #ElonMusk, #SpaceX, #innovation

The Key to Writing Faster

My college track coach was not the nicest guy in the world, but he had a unique ability to distill complex concepts into the simplest terms. On our first day of practice, he gathered all the nervous freshmen together and barked: “Gentlemen: The key to running faster is to practice running faster. Hopefully it won’t take you four F’n years to figure that out.”

The rest of Coach’s speech had too many profanities to recite in this forum, but his bluntness and world-class motivational skills got him into the Track & Field Hall of Fame. So, we sprinted down the longest, steepest cow pastures we could find near campus. We did dozens of 100 meters sprints—AFTER “warming up” with 10 mile runs in the heat. We allowed Coach to chase us in his pickup truck (at 10-12 mph) as we sprinted up abandoned fire trails—with no shoulder to turn out on if you got tired.

The idea was to get our legs (and minds) used to turning over faster than they ever had before. That, or get run over. We thought Coach was out of his mind, but as our times began dropping and the wins piles up – 150 straight meets at one point – his approach didn’t seem so insane.

Busting through summer doldrums

As we head full steam into the summer doldrums, many of you are struggling to get your blog posts, articles, presentations, podcasts, videos and eBooks to the finish line. It’s natural to hit the mental wall during the Dog Days of summer. A week doesn’t go without someone asking me for a secret formula or quick “hack” to help them bust through writer’s block or get off the procrastination treadmill.

As far as I know, there’s no secret. You just have to practice writing faster.

Whether you use a PC, tablet, phone or legal pad to compose your thoughts, most of you can write plenty fast—and cogently. You got through years of schooling and advanced certifications. Didn’t you? You just tend to get hung up on perfection. Blogger Hannah Heath explains why you should let your first draft suck and Vaibhav Vardhan explains why your first draft is supposed to suck.

Our advice: Just listen to your inner voice. Get your thoughts on paper and then revise, revise, revise. To paraphrase Voltaire: “Don’t let perfection be the enemy of good.”

Here are some tips that have helped many of our clients:

1. Frame it. We’ve never been big on formal outlines since they conjure bad memories of school term papers. But you still need some kind of framework for the wisdom you’re planning to share with your audience:
-- Start with a 1-2 sentence intro about why you’re taking on this topic today.
-- Then come up with 3-4 bullets about what the reader will learn.
-- Conclude with one big thing the reader will learn after reading what you have to say.

2. Time It. Set the timer on your phone for 30 minutes. Don’t answer any calls or emails and just write away. At the 30-minute mark, stop typing and see what you’ve got. Don’t worry about grammatical errors or typos. Just ask yourself, does it flow? Does it make a point? Does it sound like me? If not, give yourself 5 more minutes max.

3. Sell it. Now can you write a provocative headline and subhead around what you’ve got? Why should a busy reader take time out of their day to stop what they’re doing and read your words? What can you share that they haven’t already heard a dozen times before?

4. Summarize It. Summarize what you’re trying to tell your readers/clients/followers in 3-4 bullet points. Those are the “Key Takeaways” that go at the top of your piece to make it easier to scan on a phone, tablet or computer screen.

5. Step away from it. Take a break from your writing for at least an hour. Chances are, the words you thought were so brilliant before your break suddenly stink like a garbage dump I August upon your return. Don’t despair, that’s part of the process. You can give up, or you can dust yourself off and make it better.

6. Read it back to yourself aloud. Better yet, dictate it into your smartphone voice recorder and play it back. You may not like what you sound like, but this technique will prevent from straying too far from your point and from falling into the run-on-sentence rabbit hole.

7. Revise it. E.B. White said, “writing is hard work and bad for the health.” Perhaps it is, but it’s an essential part of communicating with your clients, prospects, employees and stakeholders. Set a deadline. Go with your best effort, and then revise, revise and revise even after it’s been published. That’s one thing that’s great about publishing in today’s electronic age. It’s never been easier to fix things and make them better in v2.0 (or v3.0).

Conclusion

Writing is like a muscle—the more you exercise this skill, the stronger, leaner, and more efficient it will be.  To become a faster writer, you simply have to practice writing faster. But it’s less painful than getting run over by a pickup truck.

Like it or not, you need to be a writer. You might even enjoy the process of seeing your writing times and wordsmithing stamina set new personal bests.

What’s your take? I’d like to hear from you.

 

#practicemanagement, #writing

Global Minimum Tax a Big Step in the Right Direction

But the devil is in the details. If your client or company is impacted by new global tax rules, focus on your tax base not your tax rate

By Cecil Nazareth, guest columnist

 

 

Treasury Secretary Janet Yellen announced last week that 130 of the 139 countries in the Organization for Economic Cooperation and Development (OECD) agreed to a conceptual framework to overhaul the global tax system. Those countries represent about 90% of the global GDP.

 

By far the most talked about provision is the proposed minimum income tax rate of at least 15% on multinational corporations, regardless of where they operate. The OECD estimates that governments lose between $100 billion and $240 billion in revenue to tax avoidance each year. The new plan, likely to be finalized this fall, has the potential to raise $150 billion in extra tax revenue annually, according to OECD.

In a rare display of unilateral support, Russia, China and India joined the U.S. and other G20 countries in supporting the global minimum corporate tax. That’s a huge step forward since China and India previously had concerns about the proposed overhaul. In fact, of the nine nations that refused to sign the tentative framework, only Ireland is a significant player in the global tax (avoidance) arena since it is the European headquarters for most of the large U.S. tech companies. The others are Barbados, Estonia, Hungary, Kenya, Nigeria, Sri Lanka, St. Vincent, Peru and the Grenadines.

Rationale behind the overhaul

As countries seek to attract more foreign investment, Yellen among others have long argued that they drive their tax rates lower as they compete to create the most favorable environment for businesses, which in turn drives tax revenues down for everyone—hence to so-called race to the bottom. 

Steven Plotnick, an international taxation expert of counsel to McLaughlin & Stern, told me the other day that “the minimum global by-country corporate tax rate is designed to limit the use of tax havens to shield profit of multinational companies, while potentially giving smaller countries more tax revenue from the largest corporations.” By creating a more level playing field, Plotnick said the minimum global tax rate, which would now be the least amount applied to companies’ overseas profits, would eliminate racing to the bottom in terms of corporate taxes.”

As detailed in my forthcoming book, Global Accounting: 2021 & Beyond, corporations have long used a myriad of tactics to reduce their tax liability, often by shifting profits and revenues to low-tax countries such as Bermuda (7%), the Cayman Islands (0%) or Ireland (12.5%), regardless of which country or jurisdiction a sale is made. Multinationals are highly trained profit-shifters. Amazon, Google, Nike, Fedex and other U.S.-based multinationals generate billions of dollars in profit and pay little or nothing in corporate tax. That also deprives the U.S. of tax revenue it should have received in exchange for providing good infrastructure, law enforcement and military protection for companies doing business here.

For years, the OECD has pushed to eliminate corporate strategies that it believes “exploits gaps and mismatches in tax rules to avoid paying tax." The global minimum tax would apply to companies' foreign earnings, meaning that countries could still establish their own corporate tax rate at home. 

But it’s not that simple.

It’s very easy for companies to move intangibles across borders and pay tax on it at the lowest possible rate. The U.S. isn’t the only country that’s been trying to curtail this process, but it hasn’t been easy.

For instance, France came up with a digital tax a few years ago in which they taxed all the big U.S. tech companies (Amazon, Google, Facebook) claiming those behemoths were doing business in their countries but not providing those countries with any tax revenue. However, after the European digital tax was passed, the U.S. retaliated by imposing tariffs on French wines and other popular goods that were being exported to the U.S. market, making those goods significantly more expensive to U.S. consumers, restaurants, and liquor distributors than they used to be.

So who wins? Nobody! Hence the proverbial race to the bottom.

Adapting tax policy to the modern world

I believe 15% is a reasonable corporate tax for multinationals to pay. When international tax laws were written a century ago, they were based on what’s called a “physical presence test.” In other words, wherever a company had a permanent physical establishment, they would have to pay tax to that jurisdiction.

But physical presence has no meaning in today’s digital world. For example, Amazon is selling product in France, Germany, and other European nations, but it doesn’t have a physical office or manufacturing facilities in those countries. Amazon, at a minimum, has major warehousing and distribution structures in France. It makes a lot of money selling to consumers in those countries, so it should pay a base level of tax to conduct business there. I’ve found that it’s all about moving from a physical presence test to a “revenue-earned” model. The logic being, if you earn money in a particular country, that country should get a fair share of the global minimum tax you pay.

Advantages of the global minimum tax

1. It should eliminate significant profit-shifting to low-tax countries. According to Plotnick, who is also an adjunct professor of partnership taxation at New York Law School, with each country having at least a 15% corporate tax rate, most companies would not feel as incentivized to move their intellectual property abroad or otherwise shift profits from one jurisdiction to another. “Of course, 15% is less than the current U.S. corporate tax rate of 21%, so there will still be some incentive to shift profits,” noted Plotnick. But overall, assuming enhanced tax revenues are a positive development, all countries should benefit, he added. 

2. It eliminates trade wars. With every company paying a significant effective corporate tax rate on income regardless of where that income is earned, it would eliminate silly disputes in which you have a digital tax (i.e., France) being imposed by one country and retaliatory tariffs (i.e., United States) on the other. “Unfortunately, as the ’income base’ upon which each company imposes this 15% minimum tax has not been explicitly defined, it is unclear that manipulations cannot still continue to occur,” Plotnick cautioned.

3. It makes it easier for multinationals to plan their tax burden so they can allocate profits and taxes accordingly.

Which multinationals will be impacted?

Roughly four in five Fortune 500 companies (80%) are based in the United States. If we shift to a revenue model instead of the traditional physical presence test, then a U.S. multinational like Apple Computer, currently paying 12.5% income tax to Ireland would have to pay an annual additional 2.5% minimum tax to the United States. The United States would still be entitled to another 6% tax on dividends when a dividend is paid from Ireland to the United States. As a result, there would still be some tax incentive to maintaining a presence in Ireland. However, Ireland may not like that arrangement.

According to Plotnick, if Ireland decides to bump its corporate tax rate up to 15%, then a company like Apple would presumably have no tax incentive to be in Ireland as opposed to any other 15%-taxing jurisdiction. Thus, the overseas countries Apple then chooses to operate in going forward will be driven by non-tax business factors (e.g., qualified work force, manufacturing capabilities, etc.). But, Plotnick said, to the extent that Apple continues to operate overseas and does not bring jobs and operations back to the United States, the U.S. could end up receiving less in tax revenues as creditable taxes paid by Apple (for example) would now be increasing to 15% on its overseas income.

“Of course, countries do not always define income in the same manner (see Challenges, below),” noted Plotnick. For example, the United States allows for “bonus depreciation” and certain income to be tax-exempt, while other countries do not. So, the exact “interplay of this 15% minimum tax” remains to be seen, Plotnick added.

Challenges

The global minimum tax has challenges, of course. What should a company’s taxes in each country be based on? Will it be on net profits, allocated profits, sales, advertising, or some other metric? As Plotnick observed, the United States presumably believes its 21% tax rate exceeds the 15% global minimum. The U.S. may believe it does not need to change its definition of income that’s subject to tax or how that income is sourced (U.S. or foreign) to comply with the proposed 15% global minimum tax--perhaps apart from getting rid of the artificial deduction for Foreign Derived Intangible Income (FDII).

From where I sit, the global minimum tax makes sense at the 30,000-foot level, but there’s a lot of finetuning to do. As always, the devil is in the details.

Again, the tax base (not the tax rate) is what will be the most challenging aspect of the global minimum tax. That’s because it’s very unclear what you will base the 15% tax on. If it’s based on revenues, then you’re essentially talking about a sales tax. And nobody likes the sound of that.

Also, we still need Congressional approval for the global minimum tax. It all comes down to members resolving two critical questions:

1. What are we giving up by moving our tax base outside our borders?
2. What are we getting in return?

If we believe that our 21% corporate tax rate satisfies the 15% minimum, “I think we might just be done,” suggested Plotnick. “If we want to impose a new top-up regime to add to Subpart F and GILTI, to make sure income from certain jurisdictions are subject to a 15% tax, then that would require legislation, but I am not sure that part is required necessarily,” Plotnick added.

In either case, I’m confident the global minimum tax is not likely to come to fruition until 2023. Multinationals are going to benefit greatly by this type of simplified, across-the-board tax, other than perhaps having to pay more in tax currently. As with any new legislation there will be winners and losers. Countries that were not able to collect tax on multinationals in the past may now be able to collect some money and improve their tax base. But Ireland, Cayman Islands and other low-tax havens could see the tax coffers shrinking at a time when they are still digging themselves out of the COVID-induced recession.

Conclusion

This fall, there should be a more formal sign off on the global minimum tax by 130-plus countries that support it. Obviously, there will need to be some fine-tuning, but moving to a revenue-based model from the century-old physical presence test is much more valid in this inter-connected digital age.

Taxing multinationals at 15 percent would still leave them facing a lower rate than the average American pays in state and federal income tax. But it’s a step in the right direction and halts the suicidal tax race to the bottom.

 

Cecil Nazareth is a partner with Nazareth CPAs–Global Accountants, a CPA firm with offices in New York, New jersey and Connecticut. The firm specializes in international tax and accounting, particularly for SME companies, subsidiaries of foreign parents and high-net-worth families in India and the U.S. Nazareth is a member of the AICPA’s Global Issues Task Force and author of the books, International Tax & Compliance Handbook and Global Accounting: 2021 & Beyond.

 

#Globaltax, #CecilNazareth, #StevenPlotnick

Survey: Wealth Advisors Most Optimistic; CPAs the Least

As we prepare to release our 5th annual CPA/Wealth Advisor Confidence Survey™  to the media and general public, this much is clear. Financial advisors of all stripes have never been busier. But tons of billable hours and ample referrals don’t necessarily translate into satisfaction.

First the good news: Four in five survey respondents (81%) told us they expect their firms to have positive revenue grow in 2021. That’s up from 75 percent who felt this buoyant at this time a year ago. Further, nearly two in five respondents (37%) expect to see double-digit revenue growth in 2021 (i.e. 10% or greater)--up from just one in four firms (28%) before the onset of the pandemic.

But when you start looking at the types of practices each of the 300-plus respondents run, the differences in growth expectations are striking. For instance, nearly all (98%) CFP/Wealth advisors survey expect to see topline revenue growth in 2021, compared to just 75 percent of CPAs and 71 percent of Estate Attorneys and Planned Giving Officers.

Further, Wealth Advisors were far more likely than other types of advisors to anticipate double-digit revenue growth over the next 12 months.

Our data indicates three in five Wealth Advisors (60%) expect to grow by 10-percent or more in 2021, compared to two in five (40%) Estate Attorneys/Planned Giving officers and less than one in four (23%) CPAs.

Expecting Double-Digit Revenue Growth in 2021

Wealth Managers ***************************************************60% Estate Planners/Giving  ************************40% CPAs ***********************23%

CPA Trendlines, HB Publishing & Marketing Company, LLC; Investments & Wealth Institute, and The Financial Awareness Foundation, 2021. All rights reserved

“Wealth Managers, by their very nature, tend to be more optimistic than attorneys and CPAs,” observed Randy Hubschmidt, Partner, Fortis Family Wealth (Valley Forge, PA). “Attorneys are largely trained how to keep others (counterparties to contracts) from doing things. Similarly, CPAs tend to be backwards looking – they report history whether that is financial statement history or tax reporting history.” By contrast, Hubschmidt said wealth managers tend to be trained in finance, which is a forward-looking discipline and “less worried about the past.”

To a certain extent, CPA Karen Koch, Senior Director, Source Advisors (Louisville, KY) agreed. “Whether a CPA, wealth advisor, or attorney, we all struggle with how to grow the business even though our clients continually ask for more services.  We are uncertain how to incorporate client needs to a revenue stream.” According to Koch, the future growth of accounting firms is likely going to include strategic relationships with vendors that can offer expertise not typically found within a professional services firm. “We need to assure our clients we are the trusted advisor that knows how to deliver fully defensible services with a team approach,” Koch added. 

While wealth advisors have been the most confident advisors throughout the five-year history of our survey, estate planners showed the largest uptick in optimism over the past year. Two in five estate planners/giving officers (40%) expect to grow their revenue by double-digits in 2021 To put that into perspective, less than three in 10 estate planners (29%) expected double-digit growth at this time a year ago.

Wakeup Call

Estate Planner Randy Fox, Founder, Two Hawks Consulting (Skokie, IL) told me recently that potential tax upheaval and likely lowering of the estate tax exemption is driving more clients to planners’ doors. Fox also said COVID-19 woke up a lot of people to the fragility of life. “When we see 40-year-old friends and 30-year-old coworkers dying in the hospital, there’s a heightened sense of one’s own mortality,” related Fox. “Everyone knows someone who died unexpectedly or was in crisis mode during the darkest days of the pandemic. It’s especially sad to see young and middle-aged adults gravely ill in the hospital without having health care powers of attorney identified. Talk about a huge wakeup call.”

Estate planner Hyman Darling, Partner, Bacon Wilson, PC (Springfield, MA) noted that more people than ever are aging in place and are concerned about their future financial situations. He also said parents are taking the initiative to plan for long term care, estate taxes and addressing the issue of possibly “outliving” their savings. “Financial planning companies are adding staff and developing new products to assist with these issues, thus more planners will be marketing these strategies to the clients.”

Kyle Walters, CIMA has the unique perspective of a wealth advisor who has merge with several regional accounting firms to form Dallas-based L&H CPAs. According to Walters, most CPAs are analytical numbers people who have been drawn to their profession because they like the sense of balance, order and control it demands (i.e., Debits = Credits).

However, with that mindset, Walters said it’s harder for CPAs than others to get inside their heads and modify their habits or behaviors. “There’s no standard, reg or best practice to follow when it comes to navigating the ‘gray areas’ in a client’s financial life. Instead of one or two tax deadlines per year, it’s an ongoing process in which they clients need their CPA all year round. Their expert advice—not their ability to fill out rows and columns for the government—is what clients increasingly value,” added Walters.

That’s something that wealth advisors and estate planners long ago figured out.

*** Ping me any time if you’d like a copy of the 2021 survey findings or would like us to present the findings to your firm or professional organization.

Conclusion

Our 2021 survey is a joint initiative of CPA Trendlines, Elite Resource Team, The Financial Awareness Foundation, the Investments & Wealth Institute and HB Publishing & Marketing Company. A total of 309 financial advisors from throughout North America took part in a 25-question online survey during the first quarter of 2021. Respondents received no financial or in-kind incentives to complete the survey other than a promise to receive a pre-publication copy of the results. Sincere thanks to my co-authors Rick Telberg (CPA Trendlines) and Valentino Sabuco (The Financial Awareness Foundation).

What’s your take? I’d like to hear from you.

 #practicemanagement, #wealthmanagement, #investorconfidence, #economy, #cpafuture

Can Baby Bonds Put Disadvantaged Kids on the Path to Prosperity?

Thanks to legislation approved on Wednesday, every year over 15,000 Connecticut infants born into low-income families will receive $3,200 government-funded savings accounts. The accounts are designed to provide qualifying children with an estimated $10,600 when they turn 18. The returns are based on a projected average rate of return on investment over 18 years of 6.9 percent, the same assumed rate of return for public pension plans in the Nutmeg State. 

Under the bill, awaiting signature from Governor Lamont, $50 million a year will be directed toward providing accounts of $3,200 for about 15,600 children whose mothers are receiving insurance through HUSKY A, the state’s Medicaid program. 

Connecticut is the first state in the nation to pass such a program.

While Connecticut has the highest annual income per capita in the country, it also has one of the highest rates of income inequality in the nation. The U.S. Census Bureau ranked Connecticut in 2018 as having the third-highest level of income inequality in the country, behind New York and Washington D.C, according to a report from Connecticut Voices for Children.  

Once the qualifying children reach adulthood, they have until age 30 to decide what to do with the money.

The state gives recipient four options:

1. Pay for higher education.
2. Purchase a house within the state.
3. Start a business within the state
4. Put the money into a retirement account. 

According to the legislation, beneficiaries must be CT state residents and must complete a basic financial literacy course (curriculum and passing grade still TBD) in order to access to the funds between the ages of 18 and 30. Allowable expenses include education, purchasing a home in the state, investing in a Connecticut-based business or “investing in financial assets or personal capital that provides long-term wage or wealth gains.”

There aren’t many other stipulations on the young adult beneficiaries.

It appears a recipient could use the money to flip houses rather than stay in the neighborhood and contribute to the community.  Yes, they could start a risky venture without having mentorship, a business plan or good banking relationships. They could trust unscrupulous partners, financial advisors or jealous spouses with the money. They could also invest in crypto or other “alternative assets” on the premise of generating outsize returns for their retirement.

Some will argue that doling out the money without sufficient oversight is too much for young adults to handle—young adults who haven’t received much in the way of financial literacy training from their schools or families. But you could also argue that they may earn valuable life lessons from financial mistakes made with the Baby Bond money—the same as trust fund kids do.

Then of course there’s the question of how to pay for the Baby Bond program.

CT State Representative Geoff Luxenberg—a leading proponent of the program-- said a likely scenario is a “slightly higher tax on the wealthiest people.” No surprise there since CT is already one of the highest-taxed states in the nation. Shawn Woodson, Connecticut State Treasurer, said the state would also issue debt, since interest rates are at “historic lows”—but what if rates keep rising, as the Fed has hinted, down the road?

Not only could the state’s highest earning residents resent the program, but so might middle class and working-class families—who could narrowly miss out on the program while potentially strapped with student loans and other debt. Also, what happens if a family’s fortunes change for the better and a Baby Bond recipient is no longer in poverty at 18? On the flip side, suppose a family not born into poverty at the child’s birth falls into poverty a few years later and stays there?

“One of the most effective ways to narrow the racial wealth gap and break the cycle of poverty is for the State to establish saving accounts that directly invest in children born into poverty,” said Wooden in a press release. “By taking bold action now, we can change the life trajectories of thousands of Connecticut residents while also enhancing the economic trajectory of our State.”

Conclusion

We salute the bold thinking by the Nutmeg State to close the wealth gap. But why not take it a step further? Phase in the program gradually so you can make midcourse correction and set up smaller bonds for children who are born just above the poverty line. That way a child’s future is not so heavily dependent on their family’s financial footing (or healthcare choices) exactly on the arbitrary day they are born.

The Full Version of today’s post has more.

What’s your take? I’d like to hear from you.

#wealthgap, #financialliteracy, #babybonds, #inequality

Memorial Day Estate Planning Thoughts

Hard to believe it’s almost Memorial Day weekend. But it is. For the first time in over a year, extended families may finally get together (in person) to kick off the official start of summer. Whether masked or unmasked, the focus will be on grilling, boating, beaching, golfing and maybe a parade. But the term “Memorial” will be especially poignant this year. Traditionally, this is the weekend we honor all U.S. veterans who have sacrificed their lives for our country. But we’ll also be remembering the half million Americans who lost their lives during the pandemic.

As COVID forced us to contemplate our own demise like never before, estate planners have been exceptionally busy. Three of our clients have been interviewed in the national media recently about trends they’re seeing in estate planning, planned giving and legacy planning. Here are some highlights about what they shared:

What are the most common mistakes people make when it comes to estate planning? 

Randy Fox, CFP®, AEP (Two Hawks Consulting, Skokie, IL) points to five common errors he sees in his practice:

1.      Not getting it all done.

2.      Not reviewing it regularly for life changes.

3.      Not funding trusts and not changing owners/beneficiaries properly.

4.      Not telling anyone where their documents are.

5.      Not thinking through who should be executors, trustees, or attorneys in fact for Powers of Attorney (POA)s.

Mark Rioboli, CFP®, PFS, Principal and Wealth Manager, Modera Wealth (Wayne, PA) agreed with Fox that way too many successful people do not have current wills, powers of attorney, or healthcare powers of attorney. “I recommend that anyone 18 or older gets these documents prepared.” Rioboli also said since estate laws have changed significantly over the years, documents need to be updated “especially if you've changed state residency.”

Dr. Guy Baker, CFP, Ph.D founder of Wealth Teams Alliance (Irvine, CA) agreed that many otherwise financially literate people fail to keep their estate plans updated and forget to designate proper beneficiaries for their IRAs or life insurance. Baker also observed that many affluent people do not have updated wills and/or trusts “that accurately disposes of their assets in the way they would like to benefit their heirs.” He also said they may have set up a living trust but have not funded it properly. As a result, “they leave out important assets which now have to go through probate.”

Rioboli pointed out two other common estate planning errors:

1. Assuming your will controls all of your assets. “Assets can transfer by title or beneficiary designation independent of your will. You may gift assets in your will that your will doesn't control.”

2. Not following through. Rioboli said you can hire a top estate attorney to draft the best will that money can buy, but “it's up to you to re-title your assets, transfer them to a trust and follow whatever the attorney recommends.” Without the proper follow through, the will can be useless,” Rioboli added.

Why is it more complicated to get your affairs in order in the Internet age? 

Fox said since we all have a "digital presence” today, all of those categories need attention just like other assets and accounts do. According to Rioboli, password management is a challenge for most of us, and he highly recommends using a password manager. “I've used a password manager for many years, and I have over 450 passwords securely saved in it,” observed Rioboli. “I recommend using a password manager that allows you to designate an emergency contact who can access all of your passwords and notes after a period of inactivity that you specify.”

What wisdom can you share about one of the problems organizing your passwords?

Dr. Baker recommends creating a list of algorithms that can be readily found in your phone. “Make them complex --numbers, letters and symbols. Keep your public emails similar because no one is going to try and hack those.” For your financial and personal passwords, Baker said be sure they are complicated and hard to discern from information that people can find out about you. For instance, he said your street address without letters and symbols would be easy to spot.

Bottom line: Fox said don’t be cheap about your estate planning or related personal security. “Pay for and use a good password manager-account i.e., LastPass.”

What’s your take? I’d like to hear from you.

Conclusion

Look how far we’ve come since Memorial Day 2020? As with social distancing and getting vaccinated, now is not the time to let your guard down when it comes to updating your estate plan and maintaining personal security.

Enjoy the weekend. Celebrate our progress. Let’s remember those who fought so hard for our country or against the ravages of the pandemic. Get some R&R and hit it hard on June 1!

#estateplanning, #powersofattorney, #POA, #LassPass. #MemorialDay

John Legend: Winning Doesn’t Have to Be a Zero-Sum Game

Grammy Award-winning singer-songwriter, John Legend, delivered a stirring commencement address at my son’s college graduation last weekend. With his signature tenor-baritone voice wafting over Wallace-Wade stadium, he shook the sleepy students out of their slumber with expletive-filled acronyms DDMF and GTHC familiar to anyone who’s watched a Duke-Carolina basketball game. Clearly, it wasn’t going to be another “life lessons” speech from a famous rich guy struggling to connect with restless undergrads waiting to collect their diplomas.

Legend knows how to read the room.

“The fact that you’re here today, graduates of one of the world’s greatest universities means that you’ve had to approach life with a certain competitiveness,” explained Legend, who related his own experience academically competing to graduate second in his high school class, attending the University of Pennsylvania and securing a job in management consulting (Boston Consulting Group).

“That path required this constant drive to push harder, reach higher, do better —to be perfect, or close to it. I’m sure it sounds familiar,” added Legend, who regrets he was “too cool to care” during his own college graduation ceremony.

Competition post-COVID

Legend reminded the students that over the past year, they were forced to pause and suddenly see themselves, not in competition with one another, but in community with each other. Imagine that.

“We all had to slow down. Social distance. Cover our faces. Stop filling our days with maximum productivity, and simply keep each other safe. Keep each other alive. Care for one another,” related Legend.

While the competitive drive that gets students into (and through) highly selective universities can get in the way, added Legend, a multi-talented EGOT winner (Emmy, Grammy, Oscar, Tony) and philanthropist.

“If you let that competitiveness take over your thinking, you start seeing life as a zero-sum game—i.e. for me to win, someone else has to lose.”

Legend reminded us that America’s history has long been marred by dangerous zero-sum thinking: Those in power suppressing people with no voice, no power, and no opportunity including workers, women, indigenous people, black people, immigrants, the LGBTQ community. But in reality, Legend argued that when more people made more money, rich business owners didn’t suffer. They got more customers! Prosperity increased for everyone. 

Karen J. Koch, CPA, MT, (Bedford Cost Segregation) told me she agreed with Legend’s view on zero-sum thinking: “In the world of business and entrepreneurship, it is about encircling ourselves with a team of not only bright people, but people who have a heart and passion for the success of others. Creating an environment where we all win, is when we can live in a world without fear, a community with justice for all.”

Unfortunately, many professions pressure young workers into thinking the only way to get ahead is to outwork their peers, out-network them and bill more hours. But if this last year of remote work has taught us anything, it’s that “work life and home life can be successfully intertwined,” observed Randy Crabtree, CPA, (TriMerit Specialty Tax Professionals). “By getting a glimpse into our co-workers’ family lives, we have gotten to know them in a way that we couldn't previously,” Crabtree told me the other day. “The more we get to know about the lives and passions of the people we work with, the more motivated and productive we all become."

Valentino Sabuco, Executive Director (The Financial Awareness Foundation) told me we have been “mis-led and mis-educated” all these years that it must be a win–lose world. “I win you lose or I don’t succeed. It really doesn’t have to be that way. Wouldn’t it be great if CEO’s and ‘C’ class executives would communicate this message to their employees?” asked Sabuco, whose organization has championed financial awareness and financial literacy for all for over 40 years.

According to Sabuco, the 26 wealthiest people on the planet own as much as the 3.5 billion poorest! And powerful people are spending a lot to keep it that way. “Think what this might look like if we can help the nearly billions of people around the world living on less than $10 per day to reach even lower middle-class status. “If we could double the buying power of the middle class, global equity markets would skyrocket,” predicted Sabuco. “Everyone would win big, including the ultra-wealthy. The people win by improving lifestyle and quality of life, business people win by making more money equitably, and the world can win by having a safer cleaner planet!”

Conclusion

Sixty years ago, John F. Kennedy said: “A rising tide lifts all boats.” Or as Legend observed, “We all do better when we all do better.” As Legend reminded the new graduates, a commencement marks the beginning, not the end, of your next phase in life. You can’t do any better than that.

#JohnLegend, #DukeCommencement, #equality, #ZeroSum

Stop Clearing Your Throat When You Write

Don’t worry if your first draft sucks

You’d think after all the texting, tweeting and TikTok-ing we do in our limited attention-span society, we’d be better at getting straight to the point. But we don’t.

We waffle, we hedge, we tiptoe around the edges in our conversations and Zoom calls. It’s even worse in our writing. Sometimes you have to tell your team about budget cutbacks or give bad news to a high-maintenance client or tell the board why their big audacious goal for the year is not all that original--and unlikely to work. Sometimes you have to put yourself out there to try to win the business. Sometimes we just need to tell our spouses we’re running late (again).

So why don’t we just come out and say it?

Because in the back of our minds, we’re afraid of being rejected, mocked, marginalized, ignored or not taken seriously. So, we hem and haw for a few sentences sprinkling in low ROI words such as:

·        Actually

·        Basically

·        Rather

·        Just

·        As a matter of fact

·        At all times

·        Studies show

And like, um, you know, we get too far out in front of our skis. So, at the end of the day, when it’s all said and done, when you’re thinking outside the box and doing a deep dive into the issues, it is what it is. But it’s not. You haven’t said anything yet!

My high school English teacher, Mr. Hallowell, used to scribble in all caps: “STOP CLEARING YOUR THROAT!” when grading our papers. Journalistic throat-clearing is like sharing a cross-country flight with a seatmate who is constantly hacking, sniffling and harrumphing. Pretty annoying, right?

More than once I saw Mr. Hallowell tear up a student’s paper BEFORE he even started reading it. Why? “I could tell by the look in your eyes, it wasn’t your best work,” he’d tell the devastated student (disclosure: sometimes it was me). “So, I’m not going to read it, until it’s ready. Do it again!”

Mr. Hallowell’s message: Just get to the point! State your case and then make corrections if needed. Silicon Valley tech companies do this all the time with new products. Why can’t you? You might get rejected. So, what. At least you know where you stand with the reader and where you need to improve your message or your offering.

Another reason high-striving professionals have trouble getting started is because they’re perfectionists. They’re constantly burnishing their personal brands. They want everything picture perfect before they put it out there. Never a hair (or a comma) out of place. But we’re talking about a short article, blog post or client memo, here. You’re not submitting your work for a Pulitzer Prize.

As Voltaire liked to say: “Don’t let perfect be the enemy of good.” Just get to the point and move on with your day. There will be plenty of time for revising later (see below).

Here are some other techniques our clients have found helpful for eliminating brain fog and throat clearing in their communications:

1. Write quickly. Just let it flow. Don’t worry about grammar, sentence structure and punctuation. Let it rip! Don’t be a writer—be a storyteller—then revise, revise and revise. Blogger Hannah Heath explains why you should let your first draft suck and Vaibhav Vardhan explains why your first draft is supposed to suck

2. Read your work out loud or better yet, dictate it into your smartphone voice recorder and play it back. You may not like what you sound like, but this technique will prevent from straying too far from your point and from falling into the run-on-sentence rabbit hole.

3. Walk away for at least an hour. What looked so brilliant before you took your break suddenly stinks like a garbage dump on a hot summer day when you get back to your desk. Don’t despair, that’s what first drafts are supposed to do anyway

4. Start with the end in mind. Write the conclusion first, then three or four summary bullet points (i.e., Key Takeaways). What do you really want readers to take away from your article or post? Then play around with the headline (or the cover of your book). You have no choice but to be concise and on point.

5. Give it the relevance check. We all have a mental picture of our core audience when we write. We know who our biggest fans (and critics) are. Imagine them looking over your shoulder before you hit the post, send or publish button. What would their reaction be? If it stings, give your piece another tune-up. There’s no charge for parts, just for the labor.

Conclusion

 

E.B. White said, “writing is hard work and bad for the health.” Perhaps it is, but it’s an essential part of communicating with your clients, prospects, employees and stakeholders. Set a deadline. Go with your best effort, and then revise, revise and revise even after it’s been published. That’s one thing that’s great about publishing in today’s electronic age. It’s never been easier to fix things and make them better in v2.0 (or v3.0).

 

What’s your take? I’d like to hear from you.

#writingbestpractices, #effectivecommunication, #, #credibilitymarketing, #thoughtleadership

Want Media Attention? Make the Media’s Job Easier, Not Harder

I was a financial journalist for many years before starting HB Publishing. You know how you feel when telemarketers call you just after you’ve sat down for dinner? Well that’s how I used to feel when a rookie PR person or fledgling entrepreneur would pitch me a completely off base story—typically when I was crashing on deadline.

I know this may come as a shocker, but the financial media does NOT exist to promote your firm or your personal brand. Time-pressed journalists are charged with informing their readers/viewers about the most important news, trends and best practices that impact their readers every day. Do their readers really care if you just opened a branch office, hired a new partner or now offer a new service? Not likely. It might be a big deal for you and your team, but is that news going to make the journalist’s readers more successful, more efficient or better informed? As President Biden would say: “C’mon man!”

But, these are the kinds of questions you (and your agency) should be asking yourself before you pitch. So, how do some advisors keep getting quoted, published and cited by the popular press?

Hint: they’re not buying their way in or taking out big advertising schedules in those media. Instead, they’ve learned to be a “Go-To” guy or gal for busy journalists—a reliable source the journalist can count on time and time again to explain complex topics to their audience in concise soundbites—without dumbing it down or pitching their firm’s services.

That’s actually the easy part.

The hard part is getting on the journalist’s radar in the first place. You can hire an expensive PR firm; you can spend lots of money blasting out press releases on a wire service. But “spray and pray PR” rarely works.

Instead, you and your team have to do some old-fashioned legwork. It doesn’t mean making cold calls (or e-blasts). You simply have to isolate 10-20 media outlets in which you’d most like to appear. Hint: these are the outlets where your clients, prospects and strategic partners spend their time keeping abreast of your industry. Next, familiarize yourself with the specific editors, writers, producers and bloggers who are most often covering the areas that map to your expertise.

Next reach out by phone, email, snail mail and social media with a brief, but carefully targeted “pitch” that shows you are familiar with the writer’s work (i.e. their beat) and why featuring you or your firm in an upcoming article can shed new light on a topic they frequently cover—or should be covering. It doesn’t hurt to cite references to recent stories the journalist has written about a topic on which you’re an expert.

Hint: Use a few of those keywords in the subject line of your pitch email.
Hint2: Don’t give up if your first attempt goes answered. You may need follow up three or four time before getting a response.

Better yet, let the journalist know you have research, presentations or articles that could enhance their coverage of a topic and to consider you a source the next time they cover that subject. While it’s hard to get journalists to have lunch, drinks or golf, if they like your angle, they will be receptive to a Zoom call, or at least an email exchange to discuss further.

Finally, don’t be afraid to pick up the phone and call. More often than not you’ll get a voice mail. That’s fine. Even with many journalists working from home, they check their voicemail regularly because heck, they don’t get many legit voice messages anymore, and when they do, it’s usually important.

For more about getting media attention that matters, see our recent posts:

• Don’t ‘Pitch’ Stories to the Media; Be a Problem Solver
• Getting Quoted in The Journal Is Not Impossible, But……

 

Conclusion

Newsrooms are a lot thinner than they used to be and the news cycle moves faster. While journalists can be cranky at times, they’re still human. They love a good story—and even better—a good story teller. You’re a pro. Why shouldn’t you be on of them?

What’s your take? I’d like to hear from you.

#practicemanagement, #wealthmanagement, #PR, #credibilitymarketing, #thoughtleadership