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Blogger Interview: Hourly Planner's Michele Clark

Michele Clark is a financial planner with Clark Hourly Financial Planning. You can like her on Facebook, follow her on Twitter, or connect with her on LinkedIn. Her blog is an excellent read and why we originally contacted her for an interview. Here is how she answered our usual questions:

Who are the people most supportive of your life goals? How are they helping?

My husband was supportive of me when I told him that I would like to leave a perfectly good job that paid very well so that I could start a business from scratch. My mom, who has owned her own business since I was a kid, gave me great tips about business ownership and instilled in me the gumption to create my own future. I have received encouragement and referrals from a network of financial advisors in the St. Louis area I have known for many years. And I belong to a group of six women from all over the US who each own our own financial planning firm, we meet via conference call once a month to support one another and offer guidance and business counseling to one another. It is an extraordinarily supportive group.

How do you balance living in the moment versus saving for the future?
I started saving for retirement when I got my first job out of college, and have been saving forretirement for twenty years. Saving for the future is so automatic now that I do not think about it. ”Pay yourself first” is a great habit because it becomes ingrained and you do not miss the money – because you never had it to begin with.

I think that your question is an excellent one. There needs to be a balance. If you focus too much on saving for the future, you will not be able to enjoy yourself now, and that isn’t good. However if you spend all of your money now, you will be destitute later, and that would be very bad.

Over time, as our kids have gotten older, we have gained a recognition of what is important to our family and doing activities together seems to be taking on more importance while having stuff has taken on less importance. So we are choosing to spend money on activities and experiences and less on things. An added bonus to this philosophy is that when you use up the allotted funds for activities, you can switch to less expensive (or free) activities ie: a Redbox movie vs. a night at the movie theater or go to a free local concert vs. a concert at an expensive venue. There is more flexibility when activities are your focus for enjoying “the now” over material things. Which allows you to save for future basic needs.

Who is your financial role model?
My grandpa and my dad. Before opening my own financial planning firm, I was a stockbroker; not very many women stockbrokers in this world. I owe that to my grandpa and dad.

My grandpa was a plumber. I grew up in Indianapolis, Indiana, a large company in the area was Eli Lily, a blue chip stock. My grandpa owned Eli Lily stock. He told his kids to buy Eli Lily stock. So they did.

My grandpa understood the importance of investing in stocks for the long term and he passed that knowledge on to my dad, and my dad passed that knowledge on to me. When I was very young my parents gifted a couple of shares of Eli Lily to me. I watched those shared double with stock splits and I learned that 4 shares becomes 8 and 8 become 16 and so on!! Wow. I didn’t even have to do anything and the value of the account was going up over the years. The dividends were reinvesting too, so statements were coming every few months and I was seeing the account grow, this was just magic! I got a hands on lesson in “buy and hold” from a very young age. I also learned about the time value of money – so amazing. When I got old enough to babysit neighbor kids, I would come home with cash in hand and my dad asked if I would like to add money to my Eli Lily account. Of course! So I would give him cash, $25 here and $25 there, and he would write a check and mail it in so I could buy more shares. I couldn’t wait for the next statement to see how many more shares I had. I got married when I was 27. Shortly thereafter my husband’s grandmother passed away and left as a few thousand dollars. We used that money plus my Eli Lily account to buy our first house. That babysitting money sure came in handy!

Though this experience I learned what a stock was, how investing for growth worked, (I also invested in CDs thoughout this period and saw the difference!) I learned that stock prices can go down (what happened to my money!?), I saw that the prices recovered, I saw that the market had cycles of up and down periods, I saw the power of compounding by adding money and reinvesting dividends. The experience formed my attitude about investing. It created in me a patient investor who believes that you are rewarded for taking a disciplined approach to investing which is based upon an investor’s specific portfolio and set of goals vs. a haphazard
approach of constantly reacting to the ever changing stream of news and current events, such an approach is often based in fear and leaves investors feeling unsettled and not sure that they are making the right choices.

When I was growing up my dad had all kinds of sayings about money that I now say to my kids. But I think that as far as “role model” goes, he certainly did an amazing job of showing me about investing, by letting me get my hands on it and having conversations about it for years, so that it was never something mysterious or confusing. And that is a great family legacy passed down from a couple of plumbers!

Where do money and happiness intersect for you?
I think the truth of the matter is, that you need to have a certain minimum amount of money to meet your basic needs so that you are not stressed about money. The goal for each family is to determine what their basic needs are.

So as long as our family’s needs are met and we have some extra money to do some special activities and we are saving for the future at a rate that lets us retire with a similar lifestyle, then we are at the intersection of money and happiness.

A lot of financial planners are hesitant to get on social networks but your Twitter stream is so interactive. How do you avoid getting in ‘trouble’ related to regulations in the financial industry while still being open and helpful?
I look at Twitter as a way to connect with other financial advisors across the country and to connect with other St. Louis business owners. I like to retweet events or news regarding the St. Louis area; it is a way to support my community. The type of financial information that I share, either through retweets or an original post, are generally articles from well known sources such as Money magazine, Kiplingers magazine, US News and World Report, etc. generally thought to be reputable. I like to tweet about topics such as retirement and college planning because these are topics that seem to be on my clients’ mind and the kinds of questions that people ask me when I am out in the community. My goal is to educate my followers, because obviously Twitter isn’t the place to give specific advice. I do not tweet information about any specific stock or investment, I do not think that would be helpful, because no matter how good an investment is there is no way to know if it is good for you unless you have the whole picture, so there is no purpose to tweeting about specific investments.

Based on your experience helping clients, what do you think is an interesting topic related to personal finance that no one seems to be talking about?
I think that healthcare expenses in retirement planning are the topic individuals need to be the most aware of, especially if they plan to retire early. It is the expense category that can derail an “early retirement” dream if you do not plan for it.

Retiree health plans are going by the wayside, so you have to qualify for health insurance individually and pay for it out of pocket until you reach 65, the age at which you qualify for Medicare. It can be very expensive, especially when you are used to your employer paying a portion of your health insurance premium. Additionally, health insurance premiums usually increase at a rate greater than inflation.

Many people do not realize that you pay a premium for Medicare which is deducted from your social security check. Medicare does not cover everything, which is why many people pay for the additional coverage of a Medigap policy.

Don’t forget to factor in dental and vision expenses in retirement.

And of course there is the possibility that you may need Long Term Care if you need assistance with the activities of daily living when you are older, and to help offset the high cost of this type of care, you can purchase Long Term Care insurance. Premiums can be expensive, there are many different types and levels of coverage, but the amount of the premium should be factored into your retirement plan.

You made a leap from a traditional, commission-based brokerage to an hourly, fee-only practice. What made you make this change?
I went from a dual employee at a bank and bank brokerage only able to offer a short list of mutual funds and a couple annuities, then moved to a full commission brokerage firm, then to a bank brokerage firm working on salary plus bonus, then a nationally known full service brokerage firm that was traditionally thought of as one of the discount firms offering a private client experience for a fee of assets under management. Along the way I accumulated a mental list of things I liked and didn’t like about the way each business was run and if I had my own business “I would do it this way”. Well after 18 years of accumulating ideas of how I would do it better… I decided to put my money where my mouth was. I think the fee-only hourly business model is the best model for me and for my clients.

Do you think everyone is capable of learning enough personal finance to do it themselves? At what point should people realize they need help?
I do believe that everyone is capable. I spent three years of my career travelling around Missouri, Illinois, Kansas, and Oklahoma, teaching investors many different classes such as How to Build a Diversified Portfolio, and Understanding Bonds with the goal of teaching investors to be their own financial advisor and teaching them how to use online tools to do so.

I had a toddler at that time, and even though I loved that job with all my heart, it was, at that time, my dream job; I recognized that my adorable toddler needed me at home. So I stopped traveling and took a position in the branch. As I helped clients one-on-one with their portfolios I discovered that some of the clients who came to my workshops learned a lot and applied what they learned and were doing a terrific job of managing their portfolios on their own.

But what I was surprised to learn that more than half of the people that came to many of the workshops were not following through and using the knowledge they had gained or the free online tools (that practically automated the process). So I asked people what kept them from following through. Of the many answers I received they fell into three main categories:

1) Time – just too busy to take care of it
2) No interest – just do not like investing and don’t want to do it
3) Not confident – no matter how many classes and books they read, did not feel confident to go it alone.

So do I think that everyone is capable? Yes, everyone is intellectually capable, it really isn’t that complicated and there are terrific tools to make is easier.

However, the time to get help is when
1) You feel too busy to take care of it or
2) You do not like the topic and do not take care of it
3) You would like some assistance to either check your thinking or take care of it for you.