The Time to Plan Is When It’s Not Needed

I received a call last year from a woman who’d sounded desperate.  “I was just offered an early-retirement package from my company,” she’d said, the words rushed from anxiety, “and I’ve got two weeks to make a decision.  Can you help me?”  I had groaned inwardly, imagining the late nights ahead struggling to collect the necessary data, performing the analysis, and clarifying the results in a way that would enable her both to understand and to take action.  But of course I did what I could to help.

It’s not uncommon for us to put off planning for something until we see the need for it.  That’s human nature.  But it’s also risky.  Have you made a list and stashed away emergency supplies in case of an earthquake?  What about a tornado?  The latter may sound remote but one actually touched down in my backyard in 1998.  The cost and stress of recovering from an unplanned problem is usually much higher than if we had planned for it.  And we typically learn this lesson after it’s too late.  When was the first time you started backing up your computer hard drive: before or after your first disk crash?

A recent survey by Nationwide Financial found that 26 percent of potential investors do not have a financial plan.  Even worse: 38% of those that do not have one have no intention of getting one.  “We live in an era when Americans are more responsible for their own financial security than ever before,” said Michael Spangler, president of Nationwide Funds. “However, for various reasons far too many haven’t taken the time to draft a detailed financial plan to help them achieve their goals over the short, medium and long terms.  An effective plan is much more than opening a savings account or investing in your employer’s 401(k), it’s a map to ensure that you get to your financial destination.”

Without a financial plan, we are left unprepared for life’s big transitions, such as a job loss, marriage, divorce, birth of children, buying a house, inheriting money, death of a loved one, and other countless events that can have such a huge impact on the quality of our lives.  And the emotional upheaval these life transitions cause us makes it extremely difficult to make good financial decisions when we’re in the middle of one.  The time to plan is before the event occurs so that we’ll be much better prepared to effectively manage the transition and its financial impact and not get sidetracked by all the pain and stress.

Probably one of life’s biggest transitions is retirement.  US News reported that in 2009 between 60% and 80% of baby boomers had expected to work past age 65 as a way to overcome the devastation of the Great Recession.  Unfortunately, many failed to consider the employment situation or their health as factors.   As a result, according to a follow-up survey by MetLife, over half of the first wave of baby boomers to hit retirement age had stopped working before they’d planned.  Many still hope for part-time jobs or developing new careers, but have been struggling to find them.

The missing element in their plans was the inclusion of alternative scenarios.  As humans, when we make guesses about the future, we almost inevitably predict more of the same.  Unfortunately that’s not how life works.  When we include different scenarios in our plans, we reduce our vulnerability (both emotionally and financially) to unexpected changes.  And the younger you are, the more likely you are to face a curve ball or two at some point in your future.

To summarize, the time to make a financial plan for your future is now, not when you’re in the middle of dealing with a major life transition such as divorce or job loss.  And a robust plan should include several scenarios to ensure you’re prepared for at least some of the major issues life could throw at you.

Artie Green
Artie Green, CFP, MBA

Artie Green, CFP®, MBA, is a CERTIFIED FINANCIAL PLANNER™ Professional and principal at Cognizant Wealth Advisors.  He can be reached at 650-209-4062 or at artie.green@cognizantwealth.com.

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Why Have a Privacy Policy?

Privacy has been a hot legal issue for years, and the temperature is moving even higher.  Companies with websites and mobile applications are now targets for privacy compliance investigations.  Governmental enforcement actions and class action suits have become ever more common.  One common trigger is a data privacy or security breach.  Surprisingly, in 2013, another common trigger is the lack of a privacy policy.  Yes, there are some companies that create online services or Internet applications collecting personal information from consumers in 2013 and yet have no privacy policies.

California’s Online Privacy Protection Act (OPPA) of 2003 requires commercial websites or online services that obtain personally identifiable information about California consumers to post their privacy policies.  “Personally identifiable information” includes a first and last name, address, email address, telephone number, social security number, or any other identifier that permits physical or online contacting of a specific individual.  Accordingly, the definition of “personally identifiable information” is quite broad, and beyond the scope of the security breach notification laws in California and other states.  Violations of the law can occur even if the website operator or online service provider did not knowingly or willfully fail to comply.

OPPA not only says that operators of online services must have privacy policies, it also says that these privacy policies must cover certain topics.  A privacy policy must identify the categories of information collected by the operator, the categories of others with whom the operator may share the information, any means for the consumer to review and request changes to the information, the process to notify consumers of changes to the policy, and the effective date of the policy.

None of these requirements is new.   They are standard fare for privacy policies.  For instance, Federal Trade Commission has long published information about these topics in its guide to fair information practice principles.

In sum, online services that collect personally identifiable information from California consumers and have no privacy policy are violating OPPA and are risking lawsuits and governmental enforcement actions.  Even if a service has a privacy policy, if it is inaccurate, the service may be violating laws against unfair and deceptive trade practices.  Areas of greater risk include companies that collect certain kinds of information, such as geolocation information, without notifying the user first.  Also, companies that share information with third parties, but do not warn the user, are at risk.  The bottom line is that online services should review their privacy practices, write a privacy policy if they don’t already have one, update their privacy policies to match changes in law and their circumstances, and make sure their policies match their information practices.

StevenSWu3

Attorney Stephen Wu is a partner in the law firm of Cooke Kobrick & Wu LLP in
downtown Los Altos.  He can be reached at (650) 917-8045 or at swu@ckwlaw.com.

 

 

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Ten Professional Image Tips Every Working Woman Should Know

How is your image in the workplace? Do you feel heard and seen for your professional contributions? Is your visibility at its peak? We’ve all heard about people who got passed up for promotions when it seemed they had all the necessary qualifications. Don’t let this be you! Stand out, get noticed, and get acknowledged when you dress smart for the workplace.  Here are my top ten tips for professional presence.

  1. Choose quality fabrics. Cashmere, tropical weight wool, silk, and Pima cotton will hold up through a hectic business day.
  2. Look for structured garments. Blazers rather than cardigans. Pencil skirts rather than flowing skirts.
  3. Find a good tailor. Perfect fit is essential for looking professional. Clothes should skim the body.
  4. Remember the jacket. Whether it’s over a sheath dress or pants and a top, a jacket always makes you look more authoritative.
  5. Check your colors. Dark colors are more professional than lighter colors. Like bright colors? Use them as your accent colors, not for the whole outfit.
  6. Solid colors are more professional than prints. If you like prints, stick to small, traditional ones—checks, small florals, paisley, plaid.
  7. Moderate heeled pumps. Flip flops are for the beach and strappy sandals for the dance floor. But a little bit of color can be fun.
  8. Show your personality with your jewelry.  Make it classic. And avoid pieces that jingle and jangle like multiple bangle bracelets.
  9. Moderate makeup. But keep the bright red lipstick for night. Women who wear moderate makeup are perceived to have higher interpersonal skills.
  10. Well-cared for hair. Wash and wear styles can be easy. But make sure you get regular trims so it doesn’t look unkempt.
Pat Gray

Pat Gray

Pat Gray, Ph.D., AICI FLC, Pat Gray in Color Image Consulting. Certified Image Consultant
Certified Universal Style Consultant.
Co-author of “Inspired Style.”
VP Communications AICI SFBA
www.patgrayincolor.com
pat@patgrayincolor.com
650-417-5902

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Why Is Good Annuity Advice So Difficult To Find?

Annuities can be a very valuable part of an investment portfolio.  Unlike stocks & bonds, they provide guaranteed income for as long as you live (at least to the extent supported by your state’s Life & Health Insurance Guarantee Association).  But getting help on what kind of annuity to buy (let alone which one specifically) can be surprisingly difficult.  Here’s why.

The first thing to know is that an annuity is a contract between you and the issuing insurance company.  You give them money up front and they promise you a stream of income over your (and possibly your spouse’s) remaining lifetime.  Obviously you need to read the contract in order to understand the details of how you will be paid back.  That’s where it gets complicated.  For the simplest annuities, single premium immediate annuities (SPIA), the documentation is fairly straightforward.  But for more complex variable annuities such as equity indexed annuities (EIA) or Guaranteed Minimum Withdrawal Benefit (GMWB) annuities, the contract can run to 20 or 30 pages, and the details of how the various calculations and limitations are defined can have a significant impact on your actual withdrawal or income benefits.

If you do not have the inclination to figure it all out yourself, where do you turn for advice?  All insurance products are sold via commission.  You may or may not get a good detailed explanation about a specific annuity from the salesperson, but you certainly will not get a comparison of that annuity with other similar annuities from other companies that might have better benefits or lower premiums.  You are also unlikely to get help comparing the annuity income with alternative investments that might be more appropriate for your situation, simply because the salesperson doesn’t sell them.

Consumer support organizations and publications such as Consumer Reports logically would be another good source.  But again, because there is no standard for annuities like there is for auto and home insurance, a review of one annuity wouldn’t tell you much about any others.  As a result you won’t find more than general information and advice about annuities from these kinds of sources.

That leaves financial planners and independent advisors.  Because they are held to a higher standard than insurance agents (they are required to have a fiduciary responsibility to their clients, meaning they must put their clients’ interests ahead of their own), they must consider alternatives and recommend what they believe is the best choice specifically for you.  Many advisors don’t like annuities because of their complexity and lack of standardization.  Each one is different, and even similar sounding annuities from the same insurance company can have different terms & conditions.  And, just as with auto and home insurance policies, the premiums for annuities with similar benefits can vary widely from company to company.  The only way a financial planner can do a cost-benefit analysis of a complex annuity is to read the contract in detail, which involves a lot of time and effort.  And then he or she needs to compare it to other annuities as well as to other investments.  Imagine how many hours that all takes.

Are there alternative investments that are safe but better than annuities? Again, it depends on the specific annuity, as well as your goals in considering one.  I evaluated one client’s EIA by comparing it to an equivalent amount invested mostly in ultra-safe zero-coupon 10-year US treasury bonds (called strips) plus a small amount in an S&P 500 index fund.  I compared the returns over the 10 year period from 1990 through 1999, which was one of the best performing decades for the S&P 500 in recorded history (432% cumulative), and over the 10 year period from 2000 through 2009, one of the worst decades (-9% cumulative).  I found that in the best decade, the investment beat the annuity by 107% to 48% (cumulative). In the worst decade, the annuity returned 36%, while the investment, without any guarantees, returned 29%, not much worse.  The client, who was very risk-averse, appreciated the fact that an investment mostly in US government bonds (which, by the way, are safer than any annuity investment) can mitigate much of the risk even without minimum guarantees.  His insurance agent did not explain any of this.

Again, annuities can be useful tools for retirement.  But the decision to include one in a retirement portfolio depends on a number of factors specific to each family’s situation. If you are considering annuities on your own, especially complex ones such as EIAs or GMWBs, there’s a lot of due diligence you really need to perform to make sure you’re getting what you think you’re getting.  And until the various state regulatory agencies impose standards on annuity contracts, you should plan to devote many hours learning about them before making a decision to buy one.

The bottom line: Caveat emptor!

Artie Green

Artie Green, CFP, MBA

 

Artie Green, CFP, MBA

Artie Green, CFP®, MBA, is a CERTIFIED FINANCIAL PLANNER™ Professional and principal at Cognizant Wealth Advisors.

He can be reached at 650-209-4062 or at artie.green@cognizantwealth.com.

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Are You Ready for a Remodel? – There Should Be No Horror Stories

There comes a time when every home will need to be remodeled. A renovation project may be as ambitious as a whole house makeover or as simple as refurbishing a small bathroom. An experienced remodeling contractor can work with you to bring your plans to life, no matter the size of your renovation project. Today’s post is about why a remodeling contractor can add value and make your remodeling project run smoothly.

 

You may consider yourself a handy person and skilled with tools, but if you are not careful, you could make some very costly mistakes. You’ll end up in the middle of a project you don’t have the skills to complete or if you are able to finish it you’ll be dissatisfied with the final result. If you’re a fan of home remodeling programs, you know how easy they make it seem but it’s really not that simple.

 

During any renovation job there’s a lot of complicated paperwork. A lot of people don’t know the first thing about building permits and endless codes that must be followed.  However, a skilled remodeling professional will know exactly what permits and licenses will be necessary for your project.

 

A remodeling professional is more than a person that can handle a miter saw and nail gun. A skilled designer can help you develop your remodeling plans and work with you to solve any potential problems. Your remodeling professional can bring in any expert subcontractors as needed and make sure all the materials and services are delivered on time and within budget.

 

For home remodeling projects, it can be a difficult experience to do everything by yourself. You don’t want to start a project only to regret it. A remodeling professional can make your home remodeling job a success by providing the expertise you need to get the job done right.

 

ilona

Ilona Lindauer, CGB, CKD, is a General Contractor and President at IKB Design & Construction in downtown Los Altos for over 20 years.

She can be reached at 650 941 4384 or at ilona@ikbinc.com.

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Email Reminders for Corporate and LLC Statements of Information

One of the things our firm does for our clients is help them maintain their company documentation on an ongoing basis. One of the recurring tasks is to file Statements of Information with the Secretary of State after the first statement filed in connection with organization of the entity. Domestic stock corporations must file them annually. Limited liability companies must file them every other year.

Before a corporation or LLC must file a Statement of Information, the Secretary of State sends it a renewal notice. Under existing law, the Secretary sends the renewal notice to the mailing address of record. Last year, however, new legislation, AB 657, gives corporations and LLCs the option to receive renewal notices by electronic mail.

AB 657 says that corporations choosing to receive renewal notices and any other notifications from the Secretary by email instead of US mail must provide a valid email address for the corporation or its designee to receive those notices. After such an election, the Secretary will send renewal notices to the last email address of record with the Secretary.

AB 657 affords the same option to limited liability companies. Likewise, it also permits email renewal notices for foreign corporations, nonprofit public benefit corporations, nonprofit mutual benefit corporations, consumer cooperative corporations, and state credit unions. Renewal notices to these entities are also sent to the last email address of record.

Designating an email address may provide a convenience for some clients. Nonetheless, receiving renewals by email entails risk, since clients may frequently change domain names, email addresses, and personnel designated to receive emails. Accordingly, clients wishing to designate an email address may want to designate a role-based email alias for receiving renewal notices, rather than an individual’s email address.

Stephen S. Wu, JD

Stephen S. Wu

 

Attorney Stephen Wu is a partner in the law firm of Cooke Kobrick & Wu LLP in
downtown Los Altos.  He can be reached at (650) 917-8045 or at swu@ckwlaw.com.

 

 

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Choosing a Name for Your New Business: Trademark Law Issues

One of the first choices a new business must make is what name to give the business. Businesses think first and foremost about the marketing and branding considerations going into the name. Is it a memorable name? Does it help to create positive images in consumers’ minds about the product or service? All of these concerns will help businesses create a universe of names from which to choose.

In addition to the business issues involved in choosing a name, businesses should also consider trademark law. First, a new business should consult with legal counsel to make sure that the names it is thinking of using is not already taken by another business. If another business is already using the name, that business could assert a claim against the new business for trademark or service mark infringement.

Second, under trademark law, some names are easier to protect than others. For instance, famous marks like Exxon and Apple (for computers) are entitled to strong protection. By contrast, generic words such as “milk” and “car” are completely in unprotectable when used with the products they describe. No one is permitted to gain exclusive rights to use these common words.

The strongest types of marks are either made-up words having no meaning in English or have a meaning, but not in connection with the product with which it is used. Made-up marks include Exxon and Kodak, which are referred to as “fanciful” marks. English words unconnected with their product are “arbitrary” marks, and include Apple for electronics and Camel for cigarettes. Fanciful and arbitrary marks are entitled to the strongest protection under the law, and are therefore preferable, other things being equal.

The next strongest marks are called “suggestive,” because the mark is suggestive of a characteristic of a product without directly describing the product. It takes a leap of imagination to connect with them the product or service. For instance, the word mark “poison” when used with perfume suggests danger, intrigue, and excitement without directly describing perfume.

The weakest marks are called “descriptive,” because they describe a product or a characteristic of it. For instance, words like “best,” “giant,” or ” gold medal” are descriptive. Descriptive marks are unprotectable unless they acquire what is called “secondary meaning.” A business can obtain secondary meaning of a mark via repeated significant advertising that links the mark to the business as the source of the product. All three of the descriptive marks above have acquired secondary meaning, namely Best for mayonnaise, Giant for groceries in the DC area, and Gold Medal for flour. The companies using these marks have heavily advertised them with their products and thus can protect them. For other products, however, these words are merely descriptive and are unprotectable.

Finally, as stated above, generic words such as milk and car are completely unprotectable. Interestingly, the generic words “aspirin” and “gasoline” used to be trademarks. Because the companies that created them failed to protect them, and people used them as generic words, they are now unprotectable in connection with the products to which they refer.

Our firm has helped numerous businesses to create corporations and limited liability companies. We help our clients in choosing a name by checking for possible prior use. We also counsel them on what name is most protectable from a trademark law perspective. Choosing a good name from a trademark law perspective will help a business start on the right foot.

StevenSWu3

Attorney Stephen Wu is a partner in the law firm of Cooke Kobrick & Wu LLP in downtown
Los Altos.  He can be reached at (650) 917-8045 or at swu@ckwlaw.com.

 

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