Financial Planner Profile – Neil Vannoy

After putting together the financial planner websites with blogs list a few weeks ago I got a chance to meet a few of them in person at an event.  One of the planners I got to visit with was Neil Vannoy of Vannoy Advisory Group.

Getting Acquainted

Neil’s a Certified Financial Planner in Texas and apparently has a very charming wife.  As we chatted the first thing that everyone wanted to know when they stopped by to say hi was if his wife had come along.   I got a laugh out of it because it kind of reminded me of being a new dad. Everyone who comes to visit wants to see the new baby, forget about dad. Although his wife has been his constant travel companion around the U.S. and is part of the financial team, it turns out she wasn’t along for this trip so I didn’t get a chance to meet her.

Money Blogging

Neil’s an easy guy to talk to and we had an interesting conversation about sharing financial facts and information through blogging. 

He co-hosts a TV segment on his local NBC station called “Your Money Monday” where he answers viewer’s money questions. Neil tries to share a lot of the information from the show on his site, No Hidden Commissions.  Although he’s only been writing on the blog for a few months he really enjoys writing about money and investing, check out his list of the top investing myths.

Financial Planner Questions

After the event I emailed Neil some questions about being a financial planner and he was nice enough to take the time to send back the responses below.

Why did you become a financial planner?
I’ve always enjoyed doing my own financial planning – including researching investments, building portfolios, analyzing tax strategies, etc. – so it just made sense to make a career out of it. Like the saying goes, “find something you love and you’ll never have to work a day in your life.”

What do you think is the biggest benefit that your clients gain from working with an advisor like you?
Most people don’t have the time, patience, or desire to learn everything needed to manage their finances and investments successfully. Finding the right advisor will help these people navigate the complicated world of financial planning and investing, and give them more time to focus on the things in life that are important to them.

What type of people, if any, should not hire a financial planner?
I think that everyone would benefit from looking around and seeing what types of financial planners are available. Years ago, hiring an advisor meant turning over your finances to someone. While these “full service” advisors are still around, individuals now have the option to work with an advisor on an hourly basis for a second opinion if that’s all they want.

What is the biggest challenge facing your clients today?  How do you help them with those challenges?
Without a doubt, uncertainty is the biggest challenges facing investors today. A big part of my job is helping my clients address and alleviate any uncertainty they face, whether it’s uncertainty about their jobs, changes in tax law, investment returns, or the economy as a whole.

What’s the most common mistake that people make with their money and why do they make it?
The most common mistake I see people making is waiting too long before starting to plan their financial future. In financial planning, time can be both an ally and an enemy. The earlier your start the better, because your investments will have more time to grow and compound. But if you wait too long, you’ll find yourself having to play “catch up” to reach large goals like college education for your children or retirement. That can be very stressful.

What do you do when a client has a question you don’t know the answer to?
It’s impossible for one person to have all of the answers, but that’s not a problem if you have a strong network of professionals to use as a resource. As a member of the Garrett Planning Network and NAPFA, I have an automatic network of professionals I can use for guidance. In addition to these networks, I have several CPAs, attorneys, and other professionals I can use as resources.

What don’t you like about the financial planning industry?
For far too long the focus of the financial planning industry has been on “selling” rather than “advising”. I think this has left most people feeling that advisors recommend products that are better for their pockets than their client’s pockets, and this is unfortunate.

What do you really enjoy about the financial planning industry?
Although this doesn’t apply to the financial planning industry as a whole, I really enjoy being able to earn a living and help people in the process of doing something I love.

What tips do you have for people looking to choose an advisor to work with?
Look for an advisor that is “fee-only”, meaning he or she never accepts commissions from his or her recommendations. This removes conflicts of interest and helps ensure that the focus of the advisor is on providing the best advice possible rather than selling a product for a commission.

What kinds of things should people expect to see on your blog in the future?
The stated goal of the blog is “to add a little clarity to the world of financial planning and investing”, so I plan on posting useful financial tips as well as highlighting some of the “insider secrets” that investors need to know before working with an advisor.

You can follow Neil on twitter or his blog No Hidden Commissions.

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College Student Jobs You Can Work From Your Dorm Room

College students around the country will soon be traveling back to their respective colleges and universities, and many of them will have fatter wallets from summer jobs and internships. However, that money won’t last long when the price of textbooks, school supplies, and tailgate parties starts to take its toll.

One of the toughest things about being a college student when your parents don’t support you is juggling a job with school work. I had a job for the entire four years that I was in school. About half way through, I discovered eBay, and I started selling a lot of stuff on there and other people’s stuff for a commission.

It didn’t last forever, because I got sick of eBay policies and scammers, but for the year and a half that I did it, it was good extra income in addition to my food delivery job. The internet provides a lot of opportunity and your knowledge and hobbies can also provide a source of income while you are in school without working for someone else.

Here are some college student jobs you can do from your dorm room:

Tutoring. Are you great at Chemistry or Calculus? Then, you could make $20 to $40 an hour tutoring your peers! Pass out some fliers at the end of classes and start a Facebook page.

Selling on Craigslist. I used to do this on eBay, but they raised their fees and so many big retailers flooded the market, so the upside of selling on eBay diminished. I still like Craigslist in most markets.

Some markets are flooded with a bunch of junk, but many are not. Many college kids know how to sell something on Craigslist, but few of them want to deal with it. Tell them you’ll take a flat fee or a percentage of how much you get for it, and you’ll manage the entire deal.

Freelance Writing. Are you a good writer? Look for blogging jobs at job boards such as Pro Blogger and the writing jobs section of Craigslist.

Web Design and Application Development. If you know CSS, PHP, ASP .NET, or other web languages, then turn your knowledge into freelance work. Sites like eLance, goFreelance, an Guru.com allow freelance developers to start a profile and bid on contract work.

Virtual Assistant. Are you an organized person? Are you good at helping other people plan and organize?  With a computer and a phone you can have clients all around the country, check out the International Virtual Assistant Association for more info on what you can offer and how to find clients.

Being able to work from your dorm room is mostly about leveraging the skills you have or are in the process of learning. The biggest challenge is often finding people that need your expertise or your time but the Web helps make that possible. 

The great thing about many jobs like this is that you’re building up experience that will apply to your life after college, rather than just flipping burgers or waiting tables.  Not only that, they often come with a more flexible work schedule you can fit in between classes and college life.  Any other ideas for college student jobs you can work from your dorm room?

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Angies List Contractor Service Follow Up

Angies List called me up yesterday to follow up on the contractors that I’d been searching for.  When you signup for Angies List you set in your profile what contractors you’re looking to hire and they wanted to get my feedback on the company that I’d worked with.  What kind of experience I had, was I pleased with the service, etc.

I didn’t know Angies List staff followed up with members to capture their feedback on contractors but I’m glad they do.  I can see how people that have bad experiences with a contractor might be quick to lead negative comments but someone that had a good experience might just get busy and forget to rate their provider after the work is done.  Since the main value of the service is to capture input from all it’s members, I think it’s great that they follow up with us.

Contractor Searches

They also asked questions about the different aspects of membership that I was using and I learned of some features I wasn’t aware of.  In my Angies List review I wrote mainly about the features of the website for searching and screening the list of local contractors.  It turns out members can also just call into the service and ask for information on a certain type of provider and the operator will search the feedback database and make some suggestions for you. 

I’ve never used this feature before but I suppose it could come in handy if you were away from your computer and needed quick information about a company.  Maybe if you were out and about and had car trouble and wanted to lookup a car repair company before having them work on your vehicle. You can also email in the type of contractor you’re looking for and Angies List will respond with some of the best, highly rated matches from their member database.

Angies List Magazine

They also asked for feedback about the magazine, which I have been getting and reading.  It’s a monthly magazine that you get with your subscription that I’ve browsed through each month.  It has a lot of coupons from local contractors, which I haven’t made use of yet, but also a few articles on consumer services. 

One of the good tips I picked up was from an article that looked at companies that will fix your broken or damaged iPod, iPhone, or Zune.  I guess I didn’t realize these type of companies existed, it makes sense that they do.  I figured you had to either work with the manufacturer or buy a new one, these gadget repair companies could be a better alternative.

I mentioned the gadget repair article to one of my co-workers and we got to talking about the Angies List magazine and membership.  He had had some water coming into his basement and was going to checkout the service to research some companies that could help him out.  I let him know he should use an Angies List promotion code if he was going to try it out, and get a discount on the service.

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7 Ways to Save Money on Back to School Shopping

Back to school specials are here! It’s that time of year, and parents are dreading how much money they will spend over the next couple of weeks. The average family will spend about $600 this year on back-to-school supplies and clothes for their kids.

That’s a big chunk of change, especially for a families struggling to make ends meet during rough economic times. Here are some tips to help save money on back to school shopping.

1. Don’t follow the supplies list strictly. Use your own logic and consult your kids about which supplies are most important. I remember being in grade school and hardly ever using about 25% of the stuff my mom bought me.

2. Recycle old supplies. Your kids might not have used some of their old supplies, and it could still be sitting in their backpack. Hole punchers, staplers, pencils, pens, and hardcover binders are all examples of supplies that can be easily reused.

3. Buy in bulk. If you are shopping for more than one child, try looking at Costco or Sam’s for bulk items like folders, pens, pencils, crayons, and note cards.

4. Don’t take your kids with you to shop, if possible. Get a babysitter, keep one parent at home, or drop them off at grandma’s. They will try to convince you to buy stuff they don’t need, and they are very brand conscious, but won’t care what brand it is after a couple of weeks at school.

5. Don’t buy your kid a whole new wardrobe. I think some parents get into the habit to buy their kids an entire new wardrobe when they go back to school.

Sure, if your kid hasn’t gotten new shoes in a while and is growing out of old ones, then take advantage of back-to-school sales. But if you just bought them new clothes in the spring or summer, let them pick out two new outfits and possibly a new pair of shoes. Anything more is overkill.

6. Take advantage of tax savings. If your state has a tax free week or if a business decides to pay the sales tax for you, make sure you shop at those times or at those businesses. I know that JC Penney had a promotion going on that they would discount your purchase by the amount of sales tax, so it was like you didn’t pay any sales tax.

7. Stay away from sales traps. Some sales are only sales to encourage you to spend more money than you normally would. “But 1, get one half off” can be dangerous, because it could force you to buy more and spend more than you expected.

Saving money is a lifestyle. If you train yourself to save money in all situations, it will begin to feel automatic. Back-to-school is one of those times of years that we just expect to spend a lot of money, and we might let our savings guard down a little bit. Consider some of these tips, and you’ll save enough money to throw towards all of the other expenses your kids will incur during the fall months.

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Stock Analysis – Price to Book Ratio, Beta, & Price to Sales Ratio

Stock Analysis Series

We covered price to earnings growth, debt to asset ratio, and dividend yield in the last edition of the stock analysis series.  In this installment we’ll look at the measurements of price to book ratio, beta, and price to sales ratio when evalutating a company’s stock.

Price to Book Ratio (P/B)

Also know as the price-equity ratio, the P/B is used to compare the market value of a particular stock to its book value (value of each share of the company’s stock after the company’s liabilities have been subtracted from the company’s assets).

Price to Book Ratio = Current Share Price/Book Value Per Share

Value investors use this analysis to find hidden gems. Low P/B numbers can indicate that the stock is undervalued. It could also mean that the company has some serious problems. This ratio also puts a value on what would be left if the company immediately went under.

Beta

Beta is used to measure the volatility of an investment compared to the market. Usually the investment is compared to an index. The most popular index used is the S&P.

If the Beta is 1, it means the volatility of the investment is the same as the index. If the number is higher than 1, the security is more volatile than the index and if it’s lower than 1 then it’s less volatile than the index. If the number happens to be negative, it means the security typically does the opposite of market.

Beta can be used to build a portfolio of diversified investments. Financial planners use Beta to put together portfolios of stocks, both domestic and international, bonds, cash products and commodities such as oil and gold.

Price to Sales Ratio (P/S)

What do you do when you want to analyze a stock, but it is so new that there is limited earnings history. You use the P/S!!! The Price to Sales Ratio compares a stock’s performance to itself or similar companies.

Price to Sales Ratio = Stock Price/Sales Price Per Share

Like many of the other measurements, the lower the number, the better. Expenses or debt are not involved in this calculation, so this measurement only tells part of the story. Just like all the other analytical tools, this one should not be used alone to decide whether to buy or sell an investment.

Financial Accounting

Hopefully this series on stock analysis has been useful to you. If you find yourself struggling with some of the terms and concepts that have been covered (like earnings per share) and would like to be able to do fundamental analysis on a company’s stock, it might be worth while to take a class or read a book on financial accounting.

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Cash for Clunkers

Cas for Clunkers has been the source of a lot of debate over the last few weeks.  Here’s a funny “crash for clunkers” video followed by a range of thoughts and opinions on the Cash for Clunkers program. (You’ll have to wait through a 15 second commercial on the video, you can’t fast forward, I tried)

 

• Common Questions About The Cash For Clunkers Program Answered
• Finding More Cash for Clunkers
• Cash for Clunkers: I got in before the money ran out
• Get the Best Cash for Clunkers Deal
• Cash for Clunkers Bill
• Cash for Clunkers Tax Rules
• Car Allowance Rebate System – Cash For Clunkers
• “Cash for Clunkers” Is Really Economics for Dummies
• Cash for Clunkers: The Revenge
• Cash for Clunkers Program Suspended
• Cash For Clunkers Over Already?
• Cash for Clunkers Program
• Cash for Clunkers Bill
• Cash-for-Clunkers: An ‘Expensive’ Way to Reduce Emissions
• Cash For Clunkers: Good for car sales, bad for the environment

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Stock Analysis – Price to Earnings Growth, Debt to Asset Ratio, & Dividend Yield

Stock Analysis Series

In the first stock analysis article, I covered two of the most popular analytical measurements investors use to gauge the health of a particular stock, earnings per share and price to earnings ratio. These are certainly not the only measurements you should use to evaluate a company’s stock; today I’ll take a look at three more tools for your investor toolbox.  These tools are not used in every scenario but it is good to know what they are and how they are used.

Price to Earnings Growth (PEG)

The PEG is an indicator that was made popular by Peter Lynch (Fidelity Magellan Fund). It is used extensively now and some investors favor it over the P/E due to the fact that it takes into account the growth of the stock.

PEG = Price to Earnings Ratio/Earnings Per Share

Like the PE, the lower the PEG, the more undervalued the stock and vice versa. There are issues with this analytic measurement though. The number is based on projections and can be widely inaccurate. One other issue is that it is not always clear when published if past EPS or projected EPS is used.

This measurement should really only be used on growth stocks. A stock that is well established and pays a considerable dividend will most likely have a low PEG, but still be more than suitable as an investment.

Debt to Asset Ratio

This one is pretty straight forward. It shows how much of a company is financed by debt.

Debt to Asset Ratio = Total Liabilities/Total Assets

The lower the ratio, the more the company is financed by its equity. This is a sign of stability. The higher the number, the more “leveraged” the company. We have all seen in the recent past the dangers of being highly leveraged both as a company and as an individual.

Dividend Yield

While you would use the PEG above to find growth stocks, the Dividend Yield is usually used for value stocks with lower growth potential. The growth in these stocks doesn’t necessarily come from the stock price. It is created by the dividend that is paid. Investors can choose to re-invest those dividends to purchase more shares of the stock or take the cash (either way, taxes are paid the year the dividend is distributed).

Dividend Yield = Dividends Per Share (last 12 months)/Current Price Per Share

If a stock is trading at $30.00 and issues a quarterly dividend of $.25 (totally $1.00 annually), the Dividend Yield would be 3.33% for that stock.  This measurement is extremely important for those who are looking to create some income from their investments without actually selling their stock.

Hopefully the next time you look at a stock’s fact sheet, some of those numbers and symbols will make a bit more sense to you. Next up in the stock analysis series I’ll go over price to book ratio (P/B), beta, and price to sales ratio (P/S). If there are any ratios or other fundamental analysis tools I haven’t covered that you’re curious about, leave a comment below and I’ll cover them.

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Stock Analysis – Earnings Per Share & Price to Earnings Ratio

Stock Analysis Series

In the world of financial investing, there are many different types of analysis that people look at in judging the health and value of a company and its stock. Over the course of the stock analysis series we’ll explain what these methods are and how you can use them to evaluate your investments. This article will cover Earnings Per Share (EPS) and Price to Earnings Ratio (P/E).

Earnings Per Share (EPS)

When comparing two stocks, it isn’t as simple as comparing the stock price or the total earnings of each. There are too many variables that make these comparisons unfair and unrealistic. One way to get a clearer view is the use of Earnings Per Share.

EPS = net earnings/outstanding shares.

If the number of shares have changed during the period calculated (share buyback, stock dividend, etc.), a weighted average is used for outstanding shares.

Some fact sheets will show three different versions of EPS:

• Trailing EPS – based on previous fiscal year; only true EPS
• Current EPS – current year’s information; actually projections
• Forward EPS – looking out to future numbers; projections

When looking at EPS for a company, please keep in mind that there may be one-time events that could affect the number for a given period. If you see a spike in one direction or another, take a deeper look at why. Ultimately, you want to find a company that has and EPS that has trended upward over a period of time.

Price to Earnings Ratio (P/E)

Like the EPS, the P/E of a stock is one of the most popular pieces of analysis used by investors. This is also one of the pieces of information that “CNBC trained” investors often base their whole trading philosophy on. If it were only that easy…

P/E = stock price/EPS

A high P/E can mean one of two things: the market has confidence in the stock and believes the price will go up, or that it is over-priced and ready for a drop. A low P/E could a down and out stock or a Warren Buffett gem.

Be careful when using P/E to compare two different stocks, specifically when they are from different sectors. You could be looking at one stock that has a P/E of 25 where the sector average is 30. The other stock could have a P/E of 14 where the average is 10 in its sector. Using just P/E to analyze these stocks, which one do you think is a better investment? Are you sure???

Evaluating Stocks

Earnings per share and price to earnings ratio are the two most popular pieces of analysis for DIY investors, but they are NOT the only ones. They only tell part of the story. By all means use them, just remember there are other factors out there that can have an impact on a stock’s price.

Next time I’ll cover using price to earnings growth, debt to asset ratio, and dividend yield for stock analysis.  If you’d like to have the rest of the stock analysis series sent to you click here to subscribe to free updates.

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Alternative Energy Saves the Day

Our nation’s main sources of energy won’t always be there when we need them, when that happens I sure hope we’ve found enough alternative energy to keep us staggering along.

I know this from personal experience since our family just got back from a trip around the Midwest that was fueled largely by alternative energy.  Unfortunately we don’t have a hybrid car, the energy I’m referring to was derived mostly from caffeine and sugar.

Our son did not travel well which meant several nights of poor sleep for the parents.  At one point we drove a stretch from Omaha, Nebraska (home of Warren Buffet and FNBO Direct) to Des Moines, Iowa. 

While my son was entertained by the big fields of wind turbines pictured above, I could barely keep my eyes open. I was very thankful for the big jug of caffeine that finally kept me awake and helped us arrive safely at our destination; I don’t know if we would have made it without that alternative energy source.

So when the oil wells run dry, what caffeinated beverage will keep the wheels of industry turning here in the US?  I don’t know what it will be but I hope it’s as cheap and effective as sugary caffeine was for me.

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FNBO Direct Savings Challenge

FNBO Direct originally challenged a group of five people to pay themselves first and the president of FNBO Direct is now expanding the challenge to Americans at large.

FNBO Direct Pay Yourself First

I think it’s great that FNBO Direct is encouraging people to save more money and to pay themselves first.  Here is how they describe it:

“You pay your bills every month, maybe even through automatically scheduled payments. However, there might be someone you’re forgetting to pay – yourself. Paying yourself first is an important step toward a more secure financial future.”

Certainly it’s not a new concept but FNBO Direct reminds us that if we direct deposit money into our savings account before we use our paycheck to pay our mortgage, credit cards, and other monthly bills then we’re more likely to save some of it instead of spend it all.

Savings Challenge

I think that we as a country are saving more of our money now that the last few years have reminded us of how uncertain our financial situation can be. 

Financial experts were telling us we needed to save more and use credit less back five years ago but not many people listened.  Unfortunately it’s taken a major financial downturn to remind us of some basic rules of personal finance, such as:

• Spend Less than You Earn
• Save & Invest to Leverage Compound Growth
• Diversify Your Savings & Investments
• Build an Emergency Fund for Rainy Days (Years)

Now that times are tough many people have less money to put towards paying themselves first.  Understandably if you lost your job your primary concern is paying your mortgage or rent each month.  However, for those of us fortunate enough to have missed the job cuts it’s not a bad idea to automatically put aside some money each month to help save for whatever our economic future holds.

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