Happy Anniversary to Me!

This year marks my 30th year in the investment business and what a long strange trip it’s been.

My last semester at the University of San Diego I took an investment course with a young, energetic, and entertaining investment professor. His knowledge about investing was second to none and he taught our class how to apply our learning to the real world of investing. His course changed my career trajectory.

I was living the good life as a college student. I lived in Mission Beach with the beach on one side and the bay on the other. My roommate at the time was in the same investment class.

After graduation I was working for Bank of America in downtown San Diego processing loans for residents of Orange County. My roommate took a job as a stockbroker with a penny stock firm. The stock market closed at 1:00 and on most days he’d call my office to let me know he was going to the beach.  He was going to the beach at 1:30 and I wasn’t getting home until 7:30. I asked, “Jim, did you make any money today?” His response, “Bill, I’m always making money!”

The thought of making money and going to the beach at 1:30 was too much to pass up so I called a former roommate whose dad was managing a small office for Spelman & Company in Rancho Bernardo. His dad told me if I passed the series 7, he’d hire me as a stockbroker. I borrowed some old series 7 training manuals and studied for a couple of months. I passed the exam with a score of 70.3! I was later told that the lower your score on the series 7, the better your odds of succeeding in the business.

Once I received my results, I resigned from Bank of America. My first official day on the job was May 8, 1989. My friend’s dad was an incredible mentor and it was an honor to work at his side. To get clients I spent most of my day cold calling with municipal bonds.

A few months later I moved back to Los Angeles to start working with Dean Witter in Pasadena. I went through their training program in April 1990. Like my job in San Diego I spent most of my day cold calling for new business. In addition to municipal bonds I added preferred stocks to the mix, and I’d dial the phone morning, noon and night – about 300 to 400 times a day, including Saturdays. My source of leads was the Criss Cross Directory. The early 90s was a great time to cold call because there was no caller ID, cell phones, or internet to interfere with my mission. To increase my odds of success I’d find a local bond paying 7% or more – tax free! My standard script went something like this: “Hello Mrs. Jones, My name is Bill Parrott and I’m calling from Dean Witter in Pasadena. The reason for my call today is that the City of Arcadia has just issued a new tax-free bond paying 7%. Would you like to hear more about it?” I repeated this process throughout the day. For a moment in time, I was the number one trainee in my class.

At Dean Witter I was blessed to work with another incredible mentor, a gentleman who’s been on the Barron’s 100 list of top advisors each year it’s been published. After hours we were often the only two left in the office and we’d go to lunch on several occasions.  I’d pick his brain about the business at every opportunity.

My mentors taught me more than investments, however. They taught me how to treat clients with respect and to put their interests above mine. I learned much by watching and listening to how they conducted themselves daily. Their wisdom, teachings and examples are still with me today.

On May 8, 1989 the Dow Jones Industrial Average closed at 2,376. It has since risen 933% to 24,553, averaging 8.17% per year – before dividends for the past 30 years! Despite the long-term success of stocks, each year, including this one, forecasters have called for the market to drop because it’s overvalued. In fact, the first year I started in the business one large producer told me to sell stocks and buy silver. I didn’t take his advice, thankfully.

During my career I worked in California, Connecticut and Texas. After Morgan Stanley and Dean Witter merged, I joined the management pool; managing offices in New Haven, CT and Austin, TX.  A few years after leaving Morgan Stanley I joined a large discount brokerage firm to work with executives, attorneys, pilots and doctors across the country. I spent a good deal of time in hotels and airports.

When I turned 50, I started my own company. My daughter was leaving for college and I thought if I don’t start my company now, I never will. It was a leap of faith. We live by faith, not by sight ~ 2 Corinthians 5:7.    

My firm is doing well and growing. I’ve had the benefit of working as an independent advisor, a wire-house broker, and an order taker. The independent channel is, by far, the best of them all. The relationships I have with clients are much deeper and more authentic than the other channels.

It’s been a great run and I’ve been blessed beyond measure.  Here are a few tips I’ve learned over the past three decades.

  1. Family and friends come first. I’ve been blessed with an amazing wife, a beautiful daughter, loving parents, and incredible sisters.
  2. Time in the market trumps timing the market. The long-term trend in the market will give you an opportunity to create wealth for you and those you love. Don’t try to trade the market daily because you’ll lose more often than you’ll win.
  3. Turn out the noise. As I mentioned, every year, for the past 30 years, “experts” have been telling me the stock market is overvalued. If I listened to any of these individuals, I’d have missed the historic rise in stocks.
  4. Diversify your portfolio. Diversification is the only free lunch on Wall Street. Stocks, bonds and cash will help you grow and protect your assets over time. All three will play a part in your wealth journey at some point.
  5. Invest internationally. About half of the global stock market capitalization is found in companies outside of our borders.
  6. Have a plan. Financial planning will help you create wealth. Your plan will quantify and prioritize your financial goals.
  7. Rebalance your accounts. At the beginning of each calendar year, review your asset allocation. If it’s out of whack with your risk level, adjust your portfolio.
  8. Eliminate your debt. Debt is a four-letter word and it’s a killer. Too much debt will keep you from reaching your financial dreams.
  9. Giving money away to help others has multiple benefits. It will make you happier, reduce your taxes, and assist those who receive your gift. It’s a win-win-win.
  10. We live on a beautiful planet with amazing things to see and do. Get outside and enjoy your life.

Thirty years have gone by in a blink of an eye. Between classes and jobs, my friends and I would sit on the beach and ponder our future. I’m happy to report we’ve all done well, and, more importantly we’re still friends. Life is good.

May He give you the desires of your heart and make all your plans succeed. ~ Psalm 20:4

January 22, 2019

Bill Parrott is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog.

 

 

 

Forever Is A Long Time

Financial planning is important, but life planning is better. A financial plan indicates a finite service, a one-time event. Life planning takes financial planning to a higher level. It’s enduring, vibrant, and active. It’s proactive. It’s forever, and forever is a long time!

I’ve run several marathons, and I always envision myself finishing the race before I start training. It motivates me to continue running on cold winter days. My training will cover several months in order to build up my endurance to run 26.2 miles. On race day I never focus on the daunting task of running the entire marathon. I take it a step at a time, a mile at a time and eventually I’ll arrive at the finish line.

Life planning is like running a marathon. However, in life, you’ll have multiple goals all competing simultaneously. When my daughter was born, I had two conflicting goals: paying for college and saving for retirement. In addition, I had to pay my mortgage and the other household expenses. I didn’t have the luxury to choose one over the other.

Setting goals and timelines is paramount in life planning. Writing your goals down and committing them to paper will give you an opportunity to succeed.

In a famous study, The Harvard MBA Class of 1979 was asked about their goals. Only 3% of the graduating class had written goals.  Ten years later the graduates were interviewed again. The group with written goals had ten times the wealth of the remaining 97% – combined![1] Goals matter.

Financial planning is great until life gets in the way and then you must do what you can. How do you choose the life goal that’s most important? How do you prioritize them? Are short-term goals more important than long-term goals?

If you’re fortunate to live a long life, you’ll pass through several stages – each one exciting in its own way.  I’m sure if you looked back over your life you can identify several memorable moments that have shaped who you are today.

So, how do you approach life planning? Here are a few suggestions.

  • Take an inventory of your current situation. What resources do you have? Where’s your money going? How is it being spent? What are your short-term needs?
  • Write down your goals. Document your dreams. Journal your thoughts. Don’t worry about your current situation when you start this exercise. President Kennedy didn’t have the resources or knowledge to put a man on a moon, but his vision and optimism drove others to make it happen.
  • Monitor your progress. Check off items from your list after you’ve reached a goal. As you move through your life stages, set new ones. My daughter’s education is funded, so I’m adding new goals to my list.
  • Eliminate goals that are no longer important to you or your family. When I was young, I wanted a Porsche, but now that I’m older it’s no longer a goal. My cousin had a Porsche and he let me drive it often. I was able to test drive my goal before I decided to let it go. Eliminating goals is just as important as establishing new ones.
  • Review your past goals. How did they turn out? What can you learn from your successes or failures? Can your past direct you to better opportunities or help you from repeating previous mistakes? Pause, rest and reflect on where you’ve been. Climbing a mountain takes time. After you reach the peak, look around and enjoy the beauty of achieving your goal. Take solace in your journey.
  • Keep your eyes on the horizon and don’t let obstacles get in your way. Of course, there will be hardships, but if you stay focused on your written goals you’ll eventually arrive at your destination.
  • Don’t go solo. If you’re married, you and your spouse can work on your goals together. Family goals are just as important as personal ones. If you’re single, share your goals with a friend or trusted advisor. Accountability is helpful.
  • Give thanks. On your life journey you’ll encounter several people who need a little extra help. Stop and give them a hand. You’ll be glad you did.

Life planning is perpetual. It’s forever. Let your written goals motivate you to live life on your terms.

In their heart’s humans plan their course, but the Lord establishes their steps. ~ Proverbs 16:9

November 30, 2018

Bill Parrott is the President and CEO of Parrott Wealth Management firm located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process to help our clients pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog.

 

[1] http://www.lifemastering.com/en/harvard_school.html

The End Is Near!

The end of the year is here. Was 2017 successful for you? Did you obtain your goals? I hope you had a prosperous year.

Tony Robbins is a master of setting goals and he uses the acronym SMART which stands for specific, measurable, achievable, realistic, and time-frame.[1] These five ingredients are key to achieving goals.   My goal of wanting to lose 5 pounds by April 1 meets these five criteria.

In addition to his list it’s paramount to write your goals down and commit them to paper. Tom Clancy said, “If you don’t write it down, it never happened.” Written goals are like magnets pulling you closer to your dreams.  In a study by Dr. Gail Mathews she found “that you become 42% more likely to achieve your goals and dreams, simply by writing them down on a regular basis.”[2]

However, writing your goals down doesn’t guarantee success. You must track and review your goals on a regular basis.  A monthly or quarterly review will allow you to adjust your goals as needed.

Goal setting is key to achieving financial success.  Written investment goals can help you track your results.  Your financial goals should follow the SMART model.  I want to have a lot of money someday is a dream, not a goal.  But if I change it to say I want to have $1 million by December 31, 2018 then it becomes a goal that can be measured.

In a few days the new year will be upon us and you can use this time to write down your 2018 goals.  Here are five suggestions to help you achieve financial success in 2018.

  1. Have a plan. A financial plan will commit your goals to paper. It will include specific dollar amounts with dates, so you can track your progress.
  2. Benchmark your assets. Compare your investment returns to a benchmark that resembles your portfolio.
  3. Review. A quarterly review of your financial plan and investment accounts will allow you to adjust your goals as needed.
  4. Update. It’s okay to adjust your goals throughout the year. If you obtain a goal early in 2018, then raise the bar or add a new goal.
  5. Work with an advisor. A Certified Financial Planner® is your accountability partner who will keep you moving toward your financial goals.

Here is a list of books to help you kickstart your 2018 goals.

  1. The Magic of Thinking Big by David J. Schwartz, Ph.D.
  2. Braving the Wilderness by Brene Brown
  3. The Power of Positive Thinking by Norman Vincent Peale
  4. Think and Grow Rich by Napoleon Hill
  5. 7 Habits of Highly Effective People by Stephen Covey
  6. Awaken the Giant Within by Tony Robbins
  7. Make Your Bed by Admiral William H. McRaven

Alexander Graham Bell said, “When one door closes another opens.”  So, let’s close out 2017 and turn our attention to the new year with new goals, dreams and ideas.

“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” —Pablo Picasso

“Just when the caterpillar thought the world was over, she became a butterfly.” ~ Barbara Haines Howett.

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX.  For more information please visit www.parrottwealth.com.

December 28, 2017

Note:  Past performance is not a guarantee of future returns.  Your returns may differ than those posted in this blog.  Investments are not guaranteed.

 

[1] https://www.tonyrobbins.com/ask-tony/can-create-compelling-future/, website accessed 12/28/2017.

[2] https://www.huffingtonpost.com/marymorrissey/the-power-of-writing-down_b_12002348.html, by Mary Morrissey, 12/6/2017.

J.J. Watt and the Art of Setting Goals.

J.J. Watt is an immoveable force and a beast on the football field.   He’s the current defense end of the Houston Texans and a three-time NFL defensive player of the year.   He has been terrorizing quarterbacks since 2011 and has recently decided to sack his largest opponent, Hurricane Harvey.

After Hurricane Harvey decimated Houston, Mr. Watt decided to tackle a fundraising goal of $200,000 so he could help those in need.   He encouraged Houstonians and others to donate to his cause.   Professional athletes, movie stars, television hosts, and children have all raised money for his fundraising goal.[1]

His current fundraising efforts are approaching $20 million dollars or 9,900% above his original goal!  In addition to the millions of dollars he’s raised, pallets of water and other necessary items have been delivered by the truckload to a warehouse in Houston.

In fact, his fundraising has been so impressive that many people are calling for Texas State Highway 99 to be renamed J.J. Watt Parkway.[2]

His effort to love his neighbor is humbling.   What can we learn from Mr. Watt’s goal setting efforts?

  1. A goal must be specific.  A goal without details is just a dream.
  2. A goal must be actionable. Mr. Watt acted on his goal.   Goals don’t happen by themselves; you need to act on your goals so they can be realized.
  3. A goal must have a definite end date. A goal, without a timeline, will not be achieved.
  4. A goal must be in writing. Once you decide on your goal, write it down on a piece of paper or 3 x 5 card so you can see it all times.   Your goal should be visible to you always.
  5. A goal must be accountable. If you’re serious about setting a goal, have a friend or loved one hold you accountable.  An accountability partner will keep you on target as you chase your goal.
  6. A goal must be flexible. Mr. Watt’s original goal was $200,000.  He could’ve stopped at his original target, but he continued to push the envelope and encourage people to keep on giving. He repeatedly raised his target by $1 million after each milestone had been reached.
  7. A goal must be celebrated. After you’ve completed your goal take time to celebrate your efforts and then set another goal!

Goal setting is paramount for an individual to be a successful investor.   Investing without a plan can be hazardous to your long-term wealth.   A financial plan will crystalize your hopes, dreams and goals by putting them in writing.  A financial plan will move you closer to your financial goals and hold you accountable as you rush towards your financial finish line.  Individuals who complete the financial planning process have three times the net worth of those individuals who do no financial planning.[3]

If you’d like to help J.J. Watt, here are links to his fundraising and foundation websites.

https://www.youcaring.com/victimsofhurricaneharvey-915053

http://jjwfoundation.org/

You miss 100% of the shots you don’t take. ~ Wayne Gretzky #99.

The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.’ ~ Matthew 25:40

Bill Parrott is the President and CEO of Parrott Wealth Management, LLC.  For more information on financial planning and investment management, please visit www.parrottwealth.com.

September 5, 2017
[1] http://www.nfl.com/news/story/0ap3000000837347/article/jj-watt-raises-18m-in-hurricane-harvey-relief, NFL Staff Writers, 9/4/2017.

[2] http://www.foxnews.com/sports/2017/09/04/more-than-70000-sign-petition-to-rename-houston-highway-after-jj-watt.html, Ryan Gaydos, 9/4/2017.

[3] http://content.schwab.com/web/retail/public/owners_manual/principle-plan.html