Perspective on this week’s market events

It looks like the U.S. stock market will finally get something that happens, on average, about once a year: a 10+% percent drop — the definition of a market correction. The last time this happened was a whopper—the Great Recession drop that caused U.S. stocks to drop more than 50% — so most people probably think corrections are catastrophic. They aren’t. More typically, they last anywhere from 20 trading days (the 1997 correction, down 10.8%) to 104 days (the 2002-2003 correction, down 14.7%). Corrections are unnerving, but they’re a healthy part of the economy — for a couple of reasons.

Reason #1: Because corrections happen so frequently and are so unnerving to the average investor, they “force” the stock market to be more generous than alternative investments. People buy stocks at earnings multiples which are designed to generate average future returns considerably higher than, say, cash or municipal bonds — and investors require that “risk premium” (which is what economists call it) to get on that ride. If you’re going to take more risk, you should expect at least the opportunity to get considerably more reward.

Reason #2: The stock market roller coaster is too unsettling for some investors, who sell when they experience a market lurch. This gives long-term investors a valuable — and frequent — opportunity to buy stocks on sale. That, in turn, lowers the average cost of the stocks in your portfolio, which can be a boost to your long-term returns.

This week’s market drop is nothing more than a data point on a chart that doesn’t, alas, extend into the future.

The current market downturn relates directly to the first reason, where you can see that bonds and stocks are always competing with each other. Monday’s 4.1% decline in the S&P 500 coincided with an equally remarkable rise in the yields on U.S. Treasury bonds. Treasuries with a 10-year maturity are now providing yields of 2.85% — hardly generous, but well above the record lows that investors were getting just 18 months ago. People who believe they can get a decent, relatively risk-free return from bond investments are tempted to abandon the bumpy ride provided by stocks for a smoother course that involves clipping coupons. Bond rates go up and the very delicate supply/demand balance shifts, at least temporarily, in their direction, and you have the recipe for a stock market correction.

Stock market dropThis provides us all with the opportunity to do an interesting exercise. It’s possible that the markets will drop further — perhaps even, as we saw during the Great Recession, much further. Or, as is more often the case, they may rebound after giving us a correction that stops short of a 20% downturn. The rebound could happen as early as tomorrow or some weeks or months from now as the correction plays out.

Once it’s over, no matter how long or hard the fall, you will hear people say that they predicted the extent of the drop. So now is a good time to ask yourself: Do I know what’s going to happen tomorrow? Or next week? Or next month? Is this a good time to buy or sell? Does anybody seem to have a handle on what’s going to happen in the future?

Record your prediction, and any predictions you happen to run across, and pull them out a month or two from now.

Chances are, you’re like the rest of us. Whatever happens will come as a surprise, and then look blindingly obvious in hindsight. All we know is what has happened in the past. This week’s market drop is nothing more than a data point on a chart that doesn’t, alas, extend into the future.


Equifax data breach: What you need to know

On Friday, Equifax, one of the major credit reporting bureaus, issued a press release announcing that on July 29, it had discovered “unauthorized access” to data belonging to as many as 143 million U.S. consumers. We have compiled some information that we hope may help you understand what happened and what to do next. As always, please don’t hesitate to reach out to us if you have specific questions.

Equifax has stated its internal investigation determined no evidence of unauthorized activity on its core consumer or commercial credit reporting databases. However, the data accessed includes names, Social Security numbers, birth dates, addresses and, in some cases, driver’s license numbers. In addition, credit card numbers were accessed for approximately 209,000 U.S. consumers and personal identifying information on documents for another 182,000 people.

Equifax has set up a website on which you can enter your last name and the last six digits of your Social Security number to see if you have been affected by the breach.

Many people using this website have received error messages, perhaps due to the volume of people accessing it. Unfortunately, at this time, the results provided by the website can be vague and not necessarily reliable. Considering that the 143 million U.S. consumers affected represent 55 percent of the adult U.S. population over the age of 18, we recommend that you act as if your information was accessed as part of this data breach.

Your next steps

Free enrollment is being offered in the identity protection program TrustedID Premier, a three-bureau (Equifax, Experian and Trans Union) credit monitoring service run by Equifax. Anyone can enroll in this program at no charge – regardless of whether their information was accessed – through Nov. 21, 2017.

A few things to keep in mind regarding this offer:

  • Initially, arbitration language applying to those who choose to enroll in an Equifax credit monitoring program appeared to potentially prohibit them from participating in any class action lawsuits that might result from this data breach. On Sunday evening, Equifax issued a statement saying: “Enrolling in the free credit file monitoring and identity theft protection products that we are offering as part of this cybersecurity incident does not prohibit consumers from taking legal action.” Equifax has since removed the arbitration language from the terms of use on its data breach notification website.
  • Credit monitoring services, such as the one being offered by Equifax, do not prevent thieves from stealing your identity. What they can do is alert you that your identity has been stolen and, in some cases, be helpful in recovering from identity theft.


In conjunction with credit monitoring (either via a monitoring service or on your own by periodically requesting a credit report), place a security freeze on your credit files.

Note: Typically, once a credit freeze is in place, you can’t sign up for a credit monitoring service. The order in which you take these steps is important if you choose to do both.

The following are some frequently asked questions about security credit freezes:

What does a security freeze do?
A security freeze blocks potential creditors from seeing your credit file while it is in place. Therefore, an identity thief who has your information has no way of gaining new lines of credit because a creditor won’t issue one without being able to see your current credit score and file.

How do I put a security freeze in place?
You will need to notify four credit bureaus – Equifax, Experian, TransUnion and Innovis. This notification can typically be done online. Once completed, each bureau will provide you with a PIN to be used to unfreeze or “thaw” your credit file when you need to apply for new lines of credit.

Many states allow you to do this at no charge, but some states charge a nominal fee – typically up to $15 – for each credit freeze per bureau.

What is the advantage of a security freeze over a fraud alert?
A fraud alert is good for only 90 days, but can be renewed. Alternatively, you can get an extended fraud alert, which lasts for seven years.

When you have a fraud alert in place, lenders and service providers are expected to contact you for approval before issuing any new line of credit. A key point regarding fraud alerts is that lenders and service providers are supposed to receive your permission before granting new lines of credit in your name, but they are not legally required to do so.

Other Tips

The Equifax data breach is an unfortunate reminder of how valuable your data and personal information are, and is an opportunity to revisit what you can do to protect yourself:

  • Do not send personal, confidential information, including your financial account numbers, Social Security number or passwords, through email. Regardless, always use an email encryption service.
  • Review your credit card and bank statements each month for any suspicious transactions or activity.
  • Most identity theft occurs via phishing emails in which the end user is tricked into clicking on links or providing information that allows fraudsters to gain access to accounts or personal information.
  • Use string passwords and don’t default to the same password multiple times. If you have a lot of passwords, this can be difficult. Consider using password management software.

For more general information about how to protect against fraud, we recommend visiting the Federal Trade Commission’s consumer information website.

Decline in oil prices had the greatest impact on the market last quarter

As we look back at the second quarter, several events — political and otherwise — affected the markets. These events included France’s election of a new president; President Trump’s release of a proposed tax plan; and Britain’s election, in which the prime minister’s party lost seats in Parliament. But arguably, the factor that had the greatest impact on the market, across multiple asset classes, was the sharp decline in oil prices. The spot price dropped more than 14 percent, from $50.54 per barrel to $43.24 per barrel, according to the U.S. Energy Information Administration. The change in price is likely due to excess oil supply, especially in the United States, where the number of oil rigs has increased for 22 consecutive weeks.

These lower oil prices have had the effect of a tax cut for Western consumers, which helps explain the strong performance of equities in the second quarter. U.S. equities returned 3.1 percent (S&P 500 Index), non-U.S. developed markets returned 6.1 percent (MSCI EAFE Index) and emerging markets returned 6.3 percent (MSCI Emerging Markets Index).

“Despite geopolitical turbulence and political change around the world, capital markets remained quite strong overall.”

Lower oil prices can also mean lower inflation. Indeed, we see the market forecasting lower inflation today than three months ago. Lower inflation means that prices for goods and services will rise at a slower rate, but it also translates to lower nominal bond yields: the yield on a 10-year Treasury note decreased from 2.39 percent to 2.31 percent. At the end of the first quarter, the difference in yield between a 20-year nominal Treasury note and a 20-year inflation-protected Treasury note was 2.0 percent (this is called the breakeven inflation rate, or the market’s best guess at inflation over the next 20 years). At the end of the second quarter, the breakeven inflation rate had declined to 1.8 percent.

During the most recent quarter, we continued to see an upward trend in the markets, even after such historical events as the Dow Jones crossing the 20,000 mark in the first quarter of 2017. Despite geopolitical turbulence and political change around the world, capital markets remained quite strong overall. This resiliency reminds us that market movements cannot be accurately predicted, nor should their ups and downs come as a surprise. That’s why we follow the philosophy we do — and why our work focuses on designing a plan that withstands the test of time.

Boost retirement benefits with a cash balance plan

Business owners may not be able to set aside as much as they would like in tax-advantaged retirement plans. Typically, owners are older and more highly compensated than their employees, but restrictions on contributions to 401(k) and profit-sharing plans can hamper retirement-planning efforts. One solution may be a cash balance plan.

Defined benefits with a twist

The two most popular qualified retirement plans — 401(k) and profit-sharing plans — are defined contribution plans. These plans specify the amount that goes into an employee’s retirement account today, typically a percentage of compensation or a specific dollar amount.

In contrast, a cash balance plan is a defined benefit plan, which specifies the amount a participant will receive in retirement. But unlike traditional defined benefit plans, such as pensions, cash balance plans express those benefits in the form of a 401(k)-style account balance, rather than a formula tied to years of service and salary history. The plan allocates annual “pay credits” and “interest credits” to hypothetical employee accounts. This approach allows participants to earn benefits more uniformly over their careers, and provides a clearer picture of benefits than a traditional pension plan.

Benefits for business owners

Establishing a cash balance plan or adding one to coordinate with an existing 401(k) or profit sharing plan can provide significant advantages for business owners — particularly those who are behind on their retirement savings. In 2017, the IRS limits employer contributions and employee deferrals to defined contribution plans to $54,000 ($60,000 for employees age 50 or older). Nondiscrimination rules, which prevent a plan from unfairly favoring highly compensated employees (HCEs), can hamper an owner’s contributions even further.

Cash balance plans aren’t bound by these limits. Instead, as defined benefit plans, they’re subject to a cap on annual benefit payouts in retirement (currently, $215,000), and the nondiscrimination rules require that only benefits for HCEs and non-HCEs be comparable. Contributions may be as high as necessary to fund those benefits. Therefore, a company may make sizable contributions on behalf of owner/employees approaching retirement (often as much as three or four times defined contribution limits), and relatively smaller contributions on behalf of younger, lower-paid employees. These funding contributions are determined by an actuary on an annual basis and are considered independent of contributions to any existing defined contribution plans.

Of course, there are potential risks to cash balance plans as well. Unlike profit-sharing plans, you can’t reduce or suspend contributions to these defined benefit plans during financially difficult years. Similarly, investment performance within the plan may impact your ability or need to make funding contributions. So, if you do choose to implement one, it will be critical to ensure that your company’s cash flow will be steady enough to meet its funding obligations.

Be prepared

Although cash balance plans can be more expensive than defined contribution plans due to the additional administrative intricacies, they’re a great way to turbocharge your retirement savings. Work with your CPA and retirement advisors to determine if one may be right for you.

William Braddy earns prestigious CEPA designation from Exit Planning Institute

William Braddy, CFP®, a wealth manager with Kraft Asset Management, LLC, has earned the prestigious Certified Exit Planning Advisor (CEPA) designation after completing the Exit Planning Institute’s intensive program. William joins an elite group of business advisors worldwide who have received this designation. Dana Holmes, CEO of our affiliate, 2nd Generation Capital, LLC, also earned the CEPA designation earlier this year.

Vic Alexander, chief manager of KraftCPAs says, “We’re fortunate to now have two professionals on the Kraft team who have attained the CEPA designation. In close collaboration with our affiliates, we assist business owners in a variety of areas that are important in developing or implementing exit planning strategies, such as valuation, tax planning, wealth management, risk assessment and much more. Having professionals with this designation is a reflection of our commitment to help clients build, preserve and transfer business value and personal wealth.”

William adds, “Many of my clients over the years had significant wealth tied up in their businesses. Unfortunately, some did little planning to exit the business and monetize its value potential. By working together with KraftCPAs and our other affiliates, we’re confident we can provide services which will significantly change clients’ outcomes. As registered investment advisors, we at Kraft Asset Management help clients make prudent investment decisions which will position them to attain their personal goals and dreams. We understand that success means different things to different people. We’re committed to helping each client define, plan for and achieve the life they have envisioned for themselves and their families.”

William’s experience and expertise

William joined Kraft Asset Management in 2015. Prior to joining KAM, William was a senior vice president and private client advisor with U.S. Trust Bank of America in Nashville where he oversaw all private banking activities in Tennessee. With more than 20 years of experience in wealth management, he specializes in working with high-net-worth individuals and families. In addition to this most recent CEPA designation, William holds the CERTIFIED FINANCIAL PLANNER™ credential (CFP®) and holds Financial Industry Regulatory Authority (FINRA) Licenses 7 and 66.

About the CEPA program

The Certified Exit Planning Advisor program was designed for business advisors who work closely with owners of privately held companies. Using an executive MBA-style format, the program is designed around a central methodology, which is taught by the Exit Planning Institute’s dedicated faculty who are all sought-after subject matter experts and authors.

To receive the CEPA designation, professionals complete the rigorous four-day program that involves approximately 100 hours of pre-course study, 30 hours of classroom instruction and successful completion of a three-hour proctored examination.

About the Exit Planning Institute

Formed in 2005 to serve the educational and resource needs of M&A advisors, attorneys, wealth managers, financial planners, commercial lenders, management consultants, and other business advisors, the EPI is considered the trendsetter in the field of exit planning. It is the only organization that offers the CEPA program, which qualifies for continuing educational credits with 11 major professional associations, making it the most widely accepted and endorsed professional exit planning program in the world.

Do you have these critical legal documents?

I’m not afraid of death; I just don’t want to be there when it happens. – Woody Allen

Planning for your death is not the most enjoyable process. Unfortunately, bad things can happen if you don’t. One never knows when tragedy will strike; when it happens, it’s too late to start planning. Getting your affairs in order is advisable for everyone.

You may think that estate planning is only for the wealthy or for older people. Everyone can benefit from end-of-life planning, which entails more than writing a last will and testament. We are not providing legal advice, so you should consult with your financial advisor, CPA and an attorney who understands estate planning. A team approach should provide you with the best planning results.

Documents that everyone should have include:

1. Last will and testament. One of the most important estate planning documents that you can have, a last will and testament allows you to name the person you want to handle your affairs after you die and to explain how you want your assets distributed. You can name your estate’s executor (representative), name a trustee for any trusts created by the will and a guardian for any minor children you have. If you die without a will, it will be left up to a probate judge to decide how your assets are distributed and who will represent your estate. The judge may appoint someone you do not trust.

2. Living will. A living will (also known as an “advance directive”) articulates your end-of-life treatment wishes. It spells out what type of medical treatment you want at the end of your life if you are unable to speak for yourself. Some people do not want to be kept alive with machines and tubes hanging all over them. Others want to be kept alive at all costs.

3. Durable power of attorney. A durable power of attorney allows you to name someone to be in charge of making decisions for you if you become incapacitated for some reason, whether from an accidental injury, loss of mental capacity or some other reason. You may choose to name a separate healthcare power of attorney for medical decisions and a financial power of attorney for financial decisions. A healthcare power of attorney works hand-in-hand with a living will. The person you select for financial matters will not necessarily be the same person you want for health-related matters.

4. Living trust. A living trust allows you to bypass the potentially expensive and prolonged probate process and protects your privacy at the same time. A living trust provides for quicker distribution of your assets to your heirs since it can take effect immediately upon your death without probate. Generally speaking, it is most appropriate for people who have complicated financial or personal circumstances.

5. Final plan arrangements. Final arrangements can include organ donation and funeral arrangements, including how they are to be paid for.

6. Digital asset inventory. You should create and keep up-to-date a list of all online accounts, reward programs, passwords, financial and bill pay sites, social media, professional organization profiles, etc. to enable your family to manage your online presence when you are incapacitated or die.

If you have these documents in place, you should review them periodically. We recommend that you review them annually, perhaps on your birthday, to make sure they still reflect your intentions.

If you do not currently have an estate plan in place, you need a trusted financial advisor and an estate attorney who, working together, act in your best interest to help you develop a sound estate plan.

Let us help you and your attorney develop an investment plan to meet your financial goals and dreams.

The rules of prudent investing

The following rules can help investors build and adhere to a well-designed investment plan. These guidelines may be instrumental in giving investors the best chance of achieving their financial goals.

Constructing an investment plan

Recognize that the ability, willingness and need to take risk is different for everyone. Plans fail because investors take excessive risks. The risks unexpectedly show up and the plan is abandoned. When developing a plan, investors should consider their investment horizon, stability of income, ability to tolerate losses and the required rate of return.

Don’t invest in any security without fully understanding the nature of all of the risks. If investors cannot explain the risks to their friends, they should not invest. It’s critical to understand the nature of the risks being taken.

A well-designed investment plan has many elements. It should integrate portfolio management with tax planning, estate planning and risk management.

Don’t treat the highly improbable as impossible, nor the highly likely as certain. Investors assume that if their horizon is long enough, there is little or no risk. The result is they take too much risk. Stocks are risky no matter the horizon.

Only work with advisors who will provide a fiduciary standard of care. That is the only way to ensure that the advice provided is in the investors’ best interest. There is no reason not to insist on a fiduciary standard.

Prudent InvestingMaintaining an investment plan

The more complex the investment, the faster investors should run. Complex products are designed to be sold, not bought. Investors can be sure the complexity is designed to favor the issuer, not the investor. Investment firms do not simply give away higher returns.

The only thing worse than having to pay taxes is not having to pay them. The “too-many-eggs-in-one-basket” problem often results from holding a large amount of stock with a low cost basis. Fortunes have been lost because of the refusal to pay taxes.

The safest port in a sea of uncertainty is diversification. Portfolios should include allocations to the asset classes of large-cap and small-cap stocks, value and growth stocks, real estate, international developed markets, emerging markets, commodities and the appropriate amount of bonds.

Owning individual stocks and sector funds is more like speculating than investing. The market compensates investors for risks that cannot be diversified away, such as the risk of investing in stocks versus bonds. Investors should not expect compensation for diversifiable risk, such as the unique risk related to owning one stock or sector fund. Prudent investors only accept risk for which they are compensated with higher expected returns.

Take risk with equities. The role of bonds is to provide the anchor to the portfolio, reducing overall portfolio risk to the appropriate level.

Staying the course

The consequences of decisions should dominate the probability of outcomes. Investors should ask themselves if they can live with the outcome, regardless of how small of a chance there is of the outcome occurring.

The strategy to get rich is entirely different than the strategy to stay rich. One gets rich through inheritance or by taking risk. One stays rich by minimizing risk, diversifying and not spending too much.

The four most dangerous investment words are “This time, it’s different.” Getting caught up in the mania of the “new thing” is why the surest way to create a small fortune after starting out with a large one.

If it sounds too good to be true, it probably is. Investment decisions should be based on the evidence from peer-reviewed academic journals.

Keep a diary of market predictions. After a while, investors will likely conclude that they should not act on their “insights.”

Good advice does not have to be expensive, but bad advice always costs dearly no matter how little is paid for it. Smart people do not simply choose services based on cost (the cheapest doctor or CPA). Costs matter; but it is the value added relative to the cost of the advice that ultimately matters.

The material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Copyright © 2017, The BAM ALLIANCE.

What insights can we gain from our look back at 2016?

Every year brings its share of surprises. How many of us could have imagined that 2016 would see the Chicago Cubs win the World Series, Bob Dylan receive the Nobel Prize in Literature, Donald Trump elected president, the United Kingdom’s withdrawal from the European Union, and the Dow Jones Industrial Average close out the year just short of 20,000?

In 2016, the U.S. financial markets reached new highs, and stocks in a majority of developed and emerging market countries delivered positive returns. Yet, the year began with anxiety over China’s stock market and economy, falling oil prices, a potential U.S. recession, and the stock markets in France, Japan, and the U.K. registering losses of more than 20 percent from their previous peaks. U.S. equity markets were in steep decline and had the worst start of any year on record.

The markets began improving in mid-February through midyear; however, it was not always smooth sailing for the remainder of 2016. Investors faced uncertainty from the Brexit vote in June and the U.S. election in November. While both of these events created a significant amount of consternation, which played havoc with the global stock markets, the duration of the declines did not last long. Unfortunately, too many investors panicked and sold everything to cash.

“The reality is that no one has any idea what new and unforeseeable circumstances are in store for us in 2017 and beyond.”

Ultimately, many of these investors either stayed in cash or reentered the markets too late and missed out as the U.S. stock market had a strong year. The S&P 500 Index logged nearly a 12 percent return, and U.S. small cap stocks, as measured by the Russell 2000 Index, returned over 21 percent. As well as the U.S. markets performed last year, it was only the 17th best performing country out of 46 countries in the MSCI All Country World Index (ACWI). The S&P 500 index performance in 2016 was not even in the top half of the index’s historical annual returns.

So what insights can we gain from our look back at 2016? Hardly anyone predicted the Trump victory or the Brexit. The financial press of late is rife with some pundits foreseeing a higher stock market for the next year and beyond, while others are predicting a significant downturn later this year. The post-election rally is a speculative guessing game, as people are wagering on the effectiveness of the incoming administration’s economic policies before any have been implemented. The reality is that no one has any idea what new and unforeseeable circumstances are in store for us in 2017 and beyond, much less the direction or extent of the effects of those circumstances on the financial markets, and it would be foolish to base one’s long-term financial welfare on such pure conjecture.

So let us help you make sense of the media noise, sort through the clutter and weather the market’s uncertainties with peace of mind. That’s our recommendation for long-term investing success.

Take the opportunity to live well

Of the new year, celebrated Victorian poet Alfred Lord Tennyson said, “Ring out the false; ring in the true.” So in that spirit, we pose two questions:

  1. Do you feel wealthy?
  2. Do you feel “well-thy”?

In response to the first question, if you are like most people, your mind likely went to the size of your bank account. Change one small letter, and your perspective may have shifted dramatically. You may have found yourself thinking of your health, your family, your friends, your role in your community, your connection to a higher power, your career, your hobbies and more.

This begs the question, what really is “a rich life”? In his new book, “The Feel Rich Project,” Michael F. Kay says it’s about improving “our ability to live closer to our values … to build upon a foundation of appropriately aligned beliefs, behaviors, and habits.” He goes on to point out how, for so many of us, a nagging sense of dissatisfaction, of feeling that we are lacking, comes from a life in which our daily habits do not support our deepest values.

Another way to think about this is the common notion that we must first do the right things so we can have certain possessions or experiences in order to be truly happy. This way of thinking can be summarized as “DO, HAVE, BE.” Alternatively, focusing on who you want to be — from the standpoint of your character, your interactions with others, the legacy you wish to leave, what brings you joy — will lead you to do what is necessary to support those values, and you will end up with what you are meant to have. This way of thinking can be summarized as “BE, DO, HAVE.” The second philosophy not only takes the emphasis off external elements (which are much harder for us to control), but refocuses us on why we want to do or have something.

Manisha Thakor, director of wealth strategies for women for the BAM ALLIANCE, was recently interviewed for The New York Times article “How Much Is Enough?” The piece and subsequent reader comments about “enough” and its counterpoint “too much” underscore what a loaded question this is in modern life. It pertains to so many aspects of our experience — money, time, love and connection, to name a few. When our answers to “enough” or “too much” come from outside ourselves, they are difficult to control and can leave us feeling hollow.

So instead of making a list of New Year’s resolutions, why not consider a different project: Identify your core values and take whatever steps necessary to shift your daily actions in the direction of those beliefs. Looking at how you spend your time and your money will give you powerful clues about areas of your life that may be ripe for some tweaks. If family is a core value, what rituals can you put in place to ensure you are devoting the time you want to your loved ones? If financial independence is a core value, have you taken steps to fully finalize your estate, risk management and tax minimization plans? Is your spending aligned with your values?

As you begin 2017, we hope you see it as an opportunity to ensure you’re living a “well-thy” life. From all of us at Kraft Asset Management, we wish you a very Happy New Year!

Take steps to move toward your ideal life

thinkbigIf you suddenly received $10 million and the diagnosis that you had only 10 years to live, what would you start doing? What would you stop doing?

The specific dollar amount that triggers your personal feeling of financial release may be higher (or lower) than $10 million. But the power of these twin questions comes not from the specific number, but from conceptually removing one common restraint on living an authentic life (“I need more money before I …”), while highlighting the other restraint we all share: that our time on earth is limited.

Common answers to these questions are: “I would start spending more time with my family, traveling and volunteering,” and “I would quit worrying, working, and doing things or being around people that don’t bring me joy.”

This, of course, begs the obvious follow-up question: What’s stopping you from living that bigger life right now?

It seems that, increasingly, time is the constraint that keeps us from living bigger. For many of us, we feel we don’t have the time (or choose not to spend the time) to challenge ourselves to figure out what, exactly, it is that we really want. This is understandable. Self-reflection is hard work and can require us to acknowledge that we may have made some less-than-optimal choices in the past. However, like most difficult steps, there can be a big payoff at the end.

“What’s stopping you from living that bigger life right now?”

And it can be easier than you think. Neuroscientists have shown that once an intrinsic goal is identified, our “reticular activating system” starts working on the problem and, “seemingly miraculously,” solutions can start to appear. Behavioral experts have found that taking small, regular steps in pursuit of a seemingly large and impossible goal can help us achieve what once seemed inconceivable. Studies from multiple fields show that one of the most common traits of “successful” people is grit and a willingness to try, fail and try again. These findings show that the keys to having a bigger life are within us all.

This fall, take some time to ask yourself what things you would change in order to move from your current life to your ideal life. It can be helpful to have someone act as a sounding board in this exercise, and we would be happy to help. In addition, these questions make an excellent framework for reviewing your financial plan to make sure it is designed to support your personal life goals.