Yes, there’s a blog today. Now that’s dedication.
Let’s pick up where we left off and enjoy this song which we have use rights from Zac Nelson titled "Christmas Joy." Yesterday I had you create the Nine Boxes and to make a listing of all of your assets. Today I want you to take the list of assets and categorize them based on two factors, cash, income, or growth, and taxable, tax-deferred, or tax-free. Some of the items will contain some combination of cash, income, and growth. For example, a mutual fund, brokerage account, or variable annuity are bundled products that may have a combination of two or all three asset classifications. For taxable classification, there may be, for example, municipal bonds in a brokerage account that also contain stocks. This requires you to break out the municipal bonds (income and tax-free) from the stocks (growth and taxable). That’s all I am going to say about classification.
Okay, let’s talk about this for a minute, but first, some history.
Back in 1980, a sales system was developed to sell life insurance. The idea was and continues to be based around three filing cabinets where there are protection, savings, and growth-based drawers that contain various financial products. The idea behind the system is to reposition money from cash to investments and insurance. Generally speaking, the system is designed to sell high commission-based products. Whenever you see this system being used, it’s a good bet that those using it are insurance agents first, and everything else second. With that said, one day I was perusing the sales material for the sales system while leaning on the door frame to my office in the Southern Commerce Bank building in Tampa, Florida. In front of me was a row of four-drawer filing cabinets. I looked down at the material and up at the cabinets a few times, and it dawned on me. Throw out the insurance focus and make it simple. There was something here, but not for selling insurance. Instead, here was a way to help prospective and active clients visualize what they have.
I sat down at my desk, flipped open my current Moleskin (and at the time, one of the last Moleskins I had as production ceased; see below for an ancillary history), and began making notes. After several iterations, I settled on cash, income, and growth, with taxable, tax-deferred, and tax-free. I then created a template with instruction to hand to prospective and current clients. The packet included a sheet of carbon paper as photocopiers were a work-related item, home computers were still rare, and there was no such thing as smartphones, jpeg, or email as we know it today. The carbon paper was to be used to snail-mail me a copy before the next consultation to be efficient and effective. Yes, stone age; ha ha ha, go ahead and laugh, but you work with what you have at the time.
From there the nine-box asset allocation process was born and given to clients to use. I know of one person who is a broker that I once was briefly acquainted with, who continues to use the system with his clients as the primary way to track and report on insurance and investment holdings. For me, I’ve never been inclined to do for others, that which others are best suited to do on their own, thus our approach to using the same process is vastly different. I also operate on the basis that the horse who refuses to drink after being led to the watering hole, needs to die, and when it does, there’s no need to kick it, just move on.
Over time and a lot of use, I learned to psychologically profile people based upon keen observation of tell-tale signs. The “tells” are something I feel I am extremely good at for no other reason than practice, study, and surviving stressful situations by the Grace of God and grit-based wits. And so:
I do not know what you did or if you did anything at all; however, I do know this: “One’s attention to detail and their ability to focus is a strong indication of traits necessary to succeed in the game of living a wealthy life. I use a lot of psychology as I travel about this ball of mud we call earth and you are now privy to something that I’ve done for over thirty years. As a result of technology, I’ve long ago stopped explaining the nine box process on an individual basis. If you want more information and insight, click on the Get Started button, and what else: Get Started.
Enjoy Christman and the growing number of boxes in your life. Return tomorrow for Part 3.
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