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What do grasshoppers and ants have to do with investing?

Aesop’s fable about the grasshopper and the ant summarizes my philosophy for retirement saving. It goes something like this:

A grasshopper was flitting about a field singing songs all day long when an ant ambled by with a grain of corn in tow. The grasshopper asked the ant why he was working so hard on such a beautiful day. The ant explained that he and his friends had to gather food for winter. The grasshopper scoffed and said, “That can wait!” and hopped along. When the snow came, the grasshopper couldn’t find any food and crawled to the mouth of the anthill where he saw the ant. He begged the ant to share some of the food that they had stored away, but the ant explained that they had just enough and couldn’t afford to give any away. The grasshopper crawled off and the ants found him dead in the remnants of a snow bank the following spring. The moral of the story is to prepare for tomorrow for surely it will be here before you know it.

The harsh reality

Here’s the harsh reality of retirement finance. Most of us will get some social security, but very few of us will receive any meaningful pension. Despite this, most workers have put away precious little in savings to supplement their coming retirement. Coming from a financial professional this may surprise you, but I believe that 99% of investors have little or no need for an expensive full-time financial advisor. Here’s the breakdown:

Roughly 50% of Americans have essentially no savings and therefore no need for an advisor. If they do not have a pension to supplement their income, sadly they will have to live on social security and welfare in their retirement.

Another 40% of Americans have less than $250,000 saved. Unless these individuals have a generous pension, their retirement income will be made up of social security plus an extra few thousand dollars, although this “extra” will probably consist mainly of health care costs. The needs of these individuals can likely be met with about an hour or two of an advisor’s time and a few hundred dollars worth of advice.

While these numbers include younger investors who have not had a chance to build a nest egg, most of these people are grasshoppers, spending their assets instead of growing them and making no preparations for retirement. Only about 9% of Americans are “ants” who typically have several hundred thousand to several million dollars tucked away for the coming winter of retirement. What many don’t realize is that with just a little education a virtual amateur can usually manage their finances better than expensive advisors working just a few hours annually on planning and investments.

Education is the answer

Fenway Financial Advisors is launching a new educational program to help investors, especially “ants”, seeking to learn how to take greater control of their own financial destiny by simply pointing you in the right direction. Our investment coaching seminars start in January and can potentially save thousands of dollars you might otherwise spend annually on advice. This amount of savings could add years to your retirement or free up money for other expenses. (Ed. note - we have discontinued our educational seminars, however all of the items listed below are included in our personal advisory services)

Our three hour seminars can be taken privately or in a group setting ($750 per household for personalized private lessons and $250 per person including spouse for group lessons) and will teach you:

*Planning basics and tools – getting to “the number” for retirement and other financial objectives
*Managing taxes and efficient use of tax efficient retirement accounts
*Introduction to primary asset categories, advantages and disadvantages of each and investment alternatives for each
*Asset allocation including a real-life example (including a personalized asset allocation structure for private lessons)
*Advantages and disadvantages of index funds v. actively managed funds for different asset categories
*Measuring and managing risk in your portfolio
*The enormous impact of expenses on a portfolio and how inefficient expense management can delay your retirement for years
*Proper use of life, disability, long term care and longevity insurance
*Retirement portfolios and withdrawal strategies

If you’ve been keeping track, that still leaves 1%. The top 1% of Americans are neither ants nor grasshoppers. They are bees. Bees have an eight-digit net-worth and sip nectar in the summer and eat honey in the winter. Bees could also do most of their own investing, but it’s easier to let a few ants do the heavy lifting!

Here’s to hoping your holidays are spent chuckling over this article eating honey by a pool in Florida or other tropical destination! Happy Holidays and we look forward to being a part of your more prosperous 2008. Please call us at 617-948-2102 to schedule an appointment for a private seminar or an upcoming group class. More information is available on our website at www.fenway-financial.com.

Steve Wintermeier is Managing Principal of Fenway Financial Advisors in Boston.  Mr. Wintermeier received a Bachelor of Science of Foreign Service in international economics from Georgetown University and an MBA from Columbia Business School. His professional experience includes an extensive background in international business management and consulting.  He is the founder of Fenway Financial Advisors, a Massachusetts registered investment advisory firm specializing in fee-only planning and investment services.  For more information, please call 617-948-2102 or email This email address is being protected from spambots. You need JavaScript enabled to view it..