You Need Perspective | Modernize Wealth

Now More Than Ever: You Need Perspective

Now More Than Ever: You Need Perspective

Here we are, at the midpoint of an incredible year to say the least. A year that many will want to forget! We’ve had a pandemic, shut down our economy, a market crash, trade issues, and riots. How are we ever going to survive!?

The short answer is…we’ve been here before. I’m often asked by my family, clients, and business associates how on earth I can crawl out of bed every morning and look at the market? Simple, look to the past to guide the future.

Do you think this is the first health crisis we’ve ever had? Think again. Try the Spanish flu of 1918, the Hong Kong Flu in 1968, and the Aids crisis that started in 1980. You can go further back, but this will suffice for now.

Spanish Flu Pandemic of 1918

The 1918 pandemic infected at least 500 million people, of which it is estimated that 50 million perished. Medicine of the day bore little resemblance to today’s massive technological innovations. An infected patient that contracted that virus in the morning was often dead by nightfall.

Here in the US nearly 675,000 people were listed as having died from the virus. Unlike today few, if anyone, were able to earn a living from home. A much higher percentage of the population lived in poverty, and there were no relief checks in the mail. Businesses shut down without PPP forgivable loans or EIDL (Economic Income Disaster Loans) to help them survive, and the Federal Reserve, only four years in existence, hadn’t a clue what to do.

Additionally, we had the Great War which raged in Europe throughout the pandemic. Many of our soldiers died not from enemy bullets, but from the flu. It was also an off-year election. The Dow Jones industrial Average rose 10.51% in 1918, and 30.45% in 1919.

Too far back you say. Well let’s look at 1968 and see if you recognize anything.

Hong Kong Flu of 1968

Like today, in 1968 there was a terrible flu pandemic called the Hong Kong flu which killed over one million people worldwide. In the US, it is estimated to have killed over 100,000 people with a population size half of that of today, most over the age of 65 years old.

Medicine had advanced significantly in the 50 years since 1918 but was nowhere near where we are today. We also faced an economic crisis in 1968, were at war in Viet Nam, faced assassinations, and civil unrest accompanied by massive riots. The combination of funding for the war and the Great Society program caused a large budget deficit and led to inflation.

The Fed sought to curb inflation by increasing interest rates, and that resulted in rising unemployment. During the entirety of the Viet Nam war, 58,220 US soldiers were lost. About 30% of that number, or 16,592 occurred during 1968 with another 87,388 wounded in action. 1968 is often considered the peak of the Viet Nam War.

Martin Luther King was assassinated on April 4th, Bobby Kennedy on June 6th and for eight days at the end of August 1968, there were violent protests leading to eleven deaths, and over 500 injuries. There were also riots in a dozen cities around the country with looting, more death and destruction. It was also an election year in which Nixon defeated Hubert Humphrey. In 1968 the S&P 500 rose 7.66%, fell 11.36% in 1969, and was flat in 1970. Hardly a disaster.

Reasons to be Cheerful

We have problems today to be certain. But we are hoping a vaccine for COVID-19 will be found before the end of the year, and we have reason to be optimistic because of the substantial advances in technological innovation and research since 1968.

The shutdown has hurt many industries and workers, many of whom will no longer be able to return to their previous job. Bankruptcies will increase and it will take time to recover.  But, as history shows, we will recover as new industries, products, and services will be created because the American people are built to innovate and succeed.

So, when I get asked that question that I referred to earlier of how I crawl out of bed every morning and look at the market, I think of these reasons to be cheerful. After all, we can’t change the past, the future is all we can control as we all work to Make Our Success Our Legacy.

Questions or Concerns? Reach out!

All-in-all, I’d rather be celebrating July 4th in 2020 than 1968 or 1918 thank you very much! Enjoy the Holiday! Please reach out to me at 480-346-1283, or email if you have any questions, or just want to discuss further.

About the Author

John Herbert’s financial industry gravitas comes from almost 30 years’ as a Certified Financial Planner and Certified Portfolio Manager. An accomplished educator, John taught Economics at Chapman University and the University of Phoenix for many years. Sensitive to finding a balance between business, family and finance John has always had a passion for helping people build long-term wealth for their families.

An Ira Can Help You Make Your Success Your Legacy.

An IRA Can Help You Make Your Success Your Legacy.

An IRA Can Help You Make Your Success Your Legacy.

Did you know that Individual Retirement Accounts (IRAs) can play a valuable role in the estate planning process? We will get into some tips and strategies shortly, but let’s quickly recap what you already know… (more…)

Estate Planning For Business | Modernize Wealth

When an Estate Plan Might Not Be Enough

When an Estate Plan Might Not Be Enough

If you have ever spoken to an attorney and asked “What are the worst court fights you have seen, or studied in law school?” The one-word response is almost always – “Family.”

While that answer is disheartening for those of us who love and trust our family above all others, it is easy to see why it frequently occurs. It also demonstrates the crucial need for you to prepare. Correct preparation could mean that your family doesn’t suffer the fate of too many families -broken relationships, replete with irreconcilable emotional and financial damage.

Where There’s a Will…

A carefully prepared Last Will and Testament (a will) can alleviate much of that potential damage. A good estate attorney can guide you, enabling you to provide your estate with additional levels of protection to try to prevent disputes among surviving family members. Yet a will has limits. A living trust can allow the estate to transfer assets to recipients without the costs and time of probate. Unfortunately, there are still dangers out there.

Make a Strong ‘Executor’ Decision

Estate PlanningEvery will has an executor. Most financially successful people wish to see their wealth create a legacy for their children and grandchildren. They often choose one of their children as the executor of their estate to see that assets are properly dispensed, and those included in the will are given their share.  Sadly, this is where the problems often begin.

While most executors will be responsible and honest, some will not. For the dishonest executor, assets can be misappropriated or hidden, and the intent of the deceased can be ignored, often without repercussion. Taking a wayward executor to court is likely to be expensive and time-consuming…with an uncertain result.

Worse, the additional emotional strain of sitting across the table from a brother or sister, more often than not can lead to permanent destruction of the family’s relationship. Hardly the outcome a successful professional or business owner was expecting.

Even for the honest and responsible executor, the pressure placed on he/she to make certain decisions that benefit one sibling at the expense of another can create similar levels of family discord. For example; a long held family summer home. Some siblings will want to sell the summer home because they need the cash, while others do not. An executor can choose to compel those who wish to retain the summer home to buy out the other siblings, but what if those wishing to keep the cabin can’t raise the funds or obtain a loan? Who wins?

Even if the siblings are well intentioned and try to come to some arrangement, some issues can become too difficult for the inexperienced executor.

Consider a Third-Party Trustee

A professional third-party trustee can be a valuable asset. Their purpose is to create clear objectives, and help set guidelines with the estate attorney and the client. When the time arises for the trustee to act as an executor, they are bound by the terms of the will. A third-party trustee will dispatch their duties without emotion and will proceed according to the laws that govern their profession. They are licensed and subject to audit, so they are held accountable. Better your children fight with the executor than each other! Third-party trustees can even work with your children to ensure that all of them are included in the oversight, so no claim of unfairness can be leveled.

A Trustee is a Necessity for Business Owners

If you are a business owner, the issue of complexity can dramatically multiply. For the executor, experience and competency are an even greater asset since such levels of knowledge are less likely to be found among family members. Business planning decisions, such as business valuations, buy/sell agreements with partners, and liability management can overwhelm those not versed in the operations of an ongoing concern.

If one or more of your children is involved in running the business, while other children are not, the problems can compound and escalate. Accusations and mistrust can surface very quickly if the perception is that those not involved in the business are being unfairly treated, whether true or not.

An experienced third-party trustee can have a business valuation prepared by a licensed professional who will work with the family’s CPA and wealth advisor to ensure that transparency and objectivity are maintained throughout the process.

Your Business is Your Biggest Asset

Businesses are not like homes; harvesting the value of your business for the benefit of each beneficiary can be very challenging. Lending sources will likely need to be secured if the buyers are internal to the organization, while buyers will need to be found if the business is to be sold to an outside interest. Either way, management will need to ensure continuity to avoid a substantial drop in the value of the business due to poor planning. A good estate plan created by a solid team of professionals will be indispensable to ensure that each family member receives the wealth you have created for them.

Still Not Convinced?

We have a litany of clients who have shared histories of broken families with us. People who haven’t spoken to each other in years. People who now have nothing but contempt for those, who at one time, were the those they cared about the most. Stories of one sibling cheating other siblings, leaving them empty handed. Children left out of the proceeds of the estate at the hands of a step-parent, or vice-versa. In each case the story always ends with: “Mom and dad would never have wanted it like this.”

Business owners are among the most successful people in our country, but they often are the most vulnerable. A business owner’s best defense is to have a business plan and a personal financial plan that is regularly updated by a team of professionals. Specialists with the experience to ferret out problems before they occur, and before it’s too late.

Let’s Have a Conversation

Call us at Modernize Wealth at 480.346.1283 so we can start a conversation to put you and your business on a path to success. You can also email us at if you have questions, or just want to discuss further.