Jonathan Clements's Blog, page 376

Half Wrong

I WAS SINGLE-track mountain biking with two friends. We had stopped for a rest���which was when I discovered how completely wrong I���d been with most of my financial decisions.

We had all recently retired from the same company and were debating when to claim Social Security. One buddy stated that he planned to start at age 70, so he would receive the maximum monthly payment possible. He defended his position by arguing that he was in good health, which could be indicative of a long life, and this strategy is promoted by the majority of financial pundits.

The other friend said he was starting Social Security now, at age 62, the earliest possible age. He cited some recent studies���including one from the Social Security Administration���that indicated potentially greater wealth if payments are started early and then invested at a healthy return. On top of that, he noted some pundits are now suggesting that wealthier folks will likely face increased taxation on their Social Security payments in the years ahead.

My two friends then looked to me as the de facto referee, asking which of the two approaches I planned. Rather than supporting either strategy, I replied that I planned to split the difference and claim Social Security at 66, assuming no change in overall health. I justified my position by saying that I didn���t have any idea when I would die or what future tax rates would be. One friend promptly retorted, ���You���re committing to being half wrong, no matter what.���

We hit the trail for an additional hour of biking. Upon finishing, the conversation returned to financial topics. Our former employer allows retirees to take their pension as lifetime annuity payments, a lump sum payout or some combination thereof. A few retirees favor the company���s annuity option, which is far more generous than income annuities that can be purchased as an individual. This option eliminates future market risk, generates income to supplement 401(k) investments and provides longevity insurance against outliving other assets.

Meanwhile, most retirees favor the 100% lump sum option, because it provides an inheritance in the event of early death and, if properly managed, the chance to outpace inflation and increase wealth. Unlike most of my peers, including my two friends, I elected to take my pension as a combination���mostly a lump sum, but also with a small annuity. In other words, I hedged my bets, which means I���ll end up being at least somewhat wrong.

My compromising and likely wrongmindedness didn���t end there. The annuity payouts were offered with a number of options, including joint survivorship (which means my wife continues to receive payments after I die) and a number of years certain (meaning there would be a minimum number of payments, even if I died earlier). Again, I hedged my bets���opting for both joint survivorship and a minimum five years of payments���which resulted in me receiving a lower monthly annuity payment.

Conventional wisdom also suggests immediately investing a pension lump sum payout, because the stock market rises over the long haul. This is exactly what one of my friends did. While I invested the majority of the payout immediately, I also trickled additional portions of the payout into stocks over time. This approach hedged against the possibility of an immediate market downturn, but it turned out to be another of my clearly ���half wrong��� moves.

Until I had these discussions with my biking friends, I never realized how consistently wrong I���d been with my financial decisions. Again and again, I���d opted for the compromise solution and never fully committed to any approach. As my two friends reminded me, I���m always ���half wrong.��� But I���m fine with that���because I know I���m also ���half right.���

John Yeigh is an engineer with an MBA in finance. He recently retired after 40 years in the oil industry, where he helped manage and negotiate the financial details for multi-billion-dollar international projects. John now manages his own portfolio and has a robust network of friends, with whom he likes to discuss and debate financial issues.

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Apple Dunking

IN 2005, the comedian Stephen Colbert popularized the word ���truthiness.��� This term, if you aren���t familiar with it, refers to something which��seems��like it should be true, but isn’t actually supported by evidence. Are stock market pundits guilty of truthiness? To answer the question, let’s look at a recent event.

First, some background: In the life of an investment analyst, there���s a rare but dreaded phenomenon known as a ���profit warning.��� This occurs when a company can tell, based on preliminary numbers, that its quarterly results are going to be truly dismal and far below expectations. When companies find themselves in this uncomfortable situation, they move quickly to disclose what they know, rather than waiting and surprising everyone on the regularly scheduled quarterly conference call.

That is what just happened to Apple for the first time in 16 years. In a letter to��shareholders, CEO Tim Cook warned that iPhone sales had been weak and that revenue would be��down��$4 billion from last year. The stock price reaction was swift: down 10% the next day.

In response to this event, market pundits immediately took to TV and radio with these opposing viewpoints:

Apple detractors were quick to point out that ���trees don’t grow to the sky.�����In other words, companies can’t keep growing at a rapid clip forever. Just as IBM, Xerox and BlackBerry have all seen their stars fade, it is now Apple’s turn. To support their view, detractors point out that iPhone sales have��plateaued��and that Apple hasn’t delivered any truly new products in years. To further support their view, detractors pointed to Cook’s letter, in which he seemed to be grasping at straws, blaming slow iPhone sales on things like the availability of inexpensive battery replacements.

Apple supporters, on the other hand, took the position that ���this too shall pass.�����In their view, the stock market is simply overreacting. They see Apple���s stock as a bargain at these lower prices. After all, Apple is still the smartphone leader in the U.S. Last year, they sold an astonishing 217 million phones. To bolster their view, Apple supporters point to Cook’s letter, which noted a number of non-Apple-specific issues, including exchange rates and trade tensions with China. In other words, Apple is just fine. Sure, it wasn’t a great quarter, but Apple was simply the victim of factors beyond its control.

What should you conclude from these contradictory viewpoints? Is one side or the other guilty of truthiness? When you hear these types of things on TV or see them quoted in the newspaper, who should you believe?

My view is that you should ignore them both���but not because either is guilty of truthiness. Market analysts are all trained to rely on data. You can see that in the above examples: Both sides cite evidence���in fact, they both cite the same letter from Cook���but that’s precisely the problem. The stock market is not a tightly controlled lab experiment in which one can draw conclusions from the data. Far from it. Yes, there’s a lot of data, but much of it is contradictory and incomplete, so it shouldn���t be viewed as conclusive. Market analysts��sound��like they���re stating facts, when in fact they are really just stating opinions. That’s why I wouldn’t get too worried, or excited, in response to anything you read or hear about the market or any individual stock.

According to Philip Tetlock, an authority on forecasting, there���s a��negative��correlation between an analyst’s reputation and his or her forecasting accuracy. All that time being interviewed on TV, it turns out, leads to overconfidence. The upshot: To the extent that you should ignore market analysts, you should be especially leery of those who are well known.

Adam M. Grossman���s previous blogs��include Intuitively Wrong,��Paper Tigers��and��What Matters Most . Adam is the founder of�� Mayport Wealth Management , a fixed-fee financial planning firm in Boston. He���s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter�� @AdamMGrossman .

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Nursing Dollars

LONG-TERM CARE is the elephant in the room that many of us try mightily to ignore. It���s a potentially huge expense: A semi-private room in a nursing home costs an average $89,297 a year, according to��Genworth Financial.

But what should we do about it? For answers, I turned to Christine Benz, director of personal finance at Chicago financial researchers Morningstar Inc., where she���s worked for more than 25 years. Benz has written extensively on long-term care (LTC). She���s also had personal experience: Together with her sisters, she helped oversee the care for her elderly parents.

How big is the risk?��Half of folks turning age 65 will eventually need some form of long-term care, as Benz notes in her latest annual compendium of LTC��statistics. But at any given time, the vast majority of those receiving care aren���t in nursing homes. Instead, they remain at home, often receiving help from unpaid caregivers, such as their friends, spouse and adult children.

But as Benz can attest, the logistics of home-based care are daunting. ���You really need a trusted adult child to help you make it all happen���the hiring of caregivers and the managing of caregivers and the maintenance of the home,��� she says. ���There are all these things that swirl around staying in your home. You need to make sure your children are on board with that plan.���

While most LTC takes place at home, half of those 65 and older will, at some point, find themselves in a nursing home, calculates��Boston College���s Center for Retirement Research. But��50% of the men and 39% of the women who spend time in a nursing home stay three months or less, which means Medicare likely paid at least part of the cost, assuming the nursing home stay followed a qualifying hospital stay.

Not everybody gets off so lightly. The U.S. Department of Health and Human Services estimates that 15% of those 65 and older will rack up long-term-care costs of��$250,000 or more (and the tab would likely be far larger, if we put a dollar value on the unpaid help from friends and family). If you have few assets, much of this cost will be picked up by Medicaid. What if you don���t? It could be coming out of your pocket.

Should you buy insurance?��If you have less than, say, $300,000 in savings, you should probably skip LTC insurance. By the time you need nursing home care, you’ll likely have depleted your savings���or close to it���and hence you will qualify for Medicaid, which pays some 60% of U.S. nursing home costs. One downside: You���ll face limits on where you can receive care.

At the other end of the wealth spectrum, you might consider self-insuring (though Benz prefers the phrase ���self-funding,��� noting that there���s no risk pooling involved���a key component of any form of insurance). In the past, I���ve suggested that those with portfolios of $1 million and up can probably afford to pay LTC costs out of pocket. Between portfolio withdrawals and Social Security benefits, the cost should be manageable.

Benz sets the level even higher���at perhaps $1.5 to $2.5 million���and she may indeed be right. As she notes, the right number depends on a host of��factors, including the cost of nursing homes in your area and whether you���re married. Benz also points out that folks with a high spending rate early in retirement may not be left with enough to cover nursing home costs, even if they do quit the workforce with $2 million.

If you have a handle on local LTC costs, she says you might set aside enough to cover, say, 2�� years of nursing home expenses in a separate investment bucket���and perhaps twice that sum if you���re married. Even then, be aware of what Benz calls a ���fat-tail event������the risk that you���re among the 10% of nursing home residents who stay five years or more. How would you cope with that cost?

For those who plan to pay LTC costs out of pocket, Benz suggests saving traditional IRA assets for that moment. Yes, withdrawals will be taxable as ordinary income. But you���ll likely have hefty tax-deductible health-care costs, and you can use the deduction to trim the tax hit on your IRA withdrawals.

What type of insurance should you buy?��It���s the middle group���those with between, say, $300,000 and $1.5 million���who should seriously consider buying LTC insurance. Problem is, the insurance industry hasn���t exactly covered itself with glory. ���It���s hard to vouch for the long-term-care insurance market,��� Benz says.

Many policyholders have been hit with alarmingly large premium increases���sometimes so large that they can no longer afford their policy, forcing them to either drop the coverage or see if the insurer will allow them to continue paying their current premium in return for a reduced benefit.

Faced with this sorry history, folks have recently turned to hybrid policies that combine, say, life insurance with an LTC benefit or a tax-deferred fixed annuity with an LTC benefit. If you use the benefit, the eventual payout on the life insurance or fixed annuity is reduced.

Sound appealing? These hybrid policies offer a way to insure against LTC costs without the risk of big premium increases down the road. But as Benz points out, these products also involve a hefty opportunity cost: In return for the LTC benefit, you���re giving up the chance to invest the money elsewhere���where it could be earning far higher returns.

Follow Jonathan on Twitter�� @ClementsMoney ��and on Facebook . His most recent articles include Beyond Cheap,��What Now��and��Strings Attached. Jonathan’s ��latest book:��From Here to��Financial��Happiness.

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Paper Chase

IF YOU���RE GOING to form one new financial habit this year, make it good recordkeeping. A system that���s easy to follow will improve your financial life both today and for years to come. With all of the annual investment statements and tax documents you���re about to get, this is a great time to start.

Whenever I go to my mailbox, I���m on the receiving end of countless advertisements, credit card offers, insurance notices and more. It can be a challenge to figure out what���s important and what can be thrown away. The recordkeeping system I���ve implemented makes this decision-making process easier.

I have three buckets that my personal and financial documents go into. These buckets vary depending on the importance of the information and legal requirements associated with them. I don���t keep these documents in actual buckets, as you might imagine. Instead, documents are stored in different ways, depending on their importance.

1. Forever documents.��Your passport, birth certificate, Social Security card, property deeds, car titles and marriage certificate all fall into this category. Financial and estate documents to keep forever include wills, powers of attorney, tax returns, life insurance policies and any legal filings. The general rule: If it���s difficult to replace, keep it safe.

Also keep your Roth IRA contribution history. The annual contributions you���ve made to your Roth IRA can be withdrawn at any time tax- and penalty-free. You want to keep track of how much you���ve contributed, as that may be difficult to remember 20 years from now. In addition, if you have a health savings account, keep your medical receipts. Funds in your HSA can be withdrawn tax-free with proof of past medical expenses���even if those expenses occurred years earlier.

2. Supporting tax materials.��The IRS��recommends��keeping tax-related information for three to seven years. This includes all of the information used to complete your tax return, including W-2s, 1099s, K-1s and proof for the deductions you���re claiming. You should keep these records indefinitely if you don���t file a return or file a fraudulent return.

Have documents that the IRS no longer requires? Before discarding them, make sure you don���t need them for an insurance claim or a dispute with creditors.

3. One-year documents.��This section includes most monthly financial records: bank statements, credit card statements, utility bills, pay stubs, and internet and phone bills. All should be reviewed for accuracy when they���re received. If you need any of them to claim a deduction for business purposes, keep them with your tax documents. Otherwise, feel free to discard after a year.

A final suggestion: Be sure to properly store documents. Take extra care with items you need to keep for a long time. Consider a safe deposit box at your local bank or a fireproof safe at home. To protect yourself from a potential burglary, consider hiring a contractor to physically secure your safe to your home.

What about the documents you can now destroy? Think about buying a cross-cut paper shredder to destroy the information. If you need to rid your home of a large number of documents, you can likely find a commercial paper shredding business in your hometown.

Ross Menke is a certified financial planner and the founder of Lyndale Financial, a fee-only financial planning firm in Nashville, Tennessee. He strives to provide clear and concise advice, so his clients can achieve their life goals. Ross���s previous blogs include Start Small,��Never Retire��and��Starting Young. Follow Ross on Twitter @RossVMenke.

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Subtraction Mode

I’VE LATELY HAD this desire to spend money���not on big-ticket items like a car, boat or expensive watch, but on just about everything else.

When I go to the grocery store, I don’t look at prices anymore. If I want something, I just buy it. When eating out, I don’t look at the prices on the menu. I just order. I have a cable, internet and landline package that costs me $136 a month, and yet I’m only home one day a week. I don’t care about the cost. I want it and I’m keeping it.

You might say I’m irresponsible with my spending. And you might be right. What brought about this change in attitude? I blame it on my new financial advisor. When I look at my financial plan, I realize I’m not meeting my goal: I’m not spending enough. There���s a chance I will die with too much money. If I continue at my current spending level, I’m projected to have more money at age 100 than I have today.

I often thought I was too cautious about my spending. Now that I have a financial advisor who reaffirms my belief, I’m more confident about what I can spend.

At age 67, I feel like it’s time for me to reprioritize my life���to start doing the things I want to do and that���ll make my life more comfortable, easier and enjoyable. If spending more money will accomplish that goal, I’m going to do it. I’m in subtraction mode.

Rachel, my significant other, hasn’t fully bought into my new way of thinking. She���s still working and won’t retire for another four years. She still has an accumulation mindset. She hasn’t made that transition from saver to spender. And I don’t see that happening until after she retires.

On important money issues, we���re on the same page. We don’t, however, always agree when it comes to spending. For instance, I love baseball stadiums. I want to go on a tour of Dodger Stadium. They have two different tours: One costs $40 for two people to take the 90-minute scaled-down tour. Meanwhile, the two-hour tour would cost us $110 and let us see the Dodgers’ clubhouse and bullpen, as well as other intriguing areas of the stadium.

I’m willing to spend the $110 to see most of the stadium. She wants us to go on the $40 tour, because it’s better value. She would be right���if we were buying laundry detergent. But we aren���t. We���re purchasing experiences and it’s hard to put a price tag on them.

You can lose your car, house and health. But memories of travel adventures and dinners with friends or family are among the last things that can be taken from you. Those types of life experiences can comfort you when you���re in your declining years. They remind you of the best parts of your life and why your life had meaning. That’s why I want us to spend our money to capture those precious memories. This baseball tour can be one of many experiences we share.

On his deathbed, one of the last things my father said was, “Honey, spend the money.” He was talking to my mother���but I think I���ll also follow his advice.

Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous blogs include Time to Reflect,��Be Like Neil��Young��and�� First Impressions . Follow Dennis on Twitter��@dmfrie.

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Take a Break

GOT A VACATION home? There���s an overlooked tax break if you rent it out���but a potential tax hit if you sell.

First, the tax break: Long-standing rules allow homeowners to completely sidestep taxes on rental income���provided they meet a key requirement: They rent out their cottage or condo for less than 15 days during the year.

That can be a great tax break for those who own dwellings near annual events where rents soar for short periods. Some examples: Indianapolis for the Memorial Day car race, Louisville during Derby week and Augusta during its Masters tournament.

Next, the potential tax hit: The law allows individuals who sell their main residence to escape taxes on a profit of as much as $500,000 for married persons filing jointly, and up to $250,000 for single persons and married persons filing separate returns. To qualify for the exclusion, you must own and use the dwelling as a principal residence for at least two years out of the five-year period that ends on the sale date.

But what if you���re selling a second home? At one time, a seller could occupy a vacation dwelling for two years and then claim the $500,000 exclusion. But current law limits the amount of the exclusion when a second home becomes your principal residence.

The revised rules prohibit any exclusion for profit attributable to what the IRS characterizes as post-2008 periods of ���nonqualified use.��� Put more plainly, the IRS means those periods during which the former second home wasn���t used as your principal residence.

Not all of my clients reap gains when they sell their homes. Some suffer losses. While the housing market is buoyant in many parts of the country, it remains depressed in some places. Many people face the prospect of losing money when they try to unload either a principal residence or a vacation home.

The tax code has always prohibited write-offs for such losses���and, no, there are no extenuating circumstances. For instance, an IRS ruling barred a deduction for a home-sale loss when a family, with a child in a wheelchair, made a doctor-recommended move from a two-story to a one-story house.

Julian Block writes and practices law in Larchmont, New York, and was formerly with the IRS as a special agent (criminal investigator). His previous blogs include Pay as You Go,��It’s All Relative and��Now or Later. Information about his books is available at JulianBlockTaxExpert.com. Follow�� Julian on Twitter��@BlockJulian.

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Healthy Change?

SOME PEOPLE see Medicare-for-All as the utopia for health care, resulting in lower costs, higher quality and universal coverage. Others see M4A���a common shorthand for Medicare-for-All���as destroying health care in America, with total control residing in the hands of government bureaucrats.

Neither assessment is correct. Consider eight points:

Every health care system in the world has problems. Each system struggles with rising costs driven by factors like aging populations, development of new drugs and new medical technology, and the impact of poor individual lifestyle choices.
There is no such thing as “free.” Whatever the system, you pay for health care through some combination of out-of-pocket costs, insurance premiums and taxes.
Whether it’s actual insurance or a government plan, the majority are going to subsidize the minority. A tenth of American families account for 50% of health care spending in a given year, while half of families account for just 5% of spending.
To say one system doesn’t work is misleading. Different systems in developed countries around the world work reasonably well for their populations, with each nation���s citizens accepting the benefits, costs and constraints.
Measuring health care outcomes is complex. Some systems do better in one area and worse in others. The reasons go beyond the system for delivering and paying for care, and include factors like lifestyle and obesity. It isn���t accurate to say less or delayed health care always leads to bad outcomes. Recent data shows life expectancy declining in the U.S. Is that our health care system���s fault���or is it the result of the causes typically mentioned, including opioid abuse and suicide?
Changing health care systems would create losers as well as winners. A single-payer system would likely be funded through some combination of taxes, premiums and co-payments. Workers who have the bulk of their health care paid for by their employer may see higher net costs, while Americans who today pay 100% of their insurance premiums may find they���re better off.

And, of course, a tax-funded system would likely be progressive in some manner. That means those with higher income would likely pay more than others���something that���s not the case with private health insurance.

The assumptions used can greatly impact projected costs under different health care systems���and yet such assumptions are hardly reliable. Even Medicare���s actuaries note the difficulty in making projections, given the many variables.

One example: If a new U.S. system included no out-of-pocket costs at the point of service, would demand for services increase? Could such demand strain the delivery system? If the system cut fees paid to health care providers, as has been proposed, would providers respond by leaving the system?

Once implemented, any system will face the challenge of controlling costs. Even if a new system in the U.S. realizes a measurable reduction in costs upon implementation, it���s uphill from there. How will costs be managed? We can look to systems in other countries for possibilities.

But unlimited, unrestrained access to health care���as some fans of M4A expect���is not among the possibilities. Every system puts some control on usage. Other national systems apply direct limits. In the U.S., we constrain demand indirectly���through a combination of limits on insurance coverage and the price mechanism.

Clearly, there���s a growing frustration with the current U.S. system. Surveys show that 70% of Americans support Medicare-for-All. But many Americans are also confused about what a single-payer system means. For instance, in a recent survey, 47% of respondents believed they would be able to keep their current insurance under such a system.

We are years away from a major change in the U.S. health care system���years likely filled with heated rhetoric and contentious debate. It���s crucial for Americans to keep their eyes wide open, rather than accepting some appealing promise out of frustration.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous blogs include Saving Ourselves,��Required Irritation,��We’re Stuffed��and��Clueless.��Follow Dick on Twitter��@QuinnsComments.

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Start Small

THE NEW YEAR brings the opportunity for fresh beginnings. You may be motivated to set a big goal, create a business plan or start a new diet. While I encourage you to always push yourself forward, I���d offer one piece of advice: Start small.

Do you look at your goals and feel overwhelmed? I have this feeling when looking at the total amount I need saved for my eventual financial independence. To help, I reverse engineer the process and focus on the amount I need to save this month. As the Sketch Guy, Carl Richards, so eloquently puts it, ���What is the next smallest action? Do that thing.���

Your natural inclination may be to reach for the stars and set a big goal. Yet many of the greatest success stories had humble beginnings. Here are three favorites:

Richard Sears was working as a railroad freight agent in 1886 when he was given an unwanted shipment of pocket watches by a local jeweler. He sold the watches, and then used the proceeds to buy and resell more watches. This side hustle of buying, repairing and selling watches led Sears to quit his job and start R.W. Sears Watch Co. in Minneapolis. A few years later, the first Sears catalog was sent out���and the rest is history.
Brian Scudamore needed a way to pay for college. After seeing a truck advertising a junk removal service, he used $700 of his savings to buy a pickup truck. His small business quickly took off and he used the profits to reinvest in the business. Scudamore continued to buy more trucks and hire employees, which led him to drop out of college. The junk removal service was the beginning of 1-800-GOT-JUNK? The company now services over 150 locations and three countries.
Greg Glassman opened a gym in 1995 to train individuals in his unique way of combining weightlifting and aerobic exercises. As his schedule became full, he shifted from training individuals one-on-one to introducing group classes. In 2000, he founded CrossFit and began opening affiliate gyms. Although the growth was slow at first, there are now more than 13,000 affiliates across the world.

Regardless of your goals or ambitions for the year ahead, I encourage you to start small. These three steps will help you:

Only take on one goal at a time. Don���t spread yourself too thin by trying to accomplish too much at once. As you start to check small steps off your list, the momentum will build.
Make detailed plans for each goal. Spell out the when, where and how of the task. That���ll increase your odds of doing what needs to be done.
Stay focused with frequent reminders. Do you want to buy a home this year? Contact a realtor and ask to be set up for MLS (multiple listing service) alerts. That way, you���ll receive an email whenever a home becomes available that meets your specific guidelines. A small step like this will keep your attention focused on your goal.

Ross Menke is a certified financial planner and the founder of Lyndale Financial, a fee-only financial planning firm in Nashville, Tennessee. He strives to provide clear and concise advice, so his clients can achieve their life goals. Ross���s previous blogs include Never Retire,��Starting Young,��That Extra Step and Keeping It Going. Follow Ross on Twitter @RossVMenke.

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Newsletter No. 40

ACTIVE MANAGERS��still oversee far more money than index funds. Nonetheless, the index vs. active battle has arguably been won:��Index funds will almost certainly continue to gain assets, because active managers can never collectively deliver on their promise of market outperformance.

My contention: If the goal is to improve how America manages its money, it’s time to move on to three new battles, which I describe in HumbleDollar’s latest newsletter.��The newsletter also includes our usual listing of recent blog posts.

While you’re here at HumbleDollar, spend some time perusing our��money guide. It’s been almost entirely updated in recent weeks. Among other items, you’ll find the new tax thresholds and the latest data on the economy, markets and family finances.

Follow Jonathan on Twitter�� @ClementsMoney ��and on Facebook . His most recent articles include What Now,��Strings Attached��and Seven Ideas. Jonathan’s ��latest book:��From Here to��Financial��Happiness.

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Beyond Cheap

WHEN I STARTED writing my column for The Wall Street Journal��in 1994, active money managers dominated the investment scene and index funds were struggling to get noticed. A quarter century later, most money remains actively managed, rather than indexed. The triumph of indexing is not yet complete.

Still, everybody knows which way the wind is blowing. Over the decade through 2017, index funds focused on U.S. stocks���both the mutual-fund and the exchange-traded varieties���attracted $1.6 trillion in new money, while actively managed funds saw $1.3 trillion in redemptions, according to the Investment Company Institute. By voting with their feet, investors have brought relative predictability to their investment performance, while also sharply reducing their investment costs.

It is, I admit, premature to declare victory in the battle between indexing and active management. Nonetheless, I think it���s time to move on to three new fights. The battle lines for these other fights are a little blurrier. But I think they���re just as important.

1. Holistic advice. We are obsessed with the financial markets. Throughout the trading day, we watch CNBC, check stock quotes on our phones and hang on the utterances of clueless pontificators who promise to explain all. The markets���with their erratic, unfathomable gyrations���are like electric shocks to our brains, bringing elation one moment and terror the next.

But what about the rest of our financial lives? We have careers, homes, insurance policies, debts, Social Security benefits, pension plans, tax bills and estate plans, all of which also deserve our attention. How do these financial pieces fit together���and how do we decide what we���re shortchanging and where we can afford to skimp?

As I���ve argued elsewhere, I believe the core organizing notion should be our paycheck or lack thereof. To be sure, thinking through this stuff is less exciting than trying to pick the next hot stock, but it���s likely to be far more rewarding. We���ll do more good for our finances by ditching unnecessary insurance coverage than by trying to guess which way stocks are headed next.

It isn���t just everyday investors who are obsessed with the markets. Ditto for financial professionals. Partly, it���s the same unhealthy emotional trap. But it���s also about financial incentives. Whether it���s money managers or financial advisors, they get paid when we invest���and not when we save on taxes, plan our estate, buy the right size home or pay down debt. My not-so-bold prediction: To maintain their 1%-of-assets annual fee, or something close to it, financial advisors will need to offer clients a whole lot more than a portfolio of mutual funds.

2. Behavior change. We all have a pretty good idea of what we should be doing with our money���and, if we don���t, we can quickly find out using this thing called the internet.

Instead, the real struggle is getting ourselves to do what we know is right. There���s a reason those New Year���s resolutions rarely survive the month of January. Just as we struggle to quit smoking, eat less and exercise more, we find it difficult to control our spending, hang tough at times of market turmoil, and overcome our own inertia and get the estate-planning documents and insurance policies we need. Knowledge, by itself, is not enough. Instead, the real battle is to change our behavior.

To that end, we can employ a host of strategies, including automating our savings programs, sharing our financial commitments with others and visualizing our goals, so we���re more willing to sacrifice today for a better tomorrow. But there���s no silver bullet here: Changing behavior���and thinking longer-term���is hard work.

Again, this is a potential opportunity for thoughtful financial advisors. If they can help clients to reorient their thinking and coach them toward better financial behavior, they���re far more likely to survive in an era when investors are increasingly focused on lowering their investment costs.

3. Meaning. We know we ought to improve our financial behavior. But why should we improve? I don���t think it���s enough to say ���so you can retire��� or ���so the kids can go to college.��� Those may be functional descriptions of our financial goals. But they aren���t sufficiently inspiring to spur most folks to change their behavior���because they don���t convey the meaning we all seek from our lives.

What���s important to me will be different from what���s important to you. But all of us have people we care deeply about, financial worries we���d like to erase and work we���re passionate about. If we can identify what���s truly important to us, we���ll have not only the incentive to change, but also a much better idea of what we should aim for���and potentially we could get far more happiness from our dollars.

Some of us can figure this stuff out on our own. Others might need to talk it through with their spouse, friends or a financial advisor. But however we get it done, it���s a crucial first step���because it���s the key to making the connection between our money and the rest of our lives. Once we do that, our finances will no longer be some onerous task reserved for 30 minutes each weekend, but rather the tool that can make our lives so much richer.

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