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Financial Planning Roundup: Successful Book Launch

Firstly, thank you to everybody who purchased the new book Household Cybersecurity over this last week! If you have any questions about the material, feel free to ask, as you’re probably not the only person with that same question.

If you found the book to be helpful, please consider leaving a review on Amazon (or Goodreads), as that’s the best way to help others find the book.

Other Recommended Reading

Thanks for reading!

New Book — Household Cybersecurity: a CPA’s Guide to Protecting Your Accounts and Personal Information

Household Cybersecurity book coverI’m excited to announce that my latest book is now available on Amazon:

As we’ve discussed here lately, data from the FBI and FTC indicate that cybercrime and fraud have been growing at an alarming rate in recent years. In part, that’s because the tools available to the bad guys are getting better and better every year.

Unfortunately, some people aren’t even aware of the problem. They’re just following the same cybersecurity practices that they were following a decade ago.

Some people do recognize the problem, but they aren’t really sure what they should be doing to protect themselves.

And finally, some people recognize the problem, and they’re actively working on improving their security, but they have a lot of questions about newer tools, what is safe, what isn’t safe, etc.

My goal is for this book to be helpful to all three groups.

Most cybersecurity advice boils down to telling you to be careful: be suspicious of that email, don’t click that link, etc. That is good advice, but it doesn’t go far enough, because it only works if you get it right every single time, for the rest of your life.

A primary theme of this book is that, whenever possible, we want to reduce the degree to which your security depends on making the right judgment, in the moment. The goal is to put protections in place that hold up even when somebody in the household makes a mistake. Because, eventually, somebody in the household will make a mistake.

It’s similar to what we do with saving and investing. A plan that relies on somebody remembering to make manual retirement account contributions every month is much less likely to be successful than a plan in which retirement account contributions are automated. In both cases, the idea is to create a system to reduce our dependence on perfect behavior.

The Focus

As is hopefully clear from the title, this isn’t a book about enterprise cybersecurity. Rather, the question at hand is: what does an ordinary household actually need to know and do to protect their money and personal information?

If you’ve been reading this blog for a while, you know that cybersecurity isn’t my primary profession. But I’ve spent considerable time studying the subject: I’ve earned CompTIA’s Security+ certification, ISACA’s Cybersecurity Audit Certificate, and the AICPA’s Information Security & Cyber Risk Certificate.

The book’s guidance is grounded in recommendations and frameworks from relevant government agencies (NIST, CISA, and the UK’s NCSC), as well as the Center for Internet Security.

Still, the perspective I’m bringing to this subject is that of a CPA and financial planner. The book is specifically focused on what households can do to reduce their risk of fraud, account compromise, or other forms of financial harm.

A Broader Goal

I also have somewhat of a broader goal here. While the book itself is entirely focused on what the reader can do to protect themselves and their loved ones, I’m also hoping that this book can be one small piece in a broader shift toward normalizing cybersecurity discussions as part of financial planning discussions — no different than tax planning, for example.

As it stands right now, most general-audience personal finance materials don’t discuss it at all. Most financial professionals don’t discuss the topic with their clients. Financial planning training materials don’t cover it.

Cybersecurity gets left out, because it’s considered a “tech” topic rather than a personal finance topic.

That’s fine for the people who have a loved one who is savvy on these topics and willing to personally coach them. But most people don’t have that. Most people, even people trying really hard to make sure their finances are in order, are getting little to no information about cybersecurity and fraud prevention. And I believe that gap is a contributing factor to the dramatic increase in fraud that we’re seeing.

And so I hope this book will also be useful to financial professionals who recognize that cybersecurity and fraud prevention are increasingly relevant to the households they serve, but who aren’t sure what they should be telling clients.

Table of Contents

Introduction: An Epidemic of Fraud

Part One: The Threat

1. What Does a Thief Need to Access Your Financial Accounts?
2. Know Your Opponent
3. We Need Protective Policies, Because Mistakes Happen

Part Two: Fundamental Cybersecurity Concepts

4. You Are the CISO (Chief Information Security Officer)
5. The CIA Triad
6. Cryptography Basics
7. Understanding Authentication
8. Password Strength

Part Three: The Tools

9. Password Managers
10. Authenticator Apps
11. Passkeys
12. Physical Security Keys

Part Four: Policies

13. Account Configurations
14. Device Security
15. Network Security
16. Security Maintenance
17. Responding to a Cybersecurity Incident
18. Protecting Vulnerable Loved Ones

Conclusion: Layers of Protection

If you think the book might be helpful to you or a loved one, please pick up a copy:

Household Cybersecurity: a CPA’s Guide to Protecting Your Accounts and Personal Information

And if you do find it helpful, please consider posting a review on Amazon!

For More Information, See My Related Book:

Book6FrontCoverTiltedBlue

Household Cybersecurity: A CPA’s Guide to Protecting Your Accounts and Personal Information

Topics Covered in the Book:
  • Why passkeys and physical security keys are the biggest security upgrade most households haven't made yet.
  • How to choose and safely use a password manager.
  • The account settings, device habits, and network policies that actually reduce risk.
  • How to build a personal household security checklist, so good habits don't get abandoned.
  • What to do if the worst happens: a clear, step-by-step response plan.
  • How to help aging parents or other vulnerable loved ones, as well as a research finding that may surprise you about when to start.
  • Click here to see the full list.

Financial Planning Roundup: Strengths and Weaknesses of Advisor Fee-Only Models

For anybody considering hiring an advisor, it’s important to know exactly what you want. That is, it’s best if you go shopping for an advisor who meets requirements that you have selected, rather than letting somebody come to you to sell you their services.

One way in which advisors can be categorized is by what services they provide. At a very high level, the options would be:

  1. Advice-only (i.e., they provide advice but do not manage the portfolio),
  2. Portfolio management with very limited advice, or
  3. Comprehensive financial planning, together with portfolio management.

Financial planners/advisors can also be grouped by designation (CFP, CPA, PFS, CFA, EA, etc.) or by areas of expertise.

Finally, it’s important to have a good idea of what fee model(s) you’d be willing to accept. Allan Roth recently wrote a piece discussing the pros and cons (from the client perspective) of the various fee-only (i.e., non-commission) models:

Other Recommended Reading

Thanks for reading!

Ways that Owning Individual Stocks Can Go Wrong

Most of the time, when people buy individual stocks (or choose not to sell ones that they already own), the thought process appears to be something along the lines of: I expect that this company will earn lots of profits in the coming years.

But that’s not a good enough reason to buy an individual stock. (Nor is it a good enough reason to choose not to sell a stock that you already own.)

Choosing to allocate anything more than a trivial portion of your portfolio to an individual stock means taking on considerable additional risk, relative to simply owning a diversified fund of stocks. So you need to have a strong reason to think that this particular stock will earn better returns than the overall market.

And, what most people don’t know is that the performance of a given stock is not determined by whether the underlying company performs well or poorly. Rather, it is determined by whether the underlying company does better or worse than the market expected it to do. There is, therefore, little to be gained from picking individual stocks unless you have some unique insight about the company which the broader overall market does not have — something that isn’t already “priced in.”

A quick litmus test: have you even attempted a financial analysis of the company? Have you looked at their financial statements? Have you done any financial modeling at all? If not, you owe it to yourself to be honest about what you’re doing. You’re investing based on vibes. And you’re pitting that approach, and your money, against professionals who are taking a considerably more rigorous approach to the process.

Another hurdle: if you do think you have a unique insight into this company’s future profitability, it’s important to make sure that you won’t be running afoul of insider trading rules if you make any trades based on the information you have.

But even from that point (i.e., you firmly believe you have a unique insight into the company’s future profitability, and you’re confident that it’s not based on insider information), there are still multiple ways that it can go wrong.

The unique insight you have about the company could turn out to be wrong. A common version of this is, “right line of business, wrong company.” You successfully identified a line of business that grew much faster than the market expected, but the specific company you chose turned out not to be the winner in that industry.

Alternatively, the unique insight you have about the company could turn out to be right, but you were wrong about it being unique. In other words, the market already knew, and the information was already baked into the price.

Another possibility: the unique insight you have about the company turns out to be right, but you weren’t accounting for some negative factor that the market was accounting for (and you were thus overvaluing the stock).

And finally: the unique insight you have about the company turns out to be right, but neither you nor the market was accounting for a negative factor that turned out to be important (i.e., everybody was overvaluing the stock).

Financial Planning Roundup: 153 Million Drivers License Scans Made Illegally Available for Sale

Earlier this month, news broke that somebody was selling scans of more than 153 million drivers licenses. It appears that it’s the result of a breach at a company (IDscan.net) that provides ID scanning services for other businesses, such as Hertz car rental, Target, and FedEx.

This is up there with the 2017 Equifax breach in terms of total number of people affected (i.e., almost half the U.S. population). It’s depressing/infuriating that we have so little control of where our information ends up. And this event definitely reinforces the lesson that any account secured exclusively with “private” information is no longer sufficiently secured, as the bad guys increasingly have access to our private information.

Other Recommended Reading

Thanks for reading!

A TIPS Ladder in a Single ETF? (Northern Trust Inflation-Linked Distributing Ladder ETFs)

A reader writes in, asking:

“Have you encountered the ‘Inflation-Linked Distributing Ladder’ ETFs from Northern Trust? It looks to me that they create an entire TIPS ladder for you, and all you have to do is just buy a single fund. Too good to be true?”

Yes, the ETFs in question do create an entire TIPS ladder for you. But there is a catch. We’ll get to that in a moment.

Firstly, I want to note that these are very different from iShares’ target-maturity TIPS ETFs. The ETFs from iShares each buy TIPS maturing in a single year (i.e., each of the ETFs could serve as a single rung in a ladder, rather than being a ladder on its own).

In contrast, the Inflation-Linked Distributing Ladder ETFs from Northern Trust each own an entire TIPS ladder (with the final year being the year in the fund’s name). Here are the options so far:

  • Northern Trust 2030 Inflation-Linked Distributing Ladder ETF (TIPA)
  • Northern Trust 2031 Inflation-Linked Distributing Ladder ETF (TIPE)
  • Northern Trust 2035 Inflation-Linked Distributing Ladder ETF (TIPB)
  • Northern Trust 2036 Inflation-Linked Distributing Ladder ETF (TIPF)
  • Northern Trust 2045 Inflation-Linked Distributing Ladder ETF (TIPC)
  • Northern Trust 2046 Inflation-Linked Distributing Ladder ETF (TIPG)
  • Northern Trust 2055 Inflation-Linked Distributing Ladder ETF (TIPD)
  • Northern Trust 2056 Inflation-Linked Distributing Ladder ETF (TIPH)

They started with the 2030, 2035, 2045, and 2055 funds last year, and added the other funds this year. It seems likely that next year they’ll launch another four funds (i.e., 2032, 2037, 2047, 2057).

The idea is that, for each fund, as the bonds mature or make interest payments, the fund distributes cash. And when the final bonds mature, the fund distributes its remaining assets and then closes. So, yes, each of these ETFs really is an entire TIPS ladder via a single fund.

And they’re low-cost as well, with expense ratios of just 0.10%.

The catch: the distribution policy makes no sense (at least in my opinion). The funds distribute cash when bonds pay interest or mature, which makes sense. But they also distribute the inflation adjustments as they occur. What that means is that, in order for your holding to actually go up along with inflation (which is generally the idea of a TIPS ladder), you’d have to manually reinvest the distributions that are the result of inflation adjustments. And you can’t just set it to automatically reinvest all distributions, otherwise you’d be reinvesting the other distributions as well.

So these ETFs are much less work to set up than a DIY ladder of individual TIPS, but they involve ongoing management work, whereas a ladder of individual TIPS is generally just left alone once it has been put it place.

They’re so close to being a major convenience upgrade. But as it stands, they’re just trading work now for work later. For some people that might still be a desirable tradeoff. For me, it puts them in the “neat idea, but no thank you” category.

One other point: so far, the funds are tiny, in terms of assets managed. I hope they catch on. But I hope even more that somebody eventually creates a product that really is a set-it-and-forget-it TIPS ladder all in a single fund.

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