The Life Cycle of Wealth: Decision-Making Through Four Phases of Life

By Aaron Kolkman

For those who have attained financial independence, this text offers you important insights into the challenge of providing for future generations. For those still in pursuit of independence, The Life Cycle of Wealth provides a clear view of the road ahead, a concrete approach to managing risk, and an overview of the financial professionals available to guide you. For all concerned, The Life Cycle of Wealth delivers a holistic view of personal finance and a method for developing a long-term strategy to fund your purpose for life.

The Life Cycle of Wealth gives you an unprecedented look at the natural process of developing wealth over a lifetime, and the challenges involved with passing it on.
Instead of the usual tips about ‘What to do when…,” The Life Cycle of Wealth teaches you to think strategically, so you can align your plans with your values, and your actions with both.
Once you read it, you will reference it often. Again and again, The Life Cycle of Wealth will deliver truth to your financial life, so you can make great decisions that lead to achieving real wealth in your lifetime.
This book offers both knowledge and wisdom in a timeless, simple fashion that leaves you inspired to move forward with confidence and to pass your wisdom to future generations.

• Language: English
• Publisher: WestBow Press
• Release date: Dec 7, 2018
• ISBN: 9781973640707

Aaron Kolkman

Aaron Kolkman is a retired securities principal and developer of The Life Cycle of Wealth model. He previously worked for three major U.S. financial institutions before founding a portfolio risk management firm during the 2008 financial crisis. Kolkman is a recognized leader in aggregate portfolio Mean Variance Optimization (MVO) techniques to support financial planning. His Minneapolis strategic planning team incorporates all phases of The Life Cycle, with an emphasis on written estate strategies. Kolkman holds a B.A. in Psychology, a M.S. in Finance, and a Graduate Certificate in Financial Analysis. He is also a CERTIFIED FINANCIAL PLANNER and an ACCREDITED ASSET MANAGEMENT SPECIALIST. Kolkman is the principal of Fidere Media, LLC, and co-author of THE RISK MANAGER - a conservative economics, planning and portfolio management blog for families. He is a member of the Committee for the Fiduciary Standard, the International Association of Advisors for Philanthropy, and the Financial Planning Association. A native of South Dakota and Nebraska, he now lives in Plymouth, Minnesota. In his free time, Aaron loves spending time outdoors with his family: boating, camping, and biking.

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ISBN: 978-1-9736-4071-4 (sc)

ISBN: 978-1-9736-4072-1 (hc)

ISBN: 978-1-9736-4070-7 (e)

Library of Congress Control Number: 2018911533

WestBow Press rev. date: 08/22/2019

CONTENTS

I. Funding Your Purpose for Life

Money as a Resource to Pursue Life Goals

II. The Life Cycle of Wealth™

Money as a Universal Language

III. About the Cycle

Understanding The Life Cycle™ Model

IV. Phase I – Prepare

The Infrastructure of Your Financial Life

V. Phase II – Produce

Using Your Income to Fund Your Assets

VI. Phase III – Prosper

Using Your Assets to Fund Your Income

VII. Phase IV – Preserve

Structuring and Funding Your Legacy

VIII. Managing Risk

Recognizing the Pitfalls in Your Plans

IX. Optimizing Your Assets

When Diversification is Not Enough

X. Finding your Fiduciary

If Cash is King, Cash Flow is Queen

XI. Creating Recurrence

The Multigenerational Wealth Challenge

OVERVIEW

I n the digital era, wealth-building strategies, money management techniques, and how-to financial planning tips all compete for our attention. Instead of trying to navigate the nuances of personal finance based upon the loudest message or a catchy slogan, take a step back. Recognize that success in life requires excellent decision-making, which includes two ingredients: knowledge and wisdom. Having knowledge means having information needed to make decisions. Having wisdom means having a mature perspective from which to make those decisions. With respect to personal finance, The Life Cycle of Wealth ™ does provide some important technical insights, though it primarily provides the uncommon wisdom needed for excellent decision-making.

Decision-making for who exactly? Throughout this text, the words you and your are used to simplify content, but with the intent to communicate your family on two levels –1) the core family (i.e., household) and 2) the entire family tree. Further, the concepts offered are designed to facilitate conversation on both familial levels, which is critical when strategic decisions happen (Chapter III, About the Cycle). Also, wealth and money are considered synonymous, so wealth is considered in financial terms with two primary components: 1) a balance sheet and 2) cash flow. A balance sheet refers to assets owned personally – business interests, real estate, personal property, invested assets, etc. – and debts owed personally – mortgages, liens, student loans, credit lines, etc. Cash flow refers to personal income recognized, and expenses incurred for a given period. Importantly, the interaction of these two financial statements is critical: if the balance sheet is the foundation for your family’s financial life, cash flow is either a builder or a destroyer of that foundation (Chapter X, The Power of Cash Flow).

If your balance sheet and cash flow comprise your wealth in financial terms, then being wealthy must mean reaching financial independence – the point at which you have the freedom to make life choices without financial constraints. Such independence happens when a family’s balance sheet is stable enough to provide for at least the current generation. Further, this independence means that cash flow is positive or neutral – even if a major source of that income is the balance sheet. For those who have attained financial independence, this text offers you important insights into the challenge of providing for future generations. For those still in pursuit of independence, The Life Cycle of Wealth™ provides a clear view of the road ahead, a concrete approach to managing risk, and an overview of the financial professional(s) available to guide you. For all concerned, The Life Cycle of Wealth™ delivers a holistic view of personal finance, and a method for developing a long-term strategy to fund your purpose for life.

ABOUT THE AUTHOR

AaronFINALCROPPED.jpg

A aron Kolkman is a retired securities principal and developer of The Life Cycle of Wealth ™ model. He previously worked for three major U.S. financial institutions before founding a portfolio risk management firm during the 2008 financial crisis. Kolkman is a recognized leader in aggregate portfolio Mean

Variance Optimization (MVO) techniques to support financial planning. His Minneapolis strategic planning team incorporates all phases of The Life Cycle™, with an emphasis on written estate strategies. Kolkman holds a B.A. in Psychology, a M.S. in Finance, and a Graduate Certificate in Financial Analysis. He is also a CERTIFIED FINANCIAL PLANNER™ and an ACCREDITED ASSET MANAGEMENT SPECIALIST™. Kolkman is the principal of Fidere Media, LLC, and co-author of THE RISK MANAGER™ - a conservative economics, planning and portfolio management blog for families. He is a member of Kingdom Advisors and the Financial Planning Association, and served on the Committee for the Fiduciary Standard, during 2009-2010. A native of South Dakota and Nebraska, Aaron now lives in Minneapolis, Minnesota. In his free time, he loves spending time outdoors with his family: biking, boating, and camping.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

The AAMS®, or ACCREDITED ASSET MANAGEMENT SPECIALISTSM marks may be used only by persons who have received written authorization from the College for Financial Planning to use them.

DEDICATION

Dedicated with gratitude to my family tree: generations past, present and future.

ACKNOWLEDGMENTS

Thanks be to God - Father, Son and Holy Spirit – for Your amazing grace, and for lighting my path that I might live with purpose. May any glory that comes from this work be Yours.

Thank you to the many family members and friends who gave time and energy in support of this project. You have been generous beyond measure. I pray this work would be a blessing to you and others around you.

Thank you to the