The Students in Free Enterprise (SIFE) organization, which is associated with the BYU-Hawaii School of Business, sponsored a financial education seminar on October 10 that focused on retirement planning.
Michelangelo "Miki" Domine — who grew up in Tonga, has family ties in Laie and is executive director for the American Money Group (AMG) in Covina, California — explained, "I'm not here to teach you how to get rich quick...but to try to educate you a little bit about financial planning, starting now. I'm hoping you'll have an epiphany — one of those ah-hah moments."
"The first thing we recommend anyone does is segment all of your assets so you can optimize them, to take full advantage of them," he continued, pointing out that the largest financial asset many people have is their home. "But what is the most important asset you have? Your family, or what we call human assets."
Domine listed financial and family assets in a quadrant chart, then added intellectual assets, including knowledge, experience, education, traditions and skills. "You need to put together all of your assets, even though you're focusing on your financial plan," he said. "If you had to bankrupt one of these quadrants, which one would it be? Financial...because it took the other two to get that one. If I lose that one and still keep the others, I still have a chance to get it back."
In the fourth quadrant he wrote civic or social assets — "giving back to society," including taxes, of which he said, "I like to pay my fair share. Most people don't like paying taxes because they're giving up control, but when my house gets robbed, I like to be able to call the police. My concern is how the government spends the money. We try to teach people how to redirect a little bit of their taxes so they can regain some control."
Domine said AMG calls this approach the "family empowered bank™" and suggested following his company's "four Ps: Protect, perpetuate, preserve, empower — a way to live, learn, earn and give. They have to be balanced. If you're missing any one, your plan for life isn't going to work."
"Whenever you're talking to anyone about financial planning, they've got to understand it's what you want that's important, not what they want. Is postponing taxes the best way?" he asked. "Are you planning your retirement or Uncle Sam's? What do you think taxes in the future will be: Lower, the same or higher? They'll probably be higher."
Domine said planning for retirement falls into four phases: Contribution, accumulation, withdrawal and transfer, and noted that the 401K individual retirement accounts (IRA) are good overall, but "use the 401K to the best of its ability. The 401K was designed so an employer would contribute. We're saying put in the [minimum] matching, and then find another vehicle. Your tax liability with an IRA grows with your account balance. There are other vehicles that allow your principal to grow, but not your tax liability. For example, if you were a farmer, would you rather pay your taxes on the seed or the harvest?"
"You have to look at all of the financial plans possible," Domine continued. "Whenever you're going into an investment, consider how liquid it's going to be. That means you can get at your money when you need it. How safe it is, and what is your rate of return? Of the 16 most common investments, five don't pass the liquidity test."
He suggested people consider "investment grade life insurance, a universal life product," which was created by E.F. Hutton, an investment broker who had nothing to do with life insurance but wanted to grow his clients' money tax-free.
"In our company, we refer to [S&P] indexed universal life insurance as a 'bucket': You're filling up a retirement bucket," Domine said, noting that according to the tax laws regulating universal life insurance policies, you have to contribute over at least five years, maintain a minimum amount; "and if you take anything out, it has to come out as a loan."
"Either you've got to have time or money. You can start at either end, but you've got to have a lot of time with a little bit of money, or a little time with a lot of money," he said.
Domine also pointed out that there are six components of sound financial planning: Risk management, tax planning, estate planning, cash flow management, credit management and asset management. "They're all equal," he stressed. "It's all about being balanced."
"I appreciate being here. This is the first time I've presented that we've opened with a prayer. That means a lot to me."
AMG — whose CEO is a member of the BYU-Hawaii/PCC Presidents' Leadership Council — is conducting a more detailed seminar on "Smart Asset Management: Safeguarding Your Family & Retirement" on Thursday, October 12, in Kahuku Room II of the Turtle Bay Resort at 6:30 p.m. for a fee.
AMG is also sponsoring the Asia-Pacific Basketball Classic at the Cannon Activities Center on November 10-11, featuring the Seasiders and teams from China, the Philippines and New Caledonia.