Mountain Views News          Saturday, May 10, 2014

DO MORNINGSTAR STARS MATTER? 
By Gregory J. Welborn 
Mountain Views-News Saturday, May 10, 2014 
B4 BUSINESS NEWS & TRENDS 
FAMILY MATTERS By Marc Garlett 
FINAL EXAM 
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7 STEPS TO CREATING AN ESTATE PLAN THAT KEEPS 
YOUR FAMILY OUT OF COURT 
You're ready to celebrate: your offer was accepted, you got your dream home under contract, 
your financing has been approved, appraisal and inspections performed, and settlement and 
closing are only a handful of days away. What important step have you yet to take? It’s the 
final walk-through. 
It may seem minor, but this real estate tradition is critical before you take possession. This is 
the last opportunity for you and your agent to verify all is prepared - and repaired - according 
to your contract. 
Make a checklist and begin with the plumbing, starting the dishwasher and clothes washer 
upon your arrival. Check under the sinks for any signs of leaks, turn on the shower and 
kitchen and bath faucets, and flush all the toilets so you know all is in working order.
Move on to the electrical systems, by turning on all the light switches, starting up the clothes 
dryer, and making sure the oven and stovetop heating elements are working. Open and close 
the garage door while you're at it. Be sure the sellers have left you any manuals and warranties 
for the appliances. 
Don't forget to open and close all the windows and any sliding glass doors. Sure, your inspector 
is supposed to check and report on all these items, but this is your last chance to 
avoid any oversights or surprises! 
Morningstar has done such a good job of 
marketing their ranking system that not a few 
careers rest on whether a fund makes it to the 
5-Star level. Unfortunately, the ranking system 
is seriously flawed in its measurement of success 
and predictive capabilities. Laggards and leaders, 
tortoises and hares are not so easily determined. 
First, let’s point out the obvious. If there’s a 
mutual fund with a really good historical track 
record out there, it’s almost guaranteed to receive 5 
stars. But this doesn’t mean its future will be good. 
Now, let’s point out the not-so-obvious. If there’s a really great mutual fund that hasn’t had 
a particularly good run recently, but is nonetheless a fantastic fund which will bounce back, 
Morningstar may still ding it. Why might this be so? There are two primary reasons. 
Morningstar doesn’t attempt to cover all mutual funds. If the best mutual fund manager in 
the world steps out on his or her own to open a new fund, there is absolutely no guarantee that 
Morningstar will review the fund. That’s a pretty glaring error, but hey, it’s the large mutual fund 
companies that advertise the most. 
The other reason Morningstar stars don’t have predictive capability is that they have no way of 
mitigating the fact that almost all mutual funds with superior 10 year track records have underperformed 
for at least 3 consecutive years of those 10 years. In one recent study of mutual funds 
that exceeded the market by 2% per year over a 10-year period, 71% of them had a bad 3-year run 
where they under-performed by 5% per year. 
It takes a lot of patience to stay with a mutual fund that is under-performing 5% per year for 3 
years straight. The media reports will be lousy, and Morningstar will probably give it a fairly low 
rating. And yet, patience is exactly what’s needed. In order to out perform the market over the full 
10 years, investors have to stay with a great mutual fund like this for 10 years. Morningstar’s stars 
don’t help you do that. 
The bottom line here is that Stars, bells or whistles are not very good reasons to buy or sell a 
mutual fund. Knowing who is managing the fund, what strategy they are following, and whether 
that strategy is going to be successful in the future are really the important criteria. But those can’t 
be distilled down to a cute star ranking system. 
About the author: Gregory J. Welborn is the Managing Partner of First Financial Consulting, 
a fee-only advisory firm. He has worked with The Today Show, Kiplinger’s Magazine, and USA 
Today to provide objective financial advice to their readers and listeners. He has 3 grown children 
and is honored to be married to his wife of 25 years. He can be reached at gwelborn@ffconsult.net 
KEEP LEARNING: MEGA MARKETING EVENT THIS 
WEEK IN PASADENA 
It’s important to keep learning when it comes to on-line marketing. The tools 
constantly change and it’s important to get fresh ideas for your marketing efforts 
and see what other people are doing. 
Instead of writing my usual “how to” column this week, I thought I’d share 
information about a great event sponsored by Constant Contact that you can take advantage of in 
Pasadena this week on Tuesday, May 13. It will be a day of learning, networking and resources for 
your business and will cover the hottest online marketing topics and tools. 
It’s free to attend and even includes lunch! 
You can choose from several break-out sessions taught by local experts including: 
• 
Facebook 
• 
LinkedIn 
• 
Email Marketing• 
Twitter 
• 
Video Marketing• 
Content Marketing• 
Google Adwords• 
Pinterest 
• 
WordPress 
• 
SEO 
If you’d like to attend this event, simply sign up at: http://bit.ly/PasadenaMega2014 
Date Tuesday, May 13, 2014 Time 9:30 AM to 3:00 PM 
Pasadena City College, Sexson Auditorium in Building C1570 East Colorado Boulevard Pasadena, CA 91106 
I hope to see you there! I’ll be teaching the Facebook and Building your Marketing Tool Kit session. 
Sign up for their upcoming classes and presentations at: www.hutdogs.com/workshops/schedule 
Many people fail to create an estate plan because 
they don’t truly understand what their family 
will go through without a plan in place. Creating 
an estate plan during your lifetime is far less 
complicated than what your family will deal with 
after you are gone, if you don’t. 
1. Create a Trust. When most people think of 
preparing for the end of life, they think of writing 
a Will, but having a Will without a Trust is fast 
track to put your family in Probate Court after 
you are gone. Instead, to keep your family out of 
the Courthouse, you’ll want to set up a Trust and 
title all of your assets to be owned by that Trust. 
While it might feel like a lot of effort, it will save 
your family a LOT of trouble after you are gone. 
2. Designate beneficiaries. Designating 
beneficiaries for your retirement accounts and 
insurance policies is critical because these assets 
do not pass through your Will or Trust. Filling 
out beneficiary designation forms for each of 
your accounts will ensure these assets pass to 
the people you want without Court involvement. 
Be sure to review your beneficiary designations 
periodically to ensure they align with your 
current circumstances. Hot tip: never name 
minor children as beneficiaries of your retirement 
account or life insurance policies AND if you 
have more than $150,000 in a retirement account, 
consider a special trust called a Retirement Trust 
to ensure the most beneficial tax treatment for 
your loved ones. 
3. Avoid estate taxes. Most of us will not have 
to worry about estate taxes since the federal 
estate and gift tax exemption is $5.34 million 
($10.68 million for married couples) in 2014 
and indexed every year for inflation. However, 
if you are married and wish to take advantage of 
portability – where spouses are entitled to each 
other’s unused exemption – the surviving spouse 
must file the required paperwork to claim the 
exemption. 
4. Leave a letter of instruction. Not everything 
you may wish to pass on to your heirs – like 
instructions for your funeral – should be put in 
your will or Trust. Leaving a letter of instruction 
with your family or attorney can ensure your 
final wishes are respected. And take it one step 
further with a Family Legacy CD or DVD in 
which you record your values, insights, stories 
and experiences for your loved ones to refer 
back to for generations to come. We provide this 
service at no additional charge for our clients 
because we know this is one of the things families 
value the most and is least often handled. 
5. Sign a durable power of attorney. Estate 
planning is not just about death, but also ensuring 
your family can handle things in the event you 
become incapacitated. Signing a durable power 
of attorney that designates someone to handle 
your financial affairs will save time, money and 
Court hassles for your family. In fact, not having 
this one simple document in place could end up 
costing your family tens of thousands of dollars. 
6. Create an Advance Healthcare Directive. 
This document designates a decision maker 
of your choosing to make sure your wishes are 
followed when it comes to the medical care you 
want – or do not want – to receive when you are 
incapacitated or near death. You will also need 
to sign a HIPAA release form so your medical 
records can be released to your health care agent 
enabling your doctors to discuss your medical 
care with that person. 
7. Organize your paperwork and digital files. 
Since many of us live our lives online these days, 
make sure your executor has access to all your 
digital information, including website addresses 
and the log-in information for those sites. Put 
all your important paperwork – deeds, insurance 
policies, bank and brokerage statements, etc. – in 
one file and let your executor know where it is. 
Bonus tip: If you have minor children at home 
(or adult children with special needs), don’t rely 
on naming guardians in your Will alone. Create 
a comprehensive Kids Protection Plan to ensure 
your children’s care is covered not just for the 
long-term, but for the short term as well and no 
one you don’t want raising your kids ever has a 
chance to take control. 
Contact us at 626.355.4000 or www.GarlettLaw. 
com about scheduling a Family Estate Planning 
Session so we can sit down and talk about 
designing a plan that fits the needs of you and 
your family. 
*the 
creative entrepreneur 
by Lori Koop, Business Coach 
Tears came as she talked. It had been suggested by another business coach that she raise her massage 
prices. I asked her what her body said. She said his prices felt too high, but she felt obligated to listen. 
After they stopped working together, she changed them back. 
When we spoke, I gave her permission to charge what she wanted. After all, it was her business. 
And she gets to feel good about what and how she offers her services. Why would she walk away 
from money? Sometimes we don’t know why, we’re just following our gut. Maybe her calling is to 
help economically disadvantaged clients. In fact, many of her clients were retired or struggling… 
her long time customers, and she wanted to continue serving them. Maybe there’s some person she’s 
supposed to meet. In any case, it’s important she follow her intuition. 
This is one method I use when helping clients price their goods. I have clients write the various 
options on a piece of paper and starting with the first one, listen to how it feels in their body… it’s 
“rightness.” Pretty quickly they feel a “it’s too high” or “it’s too low” feeling. Comparing the first two, 
they find the “winner.” Then compare it with the third. Down the list we go, one by one, eliminating 
those that just don’t feel right … until one last guy is standing. The winner! And the right price. 
In fact, my client’s practice was full… all from word of mouth. No advertising. No social media. No 
networking. She had come to me ready to expand. She had a dream of a bigger place with other, 
like-minded professionals working along side her. This is how she wanted to increase her income, 
not thru a price increase. 
Our job as entrepreneurs and as individuals is to remain TRU. We do this by listening to our spirit 
and doing what it says. I’m sure she could have charged more, and she probably will someday, but 
that’s not what her spirit was telling her today. I know because of the tears. She knew the right price. 
She just needed to be reminded. 
. . . . . 
LORI KOOP, helping creative entrepreneurs prosper. Schedule a complimentary session: www.LORIKOOP.com 
or call 626-836-1667. (Location: 49 S. Baldwin Avenue, Suite L, Sierra Madre 91024) I write every other week. 

Mountain Views News 80 W Sierra Madre Blvd. No. 327 Sierra Madre, Ca. 91024 Office: 626.355.2737 Fax: 626.609.3285 Email: editor@mtnviewsnews.com Website: www.mtnviewsnews.com