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The Cordant Blog

Scott Malbasa, J.D., CFP®

Scott Malbasa, J.D., CFP®

Scott Malbasa is an Advisor for Cordant, a wealth management firm serving current and former Intel employees. To learn more, you can read Scott's full bio or find him on LinkedIn.
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Recent Posts

Health Care in Retirement: What Does it Cost?

by Scott Malbasa, J.D., CFP® on November 09, 2017

I had a high school physics teacher who told me more than once, “always be true to your convictions, but prepared to abandon your assumptions.”

At Cordant, we have a conviction for helping our clients make smart financial decisions and working with them to keep their financial lives on track. A key component in helping them make smart financial decisions is creating a comprehensive financial plan that is designed right, and that can be a reliable tool to help them answer questions like: Will I have enough to retire? Can I afford a second home? Should I pay off my mortgage? This is where assumptions come in: in order to create a financial plan, we have to make assumptions about the future, and those assumptions should be based on the best-known information because they can have a dramatic impact on the workability of the plan. If the data and evidence suggest our assumptions are inaccurate, we need to be (as my former teacher would be happy to know that we are) prepared to abandon, or at least adjust them.

The cost of health care, particularly for those on Medicare, is a prime example of a financial planning assumption that gets a lot of new research. This research causes us to evaluate whether our current estimates are ones with which we are still comfortable. With that in mind, I'd like to review our current assumption for health care costs in retirement, consider recent research, and evaluate whether we need to adjust.

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What Monte Carlo Projections Leave Out (...And Why You Can Still Trust Them)

by Scott Malbasa, J.D., CFP® on August 25, 2017

Do I have enough money?

Almost every client has asked some version of this question and addressing it is an important part of what we do as financial advisors.

To do that, we need a model, which we call your Baseline Financial Plan. Like any model, it’s only as reliable as the inputs. “Garbage in, garbage out” as the saying goes.  Our model (your baseline plan) consists of three key components:

  • A cash flow, which reflects future inflows and outflows based on agreed upon assumptions between us and our clients for items like Social Security, Inflation, health care etc., and which incorporate all known future financial objectives;
  • A balance sheet, which should include all the resources that are in place to support that cash flow; and finally
  • An output, which analyzes the likelihood of that balance sheet being able to support that cash flow over time.

We think that Monte Carlo simulations provide the best way to generate this output because we don’t know for certain what the future will look like.  We need to make assumptions about what to model and importantly, model (and plan for) a range of future outcomes. But obviously, comfort in the tool we use to create the output is going to heavily determine how confident clients are in their answer to the “Do I have enough money?” question.

There are a couple of questions that come up often as it relates to the analysis. They are: 1) can I trust the analysis given the wide range of potential future results? And, 2) does it account for fat tails—or in layman terms, low returns?

The purpose of this post to answer these questions related to our Monte Carlo simulations. But first, let’s take a quick look at why we use Monte Carlo in the first place.

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Make an Appointment Now to Update Your Financial Plan for 2017

by Scott Malbasa, J.D., CFP® on March 16, 2017

We know that time doesn’t slow down for anyone, but it’s hard to believe we are already more than two months into 2017. Now that you have settled into the year and have hopefully made some headway on your resolutions, it’s time to get serious about making your finances a priority for the rest of the year.

As you reflect on the financial decisions you made in the past, this is an ideal time to determine new goals and focus your attention on your financial plan to set yourself up for a successful 2017.

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Intel Settlement Check: A Reminder About the Importance of Alignment

by Scott Malbasa, J.D., CFP® on February 02, 2016

If you’re a current or former Intel employee, you may have received a settlement check that resulted from a class action lawsuit. Some of our clients contacted us about the legitimacy of the check.

You may remember reading about the lawsuit filed in 2011 which alleged four Silicon Valley companies (Apple, Google, Intel and Adobe Systems) agreed to not poach each others' top engineers, and that such an agreement violated federal anti-trust laws by serving to fix and suppress employee compensation. There is a lot of related news online, but here Reuters has a good update on the case here. And if you're really interested (or bored) a full copy of the complaint can be found here as well. 

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Financial Blueprint Creates A Strategic Plan For Your Wealth

by Scott Malbasa, J.D., CFP® on October 06, 2015

I sometimes wonder if our clients and prospective clients tire of us talking about the concepts of transparency, alignment and mutual understanding. However, past experience has given me a lens through which I view those concepts, and I want to share why they’re important to me, and how a document that we created, the “Financial Blueprint,” gives them material meaning.

In our financial planning process, Cordant uses what we call the Financial Blueprint like an investor’s one-page business plan. Essentially, this is our attempt to pull together the key pieces of information that every client, as owner of his or her financial situation, needs to either define or track. Our team must have a clear understanding of what a client wants to achieve financially and the plans identified to help them get there. It’s imperative that this also be a shared understanding with our clients, so we can use our expertise to help advance them toward their financial objectives and goals.

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