ABC Planning Workshops

                                                  Happy senior couple calculating monthly expenses at home. Horizontal shot.




Discover How ABC Planning Can Help You.

All too often people find themselves having to rely on a planner’s advice without really understanding what they are agreeing to. The ABC Planning system takes the guess work out of your decisions and provides an easy to follow and implement plan for identifying the proper allocation for you. Our easily accessible software tools and easy to follow planning process allow our clients to determine exactly what they want their money to do for them and how to achieve optimal results. Best of all, you won’t have to take our word for it, because everything is laid out in easy to follow steps and presented in plain English. It’s as easy as A – B – C!

What Is ABC Planning?

Developed by author and financial guru Dave Vick, the ABC Planning process recognizes that, for planning purposes, all money is not the same. Once you learn to identify the different kinds of money, and what you want each kind of money to do for you, you can derive a financial plan that works and lets you sleep at night.

In ABC Planning, you identify your three types of money: Yellow, Red and Green:









Yellow, which is your liquid money for emergencies, expenses, and anything else that might come up. This money protects your green and your red, but has little if any growth potential. This money is held in CDs, money markets, savings, checking, etc.

Your red money is your money at risk. This money has potentially higher growth potential, but also has the potential for significant losses. Although it may seem liquid, if it is significantly down when you need it, you could take severe losses in accessing your money. This is the money you have invested in stocks, mutual funds, real estate, precious metals and other commodities, bonds (in 2008 bonds were down as much as 30%!), and anything else that can lose money.

Your green money is your protected growth money. This money has potentially higher returns than the yellow money, but guarantees safety of principal. In addition it retains your gains and provides guaranteed income. This money offers up to 10% per year in liquidity during the growth phase, and up to 10% guaranteed growth for purposes of guaranteed lifetime income.

How does the ABC’s of Retirement Planning Model Work?


Yellow Money

The goal of Column A, Yellow Money, is to provide a sufficient amount of liquidity for the majority of your portfolio while keeping it protected from losses due to fluctuations in the stock market.
Remember, yellow money is money that typically earns lower returns, is guaranteed by FDIC, and can be liquidated with minimal expense and maximum efficiency. We are not expecting big gains in these assets because this is “cash” or short term funds. As a rule, the longer the time horizon and overall risk for an investment the greater the potential returns.

You also want to have cash available in the event you can’t work for six months to a year. You don’t have to keep 6-12 month’s salary available however you do want to have your basic living expenses covered. For example, if your monthly expenses total $2,500 and you wanted to cover six months, then you would need $15,000 in Yellow money accounts. If you wanted to cover a twelve-month budget at this rate you would need $30,000. In order to get the most interest make use of six to twelve month CDs and ladder their maturities

Common attributes of Yellow Money:

Not Investing, But Rather Savings


Lower Returns

FDIC Insured

Bank Accounts, CD’s, Money Markets, Savings, Cash Accounts

Taxable or Tax Deferred

Average 1%-3% Historically

Two Yellow Money Categories

Accessible with NO penalties for early withdrawal.

Accessible with MINIMAL penalties for early withdrawal.

The reason you want to have liquid short-term Yellow money available is because you don’t want to be forced to sell off long-term assets. It is also important to make sure you don’t have too much Yellow money or it can diminish your buying power over time.


Green Money

The second category is Column B, the Green Money Column, and holds Protected Growth assets.  These assets offer potentially moderate returns, are tax deferred, and offer partial withdrawals during the surrender period.

There are three green money rules.

  1. The principle is protected from loss.
  2. The previous year’s gains are retained as interest.
  3. You can guarantee an income for life.

The best fit or asset for this column that achieves all three Green Money Rules are Fixed Indexed Annuities.


Typically you can get up to 10% per year as a free withdrawal during the surrender period.  So the general rule of thumb is don’t allocate money to the B column in which you would need more than 10% of the next year while in the surrender period.

This is the Fixed Principal Asset column where principle is protected.  This is where the ABC model differs significantly from the Wall Street approach.

The Wall Street approach to this column traditionally has been to use a laddered portfolio of bonds to accomplish the goals of column B.  The problem is that bonds violate Green Money Rule #1, Bonds can and do lose money.

If an asset can’t do the Three Green Money Rules it does not belong in that column.  Because Bonds can’t follow those rules, it is a C column asset.  Therefore, a Fixed Indexed Annuity is probably the ideal asset for column B.


Red Money


Column C represents our Red Risk Growth assets  These assests move up and down with the market.

Investors usually chase higher returns over time, though there assets can gain or lose 30% in a year or even more.

The market “giveth” and the market “taketh” away, there are NO protections or limits.  The money is invested in the market and the principle is NOT protected.

The majority of the assets found in column C are in retirement accounts such as 401K’s, 403B’s, IRA’s, and Variable Annuities.

They can also be found in non qualified brokerage accounts, mutual funds, stocks, or bonds.

You can either be your own manager or hire a professional investment advisor to manage this part for you.

The main concern with C money is risk.  Your principle is at risk with any dollars that are in column C, the focus should be how do you manage the risk.

The strengths of the ABC model is that instead of having 100% of your investments at risk, you might only have 20% at risk and in addition to that you are going to manage that risk from a tactical approach.  So if the market goes down 30% would you rather have 100% of your money subject to that risk, or only 20% subject to that market risk.


For C (Red) Risk Money Safety First employs the investment philosophy pioneered by its strategic partner, Matson Money:  That it is both possible and prudent to apply the best academic research of the past fifty years to understand better the process of successful investing. Established over 20 years ago by well-known investment manager, author, news and television contributor Mark Matson, Matson Money is leading independent Registered Investment Advisory firm with over $5 billion under management.

Economists have long been working to understand how markets work. Prior to the availability of reasonably fast computers, this endeavor was primarily theoretical. The empirical side of academic research in the area of economics and investing began in the early 1960s.

Many believe that the publication of Eugene Fama’s Ph.D. dissertation in 1963 was the culmination of empirical research in this area. This information is the foundation upon which Matson Money has been built. Together these concepts form a solid, disciplined, and diversified investment strategy.

Matson Money’s Free Market Portfolio Theory is the combination of three evolutionary breakthroughs in the area of modern finance that encompass the Free Market Portfolio Theory: Efficient Market Hypothesis, Modern Portfolio Theory and the Three-Factor Model.

Free Market Portfolio Theory
The word “free” is used in the phrase Free Market Portfolio Theory based on the works of Adam Smith and FA Hayek. Both of these great thinkers clarified and explained the power of free markets.

F.A. Hayek
In his book, The Fatal Conceit, Hayek gives the main arguments for the free market case and labels as the “fatal conceit”-the idea that “man is able to shape the world around him according to his wishes.”

Adam Smith
In his classic work, The Wealth of Nations, Adam Smith, the “father” of modern day capitalism opined, “Every individual in pursuing his own good is led, as if by an invisible hand, to achieve the best good for all. Therefore, any interference with free competition by government is injurious. Market forces of capitalism will produce the best results, economically and socially, if they are not tampered with.”


ABC Results

ABC In 10 Years

How does The Financial ABC’s of Retirement Planning strategy perform if we did the last ten years all over again?

No one can predict the future results of the market.

We know that historically the market does two things very well…it goes up and it goes down.

We don’t know when or how much increase/decrease the future will bring, but we do know that we will experience them at some point.

The closer you are to retirement the more difficult it is to “ride out” the bad years.

It is critical to understand this and make sure that you portfolio is set up for your future, you do not want to get caught in a position of doing the same thing over and over expecting different results.