1. Jake Seraphin
12/10/2014
CRM Client Project
CLIENT BACKGROUND
Joe Seraphin, my older brother, was my client for this project. Joe turned 30 years old in
October. He’s a single, financially independent homeowner presently residing in Hamilton,
Virginia. Joe is currently a manager at an auto shop in Ashburn, Virginia. My brother’s job
demands hard work and long hours, but he receives a competitive salary. His salary, in
conjunction with minimal expenses and zero debt (outside of his mortgage), has allowed Joe to
gain a firm financial footing. Joe graduated with a bachelor’s degree in psychology from Mary
Washington University in 2006, though he’s always had a kinesthetic, technical mind with skills
and knowledge ranging anywhere from computers to electricity to mechanics. In addition, he
possesses an aptitude for finance and has actively followed the market for the past two years.
His significant accounts include an individual ROTH IRA which has been fully funded the past
seven years, along with a separate “day trading” brokerage account. He owns auto and
homeowners insurance, but does not have health insurance. My brother wanted me to
investigate concerns pertaining to the structure of his mortgage payment, as well as the return
on his investments. The following is an income statement derived from all available information
provided by the client, in order to give further background on his position for 2014.
Annual Committed and Uncommitted Expenses
Total TaxableIncome: $70,200
Adjustments: $0
Total Income: $70,200
Tax Expense: $17,657
S.S./FICA: $4,323
Fed. Income: $8,906
State Income: $4,428
Disposable Income: $52,543
Expenses from Debt, Insurance,and Savings:$27,949
Mortgage Payment: $20,052
Home Equity Payment: $1200
Auto Insurance: $528
Homeowner’s Insurance:$669
ROTH IRA contribution: $5500
Income Available for Uncommitted Expenses: $24,594

2. Jake Seraphin
12/10/2014
Uncommitted Expenses: $14,368
Real Estate Tax: $4204
Cableand Cell Phone: $1560
Food: $4800
Utilities: $780
Personal Gas: $1200
Maid Service: $1824
Total Income Remaining: $10,226
*Savings Ratio: cash surplus/after-tax income – 10% < 19% < 20%
*Housing Cost Ratio: mort. payment + prop. tax + homeowners insurance/gross income –
31%>28%
Gathering Information:Financial Goals
Like many clients, my brother was at first unable to identify any tangible financial goals.
Though I had started off asking an opening question similar to “what can I do for you/help you
with”, eventually we had to talk tangible goals. At one point he literally asked me “What if I
don’t have any goals, just hopes and dreams?” That obviously was a moment with the potential
for tension. However, Joe’s tone wasn’t of melancholy but rather almost amusement as he
realized that these were necessary questions that he needed to ask himself. Perhaps his
reaction was a defensive mechanism to hide deep-rooted concerns and avoid tension, but I
didn’t think at the time to act on it. In any case, this scenario illuminated the added value of an
advisor. I was able to challenge the client’s thought process in a way a computer or the client
himself simply could not. He had plenty of objectives and desires, but no concrete plan. For
example, Joe wanted to become more knowledgeable about finance (particularly his
mortgage), and he’d like to increase his savings and reduce his taxes. In addition, he wanted to
evaluate his insurance needs as well as increase the return and diversification of his
investments. None of these ideas had a dollar value associated with them or a time frame for
implementation, but they were all worthwhile and valuable objectives. Once these ideas began
to stir in Joe’s head and he had more of a vision, I had him fill out a questionnaire listing short-
term, intermediate-term, and long-term goals. However they weren’t necessarily SMART due to
Joe’s relative uncertainty concerning his future. At some point when the client says “I don’t
know”, I feel you can’t push them any further once they’ve reached a certain vulnerability. His
short-term goals consisted of do-it-himself housing improvements (finish screen porch, repair
baseboard heaters, replace Gable covers, etc) in an attempt to raise the property value. As
stated before my brother is a very kinesthetic, do-it-yourself hands on individual. Prior to this

3. Jake Seraphin
12/10/2014
assignment I failed to realize that the undertaking of these projects were seen by Joe as
investment decisions, rather than simply an excuse to play around with some power tools on a
Sunday. In the intermediate term my brother would like to rent his current home and buy a
new property, however he only ranked these items with a priority rating of 3 out of 5. In the
long-term Joe listed that he would like to retire with more than 3 million dollars. We never
discussed how he derived that number or the significance of it (to my fault), but it appeared
evident that the number was selected arbitrarily out of what he felt was appropriate. I knew
immediately that there were strategic recommendations I could make in the short-term to help
facilitate Joe’s goals on any timespan. The only obstacles were going to be Joe’s commitment
and discipline, unless a major life/world event occurred.
My client currently owns a Vanguard individual ROTH IRA which he’s made maximum
annual contributions to since 2007. Joe’s ROTH holdings are all mutual funds, including
Vanguard’s 500 Index Fund, Dividend Growth Fund, Healthcare Fund, and LifeStrategy Growth
Fund. The account value is slightly greater than $50,000, and has produced a 12% return to
date. In addition, 18 months ago Joe opened an online brokerage account through TradeKing,
with an account value of approximately $20,000. He does not actively manage his IRA, yet in
2014 my client executed 90 trades on his TradeKing account. The amount of activity makes it
difficult to calculate an exact return, but it’s clear to see between the realized and unrealized
gains/losses that the account has underperformed his IRA. The short and long term capital
gains in conjunction with transaction fees from this account are certainly contributing factors.
There’s a lot of churning in the account (primarily amongst tech and energy sectors), but
constant recurring holdings include Apple, Gilead Sciences, Google, SolarCity, and Tesla. I didn’t
feel I was going to be able to change my brother’s investment strategy or behavior. He enjoys
“day trading” and speculating the market looking for any potential inefficiencies. It was evident
that the pleasure the client experienced from this, along with the knowledge/experience he
gained, was worth a lower portfolio return. However, I knew there were still ways to deal with
the excessive capital gains and trading costs. I advised Joe that he ought to take those recurring
holdings and move them into a brokerage account within his ROTH. This would allow him to
avoid any capital gains, while also trading for free within Vanguard. This was by far the most
valued recommendation by the client. He had an “Aaaahh!” moment. As I could see the
excitement in his eyes and hear it in his voice, I had to immediately give Joe a precautionary
warning. I emphasized that this was his retirement account, and the decisions he made within it
were not to be taken lightly. This was not the platform for him to make risky short-sells or buy
on margin. The intention was to allow him to make certain strategic maneuvers, within his
ROTH IRA, based on current events and market conditions. For example, Joe could take action
when news broke of a stock split for Google or a share buyback for Apple.
As previously stated, Joe does not have health insurance. He was recently dropped from
his last provider after failing to pay the premiums. I expressed to him on many levels the
necessity of purchasing health insurance. Currently he’s not in a hurry to act, and is in the

4. Jake Seraphin
12/10/2014
contemplation-preparation stage. Pain is a strong motivator. He hasn’t felt the pain associated
with being uninsured while experiencing a medical emergency. He believes he may be eligible
for a hardship exemption from the federal government, qualifying him for catastrophic
coverage. What the client doesn’t realize is that this time spent in deliberation could prove very
detrimental if something bad were to happen. Joe previously did not know what a Health
Savings Account was or how it could be used in conjunction with a High Deductable Health Plan.
I told him not only is a HDHP the best combination of cost and coverage for a young, healthy
individual, but there’s also tax advantages of a Health Savings Account. Not only would a $3500
annual contribution not count towards his adjusted gross income, but all earnings and
distributions are tax free so long as he’s under 65 years old and taking the distributions for
qualified medical expenses. The cheapest monthly premium Joe could pay for a HDHP in the
state of Virginia is $180; he can afford it. Perhaps the most attractive feature to Joe was the
similarity between HSAs and IRAs with regards to a variety of self-directed investment options. I
advised Joe that he could further reduce his tax liability if he allocated some funds from his
TradeKing account into a Health Savings Account. However, again I cautioned Joe that he
wanted to allow a cash value to accumulate before he engaged in riskier investments. To me
this recommendation killed two birds with one stone: recommend affordable (and essential)
health insurance for the client, while meeting their goals to better optimize their investments.
If you look at the income statement above, my brother is currently making a $100
principle payment on top of his monthly mortgage payment. His reasoning for doing this, he
explained, was in an attempt to have 20% of the mortgage balance paid, so that he could
forego any further mortgage insurance payments. To date, Joe has made 29 of 360 payments.
The original loan amount was $275,000, with a fixed interest rate of 3.25%. His annual
mortgage insurance cost is $780. The client was curious to know if he was currently employing
an effective strategy, or whether he should make adjustments. Joe will have to have paid
55,000 of the original loan amount to achieve 20% of the balance. The client’s housing cost
ratio is already greater than the recommended percentage. In addition his interest rate is very
favorable at 3.25% fixed. Taking these two factors into account, I advised the client to refrain
from paying the additional $100 in principle every month. As described by Professor Klock, the
return he could receive from the market for investing that money would be greater than any
cost savings associated from lowering his term and eliminating his mortgage insurance. This is
especially relevant considering that Joe doesn’t necessarily consider this house part of his long-
term future.
Gathering Information:Money Profiles, Psychology, and Personality
My brother finds himself in a position where he feels a sense of stagnation in his life and
he’s ready for a change of some sorts. He dislikes his job and would like to find other gainful
employment. He would even accept a cut in pay if it allotted him more leisure time to work on

5. Jake Seraphin
12/10/2014
things like housing improvements. He’s worked hard to become financially independent, and is
very proud of the fact that he is a homeowner and has been able to fully fund his IRA. He’s
grateful for the wealth he has when put in a global perspective. However, now that he’s
accomplished these things, Joe has a sense of emptiness as he looks to discover his next major
pursuit in life. He doesn’t want to wake up one morning 10 years from now and realize that all
of his efforts have been based off of a social expectation (“The American Dream”), rather than
his own innate desires. It’s undeniable that certain influences, both internal and external, have
guided Joe towards his current state of mind. He’s a left-brained, kinesthetic socializer/director.
His financial record-keeping was quite impressive for someone with no academic background.
His joy for actively following the market and making trades (and the accompanying knowledge),
along with his high savings ratio, suggest Joe is an amasser and a hoarder. My brother depicts
scripts that money is not important, and in some instances can even be bad. Our parents, now
both retired, were successful hardworking individuals. My brother describes our mother as a
shrewd businesswoman who had a constant preoccupation with making money, though she
never gave any insight to her children. Joe admitted that he thinks our mother spends too much
and it causes himproblems. My client thinks he even spends too much, though this year he’ll
have more than $10,000 in discretionary income. Our parents divorced when Joe was 13. Our
father’s savings were partially wiped out; this according to Joe was the biggest financial
message he received from our parents. In his view, our father slaved away at U.S.
Customs/Homeland Security for 30 years, only to see some of those earnings evaporate. My
client stated the major reasoning for establishing his TradeKing account was so that he could
gain instant access in the event of a market meltdown (compared to a 30 day waiting period to
buy-back Vanguard mutual funds). Joe’s major belief about money is that a fiat money system
based on perpetual credit is unsustainable, and the national debt per capita suggests that
people are still living beyond their means. In the past Joe has entertained the idea of starting a
small business, but he has admitted that the fear of potential bankruptcy is a major deterrent.
The obviously apparent theme here is loss aversion.
Gathering Information:Behavioral Financeand Client Decision Making
My client is certainly susceptible to biases and heuristics. First and foremost is lost
aversion. Loss causes more pain than a proportionate gain causes joy. My client is no exception
to this, and is possibly particularly vulnerable due to his money scripts and history. He currently
has multiple holdings in his TradeKing account that have lost more than 25% in value, yet
they’re still in his portfolio so as to avoid realizing those losses. My brother has seen my father
experience financial loss, and he’s personally experienced it through the crisis of 2008. He’s
extremely wary of loss in the future, and has taken measures accordingly to try to protect
himself (investing himself instead of through an institution). Joe’s also a victim of the
overconfidence bias. In our discussions I was trying to understand Joe’s trading behavior. I

6. Jake Seraphin
12/10/2014
asked him what he thought his strengths were that would allow him to earn above market
returns executing this high-churning strategy. He stated that he felt his intellect and his
experience were his advantages. He elaborated that of all the minds in the globe he felt he was
certainly in the upper quartile. I didn’t disagree with this statement, but I felt compelled to
remind Joe that he wasn’t competing against the whole world. He was competing against other
investors who probably had a similar, if not greater aptitude for finance. I felt really
uncomfortable saying those words, as my intention wasn’t to discourage my brother. It was an
indirect way of me telling Joe that he needed to change his investment strategy. I was hoping
he would achieve the self-realization that he doesn’t have the resources, nor the expertise to
be able to compete against investment bankers and high frequency traders operating with
computer algorithms. In conjunction with overconfidence he’s experienced the recency effect.
His investment strategy with TradeKing netted him about 15% realized gain in the last 6 months
of 2013. Naturally, he continued this day trading behavior in 2014, but with nowhere near
similar results. His overconfidence and recency biases have consumed his left-brain thought
processes governing certain aspects of logic. Similar to the endowment effect, Joe is susceptible
to the “touchy-feely” syndrome. He values stocks he’s personally picked perhaps higher than
their true worth. If you look at my previous list of his recurring holdings in his TradeKing
account, only about half of them would be considered legitimate buy and hold blue chips.
Gathering Information:Appling Communication/Interviewing Skills
Fortunately my brother and I have a very good relationship. For our first meeting I’d
dressed somewhat professionally and we were sitting across a table from each other. However
by the end of the meeting we found ourselves informally chatting in the living room, and this is
where some of the most valuable information was obtained. He’s the big brother, and he
doesn’t want to appear weak or vulnerable to his little bro (or in this case financially
inadequate). I understood this and was trying to accommodate his efforts and complement him
wherever possible in order to keep him calm/comfortable, but this made it a little difficult to
navigate certain topics. I empathized with the discomfort he must’ve felt when it was almost as
if I was judging his financial standing, and therefore in part his livelihood. This was the biggest
thing I learned about myself from the assignment. Never before had I been so sensitive and
selective in my choice of words, especially with my own blood. Money is powerful. Money is
symbolic. Being a college student whose expenses are paid for, I’ve never personally attached
much emotion to money (“there will always be enough” script). However, through my careful
and deliberate communication with my brother, I realized that I do have an appreciation for
emotions associated with money, even if they currently don’t apply to me. Discussing feelings is
never an easy topic amongst two men, let alone when one of them is trying to keep up a certain
appearance/persona. It seems quite plausible that many of Joe’s financial deficiencies stem
from the divorce of our parents. I was only 6 or 7 at the time, but at 13 it was a traumatic
experience for him. However, I never asked him directly what lessons he learned from the

7. Jake Seraphin
12/10/2014
divorce. Instead at one point as we were discussing his investments and his distrust for financial
institutions, I asked Joe “So it seems like a lot of your decisions are based on having total
control of the outcome.” Joe confirmed, but I wasn’t sure if he was aware that I ultimately
wanted him to understand why he felt that way, as well as acknowledge that some things are
beyond control. Overall I think I was an effective communicator, because I was a very patient
and active listener focused on helping the client. After every time my brother was done talking,
I left a second or two pause to review everything he said before giving an appropriate response.
This wasn’t easy, as my brother often went off on tangents about his feelings on corrupt
financial institutions and world powers (likely to dodge discussing himself). In some instances I
wasn’t sure how to re-focus the client without interrupting him, so I decided to always let him
finish his thought. Perhaps there were instances where I could’ve been more direct because I
was dealing with a left-brained, fast paced individual. However, as we’ve often discussed in
class, the power of self-discovery and the client realizing their own solution is much more
valuable than an advisor presenting them recommendations. At the end of the meeting I
summarized all of the things we’d discussed and reiterated what specific issues he wanted me
to look into. After personal reflection my perception of my efforts hasn’t changed much. The
only thing I would suggest is that I was so eager to help the client, that it may have been
interpreted in some instances as if I was looking for problems rather than helping Joe
accomplish his goals.
Applying Information:Promoting Action
The most concerning part of Joe’s financial picture was that he did not have health
insurance. There are plenty of individuals in worse-off circumstances than Joe who still have
coverage. Equally troubling was that Joe didn’t initially discuss obtaining health insurance. Once
we established that it in fact should be a goal and a priority (I basically pleaded with him as his
brother), I began to gather information in order to weigh options. Joe made it known that he
was potentially going to qualify for a hardship exemption, and therefore catastrophic coverage
from the federal government. Another alternative which I related to Joe would be purchasing a
High Deductable Health Plan in conjunction with a Health Savings Account. Joe wasn’t familiar
with these mechanisms, and therefore naturally skeptical at first. Unfortunately, my inability to
clearly articulate all the intricacies of a HSA on my first try further fed this skepticism. The
biggest message I portrayed was the consequences of not purchasing any health insurance. Just
last week Professor Klock told me the story of his uninsured step-brother getting in a
horrendous auto accident, and the following stress it caused the family. I’d hoped that my
words would lead to the client undergoing emotional arousal, and then from there re-
evaluation. Unfortunately, effort and the fear of pain on my brothers part are bigger motivators
than my logical deductions. He’s still yet to make a decision. My recommendation was for Joe
to purchase a HDHP in conjunction with an HSA, because it aligned with his investment
objectives. Evaluative measures would include him viewing the performance and the cash

8. Jake Seraphin
12/10/2014
balance of that account, as well as reviewing his medical expenses for the year to examine if the
policy was still relevant to his needs. If asked I’d be more than willing to help with that process.
Personal Reflection:Key PerspectivesFrom You and Your Client
As alluded to earlier, the most difficult/frustrating part of this project was trying to
disguise my messages so as not to offend or upset my brother. How do you tell someone who
you respect and look up to that they’re doing something wrong? How could I give strategic
recommendations to someone who knew just as much, if not more about some of the topics
than me? I couldn’t tell him that he’s not good enough to beat the market consistently with his
current strategy. Nor could I ask him to realize that his extreme loss aversion bias, and his
general distrust for institutions, stems from the breaking up of our family unit. I’m not
suggesting that directly making these statements is necessarily appropriate, but I’m not sure if
the client entirely received the desired messages. I was adamant about obtaining health
insurance, but that’s really because it’s a cut and dry issue. The most rewarding part of this
entire project was the “aha” moment when I gave Joe his investments recommendation. That
look of realization on the part of the client and the accompanying excitement is hard to
duplicate. Again what was so surprising was the amount of sensitivity, professionalism, and
attention to detail I gave when addressing someone whom I’ve always been nothing but frank
with. Going into the project I was confident that I would be able to solve any potential
problems put forth by the client. I feel this holds true. The client asked for advice on his
mortgage and his investments, and I delivered concise, valuable insight. In addition, I was able
to recommend health insurance in such a way that was congruent with his other goals. What
perhaps I didn’t expect was the client’s resistance with regards to health insurance (although
largely stemming from his pending hardship exemption status). I was caught off guard because
it just seemed like such a fundamental element to me. As a young professional, I think I still
have some work to do in discretely guiding the direction of a conversation, rather than simply
actively listening then providing a thought-out response. My client was very pleased with the
recommendations. He said I adequately addressed all of his concerns. Joe was most frustrated
by the fact that he hadn’t been able to acknowledge or address some of these issues on his
own. He said that the most interesting aspect of the project was how the nature of our
relationship changed during that time. He could tell that I was I was using a different style and
tone than normal, and was somewhat surprised at my emphasis on attempting to be
professional.