The Traditional Financial Planning Problem…
Many investors struggle with managing their own investments, understanding legal and tax matters, and having an overall coordinated financial plan. They are not sure if their asset allocation or the risk tolerance is correct or when to adjust their portfolios and why. Many react to the media and end up overreacting trying to time the market. While this works once in awhile, statistics show trying to time the market does not work…losing opportunity and being subject to one’s own emotions rather than a logical plan.
Even with the use of a broker that you have a good personal relationship with often does not improve your investment returns. Many financial advisors have a conflict of interest by charging transaction fees, commissions, or by selling their own product. They may not be free to truly do what is in the best interest of their client due to licensing or company rules.
In addition, many advisors are trained in a narrow area of competency and expertise involving product knowledge in the areas of investments or insurance only, rather than overall financial and estate planning.
The solution to these important financial issues is to work with an independent financial advisor who has experience and education backed by professional credentials such as CFP®, ChFC®, or MBA that they work on a “fee” basis. Independence provides objective, unbiased advice rather than what is being influenced by their corporate directors or transactions that generate commissions. A “fee-based” advisor works in your best interest because the value of your account affects their compensation, putting you both on the same page. If the value of your account goes down, so does the advisor’s fee. If the value of your portfolio goes up, so does the advisor’s fee. By themselves, fee-based or commission based accounts are not necessarily always the most cost efficient or productive. Consideration should be given to expenses, trading frequency, amount invested, types of investment holdings, allocations, objectives and net performance.
A credentialed planner is important because they are bound by a “Code of Ethics” to do what's in the best interest of the client. They also have training in risk management, investment analysis and allocation, retirement and estate planning, cash flow and debt management, as well as tax issues. The difference is knowledge and expertise to understand the opportunity costs. This gives you the advantage of comprehensive integration of all your financial information.
One additional consideration in selecting a financial advisor is whether their firm is a Registered Investment Advisor (RIA). This means that they are registered with their state or the Securities Exchange Commission (SEC), and can legally call themselves a financial planner, as well as they are treated as a fiduciary, and must give you advice that is in your best interest…not just sell you a suitable product. All financial planners must legally give you the required Form ADV Part II disclosure about themselves and background, while other advisors don’t necessarily have to give you this disclosure. Only financial planners can legally charge a fee for financial planning advice.
A Registered Investment Advisor (RIA), is required by law to provide full disclosure of compensation, education, history of complaints, and conflicts of interest, other salespeople and advisors are only legally bound to sell you a suitable product, rather than give you advice as an RIA that is in your best interest under a “fiduciary” obligation by law. If you don’t get a Form ADV Part II, chances are you are not working with a financial planner…as this is required by law. Most financial advisors are licensed to sell a particular investment or insurance product and are held to a “suitability” standard by the state and federal regulatory bodies. This is a lower standard than the fiduciary standard and is related to the sale of a particular product versus being related to advice and planning.
The problem with historical financial planning is your plan is similar to your IRS tax return - it's a snapshot in time. To update it takes manual adjustments and time to organize statements and data. Wouldn’t you like a dynamic financial plan that is updating daily on an ongoing basis with current values, alerts, and graphs? Utilizing the most advanced integrated technology and software available allows your planner or advisor to network all of your assets wherever they are… into one comprehensive plan that is up-to-date every 24 hours. It can provide your net worth or asset values online anytime that you need. What this means is… if something changes in your plan…it can be adjusted quickly and accurately so that you can make better financial decisions.
In addition, you will become financially organized with all of your important documents in a safe, confidential, secure “online vault” that stores such things as past financial reports, wills, trusts, deeds, insurance policies, and a host of other important documents in one organized, secure location that is accessible from most anywhere via the internet. This makes staying organized, tracking, proactive analysis, reviews, alerts, and communication much easier and in real-time.
Financial Management, Inc….Our Strategy!
- Independent advice from professional, experienced financial planners with independent relationships with reputable firms.
- Fee-based, fiduciary planning and investment management, rather than transactional suitability commission based potential conflicts of interest
- Highly credentialed, educated, and experienced professionals
- Registered Investment Advisor, giving advice, planning and analysis in a fiduciary capacity.
- Uses cutting edge technology providing up-to-date and integrated financial plans
All this provides you with comfort of knowing that you are financially organized, your assets comprehensively integrated and proactively managed to your best interest.
You can set up your free, no obligation initial appointment by calling 509-735-7526 in Tri-Cities or 509-965-5654 in Yakima to discuss how you can benefit from these services and how our knowledge and expertise can help you simplify your financial life:
- Improved client communication
- Quarterly portfolio reviews
- Annual personal reviews
- Integrated financial analysis and planning
- Coordination of financial issues with other professionals
All this is designed to simplify your life, allow you to make better informed decisions, and improve the quality of your retirement!
No information on this site is intended to constitute an offer to sell or a solicitation of an offer to buy shares of any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under securities laws Registered Representatives of LPL Financial may only discuss securities with or transact business with persons who are residents of the following states: AZ, CA, CO, HI, ID, KS, NM, NV, OR, UT, WA
Securities offered through LPL Financial, member FINRA/SIPC.org, A Registered Investment Advisor. Financial Planning offered through Financial Management, Inc., A Registered Investment Advisor and separate entity from LPL Financial.