FAQs
General Questions
What does your firm do?
We provide comprehensive financial planning and wealth management.
What exactly does that mean?
For us, comprehensive financial planning starts with clarifying your goals. Once this is done, we develop cash flow projection based on your financial goals, resources and investment strategy. There is a great deal that goes into a plan – from tax considerations to variable investment returns to inflation impacts – so it’s a good deal more complex than a straight line projection.
Wealth management is an extension of the comprehensive financial plan. For our wealth management clients, we implement the plan and provide ongoing investment management and planning advice. While implementing a financial plan and choosing investments may sound straightforward, there is a great deal of research, knowledge and work that are required.
How do I know if I need a plan?
If you don’t have a plan in place, you likely need one. While that may seem like a standard answer, one financial goal that nearly all of us share is the desire to retire one day. If you don’t know how or if you’ll be able to afford to do that, at the very least a plan will be able to quantify the financial gap you face and provide some channels you might use to close that gap.
I just have a few questions – I don’t think I need a comprehensive plan done, and I don’t consider myself to be wealthy.
We work with clients on an hourly basis at an hourly rate. If we can get enough detail from you regarding the questions you’d like us to address, we’ll try to provide an estimate of time necessary and what the cost will be.
Couldn’t I just complete a plan on my own?
If you’re handy with a spreadsheet, you could probably come up with a rudimentary plan. However, unless you’re extremely adept, it would be difficult to model the tax impacts or the effect of uncertain investment returns on the probability of success for your plan. You might also overlook critical issues, such as areas of possible tax efficiency, gaps in insurance coverage or potential estate concerns.
How about investing on my own?
Honestly, we think you can do reasonably well investing on your own if you have a decent amount of knowledge regarding investments, follow a few simple rules and don’t neglect your investments. However, most people don’t have the knowledge and the time, and fewer still have both of these qualities and the temperament for investing. The best way to achieve superior returns over time is to follow your own strategy.
Okay, I don’t want to do this on my own, but why should I work with your firm?
There are a couple of things that sets us apart. First, we are fee-only. What this means is that we sell no commissionable products whatsoever, so our advice isn’t influenced by any hidden motives. Even the most well intentioned fee-based planner may be influenced to recommend annuity A, which pays a 7% commission, over annuity B paying a 5% commission. With a fee-only planner, commissions are never an issue, and investment expense is normally lower as a result.
Our experience and our education also sets us apart. The company has been in existence for nearly 20 years. In addition, Sandy is a long-time Certified Financial Planner, and Micah passed the final exam in the Chartered Financial Analyst program. Both designations are widely recognized, and if you’d like additional information about either one, let us know.
The next characteristic that sets us apart is our focus on client education. Unlike many planners and money managers, we take the time to educate our clients about our approach to planning and investment management. It’s your money and your financial well-being, and you deserve to have your questions answered about the advice you receive. But part of the reason we spend time educating clients is that it is something we enjoy doing.
What would the next step be if I/we were interested in working with you?
Just give us a call, and we can take it from there. If you would like additional information about the planning process before calling us, please see the FAQs on the planning process below.
The Planning Process
Why do you refer to creating a plan as the planning process?
We use the phrase ‘planning process’ because a plan is not static, but rather a dynamic document which is updated as your circumstances and goals change.
What sort of changes might impact the plan?
Any material change to your financial circumstances or your goals will likely lead to a change in your plan. Receiving an inheritance, going through a divorce or a substantial change in income are all changes in one’s financial circumstance that often lead plan changes. Changes in goals requiring a plan update include the desire to retire later or earlier.
What is the planning process?
At the highest level, the planning process involves data gathering, data entry, plan generation, plan review and lastly the design of the portfolio and generation of investment recommendations. There are typically three meetings involved in the creation of a plan, as follows:
- Base plan review, which involves reviewing data input for accuracy, gathering additional information needed, and confirmation of plan goals.
- Final plan review
- Review of portfolio design and investment recommendations
Could you provide me with a sample plan?
Sure. Just send a request to .
Fee-only versus Commission-based planners
Your fee for a plan seems higher than that which my broker/banker/non-fee-only advisor/brother-in-law says they will charge.. Why is that?
The chances are those that are willing to provide a plan at a low price – or even, at times, free – are compensated for the investments you purchase. In fact, the bulk of their revenue comes from the commission on these products, and that commission is typically a good deal higher than the price you would pay for a plan. You should care because although you are not paying the commission directly out of your pocket, the mutual fund and annuity companies are charging you a higher ongoing fee so that they can afford to pay the commission.
Can you give me a concrete example comparing the cost of fee-only planning versus commission-based planning?
Sure. Suppose that you need a fairly straightforward retirement plan, plus a portfolio recommendation on a $500,000 portfolio. A ballpark cost for the plan plus the recommendations might be $3,000. In comparison, a commission-based planner might offer to complete a plan for just $300 – or it might even be free. The catch is that the investment recommendations will very likely include loaded – or commissionable – funds on which the load is 5%. Thus, the planner would earn $25,000 in commissions, and that cost would be passed on to you over time in the form of higher fees on the funds recommended.
How Funds Pay Commissions
Funds pay commissions to the planners that sell the funds as soon as the funds are sold. In the early days, this commission was apparent to the investor, as the commission was immediately deducted from the amount of the fund the investor purchased. Thus, if the investor purchased $100,000 of Fund X, and Fund X paid a 5% commission, only $95,000 of the fund was actually purchased. These types of fund shares were referred to as Class A shares.
As you might imagine, many investors raised a ruckus about taking a such a sizeable percentage at the outset, so the fund industry adapted and B shares were introduced. An investor purchasing B shares would find that the $100,000 she purchased of the B class of Fund X resulted in actually purchasing the full $100,000 in shares. However, what the investor may not have been aware of was that ongoing expenses for the fund were much higher – often a percent or more higher annually. Furthermore, if the investor sold her shares before a pre-determined timeframe – often 5 years or longer – the investor was penalized.
The penalty was the fund company’s attempt to ensure that it earned enough in fees to cover the commission that it paid the advisor selling the fund. Unfortunately, the penalty added insult to injury when the investor was selling a fund because it had underperformed.
Share classes have proliferated as the industry has matured, but the bottom line is that any commission a fund company is paid will ultimately be covered by the fund investor in the form of higher fees.
Can You Quantify How Much Higher the Fees Would Be?
It’s difficult to do that, as fees for funds vary. However, the average fee – otherwise known as expense ratio – for mutual funds is approximately 1.5%. As noted in the section on investment philosophy, we focus heavily on the expense ratios of the funds we recommend, and many client portfolios have an average expense ratio of 0.6 to 0.7%, or less than half that of the average fund expense ratio. In fact, for clients working with us on a retainer basis, their total cost including the retainer fee we charge plus expense ratio is in the neighborhood of the average fund expense ratio alone.
Self-Directed versus Retainer
What do you mean by self directed versus retainer?
Self-directed clients are those that work with us on an hourly basis, and take our plan recommendations and implement them on their own. Often, self-directed clients will come to us from time-to-time to update their plan and investment recommendations and we will charge them for that additional work on an hourly basis.
Retainer clients are those for whom we take responsibility for implementation of the plan, ongoing monitoring of the plan, and the investment portfolio and periodic reporting. Instead of paying us hourly, these clients pay us an ongoing retainer fee.
Should I work with you as a retainer client, or should I self-direct?
That isn’t a question we try to answer at the outset, as one of the key elements in a successful planning relationship is trust. Trust is something that is built over time, so we typically don’t address the self-directed versus retainer question until the base plan has been created, at the earliest. If at that point, you are comfortable working with us and we with you, then a discussion of a retainer relationship may make sense. Given our fee structure, we do limit retainer relationships to clients with $500,000 or more in financial assets, as it is difficult for us to be profitable below that level of assets.
If I’m comfortable implementing my own plan, what real value does a retainer bring?
We work hard to quantify the value of a retainer. We believe the value is as follows:
- Discipline – one of Warren Buffett’s better-known quotes is as follows:
“Success in investing doesn't correlate with I.Q. once you're above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
”We follow a disciplined, proven long-term approach in investing, which is difficult to maintain for an investor managing his or her own portfolio.
- Monitoring – although our investment strategy does not typically involve frequent trading, we do actively monitor the investments we recommend as well as individual client portfolios. If changes are needed to recommended investments or client portfolios, we will proactively recommend those changes.
- Reporting – we provide retainer clients with quarterly reporting on both their portfolio positions and portfolio performance. Furthermore, the client’s portfolio performance is measured against a composite benchmark, which is the sum of the performance of relevant segments of the overall market. The difference between client portfolio performance post-fees and the composite benchmark performance can be viewed as the value we add as portfolio managers.
- Investment availability – a number of funds we use are institutional funds that are available only through investment advisors. We use these funds as they have demonstrated in our opinion, superior performance over the long-term.
TDA Broker vs Advisor
What is the difference between brokers and fee-based investment advisors?
What you need to know about financial advice