Frequently Asked Questions
What is included in Financial Planning?
Can’t I or My CPA Handle My Financial Planning Needs?
Do You Require a Minimum to Invest to Work Together?
What is Your Investment Philosophy?
What is included in Financial Planning?
This is a big question with a lengthy answer. The most important thing to remember is that planning is a process, because life and our circumstances evolve. There are many components that we cover over time. The following is representative of the major areas.
- Goal Setting: This is why we plan in the first place. It could be to retire at a certain age, to expand a business for a specific objective or revenue goal, or to have funds available for a child’s education. In addition to setting well defined objectives, you will need to know your current financial position first, to know what is necessary to get there.
- Cash Flow Analysis and Management: This item is what enables all of the others. We need to know what income (ie. earned, investments, rental), is coming in and what outflow, (ie. expenses, debt, taxes, current savings), is going out to determine allocations to goals.
- Debt Management: There are techniques to consider in reducing and eliminating debts while working towards goals.
- Tax Strategies: Virtually every area of your financial life will be influenced by its’ own tax treatment. You will see the impact within your plan’s cash flow. I make a concerted effort to look for opportunities to reduce current and future income taxes and to work together with your tax professional to help in making advantageous tax decisions.
- Risk Management: This element does include the “what-ifs” in life that could include coverage, including insurance for life, disability, and health. However, it also includes other aspects of risk, such as the loss of value in an investment portfolio, financial and personal risks considered in estate planning, or having liquid reserves in the event of an emergency.
- Retirement Planning: This is one segment you do not want to wait on. “Time” is the one factor you have the least control over. Although the term “retirement” is constantly being redefined, our efforts are to helping you achieve your level of financial freedom given your spending plan, savings, and resources.
- Investment Analysis: We examine all of your current investment positions for all of your various purposes (retirement, education, investing, savings), to determine how they are functioning in light of your goals. Our effort is to communicate clearly how various investments and designs work, and to give you a platform to easily track them.
- College Considerations: You could just be starting to think about saving for college, or looking at applying for financial aid. We want to consider the most advantageous approach for you.
- Real Estate/Mortgage: This topic can present an extra challenge, especially if you live in California. We will assess how your holdings fit in with the rest of your objectives.
- The Rest: You will have your own unique needs: specific accumulation goals, reviewing and maximizing your employee benefits, assessing executive compensation, and more.
Can’t I or My CPA Handle My Financial Planning Needs?
This is not solely a question of being capable to do certain tasks. You may have achieved extremely high levels of knowledge and skills related to your vocation. Your CPA could have various specialties in their practice which could include a number of the areas associated with financial planners. You would likely need to decide if you have the time and breadth of knowledge in a number of the planning topics. In addition, you may weigh doing it yourself vs. the benefits of having a professional to offer an objective view of personal family and business situations, the guidance to stay current with the latest in technology, legislative, and tax law actions, and the means to help you be accountable to your goals.
The one thing I have learned over time is that it is not always enough to have experience in your field, but you have to match up well with your client. Planning is not only about calculations (yes it is necessary), but about understanding values and what is important to you. It is very personal. So, it is a good idea to speak with a few planners to understand their approach and process.
It is true that most people’s thoughts go to investing first when they think about the role of a financial planner. Intelligent investing is very important. However, I believe you cannot discount the value of ongoing planning. The decisions made in this process (ie. mortgage choices, debt management, tax strategies, spending plans, estate considerations etc.), can translate into significant funds and influence the success of what you want to achieve in your financial plan.
Do You Require a Minimum to Invest to Work Together?
There is not an investment minimum or net worth to achieve to work together. There are practices that do require this. There are also those financial groups that do little in the way of planning.
Clients are at different stages in their financial lives. Many have focused almost entirely on their investment accounts. As can be seen above in the first question, there could be any number of financial topics to address. Clients may have experience with different service arrangements and I believe it is only fair to provide a choice for them. If client’s have not yet developed investment portfolios, but want the benefits of planning and wish to pay for it, we have that option. If there are those with portfolios they wish to have managed, we can do that under our advisory service. Though we are not deducting fees for financial planning out of investment accounts (and this cannot be done in retirement accounts), we can consider current investment advisory fees when establishing the fees for financial planning.
Typically, advisory fees are paid quarterly and deducted from an investment account. Financial planning fees are paid out of income.
I am a CERTIFIED FINANCIAL PLANNER™ professional, and completed the CFP Professional Education Program through the College of Financial Planning. I have been certified since 1990. In addition, I am insurance licensed in California, and fully licensed to transact securities and investment advisory services.
However, perhaps there is no qualification better than experience. Over the years, I have had the honor to hear countless stories and plan for many dreams!
What is Your Investment Philosophy?
We believe that financial planning and investing go hand and hand. It is to your advantage to use the technology and data we have at our disposal to understand how portfolios, pensions, social security, income programs, and their corresponding taxation effect results to verify confidence in your plans.
- Establish personal risk assessment to better understand the volatility of portfolios and expectations.
- The portfolio portion of your plan can be formulated with appropriately matched risk levels using low cost, broad market mutual funds, index funds, and ETFs; diversified globally and by various asset classes.
- Verify income coverage analyzing social security, pensions, and annuity income for payment of essential expenses.
- Stress test plan for poor markets, higher taxes, inflation, health care, life expectancy, reduction in Social Security.