A Primer

“An important thing to recognize is that the title ‘Financial Advisor’ can mean many different things. By nature, this makes this a difficult question to answer. However for most people, an Advisor should be someone who meets you wherever you are in your financial journey and competently offers objective advice and planning resources to help you define and achieve your goals. For some, that will mean identifying and selecting best in class investment talent. For others, it will mean someone who guides clients along a roadmap of planning. This question can probably be best addressed by explaining what a good Advisor is NOT. Advice is not a transaction. Advice needs to be given first and foremost to achieve what the person receiving the advice needs. It is important to recognize that ‘advising’ and ‘selling’ are very different. If you are being sold something, it’s likely not advice.”

“There are two common methods of compensation and if you have or want to get an Advisor, it is almost certain that you pay one way or the other.

Commissions - Transaction costs associated with buying something. Just about any investment product can be sold with commissions (including funds, stocks, bonds, Treasury bonds, annuities and more) An important thing to remember with commission based products is that selling is not the same thing as advising. If you are being sold an investment idea, make sure it is because it is truly the best thing for you, not because it pays an attractive commission to someone else. (note: Fiduciary Financial Advisors only do advisory work and do not offer commission based products.)

Fee-Only - When you hire someone to manage your financial affairs with a fee-only arrangement, you pay the Advisor an annual fee as a % of the account value. Typically this is pro-rated throughout the year and charged against the balance of your account each quarter. The primary advantage of fee-only is that there remains an onus for the Advisor to work hard for you. If your account value decreases, the Advisor’s compensation naturally decreases as well. (note: Fiduciary Financial Advisors work a strict fee only basis across all investment products)”

“When hiring a Financial Advisor, it is important to know the answers to questions like these:

- Do you sell any commission based products or are you fee-only?
- Do you do financial planning?
- Does your financial planning software include any stress testing for various outcomes? (the most common form of this is called ‘Monte Carlo’ and it is very important)”

“The most reliable way to find a Financial Advisor near you who meets the fiduciary standards is to use the Paladin Registry. (https://www.paladinregistry.com) We are proud to be a 5 Star Quality Advisor accepted onto the registry along with many other Advisors throughout the country who are committed to putting the interests of their clients first.”

“We don’t know you so this is a difficult question for us to answer for you.
As a litmus, try asking yourself these questions -

’Am I 100% confident that without any professional help, I can manage my financial life through various market environments, including when times are good or bad?’
’Am I 100% confident that the planning work I have done will result in having enough money to last the rest of my life?’
’Am I certain that my investments are optimally positioned when accounting for taxes and fees’

As a general rule, if the answer to any of these questions is ‘maybe’ or ‘no’ you probably need an Advisor. ”

“We can only speak for ourselves compared to broad market ranges. What we can tell you is that commission costs can range widely based on a number of factors.

Fee-only Advisors typically charge between 1-1.50% per year. Many Advisors have a reducing scale based on the amount of investment.

About Fiduciary Financial Advisors: We believe in keeping costs as low as possible. As a commitment to our clients, not a single client has an advisory fee above .95%.”

“Financial Planning (including retirement planning) is the process of meeting you wherever you are in life and determining attainable goals. Here are some common goals that proper financial planning can help achieve:

- Retirement & Early Retirement
- College Funding
- Optimal Social Security withdrawal strategy
- Liquidity needs
- Tax management
- Estate planning
- Charitable gifting & family legacy strategy
- Insurance planning
- Business succession planning
- Family business planning
- Inheritance investing

The point of planning is to navigate these circumstances as optimally as possible with a keen eye towards risks that might undermine successful outcomes.

If any of the above circumstances concern you, then yes, you could likely benefit from financial planning.

About Fiduciary Financial Advisors: We do robust financial planning for all of the above circumstances and believe that planning is a core piece of long term success. ”