What should an investor look for in a financial advisor?
What differentiates you from other investment advisors?
- I believe that customized, realistic investment plan is a prerequisite for success. But you need more than a road map; you need an experienced guide who knows what to expect.
- I have nearly forty years of hands-on experience in the securities markets. I am a Certified Financial Planner®, an Accredited Investment Fiduciary®, and a Chartered Retirement Plan Counselor®.
- I am compensated strictly on an hourly rate. Only a small fraction of investment advisors work solely on an hourly rate basis.
- For more details see my bio.
Who can benefit most from your services?
- Investors who
- Know that avoiding big losses is more important than maximizing returns.
- Want an uncomplicated, realistic investment plan customized to their personal objectives and risk tolerance.
- Want a proven investment strategy that offers the greatest probability of success.
- Wish to retain control over investment decisions but still want the guidance and expertise of an experienced professional including access to an advisor when needed without paying for full-time investment management.
- Don’t want to pay for unnecessary or expensive services.
- Are looking for the Peace of Mind that comes from knowing you have adequately addressed all of the important investment issues and met your responsibility to yourself and to your family.
What can clients expect from you?
How much work is involved?
- The majority of the work involves constructing the personal investment plan. Monitoring and maintaining the plan takes much less time.
Why should I pay for investment advice?
- Investors generally pay for advice whether they know it or not. Commissions, fees and expenses can be hidden in the price or buried in a prospectus. You need to know how much you are paying and what you are getting in return to determine if you are getting value for your money. My fee is fully disclosed and transparent but I also help clients understand the fees and expenses associated with their investments even though that is not part of my compensation.
- “Do-It-Yourself” investing can turn out to be a lot more expensive than you think. Dealing with a professional helps you avoid amateur mistakes and provides an expert’s guidance and objective opinion to offset the influence of Human Nature.
How are you paid?
- My fee is solely based on an hourly rate of $240. I do not sell products, receive commissions or charge a fee based on assets. Once we have established the scope of the project and what you expect to receive I will quote you a firm fee based on an estimate of the time involved. I do not receive any additional compensation from any source and there are no long-term asset or retainer contracts.
Why is hourly rate investment advice better than an annual asset fee or commissions?
- An hourly rate is the fairest way to pay for investment advice because the fee is directly correlated to the work performed and not based on what you buy or how wealthy you may be. You only pay for the work you want. This unbundled approach eliminates unnecessary services included in “one-size-fits-all” arrangements.
- Hourly rate investment advice is the most objective and has the fewest conflicts of interest because it is not based on what you buy or sell or the value of your portfolio.
- Hourly rate compensation allows me to recommend the most cost-effective investments for your portfolio which can save you a considerable amount of money. Eliminating unnecessary expenses increases your investment returns.
- I am compensated in direct proportion to the work that I do – no more, no less. Since I do not receive any compensation or consideration from any other source, my clients know exactly what they are paying and what they get in return.
Is there a minimum asset requirement?
- There is no minimum asset requirement nor are you required to do business with any particular broker-dealer or investment firm.
Can you advise me about my employer-sponsored retirement programs like my 401k?
- Yes. But because I do not accept direct access to account information you will need to provide me with the necessary information and account statements.
Why do I need a written plan?
- Writing the investment plan forces us to carefully consider all of the important issues. It is not just a document but a process for making prudent investment decisions. A written plan disciplines us to make decisions deliberately and helps us avoid reacting to short-term market fluctuations. It helps us determine the right amount of risk – not too little, not too much. A written plan is our reference point to tell us when action is required and what should be done next. It frees us from the nagging question, “should I be doing something right now?”
- We are our own worst enemy when it comes to investing - our human nature and intuition work against us. Without a prudent, written plan, we can easily be influenced by our emotions – fearful when the market is down (and stocks are cheap), euphoric and overconfident when the market is up (and prices are high).
What are the benefits of an Asset Allocation strategy?
- Asset allocation is a balanced diversification strategy to reduce overall risk. It eliminates the possibility that a large portion of your investment capital is concentrated in a single company or sector which experiences a disastrous decline in price (think Enron or bank stocks). It is also a technique to cast a wide net around more investment opportunities.
- An asset allocation strategy using regular rebalancing forces us to “buy low, sell high.” It reins in the speculator and forces the timid investor to step up to the plate.
What are the benefits of Index Funds?
- An index fund gives you broad diversification and normally has much lower expenses than actively managed funds (this is not a sales charge – all funds have management expenses). Index fund managers do very little buying and selling so you avoid heavy “transaction costs” (commissions, dealer markups, spreads, etc). This also means you won’t have to deal with large taxable capital gains distributions at the end of each year.
How does Human Nature affect our decision making?
- Our innate Human Nature encourages us to make bad investment decisions. Rationally we know that to be successful we must “buy low, sell high” but emotionally we feel more comfortable doing the opposite. Do you remember how everyone had so much confidence in the stock market (and internet stocks in particular) when prices were peaking in early 2000? At the bottom of the market in March of 2009 most investors were pessimistic and more eager to sell than to buy. We are “hard-wired” to feel most comfortable when we are doing the same thing as everyone else. Unfortunately, in the market, when everyone is doing the same thing, the game is pretty much over. We have to insulate ourselves from these normal, human impulses.
Are your fees deductible?
- Yes. Section 212 of the IRS code permits an itemized deduction for tax and/or investment advice in the miscellaneous section of Schedule A. It is subject to a 2% floor of the adjusted gross income on a personal tax return. Tax questions should always be referred to your tax advisor.
If you don’t sell products, how do I invest in the securities you recommend?
- Although I will provide you with recommendations, you are free to place orders with any financial institution of your choosing. I can assist you in opening accounts, placing trades and answering any questions you might have.
When the plan is complete does our relationship end?
- No. Although there is no annual fee or extended contractual obligation, I expect this to be a long-term relationship. I maintain contact with clients during the year and encourage then to meet with me for an Annual Review and Rebalancing. In addition, I ask clients to contact me whenever they have questions or concerns during the year.
How can I get started?