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What is fee-only financial planning?

Fee-only financial planning is a financial advisory model in which your investment advisor is compensated directly by you, our client. We do not accept fees, incentives, commissions, or any other type of compensation from anything we recommend to you. This compensation model reduces conflicts of interest because we act only in your best interests, making the best possible recommendations for you and managing your finances the way you would if you had the time and expertise.

What is the difference between a fee-based vs fee-only financial planner?

Although the terms fee-based and fee-only sound very similar, there are some important differences every investor should understand. Fee-only advisors do not receive any compensation based on product sales. Because fee-only financial advisors are compensated by their clients, they are able to provide fiduciary-level advice, acting only in the best interests of their client. Fee-based firms charge an investment management fee to their clients similar to the fee charged by fee-only firms. However, fee-based advisors also collect commissions based upon the products they sell in addition to the fees collected from their clients. Financial Strategies was one of the first fee-only Milwaukee financial planning firms. We do not collect commissions, referral fees or any other fees based upon the products we recommend.

What is the National Association of Personal Financial Planners? Why does NAPFA membership matter?

The National Association of Personal Financial Advisors (NAPFA) is a professional association of fee-only financial advisors. NAPFA was launched in 1983 by a group of financial advisors who wanted to minimize conflicts of interest. The organization has developed a code of ethics and fiduciary oath that must be signed by all members. The values of all NAPFA members include:

  • To be the beacon for independent, objective financial advice for individuals and families
  • To be the champion of financial services delivered in the public interest
  • To be the standard bearer for the emerging profession of financial planning

What does a fee-only financial advisor cost?

The first thing to keep in mind is that a fee-only advisor does not earn commissions. There are several ways a fee-only financial advisor can be compensated. If you are interested in only having a Comprehensive Financial Plan, then, depending on the complexity of your situation you may pay the advisor a fee anywhere from $1,000, if your situation is relatively straightforward or the plan could cost $10,000 or more if your situation is complex.

If your situation calls for both a Comprehensive Financial Plan along with managing of your assets such as IRA’s, 401(k)’s, investment accounts then you may end up paying a percentage of assets under management. Typical is in the 1.0%-1.5% range. Some advisors will waive their Financial Planning Fee in this arrangement.

There are also planners that charge you an hourly fee or a retainer fee. No matter which model you determine is suitable for you, just like anything else, make sure you have a firm understanding of how you are paying and what services you will be receiving.

What does assets under management mean?

Assets under management is the term used to describe how much money an investment management company controls. This number changes every day, depending on the performance of the stock market, increased investor flows, reinvested dividends, and other factors.

What is asset management?

An asset manager works with clients to determine how to manage and grow their capital assets. At Financial Strategies, we work with clients to understand their life goals and current financial situation, then develop plans that help them achieve their goals. We consider more than just retirement planning when making these goals. Our advisors also look at insurance coverage, executive compensation plans, business ownership, current assets, legacy and estate planning, and your family goals. We then work with you to manage your assets in a way that will provide you with peace of mind as you work towards, and achieve, your life’s goals.

What is a fiduciary financial advisor?

A fiduciary is a person who is legally and ethically required to act in your best interest. In the world of financial advisory services, a fiduciary financial advisor has the power and responsibility to put the investor’s best interests ahead of their own. A fiduciary advisor can buy and sell securities in your account on your behalf without your expressed consent before each trade. Because of this important responsibility, fiduciary financial advisors are held to a higher standard than non-fiduciary advisors. As members of NAPFA, our investment managers are required to take a fiduciary oath agreeing to always act in good faith, disclose conflicts of interest, and refuse all referral fees or compensation contingent upon the purchase of any particular product.

What is asset allocation?

Asset allocation is a way to describe a person’s investment strategy. It describes how an individual investor balances risk and return. We use different types of investments, including stocks, bonds, cash and equivalents, to balance our clients’ portfolios and support their tolerances for risk vs. reward.

Will you work with my CPA, attorney, and other advisors?

Absolutely. We often partner with outside advisors such as CPAs and attorneys to ensure that every professional advisor you retain is fully informed of your goals and plans for the future.

What is diversification?

Diversification is a way investment advisors manage risk by mixing a variety of investment types within an individual clients’ portfolio. The diversity of each client’s portfolio depends on his or her current financial situation, stage in life, and goals – all of which are analyzed during your Discovery Meeting.

What is the difference between financial planning and retirement planning?

Retirement planning is a part of an overall financial plan. Basically, a financial plan is like a road map for a cross-country trip; while a retirement plan is like a road map for a particular town on the overall route. To ensure you are able to meet your short and long-term financial goals, it is important to have both a comprehensive financial plan and a retirement plan.

How often do you meet with your clients?

Initially, we begin our working relationship with 1 – 3 financial exploration meetings to develop your financial plan, followed by 3 – 5 advanced financial planning meetings to implement your plan. For more complex financial situations, we will hold additional meetings as needed. Once these meetings are complete and your plan is implemented, we will meet as often as you need, at least annually, to review your progress.

Can you help me with charitable giving strategies?

Charitable giving is an important part of your investment strategy, legacy, and tax planning. We discuss charitable giving during our initial discovery meeting and are available for consultation or questions at any time during the time we work together.

Why should a financial advisor review my executive compensation package?

Your Fee Only Financial Planner should review your executive compensation package for several reasons. First, whatever vehicle it is, Stock Options, Deferred Compensation, Restricted Stock, your advisor will want to incorporate them into your overall Financial Plan. Second, your advisor will want to have an understanding of how and when you become vested and how and when they are awarded to you. This is important for tax planning. Lastly, your advisor will want to understand the distribution options so that he can develop a plan for when you receive this compensation so as to manage the tax implications and ensure you are taking advantage of all of the planning techniques that the IRS allows.The bottom line is that there are a lot of moving parts when it comes to executive compensation packages and it is crucial to have a financial planner working for you who understands all of the ins and outs so that you don’t make a mistake and get hit with a huge tax bill.