Financial freedom means something different to everyone. But the way to get there is typically the same. At Financial Freedom, we like to use this equation:
Comprehensive financial planning + asset allocation + investment management = Wealth Management
As a Certified Financial Planner™ (CFP®) and chairman of Financial Freedom, I have spent almost 40 years assisting clients in achieving their life and financial goals. Like our name suggests, the Financial Freedom team focuses on providing wealth management services, which includes comprehensive planning and investment management/asset allocation, to help people reach financial freedom.
These topics can be confusing to people, so let’s break down each part of the equation.
Comprehensive Financial Planning
The development and implementation of a comprehensive financial plan is the foundation, or roadmap, to achieving your goals. The comprehensive plan provides a rock-solid foundation on which you and your family can build your financial fortress. Based on your individual goals and objectives, a financial advisor should help you develop and implement a comprehensive plan that is uniquely tailored to your needs. At Financial Freedom, we help you in the following areas:
- Financial (and non-financial) goal setting and goal achievement
- Investment management and asset allocation
- Retirement planning (including 401(k) rollover planning)
- Estate planning
- Cash flow analysis and savings reviews
- Insurance as well as risk analysis and risk reduction
- Tax planning and effective tax-reduction strategies
- College funding for children or grandchildren
- Getting the most from executive compensation and stock options
Investment Management and Asset Allocation
Once a comprehensive financial plan has been developed, a financial advisor should help you successfully accumulate and manage the wealth necessary to achieve your goals. (At Financial Freedom, each of our client’s accounts is a separately managed account. Having separately managed accounts allows us to tailor the asset allocation and portfolio diversification to your specific needs. Other advantages of a separate management account include the potential for tax efficiency and the ability to include or exclude a specific stock or mutual fund.)
The core of investment management involves providing proactive and ongoing asset allocation and portfolio diversification that is responsive to changing investment opportunities and client circumstances.
How a Team Can Help
If you are already working with another professional, such as a CPA or estate planning attorney, a financial advisor should honor that relationship and work closely with that professional to provide you with an outstanding and integrated financial, estate and tax plan.
If you do not have relationships with other professionals that may be needed to implement your financial plan, look for a firm like Financial Freedom, which has a team of professionals that are available to work with you. Financial planning can be complicated and overwhelming, so if you can get “one-stop financial shopping,” as we say at Financial Freedom, the process can be simplified.
We also recommend finding a fee-only financial advisor to work with. Fee-only financial advisors are compensated solely on the basis of fees paid by their clients and do not accept commissions or compensation from other sources. This form of compensation should provide you with a high-level of confidence that you are receiving independent and objective recommendations. If an advisor is only paid by you, it eliminates even the perception of a conflict of interest.
Some investors decide to take a DIY route when it comes to their financial planning to “save money.” While this may work in some cases, for the majority of people, this can be a costly mistake. And we say this because most people are not financial service experts. They may watch the market, but they may not really understand what they’re looking at. They don’t have the time or interest to stay up-to-date on estate and tax laws. For example, are you aware of all of the recent income tax changes and how they could affect your ability to itemize deductions?
The more money you have, the more important it is to protect it. And unfortunately, many times, when a mistake is made and money is lost, it sometimes can’t be recovered.
Some people assume that working with a financial professional is expensive, but ask yourself, you much will it cost you if you do it on your own and make a mistake?
Top 5 Questions to Ask a Wealth Management Professional
You want financial freedom. You want help putting together a comprehensive financial plan. Now, how do you find the right person to help you put it all together?
Here are 5 questions we encourage you to ask:
1. How do I ensure I will not run out of money in retirement?
For many people, the entire issue of financial security centers around this topic.
2. What value-added wealth management services do you provide beyond simply managing my portfolio?
Portfolio management is only one component of a holistic wealth management approach.
3. Do you provide an annual performance evaluation?
An annual performance evaluation is a vital component of a successful program and should track results against industry benchmarks.
4. What are your qualifications?
It’s important to know your wealth manger’s qualifications, because credentials vary widely.
5. How do you get paid?
Does your advisor earn commissions, trips or any other value from anyone other than you, the client?
Hiring a financial advisor to work with and to trust your future, your retirement and your hard-earned nest egg with is an important decision to make and should not be taken lightly. He or she can help determine when you can retire, how you will live in retirement and what you’re able to leave behind when you’re gone, if anything. So do your homework. Ask questions. Review your plan on a regular basis.
If you think Financial Freedom may be the right fit for you, contact us to see how we can help you get to financial freedom – whatever that means to you.