Category: Blog

24 May

Dear Financial Planner, Can I get a Reference?

Linda Rogers Blog
Individuals wanting to work with our company often call us and ask us for a reference. This makes sense. In almost every industry you want to know someone who has worked with a service provider before hiring them yourself. Though in the world of investment advice the answer is;

No, we can not give you a reference.

There has been this misconception that advisors can provide references, but this is not the case. While for us advisors, this makes our job of getting new clients harder, especially for those of us who pride ourselves on providing top notch service, this rule does come with a valid reason.

Let’s start with what the rule is.

The Securities and Exchange Commission (the “Commission” or “SEC”) regulates investment advisers, primarily under the Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act “…generally defines an “investment adviser” as any person or firm that: (1) for compensation; (2) is engaged in the business of; (3) providing advice, making recommendations, issuing reports, or furnishing analyses on securities, either directly or through publications.” “Subsection (a)(1) of the Advertising Rule provides that it shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business to, directly or indirectly, publish, circulate or distribute any advertisement that refers, directly or indirectly, to any testimonial of any kind concerning the adviser or concerning any advice, analysis, report or other rendered service. . . . such advertisements are misleading; by their very nature they emphasize the comments and activities favorable to the investment adviser and ignore those which are unfavorable.”

Why is this in your best interest?

The SEC enforces this rule on investment advisors because they do not want one good experience of a client to be marketed as the sentiment of all the clients of that advisor. When you ask for a reference from an advisor, are they going to send you to someone who had a bad experience with them or a good one? Of course, they will give you the name of someone who is a cheerleader for them and their firm. The SEC does not want advisors to be able to tout their good experiences without advisors sharing the bad ones as well, so they do not allow advisors to use client referrals. A reference is considered a testimonial since the advisor would first be able to vet who the reference is, which allows them to choose someone who they know had a good experience and will say good things. Also, your advisor should not give out a reference because it breaks confidentiality with their client. Clients of advisory firms have a right to privacy and confidentiality and unless it is previously discussed with a client, an advisor should not share any contact information or details about their clients with anyone. Instead of asking for a reference you might want to ask your future advisor if they have had any complaints from previous clients and what they did to remedy their client. You can use the SEC search or BrokerCheck websites to find any discourse or suspensions for advisors you are currently looking to work with. If you find an advisor who is going to give you a reference, ask them how they do business and who they are regulated by. You might find out this is not someone you want to work with.

Finding and giving advisor referrals.

You can still find referrals for advisors in your general network, on Yelp, or other social media profiles. The SEC does allow clients to post their experiences on the internet as long as the advisor has no ability to edit, hide, or delete unfavorable posts. Advisors should have no control over the content that is posted about them on third-party independent websites. “An investment adviser’s or IAR’s own social media profile or account that is used for business purposes is not an “independent social media site.” So, if you would like to leave a review, do not post it on the personal social media pages of the advisor or they will likely have to take it down. Your advisor should not draft your review for you or post it on your behalf. If you would like to review your advisor it needs to solely come from you. Also, your advisor should never provide you compensation for giving them a review.

Trust in your own experience.

So, when you call an advisor and directly ask for a referral, they should not give you one, but you can still find them on your own. Just remember, this rule was instituted to benefit the consumer, not the advisor. The SEC’s goal was to help the consumers to not get sold bad advice based on one client’s favorable experience. Consider this when you are looking for reviews of an advisor. There are so many different types of advisors who sell different products, have different services, charge differently, and work differently. You have to find the best fit for you which might not be the best fit for someone else. In the end, you should always make sure you trust your advisor and poke holes in any good reviews you find. You should not trust a testimonial or one client’s good comments but instead, trust your own experience. There are many questionnaires you can find online that will help you ask potential advisors why you should work with them, which can act as a guide to making your own judgment. You should always look for someone who is a CFP®, fee-only and a fiduciary. Let your own opinions, not the opinions of others, direct who you want to work with. Sources:  Alicia Butera, CFP® is a Financial Planner for Planning Within Reach, LLC (PWR) located in Scripps Ranch, San Diego, CA. She is the Director of Financial Planning and Marketing for PWR. Alicia manages the financial planning process from start to finish with her clients, answering their questions and providing them guidance. Alicia has 8 years of experience in wealth management and works virtually with clients all over the US. Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego, CA. PWR is a virtual firm that is woman-owned and serves busy families and impact investors. Planning Within Reach, LLC and their advisors never receive any type of commissions for sales and does not have any insurance licenses or brokerage relationships.
05 Feb

You Should be Dreading a Tax Refund

Linda Rogers Blog Tags:

It is tax season and the common misconception is that getting a tax refund is a good thing.

As per the New York Times, “Americans generally prefer to have too much withheld … Typically, three-quarters of tax filers receive refunds — including last year [2018], when more than 102 million tax filers got money back.” Here is why you need to rewire your thinking and start dreading a tax refund.

What is a tax refund?

A tax refund means that you prepaid more taxes than you owe.

What is a withholding?

Withholding means that money is sent directly from your paycheck, or in the form of estimated payments, to the federal and state government to pay a portion of your tax bill. In a perfect world, you want your withholding to be exactly the same as the amount of taxes you owe.

Getting a refund is a bad deal financially.

You are giving away your money as a free loan to the government. When you get a refund, the government is essentially giving you back money that you have loaned them. Also, they do not pay you any interest on this loan. When you overpay your taxes, you lose out on the opportunity to keep the money that is yours and grow it throughout the year. Do you really want to be loaning the government your money and get no interest in doing it? They keep your money until you file your taxes. You can not get your money back until you file your taxes, proving you are owed a refund, and they deposit or send you a check. You could be waiting over a year to get your money back. The IRS and states assume that you are sending them the right amount until you let them know with your tax return. You could have used this money all year. We have been wired to think that getting a refund is getting free money, but it is not. The refund you get is your money, and you should have had in your pocket all year to save, spend or invest.

Don’t Expect an Excessive Tax Refund for 2018.

This year with the promised “tax cuts” to most of the middle class; many individuals are assuming they will be getting a large refund. What wasn’t publicized is that you most likely have been receiving this “tax benefit” all year long, as paycheck withholding rates were updated to match the new tax brackets. So, you effectively have been receiving your tax benefits all year in the form of more money in each paycheck. Therefore, don’t expect a large refund when you go to file.

Make sure your withholding is correct.

Use the IRS Withholding Calculator  Follow the easy instructions on the withholding calculator to estimate your tax liability for 2019 and get tips on how to fill out your W-4. (See my example below.) You will need to have a paycheck handy to fill out this calculator.   Fill out a new W-4 and send it to your payroll department Based on the results of the calculator, use form W-4 to update your withholdings. In the example I did above, you can see that I should fill out a W-4 as “single” and with “1 allowance”. Have a tax preparer run a projection for you If you feel overwhelmed, confused or your situation is more complicated than what the calculator can handle, contact a tax preparer. A tax preparer (CPA or EA) can run a tax projection for you and help you plan your withholdings and tax strategies to implement for 2019 and beyond.

Why withhold at all?

The opposite end of the spectrum has consequences as well. You will be subject to penalties and fees if you do not withhold enough taxes from your pay. You are required to have “paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller” to not get hit with a penalty. The rules are different if you earned a very high income or are in specialty fields of work. You can determine how much you will owe in penalties and fees by using form 2210.

For the average taxpayer, the withholding rates do a good job.

  • If you have a second job, get untaxed bonuses, are self-employed, have large deductions, etc. your actual tax bill could differ significantly from the standard withholding tables.
  • When life changes your W-4 should change. Don’t forget that when you get married or have children, you should also review and update your W-4.
Check your withholdings each year to make sure you will not have a surprise refund or a substantial underpayment penalty. Tax refunds are not a good thing and are not free money. Rewire your thinking. Keep your withholdings accurate and updated to make sure that you are on track to only pay the taxes you will actually owe. Get help from a tax preparer or fee-only financial planner if you need help.
Alicia Butera, CFP® is a Financial Planner for Planning Within Reach, LLC (PWR) located in Scripps Ranch, San Diego, CA. She is the Director of Financial Planning and Marketing for PWR. Alicia manages the financial planning process from start to finish with her clients, answering their questions and providing them guidance. Alicia has 8 years of experience in wealth management and works virtually with clients all over the US. Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego, CA. PWR is a virtual firm that is woman-owned and serves busy families and impact investors. Planning Within Reach, LLC and their advisors never receive any type of commissions for sales and does not have any insurance licenses or brokerage relationships.
11 Jul

The Financial Planning Process

Linda Rogers Blog

Are you wondering what it looks like to do financial planning with a fee-only and fiduciary financial planner?

While each planning firm does things differently, here is how we at Planning Within Reach walk our clients through creating and developing a financial plan.

An Initial Call

We start by understanding your desire to have planning done now and what questions you need answers to. Here we can determine if we are a good fit for each other and if we would work well together. We give you a quote for the cost of your plan on the call.

Financial Goal Discovery

Once you move forward, the planning process starts with a discussion about your financial goals. Everyone’s goals are different and that’s why each plan is customized to the client’s particular situation. Examples of goals are; home purchases, planning for babies, saving for retirement, saving money on taxes or even taking a less stressful, but lower paying job, to name a few. We want to know your goals so we make sure your plan incorporates guidance on how to reach them.

Gathering Data

We send a checklist of financial information to collect, that helps us build your comprehensive plan. Things like; insurance declarations, pay-stubs, expenses, estate planning documents, beneficiary designations and more help us to review your entire financial life as a whole and build a plan that encompasses it all.

Creating the Plan Recommendations

PWR does the heavy lifting to crunch numbers and organize your financial data to come up with plan recommendations for you. When we present your plan, we discuss the multiple options you have for achieving your goals and let you decide what feels like the best route to take. Once that route has been set, we give you a one-page prioritized action list of items for you to tackle.

Implementing the Plan

Our clients are responsible for implementing the recommendations we give them. We give help and encouragement along the way to keep you accountable and on track with the plan’s action steps. We check in with our clients every four months and throughout the year we are available for any clarifying questions on the advice given in the plan.

Revisiting the Plan

Life is constantly changing, so you need your plan to change with you. We recommend reviewing your plan every year or sooner if there is a large life event or change such as an inheritance, job change, or an unexpected bonus. While all of our financial plans follow the same process, no one plan is exactly the same. Financial planning is not a “one-size-fits-all” approach and your financial planner should plan for your specific situation. The best plan is one that you are committed to sticking with, which is why we recommend you work with a fee-only and fiduciary professional to create a custom plan for you. Take action today and contact a planner to help you go through the process of documenting your financial goals and how to achieve them.   Alicia Butera, CFP® is a Financial Planner for Planning Within Reach, LLC (PWR) located in Scripps Ranch, San Diego, CA. She is the Director of Financial Planning and Marketing for PWR. Alicia manages the financial planning process from start to finish with her clients, answering their questions and providing them guidance. Alicia has 8 years of experience in wealth management and works virtually with clients all over the US. Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego, CA. PWR is a virtual firm that is woman-owned and serves busy families and impact investors. Planning Within Reach, LLC and their advisors never receive any type of commissions for sales and does not have any insurance licenses or brokerage relationships.
23 Jan

Are You Overpaying for Bad Investment Management?

Taylor Schulte Blog

The shortcomings of active management are well-documented, with mounds of evidence that should leave you drawing the conclusion that active investment managers aren’t the secret to financial success.

Seriously. Just pick your source:

Or skip the news and go straight to mutual fund companies themselves. This report from Vanguard shows that only 18% of the funds that have been around for the last 15 years outperformed their benchmark.

The question may not be so much about whether active managers can outperform the market.  The data answers that with a resounding no.

But you still might wonder why this is the case. The answer depends from firm to firm, but by and large active managers go wrong by thinking they know something the rest of the market doesn’t.

Why Active Management So Often Fails

Thinking you have secret or special information that no one else knows about flies in the face of the Efficient Market Hypothesis. That’s the theory that financial markets are efficient ones in which securities are almost always priced correctly according to their value.

That doesn’t mean prices can’t be wrong. It just means that they reflect how the market currently values those securities.

Any time a new piece of information enters the market, prices (on things like stocks and bonds) change to reflect that bit of data. And information flies into the market constantly.

Not only that, but there are millions of market participants just like you out there. There are even some who are much more sophisticated than you are. Don’t take that personally! In this case, it just means that they are professional traders who do this all day long.

They use complicated tech and algorithms to seek out information about the market. When you multiply this by the number of people participating in financial markets, the result is that it’s almost impossible for a single, random individual to know more than the wisdom of the crowds.

Understanding the Wisdom of the Crowds

In fact, there are a few experiments that demonstrate just how powerful our collective, average knowledge is.

One was done by NPR with Penelope the cow (yes, you read that right). Planet Money team members had people guess the weight of a cow at a state fair. Even though there were some outliers in the guesses, with some people guessing really far under the cow’s weight and others guessing incredibly far over…

The average guess, out of over 17,000 people submitting their best estimate, was 1,287 pounds. Penelope’s actual weight was 1,355. That’s just 68 pounds of the exact right answer.

This experiment has been repeated over and over again with jars of jelly beans — and you can do this yourself if you’re curious. Grab a bowl, fill it with tiny candy pieces, and then ask everyone in your office to guess how many candies are in the bowl.

You’ll find that while there are some extreme answers at either end, the average will likely come in very close to the actual number of candies in the jar.

That’s the wisdom of the crowds. It works with cows, it works with jellybeans — and it works with assets in a financial market.

Millions of market participants are all “guessing” the “correct” price of a stock. The stock’s price represents an average of all those assertions, and as it turns out, the average is almost always incredibly close to being spot on.

This is what active managers are up against. They base their actions on the (often incorrect) idea that they know more than the market and all its participants do. This is why a passive investment strategy probably makes far more sense for you and your financial life.

The Advantage of Passive Investment Philosophies

Passive investing is simple and it’s something I regularly preach on my rapidly growing retirement podcast called Stay Wealthy.

Where active managers try to find mispriced securities, passive investment managers build out well-diversified portfolios that represent broad segments of the market.

Passive investment managers don’t believe they have special information that allows them to beat every other market participant to the punch. That means they don’t pick individual stocks nor do they think they know when the next big market fluctuation is going to happen.

The truth is that no one knows when the next big market downturn will happen. We don’t know when the market will hit its peak. People can make predictions and forecasts all they want, but it doesn’t change the fact that no one knows with certainty when these things will happen.

Passive managers don’t try to forecast or guess. They invest for the long term, knowing that historically, the market has always gone up over decades of time (although past performance is never an indicator of future results, no matter what you invest in).

They also know that selling out of the market when things get volatile often leads to worse results than simply riding out the month to month fluctuations and continuing to buy in with dollar cost averaging.

What Does Your Financial Advisor Believe?

One of the questions you need to ask a financial advisor before you work with them is, “what’s your investment philosophy?”

If you run into someone who thinks they know more than the market, you may want to keep looking. Not only are they highly unlikely to underperform, which costs you in potential returns, but they’ll likely charge you a premium for doing so!

Active managers may charge 1 to 2 percent of the assets you have under their management as their fee. That’s on top of the fees and expenses included in the funds they invest your money within, which can bring your total fees up to 2 to 4 percent.

And if they’re not a fiduciary and sell you into investment products loaded with commissions, you could be paying even more.

That’s another advantage of financial advisors who help their clients with investments through passive strategies. Not only do they provide a better return for their clients, but they charge less for their service.

Thanks to innovations in technology — and the fact that index funds are much lower-cost than actively managed mutual funds — a passive investment manager can provide an investment management service for a much lower fee.

That’s critical because even small differences in fees can add up to hundreds of thousands of dollars you don’t get in your net return over your investing lifetime.

Before you hire any financial advisor, make sure they are willing to work as your fiduciary 100 percent of the time. They should also be fee-only, meaning they don’t receive any kind of commissions or kickbacks.

You are the only person who pays your advisor, which eliminates conflicts of interest that would exist if they also got paid by mutual fund companies for investing their clients in certain products.

Finally, an advisor should be able to explain their investment philosophy to you. If you don’t feel comfortable with their approach, keep looking.

27 Sep

The One Question to Ask a Financial Advisor

Jon Luskin Blog Tags: ,

“How do you make money?”

That’s what you should ask a financial advisor before that advisor ever opens their mouth. And if the answer isn’t:

“I’m paid directly by my clients.”

Then you need to run far away, and run screaming the entire time.

In case you think this is a dramatic response, think again. Working with a financial advisor who is compensated by any way that isn’t directly by their clients is a recipe for some very bad financial advice.

Why is an advisor being compensated directly from their client so important? It all boils down to incentives. If a financial advisor isn’t paid directly by their client, then that advisor is paid somehow. Usually, that somehow is via a commission from an insurance company or a big bank pushing a financial product (like an annuity). And, you likely don’t need that financial product.

The problem is that the advisor is working to get paid. That can mean doing a disservice to the person asking for help, for the person seeking genuine financial planning advice.

Would You Take Automobile Maintenance Advice from a Car Salesman?

Don’t believe me? Let’s consider an example: buying and maintaining a car.

Would you take auto maintenance advice from a car salesman? Of course not! Why not? Because the car salesmen’s advice would likely be:

“Buy a new car.”

No matter what question you ask, it’ll be suggested that you buy a new car.  That’s because selling cars is how the car salesmen gets paid. The car salesmen doesn’t get paid for giving automobile maintenance advice. In fact, the car salesmen may even give you bad automobile maintenance tips. That’s because the salesman wants you to buy a new car sooner. If the car salesman gives you auto maintenance advice that ends up in your car getting destroyed, then the car salesman has the chance to sell you a car! Giving advice that ends with you buying a new car is good business for the car salesman.

It’s the same for the financial advisor. If the financial advisor only makes money when that advisor sells you a whole life insurance policy, then you buying a whole life insurance is going to be the financial silver bullet that solves all of your money problems. (Of course, you may already know that buying a whole life insurance is not the panacea to solve all your financial problems. In fact, buying an overpriced whole life insurance policy will likely increase your financial problems.)

Free Financial Advice

Perhaps you’re not convinced. After all, financial planning advice can be expensive. And there are a lot of financial advisors out there that are willing to help you for free. So, why not get some free financial advice? Here’s why:

Yes, getting stuff for free is always awesome. But, getting free stuff only really counts if what you’re getting is any good.

And while there may be such a thing as “free financial advice,” there certainly is not a thing as free financial advice that you actually want to use. If a financial advisor offers advice for free, it’s time to turn around, start screaming, and start running. That’s because free financial advice is usually just a sales pitch for a terrible financial product – be it a whole life insurance policy, over-priced mutual fund, or anything else.

Free “financial advice” is akin to watching an informal. One could make the argument that there are no commercials during an infomercial. But, that would be missing the point. In an infomercial, the entire segment is one big long commercial. And just like in an infomercial, if the products were any good, those products probably wouldn’t need an infomercial to sell. The best products truly speak for themselves.

The Wrong Way for Financial Advisors to Make Money

So, now we know that free financial advice is bogus. If you want to get real financial planning advice, you are going to have to pay for it. If you’ve decided that it does make sense to pay for financial planning, know that there are several ways that a financial advisor can get paid.

Commission for a Selling Something You Probably Don’t Need

The first way an advisor can get paid we’ve already covered. It’s for selling a bad financial product that you probably don’t want. And at the risk of subjecting you to industry jargon, the financial advisor who gets paid for selling stuff is known as a commissioned salesperson.  Commissioned salespersons are the folks that you must absolutely run screaming from.


If a financial advisor says they are “fee-based,” it’s also time for running and screaming. Fee-based is a term created by commissioned salespeople to further confuse hard-working Americans. If you hear “fee-based” from a financial advisor, run away. Oh, and while you’re at it, remember to scream.

Here’s one dead giveaway for a financial advisor that you do not to work with: if that financial advisor has an insurance license number. You’ll find this insurance license number on their business card and their e-mail signature, just like the below:


If you see this, run far away.

If you see an insurance license number, it’s time to lace up your running shoes and clear your throat. Because you’re about to start running and screaming. On that same note, you can look up an advisor to see if they have licenses to sell investment products. If you see either the:

  • Series 63
  • Series 66
  • Series 6, or
  • Series 7

then you know that it’s time to break out your running shoes.

See something besides a 65? Get ready to run!

Unfortunately, this area can get complicated. You want an advisor to hold a Series 65. But, you don’t want a 63 or 66. Confusing, right? A series 65 isn’t a license to sell products. It’s a license to give investment advice.

The Right Way for Financial Advisors to Get Paid

While “fee-based” is bad, “fee-only” is great. Fee-only means the advisor only gets paid by their client directly – and not indirectly from a company selling expensive financial products, like an annuity or whole life insurance. The term commission-free can be used interchangeably with the term fee-only.

This brings us full circle to the beginning of this post, when you ask the financial advisor:

“How do you make money?”

A fee-only financial advisor can be paid in several ways.

Hourly Fee-Only Financial Planning

Financial advisors who charge an hourly rate are one type of fee-only financial advisor. This is the same way other professionals operate – such as attorneys.

One great resource for finding fee-only advisors is via the Garrett Planning Network. Hourly financial planning can start at $150/hour. If a financial advisor is a member of the Garrett Planning Network, you know that the financial advisor is getting paid the right way: directly by the client.

Fee-Only Financial Planning via a One-Time Fee

When you pay a one-time financial planning fee (which can start at $1,000 and go up to $10,000 or more), you’re likely working with a fee-only financial advisor. Given the high price, you should be getting a robust financial plan and unbiased financial planning advice. You can find fee-only financial planners who charge a one-time planning fee at the National Association of Personal Financial Advisors (NAPFA).

Fee-Only Financial Planning for an Ongoing Retainer

The ongoing retainer is my favorite billing model for fee-only financial planners. This is because you get a financial planning professional to maintain your financial plan. This gives you the best chance of achieving your financial goals. The ongoing retainer model works so well because clients aren’t disincentivized to reach out to a financial planner for fear of incurring an additional charge for each question they ask. (This is one challenge of using the hourly model). Moreover, the fee-only financial planner billing on the retainer model stays in the client’s life ideally forever. This means the advisor is able to help the client to accomplish all of their financial To-Do’s. That is not the case with the one-time fee model.) With the other two fee-only models, the advisor gives advice to the client, with the adviser crossing their fingers that the client will actually follow through on their prescribed financial planning

That is not the case with the one-time fee model. With the other two fee-only models, the advisor gives advice to the client. After that, the adviser simply hopes that the client will actually follow through on their prescribed financial planning To-Do’s.

Ongoing retainers can start as low as $99/month. But, the price can go up to several thousand dollars a year. You can find fee-only financial planners working on the retainer model at the XY Planning Network.

Assets Under Management (AUM) Billing

When an advisor charges a percentage of your investment account being managed, that advisor is also a fee-only advisor. However, AUM billing is my least favorite fee-only billing model. This is because AUM billing model still leaves a rather undeniable conflict of interest. This is the incentive to keep your investment portfolio as big as possible, and to grow your portfolio as fast as possible. Fortunately, some savvy consumers are starting to figure this out.

In my days as a fee-only financial planner, I’ve witnessed rather inappropriate strategies in the quest for keeping AUM fees rolling in. This has included taking out loans against an investment portfolio. And you may not need me to tell you that’s a bad idea.

However, for some people, the AUM billing model may be the only option. This may be the case if your budget is simply too tight to make any of the other fee-only billing options possible. Some advisors at NAPFA, Garrett and XY can offer AUM billing.

How is a Financial Advisor Paid?

So, remember, the first thing that you want to ask a financial advisor is:

“How do you make money?”

Now you know that you want a financial advisor to be paid by you directly. And, you’ve got several options for how you can pay that fee-only financial advisor directly:

  • Hourly
  • For a flat project fee
  • For an ongoing retainer
  • AUM billing

So, if you ask a fee-only advisor how they are compensated, you can rest assured you’ve found a better advisor when they answer:

“I’m paid by my clients directly.”

One More Question to Ask a Financial Advisor

“Are you a fuduciary?”

OK. I know I titled this blog post, “The One Question to Ask a Financial Advisor,” but there are actually two questions. However, “Two Questions to Ask a Financial Advisor” just isn’t a catchy blog post title.

You want your financial advisor to be a fiduciaryFiduciary means that the financial advisor is legally required to put you first. A fiduciary acts in your best interest, over their own. Usually, a fee-only financial advisor is also a fiduciary. But, it never hurts to ask the fiduciary question. Of course, if the advisor answers “no” to the fiduciary question, don’t fret. At least, you’ll be getting some good exercise as your run as away from that financial advisor as quickly as possible.

18 Aug

How Much Does a Financial Planner (Advisor) Cost?

Scott Frank Blog

So you are ready to get your financial life in order. Great! But one major question looms overhead: how much should you pay for comprehensive planning?

It amazes me how difficult the answer to this question is to find. Most financial advisors don’t list their pricing on their website.

I think the main reason most advisors don’t put prices on their websites is because they want to explain their value first. Another is that every client is different and they don’t know exactly what they will charge until they understand your needs.

Fair enough. But I think you should be able to know roughly what you can expect to pay. Let’s try to get you in the ballpark.

So how much does a financial planner/advisor cost?

Well… It depends.  How much help you are looking for?

In order to know what is a reasonable price to pay for financial advice, you need to decide how much advice you are looking for and who you want to implement the recommendations. The range of services offered by a financial adviser can range from a one-time meeting to all-inclusive ongoing planning and investment management. The more advice you are looking for the greater the cost. Additionally, the more service you are looking for, the greater the cost.

One-Time Meeting

When is this a good option?

A one-time meeting works well when you want to address one or two financial questions. Perhaps you want to have your portfolio validated by a professional, discuss cash flow issues, evaluate your student loan repayment options, or make sure you are optimizing your employee benefits. A one-time meeting will give you access to a certified financial planner who can provide you with objective advice.

This can also be a great option if you haven’t worked with a financial advisor before and you want to dip your toe in the water rather than diving in headfirst.


The cost tends to range from $400-$1,000. This typically includes a one to three hour meeting with the advisor as well as follow up with recommendations and actions items for you to complete.

Hourly/Flat Fee

When is this a good option?

Hourly projects or flat fee plans can be a good option when you have more than one or two questions and you are comfortable implementing the recommendations on your own. The planner does the analysis, presents recommendations, and you take it from there.

One caveat here that is really important!  Taking a plan home and putting in your nightstand drawer or file cabinet does not count as taking action.  If you find that you don’t act, you should increase your engagement with a planner so they are implementing the plan on your behalf.  Information does not equal transformation.  The whole point of financial planning at its core is to align your money with your life.  If you get the plan and don’t execute you have done nothing but make yourself feel like you have done something.


Most certified financial planners will charge based on the project. They typically charge around $150-$300 per hour. Rates will vary depending on the advisors experience, expertise, and competition. The cost of the plan will depend on the scope of the engagement. From what I have seen, comprehensive financial plans range from $1,800-$7,500. Keep in mind if your financial situation is complex, you may pay more than the normal range.

Ongoing Comprehensive Financial Planning

When is this the best option?

Ongoing comprehensive financial planning works well for people who don’t have the time, knowledge, or desire to manage their finances. With this service, your financial planner will guide and coach you through your financial life. Have a financial question, give your adviser a call or email, have them recommend the best course of action, and have them help you implement the recommendations. This option works well for people who want to have ongoing access to a financial planner at a reasonable price.

With ongoing planning, the advisor often takes on the role of your financial guide and provides advice, coaching and accountability. This is truly full service and typically covers most facets of your financial life such as: estate planning, insurance analysis, investment analysis, cash flow/budgeting, employee benefits optimization, tax planning, retirement planning, home affordability analysis, student loan repayment, and college planning.


More and more advisors are offering this type of service with an annual retainer. Some will charge $500-$5,000 upfront for the initial planning phase and then charge the annual fee which is payable monthly or quarterly, fees can range from $2,000 to $25,000 depending on the complexity of your financial needs.  Once again, if your financial situation is complex, you may pay more than the normal range.

Some advisors who offer comprehensive planning are including investment management in the annual retainer.  This is an interesting shift since it frees the advisor to view your balance sheet as a whole, they aren’t getting paid solely on the investments you placed with them.  This may help remove a conflict of interest that exists with fee-only advisers who charge their fee on assets under management is you want to pay down your mortgage or buy a rental property with funds that are currently invested.

Investment Management

Many advisors also offer portfolio management services. For most of the advisors I know, there is a distinction between recommending asset allocations and managing portfolios.


Fees for portfolio management range from 2% to .25% depending on the amount of assets you have managed and how they are managed.  There can also be additional fees for trading costs and underlying investments.

Some advisors include comprehensive financial planning and asset management under the assets under management (AUM) fee. This is still the most common type of fee I see charged by registered investment advisors (RIAs). Many of which have investable asset minimums of $500,000 or $1,000,000 to get started. A 1% fee on $1,000,000 means you are charged $10,000 per year.

It is important to understand what you paying for so your expectations are aligned with reality.  Some RIAs that charge on AUM will hold themselves our as comprehensive planners when they are really investment managers who do light planning such as running a retirement planning projection.  Ask them what their planning process entails and you quickly know what they are truly offering.

Where can you find fee-only financial planners?

XY Planning Network is a good place to find certified financial planners who are working with Gen X and Gen Y.  As a group of advisors, they are passionate about bringing financial planning, that was historically reserved for millionaires, to Gen X and Gen Y regardless of net-worth or investable assets.

NAPFA’s find an advisor site is another good place to start your search.

Association of Comprehensive Planners is another great place to search.  Especially if you would like your planner to have a solid understanding of taxes.

San Diego Financial Advisors NetworkIf you want to find a local advisor in the San Diego area who is fee-only, this is a great place to start.

19 Jul

How to Make Your Money Make You Happy

Mary Beth Storjohann Blog

Contrary to popular belief, financial peace and happiness is not brought on by the amount of money you earn, but instead by where we allocate the money that we do keep. When it comes to our finances, there’s a battle that we often face: Do we spend our money on possessions or do we spend it on experiences? And in the end, which will make us happiest?

Research done by Elizabeth Dunn and Michael Norton, academics and authors of Happy Money shows that though many fantasies of wealth involve fancy homes, expensive cars and designer wardrobes, the satisfaction that comes with these possessions actually wears off pretty quickly and one left with is a feeling of guilt and a pursuit of the next thing or object to being you happiness.

Instead of focusing on the items and possessions you can accumulate (which tend to lose value immediately after you purchase them), turn your attention to experiences when you’re spending your money. Whether you’re looking for a new vacation spot or trip, a dining event to remember or a basic date to an amusement park or winery, think about the memories you can create, who you’d most enjoy having the experiences with and set a goal of making them happen. According to Dunn and Norton, these experiences translate into more happiness because they’re associated with memories – which typically involve those you love and enjoy spending your time with.

If you’re struggling on where to start, here are 6 ways to gear your spending towards your happiness:

Figure out your values and kick FOMO (fear of missing out) to the curb: Decide what is most important to you about life and money. Is it time with family? Flexibility in work? Freedom to do what you want, when you want? Giving back? Security? Once you know where your priorities lie and you set clear-cut goals around them, you’ll be able to tune out the noise and distractions you likely face on a daily basis from social media, advertisements, and more. Knowing your values makes it easier to say “no” to the “shiny objects” and things that don’t matter and instead direct your dollars towards the things / experiences that are important to you.

Spend money on others: Whether it’s buying a latte for the next person in line at Starbucks, donating to a cause dear to your heart, or purchasing a meaningful gift for a friend or family member; the feelings associated with doing something good for someone else can outweigh the satisfaction of spending money on yourself.

Practice delayed gratification: Think about when you book a vacation. If it’s a couple months into the future, chances are you’re pretty excited about the trip and the potential fun you’re going to have right up until you leave. Who knows if the vacation will actually live up to your expectations, but chances are you are pretty happy thinking about it while waiting to embark. Book your trips now (and a few of them throughout the year if possible), but wait a bit until you actually leave. This will translate into extended periods of happiness.

Choose experiences over possessions: Chances are it’s the times spent with friends, family, out to dinners, on European or tropical vacations, hiking, game nights and more that you’ll look back on to make you happy. When spending your money, keep this in mind. If you are spending it on possessions, try to make them a part of experiences such as playing dress up with your daughter in the new clothes you bought, or using your new laptop to launch a side business pursuing your passion. The experiences tied to the possessions can give more happiness than the possession alone.

Focus on the little things. Instead of saving up for one big trip in the summer, why not take three smaller trips throughout the year? Or instead of quitting your latte habit completely – why not indulge once a week to make it a sweeter experience? The pleasant smaller experiences we have on a more consistent basis can translate into a larger happiness effect in the long term.

Invest in yourself: Consider investing your money in your personal growth. Whether it’s taking guitar or cooking lessons, learning a new language, starting kickboxing or taking improve classes at a local theater, spending your money on personal development will allow you to feel more satisfied and happier in your life as you achieve new milestones and gain new skills.

21 Jun

Mid-Year Financial Check-Up

Linda Rogers Blog

Can you believe it is already the end of June 2017? Where did the first half of the year go?

Summertime is now in the air. Sun, fun and the sand between your toes have you dreaming of strawberry daiquiris and boating (or maybe that’s just me). However, before you get comfortable in that lounge chair and jump straight into the second half of the year let’s stop and take a minute to reflect.

Halfway through the year is a great time to think about what you have and have not accomplished towards your financial goals. Then, re-plan for the next six months to come. Below I have questions to help you get your financials back in tune.

Think back to when we started 2017

    • What were your financial goals in January?
    • Are you on track? Have you made progress?
    • Did you stick to your savings or a debt-payoff goal?
    • Do you have more or less discretionary income than you thought? (Building up a balance in your checking account?)
    • How do you feel you did these first six months? Positive? Negative?

After writing the answers to these questions down, think about where you are now versus where you thought you would be today.

Now is a great time to readjust. In the last six months, if you haven’t met your goals, review why not. Have things just come up, out of your control, that ate away at your cash? Did you spend more than you budgeted? What can you do differently?

One idea is, try having “FREE” days. At least once a week. What is a free day you ask? As it sounds, it is a day where you spend no money! For me, when I schedule free days, it helps me to limit my unnecessary purchases. Which in turn, helps me realize how many times I buy silly things that I want in the moment but don’t need. Some months I look back at my credit card I have 10 or more $1-20 purchases, and they add up very quickly. We want to eliminate the unnecessary and unfulfilling random splurges. Put that money towards something satisfying that will bring you long-term joy. The goal on free days is to help yourself realize what you need vs. what you want. It is a one day exercise and challenge I highly recommend.

Now that you have written down what happened in the last six months, and have some ideas on how to financially challenge yourself, let’s plan how you will reach your financial goals in the next six months to come.

Adjustments for the next six months

    • Can you increase savings towards the goals you had? How will you?
    • Do you have a new goal you need to save too? What is it?
    • Is there anything causing you financial stress you can look at reducing in some way?
    • What would make you feel financially successful by year end?
    • Imagine yourself at the end of 2017, what is your mental picture of financial success?

Now, can you commit to making these changes happen? It is essential that you choose small and bite-size goals at first in this process. Make sure that your goals are not too overwhelming as it defeats the purpose. If you are too strict, you will burn yourself out in a few months, and it won’t last the full six.

Building successful financial habits is like being on a diet. When you are trying to eat healthily, it is always a balance of good food and enough indulgence where eating the good food, most of the time isn’t so bad. Then, after a while, you don’t even want the bad food anymore. That is what we want to accomplish. We want to take small strides to create successful financial habits in the next six months that will hopefully last you a lifetime.

The Key
The greatest habit of all is always to be mindful of your money. If you are conscious and aware of your financial situation, you will have full control. It is when you don’t want to think about it or when it isn’t top-of-mind that the train will fall off the tracks. Knowing where you are now and what your goals are, and keeping them top-of-mind, will ultimately make you successful. Awareness and will-power are the true keys to success.

Keep Being Aware
Make a note in your calendar to review our goals every month for the rest of the year. Each month review how you are doing. It might sound like a lot of work, but if you want to make significant progress on your goals it is essential to keep them a priority, so you can make quick adjustments if your plan goes awry.

Also, if you share your goals with others or make them known, you are more likely to stay on track. Try this exercise with a friend or significant other. Keep each other accountable for reaching your version of financial success by the end of 2017.

At the end of 2017, look back at the whole year. How much better did you do in the second half of the year planning versus in the first half?

If writing down and visualizing your goals helped you stick to them, make it an annual plan!

24 May

The 10 “Must-Dos” After You Say “I Do”

Adam Werner Blog Tags:

The 10 “Must-Dos” After You Say “I Do”
Start your marriage with a sound financial foundation…
-By Adam Werner, CFP®, April 12, 2017

Congratulations on the nuptials! In the eyes of your family and friends (and the US Government) the two of you are officially a family! New doors have now opened and it’s important to take the time to ensure you’re headed in the right financial direction. Here are some key things to do in order to save money and create a sound financial foundation for your marriage.

1. Medical Insurance – Who has the better plan?
Generally, you have 30 days to add your spouse to your employer’s health coverage. If you miss this window, then you will have to wait until the next Open Enrollment. Make sure you know the ins and outs of your policies so you understand which person has the better plan and/or the cheaper family plan. Remember that cheaper may not always be better.

2. Other Employer Benefits – Can either of you be added for free or for cheap?
Find out whether your employer offers other benefits to your spouse, such as dental or vision insurance…


18 Apr

3 Types Of Fiduciary Financial Advisors – And Why It Matters

Steven Fox Blog

Even though the Department of Labor’s new fiduciary rule for financial advisors has not yet been implemented, it has already been effective in increasing consumer awareness of and interest in the concept of fiduciary duty. In general, the term “fiduciary” simply means somebody who has a legal and/or ethical obligation to put the interests of another in front of their own interests.

Some common examples of fiduciary duty include the duties of attorneys to their clients, corporate board members to their shareholders, the trustee of an estate to the beneficiaries, or court-appointed guardians to minor children. Many people would presume that financial advisors also have a fiduciary duty to their clients, but that is not necessarily the case! In fact, the far majority of financial advisors do not currently have a legal responsibility to put their clients’ best interests before their own. Most financial advisors are subject to a lower standard called “suitability”, and there are others who are only required to act as a fiduciary for certain aspects of their relationship with clients.

There are two basic components to fiduciary duty: a “duty of loyalty” and a “duty of care”. Having a duty of loyalty means that a fiduciary has a responsibility to do what’s best for their client, rather than for themselves. Having a duty of care means that a fiduciary is knowledgeable and competent in their profession.

In the context of fiduciary financial advisors, fulfilling a duty of loyalty could mean advising clients to buy lower-cost financial products rather than another product that pays a higher commission rate for the advisor. Even better, they could follow a business model that seeks to avoid such commissions altogether. Financial advisors who receive variable compensation depending on the advice that they give will always have an inherent conflict of interest, which creates the potential for them to abuse the trust that clients should be able to have in their advice.

An example of a financial advisor fulfilling their fiduciary duty of care could be the advisor pursuing professional designations that challenge them to learn as much as possible about the topic areas within financial planning. Completing advanced education increases their ability to provide the best possible advice to clients, passing exams serves as a way to demonstrate their expertise, and keeping up with continuing education requirements helps to maintain or further enhance that knowledge.

Within the financial planning industry, there are a variety of types of fiduciary standards. Though they all require financial advisors to put their clients first, there are important differences in how these standards are applied. Not all fiduciaries have to act in the best interest of their clients at all times and in all ways, nor are all fiduciary standards enforceable by law, nor do all of them include both a duty of loyalty and a duty of care. This is true even if they (perhaps rightfully) call themselves a fiduciary!

There are three general types of fiduciary standards that a financial advisor may fall under:

  • An SEC fiduciary under the Investment Advisors Act of 1940 (called “Registered Investment Advisors”)
  • A fiduciary under the new Department of Labor rule about retirement accounts
  • Voluntary fiduciary standards

SEC Fiduciaries (Registered Investment Advisors)

Whenever you’re working with a financial advisor who is with a firm called a “Registered Investment Advisor” (often abbreviated “RIA”), it means that they fall under a regulatory structure defined by the Investment Advisers Act of 1940. RIAs are required to go through a registration process with either the Securities and Exchange Commission or (for smaller firms) state securities authorities.

All RIAs are required to act in the best interest of their clients, whether they are registered with the SEC or their state. The RIA version of fiduciary, though, is more about disclosing conflicts of interests than it is about necessarily removing them. Some RIAs still receive commissions for various financial products that they sell to clients, which is permissible as long as they properly disclose the arrangement.

One of the biggest limitations of the RIA fiduciary standard is that it only applies to RIAs, not broker-dealers. RIAs currently make up only a small portion of the financial services industry. In addition, it only applies while the financial advisor is giving investment advice. It is irrelevant when discussing other areas of financial planning.

If you’re interested in learning more, see Section 206 of the Investment Advisors Act of 1940.

DoL Fiduciaries

For many years now, the Department of Labor has been trying to institute a required fiduciary standard for anybody who provides advice about retirement accounts. A new rule was finally passed last year and was set to take effect in April of 2017, but it has been delayed and there is some doubt over its future with the new administration in the White House. As of this writing, it looks likely that the rule will be taking effect in June of 2017.

The DoL fiduciary rule is important because it prohibits some types of transactions that are not in the best interest of consumers, such as variable compensation. It also requires additional disclosures. In general, it is more restrictive than the fiduciary definition applied to RIAs.

Another major factor with the DoL rule is that it will apply to anybody giving advice to retirement investors, not only RIAs. So for the first time, financial advisors working at broker-dealers and insurance companies will be required to follow a fiduciary standard. They can still receive commissions for investment or insurance products that they sell, but there will be more regulatory scrutiny.

An important limitation to understand about the DoL fiduciary rule is that it only applies to retirement accounts. It has no bearing on advice regarding nonretirement accounts or financial advice outside of investing. This creates odd situations where a financial advisor could be required to act as a fiduciary when giving you advice about your IRA or 401(k), but not when discussing your taxable investment accounts or other areas outside of investing.

Voluntary Fiduciary Standards

The third category of fiduciary standards for financial advisors is made up of a variety of voluntary professional certifications and oaths. These standards are created by organizations seeking to improve the financial advice given to consumers. They generally tend to be stricter than the RIA and DoL definitions of fiduciary, focus on avoidance of conflicts of interest rather than disclosure, and have no legal consequences for financial advisors breaching their fiduciary duty. There is no legal enforcement of these standards, and nobody is ever required to adhere to them unless they voluntarily choose to do so.

One of the most common voluntary fiduciary standards is that applied to Certified Financial Planners, who are all required to follow the CFP® Board’s Code of Ethics and Practice Standards. All CFP® professionals must agree to act in the best interest of their clients any time that they are advising on “material elements of financial planning.” This fills in a big gap left by the RIA and DoL standards, which only apply to investment advice.

The CFP® fiduciary standard focuses primarily on the duty of care element, and only lightly addresses the duty of loyalty. Becoming a CFP® requires advanced education, passing a challenging exam, several years of experience, and the completion of ongoing continuing education requirements.

The biggest limitations of the CFP® fiduciary standard are that it only applies to CFP® professionals (a purely voluntary certification), there are no restrictions on commissions for investment or insurance products, the lack of a legal foundation means that the only punishment for breaches comes from the CFP® Board, and it only applies while the financial advisor is doing financial planning. This creates a potential problem when CFP® professionals can complete a financial plan for a client and then “switch hats” and become a salesperson collecting commissions for selling the products that they recommended.

Besides CFP® certification, there are a few other voluntary fiduciary standards that financial advisors may choose to adhere to. Many of them are established by membership organizations, such as the National Association of Personal Financial Advisors or the XY Planning Network. Interest groups such as the Institute for the Fiduciary Standard create their own versions. Some financial advisory firms also create their own fiduciary agreements that they sign with the client at the beginning of every relationship.

These other voluntary fiduciary arrangements often focus on avoiding conflicts of interest, not just disclosing them. Like the CFP® fiduciary standard, there are generally no legal consequences for breaches, though some of these organizations may require financial advisors to sign an agreement with their clients that they’ll abide by a fiduciary arrangement. Breaching those agreements may give clients the ability to sue.

Finding a fiduciary financial advisor

Most people searching for a financial advisor to work with would expect (and want) a professional who is both competent and puts clients first. It’s important to keep in mind that the far majority of financial advisors are not currently subject to any of these fiduciary standards. And because there are different types of fiduciaries, saying that they’re a fiduciary does not necessarily mean that they are required to act in your best interest at all times and in all the ways you engage with them. Know the differences between different types.

Don’t be too shy to ask questions! It’s entirely reasonable and fair to ask your financial advisor how they get paid and what conflicts of interest they may have when giving advice. Some people believe that conflicts aren’t always a bad thing, as long as clients are aware of the arrangement and understand that it may impact the advice they receive. Others think that financial advice should be completely separate from the sale of financial products. You can decide for yourself, there are a wide variety of financial advisors to choose from.

Consider working with a financial advisor who adheres to several different fiduciary standards. If they bring up the subject before you ask about it, then it’s probably something that they believe to be an important part of the way that they serve clients.

Keep in mind that all members of the San Diego Financial Advisors Network adhere to at least one (often, multiple) versions of the fiduciary standard. All of us firmly believe in putting clients first!