Average is not good enough … Our goal at Family Investment Center is excellence. We find excellent investment products and supervise an excellent service package. We maintain a library of excellent research materials and financial planning resources. We also demand top safety and security for our clients.
We won’t settle for average. We continually seek top managers or securities and meld them into superior custom portfolios. Each palette of investments is carefully tailored to personal or family goals. We enlist excellent managers, research, resources, and effort for our clients. Don’t settle for average. You deserve excellence.
Please search our blog posts for answers to common investment questions, and we look forward to sharing our knowledge and experience with you first-hand.
Don't Fall Behind (as most Americans do) on Retirement Planning
As much as Americans focus on money, it’s disarming to know how few are focused on their financial future. The American College of Financial Services, in its survey of respondents who are in retirement or nearing it, found that close to 75 percent failed their quiz regarding retirement planning.
Americans are living longer, which means that if you stop working at age 65, you’re no longer planning for a ten-year period where you’re not earning an income – it’s likely much longer and you need to carefully plan for the decade-plus of no income other than what’s been put in retirement savings.
Only six in every 100 people were able to “ace” the quiz, implying that they are well-prepared for their retirement years. Almost 66 percent of the people quizzed reported that they had high levels of self-knowledge regarding retirement planning, which means that in actuality, they are unaware of their real financial situation as it relates to retiring comfortably.
As with any survey, differences in demographics were revealed in the retirement survey. For example, around 35 percent of males passed the quiz compared to 17 percent of females. This is particularly disturbing given the fact that women, on average, live longer than their male counterparts, which means their retirement planning acumen needs to be on point.
Another demographic difference showed that those with higher levels of education and wealth were more likely to be prepared for retirement. People with one million dollars or more in assets were 250 percent more likely to pass the test than those with less than one million. Furthermore, only nine percent of those without a college degree passed the quiz.
The caveat here is that people who can pass a financial literacy quiz are better planners and are better prepared to meet the challenges that can occur in retirement. And while it is evident that some demographics fair better than others, it doesn’t have to be a barrier to financial preparedness in retirement. All that is needed is a trusted advisor who can assist you in developing a sound retirement plan, and your ability to stick to that plan.
When you seek out an investment advisor, you should choose a trusted, experienced professional that can offer objective and non-conflicted advice. The best way to avoid conflict is to seek out a fiduciary, because a fiduciary must act in what they believe to be your best interests. Rather than work toward boosting their income by choosing products that give them a commission, many are fee-only advisors, which means they have no reason to offer something to you that doesn’t fit your goals.
At Family Investment Center, we have always operated as fiduciaries. Our goal is to get you to think about your goals for retirement and find ways to make sure you reach those goals. Contact us today and let’s start planning your own freedom tour.
Hint: The Fiduciary Rule is Set to Protect Investors
After a delay by the Department of Labor in calling into action a new fiduciary rule, investors need to know that it is now in effect and could affect the way they plan for retirement.
Investors currently have nearly $8 trillion in IRAs, and the new rule looks to protect that money. This almost did not come through as the new executive administration called for the Department of Labor (DOL) to review regulations and prepare an updated analysis regarding economics and legal areas surrounding this rule, which covers IRAs and 401(k)s. The administration also sought public input regarding new exemptions or changes to the regulatory portion of the rule.
However, as of June 9, 2017, the rule is in effect. So, what does this mean, exactly, for the everyday investor? First and foremost, the rule seeks to protect investors from getting conflicted advice from financial advisors. Brokers and investment advisors are now required to act as fiduciaries, putting their clients’ best interests first.
All financial advisors will be required to comply with the rule’s impartial conduct standard, which should help protect billions of dollars worth of investments. According to a 2015 report from the White House, that’s how much is at risk with conflicted advice from advisors who have something personal to gain from selling various products.
The response from the industry has been everywhere from panic to acceptance. Many firms make a lot of money off their former business model, which involved taking commissions on various products they sold to investors. For example, many have adopted new models that involve mutual funds that exclude various fees.
Does this mean that all investors are no longer going to be subjected to investment advice more motivated by profit for the advisor than for themselves? It does not. Investors need to take a little time and look into who is managing their finances. The first question they should ask of prospective advisors is if they are a fiduciary.
Ask them how they are paid for the work they do for you. Are they taking an hourly fee or just a percentage based on your overall portfolio? You need to make sure they’re not taking a commission, or you could be one of the many who are receiving conflicted advice that costs you money.
At Family Investment Center, we have operated as a fiduciary from day one. Our relationships have always been on solid footing because our clients come first, not commissions. When our clients do well, so do we. Let’s start planning your financial future in our truly commission-free and client-focused environment.
Retiring Early Requires the Right Mix of Investing Strategies and Diversification
Do you dream of an early retirement? If you want to get out of the workforce before the traditionally targeted age of 65, your investing strategies may need to be adjusted. It may seem simple, but a quick reminder can be very beneficial. Here are some important steps to take:
Get Involved Early
It’s an overused saying but it is true: the best time to start saving is yesterday; the second-best time to start getting serious about investing for your future is today. If you want to retire early, you need to start planning as early as possible, which is why Millennials should consider strategies now that will put them in a position to make that early retirement decision in a couple of decades. The sooner you begin saving, the more compounding you’ll have working in your favor later.
If you’re making up for lost time, don’t worry – you’re not alone. Many investors pick up the intensity of their investments in mid-life. It’s important to start where you are and move forward consistently.
Establish Solid Goals
If you’re in your mid-to-late 20s, your vision of the future is likely going to alter by the time you’re in your late 30s. That’s fine, but establish your goals for retirement now so you have a plan to guide your investing strategies.
“Where should I put my money?” It’s an appropriate question, and most investment advisors will point to an IRA and an employer-matching 401(k) as excellent vehicles for early retirement. Talk to your investment advisor about diversifying your investments in a variety of types, as this will give you the best chance at growth, especially when the market is volatile.
Keep an Eye on Taxes
Being tax-efficient in your investing strategies is important for an early retirement. For instance, tax-deferred savings vehicles like 401(k)s and IRAs can help you boost your savings. If your employer offers a match on your 401(k) contributions, you're going to see your savings grow more quickly.
Healthcare Can Get Expensive
This is an area of retirement planning that you may not have thought about – your health. Maybe you haven’t been to a doctor in 15 years and any sickness you’ve had has been managed from home. Unfortunately, you’re likely going to be visiting your family practitioner more often when you hit your golden years, which will increase your cost for healthcare.
Even though you may not have medical problems now, you need to budget for costs related to healthcare because your medical issues can wipe out your savings if you’re not prepared.
At Family Investment Center, we’ve established many investing strategies for our clients who want to retire early. Every situation is different and requires a customized approach, which is why you should come in and talk to us about your retirement goals. We’ll help put you on a path where an early and comfortable retirement may actually be attainable.
The Benefits of Having an Investment Advisor on Your Side
Taking the DIY approach can be a fiscally responsible and perfectly acceptable way of approaching a variety of projects. But when the project is complex and requires a great deal of skill to pull off, it is valuable to bring in a professional. When it comes to retirement planning or building up investments for other things in life, taking the DIY route is risky. Working with an investment advisor can ensure you have all the right information you need for your investment planning.
Dan Danford, a frequent contributor to Investopedia, writes in a new column about the joys of the do-it-yourself process and the realities of the complex investment planning that requires a professional investment advisor. Using the analogy of lawn maintenance, Danford dives into the DIY vs. hiring a professional lawn service approach.
“If you want a lawn to look nice and enhance the value of your home,” Danford said, “you can do-it-yourself or you can hire a lawn service. Either approach can create stunning results, but that’s where the similarities end.”
Danford argues that to take care of your lawn, you must purchase all the necessary tools and know how to use them if you want to see a greener lawn. A mower, irrigation system or hoses, fertilizer, grass seed, organic applications, nutrients, blower, spreader, etc. – these are the tools that will cost you a lot of money, not to mention the man hours you have to put in, to make that lawn lush and green.
Granted, some people really enjoy the process of caring for their lawn. Perhaps they find it meditative or an activity shared by the family. And the results are satisfying, if they’ve done it right. The risk is that if you make a mistake, it could take years for the lawn to recover, just as it would if you make a DIY investment mistake.
When you hire a professional lawn service, it “requires less personal attention,” Danford said. “They just show up when something needs doing and they take care of it. They own and maintain the equipment, provide supplies and hire the required labor.”
The investment business offers similar parallels. A full discretionary investment management service offers many more tiers of options than a DIY investor can gain access to. You can spend time and money on the necessary tools to make an investment plan, and perhaps come up with a solid one, but the money (fees) you put toward an investment advisor who does this full time can offer more promising results.
“Many investors would be far ahead to let professionals do their heavy lifting,” Danford said. “A green thumb – in lawns or money – grows ever greener with quality professional help.
Danford and his team at Family Investment Center have the tools required to assist you in your investments. They will discuss your options with you and assist you in making fact-driven decisions regarding your financial future.
Safeguarding Investors Should be Mandatory
The Department of Labor (DOL) is taking a close look at the fiduciary rule as opposing sides are heating up their banter. On one side, people argue that the rule has prompted many frivolous lawsuits against brokers whose clients believe they breached their fiduciary duty. On the other, proponents say the rule protects investors from conflicted investment advice.
Will the increase in litigation cause the cost of advice to go up? That’s something the DOL will be looking at. Also, regulators want to look into any abuse upon sponsors of defined contribution plans.
While the rule is focused on making sure those who want to offer conflicted advice have a disincentive to do so, President Trump signed an executive order to review and perhaps rescind the fiduciary rule, which went into effect in April.
Before the rule went into effect, a financial advisor who is also a registered broker was only supposed to recommend investments that were “roughly suitable” for their clients. This means that if one fund would offer that advisor a better commission, they were more inclined to offer it to you, regardless of how it would fit your investment planning.
The rule took several years to develop, but it has some flaws, including the fact that advisors have found some ways to work around the rule. Regardless of weak areas, it’s estimated that without the rule, investors were losing close to $17 billion a year due to conflicted advice.
Some in the industry are saying the DOL will find that litigation has increased, which means it could be rescinded. Others, however, believe the DOL will recommend adjustments to the rule, not a full rescinding.
Dan Danford, founder/CEO of Family Investment Center, said as a fiduciary, he and his staff want to put all the information out that they can so their investors are safeguarded. For instance, over a 30-year period, investors seeking advice that turns out to be conflicted see a 12 percent loss in potential growth. That’s not something a fiduciary will find acceptable. Founding the Family Investment Center in 1989, Danford opened his doors as a fiduciary, which was rare at that time.
The best choice, regardless of what the DOL does or doesn’t do with the fiduciary rule, is to seek out a fee-only advisor. These are licensed professionals who don’t take commissions. Furthermore and perhaps more importantly, they’re only looking out for the best interests of their clients.
When you come to us at Family Investment Center, we’ll not only act in your best interests, we’ll walk you through everything you need to know about your specific investment planning strategy.