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.
Change Your Mindset to Get in a Healthier Financial Planning Position
The best fitness coaches let their clients know that to reach their goals, it takes sticking to a plan, and that a plan is a long-term situation. The coach has the experience required to guide clients through the right exercises and nutrition plans to help them reach their specific goals. Financial planning professionals are similar in their tactics.
Think of your financial planner as your health club instructor for a moment. Your goals can be anywhere from improving your cash flow to managing your taxes or focusing on retirement and estate goals. Maybe you’re more interested in business planning or insurance. When you go to your financial planner, they will have a series of “exercises” that can help you reach your goals.
Your Financial Planner Should Have the Tools You Need
When you go to your health club, they have all the tools you need to develop or tone specific muscle groups. Furthermore, the club has seasoned experts there to show you how to operate the equipment correctly. On your first trip to the club, you’ll likely get a consultation where a fitness coach will help you set goals and develop a strategy for reaching them. The same can be said of a financial planner. They will sit down with you, talk about your current situation, and you’ll together set goals.
Taking Inventory and Keeping Track: Important Roles of a Coach
Your financial planner will listen to you as you talk about your challenges and various ideas. Then, you’ll get a comprehensive financial review to gather all your documents and establish a way to keep everything organized - just as you keep track of your reps, sets, body fat and weight as you track progress at the gym.
Individualized Attention is a Key Element
A fitness coach is able to offer special, customized care – because no two clients have the same body types or challenges. The same can be said of a financial planner – it’s not a one-size-fits-all approach to helping you manage your money and your investments. They’re going to look at you as the individual you are, and do what’s best to get you on track to meet your goals.
At Family Investment Center, we strive to act as financial coaches. It’s our mission to assist our clients in using their money more effectively so they can live the life they envision for themselves. If you’re committed to improving your financial health, contact us today. What are you waiting for?
Putting Together a Game Plan for Your Investment Strategies
World Cup season recently wrapped up, and even though the United States didn’t qualify this time, soccer fans across the country and the world we’re living, breathing and talking soccer outcomes day and night. What does the World Cup have to do with your investment strategies? More than you might think! Here are a few soccer strategies that are also great tips for your investments:
Seek Professional Guidance
All good soccer players know where they excel, and they don’t stray from their comfort zones very often. If you want a good striker, Pele famously filled that position for his teams. So how does that analogy work for investing? When it comes to choosing someone to manage your money, you’re probably not going to ask a painter to do it, right? You’re going to ask a trusted investment professional who knows all about the various investment vehicles that will work best to help you meet your goals.
Don’t Stray From the Plan
When soccer players get emotional, things don’t usually go well. In most cases, it’s a red card that comes flying out of the ref’s pocket and into the air. This is generally in response to a flagrant penalty, which results in the player being taken out of the game.
When investors become emotional, similar things happen, only it’s more severe than being taken out of a game – it could sink your life’s savings. Many investors get nervous when the market becomes volatile. They make rash decisions and pull out of an investment as it falls, never getting the chance to make that money back when the stock rebounds.
Don’t stray from the plan, and remember that it’s a long-term situation, not a short-term process.
Know When to Readdress Your Strategy
In professional soccer, the coach doesn’t make substitutions without a plan. Therefore, when a substitution is made, it’s only after serious thought. The same is true in your investment strategies. While an emotional investor will make many changes to their investments, a wise investor will only do that when it’s necessary. For example, as you age, shifting your money to less risky investments may be the best strategy for you.
At Family Investment Center, we’ve helped people across all walks and stages of life develop investment strategies that work toward their goals. As it was in our beginnings, and as it still is today, we’re commission-free and focused on your success. Contact us today and we’ll discuss our approach to see if it’s a fit for you, whatever season of life you’re in.
In a Time of Complexities, a Fiduciary May be the Solution
The opaque nature of the fee structure that many investment advisors follow has prompted Jay Clayton, SEC chairman, to target the complexities in hidden fees that are bad news for investors. Fiduciaries who are fee-only are becoming a more popular option for investors who need assistance in planning out their financial future.
Clayton is looking to crack down through enforcement, but also by clarifying disclosure requirements, according to an article in Investment News. Clayton has spoken out recently about advisors who are putting money for clients into an expensive mutual fund rather than those that are low-cost. Also, he’s spoken out about a type of financial advisor who will use fund assets to pay expenses for their firm when those expenses should be covered by the firm.
There is also the issue of brokers that will mark up securities prices to give themselves a raise, and they do it in secrecy. Consumers are beginning to take notice, as they become more fluent in investment terms – and as they continue to watch market dips with apprehension.
Fiduciaries act in the best interest of the client, and they typically have less complex fee structures to prevent confusion for clients or keeping them in the dark about what they’re being charged. Commission-free fiduciaries pose far less risk of giving advice that isn’t objective. The White House under Obama put out a report that said, “Some firms incentivize advisers to steer clients into products that may have higher fees and lower returns.” This conflict of interest was estimated to cost investors $17 billion a year.
Simply put, fiduciaries are advisors who will listen to you about your fears, your goals and how you want to spend your life in retirement, then offer advice that is in your best interest. A good advisor will speak in terms that you understand, yet without talking down to you. They will charge a fee that is transparent and easy to understand.
At Family Investment Center, we’ve operated as a fiduciary since day one. Our entire team has a hands-on approach to managing clients’ accounts, which means we collaborate to ensure that every client is thoroughly covered and getting what we feel to be the best advice. Schedule an appointment with us today and find out why jargon-free, client-first service can be a straight path to confidence.
Investment Strategies and Sudden Gains (Such as Tax Returns)
If you find yourself with unexpected money, you may also find yourself with questions. For many, receiving an unexpected sum of money is exciting – but it also requires a strategy. Investment strategies for these life experiences don’t have to be complicated; it can be helpful to review the concepts below.
Here’s more to ponder: thinking beyond tax season, the National Endowment for Financial Education found that almost 70 percent of people who hit it big will find themselves in the same situation they were in before obtaining that money.
Recently Forbes asked a dozen investment advisors about investment strategies for windfalls. Here are their top tips to keep in mind:
1. Pay Down Your Debts
While it isn’t as fun as going on a shopping spree, paying down certain types of debt is vital for a brighter financial future. (Note: some debt is good debt. Credit card debt is never good debt. Talk to an advisor about which debt is good and which is bad.)
2. Make Fact-Based Decisions
The first reaction after receiving a windfall might be to spend, spend, spend. However, to sit and do nothing aside from developing an investment strategy is probably your smartest option. Rather than focus on short-term expenditures that satiate your shopping itch, think long-term.
3. Hold on to It
If you have no real debt to speak of, put some of the money into the bank. We never really know what life will give us, which is why setting aside enough to cover three to six months of expenses (“emergency fund”) is wise.
4. Invest It
Before you invest your windfall, you need to ask yourself a couple of questions: is my emergency fund in good shape and are my debts paid down? If you can answer yes to both, consider investing in accounts like an IRA or brokerage account. There are many different options, so talk to an investment advisor about what’s best for you.
5. Addressing Risk
For those who are immediately thinking long-term with this windfall, it’s reasonable to look down the line and assess when you think you might actually start spending this money. You need to assess the risk associated with various investments so that you have a chance at compound returns, yet the risk is low enough so that it will be there for you when you need it. There are also taxes to consider, so talk to your investment advisor about which options fit your goals.
Windfalls can cause a flood of emotions, which we all know is not the best state to be in while considering financial decisions. Do yourself a favor and hold off on making decisions and contact your investment advisor about steps you should consider.
At Family Investment Center, we’ll talk to you about your goals and how this windfall can work toward those goals. Contact us today and let’s build a solid investment strategy together.
Why an Advisor Should be More Than Just “Experienced”
Most investment advisors have gone through a number of exams and licensing steps to earn their position. But is that enough? You want an investment advisor who is up-to-date in their industry so they can help you develop an investment strategy that is the best fit for your life.
Licensing exams will test the applicant’s knowledge of basic products and state and federal laws regarding investing. While one would hope a firm would only hire people with appropriate education, not all exams hold them to the same rigor. Regardless of how extensive an advisor’s education has been, it’s important for them to continue on a path toward furthering their education.
One credential you have likely heard about is CERTIFIED FINANCIAL PLANNER™ , or CFP®. These professionals complete education and testing in areas including budgeting, planning for retirement, saving for education, tax planning, estate planning, insurance, and other areas. They are also held to rigorous experience and continuing education standards and are required to act in clients’ best interests in a constantly changing environment.
While credentials are helpful, are they enough to ensure that you’re getting the advice that will help you reach your investment goals? Advisors can also attend national conferences to boost their education and gain new ideas.
One example is Charles Schwab’s annual IMPACT conference, which provides an excellent opportunity for investment advisors to hear from others in their industry and to soak up new insights. The cornerstone of IMPACT is education, and the conference is designed to cover vital topics in an industry that continues to evolve.
Dan Danford, CEO of Family Investment Center, says taking his professionals to IMPACT is an investment in and of itself. “It’s not cheap to take all our advisors to the IMPACT conference,” Danford said. “This year it was in Chicago, but we’ve gone to Denver, San Diego, Boston, and Washington DC before.”
Despite the travel expenses, Danford said it’s totally worth the investment because the value is in what they learn.
“There are thousands of advisors there,” Danford began, “dozens of educational sessions and top-rated keynote speakers. Most of all, we learn how others are doing what we do for clients. We see new products, new software, new service models, even new competitors. Most of all, we hone our craft. Because being better each day is one powerful key to helping others.”
At Family Investment Center, we’re constantly expanding our knowledge of the investment industry so we can better serve our clients. Regardless of your level of expertise in investments, we can help you meet your goals. Contact us today and let’s talk about what your money can do for you.
Three Quick Reminders for 401(k) Investing
A 401(k) is an excellent investment tool that many workers utilize today for their retirement. Most pension plans have been replaced, in many cases, with a 401(k). Some companies offer an employer match, which is free money to you (or a company benefit, if you prefer to look at it that way). That is why 401(k) investing can be a key part of your portfolio.
First and foremost – if your company does offer a match, it may only be a single-digit percentage. Consider taking full advantage of this, because if you’re not contributing the maximum amount, you’re leaving money on the table that could be increasing the amount you have in your account when you retire. This means that if your company matches up to five percent, you should attempt to contribute five percent of each paycheck in the company 401(k) to get the full company match.
Many people will contribute more than what the employer will match because not only will they benefit from the compound interest of the matching amount from the company, but they’ll also have extra going into it that will give them more options in what they can do in retirement.
Most employees who contribute to their 401(k) accounts don’t miss it because it’s automatically withdrawn from their paycheck and placed directly into the account. There are no checks to sign or money to withdraw; you just get your regular paycheck, and you can see your contribution in the itemized list of deductions.
Enrollment is automatic, as well, for many companies, which means there is no decision to make on your part. All you have to do is adjust how much you’ll be putting in per pay period.
Take it to the Max
A goal for your investment is to try and reach the maximum amount the IRS allows you to put in every year. (There are some circumstances where this may not be in your best interest, though, so be sure to consult an advisor.) This number can change, but currently, you can contribute up to $18,000 of earned income per year.
If you’re 55 or older, you can contribute more – it’s called a “catch-up contribution” that allows you to contribute an extra $6,000 a year. This is an excellent option for people who’ve gotten a late start on retirement.
Don’t Abuse the Bonus
What do you do with your tax refunds, bonuses and raises? Do you plan big nights out, trips and large purchases? If you just spent a small percentage of that money on those things and then took the rest of that extra money and put it into your 401(k), you will grow your retirement savings at a faster rate. Let’s say you just got a five percent raise. Consider bumping up your contribution by four percent; then you may have that much extra to use in retirement.
At Family Investment Center, we’ve got many ideas to help you plan for retirement. Contact us today and schedule a visit to talk about a strategy for your investments.
Practical Steps Toward Solid Goals With the Right Investment Advice
Investing isn’t about guessing at stocks and bonds or simply selecting which bonds might have the highest interest rates. To the contrary: managers looking over large portfolios, such as pension plans, university foundations and charitable endowments utilize applied portfolio science in a deliberate way, and it’s investment advice you can use in your own planning.
In a practical sense, these large portfolio advisors are looking more at the forest and less at the trees. You can use this philosophy as you look at your 401(k) or IRA investments. If investing has never appealed to you, it should be mentioned that it can actually be fun. Surely you know some people who enjoy the challenge of it. However, be warned – if you’re getting a thrill out of investing, you might be looking at all the trees and have no eye on the forest.
Your winnings on a hot stock might be a thrill, but how many losses did it take to get there? And did you just break even? Results matter, and these aren’t the results you want. If you’ve made a decision that has a potential swing in your eventual portfolio of $100,000, $50,000 up or $50,000 down, what would you do with the $50,000 extra? Buy a better car? Add a cruise or two to your vacation calendar? Upgrade your housing option?
What if the portfolio suffers the $50,000 down? What will you give up? Vacations? Drive an older or cheaper car? Medical insurance? Prescriptions? Rent? You can’t be focused simply on making money – you have to have a plan for long-term results that will set you up for the future when your career ends. This might require some behavioral changes that put less focus on toys, such as bigger homes and faster cars.
Fortunately, you have measurements all along your investment journey to assist you. Here are some practical solutions you need to consider as you plan your strategy:
- Use a goal-based system for finance and investing. What is the upside and downside of achieving those goals?
- Internalize that reward or penalty for each financial goal. Often, the penalty is far more powerful than the reward.
- Don’t impose artificial schedules on something that can’t be scheduled. Investing works, but the cycles and time required are irregular. The stock market, especially, grows in fits and starts.
- Forget the “get rich quick” stuff. The hot stock tip or lottery ticket are long shots. They aren’t a practical solution for reaching your goals.
- Find a good fiduciary advisor to help. Not next week or next month, or “when I get some money.” Today. You surely fall into one of two categories: you know what you need, and a professional can help you get better, or you don’t know what you need, which is an even stronger case for getting help.
At Family Investment Center, we bring the investment advice that is customized to fit each individual situation. Come talk to us in our commission-free, jargon-free setting and we’ll help you see that “Money is freedom, and freedom is fun.”
Take a Different Approach to Investing for Women
Are Americans on the right track with a strategy for adequate retirement savings? A report by MassMutual would put the answer at a resounding “no.” The report found that 72 percent of people overall agreed they aren’t prepared for retirement. But what about women? Is investing for women any different than it is for men? Do women feel they are as unprepared financially for retirement as men do?
The answer is “yes,” as the report found that women are three times more likely to say they can’t save for retirement. Women are also more likely than men to say that financial concerns are a cause of stress in their life, limiting how they function in the world and receive medical care. Not surprisingly, it can also be the source of friction in relationships.
The report did find that women are more likely than men to seek employer-sponsored programs to help them feel more confident about their finances. However, when it comes to Social Security counseling, men are more apt to seek that out than women. That doesn’t mean women are less concerned about their Social Security and talk of cuts to that program, as the report found that only 33 percent of men were concerned compared to 52 percent of women.
What are some steps women can take now toward a financially secure retirement? Here are some keys for starting:
· Workplace Retirement
If your workplace offers a retirement plan, sign up for it. Your contributions could help reduce your income taxes, and it’s often money that you don’t miss because it is directly deposited to the account from your payroll.
· Pursue More Education
You will gain more confidence and conquer reservations or outright fear of investing if you’re more financially literate. Consider talking to an advisor that cuts out financial jargon and explains things simply.
· Avoid Emotions
It’s been said before – emotions and investing don’t mix. Bad decisions are almost always made on a “gut feeling” that is brought on by an emotional outburst.
· Stay the Course
Investing shouldn’t be a short-term strategy. Only people looking to “play the market” think of it that way. The market will rise and fall, sometimes sharply in the short term. Stick to a long-term plan and diversify your portfolio to boost your return potential.
If the process of going to a financial advisor intimidates you, just remember that we work with people in every stage of their investment strategy, from young investors just starting out in their careers to those who are well into their retirement. We work with people who are quite literate in finances and investing and with people whose knowledge goes no further than a checking account.
At Family Investment Center, we can help both men and women with an investment strategy that is personalized for their unique needs. Come in today and let’s chat about your plans for the future. Here’s another note of interest: November 2017 is Millionaire’s Month at Family Investment Center. Why are millionaires rich? How do they think? What do they do (or not do) that you can apply to your own life? Is there a secret? Read more on our website or listen to Money is Freedom on SoundCloud or iTunes for a special four-part series.
3 Things You Need to Hear an Investment Advisor Say
Dan Danford, CEO and founder of Family Investment Center, came to the industry “by accident.” While working in the trust department of a bank, Danford was in charge of pension and profit sharing plans. He found that he was proficient at explaining investing to people that helped them better understand the process.
He parlayed that talent by creating Family Investment Center, bucking the trend in the industry by establishing a fee-only structure of payment. As a fiduciary, Danford and his team are solely focused on the best interests of their clients.
Danford is featured in a video on Investopedia where he explains how the Family Investment Center approach is unique in the industry. He also offers insights into how the team thinks about investing. Read on for a summary of these insights.
1. About Family Investment Center: You get a whole team
“People who walk in our door don’t get assigned to a particular advisor and work with that advisor. Instead, our team helps every single client. Each and every one of us sees all the transactions for all our clients every day. Each and every one of us has access to notes and files. That way, no matter who you are or what your situation is, you aren’t dependent on the whims of one person.”
2. Investing Values: Practical insights
“I favor the ones that have been shown to work. When someone comes to me and they ask about investing, one of the first things I want to know is what their situation is so I can compare them in my mind to people I’ve worked with in the past. Then I can draw upon my experience and ask, ‘What has worked for those people and what is likely to work for these people?’”
3. Advice Most Frequently Given: Be mindful
“What I suggest to people is that they are mindful of what they do financially. If they’ll just give it some thought ahead of time, they’ll make wise buying decisions, and those pay off in the long term.”
For more information about how Family Investment Center works for our clients, contact us today and schedule a visit. November 2017 is Millionaire’s Month at Family Investment Center. Why are millionaires rich? How do they think? What do they do (or not do) that you can apply to your own life? Is there a secret? Read more on our website or listen to Money is Freedom on SoundCloudor iTunes for a special four-part series.
Get Started With Some Investment Advice From Warren Buffett
Are you confused by all the conflicting advice out there on how to best invest your money? What would an investor who has seen a large amount of success with his investing list as top investment advice? Warren Buffett has been successful with his investment strategies and offers up some basic foundational steps that can be a key part of any investment strategy. Let’s take a look at several of his recent tips:
Keep it Simple
Warren Buffett says he doesn’t look to “jump over seven-foot bars” with his investments. Instead, he seeks out the one-foot bars he can step over. These one-foot bars include non-flashy investments like utilities, insurance and manufacturing, which is something that will always be in demand, thus representing a generally safer and potentially successful investment.
Be Careful With Forecasts
Buffett is known to say that forecasts say more about the forecaster than they say about the future. He’s extremely mindful of trying to guess how markets are going to behave, and doesn’t go into panic mode when the market fluctuates. Instead, investors need to stick to their long-term plans.
Trustworthy investment advisors will tell clients to always think long-term in their investment strategies, especially if they’re putting any assets into the market. Yes, when the economy takes a turn, so too may your investments. However, the market recovers, and so too do your investments. Buffett says you can’t think short-term and that if you’re not willing to own a stock for 10 years, don’t even consider it for 10 minutes.
Don’t Make Impulse Decisions
Buffett is a great student, which means he’s always reading and always thinking. He says the more he does that, the less likely he is to make impulse decisions. Impulse decisions can actually be prompted by something investors read – especially anything that touts a stock as a “sure thing.” Don’t jump on it. Always be reading and thinking.
Don’t Sit Fearfully
The only time you should be fearful of jumping on an investment is when others are feeling greedy. However, a careful and well-planned strategy can provide great results. When an opportunity arises that you’ve had your eye on for some time, take action.
Buying Stocks and Homes Have Similarities
Buffett encourages people to buy stock the way they buy a house. Why? Because, if you understand a stock in the same way you understand a house you plan to live in for decades, you’re on the right path.
At Family Investment Center, we like the words of Buffett because we too share the same values in terms of not being impulsive, having a commitment to attention to detail, looking at investments as long-term strategies and not trying to forecast what the market is going to do. We know every investor is different and requires a different strategy to reach their goals. Contact us today to help you develop your personal investment plan.
The State of the Target-Date Mutual Funds in an Investment Portfolio
The best investment portfolio goals are long-term in nature. However, as you get into the latter part of your career, it makes sense to start rethinking how your investments are diversified.
Changing your investment strategies by shifting assets to safer places as you get older could be a change you need to make. Does this mean all ofyour stock investments need to be shifted as you near retirement? Not necessarily. We know that there are risks related to investing in stocks, but there are also rewards. Generally, when one retires, there’s still a need for at least a portion of stocks, just to keep pace with inflation. So, for many, the changes to investment portfolios near retirement are only slight.
The Target-Date Fund
The advantage of target-date funds is that you can invest in a variety of stocks and bonds that will automatically become more conservative as you age. The closer you get to your retirement date, the more bonds and less stocks you’ll see in the portfolio.
For instance, you can choose a fund that currently invests 55 percent of your assets in stocks and 45 percent into bonds. The bonds will help to ensure that a good portion of your money is safe while the stock investments give your investment portfolio room to grow with the market. As you age, the fund manager will adjust the portfolio more conservatively.
Exchange-traded funds (ETFs) are similar to mutual funds in that each ETF owns shares of numerous stocks or bonds. ETFs give you the opportunity to customize how you make investments in equities and bonds in a way that are more suitable for your specific goals and your style of investing.
Another advantage is that ETFs offer lower expense ratios than typical mutual funds. And similar to individual stocks, they are actively bought and sold from open to close of the market.
While buying shares of individual stocks could be the best fit for you, that will definitely not be the case for everyone. Although many of the dividend-paying stocks have rallied for a number of years, that also means that many share prices are higher now. Ask your investment advisor about stocks that will give you a good mix of income, value and growth potential.
Build a Strategy With a Professional
Taking the DIY approach to your investment portfolio might feel gratifying, but this is too important an issue to treat it like a hobby. Consider asking an investment advisor for help assisting you in adjusting your investments as you get closer to retirement.
At Family Investment Center, we’ve worked with many clients in situations just like yours, and we have strategies that can provide you with confidence. Contact us today and let’s work toward your goals together.
Simple Investment Strategies to Get You Started
Are you a part of the Millennial generation that is being discussed so frequently today? Some of the attributes that have been pinned on you aren’t accurate, nor are they fair, but you’re definitely in a generation that is coming up – fairly new to your career and perhaps struggling to come to terms with investment strategies that will see you through to a fruitful retirement. We have compiled some personal finance tips that can put you on the right path.
1. Your Parents Aren’t Always Right
One common characteristic of Millennials is that they have “helicopter parents.” These are well-intentioned parents who took great interest in every part of their child’s life. They are often thought of as friends for whom you can go to for advice. However, when it comes to helping you develop investment strategies, you have to realize your parents’ situation is entirely different from yours.
There is a good chance that the strategies your parents developed for themselves will not work for you. You shouldn’t have your retirement account invested the same way someone from another generation does. You need to look at what you want to accomplish and align with the best investment strategies for your unique personal situation.
2. Look at Your Finances Often
It can be a source of stress when you’re constantly on a tight budget, but you need to avoid ignoring your finances, as that will make developing a plan more difficult. You’re not always going to like what you see, but at least you have the option to be proactive rather than reactive.
3. Look for Inefficiencies in Your Budget
It’s understandable that as you pay down your student loans and pay all your bills on your base salary, the money you put toward investments may not be a large amount. However, making small cuts to your budget can give you a nice little boost now that could turn into a lot of money later on.
Cable television is one expense that might feel painful to cut out at first, but that extra $100 (or more) per month can do wonders for an investment account. From clothing purchases to eating out, find areas where you can make small changes.
4. Take Advantage of Automatic Contributions
Many employers offer retirement plans with a company match. If your company has this, you’re losing money by not signing up. If your workplace doesn’t offer a plan, consider setting up an IRA and have money directly deposited into it each month.
At Family Investment Center, we’re committed to helping our clients find the right path to financial freedom. Contact us today and let’s discuss where you want your own personal “freedom tour” to take you.
Protect Your Future With a Wealth Management Strategy
We all admire the risk-taking entrepreneurs out there who put so much on the line and reap great rewards in return. However, while entrepreneurs are known for their abilities to creatively build a plan for their startup, they can be lacking in planning their exit strategy for safeguarding their wealth. If you are an entrepreneur and this describes you, the lack of a wealth management strategy will not only affect your own retirement, but the financial good of your family and the generations to follow.
It’s not uncommon for the bulk of an entrepreneur’s portfolio to be heavily invested in his or her own company’s shares. However, if for example, you’ve got 60 percent of your money in your own shares, the remaining 40 percent should be in something with less risk associated with it. This will give you a more diversified portfolio.
Why is it so important for an entrepreneur to take more precautions in a wealth management strategy? Most are supported by investors who could stand to lose their entire investment if something goes awry.
And what about the exit strategy? According to a U.S. Trust survey, roughly 63 percent of business owners have not formulated an exit strategy. They don’t have a plan for whether or not they’ll sell or transfer ownership upon their death or retirement. This is also an important aspect of developing a wealth management strategy because this merger or acquisition process can be quite complex, and a lot rides on the success of this process.
Also, according to a study by Deloitte, only 59 percent of family-owned businesses have a plan in place for an unfortunate event, such as the death or disability of the head of the company. The lack of a plan can lead to a difficult and damaging set of events to follow, and it can sink the company and potentially destroy business and family relationships.
If you head up a company and something should happen to you, you will want your family to be protected. Also, a wealth management plan should establish protections for all your business partners so they have the capital they need to continue on.
Many great and powerful companies have been built on the backs of risk-takers, but when it comes to building and managing a portfolio for wealth management, it’s important to turn to a professional investment advisor who is steeped in the knowledge of what risk means in investments.
At Family Investment Center, we can work with you for a wealth management strategy that considers your unique needs. Contact us today and let’s get started.
How Taxes Can Affect Your Investment Portfolio
There is so much going on in Washington D.C. these days that it’s tough to keep up. However, given the recent movement regarding regulatory reform, it might be a good time to stop following the news surrounding the current administration and look at your investment portfolio to how it might be affected.
The Trump administration is eyeing a three percent or better GDP, which Treasury Secretary Steve Mnuchin said in May is achievable, but only if they make historic reforms to taxes and regulations. He also said he’s got a large group of people working on tax system reform while also making strides to undo the Dodd-Frank Act, which was put in place in 2010 in a response to the financial crisis that led to the Great Recession. It’s controversial and people are taking sides.
Mnuchin also said the administration is working to simplify personal taxes and make business taxes more competitive. The reforms Mnuchin talked about last month at a Senate Banking, Housing and Urban Affairs Committee hearing have some believing that if they are able to make these changes, corporate heavyweights could forge ahead with longer-term planning. Could this ease the uncertainty that causes a volatile stock market? The answer may be a resounding “yes” in the corporate world.
It’s also important to note that in 2015, Congress took the research and development tax credit, which had traditionally included sunsets that were frequently extended, and made it permanent. This means large companies, including those that are publicly traded, can more lay out their planning strategies and product development, which again, could lead to more stable performance on the stock market.
However, there might be a snag in the form of funding gaps for a few reasons. First, there is a move to rebuild infrastructure in the U.S. and keep the military the strongest in the world, which is expensive. At the same time, the aging population requires their entitlement programs, which means there will be a funding gap that must be dealt with. One possible solution is a border adjustment tax, which is being opposed by retailers who get a majority of their goods overseas or across borders.
All of this means that as an investor, you need to consider which companies will benefit from these changes, which will be hurt, and make sure your investment portfolio is set up to weather any storm. An investment advisor will tell you that fear and investing are two things that don’t mix well.
To really stay on top of these reforms, talk to your investment advisor about where your money is and if it should be adjusted to better reflect the positive changes that could result from taxation and reforms.
At Family Investment Center, we make it our duty to follow any change in public policy that impacts our clients’ investment portfolios. We welcome the chance to talk about these changes with our clients and offer strategies that will align with your goals and the current or impending reforms. Schedule an appointment with us today and let’s start planning your financial future.
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.