ANSWERS TO FAQS
We work hard to answer all of your important questions.
What is a Registered Investment Advisor and why should I care?
A Registered Investment Advisor is a company that has registered with either the federal or state government to provide fiduciary guidance to its clients in the area of financial planning, investing, and the financial markets. The key word here is fiduciary, because a fiduciary is required by law to put the client’s best interests above his/her own. Clients should always seek a fiduciary, who is generally held to a higher standard legally than a representative of a bank or a brokerage firm who may only be held to a suitability standard.
What is a CERTIFIED FINANCIAL PLANNER™ professional?
Those with this credential have done extensive coursework, and completed education, examination, ethical, and experiential requirements. Anyone can call himself a “financial planner,” but the CFP® mark is highly respected and has a national oversight board. Only a select group of planners have met the rigorous education, examination, experience and ethics requirements necessary to call themselves Certified Financial Planner™ professionals or CFP® practitioners.
What is Fee-Only, or maybe-what isn't Fee-Only?
Fee-only advisors are paid directly by the client, in such a way that the client understands the cost of the advisor’s service. CPAs and lawyers generally work this way. Other financial advisors may receive commissions and other compensation that the client isn’t informed about, or incentives to place you in their companies' securities. Employees of brokers-dealers, or those affiliated with broker-dealers, may receive only commissions or some other commission/fee arrangement.
Why do Fees matter?
If you can minimize the fees that you pay, you maximize the money that you keep, so that you have more to GROW and GIVE. There are many hidden or masked fees in the investing world, and Forthright Financial Planning LLC, which was designed from the beginning to run efficiently, will minimize your fees and keep you informed of your choices.
What is an ADV?
The Form ADV Part 2 is a standardized government disclosure form that all Registered Investment Advisors use. You should receive a copy of one before working with an advisor, and you should review it thoroughly. It will tell you a lot about an advisor’s business. It is also good to cure insomnia.
Why should I pick Forthright Financial Planning LLC?
You should carefully evaluate and interview several choices for the position of financial planner. Interview at least three professionals in person, preferably with a standard list of questions. Here are some helpful questions to ask when you are interviewing financial advisors and planners.
Ask each individual about their education, career experience and familiarity in working with clients whose situations are similar to yours. Also ask:
Often, there is a strong chemistry with one choice that will lead to an extended trust-filled working relationship. Many older women initially feel more comfortable with a man, especially if their husbands have been their sole financial advisor. However, Jenny has observed that business relationships that are nurturing, combined with the more detail-oriented approach that many women financial planners such as Jenny bring to the profession, ultimately are a better fit.
How important is it to check for references?
This is extremely important, because your money is important, and you don’t want to get taken advantage of by a sweet-talking salesperson. Take the time to check references, and inquire as to why their last two clients left. Ask about the advisor’s volunteer work within the community, and ask for a reference there also. Read the advisor’s ADV Part 2.
How important is the financial media to my investment decisions?
Jenny observes that we seem to be a nation of trend-followers, exemplified by the recent hedge fund debacles, and before that, the “dot com” boom and bust. People and things can receive a lot of positive press (good marketing) without having a lot of substance underneath (Enron, WorldCom, subprime mortgages, etc.) Forthright Financial Planning LLC resolves to be a small company providing services that meet the needs of a small, select group of clients. Jenny’s desire is to have business relationships that become friendships, not to take advantage of a client’s fears.
What is an Investment Policy Statement and how is it used?
The Investment Policy Statement is your money’s job description formulated with input from both you and Jenny. We customize these to your portfolio, your tax considerations, your philanthropic desires, your employee stock options, and any other unique considerations. The most significant thing we lay out is areas of investment risk and reward, their impact on your portfolio, and your ability to tolerate various degrees of risk, given your past experiences and your personal temperament.
What is Asset Allocation, and what does it mean for me?
Asset Allocation is a term meaning how your portfolio is distributed among stocks, bonds, real estate, alternative assets, and cash. It is often shown as percentages, and generally gets more conservative as one ages. Your portfolio can include individual stocks and bonds, mutual funds, exchange-traded funds (ETFs), limited partnerships, and other financial instruments. Each of these categories has risks that can be identified and minimized in conjunction with expert advice. Many financial studies show that Asset Allocation can be the single most important decision in determining whether you achieve your financial goals.
What is Portfolio Rebalancing?
Rebalancing is where Jenny adjusts your portfolio to match your IPS objectives. By doing this periodically, it prevents a single asset class from taking over the portfolio, thereby decreasing your risk by diversifying your assets.
I still can’t decide. What should I do?
That’s fair, because it is hard to choose someone when you don’t know them personally yet. Please feel free to call us and ask any additional questions. Jenny can tell you about what’s hype and what’s substance when it comes to financial planning. Since Jenny likes to take lots of time to make important decisions, she extends the same courtesy to her prospective clients. We will do follow-up checks, but we won’t bug you. (We save the nagging for the current clients! :)