What is fee-only financial advice? How does that differ from other financial advisor options?
Fee-only advice is advice which is paid for by the client rather than commissions from an outside party. PWFS is a fee-only advisor, and we do not accept commissions of any kind. We embrace serving in a fiduciary relationship with our clients, which means doing what is in our client’s best interest. We do not get paid more if we recommend investment A versus investment B. We do not get paid more if we recommend that you purchase insurance. We do not get paid any less if we recommend you terminate some insurance you have.
What are the ethical standards to which financial advisors are held?
Financial advisors are held to one of two standards: the fiduciary standard or the suitability standard. The fiduciary standard, which we have always embraced, requires that we make recommendations which are in your best interest.
The suitability standard, which commission-based advisors are most often required to observe, requires that the investments being recommended to you must be suitable, but it does not mean you will pay the lowest commission. Some or all of a broker’s income may be dependent upon steering their clients to a limited slice of the thousands of financial products available. How do you know which of these two standards your advisor follows? Ask, and expect a plain and simple answer.
What is required to be a Certified Financial Planner™ professional (CFP®)?
CFP® professionals are licensed by the Certified Financial Planner Board of Standards. They must pass a 10-hour comprehensive examination covering insurance, tax strategies, retirement planning, estate planning, and investments. They must also have at least three years of full-time financial planning-related experience. To maintain the designation, CFP® professionals must complete 30 hours of continuing education every two years.
Most people think all financial planners are "certified," but this isn't true. Anyone can call himself a "financial planner." Only those who have fulfilled the above requirements of the CFP Board can display the CFP® certification marks, which represent a high level of competency, ethics and professionalism. CFP Board's Standards of Professional Conduct require CFP® professionals to prioritize your interests above their own.
Who keeps my accounts, and who has access to them?
PWFS does not maintain possession of any client assets. In general, clients’ accounts are held by Raymond James, our qualified custodian. As the custodian, Raymond James is responsible for creating statements, executing transactions, etc. We do not have the authority to withdraw anything from your accounts without your approval.
PWFS does however have access to view account data. This allows us to provide you with comprehensive reporting on all accounts in your portfolio. What rate of return did you earn across all accounts last year? What expenses did you pay – to anybody, in any account – last year?
You always have full access to your own accounts and can view them at any time.
In an age of cyberattacks, how do you keep my money and private information safe?
Raymond James’ systems are continuously monitored for evidence of tampering or unauthorized activity. RJ employs comprehensive firewall and antivirus technology, as well as specialized programs to prevent and detect intrusion. RJ also maintains strict controls to limit and monitor employee access to systems.
Raymond James allows its clients to activate dual authentication on their accounts, which adds a second level of authentication to your log-in. RJ clients also have access to the RJ Vault, which is an encrypted and secure method to send and store account related documents. RJ continuously monitors and updates their security features to protect you and your investments.
Can I get a consultation on an hourly basis? I am not interested in an ongoing long-term relationship with an advisor.
Sorry, no. We no longer offer services on an hourly basis. Several years ago, we determined that we serve our long-term clients best when we remain focused on their financial planning. Likewise, we do not prepare tax returns, but instead choose to interface closely with our clients’ CPAs when needed. For our financial planning clients, we review our clients tax returns each year to see if we can recommend certain tax strategies to reduce taxable income.
Are your fees tax deductible?
Our fee is a tax-deductible item; however, it is a Schedule A deduction subject to a floor that is a function of Adjusted Gross income. Therefore, our fee may be fully deductible, partially deductible, or not deductible at all.
We can help you determine which applies. Ultimately, this is a decision for you and your CPA. We are happy to discuss the options with your CPA to help them determine what is best for you.
I've decided to take a closer look. What's the best way to get started?
Simply call us at 913.385.5523. We will provide information on our services and fees. After our call, you can decide if you're interested.
If so, you can make an appointment to come in and interview us!
Our goal in the initial interview is to get a better understanding of your financial situation. We recommend that you bring in financial documents so we can identify gaps and make recommendations. We believe this is the most productive use of time, but some people do not bring in anything but a list of questions. We will answer your questions and try to provide whatever information you need to make your decision on whether you want to hire us. There is no charge for this meeting.
I have decided to hire you. What is next?
We will ask you for any documents you have that will help us assess your financial situation, and will then prepare a strategy for your financial plan. We will prioritize tasks based on your needs and our professional opinion to make the process less overwhelming.
How long does it take to set up and implement a financial plan?
Gathering information and analyzing your financial situation generally takes three to six weeks. We also develop the investment plan at that time, review it with you, and hopefully get your approval. After which, we accept funds and spend the first six months tailoring your investment portfolio. Next, we start on the other financial planning tasks. For you, that may be a retirement plan to see if and when you can retire or it may involve work on estate planning to get assets titled correctly to help avoid possible estate taxes or beneficiary mistakes. Additionally, you may choose to have us delve into your insurance and provide feedback. Your investment plan considers tax consequences of any proposed sale and any fees for consolidating or moving accounts, because we feel it is important for you to know and approve all aspects of your investment plan. Sometimes we even make exceptions to the usual timeline and work on some issues simultaneously if you need to make decisions sooner.
The timeline and implementation of both investment and financial planning action items are presented and discussed when we present your investment plan.
Will you try to sell me investment or insurance while providing financial advice?
Absolutely not. We do not sell investment or insurance products, and are not associated with any third-party providers who do so. Because we do not accept commissions of any kind, clients can be assured our recommendations are not influenced by hidden financial gains to ourselves. For example, we can assist you in getting quotes from various sources for insurance products, such as life insurance and long-term care insurance. Then we can help you compare quotes and help you make decisions about the level of coverage that is appropriate. If you do not have an agent that you already work with, we can give you the names of two or three insurance agents or agencies. But we do not sell you insurance.
Likewise, when recommending investments, we have no financial incentive to advise you to purchase investment A versus investment B. We are paid the same. Our concern is what is in your best interest.
Could I talk to some of your clients as references?
Absolutely! We almost insist that you do. While it's true we are not likely to suggest someone who would speak negatively about us, there is a lot you can uncover by speaking to two or three long-term clients. You will find out what we do, and what we do not do. You can ask a client reference what they like best and least about our team. We ask clients to serve as references for us who have issues similar to yours, so you can confer on those matters and get an idea about assistance we deliver. We provide a list to our clients and to you on what those issues are, to help you format your discussion points.
What do you invest in?
We use mostly institutional mutual funds and some ETFs (exchange-traded funds) to diversify across asset classes, such as cash, bonds, stocks and non-traditional. Institutional classes of mutual funds let us get cheaper operating expenses than investors can access on their own. All mutual funds have internal operating expenses which pay for the manager, the analyst, and all those prospectuses you get in the mail. A lower operating expense ratio means higher performance per year. These lower expenses offset a portion of our fees.
Do you invest in individual stocks and bonds?
Generally, no. However, if a client already owns individual stocks or bonds, we will discuss if a custom portfolio utilizing the existing positions make sense. If you have low-cost basis stock positions, a custom portfolio incorporating these low-cost stocks often makes the most sense. As always, our investment plan proposal details all our recommendations before any decisions are made.
How do you decide to recommend, or change the recommendations, for an investment?
We have an internal investment committee that meets regularly and makes recommendations for managing portfolios. Three CFP professionals are active members of this committee.
We use investment research to monitor the mutual funds and ETFs (exchange-traded funds) we are using. Each month we delve deeper into some asset segments to see what else is available. We use a long-term focus, with 5-year and 10-year data points, while keeping an eye on short-term statistics. We follow management commentaries and conference calls, and turnover among the fund’s management and analysts.
Our CFP professionals are diligent about staying current on financial trends and business news, both in the US and globally. We read journals and white papers, attend conferences and meet with fund representatives. We are constantly doing due diligence to fine tune portfolios to help counter any changes in the market.
We are educated in the field and have commensurate credentials. We have a great deal of experience in this field. We spend our time (almost) every day in this field.
Could I spend some of my time and do this myself.
Yes, but only if you have the right aptitude, willingness to research and monitor the financial markets and investments, and discipline to invest for the long term. However, even if someone possesses all the above, we have seen that most people are unfamiliar with the related tax issues that in combination with sound investment management, helps him/her maximize their wealth by making the right decisions.
What are all the costs of investing?
We believe you should know all the costs of investing, and include reports in your review meeting to cover those listed below.
There are indirect costs of investing. Both mutual funds and ETFs have internal expenses. We always try to use institutional share classes when available, to obtain lower operating expenses than you would get on your own. Lower cost institutional classes can provide you with a higher rate of return.
Our fee is a direct cost of investing. In addition, in your accounts at Raymond James, you pay a transaction fee to Raymond James when we buy or sell a mutual fund, ETF, or stock. Our institutional rate is most often $0, and sometimes $10 or $20. This is substantially reduced from the retail rates most pay at other brokerage firms. However, we are not frequent traders since trading costs reduce our clients’ rate of return.
For clients who have non-Raymond James accounts that we manage, such as an annuity or 401k at work, you may pay additional indirect costs. In some cases, we will recommend transferring an annuity to a cheaper financial institution. We report on the expenses you are paying inside those accounts so you are at least aware of the price tag.
Finally, taxes you pay to the government are a cost of investing. In taxable accounts, we monitor your tax position throughout the year and share that information with you since we are sometimes able to use tax strategies to minimize taxes. You will pay more taxes if you buy and sell frequently. (Some advisors have an incentive to do that if they are commission-based.)
Are my investments insured?
No, investing in securities involves risk of loss that investors should be prepared to bear. No custodian insures against investment losses.
However, accounts held by Raymond James Bank, N.A. or in the Raymond James Bank Deposit Program are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC protects against the loss of insured deposits if an FDIC-insured bank or savings association fails. FDI deposit insurance is backed by the full faith and credit of the United States government.
Raymond James has purchased excess Securities Investor Protection Corporation (SIPC) coverage through various syndicates of Lloyd’s a London-based firm. SIPC account protection applies when a SIPC-member firm fails financially and is unable to meet obligations to security clients, but does not protect against market fluctuations. The additional protection currently provided has an aggregate firm limit of $750 million, including a sub-limit of $1.9 million per customer for cash above basic SIPC for the wrongful abstraction of customer funds.
The basic FDIC deposit insurance coverage limits are: $250,00 for a single account with one owner; $250,000 per co-owner on joint accounts; and $250,000 per owner on IRAs and certain other retirement documents. These deposit insurance coverage limits refer to the total of all deposits that an account holder(s) has at each FDIC-insured bank. The above list shows only the most-common ownership categories that apply to individual and family deposits, and assume that all FDIC requirements are met.
If you have questions, please visit fdic.gov/deposit or call 877.275.3342.
I've retired! Where do I take money from first: my IRA, annuity or brokerage account? How much money can I take yearly without running out?
Withdrawal strategies during retirement are important. By properly prioritizing each account you draw from first, second, etc., clients can minimize their taxes and maximize their wealth. You will also want to consider your estate plans to avoid leaving heirs financial assets that will be heavily taxed. Our withdrawal analysis can help you determine how much to withdraw annually. Withdrawing too much can leave you without funds late in life; too little can deny you the pleasures you deserve.
Can I retire at 60 with what I have in my 401k and joint account? Do I need to increase what I am saving each year to do that?
Many clients ask these questions. A retirement projection and analysis can provide you with the answers for your situation and explore your alternatives. Perhaps you can choose to work part-time, retiring at age 60, as some of our clients do. Or, perhaps you will purchase a second home in Arizona as one fun-loving couple chose to do recently.
I just turned 70-and-a-half. Do I need to do something with my IRA?
Retirement is no longer a simple phase of life. Many retired clients choose a long-term, on-going relationship with us to handle the details, freeing them to enjoy this time in their lives. Yes, at 70-and-a-half, you do need to start your IRA distributions if you have not already done so. Which accounts you withdraw from first - IRAs, Roths, taxable accounts - can help you maximize wealth. We work with clients to see what is best for their situation.
We are worried about what will happen to our children and our assets if something happens to us. What should we do?
Clients often are wise to prepare for the “if something happens” scenario. Based on the size of your estate, we will discuss different alternatives you may want to pursue. In addition, for financial planning clients, we prepare a report of all assets under management to ensure that your time with your estate planning attorney is most productive. Since we give fee-only financial advice, we are not biased to recommend that you buy insurance merely to leave a huge legacy or pay potential estate taxes.
Look at my stock options. Can you help me determine how much I really have, and what I should have? What I should do with these?
Executives often do not have time to analyze the complexities of stock options. Company reports may not clearly spell out tax consequences. Our analysis can help you see how much you really have, after all taxes are paid. Plus, you will want to carefully plan when to exercise your stock options, particularly if you have incentive stock options. You may want to take advantage of stock swap features if they're included in your plan. Modeling analysis can help you determine when to exercise - now or wait 10 years? What factors in your situation, and in your company, may affect timing for exercise?
We have investments scattered here and there, but we cannot watch them like we should. How can we do better?
When you choose our investment management services, we develop and monitor a diversified investment portfolio. Most clients do not have the time, knowledge, or desire to tackle that task. We will review all your investment accounts: IRA, 401(k), 403(b), and taxable accounts. We will develop an investment plan to help determine which specific investments are appropriate to keep and what investments could be purchased to upgrade the quality of investments and increase diversification.
We provide fee-only financial advice to our clients on all our services. This means that we do not accept any commissions. Our fee-only approach lets you know exactly what you are paying and how it affects your return.
Your investment plan considers tax consequences of any proposed sale, and any fees for consolidating or moving accounts. We feel it is important for you to know and approve all aspects of your investment
Will you work with my other advisors, my accountant, attorney or insurance agent?
Absolutely, we welcome the opportunity to work with your other advisors. Or if you need additional assistance, we can give you the names of accountants, attorneys or insurance agents to interview.