PHilosophy

Put the client in the best possible position to achieve his goals.

Give the client every possible advantage to achieve her goals.

Thereby, maximize the client’s chance of success.

And do those things for a fair shake on the fee.

In financial planning for retirement, that means, specifically:

Investments ought to be broadly diversified, very low-cost, and passive.

Too many financial advisors use high-cost, actively-managed investments in their clients’ accounts. That’s often because those investments pay those advisors kickbacks for using them, a clear conflict of interest. But clients aren’t told about the kickbacks. Nor are clients told how much those investments’ unnecessary costs and additional risks subtract from their bottom lines.

I use ultra-low-cost index funds as the staples of my clients’ investments, because that’s what’s in the client’s best interest.

Unlike investment strategies, tax strategies ought to be proactive.

Most financial advisors ignore the responsibility of planning, managing, and doing their clients’ income taxes. But income tax planning and management are essential in protecting any client’s best retirement interest.

I personally complete and file most of my clients’ income tax returns (and thoroughly review the ones I don’t). That’s not just for their convenience. By seeing everything in their tax picture, I’m able to give them every possible advantage in not paying unnecessary taxes, both today and “tomorrow.” And that may make all the difference for my clients.

Retirement income plans ought to be robust against real-world conditions.

When many financial advisors create a projection of someone’s future, they assume that person will earn the same investment return and face the same inflation rate every year. Such projections are indefensibly unprofessional, because those assumptions are utterly invalid. Other financial advisors use Monte Carlo simulation software, which is similarly deficient.

I plan differently, in a much more realistic, robust, better-for-my-clients kind of way. That means my clients are far better prepared to withstand whatever the real world may throw at them, which makes all the difference in their peace of mind.

Financial advisory fees ought to be clear, fair, and not a percentage of investments.

The percentage-based fees that almost all financial advisors charge create major conflicts of interest with their clients. Chief among those is the absurd overcharge of the client that often results. It’s truly a scam of epic proportion.

My advisory fee ($2,500 up-front and $6,500 per year) is based on the work I do and the service I provide (the time, energy, and expertise required). It’s also far less expensive than the 1%+ of their investments that my clients used to pay, or would pay elsewhere.

A financial advisor’s incentives matter, and there ought to be just one: protecting the client’s best interest.

Another huge conflict of interest problem is financial advisors accepting upfront commissions or sales loads for selling certain investments or insurance products. Those are always winners for advisors, but losers for their clients.

If you work with a financial advisor, the only reliable way to protect your best interest is to work with an advisor that has no conflicts with your best interest. Such an advisor neither charges percentage-based fees on your investments nor accepts commissions or sales loads for selling you investments or products. My firm, Safebridge, is such an advisor. Because that’s how it ought to be.