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January, 2020 |

Retirement Planning Overview

January 17, 2020 | By | No Comments

Nearly 60% of the inquiries for services that I receive through my website involve pre- and post-retirement planning. In most of these cases, individuals, like you and your family, are trying to determine whether you can afford to retire and if so, when?.

As a professional advisor, I believe this is one of the most stressful periods in life, when the uncertainty surrounding retirement very often ties the family up in knots. You may attempt to go through this on your own, and certainly you may be capable of doing so. On the other hand, you may be seeking assistance, and if so, you should seek out planners with experience and expertise in retirement planning and, most important, those who do not sell or promote products. 

This may sound self-serving, as I am a fee-only financial advisor: I have no licenses to sell any products, nor do I receive or share referral fees or commissions. What I provide is retirement advice to you for a fee. I quote you a fixed fee upfront and if you agree, we lock it in with a contract., You now becomes a client of Squam Lakes Financial. 

Squam Lakes Financial offers two levels of service. You may want a blueprint to move into the future on your own, which we can accommodate through a Financial Plan. It typically takes 3 to 8 months to complete, and it involves providing a significant amount of personal information, including details about each of your family members along with accurate financial data. Once  I have this information, I prepare your retirement plan, and we then move into the recommendation phase, including 3 to 4 meetings, either in my office or at your home or office. 

You may need product such as long-term care insurance, umbrella policies, etc. as part of the retirement planning process. But developing a retirement financial plan is the first step. Without the plan, how can you know how much, if any, product you will requirei?

The plan determines this, and you then chooses whether to implement the product recommendations If products are required, you may either choose to use your own sources, or I can supply recommendations from a group of trusted providers. 

 

If you are seeking a longer-term, retainer-based relationship, “Financial Planning” is an alternative. It is also based on a fixed fee. In addition to preparing a retirement plan and helping you implement the recommendations, the relationship extends to cover other issues that may arise. 

One point I emphasize: The single most important aspect of retirement planning is “cash flow.” You’ve probably been told that investment management, estate planning, and tax planning are vital to retirement planning. Each of these issues is important in completing a comprehensive financial plan, but when it comes to retirement planning, you either have the cash flow necessary to retire or you don’t.

It’s no tragedy not to have the necessary cash flow at the time we meet. My role is to make recommendations that will help you create the cash flow you need to sustain the lifestyle you hope to have. We can accomplish that goal, assuming we have adequate time to plan prior to your actual retirement date.

As an example, you may have a net worth of $1.5 million, but if it’s tied up in raw land or non-income-producing assets, it may not be an appropriate retirement asset unless it can be sold and converted to cash. We will work together to reposition your assets to develop an income stream.

In summary, retirement may be one of the most stressful events you will ever face. We can make the transition smoother by guiding you to ensure you have the cash flow you need to fund the retirement lifestyle you desire..

Whether you select the short-term financial plan, or the more comprehensive financial planning relationship, be assured my goal is aligned with yours: to make your retirement as financially comfortable and pleasant as possible. Feel free to email me at bob@squamlakesfinancial.com or call me at 603.968.2317.

What is Fiduciary Duty?

January 15, 2020 | By | No Comments

A Fiduciary Duty” is an obligation to act in the best interest of another party. A “Fiduciary” is a person acting in a fiduciary capacity and is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client.

In the world of financial planning, we are fortunate, in most circumstances, to have professionals who put forth a fiduciary duty to their clients. This is not necessarily uncommon, but it is critical to a client to know that the recommendation being made by the planner/advisor, are free of conflicts of interest.

In and of themselves, conflicts of interest are not necessarily bad. They become bad when there is a failure to disclose the nature of the conflict. As a very vivid example, I am a fee-only financial advisor who sells no product and receives no referral fees. Is it possible that I could have conflicts of interest? The answer of course is yes, but the key to the regulations are intended to be sure that the advisor discloses those conflicts so the client can make an intelligent decision as to what’s best for them, not the advisor.

A good example might be a sales-professional who has convinced the client she needs $1 million of term life insurance. One insurance company may pay her a 10% commission, another company pay a 15% commission and let’s say another pays a 25% commission. Let’s go one step further and assume for the moment that the quality of the insurance product is the same in each and every case.

Does the sales professional have an obligation to disclose that the commissions differ by the company selected? I truly believe the answer is yes and once the client understands that the policies have the same level of quality, the client and the sales professional can decide as to how to proceed from there.

As noted above, a conflict of interest, may or may not exist when the recommendation made by an advisor provides an undisclosed financial incentive to the advisor. Regardless of whether proportional to the recommendation made to the client, it is something that needs to be disclosed.

The brokerage industry has fought this definition for years and continues to do so. Thanks to the NAPFA (National Association of Personal Financial Advisors), the CFP Board of standards and other organizations who claim to represent the client, we have attempted to warn the general public to specifically request from any advisor any conflicts of interest that may exist before implementing any recommendation

This leads to what I believe is how recommendations are developed. In our world, where products are not sold by me or other members of NAPFA, we begin with a written plan. What’s interesting about a comprehensive financial plan is that it will identify the need for product. Since we don’t sell product, we will then turn to the client and their professionals or recommend other professionals who have served our client’s needs in the past.

Most financial plans cannot be completed without the sale of product, with rare exception. Product in and of itself is not bad. In fact, it is necessary in probably 90% of the situations in which I’ve been involved both in financial planning and pre-and post-retirement planning.

Begin with a written plan. Before you buy any product to protect your family or implement a plan, ask the advisor if they have any conflicts of interest. If you are already beyond that point, weather it is life insurance, long-term care insurance, annuities or investments, etc. ask the advisor how he/she arrived at his/her recommendation.

If it fits in with your own thinking and has been justified to your satisfaction, then go ahead and purchase the product.