Archive for the ‘Fee-Only’ Category

Are you on track for retirement?

Thursday, March 3rd, 2011

Here is a ‘quick and dirty’ tool that I found in Money Magazine (Feb 2011), that gives you a quick assessment to see if your retirement savings are on track.

For each age there is a savings factor (e.g. at age 30 the savings factor is 0.3).  This means that if you want to retire at age 65 you need to have 30% of your salary saved by age 30.  If you earn $100,000 this means that you would need to have $30,000 saved for retirement.  At age 50 the factor is 4.5 which means that if you earn $100,000 you would need to have $450,000 in retirement savings.

Age        Savings Factor

30               0.3
35               1.1
40               2.0
45               3.2
50               4.5
55               6.2
60               8.2
65              10.6

This table is a better estimate for younger ages when retirement is far off and you want a quick reality check.  As you get closer to retirement so many other specific factors could affect your number (e.g. will you have a mortgage, will you move, will your lifestyle change, etc.) that it may be worth doing a more specific sophisticated analysis, or even seeing a Fee-Only(tm)  Financial Planner.

Posted in Fee-Only, Investing, Retirement Plans | No Comments »

Money Bus Serves Over 100 People in Chicago

Tuesday, April 27th, 2010

Well the numbers are in and the Money Bus (www.yourmoneybus.com) served over 100 people in two days in the Chicago area. The Money Bus was sponsored by the NAPFA Consumer Education Foundation, Kiplingers, TD Ameritrade, and FiLife/WSJ. The bus travels the country and at each stop local NAPFA advisors provide free advice (no product sales!!) to consumers. We answered questions about retirement planning, 401ks, credit card debt, college savings, emergency funds, layoffs, foreclosures, mortgages, etc.

Posted in Fee-Only, General, Home Financing, Investing, Money Values, News, Retirement Plans | No Comments »

New 401k Fee Disclosure Coming

Monday, April 12th, 2010

The Labor department is proposing new 401k fee disclosure rules which  will require written agreement in place to provide services to disclose both direct and indirect compensation for plan advisors.  This will affect many advisors who do not work with plans as fiduciaries and who’s compensation arrangements are not transparent.  For more watch this video.

Posted in 401k and 403b Plans, Fee-Only, Retirement Plans | No Comments »

Index Funds Make Even More Sense in a Downturn

Monday, August 3rd, 2009

According to the Wall Street Journal many large institutional investors are turning too index funds after finding that actively managed mutual funds have not performed well during the downturn.

They would rather have the guaranteed lower cost of an index fund vs. the unfulfilled promise of better performance through an actively managed fund.

This is the strategy that I use with my clients.  Although some actively managed funds will out perform an index fund the percentage that do is actually less than chance would predict.  It is also difficult to predict which managers will outperform and index fund year after year.  This is especially true for bond funds.  According to Morningstar the Vanguard Total Bond Market Index Fund has outperformed 83% of its peers over the last 10-years.

Index funds charge substantially less than their actively managed peers.  A low cost index fund costs about 1% per year less than its actively managed peer.  That means that the actively managed fund would have to outperform the index fund by 1% per year just to be equal.  That is very difficult to do for almost all managers.

Posted in 401k and 403b Plans, Fee-Only, Investing, Money Values, News, Retirement Plans | No Comments »

How do you who your Financial Advisor is really working for?

Saturday, March 28th, 2009

Jason Zweig of the Wall Street Journal wrote a nice piece in today’s paper about the arcane world regulating Financial Advisors.

Most advisors are not required to work in your best interests. That includes any advisor at a bank (e.g. Chase, Bank of America, Citibank) or brokerage company (Merrill Lynch, Smith Barney).

Despite the nice ads stating how they really help you out, their approach is similar to a car salesperson that explains the feature of a car and sells you one that is “suitable” for you needs but not necessarily what he things would be best with you. Most people understand that about a car salesperson but not their financial advisor.

The National Association of Personal Financial Advisors NAPFA) has a great series of videos that you can watch at www.focusonfiduciary.com .

Posted in Fee-Only, Investing | No Comments »

NAPFA Launches Financial Education Bus Tour

Monday, June 2nd, 2008

As part of its consumer education mission NAPFA through the NAPFA Consumer Education Foundation is launching a nationwide financial education cities through the use of a bus outfitted with all the latest interactive learning tools. NAPFA members in each city will hold consumer education events in each city to coincide with the bus tour.

Check the http://www.napfafoundation.org/ website for updates on when the bus will be coming to you.

Posted in 401k and 403b Plans, Fee-Only, Retirement Plans | No Comments »

NAPFA Conference Report

Thursday, May 29th, 2008

Ok, I normally don’t blog about industry stuff, but I just came back from the National Association of Personal Financial Advisors (NAPFA) National Conference in Long Beach, CA.

The conference was the best yet. For those of you not in the industry, the NAPFA national conference is the premier events for Fee-Only advisers. We attend sessions on all aspects of financial planning to keep up to date on the industry and to keep our skills sharp. We also have the opportunity to meet and speak with well over 100 vendors in the industry representing anything from mutual funds to financial planning software. It’s a great opportunity to take some time to learn what’s out there.

Posted in Fee-Only | No Comments »

Why “Independent” Financial Advice can still be tainted, only a Fiduciary Advisor puts your Interests First

Wednesday, May 9th, 2007

I recently participated in a focus group of financial advisors.  About half of the participants were Fee-Only advisors who have a fiduciary relationship with their clients, and the other half were independent brokers.  The “independent” in this case meant that they were not representing a large broker/dealer like Merrill Lynch or Smith Barney.

These brokers were Fee-Based, which means they charged a fee but still received commissions based on the products they sold.

A telling difference between the Fee-Only advisors and the brokers came when the moderator asked what type of “rewards” would you like to receive in exchange for doing business with a mutual fund company.  The Fee-Only advisors replied either “nothing” or “more detailed information on the company’s web site” The brokers preferred to receive merchandise:  golf shirts, hats, etc.

To me this clearly shows who will work in your best interest and who may not.  For more information on fiduciary advisors go to www.focusonfiduciary.com

Posted in Fee-Only | No Comments »