In this blog post, we’ll dive into what is looks like to hire a financial planner. We’ll discuss the importance of understanding different fee structures, introduce key investment philosophies, and highlight the benefits of utilizing financial tools and dashboards.
Types of Financial Planning Fees
When it comes to financial planning, understanding the fee structure is crucial. The primary types of fees you’ll encounter are financial planning fees and asset management fees.
Financial Planning Fee:
This fee covers the comprehensive financial planning services provided by your advisor. These services can include:
- Tax planning
- Establishing investment policy
- Risk management
- Retirement planning
- Cash flow planning
- Estate planning
Asset Management Fee:
This is a fee charged for managing your investment portfolio. It is often a percentage of the assets under management (AUM). The fee is usually clearly labeled and can vary by advisor.
Key Financial Terminology Related to Fees
Understanding the terminology associated with financial planning fees can help you make informed decisions:
- AUM (Assets Under Management): This refers to the total market value of the assets that an advisor manages on behalf of their clients.
- Fiduciary: A fiduciary financial advisor is legally required to act in the best interests of their clients.
- Fee-Only: These advisors charge a flat fee or an hourly rate rather than earning commissions from product sales.
What are You Paying For?
It’s essential to have complete clarity on what services are included in each type of fee. The financial planning fee often covers a range of advisory services, while the asset management fee is specifically for the management of your investment portfolio. Be sure to ask your advisor for a detailed breakdown of what you’re paying for.
Avoiding Fees on Retirement Accounts
A significant advantage in financial planning is understanding where you can save on fees. One beneficial strategy is avoiding fees on assets held inside your retirement accounts at work, such as 401(k)s or 403(b)s. Some advisors might charge management fees on these assets, but others, like Mainstay Capital, do not. This can significantly lower your overall advisory fee while still receiving guidance on investment allocations within these accounts.
The Investment Philosophy
Targeting Market Returns
One effective investment strategy is targeting market returns. This approach involves aiming to match the performance of the market as a whole rather than trying to outperform it. This strategy is based on the idea that:
- Most investors who claim to consistently outperform the market are more likely lucky than skillful.
- The few skilled investors often work at highly selective firms not available to the general public.
Choosing the Right Markets
When targeting market returns, it’s crucial to choose the right markets. Various markets include:
- U.S. Equities: Stocks of companies based in the United States.
- U.S. Bonds: Debt securities issued by the U.S. government or corporations.
- International Equities: Stocks of companies based outside the United States.
- International Bonds: Debt securities issued by non-U.S. governments or corporations.
- Real Estate: Physical properties, such as land and buildings.
- Commodities: Raw materials and agricultural products.
Investing in a market index fund allows investors to gain exposure to a broad range of markets, providing diversification and reducing risk. However, it’s important to understand the different types of markets available and choose the right ones for your investment goals.
U.S. equities are often considered the backbone of any investment portfolio. These stocks represent ownership in companies based in the United States, ranging from large corporations to small businesses. As the U.S. economy grows, so do these companies, making them an attractive option for investors.
Importance of Diversified Investment Strategy
Diversification is a key principle in reducing investment risk. By spreading investments across different asset classes and geographical regions, you can reduce the impact of market volatility on your portfolio. A well-diversified portfolio may include:
Leveraging Financial Tools and Dashboards
Incorporating financial planning tools and dashboards into your financial strategy can provide a comprehensive view of your financial health. These tools offer various benefits, including:
- Real-Time Financial Data: Access to up-to-date information about your portfolio and financial situation.
- Holistic View: See your entire financial picture in one place, including assets, liabilities, income, and expenses.
- Scenario Analysis: Run what-if scenarios to visualize how different decisions could impact your financial future.
- Goal Tracking: Monitor progress toward financial goals such as saving for a home, education, or retirement.
Financial Dashboard Benefits
A financial dashboard can help you stay organized and make informed decisions. Key features of a financial dashboard include:
- Account Aggregation: Consolidate accounts from different institutions to get a complete view of your finances.
- Budgeting Tools: Track your spending and manage your budget more effectively.
- Investment Tracking: Monitor the performance of your investments in real-time.
- Alerts and Notifications: Get reminders for important financial tasks and alerts for significant changes in your accounts.
Example: Mainstay Capital’s Financial Tools
At Mainstay Capital, we provide a comprehensive financial planning tool that offers the following features:
- Quarterly Reviews: Regular reviews prior to meetings to ensure you’re on track with your financial goals.
- Real-Time What-If Scenarios: Demonstrate the impact of financial decisions before implementing them.
- Transparent Reporting: Clear visualization of your financial health and portfolio performance.
Investment Management Platforms
Investment management platforms like Altruist provide a streamlined way to manage your assets. These platforms offer various features, including:
- User-Friendly Interface: Easy navigation and access to account information.
- Performance Tracking: Detailed reporting of investment performance.
- Transparent Fee Structure: Clarity on management fees and expenses.
Benefits of Using Altruist
At Mainstay Capital, we utilize Altruist to manage our clients’ assets. Some benefits of using Altruist include:
- Comprehensive Dashboard: View all your investments in one place.
- Efficient Management: Simplifies the process of managing multiple accounts.
- Transparency: Clear insight into how your money is being managed and the associated costs.
Schedule a Consultation
Take the first step towards securing your financial future by scheduling a consultation with an experienced financial advisor at Mainstay Capital. We’re here to help you navigate the complexities of financial planning and achieve your financial goals.
Remember, personalized financial advice is crucial in addressing your unique financial needs. At Mainstay Capital, we pride ourselves on offering customized solutions tailored to each client’s situation.
Disclaimer: Mainstay Capital is a registered investment advisor. This content is for informational purposes only and does not constitute personalized financial advice. Please consult with a financial professional before making any investment decisions.
