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Not Knowing This About Your Financial Advisor Will Cost You

As an In-House Tax Strategist for a “Wealth Management” office, I had the unique perspective of watching and observing the gyrations a wealth advisory team will go through in order to “land a client”. My job, of course, was to bring value added services to the existing and potential clientele. Well, not exactly. I had the mindset of that purpose but in truth, it was just one more way for the “financial advisor” to get in front of another new prospect. In fact, that one purpose “get in front of another prospect” was the driving force in every decision. Think about it this way. A Financial Advisory Firm will make tens of thousands of dollars for each new client “they land” versus a few hundred dollars more for doing a better job with their existing clientele. You see, depending on how a financial advisory firm is built, will dictate what is most important to them and how it will greatly affect you as the client. This is one of the many reasons why Congress passed the new DOL fiduciary law this past spring, but more about that in a latter article.

When a financial advisory firm concentrates all of their resources in prospecting, I can assure you that the advice you are receiving is not entirely to your benefit. Running a successful wealth management office takes a lot of money, especially one that has to prospect. Seminars, workshops, mailers, advertising along with support staff, rent and the latest sales training can cost any size firm hundreds of thousands of dollars. So, as you are sitting across the glossy conference table from your advisor, just know that they are thinking of the dollar amount they need from the procurement of your assets and they will be allocating that into their own budget. Maybe that’s why they get a little ‘huffy’ when you let them know “you have to think about it”?

Focusing on closing the sale instead of allowing for a natural progression would be like running a doctor’s office where they spend all of their resources how to bring in prospective patients; how to show potential patients just how wonderful they are; and the best way for the doctor’s office staff to close the deal. Can you imagine it? I bet there would be less of wait! Oh, I can just smell the freshly baked muffins, hear the sound of the Keurig in the corner and grabbing a cold beverage out of the refrigerator. Fortunately or unfortunately, we don’t experience that when we walk into a doctor’s office. In fact, it’s quite the opposite. The wait is long, the room is just above uncomfortable and a friendly staff is not the norm. That is because Health Care Providers spend all of their time and resources into knowing how to take care of you as you are walking out the door instead of in it.

As you are searching for financial advice, there are a hundred things to think about when growing and protecting your wealth, especially risk. There are risks in getting the wrong advice, there are risks in getting the right advice but not asking enough of the right questions, but most importantly, there are risks of not knowing the true measure of wealth management. The most common overlooked risk is not understanding the net return on the cost of receiving good financial advice. Some financial advisors believe that if they have a nice office with a pleasant staff and a working coffee maker they are providing great value to their clients. Those same financial advisors also spend their resources of time and money to put their prospective clients through the ‘pain funnel’ to create the sense of urgency that they must act now while preaching building wealth takes time. In order to minimize the risk of bad advice is to quantify in real terms. One of the ways to know if you are receiving value for your financial advice is to measure your return backwards.

Normally, when you come to an agreement with a financial advisor there is a ‘management fee’ usually somewhere between 1% and 2%. In fact, this management fee can be found in every mutual fund and insurance product that has investments or links to indexes. The trouble I observed over and over again as I sat through this carnival act, was that management fees, although mentioned, were merely an after-thought. When presenting their thorough portfolio audit and sound recommendations, the sentence used to the unsuspecting client was that the market has historically provided an average of 8% (but we’re going to use 6% because we want to be ‘conservative’) and we’re only going to charge you 1.5% as a management fee. No big deal, right?

Let’s discover why understanding this management fee ‘math’ is so important, and how it could actually save your retirement. This could actually keep you from going broke using a financial advisor simply by measuring your financial advice in reverse. Let’s look at an example to best demonstrate a better way to look at how good your financial advisor is doing.

Now, before we begin, I have always understood that whoever gets paid first wins. We only have to look at our paycheck to see who gets paid before we do to understand that perspective. It is equally important to know that management fees are taken out first, unless you are lucky enough to have the income, the assets and a willing financial advisor to only get paid when they make you money. Funny though, this is exactly how you should review your own historical performance with your financial advisor and if they should be fired. Let’s say you have investable assets of $250,000 as you sit down with a wealth management team. They have just provided you with PowerPoint presentations, marketing materials and a slideshow on their 50″ HD Computer Screen in their freshly redecorated conference room showing that you can make 8% and they’re only going to charge you 1.5% annually (quick math $3,750 every year). You see in their presentation your investable assets appreciating over the next 10 years all the way up to $540,000. Sweet!

Now, this is not the article on why using the “Average Rate of Return” is absolutely the wrong measurement to use because it uses linear math when it is more appropriate to use geometric math in Compound Annual Growth Rate which incorporates time… But let’s look at how fees have a depreciating element to your investments.

After consideration, you agree to a 1.5% annual management fee to be paid quarterly. The financial advisor needs to get paid first so your portfolio’s management fees come out first. Consequently, your $250,000 becomes $249,000 and at 8% average annual rate of return, your assets after the first quarter are now $254,000. After the first year? Your assets are now worth $266,572 after fees of $3,852.

Financial Advisor Portfolio or Self-Managing ETF Portfolio

Self-Management Portfolio

I’d like to take this time to explore the differences in doing your own portfolio built on buying two ETFs (SPY and AGG). For the purposes of this illustration we will be allocating 80% to the S&P 500 (SPY) and 20% Barclay’s US Bond Aggregate (AGG). This is the time to say, I am not recommending any specific investments: this is for illustrative purposes only. The actual average rate of return for this allocation for the past 10 years is 4.24%, so without considering fees, an initial investment balance accumulates to $381,292. These ETFs have an embedded annual management fee of.15% (SPY) and.08% (AGG) with an aggregate of.14% for this allocation producing $4,178 in total ‘out of pocket’ fees over the 10 years. If we understand that our portfolio appreciated $130,319 and it cost you $4,178 for a Net Gain in your portfolio, then your NET COST of FEES is 3.21%. But it doesn’t end there, to truly quantify how fees eat away at your portfolio we must take this process a step further. The TRUE COST of FEES is calculating the difference of your portfolio with and without fees, in this case is $5,151 and comparing that to the Net Gain in your portfolio or 4.1%. In other words, over a ten year period, the cost of having these investments was 4.1%, $381,292 (without fees) versus $376,141 (Ending Balance with fees).

Financial Advisor Portfolio

For the sake of this illustration we are going to assume the financial advisor does better over the same 10 year period, about 6% annual average rate of return. You agree to let them take a 1.5% annual management, paid quarterly. Your $250,000 portfolio accumulates to $392,308 over 10 years with ‘out of pocket’ fees of $47,108, or $4711 per year. Your portfolio’s NET COST, or the fees of $47,108 to gain $189,416 in your portfolio, is almost 25%. More than that, your TRUE COST of Financial Advice is 44.7%. Plainly, your Financial Advisor’s portfolio is $63,617 less than if you had no fees and it accumulated to $455,926. As expected, your portfolio realized an average rate of return of 5.69%. In this illustration, the financial advisor portfolio did ‘out-perform’ the DIY portfolio of ETFs by $16,167 by outpacing the average rate of return by.61% annually.

Utilizing our proprietary software and a hundred test cases, we wanted to see how much better does a financial advisor need to realize to bring value to the client advisor relationship? This number is dependent on a number of factors: amount of investable assets, length of time, management fees charged and of course, the rate of return. What we did experience, is that the range went from its lowest to 1.25% to as high as 4%. In other words, in order to ‘break-even’ on bringing value to the client-advisor relationship, the financial advisor must realize at least a 1.25% higher net gain in average rate of return.

Please know, that we are not trying to dissuade anyone from utilizing the services of a financial advisor. We would be making our own clientele pretty unhappy. Instead, we want to present more transparency on how to measure the competency level of your financial advice. Heaven knows an experienced, knowledgeable advisor brings much more to the relationship than can be quantified by a number, but we do want the ability to truly measure the cost of this financial legacy. Just like most things in life, the line between success and failure is razor thin. In the above illustration, if the financial advisor portfolio’s ending balance was lowered by just $25,000 that would mean the annual average rate of return lowers.5% resulting in a lower ending balance than the self-managed account by $6,527. What if we changed the allocation to 70/30 allocation split? The Financial Advisor’s portfolio underperforms by $12,144 while still costing the client almost $60,000 in fees over the 10 years.

One final thought as we wrap things up here. You may be interviewing for a new advisor now or possibly in the near future. One of the most important questions you would want to ask and most of them do not want to answer or know how to answer is, “How good is your historical performance?” Now, this is usually where you get the song and dance from the wealth management team. They will extol the virtues of “every portfolio is different” or “all circumstances and risk tolerances inhibit us from ‘projecting’ rates of return” or, my favorite, “It’s about the plan! Your dreams and goals will be much different than anyone else, even if they have the same amount assets, income and risk assessment.” These of course are all true statements, but it does not preclude a wealth management team from the ability to show past performance of how they manage money. Going out on a limb, isn’t that why you are interviewing advisors? To see if they can do better than what you are currently doing either on your own or with your soon-to-be-ex financial advisor?

A Look Behind the Curtain

What most financial advisors won’t tell you is just how similar the construction of each client portfolio really is. I can’t tell you how many multi-million dollar firms have every client’s portfolio look pretty identical from one another. It’s usually made up of “3 Buckets”. Now these have different meanings for different advisors such as “Soon – Not so Soon – Long Term Money” or the “Safe – Moderately Safe – Risky” purposes for your investable assets. Believe me when I say this, most advisors pay a lot of money and spend a lot of their time on how to tell this story, to get the client to change their mindset of what they have been taught all along since childhood from their parents. It is not necessary for financial planning to be this complicated, unless of course, there is salesmanship going on. We learned from an early age and then proactively budgeted our entire adult lives to make more than we spend, save as much as we can so we can live off of what we have accumulated. But somehow, wealth advisors have created this sales system to get people to worry (“The Pain Funnel”) that they will outlive their money or worse, not be able to keep the lifestyle clients so richly deserve. You see, in sales, you create pain, step on it and then provide a solution. I believe we can be a lot more honest here and focus our advice transparently without resorting to ‘scare tactics’. Building an investment portfolio, retirement income strategy or legacy plan should be as comfortable as they are obvious.

Most wealth management teams will start with the same basic “financial plan” for your assets: short-term money that has no volatility (this is where you have your emergency/vacation/play money); then you will have near-short term money (usually about 3 – 7 years of very little volatility; and then the last division of your assets is long term money (10 years or more) with a lot of volatility (managed money). Please be aware that this is the exact moment where financial advisors practice in order to “land the prospect”. They will have you write in the percentage of how much your assets you want in the first, second and third ‘buckets’ according to your “Risk Tolerance”. I’ll explain in a later article why this entire methodology is mathematically inhibitive to long term financial success. In lieu of writing in percentages, you’ll better served to focus on two facets: the fees for the first two ‘buckets’ (your rate of interest is generally very low so any fees will have a higher detrimental effect) and the entrance and exit strategy for your managed money held in the last bucket. They will tell you that “long term growth is omnipotent to the success throughout your retirement years. So, if that’s the case they had better ‘show you the money’!

Bottom line: There is a historical performance of your wealth management team that can be shown… so ask for it. Oh, another hint, make sure it is actual performance and not ‘back tested” performance. The financial industry now has software programs that allow us to take a computer-based allocation model and utilize financial data of domestic stocks and bonds for the past 20 years to show a simulated historical performance within a 3% margin of error. I don’t know about you, but I would want my money manager to have more than a couple of years of experience no matter how pretty their brochures are or wonderful their office smells.

So, how are We Really Doing?

Earlier, we compared what an average financial advisor (giving them the benefit of the doubt that they indeed performed better over a 10 year period) did compared to a Do-It-Yourself portfolio made up of S&P 500 and Barclays US Bond Aggregate ETFs. But how did the same portfolio do against the Nasdaq (QQQ) over the same time period? Given the same 80/20 allocation, the QQQ Portfolio gained an average of 12.73% annually versus the 6.05% for the Financial Advisor. The Nasdaq (QQQ) plus Bonds (AGG) gained over $471,000 more in assets over that same time period, or roughly $47,000 per year. Now, I need to point out that if we looked at QQQ returns of 2000-2009 then the portfolio would have lost an accumulated 9.12% of value in assets. The QQQ ETF Net Average Annual Rate of Return since 2000 is 2.38%. Our focus in putting together client portfolios is to minimize inhibitors like fees, taxes and risk since those are in our control (can’t control the market). When viewing portfolios and net worth statements of our clients through this prism and then bringing it through our proprietary software, we can grade ourselves as well as our portfolio managers with real, audited data. For example, one of our money managers has a computer-based, moderate growth portfolio (70/30 allocation split) that has a 12.68% average rate of return over the same time period as all 3 portfolios. Loosely translated, this Moderate Growth Portfolio outperformed the S&P 500 ETF Portfolio by $342,000. When it comes to the accumulation portion of our client’s financial plan, we can ascertain what is working and what isn’t by quantifying the NET performance.

With so many choices, it is difficult to ascertain subjectively who you should trust as a financial advisor, if you should trust one at all! As a consumer, when we purchase just about anything, we constantly compare the price versus the benefit of ownership with an understanding the sliding scale of risk associated with owning whatever we are buying whether it’s buying a gallon of milk, a haircut or a piece of furniture. The higher the price, usually higher the risk, the more we want to weigh the attributes of doing something or doing nothing; measure the value of hiring it done or doing it yourself. The legacy of ownership greatly effects the amount of risk involved in getting the right information in order to act on the right advice for results that are satisfactory to your needs and expectations. Our purpose for creating this proprietary software was to come up with a simple ‘report card’ to measure between advisors and to affirm the decision to have someone else manage your investable assets and your financial future. We believe that as financial advisors, we should be held to a measurable account definitive to always doing what is best for the client’s interest. The largest service we provide is inherently, producing a higher net rate of return on the overall net worth of our clients than if they simply could manage their own financial assets. In today’s financial environment, we cannot afford to make any mistakes no matter how minuscule. This is why having the ability to simply, clearly quantify the value of your advice is truly omnipotent to your financial success.

The Traditional Kitchen Island

A traditional kitchen island can be an attractive addition to any space. The following information will help you determine whether an island is the right addition for your space. Consider whether or not it will be used for different purposes than just cooking.

The use of a kitchen island will depend on the style of the kitchen. There are traditional kitchens where the kitchen island serves as a storage area and a cooking surface, as well as a design feature. In this case, you will need to consider how much space you have available for the addition.

The amount of space available to you for the addition of a traditional kitchen island depends on the type of kitchen that you have. If you have a smaller kitchen, then you may not be able to install the island yourself. You will also need to determine whether or not you want an island at all in your kitchen.

Traditional kitchen islands are made up of metal or wood. It is often difficult to find a steel or wood-based island these days. Metal ones can look very old-fashioned and wooden ones look out of place. Plastic or metal materials may also not have a good feel and looks like a fad.

In most cases, a traditional kitchen island has a lip which is placed over the top of the stove, along with a lip which sits under the island. The purpose of the lip is to keep the stove away from the surface of the island. The lid of the island is installed above the lip.

Because they are so large area to cover, island cooktops are usually quite large. Cooktops are especially large in commercial kitchens because commercial kitchens have a lot of surface area. A small commercial kitchen may be able to fit one or two cooktops, but if the kitchen is large, then a large island may be necessary.

A traditional kitchen island will often include kitchen storage space beneath the island. The storage space can be used for things such as tools, pots and pans, glasses, plates, and utensils. The placement of the storage area depends on the design of the kitchen island.

For a large kitchen, the cooktop is generally placed above the lip of the island. For a smaller kitchen, the cooktop is placed below the lip of the island. Both designs of the cooktop and the island style affect the style of the storage area.

For larger kitchens, installing a traditional kitchen island is a simple, straightforward process. However, installing a small, traditional island can be more difficult. You will need to make sure that the island is able to accommodate a cooktop and that there is enough space for the cooktop to be mounted below the lip of the island.

Also, you should consider whether or not the island and the storage space are complementing each other. Do you want the island to provide storage or would you prefer the cooktop? You will also need to consider the functions of the two elements of the traditional kitchen. If the cooktop is going to serve more of a function than storage, then the island should be placed under the lip of the island to keep the cooktop from sliding off the island.

The kitchen island and the storage space should be matched. The island should be there as a visual element and the storage space should be there to provide maximum utility. To make sure that these two elements are well matched, you should measure both elements to ensure that they are compatible.

Overall, a traditional kitchen island is a great addition to any kitchen. Whether you choose to install the island yourself or you will hire a professional to do it for you, you will enjoy the design and functionality of this classic feature.

What Is Medicare Part G?

According to a recent article in the Wall Street Journal, The United States is leading the way when it comes to Medicare part G, Australia is leading the way when it comes to Medicare Part D prescription drug coverage. This government program, started in 2020, allows seniors to obtain the prescription drugs they need at no out-of-pocket cost to them.

The Federal Government of Australia has made it easier for seniors to use this program to lower their prescription drug costs. A Medicare Advantage Plan is offered by private insurance companies in Canada and the United States to seniors with Medicare Part D coverage.

If you are looking to use this program for your own medications, you will find it very easy to do so. Medicare Part D is an insurance program that pays for most types of prescription drugs that are dispensed by a pharmacy. In addition, you will also be able to buy most brand name products that can be found on the shelves of a pharmacy.

The new drug coverage, referred to as Medicare Part G, is designed to help make the process much easier. Part G is an added program that covers Medicare Part D prescriptions when you have private health insurance and has a Medicare Part D prescription.

You may be asking yourself if this Medicare Part G will really change your life. For starters, a review of its coverage is important to see how it can benefit you.

Before you choose a plan to go with, you should learn about the different plans that are available. There are many of these programs that offer you more coverage than you might think, which means you could save hundreds of dollars in the long run.

With Part G, you can now take advantage of two separate programs. Medicare Part D includes most brand name prescription drugs that are made available to seniors who have a Medicare Part D prescription.

Another part of this Medicare Part G program is the Medicare Part C prescription drug coverage. This program provides coverage for some brand name products that are not part of the Medicare Part D program.

It is important to note that Medicare Part G is designed to cover all prescription drugs, including those that are not part of the Medicare Part D program. You will not be limited to these programs, which makes the choice even easier.

Medicare Part C is the only one of the two programs that actually offers coverage for any brand name drugs that are not part of the Medicare Part D program. Because of this, it is important to understand that Part C will pay you a percentage of the cost of your prescription drug bill.

Depending on the policies you select, Part C may pay only a portion of the cost or may not pay anything at all. This means that if you want to get the most out of this program, you must be sure that you select the right policy.

With Medicare Part G, there is no need to worry about drugs being out of your reach. This new program will provide seniors with more affordable drug coverage so they can get the prescription drugs they need at affordable prices.

Discovering The Best Of Ware Appliance Repair

Ware Appliance Repair a dependable local device repair business is even more of a task than it is a job to fix. If you are tired of employing that economical service from that huge firm, you can currently rely on local device repair work companies for the right sort of job.

There are two kinds of regional device fixing firms that can assist you locate the most efficient and also practical solution for your home appliance issues. Among these two businesses offer the need to fix home appliances with the right understanding in just how to fix the appliance for less than the cost of a brand-new one. The various other kind can assist you in all facets of appliance repair.

These firms can accomplish jobs on significant devices like washing machines, fridges, and washers. They also have staff members to deal with all areas of repair work consisting of basic maintenance and also troubleshooting.

This is what you should seek in a business. They must have experienced specialists working at their appliance solution centers and also ought to be able to fix your trouble. Do not make the mistake of hiring a machine shop without understanding their background and also experience.

When making the decision whether to employ a neighborhood device repair service business or a private, think about the following inquiries and also pick the one that you think is best for your requirements. Will you be making your device repairs internal? If so, figure out just how much they bill for fixing your very own home appliance.

You must have the ability to approximate the cost of getting a brand-new device as well as learn if they are furnished to fix your device. Ensure they will certainly not need that you acquire an equipment to fix your appliance as well as additionally inquire about the service warranty that is given with their service.

The price for replacing your home appliance might be various if you look for the services of a regional home appliance repair firm because they do not have a lot of overhead costs that are necessary for paying their workers. They additionally do not need to pay for sales individuals or renting in order to proceed their company.

When you decide to hire a regional appliance repair company, figure out their qualifications. Your neighborhood device service center should be able to complete a quality assurance kind that you complete when they request your guarantee info.

Your neighborhood appliance repair service need to additionally have documents as well as warranties that you can rely on. This must be from their previous clients and preferably, ask the proprietor to call your regional Better Business Bureau for you to learn about their previous issues.

At the end of the day, you must use your local appliance service center. In the end, it will save you money and time to ensure that you obtain a quality service that will certainly last you a very long time.

Be sure to consult your neighborhood Bbb for your regional fixing business before you give them your money. Make sure they have good evaluations and also a tested track record out of commission home appliances.

Committed To Zscape Games San Ramon, CA

Zscape Games San Ramon, CA is the online video games committed to a wide variety of concepts and beliefs. It likewise consists of a number of games that can be played offline or on-line to play whenever you want to.

Escape is a journey video game where the gamer have to overcome every one of their challenges as well as risks. The game comes with numerous levels and may have a number of opponents. The primary objective of the game is to get to the one in charge as well as accumulate every one of the eggs in the level. The boss fights are of various kinds, which include fire, ice, rock, twister, and water.

The primary purpose of the game is to go through the degree while staying clear of the barriers. If you try to go through an opponent, the adversary will die too. If you make a wrong turn, your character will certainly drop from his dragon and you will be harmed by it.

Battles are embeded in various areas, such as cities, deserts, castles, woodlands, mountains, as well as other landscapes. This might make the game more challenging for the gamer. A number of opponents will come to you have to avoid them. In certain maps, there will certainly be a water board where the only way to move is to swim via the water and also navigate it.

In Zscape, you need to search for two eggs, which are hidden in a particular area. After you discover the egg, the egg will count on red. You can lug the egg for afterward by pressing the retreat key. The next time you will certainly be sent back to the start of the level, but you will certainly have the ability to gather one more egg from the same location.

When you bring the egg to the one in charge, you should travel through all of the opponents before lastly beating the boss. There are additionally some adversaries that exist to give the gamer a difficult challenge. These are the hydra, scorpion, and vampire. They will certainly be extremely challenging to defeat, also for expert gamers. You need to not expect to defeat them in one run.

The only way to beat the games is to make use of the guidelines of the Zscape Gamings San Ramon. The overview, which is offered by the site is interactive. You can make use of the overview in the same way that you made use of the walkthrough. The overview provides some information as well as tips about the degrees.

The walkthrough includes a checklist of all the challengers that the player can come across throughout the trip with the video game. In the Zscape Games, there are couple of tools that you can use. These include the projectile attacks, zaps, and also the fireballs. There are additionally tools that are available to be used, such as the ice choice as well as the star.

To get the most out of the Zscape Games, you require to utilize the guide to obtain the best technique. The overview can likewise lead you through the video game. When you encounter an enemy, the walkthrough will certainly inform you where to attack as well as what weapons to use. You will certainly likewise be told where to obtain the things needed.

There are some actions that can be done while playing the Zscape Games. One is called the Turtling, which is a strategy that stops you from being harmed. It will certainly trigger you to conserve all your products, stay clear of damage, and also stop other enemies from getting to you.

Before buying any kind of software from Zscape, do some study on the firm and its staff. If the internet site supplies totally free trials, do not think twice to sign up and also test the program. You can do so any time during the week. Likewise, before making a decision to acquire any software, do a comparison of costs to see which one will certainly use you the best bargains.

Helpful Links;

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