Frequently Asked Questions

Sometimes investment firms create and use identical portfolios for their clients regardless of whether the account is a taxable account or tax deferred account. 

• Perhaps you may benefit from our asset location process.

Your income allocation is comprised of the components of your taxable income you can control.

• How much should I distribute from my IRA each in year in retirement?
• How much should I contribute to my Roth IRA during my working years?
• How much should I convert from IRA to my Roth IRA in any given year?

Every client wants to get the most out of their investments.  They want the highest possible returns with the least amount of risk. 

• Most investors own multiple accounts and products, purchased at different times, for different reasons, with little or no consideration of how those accounts may work together.
• The fact that a part of an investment’s growth is given up in taxes is often seen as unavoidable.
• There is a way to reduce the taxes paid on investments, capture more of the investment returns, without changing the investments themselves.
• Optimizing a portfolio’s asset location provides exactly that.
• Perhaps you should reconsider your asset location strategy.

What is asset location?

• The goal of investing should be to provide the highest after-tax returns across the entire portfolio.  It begins by placing the assets where they will be the most tax-efficient.
• By looking at the anticipated returns from each investment type, and then looking at the way they incur the least amount of taxes.
• This means you keep more of the portfolio’s returns, without changing the overall investments.

Improve your chances for more consistent returns over time. 

•  By investing in several different asset classes, you can improve your chances of participating in market gains, and lessen the impact of poor-performing asset categories on your overall portfolio returns.

Reduce overall risk.

• Portfolio diversification can reduce the amount of volatility you experience by simultaneously spreading market risk across many different asset classes.

Stay focused on your objectives

• A well-allocated portfolio alleviates the need to constantly adjust investment positions to chase market trends, and can help reduce the urge to buy or sell in response to the market’s short-term ups and downs.

• Asset allocation is the process of combining asset classes such as stocks, bonds, and cash in a portfolio in order to pursue a client’s financial goals.

• Taxes can wait
  • sheltering investment growth in tax-deferred accounts over the long term may result in more wealth for retirement.

Participating in your employer’s plan helps to automate your retirement savings through a “savings habit.”

• You may be eligible to receive an employer match for your contributions.
• Your plan offers you tax benefits
• Potential tax deduction
• Tax Deferral on the contributions
• You may be eligible to receive an employer match for your contributions.
• Your plan offers you tax benefits
• Potential tax deduction
• Tax Deferral on the contributions

Link to “Start Young” Content

Link to Dollar Cost Averaging

Why the Sequence of Returns is so Important to Retirees

• Most investors go through life making a series of periodic investments to their savings plan(s), which is called “Dollar Cost Averaging”

• Dollar-Cost Averaging is one of the most common forms of periodic investing.  It involves continuous investment of the same dollar amount at predetermined intervals.
• This strategy helps you continue to invest, even when the investments price levels fluctuate.
• In early years, because you have time on your side (hyperlink), your focus should be on accumulating shares and keeping the fees and investment-related expenses relatively low.

The Timing of Distributions Makes a Difference

• During retirement, the timing of investment returns can have a dramatic impact on your account.
• Withdrawing assets in a down market early in retirement can significantly impair your portfolio over the long term.

Dollar-Cost Averaging involves buying a fixed dollar amount of an investment or fund on a regular basis.  Instead of trying to invest only at the “right time,” make a commitment to invest and stick to the plan – regardless of what the markets are doing.

• Embrace market pricing
  • The market is an effective, information-processing machine.  Millions of participants buy and sell securities around the world markets every day, and the real-time information they bring helps set prices.

• Don’t try to outguess the market
  • The market’s pricing power generally works against mutual fund managers who try to outsmart other participants through stock picking or market timing.  

• Resist chasing past performance
  • Some investors select mutual funds based on past returns.  However, funds that have outperformed in the past do not always persist as winners.  Past performance alone provides little insight into a fund’s ability to outperform in the future.

• Let markets work for you
  • The financial markets generally have rewarded long-term investors.  

• Consider the drivers of returns
  • Academic research has identified these equity and fixed income dimension, which point to differences in expected returns.

• Practice smart diversification
  • Diversification helps reduce risks that have no expected return, but diversifying within your home market is not enough.  Global diversification can broaden your investment universe.

• Avoid market timing
  • You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.

• Manage your emotions
  • Many people struggle to separate their emotions from investing.  Markets go up and down. Reacting to current market conditions may lead to making poor investment decisions at the worst times.

• Look beyond the headlines
  • Daily market news and commentary can challenge your investment discipline.  Some messages stir anxiety about the future while others tempt you to chase the latest investment fad.  When tested, consider the source and maintain a long-term perspective.

• Focus on what you control
• Make the most of the things you control but be sure to evaluate factors that are somewhat or completely out of your control.
• Create an investment plan to fit your needs and risk tolerance
  • Diversify broadly
  • Reduce expense and turnover
  • Minimize taxes

Applying Science to Investing

Because you cannot control the market, you need a plan that gives you the highest probability of being able to achieve your long-term plan and to seek to realize your most deeply held goals.

• What you spend at any point in your life is the key to understanding the impact of your current and future financial decisions.
• Having the framework to know how much and how you spend your money will provide you valuable insights to your current financial picture and your future financial plan.

We can help with your budgeting and analysis:

A written document with the purpose of providing meaningful direction and guidance for trustees and investment professionals regarding the selection and management of investment assets based on established and documented investment goals and objectives.

You should ask your Human Resources Director or the advisor on your plan.

• You should request such document(s) from your plan as, but not limited to:
  • Annual Plan Description
  • Investment Prospectus
  • Detailed Account Related Expenses in your account

• Typically, the characteristics of people who choose not to hire a professional to assist them with their individual set of needs are
  • Time – They have time to spend on their respective task(s).
  • Aptitude – They have the unique skills needed to accomplish their desired task(s).
  • Desire – They enjoy spending their time accomplishing the task(s).

If at any time, one of these three elements are no longer present in one’s life, they likely will choose to hire and delegate to a financial advisor.

This delegation allows them to spend their time in other ways that they so choose.

• The process helps provide personalized advice and direction that strive to put you in a better financial position.
• The world constantly changes and so do your personal set of circumstance, so we you make better financial decisions.
• Financial planning is more about managing behavior than managing money.

“No airplane can take off without a flight plan, no ship can set sail without a plotted course.” ~ Nick Murray.

• Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of plans and their beneficiaries.
• Individuals acting in this capacity are expected to provide services according to five basic principles of fiduciary duty:  Prudence, loyalty, exclusive purpose, diversification, and adherence.

Individuals acting in a fiduciary capacity are expected to provide services according to five basic principles of fiduciary duty:  

• Prudence 
• Loyalty
• Exclusive purpose
• Diversification
• Adherence

We invite you to experience a fiduciary relationship where your interests, goals, and objectives come first.

We invite you to experience a fiduciary relationship where your interests, goals, and objectives come first.

• Individuals acting in a fiduciary capacity are expected to provide services according to five basic principles of fiduciary duty:
  • Prudence
  • Loyalty
  • Exclusive purpose
  • Diversification
  • Adherence

• Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of plans and their beneficiaries.
• Individuals acting in this capacity are expected to provide services according to five basic principles of fiduciary duty: Prudence, loyalty, exclusive purpose, diversification, and adherence.

A written document with the purpose of providing meaningful direction and guidance for trustees and investment professionals regarding the selection and management of investment assets based on established and documented investment goals and objectives.

• Effectively managing taxes over a lifetime requires a careful balance of your current income tax picture and a focus on income tax diversification.  (link to income allocation)
• Contributing to a Roth early in your career and shifting as your income increases to a pretax IRA or 401(k).
• Having a strategy for proactive Roth conversions in lower income tax years.
• Understanding the impact of your Required Minimum Distributions (RMDs) in retirement and how they would impact your income taxes. (link to income allocation)

• The Retirement Landscape
• Your retirement equation
• Social Security timing tradeoffs
• Maximizing your social security benefits
• Retirement spending and inflation

• How Roth IRAs fit into your:
  • Asset Allocation
  • Asset Location
  • Income Allocation

• How long do you want to work versus need to work?
• What would early retirement look like?
• What are your retirement income needs?  (We can help with your budgeting.)
• What impact does working one more year have on my retirement plan?
• How does your social security election fit into your plan?
  • Do you need help understanding the election tradeoffs?
• How does planning for income taxes play into your current decision making? 

• How will you spend your time?

There are typically four options to consider when leaving an employer’s retirement plan, each with its benefits and considerations.

• Roll the retirement account into an IRA account (IRA Rollover).
• Leave the money in the former employer plan (if allowed by former employer).
• Move the assets to a new employer (if allowed by new employer).
• Withdraw balance of assets or “cash out” of plan.
• Convert all or part of the retirement account into a Roth IRA (Roth IRA conversion).

Converting a portion of your tax-deferred assets to a Roth IRA may be a planning consideration based upon your particular circumstances. 

• Each option has its advantages and disadvantages, but the decision should fit into your financial plan.

• To be sure that your investment allocation is appropriate.

• To review the current costs and fees associated with maintaining the plan.
• To review the current beneficiary arrangement(s) are in accordance with your wishes.

• Embrace market pricing
  • The market is an effective, information-processing machine.  Millions of participants buy and sell securities around the world markets every day, and the real-time information they bring helps set prices.

• Don’t try to outguess the market
  • The market’s pricing power generally works against mutual fund managers who try to outsmart other participants through stock picking or market timing.  

• Resist chasing past performance
  • Some investors select mutual funds based on past returns.  However, funds that have outperformed in the past do not always persist as winners.  Past performance alone provides little insight into a fund’s ability to outperform in the future.

• Let markets work for you
  • The financial markets generally have rewarded long-term investors.  

• Consider the drivers of returns
  • Academic research has identified these equity and fixed income dimension, which point to differences in expected returns.

• Practice smart diversification
  • Diversification helps reduce risks that have no expected return, but diversifying within your home market is not enough.  Global diversification can broaden your investment universe.

• Avoid market timing
  • You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.

• Manage your emotions
  • Many people struggle to separate their emotions from investing.  Markets go up and down. Reacting to current market conditions may lead to making poor investment decisions at the worst times.

• Look beyond the headlines
  • Daily market news and commentary can challenge your investment discipline.  Some messages stir anxiety about the future while others tempt you to chase the latest investment fad.  When tested, consider the source and maintain a long-term perspective.

• Focus on what you control
• Make the most of the things you control but be sure to evaluate factors that are somewhat or completely out of your control.
• Create an investment plan to fit your needs and risk tolerance
  • Diversify broadly
  • Reduce expense and turnover
  • Minimize taxes

Applying Science to Investing

Because you cannot control the market, you need a plan that gives you the highest probability of being able to achieve your long-term plan and to seek to realize your most deeply held goals.

• Transfer business or business interests to the next generation
• Provide business continuity during the transition.
• Provide potential retirement income as part of succession plan.
• Minimize gift and estate taxes, when possible.

• How long do you want to work versus need to work?
• What would early retirement look like?
• What are your retirement income needs?  (We can help with your budgeting.)
• What impact does working one more year have on my retirement plan?
• How does your social security election fit into your plan?
• Do you need help understanding the election tradeoffs?
• How will you spend your time?
• How does planning for income taxes play into your current decision making?

• The Retirement Landscape

• Your retirement equation

• Social Security timing tradeoffs

• Maximizing your social security benefits

• Retirement spending and inflation

How Roth IRAs fit into your:

• Asset Allocation

• Income Allocation

• Deciding when to claim benefits will have a permanent impact on the benefit you receive.

• Claiming before your full retirement age can significantly reduce your benefit, while delaying increases it.

• Planning for your benefit may only be half the picture, do you have a plan for your spouse’s benefit? (contact us)

• Delaying benefits means you should have increased Social Security income later in life, but your portfolio may need to bridge the gap and provide income until the delayed benefits are received.

• The decision to delay may be to protect a spousal benefit, as well as, just your own social security benefit.

You also may need consider your potential portfolio returns and your life expectancy.

• We would be glad to assist with your evaluation (contact us)

• Together, we can create a financial plan in line with your goals, needs, and vision for the future. (our process)

• How long do you want to work versus need to work?

• What would early retirement look like?

• What are your retirement income needs?  (we can help with your budgeting.)

• What impact does working one more year have on my retirement plan?

• How does your social security election fit into your plan?

• Do you need help understanding the election tradeoffs?

• How does planning for income taxes play into your current decision making?  (link to income allocation.)

• How will you spend your time?

Link to our process

• The Retirement Landscape
• Your retirement equation
• Social Security timing tradeoffs
• Maximizing your social security benefits
• Retirement spending and inflation
• How Roth IRAs fit into your:
  • Asset Allocation
  • Asset Location
  • Income Allocation

• Embrace market pricing
  • The market is an effective, information-processing machine.  Millions of participants buy and sell securities around the world markets every day, and the real-time information they bring helps set prices.

• Don’t try to outguess the market
  • The market’s pricing power generally works against mutual fund managers who try to outsmart other participants through stock picking or market timing.  

• Resist chasing past performance
  • Some investors select mutual funds based on past returns.  However, funds that have outperformed in the past do not always persist as winners.  Past performance alone provides little insight into a fund’s ability to outperform in the future.

• Let markets work for you
  • The financial markets generally have rewarded long-term investors.  

• Consider the drivers of returns
  • Academic research has identified these equity and fixed income dimension, which point to differences in expected returns.

• Practice smart diversification
  • Diversification helps reduce risks that have no expected return, but diversifying within your home market is not enough.  Global diversification can broaden your investment universe.

• Avoid market timing
  • You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.

• Manage your emotions
  • Many people struggle to separate their emotions from investing.  Markets go up and down. Reacting to current market conditions may lead to making poor investment decisions at the worst times.

• Look beyond the headlines
  • Daily market news and commentary can challenge your investment discipline.  Some messages stir anxiety about the future while others tempt you to chase the latest investment fad.  When tested, consider the source and maintain a long-term perspective.

• Focus on what you control
• Make the most of the things you control but be sure to evaluate factors that are somewhat or completely out of your control.
• Create an investment plan to fit your needs and risk tolerance
  • Diversify broadly
  • Reduce expense and turnover
  • Minimize taxes

Applying Science to Investing

Because you cannot control the market, you need a plan that gives you the highest probability of being able to achieve your long-term plan and to seek to realize your most deeply held goals.

• Transfer business or business interests to the next generation
• Provide business continuity during the transition.
• Provide potential retirement income as part of succession plan.
• Minimize gift and estate taxes, when possible.

• Long Term Care: Not just nursing homes – Many individuals will need long term care, which often starts with home care and may progress to assisted living or care in a nursing home.

• How your Long Term Care plan fit into your financial plan?

• Do you have adequate life insurance coverage?
• Do you want to provide for specific children?
• Do you have an interest in charitable giving?
• Do you have intentions of leaving certain assets to certain heirs?
• Have your planned for potential estate tax implications?
• How is your buy-sell funded? (If applicable)
• Do you need Long Term Care Insurance?

To better understand your Goals, Needs, and Vision for your desired Asset Transfer Plan.

• Asset transfers plans usually need to established with the assistance of an attorney to create:
  • A last will and testament (sometimes referred to as “a will.”)
  • A revocable trust (sometimes called a “living trust”)
  • An irrevocable trust
  • A special needs trust

To take the time to ensure that you know who may inherit your legacy, which could span over a lifetime.

Generally, any account or insurance policy that has a beneficiary, such as, but not limited to:

• Individual Retirement Accounts (IRAs)

• Retirement Plans with current and previous employers.

• Life Insurance policies.

• Other insurance policies that have a beneficiary.

• Do you remember who are your beneficiaries?
• Have you named a contingent beneficiary?
• Do you have accurate information about your beneficiaries?

It can be very difficult for investors to be objective and unemotional when it comes to their money.

For that reason, we believe one of the best ways to determine your risk tolerance is to:

• Plan to stay invested
• Divide and conquer
• Build a plan
• Time-based segmentation

Plan to stay invested

• Trying to time the market is extremely difficult to do. 
• Market lows often result in emotional decision making.
• Investing for the long term while managing volatility can result in a better investment outcome.

Divide and Conquer

• Aligning your investment strategy by goal can help you take different levels of risk based on varying time horizons.
• This can help reinforce your saving habits to ensure you are saving enough to accomplish all of your goals – not just the ones that occur first.

Build a Plan

It may be useful to match dependable income sources with fixed retirement expenses while coordinating other investments with more discretionary expenses.

Time-Based Segmentation

• Aligning your time horizon with an investment approach may help you be more comfortable with maintaining diversified portfolio allocations throughout your accumulation years, as well as throughout your distribution years. Learn more about your Financial Timeline.

• Together, we should review your situation periodically, to ensure that your funds are balanced appropriately throughout your portfolio. Learn more about Our Process.

• Plan for longevity – You may need to plan on the probability of living much longer – potentially 30+ years of retirement, and a portion of your portfolio for growth to maintain your purchasing power over time. How does my spending and inflation impact my financial plan? ^FAQ

How can increasing costs impact my retirement picture?

• These increasing costs are sometimes referred to as inflation.
• Inflation can disproportionately affect retirees due to their spending habits, as well as, the price increases for their necessities.
• The rising cost of healthcare continues to be a concern as we continue to live longer.

How do I find out my risk tolerance?

Take 5 minutes to answer a few questions to capture your risk tolerance and see if your portfolio fits you.

To better understand your Goals, Needs, and Vision for your desired Power of Attorney Plan.

• Power of Attorney designations generally need to be established with the assistance of an attorney to create:
  • General Power of Attorney (sometimes referred to as “POA.”)
  • Durable Power of Attorney
  • Health Care Proxy
  • Advance Health Care Directive
  • Living will

• It is an opportunity to determine whether current beneficiary designations are consistent with your financial goals.

• Mistakes made when designating beneficiaries can be costly for you, your family, and those you care about, by impairing their ability to preserve, protect, and pass on their assets as they intended.

• The cost of care can have significant variations depending on where care is utilized.

• The average care needs don’t tell the whole story since some individuals won’t need care, some have a short-term need, and others will need significant care for more than 5 years.

• Long term care is not just nursing homes.
  • Many individuals will need long-term care which often starts with home care and may progress to assisted living or care in a nursing home.

• As part of our process, we can evaluate your current coverage and help facilitate a conversation about how your insurance fits into your needs, goals vision.

Sometimes investment firms create and use identical portfolios for their clients regardless of whether the account is a taxable account or tax deferred account. 

• Perhaps you may benefit from our asset location process.

• Life insurance takes on different roles throughout your life depending on your needs, desires, and circumstances.
  • Early Years
  • Managing Life’s Transition
  • Later Years

• Life insurance takes on different roles throughout your life depending on your needs, desires, and circumstances.
  • Early Years
  • Managing Life’s Transition
  • Later Years

• Life insurance takes on different roles throughout your life depending on your needs, desires, and circumstances.
  • Early Years
  • Managing Life’s Transition
  • Later Years

• Transfer business or business interests to the next generation
• Provide business continuity during the transition.
• Provide potential retirement income as part of succession plan.
• Minimize gift and estate taxes, when possible.