ICFP FAQ
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The Risk of “Safe Assets” is that you might end up running in place
How many millionaires do you know that have become wealthy by investing in savings accounts?
I rest my case.
Sources:Bankrate.com, U.S. Treasury, and Standard & Poor’s. Rates of return and inflation are derived using the averages from 1995 to 2016. U.S. equities are represented by the S&P 500 Index. Past performance does not guarantee future results.
Accounts for Individual(s)
Accounts for Employer(s)
Work with us to better understand how these types of accounts fit into your financial plan.
You should evaluate a Roth IRA at different stages of life
Income allocation is what sources of income are reflected on each year’s tax returns. These sources are different based upon your set of circumstances, but could be, but not limited to, Wages, Pensions, Social Security Benefits, Retirement Plan distributions, Taxable Savings, Dividends, Capital Gains, distributions from properties or companies; the list goes on.
Only after we have a firm understanding of your needs and goals, compensation for our services can take on one of these four forms:
Each implementation strategy has its benefits and its draw backs. The key catalyst for making a decision is based on your situation.
Others choose to create a retainer arrangement to have various financial planning services for their situation on an ongoing basis.
Diversifying advisors may provide you insight to the different levels of service other investment professionals provide. However, this perceived diversification may result in inadequate financial planning due to a lack of knowledge of holdings elsewhere, as well, as potentially unsuitable investment allocations due to the lack of knowledge of material changes to your account(s) with other institutions. The investor also may be able to save on overall investment related expenses by consolidating accounts and taking advantage of relative economies of scale.
Some engagements listed below, not limited to:
A broker/dealer is a company that a registered investment professional is required to affiliate with in order to buy or sell investment products on behalf of investors. The broker/dealer holds responsibility for regulatory compliance and adherence to securities laws. The Securities and Exchange Commission (SEC) delegates the supervision of financial advisors to the Financial Industry Regulatory Authority (FINRA).
An independent financial professional is not an employee of an investment or financial services firm – they are an independent business owner. They have the freedom to structure their business in a manner that best serves their clients. The independent financial professional utilizes the services of the broker/dealer to process investment business, provide services such as practice management and education.
You may be familiar with broker-dealers that are subsidiaries of conglomerates such as commercial banks, investment banks, and investment companies. An independent broker-dealer is different from such firms because they generally do not underwrite securities, they do not create research, and they do not engage in investment banking.
Now, more than ever, a client wants ‘‘peace of mind’’ when it comes to the safety of financial assets.
A registered representative is an independent business owner who provides financial guidance to their clients and is typically paid a commission when you purchase a financial product.
An Investment Advisor Representative (IAR) is an independent business owner who provides financial guidance to their clients and is generally paid a fee for either managing assets, giving advice or both.
A broker-dealer processes the commission business of registered representatives licensed with the firm and holds responsibility for regulatory compliance and adherence to securities laws.
A Registered Investment Adviser (RIA) processes the fee-based business of IARs licensed with the firm and holds responsibility for regulatory compliance and adherence to securities laws.
Pershing LLC, National Financial Services, LLC, and select firms provide the trade execution, clearing, custody, and other services for securities and related transactions.
Mutual funds, managed accounts, stocks, bonds, etc.
As part of our ongoing commitment to our clients, we continually seek knowledge in our industry to be best prepared to address the needs of our clients. Click here to read about each of our members’ designations.
Whether you’ve been investing for decades or are just getting started, at some point on your investment journey you’ll likely ask yourself some of the questions below. Trying to answer these questions may be intimidating, but know that you’re not alone. Your financial advisor is here to help. While this is not intended to be an exhaustive list, it will hopefully shed light on a few keyprinciples, using data and reasoning, that may help improve investors’ odds of investment success in the long run.
The market is an effective information-processing machine. Millions of market participants buy and sell securities every day, and the real-time information they bring helps set prices.
This means competition is stiff, and trying to outguess market prices is difficult for anyone, even professional money managers (see question 2 for more on this). This is good news for investors though. Rather than basing an investment strategy on trying to find securities that are priced “incorrectly,” investors can instead rely on the information in market prices to help build their portfolios (see question 5 for more on this).
Flip a coin and your odds of getting heads or tails are 50/50. Historically, the odds of selecting an investment fund that was still around 20 years later are about the same. Regarding outperformance, the odds are worse. The market’s pricing power works against fund managers who try to outperform through stock picking or market timing. One needn’t look further than real-world results to see this. Based on research,1 only 19% of US equity mutual funds and 11% of fixed income funds have survived and outperformed their benchmarks over the past 20 years.
Some investors select mutual funds based on past returns. However, research shows that most funds in the top quartile of previous five-year returns did not maintain a top-quartile ranking in the following five years. In other words, past performance offers little insight into a fund’s future returns.
Financial markets have rewarded long-term investors. People expect a positive return on the capital they invest, and historically, the equity and bond markets have provided growth of wealth that has more than offset inflation. Instead of fighting markets, let them work for you.
Academic research has identified these equity and fixed income dimensions, which point to differences in expected returns among securities. Instead of attempting to outguess market prices, investors can instead pursue higher expected returns by structuring their portfolio around these dimensions.
Diversification helps reduce risks that have no expected return, but diversifying only within your home market may not be enough. Instead, global diversification can broaden your investment opportunity set. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.
It’s tough, if not impossible, to know which market segments will outperform from period to period.
Accordingly, it’s better to avoid market timing calls and other unnecessary changes that can be costly. Allowing emotions or opinions about short-term market conditions to impact long-term investment decisions can lead to disappointing results.
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.
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. If headlines are unsettling, consider the source and try to maintain a long-term perspective.
Work closely with a financial advisor who can offer expertise and guidance to help you focus on actions that add value. Focusing on what you can control can lead to a better investment experience.
The Risk of “Safe Assets” is that you might end up running in place
How many millionaires do you know that have become wealthy by investing in savings accounts?
I rest my case.
Sources:Bankrate.com, U.S. Treasury, and Standard & Poor’s. Rates of return and inflation are derived using the averages from 1995 to 2016. U.S. equities are represented by the S&P 500 Index. Past performance does not guarantee future results.
Sometimes investment firms create and use identical portfolios for their clients regardless of whether the account is a taxable account or tax deferred account.
Your income allocation is comprised of the components of your taxable income you can control.
Every client wants to get the most out of their investments. They want the highest possible returns with the least amount of risk.
Improve your chances for more consistent returns over time.
Reduce overall risk.
Stay focused on your objectives
Participating in your employer’s plan helps to automate your retirement savings through a “savings habit.”
Link to “Start Young” Content
Link to Dollar Cost Averaging
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.
“No airplane can take off without a flight plan, no ship can set sail without a plotted course.” ~ Nick Murray.
We invite you to experience a fiduciary relationship where your interests, goals, and objectives come first.
Whether you’ve been investing for decades or are just getting started, at some point on your investment journey you’ll likely ask yourself some of the questions below. Trying to answer these questions may be intimidating, but know that you’re not alone. Your financial advisor is here to help. While this is not intended to be an exhaustive list, it will hopefully shed light on a few keyprinciples, using data and reasoning, that may help improve investors’ odds of investment success in the long run.
The market is an effective information-processing machine. Millions of market participants buy and sell securities every day, and the real-time information they bring helps set prices.
This means competition is stiff, and trying to outguess market prices is difficult for anyone, even professional money managers (see question 2 for more on this). This is good news for investors though. Rather than basing an investment strategy on trying to find securities that are priced “incorrectly,” investors can instead rely on the information in market prices to help build their portfolios (see question 5 for more on this).
Flip a coin and your odds of getting heads or tails are 50/50. Historically, the odds of selecting an investment fund that was still around 20 years later are about the same. Regarding outperformance, the odds are worse. The market’s pricing power works against fund managers who try to outperform through stock picking or market timing. One needn’t look further than real-world results to see this. Based on research,1 only 19% of US equity mutual funds and 11% of fixed income funds have survived and outperformed their benchmarks over the past 20 years.
Some investors select mutual funds based on past returns. However, research shows that most funds in the top quartile of previous five-year returns did not maintain a top-quartile ranking in the following five years. In other words, past performance offers little insight into a fund’s future returns.
Financial markets have rewarded long-term investors. People expect a positive return on the capital they invest, and historically, the equity and bond markets have provided growth of wealth that has more than offset inflation. Instead of fighting markets, let them work for you.
Academic research has identified these equity and fixed income dimensions, which point to differences in expected returns among securities. Instead of attempting to outguess market prices, investors can instead pursue higher expected returns by structuring their portfolio around these dimensions.
Diversification helps reduce risks that have no expected return, but diversifying only within your home market may not be enough. Instead, global diversification can broaden your investment opportunity set. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.
It’s tough, if not impossible, to know which market segments will outperform from period to period.
Accordingly, it’s better to avoid market timing calls and other unnecessary changes that can be costly. Allowing emotions or opinions about short-term market conditions to impact long-term investment decisions can lead to disappointing results.
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.
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. If headlines are unsettling, consider the source and try to maintain a long-term perspective.
Work closely with a financial advisor who can offer expertise and guidance to help you focus on actions that add value. Focusing on what you can control can lead to a better investment experience.
There are typically four options to consider when leaving an employer’s retirement plan, each with its benefits and considerations.
Converting a portion of your tax-deferred assets to a Roth IRA may be a planning consideration based upon your particular circumstances.
“Every night before I get my one hour of sleep, I have the same thought: ‘Well, that’s a wrap on another day of acting like I know what I’m doing.’ Most of the time I feel entirely unqualified to be a parent. I call these times being awake.”
—Jim Gaffigan
“In my house I’m the boss, my wife is just the decision maker.”
“There’s no place like home.” —Dorothy Gale
Whether you’ve been investing for decades or are just getting started, at some point on your investment journey you’ll likely ask yourself some of the questions below. Trying to answer these questions may be intimidating, but know that you’re not alone. Your financial advisor is here to help. While this is not intended to be an exhaustive list, it will hopefully shed light on a few keyprinciples, using data and reasoning, that may help improve investors’ odds of investment success in the long run.
The market is an effective information-processing machine. Millions of market participants buy and sell securities every day, and the real-time information they bring helps set prices.
This means competition is stiff, and trying to outguess market prices is difficult for anyone, even professional money managers (see question 2 for more on this). This is good news for investors though. Rather than basing an investment strategy on trying to find securities that are priced “incorrectly,” investors can instead rely on the information in market prices to help build their portfolios (see question 5 for more on this).
Flip a coin and your odds of getting heads or tails are 50/50. Historically, the odds of selecting an investment fund that was still around 20 years later are about the same. Regarding outperformance, the odds are worse. The market’s pricing power works against fund managers who try to outperform through stock picking or market timing. One needn’t look further than real-world results to see this. Based on research,1 only 19% of US equity mutual funds and 11% of fixed income funds have survived and outperformed their benchmarks over the past 20 years.
Some investors select mutual funds based on past returns. However, research shows that most funds in the top quartile of previous five-year returns did not maintain a top-quartile ranking in the following five years. In other words, past performance offers little insight into a fund’s future returns.
Financial markets have rewarded long-term investors. People expect a positive return on the capital they invest, and historically, the equity and bond markets have provided growth of wealth that has more than offset inflation. Instead of fighting markets, let them work for you.
Academic research has identified these equity and fixed income dimensions, which point to differences in expected returns among securities. Instead of attempting to outguess market prices, investors can instead pursue higher expected returns by structuring their portfolio around these dimensions.
Diversification helps reduce risks that have no expected return, but diversifying only within your home market may not be enough. Instead, global diversification can broaden your investment opportunity set. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.
It’s tough, if not impossible, to know which market segments will outperform from period to period.
Accordingly, it’s better to avoid market timing calls and other unnecessary changes that can be costly. Allowing emotions or opinions about short-term market conditions to impact long-term investment decisions can lead to disappointing results.
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.
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. If headlines are unsettling, consider the source and try to maintain a long-term perspective.
Work closely with a financial advisor who can offer expertise and guidance to help you focus on actions that add value. Focusing on what you can control can lead to a better investment experience.
The Risk of “Safe Assets” is that you might end up running in place
How many millionaires do you know that have become wealthy by investing in savings accounts?
I rest my case.
Sources:Bankrate.com, U.S. Treasury, and Standard & Poor’s. Rates of return and inflation are derived using the averages from 1995 to 2016. U.S. equities are represented by the S&P 500 Index. Past performance does not guarantee future results.
The Risk of “Safe Assets” is that you might end up running in place
How many millionaires do you know that have become wealthy by investing in savings accounts?
I rest my case.
Sources:Bankrate.com, U.S. Treasury, and Standard & Poor’s. Rates of return and inflation are derived using the averages from 1995 to 2016. U.S. equities are represented by the S&P 500 Index. Past performance does not guarantee future results.
You also may need to consider your potential portfolio returns and your life expectancy.
The Risk of “Safe Assets” is that you might end up running in place
How many millionaires do you know that have become wealthy by investing in savings accounts?
I rest my case.
Sources:Bankrate.com, U.S. Treasury, and Standard & Poor’s. Rates of return and inflation are derived using the averages from 1995 to 2016. U.S. equities are represented by the S&P 500 Index. Past performance does not guarantee future results.
Risk profiling is a process for finding the optimal level of investment risk for your client by balancing their risk required, risk capacity and their individual risk tolerance.
Risk Required is the risk associated with the return required to achieve the client’s goals from the financial resources available.
Risk Capacity is the level of financial risk the client can afford to take.
Risk Tolerance is the level of financial risk the client is emotionally comfortable with.
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:
Generally, any account or insurance policy that has a beneficiary, such as, but not limited to:
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:
It may be useful to match dependable income sources with fixed retirement expenses while coordinating other investments with more discretionary expenses.
To better understand your Goals, Needs, and Vision for your desired Power of Attorney Plan.
Sometimes investment firms create and use identical portfolios for their clients regardless of whether the account is a taxable account or tax deferred account.
Offices conveniently located in Lombard and Naperville, Illinois.
Office: | 630-796-6161 |
Facsimile: | 630-796-6162 |
Lombard: | 555 E Butterfield Rd., Suite 212 Lombard, IL, 60148 |
Naperville: By appointment only | 1700 Park St., Suite 203 Naperville, IL 60563 |
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC to residents of AK, AZ, CA, CO, DC, FL, GA, HI, KS, IA, IL, IN, LA, MA, MI, MN, MO, NC, NJ, NM, NV, NY, OK, OR, SC, SD, TN, TX, VA, WA, WI. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Independence Capital Financial Partners, LLC are not affiliated.
© Copyright 2022 Independence Capital Financial Partners, LLC
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“Good habits, which bring our lower passions and appetites under automatic control, leave our natures free to explore the larger experiences of life. Too many of us divide and dissipate our energies in debating actions which should be taken for granted.” —Ralph W. Sockman
Things to think about:
Building financial health is not only about acquiring wealth, it’s also about protecting wealth.
Now that you have built a legacy, it’s important to think about how to distribute that legacy to the next generation. Thinking ahead can make the difference when it comes to passing down not just assets, but values, to later generations and causes.
Wealth is not just financial. It is not only found in bank vaults or investment accounts nor can it be measured in the number of homes or material items possessed. It may sound cliché but for most people it is the quality of family relationships, the human assets that really matter.
The human assets are the people in our lives. Human assets are also the values and principles that guide our lives and made us who we are today.
They are the unique stories and collective life experiences that formed across generations. Human assets include the skills our family members possess and our family’s collective interpretations of what constitutes happy and fulfilling lives. It is the governance framework used to make decisions that affect the entire family.
Families should set aside money for investment as early and as often as possible.
In the above example, we highlight a 25-year old who is investing $12,500 per year in hypothetical investments returning 6% per year. By age 65, our 25-year old will have contributed $500,000 into her investment account but will have earned $1,563,096 in investment returns for an end sum of $2,063,096.
But what if she started later in life? Not only will her total contributions be smaller but her earned returns will be smaller as well. In fact, if she doesn’t start until she is 45 years old then she would have to invest an additional $40,087 per year to catch up to her 25-year-old self.
In short, start young and invest often.