Last month, we provided a detailed description of what Guide Financial Planning’s ongoing financial planning services entail. We mentioned there that we also offer investment management as an optional service for our ongoing planning clients. Here we will delve deep into that and what it looks like.
Why Not Stand-Alone Investment Management?
We only offer investment management to our ongoing financial planning clients. This makes us somewhat unique within our industry. We believe that to act as a true fiduciary and provide the level of service that we hold ourselves to, we must be involved in every area of our clients’ financial lives, not just with investments.
In order to make recommendations for how much a person should be investing, we need to fully understand their competing goals and their cash flow situation. In order to provide solid recommendations on where a person should be investing, we need to be familiar with their tax situation both in the present and future. In order to make recommendations on how a person should invest, we need to understand their future plans and how their investments fit in with the rest of their financial picture.
We view investments as only a piece of the puzzle and not the entire puzzle. Investments must fit properly into an overall financial plan. Because of that, we do not manage investments without providing financial planning as well.
What We Do With Your Investments
When we manage investments for you, there are some things that we do that are hard to replicate on your own.
We use software to track all of our clients’ accounts on a daily basis to determine if they need to be rebalanced based on the Investment Policy Statement that we put in place together, so you have the peace of mind of knowing your accounts as a whole are never out of balance.
Rather than view your accounts as a number of individual accounts, we view them all as one big portfolio and invest each investment in your portfolio in the account that is most favorable to you based on taxes, projected growth, etc. For example, investments that produce a lot of income are typically held in qualified retirement accounts rather than taxable accounts to reduce taxable income each year.
Full Implementation of Investment Principles
The investment principles we follow are earning market-like returns, being diversified, choosing a sustainable strategy, keeping costs low, and overweighting expected market premiums. (Read more about them here.) While we can help you to mostly implement these principles if you manage your investments on your own, we can help you to fully implement the principles if we are the ones managing the investments, which we believe will increase your expected investment return over the long term.
Manage Tax Situation
When we manage your investment accounts, we can help you to minimize taxes in the current year and over the long term by taking into account things like short- and long-term unrealized capital gains and taking advantage of a strategy called tax-loss harvesting.
Implementation of Tax Savings Strategies
If we determine that it's best for you to implement strategies like Roth Conversions or Qualified Charitable Distributions, we can implement these strategies for you, rather than you having to work with a different investment company to implement these strategies. We can also help you to take Required Minimum Distributions when those are required.
Personalized Customer Service
When you manage your accounts on your own, you likely need to reach out to a big call center to get your questions answered. When we manage your investments, you can reach out to us directly to speak with someone who knows the intricacies of your situation well and can more quickly and fully answer your questions.
Reporting on Investment Performance
We regularly report on the performance of accounts that we manage for our clients, while this service may not be available if you manage your investments elsewhere.
Other Benefits of Investment Management
While that is a lot of the things that we do for you when we manage your investments, there are some other benefits to having us do so:
Help You Stay Invested
Many studies have shown that those who work with a financial planner are much less likely to sell investments, and lock in losses, during a downturn than those who manage investments on their own.
Continuity of Service
When one spouse normally handles the family’s financial affairs and then is unable to due to sickness or death, the other spouse will have a much easier transition to taking on these responsibilities when we are handling the investment management for you.
Payment for Service with Tax-Free Dollars
You've never paid taxes on any of the money in traditional IRAs, so the fees that you pay to us out of these accounts are paid to us with dollars that have never been taxed. Fees paid out of your cash flow, however, are paid with money that has already been taxed.
How Fees Work
As that last point mentioned, when we manage your investments for you we are paid directly out of your investment accounts. We bill on a quarterly basis, so your fees are deducted four times a year. When we bill, we provide a detailed invoice so that you know exactly what you are paying for our services. Our investment management fees start at 1% of the account value per year and tier down for larger accounts.
How to Work With Us
We manage investments for the vast majority of our ongoing financial planning clients. They choose to have us do so because it provides them with peace of mind, time savings, and a higher expected investment return, though future performance is not guaranteed.
If you are interested in our investment management and ongoing financial planning services, the starting point is to have us build a comprehensive financial plan for you. Schedule a free introductory call to learn more and give us a chance to get to know you and your situation.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.