Examine your accounts.
We'll begin with you by reviewing your current accounts. This includes IRA, 401(k), 403(b), taxable brokerage accounts, 529, and others. This gives us a holistic view of your situation. We'll come up to speed on where you are and identify areas to improve.
Your goals, life events, and cash needs.
Discussing big life events on the horizon, like a child entering college or a planned retirement date, is the next step. Getting a sense of your yearly cash flow living needs is also something we'll do together. And we need to understand your long-term financial goals.
Your tolerance for risk.
We'll step through some scenarios to help us understand your tolerance for risk, in an effort to determine what investments are suitable for you. This process is important because people will often act differently in a crisis than they anticipate. So we'll try to determine how much risk you can absorb while still feeling comfortable.
Busywork reduction for you.
Most financial advisors want you to move your assets when you start with them. We're big proponents of simplicity and wherever possible we will try to work with what you have in place. Let's face it, you don't want to go through all of that trouble, and we don't want you to either. Shifting accounts can cause basis errors at tax time as well. Sometimes we'll have to move some of your accounts but we'll try to minimize this for you.
During "The Liberation" we'll strip away as many financial fees from your assets as possible.
"The Liberation" is our internal name for the initial implementation step. It is here that we strip away, or liberate, your assets from the financial fee takers. Consideration needs to be given to taxes here, as taxable events are often generated at this step (a process that, while unfortunate, is generally beneficial long term). We can implement "The Liberation" in different ways, depending on your situation when you begin with us.
Investment model implementation.
Once your assets have been through "The Liberation," the next step is to implement a long-term financial plan for you. This considers the various needs and constraints you have in terms of goals, cash flow, and big event needs. It factors in your penchant for risk and aims to provide you with a suitable, maintainable long-term structure. You want your investment model to be one that you will not change in periods of euphoria or crisis.
Rebalancing is an important ongoing process. It's not entirely formulaic; done carefully, many taxes can be avoided and returns can be optimized. Twice yearly we will examine which assets in your account need to be rebalanced and execute that for you. Studies show that 90% of the difference in returns relates to asset allocation, so it is important to keep your allocations from drifting off plan. You'll be kept in the loop during the process.
Review life events.
Your life will change over time. Your goals may change, your cash needs may change, the number of kids you have may change, your marital status may change. Keeping abreast of these developments in your life will help us work together to make sure you stay on track.
We will encourage you not to watch the financial news.
One of the benefits to passive investing is that it's, well, passive. We're not going to bombard you with "the next great trade" or world events that you have to respond to. In fact, we'll encourage you not to watch financial news or get caught up in the casino antics of the stock market. We'll help you mentally prepare for a future crisis or bubble: we'll train you for those scenarios ahead of time. But otherwise hiring us should help you to focus on other pursuits, whether they are work, hobbies, or family.
"The stock market serves as a relocation center at which money is moved from the active to the patient." ~Warren Buffett
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