What is comprehensive financial planning?
A comprehensive financial planning approach considers all areas of your financial situation in the formation of your personal strategy. If you do not consider all aspects of the plan one area may be adversely affected by isolated decisions, leaving you with an undesired result. For example, when reviewing your asset allocation strategy you must consider the income tax consequences of changes made in the investment accounts.
What should I expect from a financial planning relationship?
Your advisor should work with you to create a customized financial strategy after the identification of your financial goals. The strategy should address all of the unique aspects of your financial situation. MFS will assist you with the implementation of the strategy. Additionally, your advisor will have structured, routine client meetings to assure that your plan is periodically reviewed, allowing adjustments to be made as your financial situation changes.
Why is Fee-Only important?
Independence and objectivity. Advisors that are dependent upon product sales and commissions for compensation have a greater likelihood of conflicts of interest. Working with a fee-only financial planner gives client’s peace of mind as the advisor does not stand to gain financially from their recommendations. As fee-only planners receive no monetary gain from the implementation of their recommendations they can independently and objectively advise clients. Independent fee-only advisors are not tied to proprietary financial products, but can guide clients to the most appropriate solution.
What questions should I ask when interviewing a financial advisor?
- Educational background?
- Financial planning certifications and designations?
- How long have they been in the business, with what firms?
- Will they provide client referrals?
- Are they in good standing with regulatory bodies, any disciplinary actions?
- Which advisor will provide the actual client consulting?
- How is the advisor/firm compensated?
- Do they sell financial products or receive “12b-1” fees or “trailers” on investments?
- Do they assist in the implementation of the plan?
What must a client expect to contribute to the relationship?
We expect clients to significantly contribute to the financial planning process. Clients should be willing to provide all of the background information required for the advisor to prepare thorough recommendations. The client should have an open mind with regard to financial concepts, such as savings and debt and be ready to discuss new financial philosophies. Clients should be open and honest about their personal values, goals, concerns and preferences. An advisor can only assist a client after understanding the complete picture.
How is the financial strategy implemented if MFS is fee-only and does not sell products?
We provide specific recommendations for the implementation of the financial plan and consider ourselves your personal financial manager. We encourage you to use your current service providers including insurance agents, accountants, and attorneys to implement that plan as long as they are able to work as part of the team. Additionally, we can independently direct you to other professional providers who we know and trust such as a mortgage professionals, estate planning attorneys, insurance providers, etc. We will coordinate the efforts of your financial team for the successful implementation of the plan. At MFS we sell solutions, not products.
Are there minimum requirements to become a client of MFS, such as net worth or investment assets?
No, there are no minimums for service. We believe everyone that wants to begin the financial planning process should have access to quality financial advice. Our fee-only structure allows us to scale the services to the complexity of each individual client.
Do I pay for the first interview?
At MFS we provide a complimentary hour meeting to talk about your needs for financial planning services. During this interview we assess our ability to help you and explain how the process would work for you.
Can I do this on my own?
Do you need professional help in order to design and stick to an effective financial plan? This depends on your unique personal situation and dedication to learning and following key issues. Most find they are better off seeking the information, expertise, experience, and discipline provided by a financial advisor. Making quality financial decisions requires a high level of commitment to learning and research. Whether you are concerned with an asset allocation strategy, planning for retirement, paying for college expenses, or other financial goals, we believe you are better served by leveraging the experience and expertise of professionals who have dedicated their careers to serving these needs.
What do the CFP®, EA and RIA initials mean?
An adviser who has been awarded the CFP® certification is a CERTIFIED FINANCIAL PLANNER™ professional. A person designated with the CFP® certification completed a requisite series of courses offered by the College for Financial Planning and successfully passed written examinations in taxation, retirement planning, insurance, estate planning, and investments administered by the Certified Financial Planner Board of Standards. Furthermore, an adviser designated as a CFP® professional must fulfill certain continuing education requirements throughout his or her career.
Enrolled agents (EAs) are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. Only enrolled agents, attorneys, and CPAs have unlimited rights to represent taxpayers before the IRS. The license is earned in one of two ways, by passing a comprehensive examination which covers all aspects of the tax code, or having worked at the IRS for five years in a position which regularly interpreted and applied the tax code and its regulations. Enrolled agents advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Enrolled agents’ expertise in the continually changing field of taxation enables them to effectively represent taxpayers at all administrative levels within the IRS. Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are given unlimited representation rights before IRS. Unlike attorneys and CPAs, who are state licensed and who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation.
An RIA is a Registered Investment Adviser. This is any person who, for compensation, advises others about securities or provides financial planning services that includes investment advice. This person must register with the appropriate state or federal regulatory divisions. MFS is a Registered Investment Adviser, registered with the Michigan Securities Division