Many people have very little to no experience with financial advisors when they come to us. They only know what friends have told them about their own financial advisor, what they’ve read online, or what they’ve heard on a podcast.
Also, when you try to search for a financial advisor there’s so much conflicting information on the internet, you can end up more confused than when you started. In fact, many people drown in that sea of information and give up the search altogether, deciding instead to just cross their fingers and hope for the best. So, it makes sense that you might have put this off for a while.
Why would I seek financial advice?
Most commonly, when people seek the help of a financial advisor, they are facing or have gone through a major life transition. Maybe they have had a job transition, had a baby, are hoping to retire soon, or even have lost a loved one. Sometimes they just have a vague sense that their finances are getting more complex and think they might need some help.
But the truth is a good financial advisor can be helpful both in times of calm and times of chaos. In fact, we can often make a bigger difference if we have time to prepare BEFORE the transition.
What else do I need besides investment help?
Another common misconception about financial advisors is that our primary focus is investment advice. While I think it’s true that most “financial advisors” are merely “investment advisors” (more about that here), that’s just one part of what we do in wealth management.
Comprehensive wealth management includes comprehensive financial planning, asset management, and relationship management.
The three most valuable services that a wealth manager offers are, in order from important to most important:
- Technical expertise in financial planning and investments.
- Ability to support in clients throughout implementation, especially when emotions drive clients to deviate from a plan that is working.
- Willingness and ability to help clients avoid a big mistake.
Financial Planning
During the initial 30-days of our wealth management engagements, we go through a comprehensive financial planning process. We seek to answer your primary questions while fine-tooth combing your situation for opportunities in the following areas:
- Cashflow Management – We help with various decision making such as: how much cash should you have on hand, monthly contributions to goals, paying off debt vs. saving for retirement, how much should you invest to start your business, etc.
- Special Goals – Planning for large purchases or other goals such as new cars, college saving/spending, cabin purchase, marriage, career transitions.
- Risk Management – We raise red flags about various risks you face, some of which you’ll choose to outsource to insurance, others you’ll choose to bear. We help you decide.
- Tax Planning – This is an area that the vast majority of people (financial advisors included) ignore, but I love saving you money in this area. I believe taxes are critical for living in a civilized world, but you shouldn’t pay more than you are required to pay.
- Retirement Planning – Retirement is a goal for most people. If it’s not a goal for you, please be aware that most people don’t retire when they want to, but when they HAVE to. Let’s determine how soon you can get there and have fun conversations about what you will do after that magical day!
- Investment Planning – This includes investing for middle-term goals (think 3-5 years) and long-term goals like retirement, moving abroad, etc. It also includes things like employer stock grants, inheritance, excess cash that you just aren’t sure about, etc.
- Estate Planning – Listen, nobody likes to do this, but if you don’t, the state will do it for you!
I want my recommendations to fit you like a glove. Or said another way, I want my recommendations to be the same as the decisions you would make if you had our experience and education. To that end, I learn as much as I can about you and your situation to create those recommendations. It’s a deeply empathetic process – that’s why most of our staff at Bright Road Wealth Management is recruited from OUTSIDE the industry, and the primary qualities we seek are 1) super smart people, 2) people who care about others, and 3) people that have high intrinsic integrity.
After the recommendations are developed, we work together to fine tune them. Through our process, clients begin to see that they are no longer in this alone!
Asset Management
During the next 60-days of our process, we work on your behalf to tidy up your financial landscape. For most people, this means “herding the kittens” of your orphaned 401(k)s from previous jobs and all the accounts you opened each time you read an investing book. Remember when you had all that time for reading? It also frequently means setting up automated contributions to various accounts based on your goals. We make this as easy as possible, in the face of a financial system which is designed to be difficult! Some of those 403(b) companies from the teacher’s lunchroom just don’t want to give up your dollars, but we bulldog them until they do (no offense to bulldogs).
Once we’ve corralled your accounts, we invest them per the decisions we made together during your Financial Planning process. We primarily use a low-cost globally diversified portfolio of EFTs from companies like Dimensional Funds, Avantis Fund, and PIMCO. Once invested, we use tolerance band rebalancing to adjust your portfolio throughout the year. Annually, we review all our fund selections internally for potential underperformance. Still, our clients experience very low turnover, because these funds are already lowest-cost, best-in-class funds.
Relationship Management
Now that we’ve gotten your cashflow goals and investments sorted, we move on to implement the rest of the financial plan. We’ll refer you to other professionals such as accountants, insurance agents, estate attorneys, realtors, mortgage brokers, etc. who can help you implement any recommendations that we don’t implement for you. This can take months to years depending on how aggressive you want to be. With our help, it usually takes about 18-24 months for Comprehensive Wealth Management clients to implement these parts of the plan. If all that sounds overwhelming, don’t worry! We eat the elephant one bite at a time! Remember, we are here to make life easier for you, not to give you busy work!
Once you choose a professional for a specific job, we work with them as a team on your behalf. For instance, we work with:
- your CPA to implement your tax plan and help them file your returns each year,
- your estate attorney to develop your will or trust, and ensure their directions are implemented,
- your insurance agent to ensure you have the right coverage,
- your mortgage broker to ensure timely closings, etc.
Ongoing planning and avoiding pitfalls
We live in a changing landscape, and financial advisors act as your guides in that changing landscape. Your “plan” is an active, living thing, and above that, it is our presence in your life – another person, deeply committed to the financial success of you and your family.
Your goals change over time; as you complete one goal, another may take its place. Law and regulation changes impact your plans more and more frequently. The uncertainty of your everyday life can bring loss and heartache or windfalls and unexpected joy, thrusting us right back into planning mode at random times.
One of our most important jobs is to help you avoid the horrendous costs of what Nick Murray calls “The Big Mistake”. The greatest value we can provide is our willingness and ability to help you avoid that bad idea or big mistake. The longer I do this work, the more intuitive I get about these big mistakes as they arise. After you’ve witnessed lifetimes of success and lifetimes of failure, you develop a bit of a spidey-sense. Most of them sound reasonable enough to clients, but we see them coming a mile away! Some of the big mistakes people have brought to us:
- I invested in a neighborhood restaurant, because I wanted an investment I could touch, that was real, not like stocks. It closed 18 months later, and I lost it all.
- I heard backdoor Roths were a good idea, but I didn’t know all the rules. I paid tax and penalties.
- We inherited a significant amount of money, but a few years later have no idea where it went, even though we aren’t big spenders. We don’t want to do that again.
- I thought selling my business would provide for my retirement, so I didn’t save. I haven’t been able to find a buyer who will pay what I think it’s worth.
- After my investments lost 30%, everyone was sure a recession was coming. It was so obvious, so I sold my investments. I wanted to wait until things felt more settled to reinvest and now it’s too late/expensive to invest.
- I wanted my kids to go to the best college they could get into, but didn’t realize it would mean I can never retire.
- My friend/neighbor/coworker/brother-in-law said there was no way it could lose.
- I made so much money on my first few day-trades, I thought I was a natural.
- I invested in a few stocks that had been doing very well in the few last few years and lost so much I had to delay retirement 5 years.
- We just wanted a nicer place with a bigger yard for the kids.
Sometimes these changes carry opportunities or risks that can change the course of our lives. Sometimes they work out, but many times they were doomed from the start. More often than not, it depends on the circumstances of your life whether these are good or bad ideas.
As I like to say, “there are 5000 financial rules of thumb, but only 27 apply to YOU.” Financial advisors are the shortcut to help you sort the signal from the noise, find those 27, and ignore the rest.
At Bright Road Wealth Management, we’ve helped our clients make decisions through all kinds of change. Working with a client before an opportunity randomly shows up allows us to build a foundation. This way you can be ready to make the most of that change. Here are a few recent examples:
- Marriage, divorce, babies, death and impairment of a loved one
Helped clients set aside emergency funds and other planning so when these events happen, they can focus on their family instead of worrying about finances. - Buying and selling homes, buying and selling cars
Helped clients evaluate cash vs. loan purchase, evaluate offers, referred realtors and brokers, etc. - Windfalls including inheritance, stock compensation, large asset sales
Helped clients decide how best to deploy assets for goals and tax efficiency. - Moving out of state, moving abroad, downsizing
Evaluated ability of financial situation to weather change.
Supported clients with timely investments and cash movement - Career transition (lay-offs, back-to-school, resignations, starting new businesses, retirement, mini-retirement)
Re-evaluated entire financial plan and encouraged clients to take unreasonable, but responsible risks to achieve their dreams.
I wish I could tell you all the weird things we’ve done for clients. We are compiling a list and someday maybe I’ll share it.
Obviously, as a financial advisor, there should be and are real boundaries. But when your clients are fun to work with, appreciate your help, and are nice people on most days, it’s hard to resist helping when they need it! Fortunately, at Bright Road Wealth Management, we’ve built a network of great people with expertise that complements ours, and they help with the heavy lifting!
