What is the mission of Financial Planning Associates, Inc?
We provide valuable personal financial planning and investment management services, primarily to individuals and families.
Do you offer services to trusts and estates?
Yes. We also manage assets for trusts and estates.
What principles guide your relationships with and services to your clients?
We are guided by the principles shown under the menu item “Our Philosophy and Beliefs” where we state that we have a fiduciary relationship with our clients. We do, and must at all times put our clients’ interests first.
Do you charge a fee for your services?
Yes. We have bills to pay, too.
Do you receive commission income?
No. Our compensation is Fee-Only.
Is Fee-Only the same as Fee-Based?
No. A Fee-Only adviser is compensated only by client fees. The term Fee-Based is used by advisers who charge fees, but also receive commission income for selling financial products such as annuities or insurance. Fee-Based advisers have a financial incentive to recommend certain products. Fee-Only advisers do not.
Is Fee-Only better than Fee-Based?
If you seek objective advice Fee-Only is better.
Do you charge a fee for an initial consultation?
There is no charge for your initial meeting.
What services do you provide?
We provide two services:
Firstly, Personal Financial Planning (PFP), which includes cash flow modeling, retirement planning, risk management/insurance analysis and planning, investment planning, tax planning, and estate planning. We take a comprehensive, coordinated approach to financial planning.
Secondly, Investment Management (IM), which includes investment policy development, asset selection and ongoing management of assets. Our asset management systems are largely automated, however, we personally authorize and review each transaction.
Do your clients always subscribe to both personal financial planning and investment management services?
Most of our clients subscribe to both services. We believe that we can deliver the greatest value to our clients when the personal financial planning activities and the investment management activities are closely integrated. In some cases, our fees are discounted when clients choose both services. However, we do also have successful client relationships in which we only provide one service. We desire to have long-term, mutually beneficial relationships with all of our clients.
Describe personal financial planning fees.
In most cases, our clients prefer an ongoing relationship and pay a specified annual or monthly fee instead of a per hour fee. The amount of the specified fee will be determined during the initial meeting and will include the first comprehensive PFP analysis and ongoing support. Annual follow up review fees may be reduced or waived for clients who choose our investment management services.
Can I just pay for a one or two-hour consultation?
Yes. You can purchase an hourly consultation. The rate is $295 per hour in increments of one hour.
Is the financial planning engagement ongoing?
Except for hourly services the personal financial planning engagement is an ongoing, long-term relationship, unless and until one party desires to terminate the engagement.
Is it required that a client pay a renewal personal financial planning fee each year?
It is not required, however annual reviews are recommended. Our experience over many years has proven that clients who commit to annual reviews are more likely to accomplish their financial objectives.
Is client data kept confidential?
Yes, our contract requires that client data be kept confidential except where specifically authorized by the client, or necessary to provide services for the client, or required by law.
Describe investment management fees.
Our fees may vary depending on our estimate of the time required to fulfill our obligations to the client and other factors. Our strategy for setting fees is driven by a desire to be profitable and competitive. A typical investment management fee schedule is shown below. A given client may pay less or more. Once determined, the fee schedule will not change without timely notification.
FPAI Investment Management Fee Schedule
|Account Value (Includes associated accounts.)||Per Quarter Fee||Per Year Fee||Average Per Year|
How are investment management fees paid?
Investment management fees are drawn from clients’ accounts during the first week of each calendar quarter. The amount of the fee is based on the aggregate value of client accounts at the end of the preceding calendar quarter, adjusted for cash flows into and out of the portfolio during the period.
Do you charge performance-based fees, like hedge funds?
We do not take performance-based fees. Our investment philosophy and our investment strategies are based on the assumption that our purpose is first and foremost to help our clients manage risks. We do not believe that performance-based fees are consistent with our risk management purpose.
What types of clients do you serve?
Our clients are individuals, couples, trusts, estates or qualified retirement plans.
Describe personal financial planning.
The intent of a personal financial planning engagement is to assist the client in the development of a plan for accomplishing financial objectives. The planner will endeavor to understand the client’s circumstances and values in order to offer information and advice which will contribute to the successful attainment of stated goals.
Personal financial planning is a process. It is ongoing.
Initially, the process usually involves two or three face-to-face or virtual meetings during which the client and planner exchange information. The client provides information concerning her purpose and situation, and the planner provides insights and recommendations. Typically the planner will make use of specialized computer software to model various client scenarios. The purpose of such modeling is to provide the client with information for making decisions. Subsequent reviews may require only one or two meetings.
Can you do web conferencing?
Yes. We meet with many of our clients via secure video conferencing technologies, and we maintain capabilities for securely transferring data to and from our clients.
Describe investment management.
The intent of investment management services is to assist the client in managing portfolio risks. To that end, the adviser will develop and recommend an investment strategy which the adviser believes will manage the various components of portfolio risk appropriately and facilitate accomplishment of the client’s financial goals. We will then implement and maintain the plan.
Do you actively trade in client accounts?
We do trade in our clients’ accounts, but not too actively. Our normal posture is to trade when our automated trading software indicates that some account positions have moved beyond the tolerances specified in our models. However, at times we do hold or trade against the models because we believe it will be in our clients’ interests to do so. Investment results cannot be guaranteed, but we do our best to manage our clients’ accounts to meet their objectives.
Is there a minimum account size?
No. We desire to provide competent, objective service regardless of account size. However, of necessity, our implementation strategies will vary based on account size. Larger accounts benefit from greater diversification and economies of scale.
Are there risks?
There are always risks. The prevailing academic theories, known collectively as modern portfolio theory, suggest that the only risk-free investment is the short-term U.S. Treasury bill. By definition, this investment type has no credit risk and little interest rate risk, and historically this asset category has yielded a return approximately equal to inflation.
Of course, in a taxable account the return on this investment would be reduced annually by the owner’s income tax obligation; therefore, the investor’s purchasing power would be eroded year-by-year. In addition, there are periods during which the return on this asset is lower than inflation. Other investment types are more likely to suffer short-term losses, but may also be more likely to have long-term total returns greater than inflation. The single, perfect investment does not exist. It is our belief that a broadly and efficiently diversified portfolio of assets increases the likelihood that our clients’ financial objectives will be met.
Explain “broad, efficient diversification.”
As a risk management device, the idea of diversification is rather intuitive. We choose to not put all of our eggs in one basket to avoid the possibility of losing all of our eggs should that one basket come to harm. With regard to financial “eggs”, we can go further. Any single investment asset is subject to various risks. And, the economic circumstances that would cause the value of one asset to decrease would likely cause the value of certain other assets to increase. Economic circumstances are constantly changing, and the values and risks associated with various assets change as well. Through the use of broad, efficient diversification an investor hopes to manage risks by combining assets in such a way that the portfolio grows without unnecessary volatility.
How do we accomplish broad, efficient diversification?
We use every available resource to determine an appropriate action plan for our clients. We will use portfolio modeling software to assist in understanding the behavior of capital market assets historically but will rely ultimately on our experience and understanding to develop and implement the strategic plan.
Our primary research sources are the Morningstar and Schwab databases, which include global real-time and historical information concerning stocks, bonds, mutual funds, exchange-traded funds, hedge funds, indexes, closed-end funds, college savings plans, money market funds, insurance plans, separate accounts, variable annuities, and unit investment trusts. Access to this information allows us to gain an understanding of how the various asset categories have behaved under changing circumstances. We apply this knowledge in the development of investment portfolios for our clients. We use the Markowitz mean-variance portfolio optimization algorithm, applied with a substantial dose of good sense based on years of experience. While we believe that our strategy increases the likelihood that our clients will reach their financial goals, it must be understood that results are not, and cannot be guaranteed and that the risks of the portfolio are borne by the client.
How is our strategy implemented?
In the interest of reaching the client’s financial goals the adviser may recommend the purchase (or sale) of stocks, bonds, mutual funds, exchange-traded funds, real estate investment trusts, direct participation programs, bank certificates, guaranteed interest contracts, variable insurance contracts, or any other investment type that the adviser believes would be beneficial (or detrimental) to the accomplishment of the client’s objectives.
What specific assets do you use to implement your strategy?
In most cases, we choose exchange-traded funds (ETFs) to implement our strategy. ETFs tend to have very low ongoing operating expenses and maximum tax efficiency as compared with traditional mutual funds while still providing diversification within categories. We will usually recommend that client financial assets be held in accounts at Charles Schwab and Company.
Are asset distributions automatically reinvested?
Most often distributions from assets held in Schwab accounts will not be reinvested directly but will be automatically transferred to that account’s cash equivalent fund. Reinvestment will then be made based on the investment policy, and the adviser’s discretion.
Do you use other custodians besides Charles Schwab and Company?
Yes, in some cases Charles Schwab and Company may not be the best available custodian for a particular client asset or account. In those cases, we will recommend alternative custodians. We are able to securely integrate our investment management systems with custodians such as Fidelity, Vanguard, Wells Fargo, etc.
Do you do short-term trading?
We do not believe that short-term trading is likely to be beneficial to our clients. Nor do we believe that technical analysis or market timing strategies are of value.
When do you trade?
We trade when we believe the transaction(s) will prove beneficial to our client.
Has the adviser or a management person been involved in any legal or disciplinary event?
Neither the adviser nor any management person has been involved in any legal or disciplinary event.
Do you take custody of client assets?
We do not take custody of client assets.
Do you have investment discretion?
Yes. Our clients grant us limited power of attorney to operate in their accounts based on our agreed-upon strategy and to draw fees from their accounts based on our fee schedule.
How long have you been in business?
Financial Planning Associates, Inc., has been in business since 1998.
What is your longest client relationship?
Financial Planning Associates, Inc. has continuous client relationships since 1998. The firm’s principal, Carl Goodin has continuous client relationships since the mid-1980s.
Yours is a small company. What happens to your clients if Carl Goodin or another employee is unable to continue to provide services?
Our operations do not generally require urgent action. Our investment strategies are not based on frequent trading. In fact, a typical client account trades only a few times per year. We expect to remain willing and able to serve our clients for many more years. In the event that we would become unable to perform for our clients, we would recommend a satisfactory replacement adviser.
Does your office have a dress code?
Our office dress code is as follows: Dress comfortably. I will likely be wearing jeans and a shirt. But the jeans will be clean. And so will the shirt.
To schedule your free get-acquainted meeting with Carl Goodin, CFP® click here.
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