How To Choose A Financial Advisor In Lakewood, Colorado
If you are evaluating financial advisors in Lakewood, CO, there are a number of factors to keep in mind. First, ask yourself if you really need a financial advisor or if you are qualified to do it yourself. Next, it is important to understand what investment management is, and how it can help you reach your financial goals.
Another factor to consider is how comprehensive planning, which takes into account all of your financial and personal circumstances, can benefit you. It’s also important to understand the differences between brokers and financial advisors, and how they can influence your selection of a financial professional.
All these factors are covered in greater detail below. Click on any topic to review that specific information:
Given today’s complex economic and financial conditions, making financial plans can be challenging, to say the least. If you have extensive training in analyzing financial statements, projections, and investments, you may feel comfortable managing your investments and designing and implementing a financial plan yourself. However, gaining enough experience and expertise to feel comfortable doing so can be both time consuming and expensive in the form of mistakes made in the learning process.
When it comes to something as vital as planning for retirement or funding a child’s education, to name a couple of common major financial goals, many people feel they are better served by enlisting a financial advisor to assist them in the planning process.
Who can benefit from working with a financial advisor?
Just about anyone looking for help in reaching their financial goals can benefit from working with an advisor. Some common scenarios where a financial advisor can be of assistance include:
Pre and early retirees: Whether you are just entering into retirement or evaluating your retirement plans, important decisions need to be made. In these days of increasing lifespans, early retirees need to be conscious of longevity risk – the risk of outliving your income. As a result, it is important to pay extra attention to your portfolio allocation to ensure that it is designed to last a lifetime.
If you haven’t retired yet but plan to, in addition to portfolio allocation, it is also crucial to stress test your retirement income expectations. If they end up being higher than expected will you have enough savings to cover them? Should you set aside more for retirement now in order to improve your chances of living the life you want to live in retirement?
Business owners: Owning a business provides you with a number of options for planning for retirement and other financial objectives. At the same time, tax and retirement planning for business owners can be extremely complicated. A financial advisor can help you make sense of the options available to you as a business owner when it comes to asset protection, insurance and achieving your financial goals.
Medical professionals: People working in the medical industry often find themselves faced with choosing from a wide variety of retirement plans and compensation options. This can include 401k, 403b, and 457 plans in addition to employer-sponsored pension plans.
Physicians: Doctors are often faced with a number of tough choices with regard to their business. If they operate independently, setting up retirement plans and shielding themselves from liability requires making a number of complex decisions. If they work with a larger medical group or corporation there are also a variety of financial issues in terms of who is responsible for insurance, retirement plans, etc. that must be considered.
Newly married: Marriage brings with it a number of complicated issues related to tax status and how to handle joint and separate investment accounts. It can also present budgeting challenges, as the newly married spouses must find a way to work together when planning expenditures and setting aside savings.
Divorced: There are a number of financial challenges that accompany divorce, which can include making plans for living on a single income, keeping track of child support and alimony payments, and the need to recalibrate retirement plans and portfolio allocation, to name a few. It’s important to draw up a spending and savings plan that takes into account your new financial situation as soon as possible to deal with these challenges.
Selling a business: The sale of a business, in addition to a cash influx, typically involves making a number of important tax-related decisions. These can include structuring the transaction to receive payments over time or taking other steps to reduce the immediate tax consequences. Another major decision that must be made is how to invest the proceeds of the sale, whether to provide an income in retirement, to start another business, pay for a major transaction such as buying a house, etc.
Want to pay less taxes: The U.S. tax code features a wide variety of clauses that enable you to reduce the taxes you pay each year, from retirement plan contributions to passive income deductions, real property depreciation and more. To maximize the funds available to you for investment, savings or spending it is crucial to analyze your tax situation to look for ways to use the tax code to your advantage.
At The Normandy Group, we specialize in working with Pre and Early Retirees, Business Owners and Corporate Managers, Professionals, including Medical Professionals.
Read our blog article: Best financial planning tips for new physicians
One area where a financial advisor can offer professional assistance in the financial planning process is investment management. This involves not only selecting investments that offer the type of returns that can help you achieve your financial goals but also managing risk in the process. Investing in the highest returning, most volatile assets can work out well during a bull market, but if a bear market strikes, especially just before retirement, such a strategy may fail to achieve its intended results.
The advisors at The Normandy Group will work closely with you to help you achieve your financial goals and will prioritize keeping you informed so you feel more confident and in control.
Our investment approach takes into account both risk and reward when selecting investments. This is often done in accordance with Modern Portfolio Theory (MPT) or other such strategies that focus on selecting a portfolio allocation designed to provide the highest potential return for a given level of risk. We will make sure we understand your situation, goals, and preferences regarding risk tolerance.
When financial plans are made in isolation, without considering how each aspect of your plan affects the others, the results can be suboptimal. Comprehensive planning takes into account the links between the various aspects of your financial life to design a plan that addresses personal, social and financial wealth issues to balance your plan between these factors.
The goal of this type of planning is to match investment, tax, and estate plans to the whole person. Failure to do this can result in fragmented planning which may enable you to achieve one or more financial goals, but only at the cost of failing to achieve others. A well-balanced comprehensive plan considers your financial life as a whole to help you set goals that complement, rather than conflict with, each other.
At The Normandy Group, we look at the whole person and believe that creating a balance between your personal, social, and financial lives is the key to a lasting commitment to your goals.
Read our blog article: How a recession can benefit your financial plans
There are a number of differences between brokers and financial advisors that are of importance if you are considering working with a financial professional. Generally speaking, stockbrokers are more focused on providing transactional advice while financial advisors are focused on offering long-term advice centered on helping their clients achieve their financial objectives.
Financial advisors are typically considered to fall under the “fiduciary” standard, which requires that they put their clients’ best interests first when offering advice. Stockbrokers usually are covered by the less strict “suitability” standard, which only requires that they provide clients with advice that is “suitable” for them.
The way brokers and advisors are compensated fits into this distinction, as stockbrokers are typically paid via commissions on a per transaction basis, which can create a conflict of interest due to the potential for “churning,” when a broker makes trades in a client’s account solely for the purpose of boosting his or her compensation.
Advisors, on the other hand, generally work on a fee-only or fee-based model, whether through hourly fees for advice or via fees paid as a percentage of their client assets under management (AUM). This avoids potential conflicts of interest and earning fees as a percentage of AUM puts the advisor on the same side of the table as the client. The advisory fees are tied to the performance of the account.
In order to ensure you are getting advice from a well-qualified financial advisor, working with a CFP® Professional (CERTIFIED FINANCIAL PLANNER™ Professional) is recommended. To earn the CFP® designation, an advisor must complete courses and pass exams related to each segment of the financial planning process, including planning for retirement, managing investments, evaluating insurance, etc. Additionally, to remain certified, CFP® Professionals are held to the highest ethical standards and must complete continuing education. This means that they must act as a fiduciary by always putting their clients’ best interests first when offering advice.
At The Normandy Group, we have CFP® Professionals and are fee-based. You will always know what the cost of our services are.
If you are looking for a CFP® Professional in Lakewood, CO there are a number of factors to consider. These include:
Do you need a financial advisor?
While it’s true that if you have significant expertise in managing investments and modeling financial plans you may not need an advisor, for most people seeking an advisor with knowledge and experience in these areas is the most practical route to take. A financial advisor is trained to help you make important financial decisions and to help you monitor your financial plan on an ongoing basis and make any adjustments to those plans as needed. Unless you feel extremely confident in your financial planning and investing abilities, working with an experienced advisor is likely to be the best option.
Do they provide investment management services?
As described previously, investment management is about more than simply selecting assets, such as stocks or mutual funds, which may have impressive track records. It involves the crucial task of managing risk so that your portfolio is properly diversified to withstand market downturns without unduly jeopardizing your ability to attain your financial objectives. When evaluating financial advisors, make sure that they are equipped to provide investment management services that take into account the potential for bear, as well as bull markets.
Do they offer comprehensive planning?
Making financial plans in isolation can lead to results that don’t optimize your overall financial position. For instance, you might save a lot of money, but at too high a cost in terms of current spending; alternately, you might save too little today and find that your retirement lifestyle suffers as a result. Verify that any financial advisor with whom you are considering to work can perform comprehensive planning, rather than simply focusing on a specific area or two of the process.
Should you work with a CFP® Professional?
The CFP® designation demonstrates that a financial advisor has demonstrated a high degree of relevant knowledge with regard to the core functions of financial planning. It also shows that the advisor is committed to maintaining the high education and ethical standards expected of a CFP® Professional. Working with a CFP® Professional provides you with the assurance that your advisor has significant knowledge relevant to the financial planning process. Before hiring an advisor, check to see if they have attained the CFP® designation.
Are they local?
While the financial advisor you work with does not necessarily have to be local, there are advantages to working with an advisor in the Lakewood, CO area. First, many investors prefer to work with an advisor they can meet in person. Another reason is knowledge of local financial conditions, whether at the city, county or state level. Also, there can be differences in taxes on the local and state level, as well as the retirement plans offered in the area.
Read our blog article: Are my savings coronavirus prepared? Do I need a financial advisor?
This page has described a number of criteria you can use to narrow down your choices when selecting a financial advisor. These include the advisor’s approach to offering investment advice; their ability to offer comprehensive financial planning; whether they have been granted the CFP® designation, and if they are based in the area.
At The Normandy Group, we focus on offering investment advice that is aimed at helping our clients meet their investment objectives through diversified portfolios that take into account both risk and reward potential. We focus on comprehensive financial planning that considers the whole person when making strategic financial decisions.
We are CFP® Professionals and Investment Advisor Representatives in Lakewood, CO. Our clients trust in us to put their best interests first as fiduciary financial advisors when it comes to designing plans to help them meet their financial goals while consistently monitoring the performance of their investment portfolios.
Contact us today, and find out how The Normandy Group can help you achieve your goals for tomorrow.