A Question of Value

In 2016, we  surveyed a number of our clients on a variety of topics. One of the “questions” related to understanding the level of our clients’ perceived value in working with us was: “I receive good value for the fees I pay” – a question that seemed pretty straightforward as we were selecting from the alternatives our consulting firm provided.

However, upon further consideration, we have come to realize that the concept of perceived value is easy to define, but difficult to measure. In order to do so, we also need to know which benefits are being considered and how their value is being measured.

We constantly strive to provide the most value possible to our clients. Our strategy is simple: provide better, more comprehensive services to our clients at more competitive rates than other firms offer.

While the fees we charge are referred to as investment advisory fees in the majority of cases, they almost always cover all of our advisory and financial planning services. These include not only investment management, but many other areas such as long-term wealth accumulation planning, retirement income and distribution planning, insurance planning, estate planning and the coordination, integration and implementation of planning strategies – all of which we believe add significant value beyond investment management even though quantifying the potential economic impact is difficult.

From the perspective of cost, our investment advisory fees are low by industry standards. In fact, others in the industry often advise us to raise our fees. Below is a graph illustrating our fee schedule relative to other similar firms using data from the 2015 Schwab RIA Benchmarking Study for advisers with assets under management between $100 million and $250 million.

A simple definition of value is: a measure of the benefit gained from goods or services. We strive to be valuable to our clients by providing comprehensive, customized and integrated financial planning that covers a broad spectrum of topics. While it is a standard practice within our industry to use a single “investment advisory fee” as a means of charging for financial planning, we hope you agree that it understates the scope of the work we do (click diagram).

Three Reasons Everyone Needs an Estate Plan

Estate planning is important on so many levels. And it’s not just for the wealthy.  Having a basic estate plan in place is essential for everyone – from avoiding confusion to caring for the loved ones you leave behind to being sure they are the ones who receive your legacy, not Uncle Sam.  The following are three distinct reasons for planning:

1. Beneficiary planning so that your assets to pass to who you want, when you want, and in the amounts you want. Having up-to-date Wills and/or Trusts can help avoid any confusion and ensure that your wishes are followed.

   Having up-to-date documents becomes even more important when a minor child(ren) is/are involved.  By creating the appropriate documents, you can name the guardian(s) you want for your child(ren) versus allowing the court to make the decision for you after it’s too late.  Also important to consider is the timing of distributions.  Staggering the ages that assets are received, such as 1/3 at age 25, ½ of the balance at 30, and the remainder at 35, will provide several opportunities for your child(ren) to learn to use the assets wisely.

2. To avoid probate, which can create significant delays in distributions, be time consuming, and make your estate subject to additional costs.  It also makes your estate a matter of public record, removing any privacy for you and your family.

   For any assets that will pass directly with beneficiary designations, such as life insurance and retirement plans, you should be sure these designations are up-to-date.  You might also consider the creation of a Trust(s) to own assets, which can help to avoid probate.

3. To provide for blended families in the case of divorce, death, and/or remarriage. With blended families, there are more opportunities for things to go awry and often times, spouses (or former spouses) may not see eye-to-eye on things.

Taking the time to be sure your loved ones are properly cared for is well worth your careful consideration – and the expense – to be sure your documents are structured appropriately. If you haven’t reviewed your estate plan recently and would like to, please contact us.  If changes should be made or documents have yet to be created, we are happy to provide you with sources for this.