Tag Archives: Choosing an investment firm

Financial Guidance for Regular, Middle Class Investors

As major brokerage firms focus on the multi-millionaire and billionaire clients, the so-called “mom and pop” investor class, those that typically define themselves as “regular” or “middle class,” is getting less love.  Yet these are the people who are most in need of financial advice.

If you have, say, Donald Trump’s wealth, you really don’t need much advice on your saving rate… or advice on when to apply for Social Security.  You can be sure that Trump has a plan, but it’s not going to focus on retirement.

The middle class needs this.  But it’s hard to get unbiased investment and planning advice from the major Wall Street investment firms.  That’s where the growing ranks of Registered Investment Advisors (RIAs) come in.

In many cases RIAs are experienced financial consultants who don’t want to be employees of huge mega-banks pushing proprietary products.  They want to do the right thing for their clients; to act as fiduciaries.  They want to be able to give truly unbiased advice about the right investments for their clients, not rewarded by a big firm for selling in-house mutual funds or the deal of the day.

RIAs get to know you as individuals.  They have access to the latest technology.  Many are willing to create a financial plan for you without requiring you to turn your investments over to them.

If you hire them to manage your money they will often save you money by reviewing your estate plan, give advice on how to title your accounts, send tax information to your accountant, and make suggestions for passing your estate to your heirs with the least fuss.  All this as part of their over-all service.

If this sounds like something you would like to explore, check out our website, give us a call or come see us.  We’re conveniently located in North Suffolk behind the police and fire station on RT. 17.

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Breaking Away from the Big Box Store

A new independent RIA (Registered Investment Advisor) sat down for an interview recently about the reasons he left one of the major investment firms. We found most of his reasons familiar because they are the same reasons we set up our own independent firm five years ago.

Here are some of the things he said.

The financial world has changed ….

Besides working at [three different firms I have] more than 30 years in the business. Post–financial crisis, the world around us has dramatically changed. Over the past several years, I’ve seen former colleagues leave to start their own practices. They were doing so well that about two years ago I started seriously exploring my own options.

He likes the freedom of independence …

At [his last firm] I found their support a little cookie-cutter in nature. As part of an organization serving about 7,000 other advisors, I felt like my practice was being forced to manage our clients in a way that appealed to the lowest common denominator. … I still felt limited in what type of services I could offer my clients.

Simply helping business clients connect with bankers, lawyers and other professionals can prove very beneficial. At [Big Box Store], I had to make sure to refer outside businesses only if they met with the wirehouse’s approval. I found that somewhat limiting. … So being able to control my own referral network should create more opportunities to provide a broader network of value-added contacts to clients.

What else can you do that you have not been able to do before?

A big advantage of being independent is being able to advise clients with assets held at other institutions. But we’re also finding more freedom in other areas. For example, one of our clients owns a business that lends to farmers. He has asked me to help open a new line of credit worth about $30 million and shop for the best deal. With another client, we’re helping him interview investment bankers and begin a formal process to sell his software business, which we think is worth between $40 and $50 million.

At Korving & Company, a lot of what we do for our clients has nothing to do with investment management. Right now we are helping a recent widow gain control of her financial affairs. She asked us what we owe her for our services. As a client, there is no extra fee; it’s part of our holistic service model when we act in our fiduciary capacity.

If your financial advisor works for a major firm he is constrained – in many ways – by the limitations placed on him by his employer. Give us a call and see what independence can do for you.

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What makes us different?

When most people think about investment firms with tens of thousands of “investment advisors” they think of people who call them up with recommendations to buy a stock or bond for their account.

But what’s the objective? What are you trying to accomplish? Will his recommendation take you closer to your goal, or farther away? What’s his motivation for the suggestion?

Think about getting on an airplane. You want to go the Phoenix. Does the pilot ask you what route you would prefer? How fast he should fly?  How about a detour to Minneapolis?  If he did, you would probably get off the plane. It’s his job to pick the best route in the shortest time and with the least risk.  That’s what you’re paying him for.  You want him to do the flying, you expect him to get you there without your input.

That’s what a real financial advisor does for you. He doesn’t suggest buying or selling stocks, bonds or mutual fund. He picks the best investments that will lead you to your goal and keeps you advised of your progress. He’s not selling investment products, he’s taking you to your destination in the best way possible.

At Korving & Company we ask you what your destination is, what your goals and dreams are and then put together a plan … and a portfolio that’s designed to get you there with the least risk in the time of your choosing.  We are Certified Financial Planners (CFP)™

That’s what makes us different from the Big Box stores. Check us out on the web.

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Merrill Lynch to Clients: Join “One” or Pay Commissions (via Financial Advisor Online)

The largest investment firms are moving their clients to their fee-based platforms.  Most of the other firms are doing the same.

There is nothing wrong with fees rather than commissions.  In fact, we believe that fees are preferable for most investors.

But they are not always the right, or the lowest cost, option for some.

For clients who have less than $1 million, the fees with “One” are often higher than they can get elsewhere.

If you are a customer at one of the “Big Box” stores and want to shop around to see if you can get better service and perhaps a better price.  Check us out.

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Survey says: do-it-yourselfers prefer guidance.

A J.D.Powers survey of self-directed investors asked them to rank their investment platform in order of preference. Schwab took the top spot and Merrill Lynch and Wells Fargo vie for the bottom spots.
What I found most interesting is that about one-third of all self-directed investors would prefer guidance.

Meanwhile, at least a third of independent investors polled in the survey would prefer some sort of guidance, such as additional financial planning tools or access to a live FA, and those who feel that they received that guidance are overwhelmingly happier with their broker and feel more knowledgeable about the value of the service they get.

So if investors want guidance and are happier when they get it, why don’t they seek it out? We’re not sure of the answer. But if you happen to be one of the people seeking guidance and want to see if we’re the ones for you, please let us know.

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The right time to invest?

time to invest

Is this the right time to invest?  Good question.

Here’s another good question:  when is the best time to plant a tree?
The answer:  “Now.”
Here’s a better answer:  “When you were a child.”

Time is our most precious resource.  A wasted moment is lost forever.  Trees take time to grow.  The same is true for wealth.

We are often asked “is this a good time to get into the market?”  The answer is that there is no better time.

Here’s why.

If you put your money in a savings account you might get about 1%.

At that interest rate it takes 70 years to turn $100 into $200.

If you could grow your money an average of 5% per year, that $100 would grow to $200 in 15 years.
If you can get 6%, it would take 12 years to grow to $200.
If you can get 7%, 11 years would get you to $200.
If you can get 8%, 10 years would get you to $200.

At 15% your money doubles every 5 years.

We are big advocates of people working hard for their money.  But we are just as insistent that money should work hard for them.  Why be a hard worker with lazy money?

Investing is one of those things that people put off.  But doing so wastes their most valuable resource:  time.

If you’re not happy with the way your money’s working for you, check out our website or give us a call.

No sales pitch, no pressure. Just good advice. That’s the reason we won the 2015 Suffolk Small Business of the Year award from the Hampton Roads Chamber of Commerce.

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Avoiding the sales imperative

Have you ever gone to an “investment seminar” that was really a sales pitch for a product? If you live in an area that draws retirees, you can dine out almost any day by going to lunch or dinner seminars hosted by insurance salesmen or stock brokers.

Listening to a financial salesperson is perfectly appropriate, but most of the time people put the cart before the horse. The first step to achieving your financial goals is to determine what those goals are. They are not the same for everyone. One person may believe that he who dies with the most toys wins. Another may want to live the rest of his life in contemplation, to write or to practice spirituality.

One of my clients received a life-changing financial gift and now wants to share her bounty with her church and to provide scholarships to students because she recalls how difficult it was for her to finish college.

My role, the role of a true financial advisor, is to help her achieve her goals in the best, most efficient way possible.

The role of a financial advisor is primarily to help his clients achieve their goals, whatever they may be. In this role he may manage his client’s assets, he may provide tax guidance, he may provide estate planning, and counsel his clients on charitable giving. But note that the focus is on the client, not the sale of the annuity, life insurance policy or the mutual fund. The goals of the client are first, last and always the objective.

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Do you have a Dusty Trust?

What’s a dusty trust, you may ask, or a dusty will? They are trusts and wills that are so old that you have to blow the dust off. It’s a term made up by David Richmond of Eaton Vance.

Many actually THINK they are speaking the truth. For them, the definition of estate planning is the will and trusts they set up at age 35 when their youngest kid was still in diapers. Doesn’t matter that they are now in their late 60s and have accumulated millions since those early hopeful days, including all sorts of treasures, especially the most precious ones … grandchildren

But it also applies to trusts and wills that are not very old. The estate tax laws have been changing almost every year for the last decade. That means that terms like “estate tax exemption” now have very different meanings than they did 10 years ago. It’s possible that you could accidentally disinherit your spouse unless you update your estate planning documents.

Beneficiary designations should also be reviewed regularly. I spoke with someone recently whose wife passed away earlier this year. He was forgetful, and his investment account still had his wife’s name on it. She was the beneficiary of his IRA as well as his life insurance policy. Her name was still on the deed to their home.

The role of a good Registered Investment Advisor (RIA) like Korving & Company is to review your estate plans and beneficiary designations, advising you about changes that you need to be aware of. Whether its changes in the tax laws or changes in your personal life, keeping you updated will keep your heirs from inheriting a tangled mess.

For more information, get a copy of our estate planning guide: Before I Go.

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What clients say about our firm

We have been doing some market research recently.  We asked some of our clients to come in and tell us how they would describe our firm.  The other day a retired couple and their daughter came in and I asked them to tell me in one word or a brief phrase how they would describe us.  Here’s what they said:

  • Caring
  • Honest
  • Personal
  • Not a big Wall Street firm
  • Works for me
  • Cares for my financial well being
  • Talks to me
  • Class act

If you’re looking for a firm that’s honest, knows you personally, cares for you, works for you, and is in regular touch with you, let us hear from you.  We may just be the right fit for you.

 

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