What Does Fee-Only Mean?
Fee-only describes Financial Guidance Group, Inc.’s compensation method. We are solely paid by our clients, rather than commissions and sales fees, so our advice is unbiased and free from any industry or product affiliation. We work for you and you alone, not a mutual fund, insurance company or financial product vendor.
Why Is Fee-Only Important?
Fee-only is important because it removes any compensation-related conflicts of interests between you and your planner. The typical broker or financial advisor is paid not by the quality of their advice, but by how much product they sell or how many transactions they perform. Their incentive is to sell, not provide individual advice. Also, since the products they sell are usually insurance, annuities and mutual funds, they have no incentive to help you with other important areas of your financial life.
What Services Does Financial Guidance Group, INC Provide?
We offer Wealth Planning and Investment Management Services. Our wealth planning analysis provides a “second opinion” that will help our clients identify their current portfolio allocation, investment risk, historic performance and investment costs. Clients then, usually hire us as professional managers to watch over their investments, via our investment management services. As part of this service we will manage, monitor and report on your investments to ensure that your financial goals and objectives are met in a tax-efficient, reduced-risk manner.
How Do You Select Investments For A Person?
The most important part about selecting investments is to first understand your goals, risk tolerance and time-frame until you need the money. Our wealth planning analysis will give us a good idea of how we should allocate your portfolio overall. From there we look at economic factors, the valuation of various assets, and past performance of various funds and indexes to get the specific investments for your portfolio. While each individual has unique needs, we ensure that we broadly diversify each of our client’s portfolios.
How Much Do You Charge?
We charge a percentage of assets under management for people who hire us to manage their investments. The percentage is based on a sliding scale so the more assets we manage, the lower your fee percentage will be. These fees are billed quarterly in advance based on the value of your Portfolio at the end of each calendar quarter. To get our exact fee, please click here.
Are Your Fees Tax Deductible?
Yes. Section 212 of the Internal Revenue Code permits an itemized deduction for tax and/or investment advice in the miscellaneous section of Schedule A. It is subject to a 2% floor of the adjusted gross income on a personal tax return.
What Is A Fiduciary?
Investment advisors are bound to a fiduciary standard that was established as part of the Investment Advisors Act of 1940. They can be regulated by the SEC or state securities regulators, both of which hold advisors to a fiduciary standard that requires them to put their client’s interests above their own. The act is pretty specific in defining what a fiduciary means, and it stipulates that an advisor must place his or her interests below that of the client. It consists of a duty of loyalty and care, and simply means that the advisor must act in the best interest of his or her client. For example, the advisor cannot buy securities for his or her account prior to buying them for a client, and is prohibited from making trades that may result in higher commissions for the advisor or his or her investment firm. (To learn more, see The Rise Of The Modern Investment Bank.)
It also means that the advisor must do his or her best to make sure investment advice is made using accurate and complete information, or basically, that the analysis is thorough and as accurate as possible. Avoiding conflicts of interest is important when acting as a fiduciary, and it means that an advisor must disclose any potential conflicts to placing the client’s interests ahead of the advisor’s. Additionally, the advisor needs to place trades under a “best execution” standard, meaning he or she must strive to trade securities with the best combination of low cost and efficient execution.
Brokers are not held to this standard.