Our Money: What Successful Couples Do

You would not expect a business to succeed unless the owners established short and long-term goals, and took the time to track expenses and income. When it comes to couples and money, the same expectations hold true. Setting goals and tracking financials can make all the difference to a lifetime of financial success.

But as you know, not all couples experience financial success. What stands in the way? First, couples are often unsure how to collaborate with one another to make good financial decisions. Second, money is personal and each partner brings his or her own values, desires, habits, and baggage from the past into the conversation. However, as you are about to see with the story of Eva and Brian, the past does not have to present an obstacle course to financial bliss within relationships.

Eva, aged forty-two, works for a local university and was never married. Brian, aged fifty, is a partner at a large law firm and has two children from his first marriage. You can imagine how different their incomes, savings, and lifestyle choices were before they met. They decided to contact Entrust due to their uncertainty about how to fairly join their diverse finances and investments, a goal they wished to achieve prior to their upcoming marriage.

While there is no magic formula because financial success in marriage is a journey, not an end-game, the following steps helped Eva and Brian to get on track:

  1. Put all your cards on the table. Before you marry, be honest about where you are today financially––review your current situation, including your income, expenses, debt, savings, and financial goals. Not surprisingly, this type of truth party takes courage. In our illustration, Eva was ashamed that she still had some student loan debt to re-pay; Brian was embarrassed that his investments had been in cash since 2008.
  2. Determine your income and expenses. With a clear understanding of the pieces of their financial puzzle, Eva and Brian were then able to collaborate regarding expenses. They now use mint.com to make it easy to monitor their cash-flow, and report how reassuring it feels to know how much money comes in, how much goes out, and to have a firm grasp on where their money is spent.
  3. Create and work toward precise goals, and specify timelines for achieving them. Brian and Eva are excited to be aiming toward achieving retirement goals as well as planning to provide for an elderly parent and special needs child. They conduct monthly financial check-ups and find creative ways to celebrate when their progress reports are right on track.

Today, Eva and Brian feel a revitalized sense of financial security because they know that they are on track–collaborating and sharing responsibility for achieving everything they need for a lifetime of financial success. If you need help fine-tuning the financial bliss in your relationship, contact us right now: info@entrustfinancial.com or 610-687-3515.

THERE IS NO FREE LUNCH

Business Owners interested in 401kIf you are like many of us, you believe your employer-sponsored 401(k) plan is “free.” After all, you do not receive a fee report outlining the calculation of your pricing. And perhaps with respect to your personal investing, you or others you know may also have reason to believe investment advice is virtually free. For instance, one commonly heard claim some advisors make to clients is: “You don’t pay me. My firm pays me.” No wonder such investors assume they are getting a free lunch.

Kerri and Dan’s experience illustrates this important concern. Kerri and Dan are entrepreneurial and own a law firm that they have grown into a successful business with close to one hundred employees. They established a company 401(k), so that they and their employees could save consistently for retirement. Believing their 401(k) to be virtually free, they hired the same advisor who provided the 401(K) to assist them with the management of their personal assets. It did not occur to them that the absence of a quarterly fee report outlining the calculation of pricing–for both their company 401(k) and personal portfolios–was a signal of hidden costs.

What prompted Kerri and Dan to question their current financial advisory relationship and to schedule a meeting with Entrust for a second opinion? It was the attention-getting new regulations, applicable to employers offering a company 401(k). The new governmental regulations, which among other things emphasizes the employer’s responsibility to provide transparent fee disclosures, caused Kerri and Dan to realize that they were not exactly sure what their investment management expenses were.

Entrust’s fee-based business model and long-standing commitment to transparent reporting of investor costs appealed to Kerri and Dan. Our work together led to the identification of hidden expenses that were substantial. We were then able to provide a proposal to fulfill their 401(k) and personal investing needs that utilized transparent fee reporting and less expensive investment management.

Common examples of hidden expenses that many investors pay without realizing it include:

  • Revenue sharing among mutual funds, another investment company and the advisor
  • Monthly administrative fees that provide additional compensation
  • Excessive internal expenses within mutual funds

Like Kerri and Dan, you may be ready to move beyond hidden costs such as those named above and instead, discover the benefits of a transparent fee model to fulfill your investing needs. We would love to start a conversation: info@entrustfinancial.com  or (610)687-3515. Better yet, if you are a business owner and would like an evaluation of how much your “free lunch” firm 401(k) and personal financial advice really costs, contact us right now for a second opinion: info@entrustfinancial.com  or (610)687-3515.

Financial Security Throughout Retirement

Couple saving for retirementWe spend most of our lives working and saving so that at some point we will have the financial freedom to step away from the grind and do something else.  Do you know if you are on track for financial security throughout retirement?

Just posing this question reminds me of our clients Brent and Wanda. When we began working together in 2005, they were about forty years old. As small business owners, their demanding schedules prompted them to aspire to retire early–preferably before turning sixty years of age. Their rationale was that since they devoted almost every waking hour to their business, they wanted the option to step away sooner rather than later, and start enjoying the money they were accumulating from all their effort.

When we met initially, Brent and Wanda were worried. They could easily identify their primary goal: retire, and when they wanted to reach it: before the age of sixty, but they had no idea what steps to take to accomplish it. Preparing financially to have enough income during retirement felt like an insurmountable task to them.

To fulfill their goal within the timelines they preferred, we began by creating a retirement game plan with three major steps:

  1. Identify their “number.”
  2. Implement a savings plan to attain their number.
  3. Design an investment portfolio.

Having agreed upon the strategic steps to take, it was time to dig into the details for each step. Read on!

Step 1: Identify their “number.” Brent and Wanda were diligent savers but had no idea how much to save to fully fund their retirement; in other words, their number. We began by establishing where they were financially, and followed that analysis by making projections for future income needs. To replace the income for their current style of living, aiming for financial security throughout retirement, we discovered that a minimum of $4.5 million would need to be accumulated in their retirement accounts.

Step 2: Implement a savings plan to attain their number. Once we identified their number, $4.5 million, it was time to calculate how much Brent and Wanda would need to save annually and in what type(s) of accounts. For instance, it is typical to maximize tax-deferred accounts for annual retirement savings. Business owners have a variety of such accounts, or retirement plans, to choose from. We recommended that this couple utilize a 401k and Profit Sharing Plan because these plans permit maximum savings for the future, in part by reducing current income tax liabilities.

Step 3: Design an investment portfolio. The right portfolio of investments makes all the difference in whether investors achieve their retirement portfolio goals, and achieve them on time! Disciplined asset allocation has been proven time and again to be the effective choice for achieving the results required to attain those all-important retirement numbers.

Follow the fantastic and successful example of Brent and Wanda. Contact us today to confirm that you are on track for financial security throughout retirement.

Entrust Video: What do you need to consider when hiring a financial advisor?

NewsWorthy, Entrust’s monthly video intended to help you make good financial choices, focuses today on:  What do you need to consider when hiring a financial advisor?

To get your thinking started, consider whether you want to work with an advisor who focuses on investment products and pretty much stops there, or whether you prefer to work with an advisor who partners with you to help you make good financial decisions in all aspects of your life. You can usually tell the advisor’s focus before the first meeting, based upon the documents you are asked to bring with you.

You may be asked to bring only investment statements. On the other hand, if you are asked to bring all documents relating to your financial life (investment statements, tax returns, legal docs, insurance policies, and so forth), that is a sign that the advisor’s approach is to get a good understanding of your financial concerns that go beyond investing, too.

Another key consideration is communication. For instance, when you first meet with the advisor, how do you feel? Does it seem that the meeting is primarily designed to tell you about their firm and their products? Or do you feel like the first meeting is structured for the advisor to listen to you, to better understand you–your style of living, values, goals and needs? You should walk away from the meeting feeling like the advisor truly understands you, and is genuinely concerned about all aspects of your financial well being. In other words, the advisor has a strong commitment to partnering with you using a holistic approach.

We hope that you find this video helpful. Please share it and visit us today: Entrust Financial or Balancing Act Book