Posts Taged ask-an-advisor

Ask an Advisor: What does a good financial advisor do?

Transcript

Aaron: 00:09
Hi, my name is Aaron Puckett. I’m a financial advisor with Puckett and Sturgill Financial Group, here with Jacob Sturgill and this is our Ask An Advisor series where we have a chance to hear common questions or receive questions in through our website and provide answers, so question that we’re going to address today is what does a good advisor do?

Jake: 00:32
That’s a great question, Aaron, and so what I think a good financial advisor does is really boiled down into four main things. The first thing is to clarify your financial goals, right? That’s just simply to say who is it and what is it and when is it that you want to do whatever it is that you want to do. From there it’s to take a look at your current situation and define your current reality and that’s just taking a comprehensive look at all of the factors of where you are today and then to plot the course of how do we utilize those assets and where you are today to get you to your financial goal. That’s the financial plan.

Jake: 01:16
But we all know that life isn’t linear and so this is point three, is it’s really to make the course corrections along the way because I’m sure your life hasn’t gone in a perfect … And you’ve had some surprises along the way, so it’s to provide the course corrections along the way. So what you notice here is I left the investment component out to last because well, investment management is important and is a core component of what we do, the investments really need to be designed to fit the financial plan and to change when the financial plan dictates not when the markets or the news make it seem like we need to make changes, so to fit them into the plan and not the other way around.

Aaron: 02:02
Yeah, so setting my goal, helping me understand where I am, what I need to do to get there, but then maintaining that relationship along the way so that we’re constantly changing and amending the plan and helping prevent any missteps along the way. Yeah, and really, I mean behind all of it is the relationship because a good advisor is going to have a good relationship built upon trust and understanding with their clients and if you have a good relationship with an advisor, I think it allows them to be a good advisor.

Jake: 02:36
Exactly.

Aaron: 02:36
But if there’s not a good relationship there then I don’t think that advisor is able to do a good job.

Jake: 02:43
Exactly.

Aaron: 02:44
Thanks for sending us your questions. I hope that you won’t be slow to call us or e-mail us if you have any questions. We want to provide good answers so thank you for joining us.

It’s Your Turn to Ask

 

 

Ask Aaron: What Steps can I Take to Manage My Investments?

As an investor, you want your investments to perform well and are poised to help you meet your financial goals. Today we’re talking to our own Aaron Puckett, CFP® about some steps that you can take to manage your investments.

Diversification is Key

Even if you’re new to investing, you’ve probably already heard someone mention diversification as a way to position your investments to handle market fluctuations and unexpected loss. But it can be tough to understand exactly what diversification is, how it can help, and how to employ a diversification strategy in your portfolio.

A diversified portfolio is one that is comprised of a variety of investments. One main advantage to the diversified portfolio is that you have the ability to choose investments all along the risk spectrum. This means that if you are interested in a particularly high risk investment, you can balance that investment with other lower risk ones in seeking to insulate your portfolio from total shock should the high risk investment play out badly.

But, of course, all investments carry with them some type of risk. Even supposed “low risk” investments can perform poorly or suffer with a market downturn. So, risk shouldn’t be the ultimate test of whether an investment makes the cut for your diversification strategy or not.

Paths to Diversification

It’s important to note that even a portfolio with seeming diversity may not actually be all that diversified. For example, investing in a bunch of corporate stocks might feel like a diversified activity – after all, there are a variety of differently sized brands across many industries, all with different stock offerings. However, filling your portfolio with a whole bunch of one type of financial product still leaves you vulnerable to weaknesses specific to that financial product.

To achieve true diversification, you want to consider a variety of different financial products with which to fill your portfolio. This mix might include stock products, bonds, and other investment vehicles.

Or you may prefer to participate in a managed fund, like a mutual fund, that pools your investment with those of other investors so that you can participate in a selection of investment opportunities that would otherwise be closed to a single investor. In addition to attended portfolio management, a managed fund generally offers simple way to diversify without a lot of extra effort.

Choosing Your Diversification Strategy

There’s no right path that offers the perfect blend of diversified investments for every investor. In fact, there are a lot of factors that go into determining exactly which portfolio mix is preferable for your investment activity.

Factors like your long-term savings goals, investment threshold, risk tolerance, and value orientation play a large role in narrowing the investment field and developing a custom diversified portfolio. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

You want to work with a professional financial advisor, like a CERTIFIED FINANCIAL PLANNER™ professional, who can help you to connect the dots between where you are now and where you want to be financially. Your advisor should ask questions, not only about your long-term financial goals, but about your personality and your lifestyle to get the best feel for which diversification strategy may likely bring you both confidence and help you pursue desired financial performance.

To learn more about how a CFP® professional can make a difference in your investment strategy and long-term financial outlook, contact Puckett & Sturgill Financial Group today to schedule a discovery meeting with one of our five CFP® professionals!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Stock and mutual fund investing involves risk including loss of principal.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Ask an Advisor: What does your first meeting with your financial planner look like?

Transcript

Paul: 00:09
Hi. Welcome to Puckett & Sturgill Financial Group’s Ask An Advisor segment. I’m here today with Aaron Puckett, certified financial planner with Puckett & Sturgill. We’re here to talk today about when you come into the office and you’re going to have an initial meeting with a financial planner, what’s that look like, and what do we think? So we’re going to have a little discussion about that, and talk about what you should expect.

Paul: 00:31
I know one of the first things when someone walks into the office is, they’ll come in, they’ll maybe wait for a minute while we gather our things and one of our administrative staff lets us know they’re here, and we’ll sit down in the conference room. What’s the first thing that comes up?

Aaron: 00:47
Yeah, I think this is one of the questions that people get nervous. They’re coming in, they don’t know what to expect. Maybe they never met with us before, met with an advisor before.

Aaron: 00:57
So first thing we’re going to do is usually give them a little bit of a high level view of how our firm works, what it exactly is it that they should expect from an advisor. We usually explain how our compensation models work, so they know how they’re-

Aaron: 01:14
How we’re being paid, how it kind of works in our industry. And then it’s going to be a lot of time for us to just kind of connect with them. I consider that first meeting as a time for them to get to know us, us to get to know them, and for us to just see if there’s a connection. Most of the time we’re not really giving a lot of advice in that first meeting.

Paul: 01:36
Yeah. It’s essentially information gathering, get to know you type of situation, and sometimes there’s an organizational component to it because folks may or may not have all their ducks in a row, and that’s okay. They may not be organized. That’s what we’re here for.

Aaron: 01:50
Yes.

Paul: 01:50
To help create that relationship where we can help you organize and put everything into one place, and make it makes sense.

Aaron: 01:57
Yeah.

Paul: 01:57
And I think that’s one of the things we love to do in that first meeting.

Aaron: 01:59
I’ve heard you call it financial triage sometimes with people. You know, we’re trying to find out what are the most pressing issues? What are the things that we need to really try to address? I guess the one key component to every first meeting that happens is we schedule a second meeting.

Paul: 02:16
Yes, yeah, yeah.

Aaron: 02:16
Because you just don’t accomplish everything in one meeting.

Paul: 02:19
Yeah, and the truth is, and I think that folks should understand this as we get to know each other, it’s a relationship business, and we don’t expect to make decisions that first meeting. We expect those decisions to be made out into the future, and I think that’s what, I think if there’s anything that anyone would take away from this conversation is that this is not pressure, this is not some sort of sales, sales pitch. This is can we help you, can we get your situation figured out and let’s hopefully make, let’s not make decisions today. We’ll make-

Aaron: 02:46
That’s an important point. We don’t ever ask a client to make a decision while they’re sitting in the office.

Paul: 02:53
Right.

Aaron: 02:53
You know, we’re always sending them home and saying “Take your time. Think on this.”

Paul: 02:57
Yeah.

Aaron: 02:58
“Sleep on it.”

Paul: 02:59
Yeah.

Aaron: 02:59
“Talk to your spouse about it,” and then we get back together to implement things.

Paul: 03:03
I think that’s a great synopsis of a first meeting, Aaron.

Aaron: 03:06
Please don’t hesitate to ask your question. Ask through the website, email us, call us, we look forward to connecting with you and it’s our pleasure. So please, give us a call.

It’s Your Turn to Ask

 

 

Ask David: What are the Top Considerations to Make Regarding My Financial Decisions?

Sifting through your financial decisions requires attention to detail and management of more than a few moving pieces. Today, we’re talking with advisor David Hemler, MS, MPAS®, CFP® about some of the primary considerations to make when thinking through financial decisions, big and small.

Consideration 1: Risk

Are you considering doing something with some of your money? What’s the risk? Everything has a risk and usually if something sounds too good to be true, it often is.

Your financial advisor can help you navigate the potential risks associated with your financial decisions, whether you’re planning to make a large purchase in the near future or are considering your retirement savings plans.

Consideration 2: Taxes

Many folks who have gotten to know me have likely heard me say; “risk and taxes, risk and taxes…” These are two main factors of working in financial planning.

While paying taxes is a certainty, overpaying on your taxes doesn’t have to be. Financial planning and maintaining a cohesive tax strategy can prevent you from paying too much in taxes on your investments, returns, and withdrawals. Your financial advisor can be an invaluable partner in determining a tax strategy that may save you money over time.

Consideration 3: Allocation

Allocation refers to the areas where you have your wealth allocated. Most people consider their stocks, bonds, cash and real estate investments as the primary areas where their assets are concentrated. But it’s important to know where your assets are distributed and how this lines up with your risk tolerance or risk acceptance and tax strategy.

There is no one size fits all approach to allocation planning, and it’s important to talk to your financial advisor about different ways you might allocate your wealth. Age-based investing and general rules of thumb come into play here, too, so it’s a good idea to work with an advisor who has a solid understanding of your situation and goals, as well as the investment options you have before you.

Consideration 4: Diversification

In some ways, diversification is similar to allocation, but with a little more nuance. You can think of allocation as the way your assets are distributed throughout larger baskets and diversification as the components that make up those baskets.

For example, if you have stock investments, you wouldn’t want to put all of your investment into a single stock. Instead, you’d split your investments between various stocks and fund options to build a more robust portfolio.

More diversity in your financial makeup makes your finances more likely to withstand market fluctuations and varying risk levels across your asset allocations.

Consideration 5: Fees

There are fees associated with many of your investments and financial activities. Sometimes, it can seem like choosing a lower fee investment is better than a higher fee one, if the returns from each are equal.

But, as with many things in finance, things aren’t always as they appear. The best way to avoid tying your finances up in unnecessary fees is to work with an advisor who can help you to understand the various fees, including hidden fees, that your financial decisions might incur.

Consideration 6: Faith

Lastly, one of the last things to consider in making your financial decisions is your faith in the decisions that you’ve made. While emotional investing isn’t the ticket to reaching your goals, having faith in the process is an essential part of managing your wealth.

When you consider a dollar, think about how you might invest it, how long it can stay there, and how ups and downs might bring you a return or loss on that single dollar. Now, apply this principle to your financial decision making process and you’ll start to see how the faith aspect works when it comes to wealth management.

Do you have money questions? Contact Puckett & Sturgill Financial Group to learn about how we can help you make informed financial decisions with confidence. Be well and prosper!

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Ask Deborah: Should I Convert my IRA to a Roth IRA?

Creating a retirement strategy is an important factor in planning for your ideal financial future. Whether you’re at the first steps and are trying to identify your options or are up for a review of existing accounts, you have plenty of decisions to make.

Today we’re talking to our very own Deborah Williams, CFP to learn more about a popular retirement topic: should I convert my IRA to a Roth IRA? She’ll answer some questions you may have about who is a suitable candidate for a conversion and what benefits such a decision allows.

If you have retirement accounts and are considering an IRA conversion, grab a cup of coffee and stay a couple of minutes as we explore the details of this option for your retirement strategy!

Identifying A Suitable Candidate for a Roth IRA Conversion

Before you determine whether to make the switch from an IRA to a Roth IRA, you want to identify whether this is an appropriate move for you as an individual. While everyone is unique and your retirement needs may likely differ from those of your neighbors or coworkers, there are some general categories of investors for whom an IRA conversion makes sense.

Younger investors, for example, can generally benefit from a conversion to Roth IRA, since they have the time to let the investment account compound and grow. If you’re not going to be dipping into your retirement funds for a few decades yet, you may want to consider making the switch.

Since Roth IRA accounts offer tax savings on distributions and withdrawals, it may be beneficial for those who are in a lower tax bracket currently and anticipate that they will be in a higher tax bracket during retirement to make a conversion. This way, they will pay less tax on the conversion due to their current bracket but enjoy the break later on when they are taking distributions and are in a higher bracket.

Roth IRAs can also be a strategy for investors who are approaching retirement age and want to avoid having to take their required minimum distribution that is mandated at age 70 1/2. In fact, if you plan to sit on your IRA funds and prefer not to use them extensively during your retirement, these accounts are ideal for passing onto your heirs tax-free.

Tax Considerations of Converting to a Roth IRA

For many, the switch from a Traditional IRA to a Roth IRA is motivated by the tax benefits of making such a move. Unlike the IRA there is no tax credit for contributions to a Roth and the value of the account at the time of conversion to a Roth would be added to taxable income for that year. So if your IRA is down in value due to a market loss it may be a good time to consider converting. But if you aren’t able or willing to make the federal and state tax payments that will be attributed to the switch then conversion will not be right for you.

Roth IRA conversions can also offer very specific tax benefits for business owners who are recording a net-operating business loss. Under certain situations, they can use the value of their loss to offset the additional taxable income created by the Roth IRA conversion. With proper planning and consultation with the CPA even an unfortunate business loss may benefit the owner’s long term retirement plan. Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

Your Retirement Savings Options

Deciding whether to convert to a Roth IRA is a personal decision that requires careful consideration. If you’d like to learn more about your IRA options or start planning for your retirement, feel free to contact Deborah at Puckett & Sturgill Financial Group for a discovery meeting.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Ask David: How Do I Create Retirement Strategies?

When you’re looking toward retirement, there are plenty of considerations to make as you put investment strategies into motion. You, like many investors, are probably interested in learning how to make smart moves today in the hopes of building a solid nest egg for tomorrow.

But what are some ways to strategize for retirement?

Today, we’re talking to our very own David Hemler, MS, MPAS, CFP to learn more about some of the most important factors to consider when planning your retirement income.

Take Your Lifestyle Needs into Account

Before you plot a course for retirement investing, it’s important to consider your lifestyle, both your present preferences and what you anticipate your future to look like. If you’re married and plan to retire, you also need to take into consideration your spouse’s preferences when factoring your future cash flow needs.

For example, if you and your spouse enjoy activities with different cost factors, you need to reconcile the differences and make a plan that accommodates your combined ideal lifestyle. Additionally, you want to factor in your anticipated health and activity levels, as well as the length you desire your retirement to be.

Once you have these parameters in place, you can start to put together a plan that encompasses the future period of time that is “your retirement”. Factors like average costs of living can be a general guide, but the cost of funding your lifestyle is an important way to figure your retirement needs.

Start Investing as Early as Possible

The ideal time to start investing in your retirement is as soon as you start to earn income. For a majority of earners, this would put the beginning of retirement savings in their teens or early twenties. But even if this doesn’t apply to your situation, it’s never too late to start putting money aside for your retirement needs.

There are two factors that play into your retirement savings planning. The first is the amount of money you need to save, or your capital needs planning goals. The second is the compounding power of the money you’ve already set aside. When you have funds set aside from your first job or two -even a small amount -, that money can potentially earn more over decades of your career and put you closer to your goals.

Find a Strategy that Works for You

Retirement planning would be easy if there were a safe investment vehicle, like a CD, that guaranteed 6% or 7% in interest. Then you could take what you needed and would allow the rest to compound over time.

But in reality, these types of investments don’t exist these days and it can be difficult to predict what today’s investments will yield tomorrow. Instead, it’s much more important to put together a retirement strategy that suits your income needs and cash flow specifically.

Partner with an Advisor who can Help You put it all Together

This leads to the most important factor in putting together a retirement savings plan that can put you in a position to work toward your retirement income needs: working with a financial professional who can help you find the pieces you need to put it all together. When you meet with a financial advisor for planning your retirement needs, you need to work with someone who spends time getting to know you before ever offering any specific advice.

At Puckett & Sturgill Financial Group, we take the time to get to know our clients in order to provide the ideal recommendations for each individual’s retirement planning needs. If you’d like to learn more about our personalized approach to retirement planning, contact us today to set up an initial meeting!

Schedule Your Free Consultation

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Ask Aaron: Are Annuities Bad?

When it comes to researching your investment options, you’ll find a plethora of choices and lots of chatter about what the “best” investment options are. Among this chatter, you’ll no doubt hear the amazing benefits of annuities as investments. You may be thinking: “are annuities a good investment for me?

On the other side of the spectrum, you might have friends or family members who have had poor experiences with investments in annuities and are quick to tell anyone who will listen. Their stories aren’t unique, as sadly there are many investors who have been hurt by overzealous salespeople, disadvantageous contract terms or a lack of understanding of what is one of the most complex investment products available.

So which is it? Are annuities bad? Or are they all they’re cracked up to be?

Let’s take a deeper look…

What is an Annuity?

First things first, let’s look at what an annuity is. An annuity is an agreement between an insurance company and an investor that includes a stream of regular payments. However, all annuities are not created equal, and it’s imperative to make investment decisions with your eyes wide open before you ever sign on the dotted line.

Who Offers Annuities?

Annuities are investment contracts offered by insurance companies. Insurance companies are able to offer certain guarantees that other financial institutions might not be able to offer such as death benefits, income benefits, or crediting benefits, also called riders.

On the outside, this seems like an appealing proposition. But if you come across an agent who seems to pressure clients toward one type of product or company, you might want to steer clear. Someone with a certain product to sell may not have much more in mind than selling as many of those products as possible in order to earn a commission, even though those products may not truly be best for their clients.

Perks of Annuities as an Investment

There are certainly perks to annuities as investments. After all, they’re still a popular investment vehicle for long-term investing.

The biggest perks to investing in annuities are the accompanying tax deferral and other possible guarantees. Many annuities are paid out in consistent, recurring amounts, which is very appealing to individuals looking to set up a consistent stream of income or obtain some type of certainty.

Downsides of Annuities as an Investment

On the flip side, annuities are often not the best investment choice. While they may come with a guaranteed return and other appealing incentives, there are almost always strings attached.

Unseen internal costs or penalties and long surrender schedules can impact your bottom line significantly. Depending upon the specifics of an annuity contract, the payout might not end up as all it’s cracked up to be. And if you’re already committed to an annuity, removing your funds could prove challenging and expensive.

Some Important Things to Remember about Annuities

The most important thing to remember when it comes to annuities is that there is no single financial product that’s best for every investor. For some investors, certain annuities might be an ideal choice. For other investors, those same annuities might be a costly mistake.

And some annuities might be terrible investments, period – even for the most likely candidate. If it sounds too good to be true, it probably is.

Your individual financial situation is an essential driver behind which investments are the best for your portfolio. Instead of a sales pitch, you deserve a personalized recommendation based on an objective review of your specific situation.

At Puckett & Sturgill Financial Group, we take the time to get to know you personally before ever making recommendations for specific financial products. Are you curious about whether annuities are right for you? Reach out and schedule a consultation today!

Disclaimer: Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 1⁄2 are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value. Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.