Tag: Certified Financial Planner

What is Financial Planning and Why is it Important

Dave Yeske, in the Journal of Financial Planning give a great answer.

Financial planning is a process for helping individuals and families use their human and material resources to transform their lives for the better. But I’d rather make a grander statement: I think financial planning is potentially the most important profession in the world, and certainly the most important profession in the 21st century.

… we deal with some of the most important forces in people’s lives. Think about the traditional professions of law and medicine, for example, and now look at financial planning. Vastly more people will suffer a bad financial outcome in their lives than will suffer from a dread disease or a perilous legal situation. We’re the ones who have the power to help people care for aging parents, educate their kids, provide for a comfortable retirement—these are the things that everyone strives for. These are also the biggest potential stress points in people’s lives.

A growing body of research is showing that financial problems can lead to negative health outcomes. Therefore, by extension, financial planners wield the power to potentially not only make people’s lives better financially, but even make them better physically. I can’t think of any other profession that is more at the intersection of everything that matters to people and everything that most impacts their lives.

When financial planners are cognizant of the magnitude of what they’re doing and the potential role they’re playing in people’s lives, I think they show up different. It’s a sacred trust that clients place in us because of the importance of this in their lives.

To which we at Korving & Company respond with “Amen.”

For help with your Financial Questions, contact us www.korvingco.com

Effective Retirement Plans Do Not End at Retirement

There are those fortunate individuals who, because of wise planning, are able to retire without having to worry about how much money they can spend after their paychecks stop.  These people can afford their needs and wants from sources like pensions and social security that adjust for inflation.  They have probably been saving all of their lives and have always lived below their means.  Others are not so fortunate.

Most middle class retirees fund their retirement spending from Social Security, a pension (perhaps), and income from investments.  Because people often live several decades after retirement, it’s vitally important to make estimates and projections about the future.

Here are just a few of the things that factor into how much it will cost to live once you retire:

  • Your basic living expenses; your “needs.”
  • The cost of your “wants” and “wishes” above your basic expenses
  • The age at which you want to retire.
  • The number of years in retirement.
  • Spousal income and, in two income families, the age at which each spouse retires.
  • Your pension benefits.
  • Life, disability and long-term-care needs.
  • The age at which you apply for Social Security.
  • The value of your investment assets at retirement.
  • The estimated return on your investment assets.
  • Your risk tolerance.
  • The rate of inflation during retirement.

Putting all these factors together is a complicated process that’s beyond the capability of most individuals who don’t work in finance.  Complex planning programs have been developed that can provide answers.  These answers typically provide a probability of success or failure via a procedure called “Monte Carlo” analysis.

We have found that people who begin planning early can make appropriate mid-course corrections while they still have time.  It also provides them with the peace of mind.  Having a well-thought-out plan for the future removes a great deal of worry an uncertainly.

If you are approaching retirement without a plan, give us a call for more information.  We would be happy to meet with you to discuss your needs.

The Importance of Having an Exit Plan for Your Retirement

I was speaking with a prominent surgeon recently, and the subject of a career “exit plan” came up.  He’s not yet 60, but he’s got a stressful job.  In addition, changes in the medical field over the past decade have made practicing medicine less attractive to him.  His exit plan was a combination of retirement and a second career.
The conversation stayed with me for a few days, and I wrote down some ideas that could help him — or anyone — craft a proper exit plan.
When you retire, your income stops.  Even if you begin a second career, your income will probably decline.  The money you’ve saved suddenly becomes much more important because it’s the source of much of your retirement income.  Avoiding major losses becomes more important than making those savings grow further.
Our surgeon has investment accounts with a number of brokerage firms and is thinking of consolidating them with one provider.  We suggested he select the financial advisor he would most trust to provide investment management for his wife if he was no longer there.  By thinking of it this way, he can determine whom he sees as most trustworthy.
Consider how your own financial advisor is compensated.  There is nothing inherently wrong with working for commissions, but in my experience it can’t help but influence the advisor’s investment recommendations.  The “fee-only” advisor has fewer conflicts of interest.  In fact, advisors who are compensated based on the assets they manage have an incentive to avoid losses and maximize growth.
There is also the question of qualifications.  Some people in the business have broad planning and investment skills and are Certified Financial Planners.  Some are experienced portfolio analysts.
The cornerstone of an exit plan is a comprehensive financial plan.  It should articulate specific goals.  It should make reasonable assumptions about rates of growth, the rate of inflation going forward and your post-retirement income needs.  Without it, you’re flying blind.  And it’s not something you can draw up on the back of an envelope.  The plan may show that you can meet all your goals without changing your lifestyle.  It may show that you need to cut back.  Or it may show that you need a second career.
The time to begin this process is before you take the plunge.  It allows you to look before you leap.

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.

What to look for when getting financial help

What should you look for when you are searching to financial guidance? Finding the financial advisor that is right for you can be difficult. You want someone you can trust; a fiduciary, someone who will put your interests ahead of his own. In some respects, it’s like getting married because a good relationship is open and long-lasting.
To help you in your search, here are a few things to look for.

  • Compatibility: like a spouse, you want someone you can talk to and who shares your view of life. If you are not compatible, you will always be on the lookout for someone else.
  • Philosophy: what is your advisor’s investment philosophy? Is it capital preservation, beating the market, getting a fair return? Is that compatible with what you’re looking for?
  • Strategy: how does your advisor go about achieving your objectives? Do you understand it? If not, ask more questions.
  • Experience: how many years has he been in business? Try to avoid having a rookie learn on the job with your money.
  • Certifications: does your financial advisor have a certificate from the International Board of Standards and Practices for Certified Financial Planners? The CFP™ designation means that he has completed the coursework and passed the test to become a Certified Financial Planner™ certificant.
  • Affiliation: is your advisor an employee of a large financial firm or is he Independent RIA (Registered Investment Advisor). Employees of large financial firms work for their company, an RIA works for you.
  • Compensation: how is your advisor paid? Fees, commissions, a combination of fees and commissions? It’s important for you to know this ahead of time.
  • Reputation: does your advisor have a good reputation in the community? You can also check to see if he has any mark on his record by checking with FINRA.
  • People like you: does your advisor deal with other people like you? This can make a difference in his understanding of the issues you are dealing with.

Finding a good advisor can make the difference between your financial success and failure. He can keep you from making major investment errors and bring you peace of mind. Twice as many people who get professional advice feel very secure about their financial future as opposed to those who do it on their own.   Korving & Company is an RIA whose principals are Certified Financial Planners™ (CFP™).  We are fiduciaries who put our clients’ interests first.  Our objective is to get a fair return.  We have decades of experience. We are fee-only.  We are proud of our reputation in the community.  Are we right for you?  Find out.

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