You Should Ask A LOT Of Questions

My philosophy is consistent with Sequent Planning, the Investment Advisory Firm and team  I use for my client's portfolios, and centers around the principle of cost-effectiveness and diversification. We strongly advocate for the use of low-cost, broad-based ETFs (Exchange-Traded Funds) that track major indices for the equity portion of an investment portfolio. This approach ensures a wide exposure to the market, reducing the risk associated with investing in individual stocks while also keeping investment costs down.

For the fixed-income part of the portfolio, the strategy is more opportunistic, adapting to the prevailing interest rate environment. We believe in taking advantage of the current rates to maximize returns from fixed-income investments, which often requires a more dynamic and responsive approach than the equity portion. This balanced strategy aims to achieve a well-rounded, risk-managed, and cost-effective investment portfolio.

We strongly advise caution against strategies that claim to consistently outperform the market. 

We recognize that markets drive investment growth and that financial advisors, including those at my firm, do not have control over market fluctuations. Furthermore, predicting which market segments will excel at any given time is not possible. Therefore, our focus is on delivering returns that closely mirror the broad market. 

We achieve this by focusing our investment philosophy of low-cost, broad-based index-tracking ETFs. This approach is designed to minimize investment costs and aims for stable, long-term results that mirror broad market performance. 

Yes, you can purchase index funds on your own and for a fraction of the cost of a financial advisor. To be frank, if your sole purpose for hiring a financial advisor is to manage your investments, you are probably wasting your money. It’s important to recognize that the true value of a real financial advisor goes far beyond just selecting investments. The investment portfolio is essentially the fuel, but it's the comprehensive financial planning and guidance through different life stages that truly define the value of a financial advisor.

You engage a financial advisor to develop and implement a plan tailored to your unique life journey, such as retirement. This includes providing advice on tax efficiency, optimizing withdrawal strategies, navigating Social Security options, estate planning, charitable giving, and making informed decisions about large purchases.

As life inevitably changes, a financial advisor helps you navigate various decision points, offering expertise and guidance tailored to your evolving needs. While investment management is a critical component, it is the integration of all these services — planning, guidance, and management — that constitutes the real value of a financial advisor. Ultimately, you are not just paying for investment selection, but for a comprehensive, adaptable strategy that supports your financial goals throughout your life. 

First, it’s important to know that we do not engage in market timing. The data is very clear that this simply does not work. 

Instead, we build a broadly diversified portfolio that can weather the market storms. This doesn’t mean that our portfolios won’t decline. They will! But we view that as a natural, normal part of investing.

Over the last 100 years, on average, the market has experienced a 10% drop at least one time per year. Over the same period, a 20% decline occurs once every 3.5 years and a 30% decline occurs once every 10 years. In these periods of decline, we do not change course. The reason for not changing course is based on the historical data that show us the best days in the market often occur within a few days of the worst days. In other words, the market’s return is typically concentrated within just a few days. If we sell based on the bad days, you’ll likely miss the best days. If you miss the best days, the damage could be massive.

Consider this…over the past 20 years the market has averaged about 10% in average annual returns. If you missed just 10 of the best days your total return would slip to about 6%. If you were out of the market for only 40 of the best days, your return would have been negative! Keep in mind that past performance does not guarantee future results.

Just know that we are fierce opponents of timing the market. It simply doesn’t work.

None of this means we employ a “set it and forget it” approach to investing. There are occasional position changes and changes to the individual weightings. Additionally, we frequently rebalance our portfolios to bring all the holdings back to their assigned percentages.

Instead of relying solely on traditional risk tolerance questionnaires, we focus on two key criteria to determine the appropriate level of risk for your portfolio:

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1) Risk Capacity: This involves aligning your portfolio's risk level with the needs of your retirement income plan. The first step is determining your income needs over the next 5-7 years. This amount dictates the minimum level of fixed income your portfolio requires. Typically, we allocate this portion to a laddered fixed-income strategy, ensuring that maturing assets provide necessary cash flow while avoiding the need to sell equities during a market downturn. For example, if your plan indicates that in 2030, you will need a $75,000 distribution, then that amount should be allocated to fixed-income assets that will mature in 2030. 

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2) Risk Tolerance: Once we establish the minimum fixed income level, we assess how much additional risk you can comfortably take. This involves understanding how much of a decline in your portfolio you can endure in absolute dollar terms before feeling compelled to make significant changes. For instance, if you have a $2,000,000 portfolio and a 10% decline ($200,000) would cause concern, a market-exposed strategy may not be ideal. Conversely, if you are comfortable with a 25% decline ($500,000) and can stay invested through market volatility, a higher stock allocation may be suitable.

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The optimal mix of investments is determined by carefully weighing these two factors together. It is important to note that risk tolerance evolves over time based on life stages and financial goals. However, adjustments should be made with a long-term perspective rather than reacting impulsively to short-term market fluctuations. Our goal is to ensure your portfolio aligns with both your comfort level and financial objectives, helping to avoid decisions that could lead to long-term setbacks.

We provide two distinct types of client relationships: 

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• One-time Planning Relationships: In this model, we offer a flat-fee service that focuses on comprehensive planning and analysis for optimal retirement distributions. This service includes strategizing the most tax-efficient sequence for withdrawing from retirement savings, determining the best scenario for Social Security filing, and evaluating the impact of Roth conversions. This relationship is akin to hiring an attorney for a specific task, such as drafting a Will or Trust. We gather all necessary information from you, develop a detailed plan, and then provide you with a thorough walkthrough of this plan. Following the delivery of the plan, we are available to answer any questions you might have about it. However, it's important to note that this relationship does not extend beyond this one-time service and the follow-up support related to the plan.

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• Ongoing Comprehensive Relationships: For clients seeking continuous guidance, we offer an ongoing comprehensive relationship. This includes all the planning steps of the one-time service, with the added benefit of ongoing advisory support. In this relationship, we not only create and implement your retirement plan but also actively manage your investment portfolio to align with the plan's objectives. This comprehensive service encompasses all aspects of planning, continuous consulting, and investment management. It's tailored for those who value and wish for continuous guidance and oversight on their journey to and through retirement.

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Both services are designed to provide tailored, expert advice to help you navigate your financial journey, whether you're looking for a one-time comprehensive plan or ongoing, in-depth financial guidance.

My client base is predominantly individuals who are preparing for, or living in, retirement. These clients have typically been diligent savers, with savings ranging from $250K to a few million dollars. While highly intelligent in their respective fields, they recognize that their time is best spent focusing on what they do best, rather than becoming retirement experts.

Our clients understand that achieving meaningful financial goals is a long-term process and have realistic expectations when it comes to investment returns. They are not interested in trying to outperform the stock market or chasing after the latest investment trends. Instead, they prioritize steady, reliable growth and maintain a level-headed approach, avoiding knee-jerk reactions to market fluctuations or current events.

Most importantly, our clients are pleasant, thoughtful individuals who value a respectful and mutually beneficial relationship. They trust our expertise to guide them through their retirement planning, allowing them to enjoy their hard-earned success while we take care of their financial future.

Paying our fee is a straightforward process. For our clients that utilize our investment advisory service, we submit a quarterly fee billing statement to our custodian. Based on this statement, the fees are then automatically deducted from your investment accounts. This process ensures convenience and simplicity, as it requires no action on your part. 

For clients that do not utilize our investment services but have subscribed to one of our advice and planning packages, you are billed a one-time fee or quarterly through Sequent Planning.  You pay your invoice directly to Sequent Planning.  

My pricing is designed to be simple and transparent, with flexible options to fit your needs. There are no hidden charges or surprises.

Comprehensive Planning Packages

Some clients choose one of my flat-fee-based planning packages, which are clearly outlined on our Pricing page. These packages can be for financial advice only or can include ongoing investment management.

Hourly Financial Advice

If you need help with a specific financial project or situation, my hourly rate is $200 per hour with a two-hour minimum. Before any work begins, I will provide you with a fixed quote for the total cost for your approval, so you know exactly what to expect.

Investment Management Fee Structure

For clients who choose a comprehensive planning package that includes investment management, the monthly planning fee is waived for accounts of $300,000 or more.  Investment management fees are tier-based from 1.25% down to 0.80%, depending upon account size.  Larger portfolios above $1.5M can be negotiated based on planning needs and complexity.

Custom Plans

Clients with highly complex estates or unique financial needs may require a custom plan. In these cases, I will work with you to create a detailed service plan with all costs clearly defined upfront.

Our compensation model is straightforward and transparent. Apart from the occasional placement of an insurance product, we do not receive any other forms of compensation. This means we do not accept referral fees, nor do we receive any kind of soft compensation such as dinners or gifts from investment sponsors. Our focus is solely on the advisory or investment fee, ensuring our advice remains unbiased and aligned with your best interests. This approach is central to maintaining the integrity and trust that underpin our client relationships.

Annuities can be a useful tool in managing risk and income during retirement, but the issue with most annuities is how they're presented during sales pitches by "advisors" who make a living selling annuities.  The complexity of these products is another point of caution, as well as hidden costs, lack of transparency, and difficulty in understanding the full scope of their implications.  

Given all that, there are still some very valuable and useful strategies that are effectively addressed with the right annuity as long as they are fully integrated into your specific retirement planning needs.  Additionally, they need to be fully disclosed as to all costs, any restrictions, how they improve your plan, how they are a better alternative to any other strategy or solution, and you can easily understand how you benefit from its use.  The key is always transparency.

I have at times implemented some small amounts of a clients portfolio in very specific, no-fee, shorter term annuities as solutions for managing risk, accessing a higher yield, or addressing a specific planning need they may not otherwise qualify for with other tools such as life insurance or Long Term Care insurance.  

When you choose to work with us, your investments are held by a third-party custodian, much like a bank but specifically for investments. This custodian is a separate, independent entity responsible for securely holding your assets. We partner with Schwab for this critical function.

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It's important to understand that while we manage your investments, the accounts are held in your name. They are unequivocally yours, ensuring you retain ultimate control over all decisions regarding these accounts. As your appointed advisor, we have the ability to view account activity, execute trades, and perform other administrative tasks

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This arrangement provides a secure and transparent framework for managing your investments, giving you peace of mind that your assets are in safe hands, while also being under your control.

Tax efficiency is a cornerstone of our approach. We pay careful attention to factors like account withdrawal strategies, investment location, the timing of Social Security filing, and decisions about Roth conversions. Each of these elements can have a profound impact on the amount of taxes you pay and, consequently, the longevity of your savings. Our goal is to optimize these aspects to enhance the overall tax efficiency of your financial plan.

However, while we incorporate tax considerations into our planning, we always defer to professional tax advisors for the final say. We highly encourage our clients to allow open communication between us and their tax advisors. This collaboration ensures that our planning strategies are comprehensively reviewed and optimized from every angle.

It's also important to note that we do not currently offer tax preparation services. Our focus is on providing investment advice and financial planning that are tax-aware, complementing the specialized services provided by professional tax advisors.

The succinct, but very unsatisfying answer is: It depends.

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Determining the right age to file for Social Security is a complex decision that depends heavily on individual circumstances. It's not a decision that can be effectively made using a one-size-fits-all approach or simple rules of thumb. There are numerous factors we consider, including the impact on survivor and spousal benefits, the composition of your savings (such as Roth, pretax, and taxable accounts), your monthly income needs, and plans for Roth conversions.

The Peak Confidence Retirement Roadmap will test multiple filing options to help determine which has the best fit with the overall plan.