INDEPENDENT FINANCIAL SOLUTIONS, LLC
INDEPENDENT FINANCIAL SOLUTIONS, LLC
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Frequently Asked Questions
What is financial planning and what does it involve ?Financial planning is the process of exploring your values, establishing personal and financial goals, and aligning your financial life so as to achieve those goals. It is about empowerment and taking control of your financial future. From a practical standpoint, IFS will need your current financial and personal information, which usually means bringing investment statements, tax returns, trusts, wills and family partnership documents, insurance, employee benefit documentation, and personal spending information. This information allows us to determine where you currently stand in relation to your goals and to develop a plan designed to help you achieve your goals. IFS works with you and supports you in implementing your plan. Depending on the situation, we will meet on an ongoing basis to monitor the plan and make necessary changes. Throughout the process, we’ll work together to help you achieve your dreams. Back to Top
Why should I hire a financial advisor?There
are a number of reasons why clients choose to work with Independent Financial
Solutions. The most common reasons
are: Delegation. There are only so many hours in the day. While it is possible to manage your own financial affairs, many individuals choose to hire a professional so that they can focus on their core personal values. These individuals would rather spend time with family and friends, or pursuing professional and personal development. Expertise. Few people have the time to study tax law, estate planning,
investments, retirement planning, insurance, and financial planning matters
full-time. Because these areas
encompass such a breadth of material, change frequently, and are extremely
complex, it pays to get the help of a professional financial advisor.
Motivation. Each of us strives to be professional, to take care of our
responsibilities and duties to others. However,
we often overlook our responsibilities and duties to ourselves.
Having a financial advisor reminds us that it is OK, in fact necessary,
to look after ourselves. The
steady and persistent attention of a financial advisor helps to keep you focused
and motivated to achieve your goals. Organization. Working with a financial advisor means having your financial
life in order. It means, knowing
where your wills and trusts are kept and if they are up to date, what your
investment return was last year, your current asset allocation, and what you
need to work on next. Peace
of mind. This comes from the knowledge that someone with expertise and
experience in financial matters is on your side. Second
opinion/reality check.
Some individuals prefer to manage their financial affairs themselves.
However, on occasion, these individuals worry that they may be doing the
“wrong” thing or are invested in the “wrong” funds or stocks. Having a financial advisor review their financial
circumstances occasionally can help these individuals assess the degree to which
their assumptions and strategies are realistic.
Support. Oftentimes we are overwhelmed by challenges that seem
insurmountable. A financial advisor
supports you in addressing your personal and financial challenges.
Knowing that you are not “in it alone” is often enough to help you
overcome these personal and financial challenges.
Values assessment. While at first it may seem strange to explore your values with a financial planner, personal values determine personal goals and have a tremendous effect upon your financial life and sense of fulfillment. The first step in the financial planning process is to explore these values and set goals. Most people benefit from taking the time to explore their values and aligning their lifestyle with those values. Back to Top
Does IFS sell any products such as mutual funds, insurance, or tax shelters?No.
IFS sells only its expert advice. No
products are sold and no commissions, kickbacks, or other compensation is
received from any party other than the client.
This arrangement minimizes the conflict of interest inherent in the
commission-based financial planning model.
Because IFS is fee-only, you can be sure to receive unbiased advice. It is in our best interest to look out for your best
interest. Back to Top
Is client information kept confidential?Yes.
IFS does not disclose the identity of its clients.
Nor do we disclose any identifying information.
Care is taken to shred any outgoing trash with client names or
information. Back to Top
What is your firm's investment philosophy?Independent Financial Solutions employs the principles of Noble Prize winning Modern Portfolio Theory. We advocate diversification across asset classes (stocks, bonds, real estate), capitalization (large, medium, and small sized companies), style (growth, value, and blend), and sectors (financial, services, technology, industrial, et cetera). Our approach focuses on reducing portfolio volatility, improving long-term performance, minimizing fees, and improving tax efficiency. We do not “time” the markets, nor do we believe we can consistently “beat” the market without taking additional risk (be wary of the individual that promises she/he can). Our firm does not select individual stocks. Instead, we use index funds, exchange traded funds, folios, and mutual funds to construct a diversified and tax-efficient portfolio. By outsourcing the stock selection process, clients gain access to the best investment managers in the world. Managers are selected based on their excellent long-term track records and consistent performance. (There is no sense selecting a mutual fund for its strong record if the manager that earned that record is no longer responsible for investment decisions.) Outsourcing individual stock selection is particularly important considering the 1991 Brinson, Singer & Beebower study that showed security selection accounts for only 5% of a portfolio’s return, whereas asset allocation accounts for 92% of its return. For more information on historic investment returns and volatility, please request a brochure on investment principles. Back to Top
Does IFS retain custody of my cash and securities?No. IFS does not take custody of clients’ assets. Securities are held at third party discount brokers of the clients’ choosing. We do not have the authority to buy or sell securities, transfer assets between accounts, or withdraw funds from clients’ accounts. After the client approves of a recommendation, the client instructs the third party brokerage to buy or sell the appropriate securities. If the client wishes, we will make a conference call with the client to the discount broker and instruct the purchase or sale of securities as appropriate. In such situations, the discount broker always asks the client to confirm his/her consent before processing the transaction. Back to Top
Are there limits to financial planning and financial advisors' abilities?Yes.
Financial advisors cannot predict the future, guarantee performance, or
earn higher than average returns year after year.
Be wary of the firm or individual that makes such promises!
Financial
planning is not a substitute for therapy. Nor
will it protect you from your own destructive financial habits.
However, it does help you formulate your goals and achieve those goals.
Neither IFS, nor anyone else, can achieve your goals for you—that takes
effort on your part. Back to Top
How does IFS charge for its services?Clients are charged a fee for services performed. Fees are based on the estimated number of hours required to perform a given task multiplied by a billable rate of $105 per hour. Before any work is completed, clients are quoted a fee for the agreed upon service. IFS
serves two types of clients—“hourly” and “retainer.” “Hourly”
clients come to IFS for a specific project, such as an investment review, an
insurance analysis, or a retirement plan. It is the responsibility of “hourly” clients to request
services when necessary. If no
request is made, IFS will not perform work for such clients. In
contrast to “hourly” clients, “retainer” clients are kept abreast of any
information that is pertinent to their financial situation, including changes in
investments, tax law, and other financial planning matters.
Retainer clients receive quarterly reports that detail asset allocation,
investment performance, and recommendations when necessary.
In addition, retainer clients receive ongoing personal financial planning
services designed to help them reach their goals.
Retainer clients pay quarterly in advance for IFS' services.
IFS and the client each have authority to terminate the “retainer”
relationship at any time with written notice.
In this circumstance, clients would receive a prorated refund for any
prepaid services. Back to Top
How do your fees compare to commission-based financial planners?Commission-Based: There are countless schedules for calculating commission-based financial planners’ compensation. The most common method is via “loads” on A and B class shares of mutual funds. On A class shares, the financial planner typically receives a one-time fee of 5% of the amount invested in the mutual fund. For instance, if you invest $100,000, then $5,000 is deducted to compensate the financial planner and broker dealer and $95,000 is invested on your behalf. With
B class shares, a certain percentage (usually 1%) is deducted annually in
addition to the investment management charge.
This charge goes to the financial planner and broker dealer and usually
continues to be charged each year for seven years.
If you sell a B class mutual fund prior to the expiration of the annual fees,
there is a deferred charge of up to 6%. Again,
assuming you invest $100,000 in a B class mutual fund, your financial planner
will usually receive $1,000 annually for seven years regardless of whether he
continues working with you. In
addition to commissions on mutual funds, it is possible to earn commissions by
selling whole life insurance or annuities.
Fees range from a 5% one-time fee to 1.25% annually on these products. Independent Financial Solutions: We do not receive any commissions, kickbacks, or compensation from anyone other than our clients. Nor do any employees or related parties receive commissions or kickbacks. Services are billed at $105 an hour and prices are quoted prior to the engagement so that you know the precise cost of services. Back to Top
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Financial planning and investment advice can only be rendered after delivery of a Form ADV Part II. Independent Financial Solutions LLC is registered with the State of Utah Securities Division. This web site is not deemed to be a solicitation for advisory services in any state where IFS is not registered or exempt from registration. |
