- How are you compensated? We are fee-only! Our compensation only comes from fees you pay. We DO NOT receive commission from the sale of products.
- What is fee-only? Fee-only is one of three main ways advisors are paid. The other two are commissions (from the sale of a product), and fee-based. Fee-based is where the advisor is paid by fees from the client, but may also sell products and receive a commission. Fee-only is the only method of compensation without the conflict of interest associated with an advisor suggesting a strategy (i.e. life insurance) for a fee, and then also receiving a commission as well.
- Are you a Fiduciary? Yes! As a member of the National Association of Personal Financial Advisors we have signed a Fiduciary Oath to put clients' interests first.
- Do you sell products? We DO NOT sell products. We offer advice. We believe that financial planning and investment advice is a process, not a one time service or product.
- How do you feel about Annuities? Annuities have a place in financial planning, just not a big place. For the most part annuities are cost inefficient as investments, which is how they are often marketed, or "sold" (nobody ever buys an annuity). So as an accumulating investment vehicle, we generally shy away from annuities. If at some point in time an annuity is warranted in a planning situation, i.e. a fixed income is desired, we would opt for a "no-load" "fixed insurance rate" annuity to minimize the internal costs. There is one available, and it isn't marketed often. We receive no commissions for this advice.
- What is the best way to save for retirement? The best way to plan for retirement is through systematic savings, NOT by trying to outperform the market. The most successful people automate this process. This is something we can help you do.
- What is the best way to set up retirement income? The best way to set up a retirement income is with an automatic monthly deposit to your bank account. This should be evaluated annually to determine if you can increase your income.
- Is there good debt? There is no "good debt" or "bad debt". There is just debt, and it is not a tool. More often than not, people get carried away with debt. It can be detrimental to their financial health. Our focus is on building Net Worth, which includes eliminating debt.
- Why should I settle for average returns of an index funds when I can try to outperform the market with funds from an advisor like you? Cost matters! The higher your expenses, the more that is taken away from your earnings. Vanguard did a study that illustrated the probability of an active equity fund beating the market. The probability of beating the market in one year is 37%. Over ten years that fund's probability goes down to 15%, 5% for twenty five years, and 1% for fifty years. Remember that most men and women are expected to live into their nineties, which means that you may have a portfolio for thirty years AFTER retiring.
- Why shouldn't I just buy the S&P 500 with all my money? The S&P 500 only represents a portion of the markets available for investment. While you might do better than you would with most salesmen/advisors, you would be better off buying an allocation of several different indexes to diversify your risk, i.e. small cap, large cap, international developed markets, international emerging markets, etc.
- Why do you call yourself low-cost? See for yourself:
Fee schedule for the average investment advisor (Money Magazine, August 2001)
|$0 to $500,000
||1.4% per year
|$500,000 to $1,000,000
||1.2% per year
|$1,000,000 to $3,000,000
||0.9% per year
|$3,000,000 and up
IAM Financial Fee Schedule (minimum fee is $4,500/yr)
||0.75% per year
|$1,000,000 and up
||0.25% per year
- Why Do I Charge This Way? IAM's $4,500 fee is based on an estimated $2,500 value for ongoing planning, $500 for professionally prepared tax return and planning, and 0.25% asset management fee. Fees are billed at 0.75% for simplicity reason and because all three aspects of your finances need to be considered to create a holistic financial plan.
- Why are your fees so low? It is simple. We keep our expenses low with technology so that we can pass the savings along to our clients.
- Are there ANY funds worth paying extra for? In our opinion, the only time it is worth paying a higher internal cost for investments is when you are buying socially responsible investments, also called SRI Funds
- What are Socially Responsible Funds? Socially Responsible Funds are funds that invest in companies that reflect religious, economic, political, or other values.
- Can I Index using SRI Funds? Yes. There are socially responsible index funds with low expense ratios. While there are not many, it is possible to diversify using these funds in an asset allocation strategy.
- Are your costs the same if I invest in socially responsible funds? Yes. While it takes more time and effort to research funds that meet your personal criteria for investing, this is another way that IAM Financial chooses to give back.
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