The Blog


The E-Book

don't get madoffed







Financial Planning Newsletter• April 29, 2011 



Financial Planning Newsletter
April 2011

Most Common Questions?:

If asked what the toughest part of my job is some might speculate that it is the analytical work in the financial plans or possibly stressing over how to make clients money without taking to much risk in their investment accounts......

Actually it's neither of those, it's trying to come up with something creative for this newsletter each month!

As with any newsletter you want to keep things interesting while not repeating the same topics over and over. While many advisors take the easy way out by subscribing to services that provide content for them (that they can copy and paste as if it was their own content), I write these monthly communications myself based on topics that I think may be of interest to folks regarding personal finance. As we are now at the end of the month and I have procrastinated all week about what to write for April the pressure was on to get something out. And suddenly on the car ride into work this morning it hit me that we should do a top question format. As in, what are some of the top questions you get as a financial planner? So for your Friday enjoyment here goes:

1. How can I get a better yield on my Savings?: This has to be one of the number one questions of all time. With rates at historically low levels any cash you have sitting in the monster mega banks checking or savings accounts are probably returning a fraction of 1% annually. Unfortunately, there isn't a magic place that you can suddenly get 4% on your savings, but there are options for a little bit better than your checking account.

Note: these are not recommendations. they are resources... do your own due diligence.

  • Everbank: go to www.everbank.com. They have some interesting rates on money market and checking. They are also offering a CD where rates are set based on commodity performance. Very interesting way to make sure you keep pace with inflation.
  • ING Direct: www.ingdirect.com. Sort of the grandaddy of online high yield savings accounts.
  • regional and local banks: here in the north Atlanta area we have State Bank and Trust which was offering attractive money market rates the last time I checked. www.statebt.com

2. Should I invest my savings to get a better return?: The short answer is that you should have your emergency fund (3 to 6 months of expenses) in an easily accessible place that won't lose money. (a savings / money market / checking or short term CD account) Investment Advisors cringe at the thought of investing someone's account only to have them call up 2 weeks later saying they need to access some of the cash. Investment accounts should only be for money not needed for several years.

3. I hear the dollar is crashing, should I put everything in Gold or Silver?: Okay, I haven't really ever gotten this question but I overheard someone in the office building telling one of his co-workers to do this. My response would have been, you're about 2 years late. Seriously, commodities have a place in investment portfolios. Personally I was big on Agriculture and Energy for the past 2 years and now more interested in Natural Gas. I have no problem with precious metals but once again understand that the prices are very volatile - you can lose money if planning on holding for just a short time. And never bet the ranch on any one thing - diversify!

4. Can I retire tomorrow?: It depends.... Yes, I do get this question quite often as a humorous response when I ask a new planning client what their retirement goals are. Never believe the online calculators or what the "experts" say. It all depends on your lifestyle. You might be surprised at what the analysis shows.

5. Is it time to get more aggressive with my investments?: And I quote: "Be greedy when others are fearful, and fearful when others are greedy" by super investor Warren Buffett.

Yes the markets have rebounded nicely and stocks seem to defy gravity at this point. However as a natural contrarian I have learned that the time to go full bore is when it makes you break out in a cold sweat, not after a 2 year run. Remember this, as I am sure at some point in the future there will be a bear market that has everyone scared and running for the exits. Everyone except Warren Buffett!

6. Can you guarantee a rate of return?: Okay, it's Friday so I thought I would throw this one in. Actually I have gotten this just a few times in my career and after laughing I promptly showed the prospective client to the door. As we know the only guarantees are death and taxes. If you ever get a financial advisor guaranteeing a high rate of return you should be very skeptical (maybe you should read the free ebook above). If any advisor could guarantee returns he/she would certainly not be needing to take on new clients. The only guarantee in financial products would be from CD's or Fixed Annuities. Bonds have a guaranteed yield to maturity, but it doesn't mean there isn't risk of principal loss. Stocks are the same way. Be realistic when working with a financial advisor and understand that the return you get will be based upon how much risk you are willing to take.

7. What can a Financial Planner do for me?: This is a question I get only occassionally. Most folks that come in already know what they are looking for help with. However, sometimes people come in wanting me to explain the value add of working with a financial planner. Realistically, if you don't have questions and specific areas that you are looking for help with a financial planner cannot make up a reason for hiring him/her. However, having worked with clients from age 30 to 90, I can tell you that when people are ready to set financial goals and/or in need of a coach to help them take their finances to the next level, that is where a financial planner adds value.

8. What's the difference in a fee-only advisor: There is still quite a bit of confusion regarding how folks in the financial services field are compensated. About 90% are still on the product side of the business and get compensated via sales commissions on investments and insurance products. A Financial Planner can work on the commission side or fee-only side of the business.

A fee-only planner / investment advisor does not sell a product and is compensated by charging a fee to provide planning services or investment managment services. Of course I am biased on which is best, but there are competent people on both sides of the business. You have to determine which compensation arrangement works best for you.


So there it is, I promise to have something more creative next month! Have a great weekend.


James A. Daniel,

This newsletter if for informational purposes only. The information contained within should not be considered as financial advice nor soliciation for financial services. Consult with your financial professional if you have any questions.

The Advisory Firm, LLC is a fee-only financial planning company and registered investment advisor.

© 2007 The Advisory Firm, LLC. All Rights Reserved.
12600 Deerfield Parkway, Suite 100 | Alpharetta, Georgia 30004

Visit our website The latest news Our Location About The Advisory Firm Contact The Advisory Firm