Q&A: What is Your Approach to Financial Planning?

with No Comments

In the CFP Board’s “Ten Questions to Ask Your Financial Advisor ” they suggest, “Before establishing a relationship with a financial planner you will want to interview several people to make sure they’re the right match for you and exhibit key traits of a good advisor. Here are 10 important questions to ask before selecting a financial planner.”

In this series we are both providing an answer for Marotta Wealth Management as well as giving a longer analysis about the question, why the CFP Board may have included it, and how other organizations might answer if they were being truthful.

The fourth question is a bit vague. The CFP Board likely includes this question because it is an inclusive way to remind people that they should find a financial advisor they believe in.

However, we find it disappointing that the CFP Board’s explanation jumps directly to a question of too cautious or overly aggressive when they were talking about financial planning.

First, equating financial planning with investment management is a common mistake. For many of those working in financial services, the primary or only service they offer is investment management, but there are a nearly infinite list of services that can be included in the financial planning of comprehensive wealth management.

Second, many financial professionals spend a lot of time talking about risk tolerance questionnaires, but they are ultimately useless. Your goals matter while your risk tolerance must be overcome. We are programmed with what psychologists call “loss aversion.” We strongly prefer avoiding losses even over seeking potential greater gains. But that doesn’t mean we can afford to reject the gain in favor of less risk. Based on your goals, there are right and wrong answers when defining your asset allocation. Only when you are ahead of schedule can your personal risk aversion be allowed to dampen the return.

Third, while we believe that our analytical approach to investment management adds a lot of value, we believe the greatest value of comprehensive financial planning comes from the many non-investing components of comprehensive wealth management. Financial planning is the process of aligning your financial choices with your life passions. And although financial planning can tell you how to accomplish your goals, it cannot tell you what your goals should be. Values transcend the cash and the numbers.

4. What is your approach to financial planning?

Make sure the planner’s investing philosophy isn’t too cautious or overly aggressive for your needs. Learn how they will carry out recommendations or refer tasks to others.

We have no secret ingredient at Marotta Wealth Management. Instead, we openly and publicly publish our strategies as articles on our website. We strive to provide the necessary resources for anyone to prepare their own investment plan and meet their financial objectives. We actively encourage the do-it-yourself people of financial planning to subscribe to our newsletter and provide themselves with comprehensive wealth management. A good place to start is our article “The Complete Guide to Creating an Investment Plan.”

For people who don’t want to do it alone, we encourage you to read our articles to get a fuller understanding of how our services work to see if we are a good fit for you. If you are interested, we would be happy to help you get started as a client!

Some investment-only firms have a limited number of investment choices and do not personalize their approach based on what investments you already own or what your goals are. These investment-only firms presume that the burden is on you to decide if their approach fits your needs. At Marotta Wealth Managaement, we aim to personalize our services to fit your needs.

We offer Life Planning in tandem with Asset Allocation Design. We offer Retirement Planning alongside Intergenerational Planning. We aim to create a comprehensive, personalized, and integrated approach to wealth management.

Many so-called financial advisors don’t actually provide any advice. Their services are limited exclusively to investment management.

But we believe as fiduciaries, it is our job to do whatever our clients would do if they had our time and expertise. The first step in our new client process is to get to know our clients and their goals before implementing any plans. The question we sometimes ask a prospective client is, “If you had the services of a financial advisor working for you, what would you want them to work on?”

If this is the approach you want for your financial planning, give us a call to get started today!

Photo by Ridham Nagralawala on Unsplash

Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.

Follow Megan Russell:

Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.