TPW Money Musing

Are you on the hunt for a high-quality financial advisor? There are (literally) thousands of people who hold themselves out as financial advisors just in California alone! How can you possibly figure out who is right for you? How do you know what questions to ask when hiring a financial advisor?

We’re here to support you on your search for a financial advisor or wealth manager. In this article, we’re giving you six important questions to ask a potential financial advisor to make sure they are the best fit for you, your life, and your financial situation.

Hiring a financial advisor shouldn’t stress you out. You know the benefits of hiring a financial advisor –, and your financial future is serious business – but you just need the right tools to make sure you’re picking the right match..

 Your financial advisor needs to have your best interests front and center. It’s the definition of fiduciary.

How do you know you are talking with a high-quality financial advisor?

Trust

Do you trust them with not only the personal details of your financial accounts but also with the personal details of your life? A high-quality financial advisor engenders trust.

Experience

Do they have a history of successful performance and a network of happy clientele who are thrilled to step forward and vouch for their professionalism and knowledge? A high-quality financial advisor has extensive experience in helping their clients reach their financial goals with confidence and clarity.

Fiduciary Standard of Care

Are they legally bound to serve in your best interests? The definition of fiduciary is that they aren’t beholden to the company that employs them or to a service provider (such as an insurance company) toin order to earn an income. They are beholden to YOU as their client. A high-quality financial advisor acts as a fiduciary.

Finding out whether a financial advisor has these basic three requirements—trust, experience, and a responsibility of fiduciary care—are why it’s crucial to ask a potential financial advisor the six questions below. Questions 1 and 2 speak to their experience and trustworthiness, while . Questions 3 and 4 speak to whether they will be acting in your best interests rather than their own 100% of the time— or that they meet the definition of fiduciary. Questions 5 and 6 help to ensure that the services they provide match your needs and your philosophies.

Here are the six questions to ask when hiring a financial advisor

1. What is your education and experience?
2. Do you have any compliance or regulatory infractions?
3. Are you required by law to operate within a fiduciary or suitability standard of care?
4. How exactly are you compensated?
5. Do you provide comprehensive financial plans?
6. What is your financial planning and investment philosophy?

If the advisor you’re interviewing doesn’t answer these six questions articulately and passionately, you may want to continue your search.

The point of finding a fiduciary financial advisor with experience, and who you trust will be a good partner for you is that it increases your odds of successfully growing and protecting your net worth and assets over time, especially with how unsettled the markets, economy, and political climate can be.

If you’re looking for a new financial advisor—even if you’re currently working with one—asking them these six questions to ask when hiring a financial advisor, and doing your due diligence to assure they’re answering truthfully, will help you be confident that you’ve got the right financial advisory partner on board.

Are you considering hiring a financial advisor? Do you think that our Sacramento wealth management firm might be a good fit? Please, use this link to set up a no-obligation consultation.

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Most investors know, exposure to real estate in a financial portfolio provides opportunities to grow net worth. In America, there are basically two tax systems: one for those in the know, and one for those not in the know. What you don’t know CAN hurt you.

Towerpoint Wealth Management Joseph Eschleman and Associate Wealth Advisor Megan M. Miller recently presented “The 9 Tax Planning Secrets Real Estate Investors Wish They Had Known” to the West Sacramento Real Estate Investment Meet Up group. Here is a recap of the presentation, and the nine tax tips for real estate investors.

Would you like to discuss your specific scenario with us?

Schedule some time with Megan or Joseph!

Are income taxes dragging you and your portfolio down, and at the same time reducing your real overall return? 

Do you know how much you are paying in fees and investment expenses?  

As an investor, what exactly are you supposed to do to reduce and manage expenses and income taxes? They are unavoidable, and will always be part of your net worth building journey.  

However, there is definitely good news – both of these necessary evils of investing are controllable, they are minimizable, and there are strategies to help you reduce them.  

In this video Joseph Eschleman, President of Towerpoint Wealth, a boutique Sacramento Wealth Management firm, explains nine specific ways to keep expenses and income taxes in check, including: 

• Five strategies to minimize the impact of income taxes on your portfolio  
  
• Four strategies to keep more of your money working for you  

Is the United States economy on the verge of slipping into a recession? Or is the exact opposite happening – is the economy continuing to recover, and is more robust than it is getting credit for?

Are we looking towards an economy in recession, or are we more recession proof than many economists believe?

While our economy is by no means recession proof, it should come as no surprise to our clients and to TPW friends and colleagues that we take this volatility with a grain of salt, as we pay attention, but rarely react, to these short-term movements. Is a recession coming? Perhaps, but there is anything but consensus on what happens next.

What we do know is this:

1. While the economy is by no means recession proof, economic expansions tend to be much more robust than recessions.

2. Even if we are facing an economy in recession, that over the past 73 years, bull markets have lasted longer (50 months, on average) than bear markets (13 months, on average), and have more than made up for periodic market declines.

This all begs the question: If we are facing an economy in recession, what can YOU do to recession-proof your portfolio?

Watch this educational video for FIVE specific strategies to help you recession proof your portfolio, even if we are facing an economy in recession!

In this video, Towerpoint Wealth’s president and Sacramento wealth manager Joseph Eschleman addresses the following:

• Common concerns about the cryptocurrency future, and why we believe that crypto is here to stay and not going away.
• What decentralized finance, or DeFi, is, and how cryptocurrency is shaping its future (look out, banks!).
• Mainstream crypto adoption trends and the Great Wealth Transfer.
• Why cryptocurrency is potentially a good alternative investment to better diversify your portfolio (is it time to tiptoe towards that crypto?).

Bitcoin is by no means new –if you can believe it, it has been more than 13 years since the digital currency officially launched! As of June 2021, more than 220 million people owned digital assets. The blockchain technology that supports it continues to prove its value. Last year, Bitcoin settled over $13.1 trillion in transactions, up 470% from 2020, a figure that represents over half of the US’s GDP for the year, and more than what Visa, one of the largest payment processors in the world, settled last year. This bodes well for the cryptocurrency future!

Throughout history, civilizations have used cattle, squirrels, jewels, wine, and seashells as money. And before sovereign currencies took hold, gold was the medium of trade for many nations (and to this day still is a very good store of value). Compared to gold, Bitcoin is a baby, and many other cryptocurrencies are still in their infancies. However, each day crypto remains accepted, active, secure, and continues to grow in popularity and usage, it will become more and more mainstream. To be clear, bank notes and credit cards were not made for today’s digital age – but crypto was!

Global finance is moving away from being centralized (money being held by banks, which have the goal of earning profits) to being decentralized, where blockchain technology eliminates the need to use profit-seeking intermediaries and third-parties to lend, spend, trade, and borrow. As a group, both Millennials and Gen Xers have a much higher level of interest in decentralized finance and a lower level of trust in traditional institutions. Now, 83% percent of millennial millionaires own digital assets. Over $68 trillion is set to be transferred from Baby Boomers to Millennials and Gen Xers over the next 25 years.

We believe that the adoption of cryptocurrency will be much like the adoption of other successful technology: It usually starts off slow and measured then quickly accelerates! Consider the internet: In 10 years, the internet growth went from a handful of users to practically the entire world. In 2021, consumers spent more than $871 billion online, a 44% increase from 2019. A digital future likely means a cryptocurrency future.

In the past two years, the US created 29% percent of its current money supply. Governments and central banks around the globe create money when they need it. The result? Monetary, price, and asset inflation. But Bitcoin has programmed scarcity–one of the benefits of bitcoin is that its supply cannot be manipulated or devalued by fiscal or monetary policy.

Questions about how to integrate crypto into your longer-term investment portfolio? We welcome opening an objective dialogue with you about the advantages, disadvantages, risks, and considerations involved. Contact Towerpoint Wealth

For virtually all investors, 2022 has been a challenging and frustrating year. Persistently high inflation has resulted in an environment of quickly rising interest rates, leading to a “double-whammy” of twin selloffs across both stocks and bonds. After increasing more than 31% in 2019, 18% in 2020, and 28% last year, the S&P 500, an often-cited proxy for the stock market, has declined more than 20% year-to-date in 2022 (as of 9.23.2022). And to make matters worse, the bond market, as measured by the Bloomberg U.S. Aggregate Bond Index, has suffered through declines not experienced in more than 50 years. Put differently, investing in conventional stock and bond asset classes has not worked very well so far in 2022.

Not surprisingly, these declines have led to an increase in demand for “supplemental” investment opportunities outside of these traditional areas, and have led more and more people to inquire about alternative investments.

Put simply, an alternative investment is any financial asset that does not classify as a traditional stock, bond, or cash. While they can vary widely in their accessibility and structure, alternatives can provide an opportunity to ^1.) boost returns, ^2.) generate income, ^3.) provide potential tax benefits, and ^4.) reduce risk in a portfolio. Institutions like pension funds and endowments have been utilizing them for years, and today, more and more individual investors are questioning why they have no alternative investments, and whether they should change their plan to include them. Watch this video to learn answers to the following questions:

• What are alternative investments?
• Is it important to have exposure to “alts” in your current portfolio?
• Is it bad if you do not own any alternatives?
• I heard alternative investments can be expensive – is that true? Does it matter?
• What are the risks and benefits of adding alts to your investment strategy?

If you would like to learn more, click the thumbnail below to watch our recently-produced webinar about alternative investments.

What is the definition of a fiduciary financial advisor, and why should you care? Here are 3 common considerations when deciding whether to partner with a fiduciary.

Duty of fiduciary financial advisor

Do you know that the only requirement a person needs to meet to be called a “financial advisor” is that they dispense financial advice? It’s true!.

While it is also true that most financial advisors at major Wall Street firms—also called “wire-houses”— WANT what is best for you, it is important to understand that they are employees first, and their FIRST professional obligation is to their employer, and NOT to you.

They are only required to do what is suitable for you, and they are bound by what is known as the “suitability standard of care.” They specifically are NOT legally required to act in your best interests 100% of the time. Put differently, they do not have the duty of fiduciary standard of client care.

In this video, Joseph Eschleman, an independent boutique wealth management firm, presents three important facts about how engaging a financial advisor specifically with a legal fiduciary responsibility should tilt the odds of success in your favor.

What is a fiduciary financial advisor – Definition of fiduciary

A fiduciary financial advisor is legally responsible for putting their clients’ personal and financial interests before their own, and always acting in their clients’ best interests –, 100% of the time. Three things to consider when choosing between a wirehouse or independent fiduciary financial advisor:

1. Fiduciary Standard v. Suitability Standard
2. Breach of Duty—Legal Recourse
3. Wall St. Investment Corp. vs Registered Independent Advisory Firm

1. Fiduciary Standard vs. Suitability Standard

The suitability standard, or simply doing what is suitable for a client, is much different than the fiduciary standard, or being legally bound to always act in a client’s best interests.

Investment brokers who work for broker-dealers (such as Merrill Lynch and Wells Fargo), and investment advisors who work for fully independent registered investment advisory (RIA) firms like Towerpoint Wealth, both offer financial, wealth, and investment planning, counsel, and advice.

However, they are NOT governed by the same professional standard.

Fiduciary advisors work directly for clients, and must place clients’ interests before their own, according to the Investment Advisers Act of 1940. They have the duty of fiduciary care. Investment brokers work for, and first serve, their broker-dealers, and must only ensure that their recommendations are suitable for their clients – this is known as the suitability standard. 

A financial advisor with fiduciary responsibility provides fee transparency, and client-centered advice 100% of the time. A financial fiduciary advisor – deals with NO – competing interests, and is able to draw from a much larger pool of higher-quality investments.

2. Breach of Duty—Legal Recourse

A breach of fiduciary duty occurs when it is proven that a financial advisor failed to act responsibly or in the complete best interests of a client. Usually, the actions are alleged to have benefitted the advisor’s interests, or the interests of a third party, instead of a client’s interests.You have legal recourse in the case of a breach of fiduciary duty only if you are working with a fiduciary financial advisor.

3. Wall St. Investment Corp. vs Registered Independent Advisory Firm

If you have a relationship with an advisor who works for a major Wall Street firm, you do not have a fiduciary financial advisor. At Towerpoint Wealth, we should know – we worked for a major Wall Street firm for 18 years! It is impossible for anyone to act in a client’s best interests 100% of the time when operating within the constraints of the employee-employer relationship.

Now that you know the definition of fiduciary, it is important to understand that no designation, rule, or regulation will completely stop individuals who have the intent to defraud other people. Despite this sad fact, engaging a financial advisor who has a legal fiduciary responsibility to you, like all of us here at Towerpoint Wealth, tilts the odds greatly in your favor.

Learn about what questions to ask when hiring a financial advisor.

Read about our Ideal Client

Ready for a no-commitment chat with us?

This post focuses on the benefits of developing an estate plan to avoid probate and assure your assets are distributed according to your wishes and in a timely fashion.

What do you want for your loved ones when you are gone? A protracted, expensive public legal process (known as probate) or an efficient disposition of the assets in your estate? 

Reasons for developing an estate plan

Most individuals want control over what happens to their assets when they pass away. And most people want the disposition of assets to be as easy, streamlined and tax efficient as possible for the people we leave behind.

These things can be designed and planned for with estate planning documents. Two of these documents are a Last Will and a Living Trust.

A Last Will states who will be the executor of your estate, who will be the guardians of your minor children, who will receive your assets, and how and when they will receive them.

But having a will doesn’t help your heirs avoid probate, which is a time consuming, expensive, and public process. Developing an estate plan also involves creating a Living Trust. A Living Trust provides lifetime and after death property management, more flexibility in how your assets will be distributed, avoids probate, and most importantly, provides for immediate asset distribution. The benefits of an estate plan are clear.

Completing the estate planning process

However, it’s important to note that it’s not good enough to just have a Living Trust document. You must also fund the trust. This is done by retitling your assets in the name of the trust, and transferring them into the trust. If your assets have not been retitled and transferred into your trust, or you die without funding it, the trust will be of little benefit, as your estate will be subject to probate, and there will be significant estate tax consequences.

If you’re still asking, “What is an estate plan?” Or if the thought of developing an estate plan sounds tedious and overwhelming, you’ll want to reach out to a trusted person for more information, guidance, and support. While most don’t focus on estate planning, financial advisors can help you get your documents in order and often are an excellent resource to help you find an estate attorney.

Looking for an estate planning advisor? Learn how to begin estate planning today.

Download our guide on Comprehensive Estate Planning