Conflict-Free Investment Management
If There’s a Place to Find Conflicts of Interest in a Firm or With an Adviser, it’s the Universe of Investment Management.
Clients get hit with trading fees, commission laden funds and hard-to-spot expense ratios (often as high as 1.4% per year). Then the firm charges their advisory fee on top! Talk about the un-golden rule.
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I keep this simple.
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When you invest in equities, you are investing in companies. When you invest in bonds, you are loaning your money to an institution. (Read more on Investing Made Simple Part 1)
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When you invest, you are investing dollars into real companies with the belief that if they’re profitable, you’ll get your share of the profit. Or you’re loaning your money to organizations with the belief that they’ll pay you back with interest. In almost all cases, you’re invested in both simultaneously.
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The Financial Industry Trains You to Look at the Wrong Things
The worst question you can ask yourself (or me) is, “What kind of return can I get on this investment?” No adviser is legally allowed to answer that question.
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A better set of questions are, “Am I comfortable with what I own and how those companies are doing financially?” and “When I loan money via bonds, is the interest rate going to be sufficient for me?”
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I’ve worked with hundreds of families over the last decade, and nobody knows the answer to these questions. People tend to lump their investments into the category of “don’t understand but should care about.”
That’s Where I Come In.
We answer these questions and I manage your investments to your financial plan, not to an arbitrary, fictitious set of numbers. Investing is a discipline, a habit and YOU are the biggest factor in the success or failure of a financial plan. Don’t know what I mean by Financial Plan?
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Invest to Your Profit (and) Loss Zone, Not a Fictitious Series of Returns! I manage investments to your expectations of profit by helping you evaluate what kind of risk you can stomach in exchange for said profits (return). A lot of times people don’t know what their expectations of profit are and they ask me what it “should” be.
Your Profit Expectations and Fear of Loss are More Dominant Than You Imagine:
That is why you need to understand your P&L Zone! It’s important for you to define how much money you expect to make (profit), or how many dollars you are willing to lose on your investments in a 6 month period (risk tolerance).
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I Refuse to Use Expensive Financial Products
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At Conflict Free Planning, we avoid conflicts of interest in the financial products we invest in. I refuse to take commission, my friends at Charles Schwab waive trading fees and we vehemently avoid high expense ratio funds when rebuilding your portfolio. I charge a low, flat
management fee, period.
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I have a lot to say about this! Check out Investing Made Simple Pt 1 Investing Made Simple Pt 2
