"If you don't know where you are going, any road will get you there."
Larry's planning strategy, with you, is to integrate all of the below processes targeted specifically towards your goals ... your desired destination so you know where you are going with your resources.
"It is more about process than it is about product."
How is Larry’s retirement planning different for you?
Larry’s focus is on both phases of retirement planning. He provides you with your single portfolio number that you should save towards during your accumulation years. What is unique is that Larry does retirement planning in reverse by using an advanced distribution methodology, to calculate pre-retiree’s numbers, that he uses for managing retiree’s actual retirement income distributions during their retirement years. Most other companies or planners calculate the retirement number under one method for accumulation years, and then switch to a different method for distribution years.
Additionally, Larry evaluates future phases of retirement (survivor phase &/or estate planning phase) through a balance sheet approach where your assets and liabilities count too. Pensions and/or Social Security are important puzzle pieces to evaluate and optimize as well. When it comes to retirement planning, whether your already retired, or planning to in the future,
Larry considers Retirement as having 3 main phases for couples (singles have Phase II and III in this spectrum): Phase I: when you are both present (traditional retirement income focus); Phase II: when only one present (replacement plan for lost income); and Phase III: is when neither is present and is called the estate plan (and here’s a real life reason why your plans should still be reviewed every few years … laws, language, court interpretation and what you thought your documents say may change, even if they haven’t in your mind!).
Finally, Larry does not use rules of thumb. Instead, he uses your standard of living as the benchmark to measure success (rather than impersonal market indexes or returns), since people wish to retain their standard of living (Larry calls it your Standard of Individual Living (SOIL) in his book Wealth Odyssey), or lifestyle, between working and retirement years in order to avoid lifestyle creep.
The Hour Glass pictured - represents the conversion of your Human Capital that is derived from your working years, into the Financial Capital that could support your Standard of Individual Living during your retirement years.
Retirement Accumulation versus Distribution.
Having a retirement accumulation plan is not the same as having a retirement distribution plan. These two phases of retirement are opposites and are often confused by the generic term of retirement planning. Do you have a retirement distribution strategy? Has it been coordinated with your accumulation plan if you are not yet retired? Do you have a Retirement Feasibility Timeline developed to know at what age retirement may be feasible that also incorporates may other factors for retirement transitions. There is more to this than just investing.
I develop a "retirement feasibility timeline" that illustrates when you may be able to retire without changing anything, if still working, and what are realistic ways to change that outcome if you're not happy with what you see. For those about to retire, or in retirement, I develop a "dashboard" where you can see how to measure and monitor the health of your supplemental* retirement income plan against what the markets and economy are doing.
*Supplemental in reference to income you may receive from your portfolio, in addition to other income from Social Security and/or pensions, if any.
Four Simultaneous and Coordinated Processes ...
How we work together
The Better Financial Education Process shows how we may work together to help you pursue your goals. An important part of the process is self discovery about your unique situation. That’s hard to do without an experienced, caring guide who can lead you through a financial planning process1 originally developed by the CFP® Board of Standards and designed to help you determine what you want to do. Financial plans developed through a defined process add to your independence, qualify of life, and piece of mind.
The next step is Investment Planning, where you efficiently align what you have with your goals and financial plan.
Drawing on years of research and real-life experience, we simplify the complexities of trying to prioritize multiple financial planning issues. We seek to empower you with a clear understanding of your financial choices and what they mean for all your individual goals as you build upon, and evaluate potential risks to, your wealth and goals. Your guided journey through the process is what helps to crystallize potential solutions to the issues that are on your mind today.
Retirement Distribution Process
Concerned about making your money last throughout your lifetime? This Retirement Distribution Process illustrates how you may plan, transition, and live on your resources during retirement, where income for your living expenses will come from your accumulated wealth instead of a paycheck. This process is based on withdrawal rate research2 which goes beyond simply investing and hoping for the best. There are benchmarks that will help you identify and evaluate options and choices as your life and markets change during your retirement years.
Larry’s methodology views the retirement challenge as simply a change in direction of which way your money flows when you transition, from working and accumulation years, to retirement and distribution years. This means that your "number" for the amount you need to save for retirement is consistent between both phases. Larry's clients do not need to change their plan between theses phases as they transition since retirement is for a lifetime, rather than simply an event. What is your retirement number?
Retirement Decision Rules
Larry's Retirement Decision Rules help you focus on preparation rather than prediction. What decision do you make; how do you know when to make it; what do you once you've made it; and when do you go through this decision process to change things back again?
Do you have Retirement Decision Rules that form a Distribution Policy Statement (DiPS) to supplement your Investment Policy Statement (IPS)?
1 click here to link to Let's Make a Plan by the Board of Standards, for a look at the Financial Planning Process.
2 Withdrawal rate research is published in many industry journals to include Journal of Financial Planning, www.fpajournal.org/.
Structured Investing Process
Investor behavior determines your long run results according to the DALBAR studies, where the average fund investor does not achieve the returns available to them from the broader markets. Structured Investing process, provides a methodology that may help you achieve broader market results to accomplish your goals. Structured Investing is more about process than about product. Implementation of the process is through an evidence-based investing approach.
Learn more about the Structured Investing process.
More presentations and videos on the philosophy and process.
Structured Investing helps us set the sails since no one can control the wind.
Investing by itself is like being on a raft. A plan provides the rudder. Your goals provide the destination to which you set your sails.
All four of the above processes are purposefully designed to integrate together in order to form a smooth transition through the various phases of your life.
A common error people make is to measure one investment against another. Investment results will differ as a result of different asset class mixtures which perform differently at different times. This is like measuring progress on a journey by the distance traveled - but what is the destination? Where are you trying to get to so fast? Is it even in the correct direction? A more appropriate measure of one's investments is to evaluate how they, in combination, are projected to achieve your goal. Progress can be measured more appropriately when your destination has also been considered.
"There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction." - John F. Kennedy
*Note - Tech tip: If a second window does not pop up and open, you may have a pop up blocker active. You may bypass a pop up blocker, anytime case by case, by holding down the shift key while clicking the link or icon you wish to open.
What are the many things I do for people?
A brief word about compensation
There are two ways that I am compensated for my advice and services. You can choose one or both.
What are fees for? Through a behavioral approach, fees are primarily to help you avoid the big mistake. Big mistakes set you back further in the hole. Paying for insight and guidance is a small price to pay for small setbacks, instead of paying for large setbacks that could have been avoided with more complete planning. Setbacks are inevitable and occasional. A well developed plan considers this reality. Poor planning that ignores or belittles other issues related to the many stages of life are also costly down the road. Pennies paid to avoid those dollar costs are worth it in the long run (which I define as the rest of your life).
BOTH methods below follow the CFP® Board of Standards Financial Planning Process and the principles under the Science of Evidence-Based Investing.
First compensation method: I receive an annual fee, paid quarterly, based on the value of the assets I advise on for you (advisement is different from management where the later tends to involve adviser discretion. I work under the advisement method, with NO discretion, which means I must have your permission in writing before taking any action!).
- Fees start at a maximum of 1.20% and go down from there based on the value of your portfolio (examples: $10mil ~ .29%; $20mill ~ .24%) with automatic adjustments along the spectrum based on values each quarter. My 1.00% crossover point is $750,000 where amounts above this have less than a 1.00% fee (understanding the advisor's "cross over point" is critical if your comparing fee schedules). Fees automatically scale to two decimal points, using a blended tiered schedule, based on aggregated family portfolio totals so there is no waiting until you may hit a different rate for it to apply. I also have no minimum requirements.
- This method is appropriate for clients who want comprehensive advice, AND investment services such as ongoing planning and portfolio management, automatic rebalancing, and expanded reporting, etc.. In other words, visibility to see what's going on, but no ability to make changes without talking first and then written permission based on conversation (which is more about how changes fit your plan; not speculation about market or economic futures). Working together this way saves you from having to do everything yourself and helps you stay focused on your overall goals and stay on track, as well as avoid a 4% to 7% cost due to poor market timing.
Second compensation method: A consulting arrangement, billed by the project or on an hourly basis at $170 per hour.
- This method is appropriate for clients who want comprehensive advice in specific planning areas only, while you are then free to implement and monitor the investment suggestions anywhere you choose, as well as you would be responsible for managing the portfolio on your own without expanded visibility, rebalancing and reporting.
An metaphor to explain the difference between the first and second methods: You get pest control for one year and then cancel because you don't have an insect problem anymore! [Surprise - they come back after awhile!] This is analogous to the second method where you get advice to solve problems as they pop up. The first method is continuously addressing things and resolve them before they become bigger issues.
We will have a thorough discussion to determine which compensation method is best for your situation. After I become more familiar with your situations and desires, I can provide more details about fees and options which are difficult initially without knowing you. Also, after we first meet, you will receive a complete written agreement designed for either method above as well as my Form ADV Part 2 & Consumer Relationship Summary (CRS or Part 3) and privacy notices that describe how we may work together.
I am an independent Registered Investment Adviser and do not sell products for any company; you invest directly and retain discretionary control over your money. I am also a member of National Association of Personal Financial Advisers (NAPFA), a national association of Fee-only advisers.
Please note: All fees, charges and expenses are detailed and disclosed through a written fee agreement prior to your becoming a client. Additional details are found in our Form ADV II, which may be downloaded here.
Additional information
Additional information may be found through my answers to NAPFA's Comprehensive Financial Advisor Diagnostic by clicking on the .pdf document below (here's a blank diagnostic to provide to other advisers you may be considering for their written input as well).
Fundamental difference between an investment adviser, and those who are not investment advisers, by registration and regulation.
What's the Difference Between Advisers?
I’m registered for investment advice under the Investment Advisers Act of 1940, as you can see from the above "Difference Between Advisers" link. I am process oriented; I am NOT registered for investment sales (product sales oriented) under the Securities Exchange Act of 1934 which governs licensing of brokers and dealers (who may work as fee-based (commissions and/or fees). I have experience working for people in various areas of their financial lives since 1997 and am a fee-only NAPFA adviser, member of the Fee-Only Network, and work as a fiduciary for you.
