financial plan

What’s Your Investor Mindset?

September 8, 2015

64% of Americans have no financial strategy at all. That’s right — no plan whatsoever to build wealth or to keep it. This finding comes from the National Consumer Survey on Personal Finance conducted by the Certified Financial Planner Board of Standards, Inc. Only 17% have a written financial plan that is updated regularly. Notably, 48% said they had benefited from having a written plan. So, congratulate yourself if you are in this group.

Why don’t more people have a financial plan? Some cited the expense of engaging a financial advisor; some said they get along just fine without a financial plan and others felt their finances weren’t complicated enough to warrant one. Others were hazy about financial services industry qualifications and 40% of respondents had no idea that there were professional credentials or designations for financial advisors. Investment and financial decisions are difficult to make for most people. Not only does it take a lot of time, the knowledge required can seem like learning a second language child’s play. There are basically three types of investor mindsets and you may have known or even been one of them.

The Do-It-Yourself investor believes that they possess the knowledge needed to actively manage their investments. They also have the time required to research among the thousands of investment opportunities, build an effective portfolio of securities and can monitor performance on a regular basis. They may do all of their own financial planning and manage their accounts through an online portal while paying transaction fees.

This type of investor likes to be involved in the investment decision-making process, however seeks the advice and expertise of a financial advisor to validate their decisions. Clients typically pay fees in the form of commissions on transactions or a fee based on the value of their assets that are wrapped into a single investment solution. Financial planning may be limited or non-existent and each investment decision must be approved in advance by the investor.

Finally, there are investors who prefer to delegate. These investors don’t have the interest, time or desire to be involved in the day-to-day investment management decisions of their portfolios and are willing to delegate financial decision making to a trusted advisor. In addition, clients are typically offered a comprehensive set of financial planning that then drives the investment decisions. Clients typically pay a fee based on the value of the assets professionally managed.

Someone who is a delegator will usually work with an independent RIA (Registered Investment Advisor) who holds a Fiduciary duty to place the needs of the client first. Sometimes an investor may mistakenly believe that a broker/advisor they work with are similarly held to this higher Fiduciary standard. This could lead to trouble for a delegator since they typically don’t take an active role in the investment decision-making process or truly understand the investments being recommended.

Which Type of Investor Mindset Do You Possess?
Investing without a financial plan is an enormous risk; investing with a financial plan that hasn’t been reviewed in several years is also chancy. A relationship with a trusted financial advisor can help bring you up to date about what you need to do, and provide you with more clarity and confidence when it comes to the financial future. Merely having a financial plan on paper doesn’t guarantee that you will reach your goals. Yet a financial plan does give you an understanding of your current financial situation, identify where you want to be and provides a path toward closing any gaps and achieving your important financial objectives.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

Why Should You Create a Financially Organized Life?

December 26, 2014

Financial organization is the cornerstone of a healthy financial life. Financial organization saves time and money because it aids in paying bills on time, being able to find needed documents during tax season, providing proof of payment, disputing credit cards or billing errors and avoiding the stress of dealing with piles of unorganized bills and paperwork. It also sets the stage for better financial decisions surrounding investments, budgeting, debt and investment planning. And, that system needs to evolve over times as your financial situation in life grows.

“As you get more successful in life, your financial life tends to get more complicated and in depth. Being organized creates the framework and a strong foundation for your financial life to ensure you are getting the most out of your money. We have seen new clients join us that had old habits that were wasting money on fees and taxes when it could have been avoided,” said Larry Harvey, ChFC and Founder of HFG Wealth Management, LLC. “I have often found what used to be done to manage money and finances is not as effective anymore as it once was when a financial picture was less complicated,” said Harvey.

Beyond organizing the paperwork properly, I also suggest deciding what family members need to know and sharing with them where you are financially, and how that is in line with your goals. For couples, clearly establishing responsibilities for financial matters is an important priority. Here are some additional best practice questions that I suggest keeping in mind as you restart for the New Year. (more…)

Echoes of Cold War

March 4, 2014

The building crisis in Ukraine has finally put markets on edge, with reports that Russia has massed troops along the border and has taken operational control of the province of Crimea. The Russia-friendly Prime Minister has fled the country, and the jostling between Western and Russian interests has intensified. After reaching new highs last week, U.S. markets have been falling this morning on news of the intensifying conflict.

So, what’s going on? The primary disagreement is on the future of Ukraine. One group, the one that ousted the Prime Minister, wants a Ukraine that increasingly partners with Europe on trade, politics and energy. The “old guard” was a much stauncher ally of Russia, and Russia does not want that partnership to end. After weeks of riots and street protests, the major powers are now getting involved.

What does Ukraine mean to markets? For Russian markets, Ukraine is important. It is one of the largest agricultural regions in the former U.S.S.R., and it has important energy infrastructure. This also makes Ukraine important to Europe. It is less important to the U.S., but from a geopolitical standpoint, the U.S. government would certainly prefer it lean toward Europe. (more…)

Make a List, Check it Twice

December 24, 2013

2013 has been quite the year for stock investors. Bond investors had a tougher go of it, and international stocks fell somewhere in between. Of course, readers of this letter are probably invested in a diversified portfolio geared to best meet their own financial goals, making the daily swings in any given asset class more palatable.

While market movements are important, the most important activities that can help you maximize your financial goals lie within your own activities. With just over a week until we put 2013 in the history books, we wanted to make sure that you’ve done everything you can do to maximize your financial plan. (more…)