Typically, the sooner you hire a financial advisor, the better. Often people start working with a financial advisor around big life changes like a marriage, changing jobs, children being born, or retirement. It might help to think about your personal retirement plan as a cross-country road trip to the West Coast. It would be extremely difficult to take a trip of this length from Huntsville, AL, without a well thought out plan of how to get there. For a successful trip you would start with your desired destination, and then plan for all of your stops, possible detours, and difficult stretches of traffic along the way. This same attention to detail in financial planning is used when a financial advisor is developing a financial plan for you and your family. Sure, you know that you eventually want to retire and spend the rest of your life at ease with your family, but how exactly do you get there? Along the way, you may want to provide funds for your child to go to college, or buy a beach house down on the Gulf coast. These are all things that a financial advisor from Vector Wealth Strategies can incorporate into your financial plan.

As the old proverb says, “There is no time like the present.” Americans are living longer and therefore need to save more than ever to know they have developed a sound financial plan for retirement. Due to constant improvements in our healthcare system along with healthier lifestyle choices, the average lifespan of Americans is up. Despite this fact, Americans are not saving nearly as much as they should be, and it isn’t even close. According to a recent survey, almost half of Americans feel that their retirement savings are not on track. Albert Einstein said it best, “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” Time is your most important ally when it comes to investment management. You will have more options down the road the earlier you decide to develop a financial plan and make retirement planning a goal in your life. When developing a financial plan for your retirement needs, it is important to work with a financial advisor who will help you factor in all of the things that will affect your way of life. You will always have your everyday expenses like the electric bill and property taxes. However, it is healthy and highly beneficial to also consider the things that you want to do, like go on a dream vacation with your family, or give a portion of your estate to your favorite charity. While all of this is great to talk about in the present, you must have the adequate savings and wealth managers to properly execute these retirement goals within your financial plan. A big part of what the financial advisors at Vector do is planning your investments to match your financial plan for these needs and wishes

Financial planners work side-by-side with their clients to craft personalized financial plans to propel them toward their financial goals. A big topic that the financial advisors at Vector Wealth strategies helps tackle on a daily basis is the looming client question, “When can I retire?” Through careful retirement planning and thorough analysis, we determine when our clients should retire and begin the significant second half that they have always dreamed of. But financial planners don’t just consider the retirement timeline of their clients. A good financial planner will offer a holistic approach to financial planning. This would include figuring out solutions in complex areas like tax planning and estate planning, or developing more straightforward strategies like an everyday budgeting plan and investment management. One of the key differentiators among financial planners is the level of service they provide.

Some financial advisors make only commissions, other financial advisors charge by the hour for their advice, while other financial advisors charge a flat fee. Many financial advisors charge based on the amount of money that they oversee through their investment management services, otherwise known as assets under management (AUM). A fee for investment management can range anywhere from 0.25% to 2% per year depending on the services that are included in the fee. It is important to understand what all is included in the fees you pay, and remember, you usually get what you pay for. Some employer retirement plans have an in-house “retirement planner” that will help you choose investments based on your age and asset level, but that is usually where the level of service stops. The financial advisors at Vector Wealth Strategies incorporate more than just investment management taking all of your financial well-being into account with your plan. About a third of what our clients pay goes into the investment due diligence and selection, about a third goes towards engineering a truly efficient tax strategy, and the last third goes into everything else, whether that is understanding when to turn on social security or whether to refinance your home.

All wealth managers are financial advisors, but not all financial advisors are wealth managers. Wealth management becomes more relevant when your net worth exceeds a certain point and your financial future involves more complex planning than your everyday financial plan. Topics like estate planning, tax efficiency, and philanthropy all become an essential part of wealth management. Even more importantly, these areas must be analyzed simultaneously in a way that allows for each goal to be achieved without negatively impacting another goal. If your liquid net worth exceeds $1,000,000 or your total net worth exceeds $3,000,000 it is time to begin talking to a wealth manager at Vector Wealth Strategies.

Financial advisors are similar in many ways to physicians. You can read online about a lot of sicknesses, symptoms, and home remedies. That might even be all that you need if you just have the sniffles. However, we all agree that self-diagnosis from WebMD is not the best nor most accurate remedy for anything more serious. The same can be said about financial advisors. You can read a lot online about investments and tax implications, but self-diagnosis can often lead to painful and costly mistakes with more complex topics such as retirement planning and college savings. The assumptions you use when planning for retirement or saving for college education have a big impact on the results. Working with a knowledgeable local financial advisor is important when the stakes are high.

Like many things in life, it depends on who you hire, but across most aspects of your financial well-being, such as investment selection, tax planning, or retirement planning, the resounding answer is yes. It is important to consider everything your financial advisor is doing for you when considering the cost. At Vector, we are constantly monitoring our clients’ accounts in multiple areas of wealth management. This monitoring involves, careful investment oversight including risk management and manager selection, progress toward financial planning goals, and tax-efficiency. According to a study by Vanguard, just implementing a tax efficient portfolio can add over 1% to your bottom line; and depending upon your long-term utilization of your money, a well-designed Roth IRA conversion plan for your former employer retirement plans can add another 0.5% annualized net return i.e. the money you keep. While all the areas we have referenced are important, for many financial planning clients, the tax efficiency alone typically more than pays for the advisory fee we charge for all services.

There are some industry standards to help with your choice such as the CFP® certification which means that person is a CERTIFIED FINANCIAL PLANNER™ professional. This can provide you with some initial direction, but even with designations, there are a wide array of results in the advice you will receive. So, a good way to begin might be to start with your friends and former coworkers who have already retired. You could also consult other professionals like CPAs or attorneys that you already work with. Consulting these individuals can help you to create a short list of financial advisors who have at least been helpful to people in similar situations as you. Once you begin interviewing candidates, you should also choose an advisor who will help you set realistic expectations and map out a plan to achieve those goals. An often overlooked thing to consider is choosing a financial advisor who is direct with you. Don’t just pick someone that tells you what you want to hear. And lastly, performance is important over time, but market returns will come and go. So, be mindful of financial advisors who focus their discussion on performance instead of asking you about your goals and dreams.

Retirement planning should consider everything you want to accomplish in retirement. A financial advisor at Vector Wealth Strategies can help you achieve a smooth transition from success in your career to significance in your second half. Developing a financial plan for this big occasion involves taking a look into who you want to be when you retire and the goals you have for that long-awaited time in your life. The information that needs to be analyzed includes the hard data, like the amount you currently have saved in your 401(k) plan, Traditional IRAs, Roth IRAs and Brokerage accounts as well as the softer items, like the amount you want to leave to your family and your charitable wishes. While it may be harder to put a dollar amount on those softer items, they are just as important as the hard data in the retirement planning process. Being headquartered in Huntsville, Alabama, many of our local financial planning clients work at large engineering firms that offer pensions. One of the important things we help our clients with is selecting which pension would best suit and compliment their existing retirement assets. At Vector, our 360 Planning Process begins with data gathering where we seek out that important information and identify the key values that define who you are and who you want to be. Next, we build the plan and recommend strategies based on your desires and needs in retirement, which we tweak and fine-tune as your life circumstances shift and change. Lastly, we help you implement your plan and monitor your progress as your plan transforms from an idea to a reality.