Frequently Asked Questions
Wealth management is a process of gathering and analyzing a broad spectrum of financial data and issues, then executing appropriate decisions. It can include many or all components of financial advice such as retirement planning, investment management, asset allocation, tax planning and/or estate planning. The process takes place over time, as wealth is accumulated. Wealth management brings together changing client situations and goals with the financial advisor expertise to sort through various financial and asset management strategies to find appropriate solutions.
People often wonder, “Will I have enough money to retire comfortably?” There’s no perfect answer because we cannot predict the future, but with a little effort it is possible to evaluate if a person is on the right track. Important factors include time horizon, spending habits, earning potential and expected retirement income among others. Retirement planning is one way to help achieve the comfortable retirement we all are hoping for.
A Registered Investment Advisor, is a firm registered with either the SEC or their state securities division that offers professional financial advice and/or investment advice for a fee. Registered Investment Advisor firms are regulated by the Investment Advisors Act of 1940 and have a fiduciary responsibility to act in the best interest of their clients.
When you choose to work with a Registered Investment Advisor you are working with a firm that has made a commitment to providing professional financial advice. Registered Investment Advisors take a fiduciary responsibility working with their clients. They operate under a stricter requirement of conflict disclosure than broker/dealer representatives. Attorneys and CPA’s are examples of other professionals that work under these same fiduciary guidelines. You pay for their knowledge, experience and service.
At Barron Financial Group our philosophy is to provide independent, objective financial advice based on client goals. With our knowledge and experience we bring a level of service that is hard to match. We strive for high levels of customer satisfaction and feel our client base is our most valuable asset.
As a fee-based Registered Investment Advisor and financial planner the majority of our work is done on a fee for service basis. This is similar to how you pay a lawyer or doctor…fee for service. This differs greatly from many representatives who earn their living by selling products that pay commission. On rare occasions, Jim may offer commissionable products to clients in response to specific situations or needs. In these cases we fully disclose our commission compensation and offer an open dialogue regarding the suitability of the product offered.
Listed below are (4) general investor types grouped by age. Notice that each investor type has specific issues associated that are very important to consider when seeking investment advice. These are the types of issues we consider when engaging in portfolio management for our clients. It’s important to understand these different life stages and how they impact investment strategy.
- Early Accumulation (Age 25-39) These clients face the challenge of developing careers, purchasing first homes, raising families and starting a disciplined saving and investment management program. This period sets the stage for future financial stability. We find that much benefit is gained when these clients engage in a small amount of financial planning to help set and prioritize goals. Risk management, insurance needs, asset allocation and investment advice are often part of the financial planning associated with this phase.
- Middle Growth (Age 40-54) As clients enter their peak earning years they are often confronted with more extensive financial management along with larger expenses such as college, second homes etc. Portfolio management during this phase is primarily to promote maximum growth while practicing prudent risk management. It is important that assets are properly managed to provide a solid base for the shift toward a more conservative investment portfolio in later years. That shift is more difficult if the assets accumulated are not sufficient to generate the investment income needed.
- Later Growth with Income (Age 55-64) With retirement approaching and the investment time horizon getting shorter, the investment portfolio must now shift into a more conservative style that emphasizes some growth, with a greater degree of investment income generation. The more conservative asset allocation mix provides a less volatile portfolio while maintaining the potential for inflation-beating returns. Retirement planning is now more relevant than ever and these clients are often asking the question “Do I have enough money to retire?”
- Retirement with Income (Age 65 and up) These clients face the challenge of maintaining their lifestyle without the earned income they are accustomed to. Having substantial savings can provide a reliable and steady income, but often there is need to use some amount of principal to augment the income generated. Portfolio management and asset allocation are critical in this phase as it can be the longest phase of a person’s life. Being too conservative and forcing frequent principal distributions can result in the rapid exhaustion of savings, while over exposure to risk can result in excessive loss of principal. This phase may also present the need for estate planning for asset protection and transfer. Many people find that as they get older, leaving a legacy to their heirs or charity is more important to them than ever before. Financial advice can be critical to make sure that goals are understood and plans implemented to best meet them.
Many people think that all financial planners are “certified”, but this isn’t true. Thanks in-part to the lobbying efforts of the large brokerage firms, anyone can call himself or herself a “financial planner”. Only those who have fulfilled the certification and renewal requirements of the CFP Board can call themselves a Certified Financial Planner and display the CFP® certification marks.
AWMA stands for Accredited Wealth Management Advisor, a designation earned from the College for Financial Planning in Greenwood Village, Colorado. The course consists of 15 modules, each pertaining to a specific portion of financial advising. Each module contains explanations of situations, issues and solutions when dealing with that aspect of financial planning. The module texts total over 1,800 pages of information and analysis. This course and the designation are designed to provide a broad overview of the situations often found in the world of providing financial advice.
At Barron Financial Group our primary risk consideration is volatility. Volatility is the potential for principal loss at any time while holding an investment. Different asset classes such as US stocks, US bonds, cash and international investments have different levels of volatility risk. Volatility can be quantified from historical data by using standard deviation, a common measure used in statistics. Larger standard deviations represent greater volatility or risk. Managing asset allocation and asset class risk is the essence of our portfolio management process.
Of course there are other types of risks we consider and evaluate as needed. These may include: inflation and interest rate risk, credit risk and liquidity risk among others. These risks can relate to the selection of specific investments or with an asset class as part of the asset allocation of an investment portfolio.
This question goes to the root of our portfolio management process. We manage risk by using our proprietary economic analysis to adjust asset allocation. We understand the natural fluctuation of asset class risks and returns. We select investment strategies and adjust asset allocation in an attempt to optimize investment return for a given level of risk.
Our ongoing portfolio management process and proprietary analytical tools allow us to monitor what is happening in the global financial markets. Movements in asset class valuations, economic cycle, momentum, and geopolitical concerns are some of the types of data we look at.
Barron Financial Group focuses on building local client relationships in all parts of Connecticut. Our local service area includes the towns of Torrington, Litchfield, Morris, Goshen, Cornwall, Sharon, New Hartford, Harwinton, Burlington, Salisbury, Canaan, North Canaan, Norfolk, Colebrook, Winchester, Hartland, Winsted, Barkhamsted, Warren and Kent.
Barron Financial Group also services clients across the country. We have incorporated secure video technology, available through our website, to allow video conferencing with remote clients. This allows our practice to feel “local” even with non-local clients.