I hope you’re doing well and have exciting plans for this weekend’s 4th of July.

Please see this week’s personal finance articles, chart, and quote below, along with an article about a new investment option for clients of Think Different Financial Planning. These portfolios are designed for clients who want to invest in companies that have a positive impact across a range of environmental, social, and corporate governance issues.

3 Articles

Getting the Goalpost to Stop Moving
Morgan Housel, Collaborative Fund

One of the most important financial skills is getting the goalpost to stop moving. It’s also one of the hardest.

Speculation: A Game You Can’t Win
Lawrence Yeo, More to That

Told in a storyboard style, this article covers the issues with speculative investments.

How Much Do You Need to be Financially Independent
Nick Maggiulli, Of Dollars and Data 

1 Chart

Keeping with the theme of environmentally friendliness, it’s encouraging to see the decrease in price across energy sources.

1 Quote

“Money is numbers and numbers never end. If it takes money to be happy, your search for happiness will never end.”

– Bob Marley 

New Articles This Week

Disclosure: The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.

Think Different Financial Planning is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.

When you access one of these web sites, you are leaving this web site and assume total responsibility and risk for use of the web sites you are visiting.

Think Different Financial Planning does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Think Different Financial Planning’s web site or incorporated herein, and takes no responsibility thereof.

A growing number of investors want to know that their investment dollars are having a positive impact on the world.

A popular methodology for this type of impact investing is known as “ESG” investing, which stands for environmental, social, and governance.

• Environmental criteria consider how a company performs as a steward of nature.
• Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates.
• Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.

Think Different Financial Planning is proud to announce that ESG portfolios are now available as an investment option. Click here to learn more about these portfolios. 

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The material has been gathered from sources believed to be reliable, however Think Different Financial Planning cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.

Please see this week’s personal finance articles, chart, and quote below!

3 Articles

Best Places Lists
Robert Silvernail

There are a lot of factors to consider aside from taxes when you decide where you want to live during retirement.

No, Millennials Aren’t Poorer Than Previous Generations
Nick Maggiulli, Of Dollars & Data

On the misconception that millennials are poorer than previous generations.

What College Rankings Don’t Tell You
Tony Isola, A Teachable Moment

College rankings aren’t what they appear.

1 Chart

Inflation is rising in the United States and Europe.

Source: The Economist

1 Quote

“Being rich is having money; being wealthy is having time.”

– Henry Ward Beecher

Disclosure: The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.

Think Different Financial Planning is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.

When you access one of these web sites, you are leaving this web site and assume total responsibility and risk for use of the web sites you are visiting.

Think Different Financial Planning does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Think Different Financial Planning’s web site or incorporated herein, and takes no responsibility thereof.

Please see this week’s personal finance articles, chart, and quote below. I was also quoted in an article from Top Dollar, which is linked to at the bottom of this email.

3 Articles

California Defies Doom with #1 US Economy
Matthew Winkler, Bloomberg

Across a number of metrics, including household income, productivity, innovation investment, and GDP growth, California ranks number 1.

How to Choose the Right Kind of Mortgage
Peter Lazaroff

A home loan usually represents the largest liability on your balance sheet. That makes it important to understand the options you have.

Do it Yourself or Hire a Financial Pro?
Schwab

There’s never been a better time to take charge of your own finances. But, everyone has their limits.

1 Chart

The median price of existing homes is up 17% in the last year. The highest 1-year increase on record.

Source: 5-Chart Friday Charlie Bilello, Compound Advisors

1 Quote

“Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.”

– Seth Klarman

Media Mentions this Week

Money Advice for Your 50s
Mikaela Sullivan, Top Dollar

I was honored to be quoted in this article. Here’s what I said:

“For many of us, our work is our life. Once people don’t have that, it can feel like you’ve lost your sense of identity and don’t have as much purpose. As funny as it might sound, you should plan what you’ll do when you’re not working.”

Disclosure: The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.

Think Different Financial Planning is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.

When you access one of these web sites, you are leaving this web site and assume total responsibility and risk for use of the web sites you are visiting.

Think Different Financial Planning does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Think Different Financial Planning’s web site or incorporated herein, and takes no responsibility thereof.

I was honored to be quoted in an article by Top Dollar, Money Advice for Your 50s.

Here’s what I said on the topic: “For many of us, our work is our life. Once people don’t have that, it can feel like you’ve lost your sense of identity and don’t have as much purpose. As funny as it might sound, you should plan what you’ll do when you’re not working.”

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The material has been gathered from sources believed to be reliable, however Think Different Financial Planning cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.

Most people estimate the price of a financial advisor to cost 1% per year. To investigate this assumption, Bob Veres surveyed nearly 1,000 advisors about their fees.

The main takeaway is that financial advisors’ fees are made up of two components.

Number one is the advisor’s fee, which is typically charged as a percent of the money that is managed, known as “assets under management” or AUM. This is the 1% fee most people have in mind.

AUM fees typically decline as more assets are managed. For instance, the fee on might be 1.0% on the first $1M and 0.75% on the next $1M. This leads to an overall “blended fee schedule,” shown below in orange:

Source: Financial Advisor Fees Comparison, Michael Kitces, Nerd’s Eye View

As you can see in the chart above, until you have $1.5M you will likely pay above 1%.

It’s also noteworthy these fees do not decrease dramatically. Even for clients with $5M the fee is approximately 0.80%, or $40,000 per year.

The second notable cost is the expense ratio. This often overlooked fee is the price of the mutual funds, exchange-traded funds, or other investment products used. Across all firms, the median cost was 0.50% per year. Importantly, these fees do not decrease as more money is invested, making them that much more impactful.

Total Costs
Adding the advisor fee and the expense ratio, the all-in cost of a financial advisor varies by asset level, but remains well above 1.0%:

Conclusion
Keeping fees low is an important component to successful long-term investing.

Those evaluating financial planning professionals should question the value of asset-based fees, and make sure to understand the total overall fee. Then, ask the prospective advisor, “How much time do you expect to spend working with me on an annual basis.” From there, calculate the fees as an average hourly rate.

As a flat-fee financial planner I believe charging an annual retainer is a fairer, more transparent compensation method. It does not cost more to manage a $5,000,000 portfolio versus a $500,000 portfolio. Why should a client pay tens of thousands more to receive the same service and investment portfolio?

This is also not how other established service professionals charge. Would an accountant charge based on your income? Would an estate planner charge based on the size of their estate? No. But this, unfortunately, is the norm in financial planning and investment management.

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The material has been gathered from sources believed to be reliable, however Think Different Financial Planning cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.