The Value of Financial Planning
Congratulations on taking the first step toward securing your financial future! If you’re starting to create a financial plan, you’re already ahead of the curve. Did you know that only one in every three adults in their 50s makes it as far as you? Those with a well-thought-out plan accumulate three times as much wealth as those without one.[1] In this article, we’ll explore the significant benefits of financial planning.
Get the most value out of your financial plan with an advisor
1. Behavioral Coaching
Investors often make decisions based on emotions, and that can be costly. For example, someone might worry when the stock market drops and sell their investments. By the time they reinvest, prices have gone up—they sold low and bought high. Being a long-term investor and ignoring the market’s ups and downs has been shown to provide the biggest reward. Advisors that provide behavioral coaching have increased returns by as much as 1.5%. On a $100,000 portfolio, that is up to $1,500 a year. These advisers helped clients stick to the plan despite market turns through listening, counseling, and guiding them.[2]
2. Portfolio Construction
Portfolio construction can add up to 1.2% to returns or $1,200. [2] It considers how (and in which accounts) money is invested and the tax considerations of those decisions[3]. Being smart about little things can really add up here. For example, putting your dividend-paying stocks in a retirement account rather than a taxable investment account allows you to skip paying tax on those dividends this year.
3. Wealth Management
An additional 1% increase in returns is possible through wealth management tools. [2] Examples here would include 1) developing withdrawal strategies and 2) rebalancing accounts regularly. This adds up to as much as $1,000 on a $100,000 portfolio.
How Jacobson & Schmitt Advisors can help
1. Behavioral Coaching
CLIENT & ADVISOR PARTNERSHIP
In our introductory meetings, JSA aims to ask questions that help us understand what is important to you and how you view your money. From your answers, we derive your “money mission” – a statement about what your money means to you. We use this as a lens to look through while developing recommendations so our advice aligns with the people and causes you care about. Getting to know you better helps us understand the types of coaching you might need and can depend on your specific goals, perceptions, and past experiences.
2. Portfolio Construction
INVESTMENT PLANNING
At Jacobson & Schmitt Advisors, our portfolio construction is unique to our firm; we own 20-30 individual stocks rather than mutual funds. This allows us to keep trading costs low, pay close attention to capital gains in tax planning, and ensure all the companies we invest in are “proud to own.” Our investment team continuously evaluates the portfolio and looks for good long-term investments. The portfolio we construct for you will support your unique money mission.
3. Wealth Management
RETIREMENT PLANNING
Our financial planning team reviews your overall household financial health at least annually. In the introductory process, we build a financial plan based on your money mission. We will help you determine how much you need to save, when you can retire, and how we can meet your goals.
TAX PLANNING
On top of reviewing your plan annually, we work to reduce the tax you will owe throughout your lifetime. A few strategies include:
- Helping you determine the best way to gift to the causes you care about (Qualified Charitable Distributions or QCDs, appreciated stock, etc.)
- Harvesting capital losses or gains
- Partnering with your CPAs to coordinate tax opportunities like Roth conversions.
- Developing a plan to help you understand where to save your next dollar of income.
- For retired clients, the conversation shifts to creating a paycheck from the wealth they accumulated throughout their lifetime.
HOLISTIC PLANNING
At JSA, our efforts don’t end with your investments. We’ll review estate plans and insurance coverage, evaluate debt, review college savings plans, and do our best to answer your toughest money questions.
PARTNERING ON YOUR FINANCIAL JOURNEY
Even if we only meet with a client once or twice a year, we are always exploring opportunities for them. If you would like to see the value JSA can add to your financial life, schedule a call so we can understand your money mission and evaluate your current financial situation. We want to make your money work harder so you don’t have to!
[1] Lusardi, A. and Mitchell, O. (2011) ‘Financial Literacy and Planning: Implications for retirement wellbeing,’ National Bureau of Economic Research, working paper 17078.
[2] Kinniry, F. et al. (2014) ‘Putting a value on your value: Quantifying Vanguard Advisor’s Alpha.’ The Vanguard Group.
[3] Kitces, M. (2015) ‘Evaluating Financial Planning Strategies And Quantifying Their Economic Impact,’ The Kitces Report, Volume 3.
Jacobson & Schmitt Advisors, LLC (“JSA”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where JSA and its representatives are properly licensed and or exempt from licensure. The information provided is for educational and informational purposes only and does not constitute investment advice, and it should be be relied upon as such. It should not be considered a solicitation to buy or an offer to sell a security.