1) What exactly is "Financial Planning"?
2) How are you compensated for your services?
3) What is special about your method of compensation?
4) What is your investment philosophy?
5) If I don't have any assets, does financial planning still make sense for me?
6) How do I know when a financial planner is worth the expense?
7) Do I have to stay with your service for any length of time?
8) What Investments Does Ben-David Financial Planning Use?
9) What are the winning numbers for next week’s lottery?
What exactly is "Financial Planning"?
Financial planning is an on-going process which aligns your financial decisions with your personal values and lifetime goals. At Ben-David Financial Planning, we formulate a financial plan that strives to promote balanced living today while focusing on achieving your long term goals.
A comprehensive financial plan encompasses all aspects of your financial life - investments, taxes, insurance, estate planning, budgeting . . . As the external & internal circumstances of your life inevitably change - markets, tax legislation, family, finances, health, and goals - the financial plan should adapt to meet your needs. BDFP responds to this reality by meeting with you to update the financial plan at least annually, or as often as needed.
How are you compensated for your services?
We are compensated for all of our services on a fee-only basis. This means that our only fees come from you, the client - not from the sale of any products, collection of commissions or referral fees. One time planning services, such as initial financial planning and college planning are billed on a project basis; ongoing financial planning & asset management are billed on a retainer basis. All fees are determined based on the complexity of the situation.
What is special about your method of compensation?
Using a fee-only structure guarantees that our advice is objective and unbiased. Our decisions are completely aligned with your best interest - not with promoting a product.
Our fee structure is based on the service you receive, not on how many products you buy or on the value of your managed portfolio. While most fee-only firms use an Assets Under Management (AUM) fee structure which often requires you to have some minimum amount of assets, our fee structure allows someone with few or no assets to receive the financial planning they need.
You pay a fixed annual retainer based on the complexity of your situation. In essence, this system of payment does not penalize clients with greater assets by forcing them to pay more simply because they have the means.
What is your investment philosophy?
In any given year, there are many managers and investors who beat the market due to luck. But over the long haul, very few active managers beat the market because even if they make a few good bets, their management fees and transaction costs wipe those gains out. As a result, index funds are the lowest cost and lowest risk solution to constructing an efficient portfolio which captures the investment returns of the world's markets.
By designing an asset allocation which suits your investment return needs and risk profile, and focusing our efforts on controlling fees, taxes, and expenses, we achieve the best return available to you with the lowest risk.
In implementing this strategy, we utilize the institutional mutual funds of Dimensional Fund Advisors (DFA). Access to these institutional funds provides you with low-cost institutional pricing, access to global markets, tax efficiency and DFA’s very targeted investment strategies.
More information about DFA is below.
If I don't have any assets, does financial planning still make sense for me?
It is a common misconception that you have to be rich to work with a financial planner. In fact, while you may not need investment management services at this stage in your financial life, just about anyone who earns an income can use advice on how to sort through employee benefits, retirement plans and insurance policies. Even a one time financial plan can be helpful by offering you guidance in the following areas:
Creating a savings & investment plan
Mapping out a strategy for achieving long-term financial goals
Analyzing employer benefit opportunities
Exposing any financial vulnerabilities
Identifying tax savings opportunities
How do I know when a financial planner is worth the expense?
Naturally, financial planners charge for their services just as do attorneys, doctors or any other professionals. But think of financial planning as an investment rather than an expense. A good financial planner should save and earn you far more money than what you pay the planner in fees. This investment may be accomplished by improving cash flow through better budgeting, reducing your tax liabilities, boosting investment returns, or even preventing a costly financial catastrophe through the application of insurance or other defensive measures. This is to say nothing of the intangible benefits such as peace of mind, time saved and a better focus on one’s financial life. If you still have doubts about your situation, talk with the financial planner you are considering and ask for specific examples of how they can help you.
Do I have to stay with your service for any length of time?
Obviously, we would like you to stay with us forever. However, there is no obligation to do that. We disclose in our contracts that clients are allowed to terminate service with us at any time. In all cases, you are the sole judge of satisfaction. Upon a written notice of dissatisfaction, unpaid fees will be waived and any deposit refunded (in the case of the initial financial plan).
What investments does Ben-David Financial Planning use?
In order to implement our asset class portfolio strategies, we utilize the institutional mutual funds of Dimensional Fund Advisors.
Although BDFP also manages laddered bond portfolios, and incorporates preexisting stock positions and active funds into portfolio allocations, the comprehensiveness and economy of scale offered by DFA funds make them excellent building blocks from which diversified asset class portfolios can be constructed.
DFA funds are not available directly to the public. With the exception of a small group of qualified registered investment advisors including Ben-David Financial Planning, these funds are available only to very large institutional investors in the public and private sectors. This limited access and high degree of accountability keep their fund costs very low and their investment philosophy consistent.
For additional information about DFA, please click here.
What are the winning numbers for next week’s lottery?
Well, we don't have all the answers, but if you are committed to the financial planning process, you won't need to win the lottery!