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Why Matheson Financial Partners?


There are a lot of options when it comes to choosing a Sacramento Financial Advisor. Which is why we have worked hard to create a firm that:

The following article outlines the three major reasons why we think Matheson Financial Partners should be trusted financial advisor.


FIDUCIARY


WHAT IS A FIDUCIARY ADVISOR?

A fiduciary advisor is someone who places your interests ahead of their own.

WHY SHOULD YOU WORK WITH A FIDUCIARY?

The Institute for the Fiduciary Standard states it simply: “They are better for you.”

A financial advisor can be held to one of two standards: fiduciary or suitability.

Fiduciaries must meet the legal duties of loyalty, due care and utmost good faith.

  • Loyalty – Put a client’s interests first.
  • Due care – Act with prudence and specialized skills.
  • Utmost good faith – Act with integrity, honesty, and transparency.

While a financial advisor held to a fiduciary standard will give you truly the best financial advice they are qualified to give, an advisor held to a standard of suitability will give you information that can be compromised due to a conflict-of-interest.

For the client seeking a financial planner, choosing a financial advisor who acts as a fiduciary is the preferred option. Yet, most financial advisors are only held to the looser standard of care: suitability.


COMMISSION-FREE


Commission-free financial advisors are often referred to as fee-only because these professionals charge a fee for providing financial advice. This is very different from a commissioned salesperson, who earns money when they sell a financial product, such as life insurance or a mutual fund.

A fee-only financial advisor is best suited to help you achieve your financial goals, and not push whichever financial product that pays out the highest in sales commission or helps achieve a sales goal.

By eliminating the sales incentive, the fee-only financial advisor gives you advice that is transparent – free of any conflict of interest that can come from the possibility to earn a commission. This works because the fee-only financial planner is compensated by you directly, and not by a third-party annuity, life insurance, or mutual fund company.


CFP® PROFESSIONAL


WHY DO I NEED A CFP® PROFESSIONAL?

Choosing a CERTIFIED FINANCIAL PLANNER™ means selecting an advisor who has passed a rigorous entry process, requiring of:

  • education
  • examination
  • experience
  • ethics

In addition, a CFP® professional is required to maintain and update their knowledge through ongoing continuing education requirements, much like an attorney, Certified Public Accountant (CPA) or Chartered Financial Analyst (CFA). This ongoing requirement ensures that the CERTIFIED FINANCIAL PLANNER™ you are working with is most up-to-date in their area of expertise: financial planning.

THE CFP® PLANNING PROCESS

To help ensure that the client receives the best financial planning experience, the CERTIFIED FINANCIAL PLANNER™ follows a six-step process.

Establishing the Relationship:

In the first step of the financial planning process, the CFP® and client come together to discuss what will be covered in the financial plan. Sometimes financial planning engagements can be limited to investment management, such as an exclusive review of a 401(k) allocation. Other times, a review of the total of a client’s insurance needs can be performed – to determine whether a client sufficient (or excess) life insurance, disability insurance, liability coverage or the right type of medical insurance for themselves and their family. More inclusive financial plans can include retirement planning – to determine if a client is on course for retirement or if their budgeting in retirement is sustainable. A CFP® Professional can also produce a comprehensive financial plan, which includes all of the above, as well as reviewing a client’s options for charitable giving and/or business retirement solutions. Some areas that can be covered in a comprehensive financial plan include:

  • Investment Management
  • Charitable Giving Services
  • Financial Planning
  • Estate Planning
  • Retirement Planning
  • Insurance Services

Gathering Data:

In the second step of the financial plan, the client provides the CFP® Professional with all their financial information. This can include an employer’s 401(k) menu of mutual funds, or statements of all their insurance policies. In addition to the hard data, the CERTIFIED FINANCIAL PLANNER™ also discusses the client’s life goals and values – to determine what matters most to them.

Analyzing Client Data:

Once the CERTIFIED FINANCIAL PLANNER™ professional has all of the client’s relevant information in hand, the analysis begins. Financial planning software, or even simple Excel spreadsheets, can be used to determine if the client has enough money saved for retirement, or if the client has enough life insurance coverage, if the client’s portfolio is well diversified and appropriately allocated given their risk tolerance and timeline to retirement.

Recommendations:

In this step, the CFP® Professional presents their findings to the clients. This includes receiving the client’s current financial situation, but also showing how the client can achieve their goals. Possible recommendations presented by the CERTIFIED FINANCIAL PLANNER™ could include:

  • Implementing a more diversified, lower-cost, tax-efficient investment portfolio
  • Opting for less expensive term life insurance over permanent life insurance
  • Charitable giving strategies to meet one’s philanthropic goals
  • Tax strategies to mitigate and estate tax and probate expenses

Implementation:

In this step of the financial planning process, the client and the CFP® Professional come together to decide not only what recommendation the client will take on, but who will be responsible for putting those recommendations into place. This may mean that the fee-only CFP® works with other financial professionals to:

  • find a lower-cost term life insurance policy for the client
  • rebalance the client’s portfolio to create a low-cost, diversified, tax-efficient solution
  • help the client open a donor-advised fund so that they can meet their charitable gifting goals.

It could also mean that the client creates a new saving goal for themselves, increasing their annual savings into IRA and/or their 401(k) accounts.

Monitoring:

For the final step of the financial planning process, the CERTIFIED FINANCIAL PLANNER™ and the client determine who will follow up on which portions of the financial issues addressed in the client’s financial plan. In the example of retirement planning, a CFP® professional can be tasked with measuring the client’s progress saving for retirement.