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The Way: The Financial Planning Process

Annie Hung-Scanga • December 5, 2020



A financial plan personalized for you may help you achieve your financial goals.


This is how I look at a financial plan: take all you have saved and invested at today’s dollar and growth based on the return you are currently getting to project the total accumulated balance. This “ending” balance should sustain you through your lifetime including retirement.


Let’s look at a couple of real-life examples.


Example 1:

A 45-year old couple, Josh and Ann, saved $500,000 in their retirement accounts and plan to both retire at age 65. Their current rate of returns on average is 8% per year. Their annual spending is $150,000. Their combined annual income is $200,000.


Example 2:

A 65-year old couple, Mike and Lauren, also saved $500,000 in their retirement accounts and just retired in 2020. Their current rate of returns on average is 5% per year. Their annual spending is $100,000. The combined annual social security income is $60,000.


Let’s see if they make no changes and follow their plans, whether their income could sustain them through their lifetime. Our goal is to ensure both couples can live the lives they want to have, (by their definition) through the projected life expectancy of age 100.


We can’t tell. How would anyone know with certainty that they will, or will not run out of money? Pray and hope is not the answer.


To make sure they won’t run out of money, could I possibly help them get better returns and accumulate more? Could I possibly help them invest in less risky investments and achieve the same level of returns?


To ensure their funds will be adequate, could I possibly re-align the investments to help get better returns? Or should they look for other sources of income? Spend less? Delay retirement age? Get part-time jobs in retirement? Stay with their adult children?


The earlier you start to plan the better is your chance to accomplish your goal(s). More money could have been made and you have lost time. True, things don’t always turn out as we plan but failing to plan is planning to fail.


It is your life, your money, your decision.


As a financial advisor, I want to spend my time wisely helping families take their finances seriously. From a professional perspective, doing a financial plan is a given, a benchmark for us to keep track of the progress, and the only way for me to help my clients, to work side by side meaningfully and productively.


If you were building a house, wouldn’t you hire an architect to draw the blueprints to see what the house will look like? And how could you budget the money needed and still pick out the materials you prefer? Don’t you think your retirement is more important than your house?

How could you decide whether your Body Mass Index (BMI) is good if you don’t have your height and weight measured? How could your primary physician assess your wellness if she/ he doesn’t have your age, blood test, etc.?


To have a personalized financial plan completed before I construct a portfolio for clients is a prerequisite for me to take on a new client. If we are to work together for you and your loved ones’ finances, we are going to do it “your way” – based on your unique financial plan.


When you are ready, I am here to assist you and your family.


p.s. I am dedicating this article to Mr. Nick Murray whose experience and knowledge has helped me realize the passion in me to be a financial advisor and the right way of building my practice.

For Start-ups—Investing in a tax conscious manner.

By Annie Hung-Scanga • April 1, 2021
For Small Business Owners
Me, Myself and I—SHould I

Me, Myself and I: Should I manage my own finances alone?

By Annie Hung-Scanga • December 24, 2020
 Should you manage your finances all by yourself, or engage a professional’s service Scenario 1: Lauren retired from her hospital position after 3 decades of service. She is the bread winner of the household. She has about less than a half million of retirement money saved up to last her and her husband the rest of their lives. Conservative in nature, she wants some “safe investments”. Scenario 2: Michael and Mary always lost money on anything they invested in – real estate and the stock market just to name a couple. Both contribute to their retirement plans at work and those performances were good. However, Michael is considering rolling over his 401K account to a financial advisor, since the advisors at his company kept on leaving the firm and he knows little about his current advisor who is assigned to his account. Scenario 3: Dr. Chen has always invested his own money. He has a total of 8 IRA, pension and retirement accounts. He needs to take his RMD and is in search of a firm to consolidate all of his retirement accounts. Scenario 4: Travis has not worked with a financial advisor in 2 decades. He is a corporate executive and is financially savvy. He has a company 401k and a brokerage account. Should you work with a financial advisor to help you manage your money? By manage, should you grant the advisor discretionary authority to trade on your behalf whenever he/she see fits. (I don’t accept discretionary accounts, nor do I plan to, ever.) This is two one million-dollar questions. Statistics show that people who engage a financial advisor’s services have higher rate of returns than if the investor managed the investments alone. (1) Drilling down into the factors that contribute to the higher returns, it comes down to the behavior coaching that helps the investors have higher overall lifetime returns. We all know we should invest when the stock prices are lower and divest when the prices are higher. However, when almost all the media is shouting “end of the world” and this time the crisis is different. All the people around you are dumping their stocks, scared, and packed up ready to leave the country (okay, the leaving part is just a joke). You probably couldn’t help but sell some of your holdings while it is probably the better time to scoop up some bargain investments instead. When you have all the time in the world, would you rather pick stocks/mutual funds instead of watching your daughter’s recital? When you have down time at work or prefer not to climb the corporate ladder; sure, by all means, manage your finances yourself. After all, you are smart and have time, why pay a financial advisor fees to manage your investment performance? Are you absolutely sure that this is the best use of your time? Could you maintain your cool to buy low and sell high? Are you certain that your intelligence and emotion bestowed on your own finances outweigh the objectivity and experiences of a competent financial advisor? What if you are unable to manage your finances? Are you the only one in the family who knows where everything is? When you travel, would you prefer to get on an airplane to reach your destination quickly or drive your car? If you could afford to buy an airline ticket, you probably could use the time better for anything but driving. If you are In need of heart surgery, would you rather hire a general practitioner or an experienced surgeon, perhaps the Chief of Cardiology, to perform the lifesaving surgery for you? Life is too short. Is spending time with your family more important than managing your investments or financial plan? Speaking of financial plan – it is kind of a “given”, a base for you to form a strategy and select appropriate investment vehicles; and if you don’t have one and don’t think you need one, then I am not the right advisor for you after all. Otherwise, I would be delighted to help. p.s. With regards to preparing a personalize financial plan, please see my other article, “The Way”. Disclosure: Diversification and asset allocation strategies do not assure profit or protect against loss. Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including loss of principal. (1) Morning Analysts 11-05-17, Think Advisor 12/12/19

Retirement Accounts at a glance for Small Business Owners

By Website Editor • December 13, 2020
The new season is a great reason to make and keep resolutions. Whether it’s eating right or cleaning out the garage, here are some tips for making and keeping resolutions.

Rollovers

By Website Editor • December 13, 2020
Why rollover your retirement accounts? Scenario 1: James retired from the company where he had worked for the last 3 decades. He probably will move out of the state and no longer be in close contact with his company. What should he do with his 401k account? Scenario 2: Laura left her company due to downsizing. Before she lands another corporate position, she wonders whether she ought to rollover her pension and 401k account with her prior employer considering the pension is invested only in company stock and earned less than 1%. The most common reasons to rollover are: Better and direct control More investment options Personal service and advice Once you have left your job, it’s probably more difficult to keep in touch with your ex-employer when you wish to change investments or re-designate your beneficiaries with your 401k account or pension plans. A company’s 401K plan usually offers 10-12 mutual funds, sometimes with company stock as the only choice. Although there usually is a designated 401k representative and toll-free help desk, that person probably don’t know you on a personal level. Please be sure to speak to your financial professional to carefully consider differences between your company retirement account and investment in an IRA. If you decided to go forward with moving your accounts you would have conducted a search and interviewed some potential advisors and found an experienced and trustworthy one that you feel comfortable to work with, then a rollover may be right for you. (1) If I am the advisor, I would have an initial meeting with you – taking about 15 minutes to explain my process and planning philosophy. Then it is up to you to ask me any questions, share concerns and decide when to leave the meeting. If you and I decide to work together, I will prepare a comprehensive customized financial plan for you and your family and use the plan to propose strategies and suggest investment portfolios. We have numerous investment options to help fit your plan. Most importantly, you will have yours truly to call upon for advice—what to do and what not to do. I will know you and your family’s finances intimately and you don’t have to be put on hold for 10 minutes and be transferred to 1 or more representatives to ask your questions. One of the most important benefits of our relationship is that you have someone to talk to in difficult times because at some point the market will decline and you may wish to cash out. History has shown this to be the wrong move. It may be time to sell some stocks so that you can buy some bargains or maybe just wait. A calming conversation could give you a new perspective. You can never turn the clock back. Make time to meet some advisors. Make time to rollover and plan better for your retirement (for your hard-earned money and life)! I am here to help. (1) Factors to consider when rolling over a retirement account include, but are not limited to, changes to availability of funds and withdrawals, fund expenses, and fees, etc. IMPORTANT DISCLOSURES Registered Principal, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA / SIPC . Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and ATO Capital are not affiliated. Neither Cambridge nor ATO offers tax advice.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
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