Skip to main content

Tag: Financial Advisor

6 Key Areas of a Financial Strategy

When training to become a financial professional, much of the course work centers on the six critical areas of creating a financial strategy. Some recognize October as Financial Planning Month, so it’s an excellent time to review those six personal finance areas of a financial strategy.1

Cash Management: 
This an important part of a financial strategy and is a broad topic that can address many issues. One area is creating an emergency fund, which is money that’s set aside for unplanned expenses. Cash management also can include looking at your “sources and uses” of money. Financial Planning Month focuses mainly on cash management and spending habits.1
Investment Approaches: 
Concerns about investment approaches are among the key reasons people start a relationship with a financial professional. When reviewing investment approaches, it’s critical to consider a person’s goals, time horizon, and risk tolerance.
Retirement Preparation: 
This is another crucial reason why a person approaches a financial professional. The chief concern for 49 percent of Americans is running out of money in retirement. The retirement preparation process reviews your current situation and helps you better understand your choices.2
Protection Strategies: 
This area looks at how well you are prepared for life’s potential financial risks such as premature death or permanent disability. Protection strategies also can include health-care considerations. By the way, did you know that 44 percent of Americans cite “declining health” as their second biggest retirement concern?2
Tax Management: 
Do you feel comfortable with current tax laws? Are you confident about your approach to tax management? Tax rules are constantly changing, and there is no guarantee that the tax landscape will remain the same in years ahead. Financial professionals often work with tax, legal, or accounting professionals when creating an overall tax management strategy.
Estate Strategies: 
How well you prepare today may help determine how your assets are distributed after you’re gone. Much like tax rules, estate rules are continually changing, and today’s landscape may change in a few years. Financial professionals often work with legal professionals when creating an estate approach. It can be a challenge to feel confident in all six key areas of creating a financial strategy. If you think you may need help, contact CapSouth Wealth Management at 800.929.1001 or visit our website at www.capsouthwm.com or https://capsouthwm.com/services/financial-estate-planning/ We’d welcome the chance to review your approach.
1. NationalDayCalendar.com, October 2020 2. AARP.com, May 21, 2019

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with CapSouth Wealth Management. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 FMG Suite.

CapSouth Partners, Inc., dba CapSouth Wealth Management, is an independent registered Investment Advisory firm.  CapSouth does not offer tax, accounting or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences.

Which is Right for Your Financial Future? Broker-Dealer vs. RIA

By: Amy Kennedy – Does your financial advisor work at a Registered Independent Advisor (RIA) or a broker-dealer? Do you know the difference?  If not, you are not alone, but you should be aware.  The differences are important when considering your financial future.  Perhaps the most important factor is one that many people are unaware of, whether the financial professional they work with is legally obligated to make recommendations that are in their best interest (not just suitable recommendations).  This legal obligation is referred to as a fiduciary duty.  Let’s review the differences so you can be confident that your financial future is in the right hands.

Investment professionals typically fall into two broad categories: advisors that work at a Registered Investment Advisory (RIA) firm and broker-dealers representatives that work at a brokerage firm.

Broker-Dealers

Examples of Broker-Dealers are Morgan Stanley, Merrill Lynch, and Wells Fargo. These firms are often referred to as “full-service brokerages”.  They generally offer a wide range of financial products and their brokers are usually incentivized to cross-sell these products. For the consumer, one advantage of this is they have access to a wide range of products through one broker.  The downside for the consumer is that many of the products come from the broker-dealer and may not be the best fit for them. Broker-dealers are held to what is referred to as a suitability standard when offering financial and investment advice. In this case, the broker only must provide recommendations that they believe are appropriate given a client’s situation; they do not have to recommend what they believe is the best option. Most investment professionals operating under the suitability standard are known as registered representatives and their oversight is through a self-regulatory organization called the Financial Industry Regulatory Authority (FINRA).

Independent Registered Advisors (RIAs)

A registered investment advisory (RIA) firm is usually comprised of a small number of financial advisors that offer clients investment advice and often other services such as financial planning and estate planning. An investment advisor representative working within a registered investment advisor (RIA) is a fiduciary. They are legally required under the Investment Advisers Act of 1940 to act in the best interests of clients.  This means client interests come before their own interests, conflicts of interests should be avoided to the extent possible, and, where a conflict of interest exists, it must be disclosed. RIAs are monitored by the Securities and Exchange Commission (SEC). The fiduciary duty is the highest standard of care under U.S. law

 Hybrid Advisor

Some investment professionals operate within a hybrid model.  A hybrid advisor conducts business with clients that is both fee-based and commission-based, and they are usually registered with the SEC and FINRA.  A hybrid advisor may or may not be a fiduciary and may operate in both capacities depending upon the service or product being considered.

How Your Advisor is Compensated

In addition to the fiduciary standard, another major difference in RIAs and broker-dealers is the way they are compensated. RIAs typically charge their clients a fixed percentage of assets under management or a set dollar amount. Broker-dealers often receive a high percentage of their compensation through commissions based on the investment products they recommend and sell and through incentives from cross-selling other products and services available within their company.

Which to Choose?

Hopefully this information serves as a guide in choosing the financial professional that is right for you.  When deciding, ask yourself this question, “Do you want to receive advice that’s objective and based solely on what’s best for you and your financial situation, or do you want to receive advice that could be influenced by how the advice financially benefits the financial professional?”

If you have questions about the differences in RIAs and broker-dealers, give us a call at 800.929.1001 or visit our website at www. CapSouthWM.com or https://capsouthwm.com/about-us/fiduciary/ to read more about the Fiduciary Standard. 

CapSouth Partners, Inc., dba CapSouth Wealth Management, is an independent Registered Investment Advisory firm. CapSouth does not offer tax, accounting, or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences.

How CapSouth Advisors are Responding to the Bear Market & Recent Legislation

How CapSouth Advisors are Responding to the Bear Market & Recent Legislation – April 13, 2020

You can tell a lot about your broker or advisor from the actions they take (or don’t take) in market disruptions. The current period, with steep market declines, extreme volatility, pandemic fear, and emergency legislation packages certainly qualifies as a market disruption. We believe good advisors and brokers excel in communicating with clients regarding the markets, financial plans, and legislative effects in such periods.

The current period offers many topics, and even opportunities, that should be discussed. These include:

  1. Basic Communication
  • Touching base with clients to determine their mindset. Is the current environment causing fear or is it looked upon as an opportunity to purchase assets at a reduced price? Each client will have a unique perspective, and it is important for your advisor or broker to understand your view. Any appropriate action will vary based on your circumstances and perspective.

2. Focus on Goals

  • It is extremely important that any action be consistent with long term goals and an established financial plan. Often emotional and hasty decisions made in times of market turmoil are harmful to the ability to achieve a long-term plan.

3. Put Cash to Work or Increase Risk

  • If you see investment opportunity when markets fall, this is a great opportunity to discuss investing extra cash or increasing risk in accounts.

4. Roth IRA Contributions and Conversions

  • Consider making 2020 contributions and conversions while markets are lower.

5. Tax Considerations of the Market Decline

  • If you have investments with a low cost basis that you have held to avoid taking the gains, these positions will likely have lower gains or no gains at this point. This may be a good time to discuss reducing or getting out of such positions.
  • Gains on investments made in non-retirement accounts will be subject to long-term capital gains rates if held for twelve months or longer
  • For some clients a partial or full conversion from a traditional IRA to a Roth IRA should be considered. Funds in a traditional IRA have not been taxed. By converting, taxes will likely be owed. Because balances in most traditional IRAs are presently lower, the associated taxes owed may also be lower. As an added bonus, if the markets bounce back in the next couple years, the growth on any converted money will occur in the Roth IRA and should not be taxable in the future.

6. Periodic Withdrawals

  • If you have consistent withdrawals, monthly or quarterly for example, from investment accounts, you may want to discuss funding the withdrawals from any cash or fixed income investments that are available. This will keep you from selling equities at a reduced price.Legislative Updates

7. Legislative Updates

  • Filing deadline – For most people, 2020 tax filings are not due until July 15th (instead of the normal deadline of April 15th).
  • Federal quarterly estimated tax for April 15th has been extended to July 15th; second quarter estimated tax payment has also been extended to July 15th.
  • Required Minimum Distribution (RMD) – If you are normally required to take an RMD from any type of IRA or from your workplace retirement plan, you will not have to do so in 2020.
  • IRA Withdrawals and 401k Loans – the CARES Act relaxes some of the rules regarding these items. Your advisor or broker should be able to discuss this in more detail should you have a need.
  • Charitable Contributions – for 2020 there is no limit on the amount of a cash gift you can donate to a charity and subsequently receive an offsetting deduction, in the amount of the gift, from your income. If you’ve ever considered a large gift to a charity, you should discuss with your advisor if 2020 is the appropriate year. This change does not apply to donations to donor advised funds.

CapSouth advisors are prepared to discuss all these topics with clients and prospects, and they have been actively doing so over the last few weeks. If your current advisor or broker is not discussing them with you or you have no current advisor, we would welcome the opportunity to speak with you and to potentially begin a new relationship.

To speak to a CapSouth advisor about these topics, contact our office at 800.929.1001 or visit our website at www.capsouthwm.com

Investment advisory services offered through CapSouth Partners, Inc., an independent Registered Investment Advisor, dba CapSouth Wealth Management. CapSouth Partners does not provide tax or legal advice. Please consult your tax or legal advisor prior to making decisions which may have tax or legal consequences. Information contained herein is believed to be reliable but is not guaranteed as such by CapSouth. Nothing contained herein should be construed as individual investment advice; all commentary is of a general nature. This commentary contains opinions; any opinions presented should not be construed as fact and are not in any way a guarantee of future events, returns, or outcomes.

Help us keep you informed!

Let us do the work and keep you updated! Sign up for the CapSouth financial updates.

You have Successfully Subscribed!