Frequently Asked Questions

Jim Lorenzen, CFP®, AIF®
Jim Lorenzen, CFP®, AIF®

Welcome to my site!

Here are some of the questions I hear asked most often, along with the answers!

“What are the services IFG provides?”

IFG’s focus is on families who want and need long-term planning and advice.  Some are working, some retired – or business owners seeking to preserve and monetize the value they’ve created – all families have long-term goals they want to achieve with available resources.  That’s where a good financial advisor can be of help.

  1. Retirement income planning:  A focused planning approach for those who’s main concern is outliving their money.  Longevity risk, combined with market risk, inflation risk, and legislative (taxation) risk over the next 20-30 years creates a very real concern among many at or nearing retirement:  “Will my money last?”   It requires a strategy to accomplish this.  The actual investment components used will vary based on each individual’s needs and desires; but, you should find it informative.
  2. Financial/retirement/wealth management planning:   This is a more holistic/comprehensive planning assignment encompassing a variety of issues, such as Social Security optimization/maximization, wealth management, estate planning and charitable giving, as examples.
  3. Investment advisory services:  The implementation stage following the planning process.   Implementation can take many forms, depending on the plan adopted and could involve a variety or combination of a number of financial tools, including investments and insurance.  You can learn more about the IFG investment philosophy here.
  4. Insurance services:  Insurance is often a component in planning both as a risk management/transfer tool, but also (for some) a mechanism that provides a tax-advantaged way to engage in estate wealth transfer and charitable giving.

“What reporting will I receive on my investment accounts?”

Virtually everyone today offers (or should offer) robust individual and aggregated account reporting.

IFG provides two levels of reporting available.  The first is the traditional level most people will find familiar.

Internet_Image_Global_Waves1  –  Custodian-level Reporting.

All investment performance reporting is provided by independent third-party reporting entities.  Just as I believe the advisor should be independent of the managers and the managers should be independent of the custodian to avoid potential conflicts of interest, the reporting entity should likewise be independent of the managers they cover as well as the advisor!   And no one should be receiving any form of `under the table’ incentives from anyone else.

Your `checks-and-balances should look like this.

  • Independent advisor – not affiliated with the custodian or the reporting entity (advisor works for the client, not the firm)
  • Independent management – not affiliated with the advisor (objective analysis)
  • Independent custodian – no advisor access to client funds (no hands in the cookie jar)
  • Independent reporting – not affiliated with the advisor (no opportunity to doctor the books)

IFG utilizes the services of two such independent reporting entities, the choice of which depending on the types of accounts and investment approaches we both agree is most appropriate to fulfill your plan.

Level #1 is pretty typical these days:  You’ll also have 24/7 on-demand independent reporting on your accounts held at Pershing (division of Bank of New York-Mellon).  You’ll be able to access complete performance and tax reporting, including the required filled-out forms, and have all the sophisticated analysis you’ll need for ‘on-demand’ year-to-date, or any time-frame you wish to analyze. You will get more than enough data to feel comfortable that you are receiving better information than the vast majority of your actively invested peers.

Level #2 may have more meaning for someone who wants to meet their own objectives.

iStock Images
iStock Images

Level #2 – Personal Goals-Based Reporting

While custodians can tell you how well your investments are doing, that’s only part of the story – and not very meaningful.

What people really need to know is how well THEY are doing!   Most people never realize, until they enter formal planning, that they may have seven or more goals they want to meet.   Some are needs, some are wants, some are wishes.   And, each category may have three or more goals, all of which may need to be prioritized.

People want to know:  Are they on-track to achieving ALL of their goals?  If not, what adjustments need to be made to increase their probabilities?   IFG’s “Star-Trac” actually plots your progress as you keep your plan current through our regularly-scheduled review process.

IFG-MGP_Retirement_Lifestyle_Workbook_Employed_001A financial plan for your future is much like a blueprint for your dream home.  You wouldn’t just run out and order materials and tools!  You’d first want an artist’s rendering of the final result.  Once you have a picture of the future, you begin to take stock of your resources and prepare a budget before beginning a blueprint.

Today, you don’t have to use a ‘pen and paper’ workbook like this because our secure planning platform, powered by PIEtech provides much easier data gathering functionality and industry-leading state-of-the-art technology.  However, the workbook will provide an idea of what data is involved in the process.

Just as you have 24/7 access to your financial plan – which you’re free to download and save on your own computer anytime –

“Once a client, what comes next?”

financial freedomWe’ll go through a Seven Step Process. We’ll being by discussing your goals and by reviewing your current assets. Out of this process will come a documented financial plan that will incorporate your short, medium, and long term needs. Wealth preservation, tax minimization, and multi-generational issues will be discussed and resolved if these are relevant.

All of these discussions, reflected in your financial plan, will become the framework for the portfolio modeling we’ll create for your current assets. The implementation stage comes next, which will involve transitioning assets from your current custodian to Pershing (Bank of New York-Mellon). You’ll also have 24/7 secure access to your account so you’ll be able to see all deposits as they arrive. It’s important to note that your assets will be in your account in your name. IFG never takes custody of your assets at any time.

Naturally, I’ll be available during and after this process to answer your questions, which we know you will have. It’s normal to expect that the first year will be the most time-intensive as we get to know one another.

“Can we meet in person prior to my becoming a client?”

Absolutely!  At the conclusion of our introductory call, we can schedule the initial consultation and I’ll forward a Welcome Kit outlining what you should bring with you to this first meeting.  I always advise people to make the most of it.

My office is easy to locate; see the Contact tab.

You can schedule your introductory call here.

“How do I become an IFG client? What is the process?”

The process is easier than you might think.

  1. You can schedule a call to arrange a visit on the phone. Feel free to ask any questions you wish.
  2. If we decide to meet, we can schedule an initial introductory meeting for a needs analysis consultation.  I will forward you a Welcome Kit that will outline what you should bring with you to the meeting.
  3. At that meeting we’ll review your situation and objectives and I’ll provide you with information about the process, including our planning/advisory agreements and ADV disclosure package.
  4. Once you’ve become a client, the financial planning process will begin in earnest. You will find this an excellent opportunity to prioritize and reflect on your short, medium, and long term goals. You’ll be making the first step in putting your financial house in order and keeping it that way forever.

“What are your fees?”

The IFG compensation model looks like this:

    • Initial on-boarding financial planning fee:   This is a one-time flat fee for creating your initial plan – quoted in advance at our second meeting based on the scope and complexity of the plan that’s required.
    • Plan reviews and Investment Advisory Fees:   Plan updates and investment advisory services go hand-in-hand at IFG.  The fee structure depends on a few variables.  You can learn more here

“Is there an account minimum?”

  • Financial Planning:  There is no mandatory minimum for financial planning services and the fee will vary based on the scope and complexity of the plan and quoted at our second meeting (there is no charge for the initial meeting).
  • Investment Advisory Services: Our clients don’t like surprises; neither does IFG.  You can see IFG’s Compensation Policy here.   While there is no hard rule on minimums, IFG investment services are typically appropriate for clients with $500,000 or more to invest.    A typical client might have a number of taxable and tax-deferred accounts aggregated to arrive at the total account value.  Overall  portfolio size will impact the type and scope of services offered; strategies appropriate for some clients may not be appropriate for others.  The investment advisory services utilized will vary based on the individual circumstances and needs of each client, given the client’s desires and investment/risk profile.
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An brief introductory call should help us both determine if IFG’s services will fit your needs. You can schedule your call here.

“Do you receive commissions from brokerages or mutual fund providers?”

No.  All investment services are fee only.  IFG does not accept any incentives or compensation from any investment brokerage, mutual fund, or investment product provider. Planning and advisory services are fee only. There are times when another financial tool is required to meet a client’s objectives, such as insurance which does not require ongoing oversight, etc., as indicated above.  In those cases, commissions provide IFG’s compensation, rather than ongoing fees.

“What is your investment philosophy?”

You can download the IFG Philosophy and Profile, an overview that should answer most of IFGi Philosophy_and_Profile 201606_001your questions.

Naturally, if you have more questions, you can schedule a call with me.

“Who would have physical custody of my assets? What brokerage firm do you use?”

IFG never takes custody of client assets. Client money is in their own accounts in their name.  As for the firm, our primary custodial relationship is with Pershing, a division of Bank of New York-Mellon. BNY was founded by Alexander Hamilton in 1784; it’s the oldest bank in the United States with a 200+ year history. It’s first loan was made to fund the U.S. Government when George Washington took office in 1789.

Unlike other banks, BNY is primarily a provider of global and domestic custody services, not a retail bank, with more than $24.5 trillion under custody and was selected by the U.S. Government to administer the TARP program. Pershing has been providing custodial services for IFG clients for over twenty years; however, Pershing is an independent provider of custodial services only. IFG does not receive compensation or incentives in any form or description from Pershing or any other investment services provider.

“Do you offer estate or tax planning, real estate advice, or insurance advice in addition to financial planning?”

These subjects are incorporated into the financial planning process, but beware of the ‘know-it-all’ advisor: No one can be expert in all these diverse areas. IFG clients fall along a wealth spectrum, and those with more substantial asset levels are best served by hiring dedicated experts in each field, including especially attorneys for estate planning, and accountants for tax planning.  IFG’s insurance services are limited to retirement, estate, and wealth management fixed products, which includes life insurance and, when appropriate and the client so desires, fixed and indexed annuities.  IFG does not provide health or property and casualty insurance.

You should think of your CFP® professional as your financial ‘general practitioner’ who can coordinate and integrate the various specialists in your planning and able to make the appropriate referrals if needed. IFG, as a matter of principal, as well as to fulfill fiduciary standards, does not accept third party compensation or incentives for making referrals.

“How can you add value to what I can do on my own?”

It’s likely the value-added proposition may be larger than you might suspect.  this is particularly true when wealth management and preservation issues are paramount.  The answer would depend on your current level of expertise, experience, and available tools.   As John Bogle, former Vanguard Funds chairman, indicated in the September 2012 issue of Financial Planning, it’s really not about picking winning stocks or mutual funds.

The real value is added by providing an investment discipline required for successful investing; and, often, the value-add comes from risk and tax-mitigation  combined with Social Security and other optimization strategies.  These can often amount to hundreds of thousands of dollars.

“Don’t many firms tout their fiduciary standard?”

The SEC ruled on June 5, 2019 that brokerage firms are now held to a ‘best interest’ standard; however, they may have just re-arranged the deck chairs to preserve the Wall Street business model:  no where in the ruling is ‘best interest’ defined and the word ‘fiduciary’ doesn’t even appear.   SEC Commissioner Robert J. Jackson, Jr. issued this statement.

The Acid Test:  Ask a ‘best interest’ broker if s/he will accept fiduciary status for all services in writing.

Here’s a report on The Fiduciary Standard you can download.

Many firms, and virtually all of the major ‘big-name’ firms, are ‘dually registered’ as investment brokers as well as Registered Investment Advisors. This allows them to act as a fiduciary in the planning process, thus the fiduciary ‘standard’, while adopting a ‘best interest’ standard when it comes to investment selection.  Since it isn’t defined, we still don’t know what it means.

“Are there a lot of fees involved?”

The media has virtually ‘brainwashed’ the public into believing fees are bad. Why not?  Who likes fees? 

 Fact is, no one works for free; it’s excessive fees that ARE bad; but, cost is a function of value, and all assets have a cost of management, including homes and cars.

The costs and fees for virtually all investments are pretty much the same as an investor would pay if there were no advisor in the picture.  The advisor’s fee (IFGs are outlined above) represent the client’s investment in professional guidance.  As indicated above, that value can sometimes be in the hundreds of thousands of dollars and well worth of the relatively small investment for professional help.

“What separates IFG from other financial advisors?”
I guess that depends on who IFG is being compared to.  You can see my background here.

IFG a small, independent, client-centered private-client boutique consultancy which began in late 1991.  Working with an independent practitioner offers some unique advantages:  Objectivity, independence in the selection of investments, managers, platforms, and other service providers, as well as no proprietary product.  IFG is also a registered investment advisor, held to a fiduciary standard.

Financial advisors at major firms, as I learned first-hand early in my career, can be limited to only those offerings their firm provides.  Today, all firms, including independent practices like mine, are able to offer a vast array of services and providers – and may of them are the same.  The real hidden issue that might be of concern to many involves the hidden “back-door” revenue sharing arrangements that may exist between the firm and the product providers.   Clients should know who the advisor really works for – and sometimes a ‘captive’ advisor-employee of a firm may not really know what’s going on ‘under the hood’.

While major firms today provide a vast array of services, there’s a bigger question a potential client should ask:

“Do I want my advisor to be an employee of a firm that has month-end numbers they must meet, or would I rather have an independent advisor who can access major `brand-name’ custodians and offerings without the need to achieve employer-mandated month-end numbers?”

As I said, clients shouldn’t have to wonder who is really compensating the advisor.

Resized CFP_Logo_GoldCredentials:  

I am a CERTIFIED FINANCIAL PLANNER® professional and an Accredited Investment Fiduciary® a certification earned from the Center for Fiduciary Studies in association with the Joseph M. Katz Graduate School of Business at the University of Pittsburgh.  I’m also a member of the Financial Planning Association.

I think my business experience may be of some value here, as well. Not many financial advisors have created and built businesses outside of this industry; few have ever had to make a payroll and grow a business. Anyone who’s been either a business owner or senior corporate executive will relate to the financial planning process, as well as the investment process, and will likely appreciate the help I can provide in other areas of their financial and business lives. You can download the IFG Philosophy and Profile.

The IFG approach begins with the IFG Credo:

Every client deserves, and has the right to expect, an objective and unbiased advisor who is fully aligned with the client’s goals, possesses a moral compass with strict standards of accountability, and who takes a straightforward, common sense collaborative approach, putting the client in control of a hassle-free process incorporating breakthrough technology and unparalleled flexibility… all with openness and transparency.

Interested in becoming an IFG client?  Why play phone tag?  Schedule your 15-minute introductory phone call!

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor. He is also licensed for insurance as an independent agent under California license 0C00742.  IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author.  The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Schedule Your
20-Minute “Right Fit” Introductory Call Now!

Jim's picture
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor. He is also licensed for insurance as an independent agent under California license 0C00742.

Schedule Your 20-Minute
“Right Fit” Introductory Call Now!