FINANCIAL
PLANNING PROCESS:
As
financial advisors and investment consultants, we believe
in the following fundamental principals with regard to designing
an investment portfolio and making specific recommendations.
The purpose of a client's investment portfolio is to fund
current and/or future financial objectives. The design of
the portfolio must take into account the client's financial
objectives, tolerance for risk, needsfor current income
or liquidity, and special considerations such as income
and estate taxes. The appropriate allocation of investment
assets for your goals andrisk tolerance is the most important
component in developing an investmentportfolio. We believe
that having a diversified, well-balanced portfolio, following
long-term buy-and-hold strategies, and having patience,
increases the likelihood that one will achieve their long-term
financial objectives.
Diversification,
dollar cost averaging, comprehensive portfolio reviews and
analysis are beneficial methods of managing assets. Dollar-cost
averaging has some advantages in a declining market--or,
more precisely, in a market whose general direction may
be downward but still has ups and downs. An investor who
bought the Dow in 1929 and held it until 1939 would have
seen a -46% return; but an investor dollar-cost averaging
would have been able to take advantage, for example, of
all the months in 1932-1934 in which the Dow closed at less
than 100. In these months, that investor would have gotten
a lot more for his money. This effect adds up to a nominal
return of 5% during the period
for the dollar-cost average method, which compared favorably
to bond interest rates over the same period.
We
believe that low cost mutual funds that consistently perform
above average against their peers are wise choices. We also
recognize the importance of culling a portfolio from time
to time. How do you create this personal financial plan?
What makes Montecito Capital Management different is our
commitment to working jointly with clients to produce a
comprehensive, custom financial plan, enabling them to make
wiser financial choices. First we focus on your goals, objectives,
priorities and values.
For instance, the reduction of current and future income
taxes may be an immediate
goal, funding a quality education for your children and/or
grandchildren may be an intermediate goal, and enjoying
a secure financial future in your retirement years is
likely to be one of your most important long-term goals.
Another goal in life for some people is creating wealth
and/or leaving a legacy for your chosen beneficiaries or
charities. You may already be on the road to meeting these
objectives and simply
need a new strategy, professional insight, or to fine-tune
your plan. You may just be starting out, or you may be somewhere
in between.
Next,
we collect detailed personal financial information and make
a thorough analysis
of this information: current financial situation, employee
benefits, children's educational funding, retirement situation,
pension and retirement plans, living estate, insurance and
investment portfolios to produce a written financial plan
with specific recommendations
to achieve your goals. Then, we share the results with the
client, who determines if the recommendations are sensible
and reasonable. Once comfortable and satisfied with the
final recommendations, clients take action or direct us
to take the steps necessary to
attain their objectives. Finally, to achieve the intended
results, you must implement and monitor your plan. Your
financial plan is a living document, reviewed periodically
for progress and adjusted appropriately. Whatever your unique
situation may be, everyone needs a periodic assessment of
where they are on the road to meeting their financial
goals. As a Fee-Based certified financial planner, we work
with people based on their preferences and needs. Some may
want a second opinion or help on a specific situation. Others
would like more comprehensive, coordinated financial advice.
There
are a myriad of different plans that must be identified,
addressed and ultimately integrated:
Risk
Management Plan
We assess the risks you face in the areas of life, health,
disability, long-term care, auto, home and personal liability.
We also make recommendations regarding appropriate coverages,
carriers, limits and deductibles.
Income
Tax Plan
We review your tax returns, analyze your current and projected
income tax exposure,
and make recommendations on how to reduce your future income
tax liability.
Retirement
Plan
We project your cash flows from now until the end of your
life expectancy using Monte Carlo simulation software),
which allows us to determine the probability that you will
reach your financial goals. If the probability is too low
for you, we can show you the effect that different changes
you could make in your life (such as how much you saveper
year, when you retire, and how you allocate your portfolio)
would have on your odds of success. We also provide recommendations
regarding contributions, rollovers and conversions to traditional
and Roth IRAs, and payout options from retirement plans
and Social Security. Additionally, we help self-employed
clients establish their own retirement plan.
Investment
Plan
We thoroughly analyze your current portfolio, provide an
extensive review of the
capital markets, help you develop investment objectives,
write a detailed investment policy statement, and design
a recommended portfolio of specific mutual funds. During
this process, we show you how to eliminate unnecessary risk,
minimize taxes and expenses, and generate any currently
needed income. We also provide recommendations on credit
card debt and any auto, home, personal or business loans.
Estate
Plan
We design a plan to achieve your estate planning objectives,
such as minimizing
estate taxes while ensuring that your estate will be distributed
according to your wishes. We ensure that all the necessary
estate planning documents (wills, beneficiary designations,
trusts, powers of attorney, etc.) are present and in order.
We also review any current liquidity or business succession
plans and make recommendations as appropriate. We remain
available for one month following the delivery of your financial
plan to answer any questions you may have and to assist
with the implementation of the recommendations.
What
types of securities do you provide advice for? If it has
to do with money and finances, we can provide counseling,
guidance and/or resources for you. We want
our clients to know that they can call on us with any and
all of their financial concerns. Clients are encouraged
to call us when they have a major life event, such as a
new job,
a baby, a marriage or divorce, or if they are planning to
buy a new home or start their
own business. We provide advice for all types of securities,
including mutual funds, stocks (as they relate to your portfolio
holdings), bonds, CDs, bank deposits, variable
and fixed annuities, limited partnerships and tax shelters.
We also provide advice on employee benefit issues, 401(k),
403(b) and other retirement programs, incentive stock options,
life and disability insurance, etc. We also encourage our
clients to call us with more common everyday questions,
such as: "How should I invest within my 401(k) or 403(b)
plan?" "How can I reduce my taxes?" "What advice can you
offer on refinancing my home?" "How can I maximize my Flex
Spending Account, Cafeteria Plan or Section
125 Plan at work?"
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