Answers to some of your most asked questions.
At Paul Winkler, Inc. we do nothing on a commission basis. We believe commissions on product sales create a potential for conflicts of interest. When managing assets, we charge a fee based on percentage of assets that declines with portfolio size. We believe this model aligns our interests with those of our clients. We also provide planning services based on hourly or flat fees. We always do an initial consultation on the phone or in person without charge so we can assess what is needed and recommend a plan of action.
We put significant emphasis on education programs for our clients to help them understand how markets work, know what to expect, and help familiarize them with what we view as the most significant academic research of the past 70 years and how to implement this research for themselves and their families.
We find this investor education to be essential in helping our clients to relax about money.
At Paul Winkler, Inc. we offer comprehensive financial planning and asset management services. Depending on the needs of our clients, our services may include: Setting accumulation goals, determining appropriate distribution strategies and how much income to take from available resources, assessing risk management (home, auto, life, disability, long-term care, estate planning, liability, etc.), allocating and choosing investments in qualified plans (401(k)s, 403(b)s, 457s, etc.), debt reduction strategies, planning for living arrangements in retirement, budgeting, how to take Social Security benefits, and more.
We approach investing from a data-drive academic approach. See questions 9 and 10 for more information on our investing approach.
We don't sell any investment products, and we manage portfolios based solely on a % of assets undermanagement.
At Paul Winkler, Inc. we are all degreed financial planners. Most of our advisors also hold designations in other areas of specialty as well.
The planning process includes looking at insurance coverages like auto, home, disability, life, health, and long-term care. We don’t sell any of these products which gives us the ability to give objective advice.
We look at tax advantaged strategies, managing work benefits programs, determining accumulation goals, assessing sustainable income streams in retirement, special needs planning, estate and legacy planning and give people access to in-depth educational programs on virtually every facet of the financial planning and the investing process.
We also use advanced financial planning software to help clients organize their financial lives and build a plan for retirement.
While an investor can take some of the concepts that we teach on investing and try to implement them on their own, most investors choose to partner with us in the process. Investing according to academic principles, daily rebalancing, and managing the investments according to a clients overall financial picture is a complex process. We also often use investment shares that are not available to the general public so that we can take advantage of techniques and strategies to reduce expenses.
Our advisors have all been in the industry for over twenty years and bring a great deal of experience to the table The reason we spend so much time educating and coaching investors is to help them know what they are doing and why. As an old client of mine once said, “you teach us how baseball works, so we enjoy the game more.” I couldn’t have said it better myself.
No, we don’t. I have found that some of our best clients started out as some of our smallest clients.
All advisors have—at a minimum—a financial planning designation of either Chartered Financial Consultant® or Certified Financial Planner®. These designations, issued by different universities, require the same underlying coursework in areas such as investment management, financial planning, risk management, estate planning, tax law, retirement and education planning.
Advisors are also required to engage in continuing education, have an expertise in the latest academic research on investing and often pursue areas of specialty.
We abide by the highest level of fiduciary standards. In other words, we consistently strive to give advice that is in the best interest of our clients. To help ensure that we meet this standard, we require that all our advisors hold advanced financial planning degrees, and that they stay grounded in the latest academic research on investing.
Some of our advisors do tax planning as a separate function. Paul Winkler, Inc. receives no compensation from this aspect of the business so as not to create a conflict of interest.
We always consider tax consequences when it comes to investment choices. How some investments can affect federal income taxes, social security taxes, retirement plan contribution limits, capital gains taxes, and other aspects of a financial plan are paramount in the planning process.
We often need to develop a tax-efficient strategy for drawing income, analyze how Medicare premiums may be affected, consider the affects of tax bracket creep, determine tax leverage issues and a myriad of other considerations while working on a client’s life income plan.
We strongly believe that much of the effort put forth by industry professionals to time the market, use tactical asset allocation, and engage in securities analysis is time poorly spent. There is a tremendous amount of research that shows that markets are highly efficient, which means looking for mispricings in securities markets is costly and largely counterproductive. Therefore, we avoid such activity and teach our clients to do the same.
We tailor the asset allocation to the client’s specific needs. There are many factors involved, such asrisk capacity, tolerance, time horizon, tax treatment, income needs, available asset classes, and many more. There is no such thing as a “one size fits all” investing plan in our view. Our client’s circumstances are the most important factor in determining asset selection and mix.
As people become more successful, they often reach increasing levels of complexity in their lives. They know what they know, but also realize that there’s a lot that they know they don’t know. They can learn this information, but that leaves an even larger—and more important— third category: the things they don’t know that they don’t know.
Information is always changing in financial markets, and research is forever evolving regarding investment strategy. On top of that, tax laws go through significant changes on a regular basis as leadership changes take place in Washington. Keeping up with the changes and how to respond to them is a full-time job.
Investors also struggle with their own instincts and emotional biases that—studies show—lead them to get returns that have been significantly below market returns throughout time. While major portfolio changes are rarely called for, a properly managed portfolio will require regular ongoing maintenance throughout the course of a year—It is not a part-time job.
Investors typically have access only to the retail investments offered by big fund companies. By working with a professional, they can get access to potentially lower cost options with the ability to implement Nobel-Prize winning research. This research has shown that there arecertain factors of investing which determine where most returns come from. Few investors are aware that this research exists, let alone know how to apply it.
Some people want to avoid the education and just have us manage their retirement savings. While we appreciate their trust in us, we strongly advise against blind trust.
Investing in capital (stock and bond) markets is very different than other areas of our lives where we seek assistance and guidance. In some industries we are more able to trust an advisor because of the high standards education required to enter the field.
In the medical world, for example, the education and practice requirements required to become a physician are rigorous, and most are familiar with the Hippocratic Oath that is still widely used to define ethical practice. When someone has M.D. after their name, you generally trust them.
There is no such uniform standard in the financial industry. In fact, most practitioners in the financial field have no formal training in financial planning.
At Paul Winkler, Inc., we require the advisors who run our offices to obtain either the Chartered Financial Consultant, or Certified Financial Planner professional designation. In addition to that, they also typically hold other specialized designations and have continuing education requirements.
While I believe holding this standard is important and goes a long way to giving the investor a good degree of comfort that they are in good hands, there is still one element that makes blind trust problematic—the investing process itself.
How do I know my mechanic did their job right? My car drives off the lot! For most professions, there’s a straightforward way of knowing if the job was done properly. It isn’t as simple with investing.
My investment portfolio may be designed using all the latest academic research on investing, and hold funds that perform as expected, yet still experience negative returns. If I don’t understand how markets work and the logic behind portfolio design, then I would likely conclude that something is wrong. This might lead me to make changes at the worst time and sabotage the portfolio.
Education helps prevent this chain of events. And this coaching process is not overwhelming for investors. My team and I have been teaching classes to investors for over twenty years, and we find that it’s easy for people to understand what they need to know to become comfortable with the investing process.
Once you do, you can start to relax about money.
Cost can be a significant factor in a successful investing outcome. Unnecessary expenses can create drag on portfolio performance and jeopardize an investor’s future goals. However, investors must guard against myopically focusing only on expenses.
Some of the lowest long-term returning areas of the market are also the least expensive to manage. There are also strategies that funds use to cut costs that can negatively affect returns. In fact, some funds are marketed as having no management fees whatsoever. But it would be naïve to think that the industry has decided start charging nothing for their services.
We do spend a significant amount of time in the education process helping people understand what types of expenses are necessary and when expenses can and should be avoided. This is another benefit of working with a fee-only investment firm. Since we don’t receive compensation from investment providers, we are free to talk openly about the issue of expenses and help guide you to appropriate alternatives.
There are no formal guidelines on how often a client can meet with their advisor—it really depends on your unique situation.
Since strategies such as market timing and tactical asset allocation (a form of market timing) are typically counterproductive, we don’t meet to discussthings like the most recent events in Washington, China, or the latest war. When I decide to get in or out of stocks, I am simply selling or buying from someone who has the same information I do. That means one of us will likely be wrong.
We also won’t call you with “A new opportunity,” these are often a ruse to get you to generate new commissions for the adviser.
Instead, meetings focus on investment coaching and financial planning. There will be more meetings at first as we take you through the coaching process and build a financial plan. After that, meetings come up on an as-needed basis, but we like to meet at least once a year to stay up to date with your ever-changing financial situation.
Common events creating a need to update the plan are workplace benefits changes, a job change, a death in the family, or any event with financial consequences. Meetings typically become more frequent as retirement looms on the horizon. Someone getting close to retiring may actually have semi-annual or even quarterly meetings to prepare for that life transition.
A custodian is very important in the investing process. Most will remember the sad saga of Bernie Madoff who bilked investors out of billions of dollars. One of the biggest reasons that investors lost all that money was that there was no custodian involved. Investors wrote checks payable to Bernie Madoff—a disaster waiting to happen.
At Paul Winkler, Inc., we are not affiliated with any one custodial firm and only recommend well-known entities. We use firms that canhold the funds that we recommend and make sure that their services and fees are competitive. In fact, we believe that competition keeps the custodians competitive.