What is a Thrift Savings Plan?

A retirement plan is an integral part of long-term financial stability, as it allows you to set aside a portion of your income to grow gradually over time. A government employee Thrift Savings Plan, more commonly referred to as a TSP, is a retirement and investment plan, similar to a 401(k), designed specifically for government employees and members of the U.S. military, allowing them to invest in their future throughout the course of their career.

TSP Contributions for Federal Employees

Once you have enrolled and made your initial contribution, the amount of your future contribution is completely up to you, and you can easily change or stop those contributions using an electronic payroll system. The only exception is members of the US Public Health Service Commissioned Corps, who are still required to use a paper form system.

The TSP offers both traditional and Roth options for contributions, which determine how those funds are taxed when withdrawn in retirement. With a traditional TSP, contributions are taken out of your gross earnings, before those monies are taxed. This results in a reduction to taxable income in the year a contribution is made. However, when you withdraw your investment in retirement, the contributions and earnings of your investment will be taxed as ordinary income in retirement.
Contributions to a Roth TSP do not receive a tax deduction when a contribution is made. These funds, will instead, grow tax-free and distributions will not be subject to tax if made as qualified retirement withdrawals.

There are several types of contributions. The regular employee contribution is the amount you have taken out of each check and deposited directly into your TSP. This amount will stay the same each check until you change the designated amount, stop the contributions, or reach the maximum amount as determined by the IRS. Automatic contributions refer to the 1% match your employer or service agency will make even if you are not contributing.

Matching contributions are those made by your employer. If you have a Federal Employee Retirement System (FERS) TSP or a Blended Retirement System (BRS) TSP, you are eligible for the automatic contribution; plus an additional 4% match depending on how much you contribute.

For those age 50 and above, you can also make catch-up contributions. This allows you to make additional contributions, beyond the regular employee-deferral limit.
IRS contribution limits affect the amount you are allowed to contribute each year, whether it be through regular contributions or catch-up contributions. The limits for 2023 were $22,500 for regular contributions and $7,500 for catch-up contributions. The Annual Additions Limit, which refers to the total amount of contributions to a TSP (employee + employer contributions), was $66,000 for the year.

In many cases, a good goal is to maximize your TSP contribution each year. This will also ensure you are receiving the full employer-match, as well. It is also important to take advantage of the opportunity to increase your contribution with catch-up contributions once you reach 50 so you can make that final push toward retirement.

TSP Investment Options and Strategies

When you participate in a TSP, you have three investment options to choose from: Individual TSP Funds, Lifecycle Funds, and the Mutual Fund Window.

• Individual TSP Funds consist of five funds (G, F, C, S, and I funds). The F, C, S, and I funds are diversified baskets of assets similar to an index mutual fund. The C fund invests in large US stocks. The S Fund invests in small US stocks. The I Fund invests in international stocks, and the F fund invests in bonds. The G fund operates similar to a savings account where the principal value does not fluctuate and interest is credited based on the short-term instrument the fund invests in.
• There are ten Lifecycle Funds investments to choose from that are made of a combination of the available Individual TSP Funds. These funds attempt to provide an appropriate risk-return profile for the fund based on a planned retirement year.
• TSP participants that meet certain criteria and are willing to pay the associated fees are able to invest part of their TSP portfolio in a mutual fund window.

Thus, TSPs work very similarly to other retirement plans such as traditional 401(k) plans and Roth IRAs. While the federal employee Thrift Savings Plans are the option created specifically for government and military employees, the strategies are similar and the end goal is the same.

It is, however, important to understand the difference between two key investment strategies—compound earnings and dollar-cost averaging. With compound earnings, you allow your initial investment to grow, then allow those earnings to continue to grow as well. This allows your investment to continuously gain momentum, constantly building on what you have already earned.

With a dollar-cost averaging strategy, you are simply taking a disciplined approach to investing by consistently making the same investment at regularly scheduled intervals rather than trying to time the market. This latter approach is the strategy employed with a TSP.

TSP Allocation Recommendations

The allocation that is right for you will change depending on your age, time with the government, personal spending habits, goals for retirement, and more. However, there are a few pieces of general advice that can be considered.

• Those early into a career usually have more capacity to take on investment risk and be aggressive with their TSP. The idea is younger participants may have more time to recover from investment losses. The C, S, and I funds are generally more aggressive investments compared to the F and G funds.
• If you are nearing retirement, it may make sense to allocate your TSP investments in a more conservative manner. The F and G funds historically have offered more stability in value, so larger allocations to these funds may be more appropriate at this lifestage.

Managing Your TSP Account

As with any long-term investment account, proper management is the key to success. This means understanding some important aspects of the TSP that could affect your long-term investment.

• If you choose to use the individual TSP funds (C, S, I, F, G), these investments will eventually drift away from the original targets you may have set for them. Periodically, you will want to check on the percentage of your TSP that is in each fund and consider a re-allocation if any investments are too large or too small a percentage of your account, relative to your needs.
• The Lifecycle funds will internal rebalance on their own – One of the perks of choosing these funds. They will also adjust their allocation from aggressive investments to more conservative investments as the fund’s retirement data approaches. However, your personal needs may change over time. This may mean the Lifecycle fund(s) you’ve chosen are no longer best suited to your investment objectives. Furthermore, your personal goals may not be consistent with the allocation provided by the fund that is closest to your retirement date. You may need to get under the hood of Lifecycle funds to choose the one that is best for you.

Withdrawing from Your TSP Account

• TSP withdrawal options include hardship withdrawals, in-service withdrawals, and post-employment distributions.
• Early TSP withdrawals often incur a 10% penalty if you are under the age of 59 ½ , except for those employees and service members who are exempt under the Secure 2.0 Act.
• TSP hardship withdrawals can only be made twice per year, cannot be repaid, and can only be taken if you are experiencing negative cash flow, have unpaid medical expenses or legal fees, or experience a casualty loss or a loss due to a qualifying natural disaster.
• Participants are eligible to take out a TSP loan when needed, which can be either a residential loan for buying a new home or a general purpose loan. Be aware that there are tax implications if you don’t repay the loan in full to your TSP before leaving your federal employment or military service.
• In retirement, TSP withdrawals made from pre-tax contribution sources will be treated as taxable income in the year of withdrawal.
• Checking your TSP balance is easy once you have enrolled and created an account on the government’s Thrift Savings Plan website. The site also has a Thrift Savings Plan calculator and tools to help you determine things like annuity payments.

TSP Special Considerations

There are some special considerations that you should be aware of with your TSP.

• Optimizing your TSP for life events is important to make sure your account is meeting your goals and needs. The best way to do that is by re-evaluating your TSP and your investment strategy whenever a major life event occurs, such as marriage or divorce.
• Changing careers. If you leave federal employment and have at least $200 in your TSP, you can leave the money where it is, but you won’t be able to make additional contributions. You also have the option to roll it over into another qualified retirement account with a new employer or to an IRA.
• Ensuring your TSP beneficiary designations are up-to-date is critical in ensuring your loved ones have access to your assets if something were to happen to you.
• There is a limit to the amount you can contribute to a retirement plan. Excess contributions to your TSP that surpass that limit must be refunded to you as taxable income.
• The Secure 2.0 Act allows for certain employees with 25 years or more of service to be exempt from the 10% early withdrawal fee commonly associated with retirement accounts. These employees include specified federal law enforcement officers, Customs and Border agents, federal firefighters, and air traffic controllers.

Pros and Cons of Thrift Savings Plans

These plans allow you to set aside pre-tax income so it grows at a continuous and gradual rate for your retirement. They also receive contribution matches from employers. In addition, if you find yourself in need of cash, you can consider a TSP loan or hardship withdrawal.

On the flip side, you are limited to the total amount you can contribute per year, and you will eventually pay taxes on your TSP funds when you withdraw them. In addition, participants have limited investment options to choose from.

While TSPs are a great investment option, other options are equally sound. Investing in an IRA may work better for some, as you will usually have a much larger universe of investments to select from.

TSP Financial Advisors

Finding the right financial advisor for your TSP is crucial, and selecting one that is familiar with TSPs and always acts as a fiduciary is a smart first step. This will ensure that they will be familiar with the specific rules and regulations of TSPs to let you make the best choices for your financial future.

Interview potential candidates to test their knowledge of TSPs, as well as their experience, and to determine if their investment strategy is in line with your own.

FAQS

Should FERS employees contribute more than 5% to a TSP?

Most FERS employees should aim to contribute at least 5% to be eligible for the maximum contribution match. More can be invested as long as the total amount does not exceed the IRS contribution limits.
Can a TSP be rolled over?
Yes, similar to a 401(k), a TSP can be rolled over into another eligible retirement plan or into an IRA.
Are TSPs taxable?
If you participate in a Roth TSP, your contributions are taken out of your paycheck after taxes. In a traditional TSP, your earnings are taxed as ordinary income once you make withdrawals in retirement. Automatic and matching contributions made by your employer will always be treated as pre-tax contributions and will be taxed upon withdrawal.
What TSPs invest solely in bonds?
The F fund and G fund invests solely in bonds.
How often can you take a TSP hardship withdrawal?
You can only take a TSP hardship withdrawal once every six months.
Can I use my TSP to buy a house?
Your TSP cannot be used to pay off a mortgage, but you can take out a TSP residential loan that can be used to buy or build a new home.
How can I get my old TSP statements?
You can access your statements by logging into ‘My Account’ on the Thrift Savings Plan website.
How can I increase my TSP contribution?
When you enroll in your TSP, your employer will provide you with access to an electronic payroll system that will allow you to make your changes electronically.
Where should I invest my TSP after retirement?
Once you retire, you can either withdraw your TSP balance, leave it in the plan to continue to grow, or roll it over to an IRA or a TSP annuity.
How do I calculate my TSP monthly payment?
The Thrift Saving Plan website features a convenient Thrift Savings Plan Calculator that helps you determine your annuity and monthly payments.

They say money makes the world go around, and in this case, they’re right. Try as we might, we simply can’t live without it—and making smart decisions about money is critical, especially when dealing with a substantial portfolio. This is where wealth management comes in.

Understanding the Importance of Wealth Management

Wealth management is a holistic approach to investments and all aspects of household finances. It is about making strategic decisions and employing effective strategies for managing a diverse portfolio.

First, it is important to understand the difference between income and wealth. Income is money earned from any number of sources like employment, a business, investments, or social security. Wealth, on the other hand, consists of the total value and purpose of your assets, such as property (e.g., homes, luxury vehicles, art, etc.) and savings. 

Wealth management services, which are offered by financial firms that employ qualified advisors such as Certified Financial Planners (CFPs), are an ideal strategy for individuals or families that have substantial financial portfolios. These services involve a suite of services for managing wealth.

What Is Included in Wealth Management Services?

Wealth management services employ many different techniques to help individuals secure their financial success. These services take a multi-level approach by assessing your current financial situation, identifying your short- and long-term goals, and helping to determine a plan to both secure your wealth and help it grow.

In addition to these evaluation and planning techniques, wealth management advisors offer retirement planning, estate planning, and tax planning, such as advising on when and how to make charitable contributions and helping optimize cash-flow for tax efficiency. Investment management is also an important component in which advisors guide clients to make sound investments in stocks, bonds, mutual funds, and EFTs that balance risk with reward.

What Are the Minimum Requirements to Open a Wealth Management Account?

Wealth management services are usually designed for affluent investors that have a significant portfolio. Most wealth management firms have minimum requirements to open these accounts. Ferguson-Johnson Wealth Management requires a minimum of $500,000 of investable assets to begin a relationship. Some wealth management firms have minimums of $1,000,000 or more.

Wealth Management Strategies for Long-Term Wealth Preservation

The first step in securing long-term preservation and growth of your wealth is to establish a financial plan, something a wealth management advisor can assist with. This will include diversifying your portfolio and ensuring that your asset allocation is balanced so a loss in one area of your portfolio won’t wipe you out financially.

Additional strategies may include investment evaluation and optimizing tax strategies to minimize your tax responsibility and advise on the tax implications of specific financial moves.

Once these strategies have all been employed, the final step is to keep working with your wealth management advisor to routinely re-evaluate your plan and make adjustments as needed.

Wealth Management Fee Structures and Benefits of a Fee-Only Approach

Wealth management firms are usually paid by either a percentage of the assets that they manage, commissions, retainer or flat-fee arrangements, or a combination of these. 

In many cases advisors that receive commissions receive compensation from other sources besides the client themselves. In these situations, it is important to be aware of the incentives that may be going into recommendations that are being provided. 

Fee-only wealth management advisors can only receive compensation from their clients. They cannot accept commissions or kick-backs from products or services they might recommend. .

The benefits of working with a fee-only wealth management firm include knowing that your financial advisor is making decisions based on your best interest, not theirs. The transparency associated with a fee-only approach also fosters a greater level of trust between client and advisor, leading to a stronger sense of confidence in your investment strategy.

How Do You Pick a Wealth Management Firm?

There are several factors that can help you select the right wealth management firm:

• Consider how much wealth you are going to have an advisor help you with. A firm that handles smaller client accounts may have a different approach than a firm that works with larger clients. You want to select one with experience handling a portfolio similar to yours.
•     Look for a professional team with CFP® professionals on staff. When it comes to your future and that of your family, you want to trust your portfolio to someone who is qualified and trained. The CFP® is often considered one of the top designations available to be obtained in the wealth management industry. 
•     Seek professional advice from an impartial third party. Attorneys, such as tax attorneys, or CPAs often have great industry insight and can help advise you regarding firms that might be a good match for your specific needs.
•     Consider how you want to grow your assets. It is important to ensure that the investment philosophy of a wealth management firm and their advisors is in line with your personal goals.
•     Look at the number of years the firm has been in business. Experience counts, especially when it comes to your finances and the future of your family’s security.

Consider the number of clients a firm has. This can be an indicator of their experience and track record in successfully managing client accounts.

How Do Financial Advisors Help with Wealth Management?

Financial advisors who work with wealth management clients have a specific set of core competencies. They are trained, and should be experienced in, effective strategies for wealth creation and wealth preservation. They are also knowledgeable about the ins and outs of wealth transfer to minimize the financial repercussions of transferring assets through methods like gifting or inheritance.

They are also trained in the technical aspects of wealth management. For example, they have an intimate knowledge of capital markets, are well-versed in financial planning, and have extensive experience in designing diversified and well-balanced portfolios.

FAQs

What does fee-only wealth management mean?

Fee-only wealth management is when a wealth management firm or advisor is paid through clearly disclosed client fees, rather than collecting commissions from third parties. By working with a fee-only wealth management firm, clients may feel greater assurance that their advisor is working in their best interest.

How do I open a private wealth account?

Begin by selecting a wealth management advisor to determine if you meet the eligibility requirements. Next, you will want to determine your goals and formulate an investment strategy. From there, you simply have to sign an agreement with the wealth management firm and fund your new account.

How do I manage sudden wealth?

The important thing to remember with sudden wealth is not to make any drastic changes to your spending habits or lifestyle. The best first step is to speak with a wealth management specialist who can help you come up with a plan to meet your current and future needs and goals.

What are some alternatives to wealth management?

Alternatives to employing professional wealth management services include a self-directed investment approach where you conduct your own research and manage your own investment plan or use a robo-advisor in which you place your funds in an account that automatically invests for you based on an investment model that does not involve your personal input.

Filing taxes is something we dread and fear each year, but with a little planning, taxes become less expensive and less bothersome. Tax planning not only aims to help save a bit of money, but also is important to avoid penalties, organize their documents, and prepare for the future. Failing to plan for taxes, conversely, is akin to throwing money down the drain.

Tax planning is especially crucial for people considering retirement. At this age, careers are winding down and families are preparing to rely on Social Security and retirement portfolios to support them for the next several decades. Depending on when someone retires, there may still be kids in college and mortgages to pay off. For these people, learning strategies that can lower taxes and protect assets is a must.

Below are some of the strategies that can lower taxes for people with differing tax situations.

Tax planning for high-income earners 

Simply put, the more money you make, the more opportunities there may be to benefit from smart tax planning.

Fully fund tax-advantaged accounts. You can lower your taxable income and possibly your tax bracket by moving as much money as possible into traditional IRAs, Roth IRAs, and Health Savings Accounts (HSAs)

Roth IRA conversions. With Roth IRAs, you can make 100-percent tax-free distributions when you retire, but some high-income earners are not allowed to make direct contributions to Roth IRAs. However, they can convert traditional IRAs into Roth IRAs. Conversions can be expensive upfront, but worthwhile over time. Aiming to fill up current tax brackets at efficient tax rates is key.

Charitable donations. The IRS allows taxpayers to deduct charitable cash donations of up to 60 percent of their gross income and non-cash donations of up to 30 percent. As a result, charitable contributions are among the most popular and common strategies for lowering tax bills. There are a number of options in the types of donations possible.

Optimizing assets. Investments differ in their tax efficiency, and you can often lower your tax bill by reviewing and reorganizing your assets. For instance, keeping mutual funds and ETFs that produce qualified dividends in taxable investment accounts while allocating funds that produce ordinary dividends to IRAs can be an effective way to realize income at preferable tax rates.

There are a variety of investments that high-income earners can consider for tax efficiency, such as tax-exempt municipal bonds.

Take advantage of itemized deductions. Filers who itemize can deduct the interest paid on their mortgages, state and local taxes, medical expenses in excess of 7.5 percent of their adjusted gross income, and more.

Tax planning for small business owners

Small business owners face a different set of tax challenges, but also a new set of opportunities to save. Tax planning should be considered an integral part of managing any small business. Here are a few tactics.

Company structure and tax status. Be sure you have the most tax-efficient structure for your business: sole proprietor, partnership, LLC, S corporation or C corporation. A business’s structure affects how its owners file taxes. If your company has outgrown its structure, you may be able to switch to a structure that can save money on taxes.

Pass-through businesses—sole proprietorships, partnerships, LLCs, and S corporations—are not taxed as corporations (or on the business level), but instead are through the owners’ individual tax returns

Tax deductions. One of the most common small-business deductions is the home office deduction. Taxpayers are able to deduct expenses ranging from real estate taxes to utilities. The amounts are usually based on the square footage of the space used, space used regularly and exclusively for business. 

Many businesses can also take advantage of the qualified business income, or QBI, deduction, which allows small business owners to deduct up to 20 percent of their share in the company’s income.

These are just a few of the strategies available for small business owners. Other tactics include leveraging tax credits, deferring income, and setting up retirement accounts. As a small business grows, generally so do its tax challenges as well as tax opportunities.

Tax planning for real estate investors

Investing in real estate is traditionally the most popular way to build wealth, and locating tax-saving opportunities is as essential a part of real estate investing as locating the right properties. Employing the right strategies can save real estate investors thousands on their tax bills annually.

Tactics these investors should explore include minimizing capital gains taxes, taking full advantage of deductions, and deferring tax with tax incentives. These investors also have the ability to borrow against the equity they’ve built in their properties with cash-out refinances, which provide cash for new investments.

Again, employing tax strategies is an integral part of managing the investment, one that takes ongoing research as tax regulations constantly change.

Tax savings for families 

Managing a family is not unlike managing a small business, with tax planning playing a central role in financial success. It’s essential for parents to learn what deductions and exemptions are available, a situation that has been in flux over the past five years. Tax cuts for corporations passed in Congress in 2017 erased the personal exemption, though offered a higher standard deduction for some families. More changes came in the wake of the pandemic, with the American Rescue Plan in 2021 raising the maximum child tax credit.

Parents should also explore the earned income credit, the adoption credit, and other family tax options.

Tax planning strategies for retirement

Pre-retirement is arguably the most important stage for tax planning. Here, retirement accounts take center stage. Contributions to 401(k)’s, and both Traditional and Roth IRAs should be maximized. People planning to retire should learn how to manage and eventually come up with a distribution strategy from various accounts to improve the tax efficiency of retirement income.

This includes making catch-up contributions, taking advantage of the saver’s credit, and avoiding early withdrawal penalties. It’s also essential to time retirement account withdrawals on a year-to-year basis.

Federal employee retirement tax planning

Federal employees need to look at additional considerations. With the exception of tax-free accounts such as Roth accounts, retirement income is still taxed. This includes income from the Federal Employees Retirement System (FERS), the Thrift Savings Plan (TSP), and Social Security—which are taxed differently depending on your income, location, and other factors.

These retirement income sources have their own specific tax rules. For instance, the part of FERS benefits based on your own contributions are not taxed, while the part based on government contributions and interest are. As for Social Security, up to 85 percent of benefits may be taxed depending on your income.

Federal employees must also consider TSP contributions, IRA and Roth conversions, and health savings accounts.

Conclusion

Two things are certain in life: taxes, and constant changes in tax laws. This makes consulting with a tax professional beneficial, especially for people with multiple income sources, people who plan to move to a different state or country, and people who want to leave a legacy for their heirs. Taking deliberate steps to manage your taxes now, and in the future, can potentially allow you and your loved ones to keep more of what you’ve worked hard to earn.

When it comes to choosing a financial advisory firm, a well-thought-out and systematic approach is crucial. A financial advisor providing guidance for financial planning in your state should be well-versed in the laws, regulations, and practices related to these areas.

Before searching for a financial advisor, it’s important to have a clear understanding of what you want to achieve financially.

Whether you need help with retirement planning, investment management, estate planning, or different financial matters, identifying your specific goals will help you find an advisor with the right expertise.

When searching for the right financial advisor in near you, it is crucial to consider their background and areas of expertise.

Key Considerations for Choosing a Financial Advisor Near You:

By considering key factors such as Assets Under Management (AUM), client count, fee structure, firm age, and clients per advisor, you can make an informed decision that aligns with your financial goals and preferences.

Some of the specific areas of knowledge that a financial advisor in your neighbourhood should possess include:

1. State Tax Laws: Understanding states’ tax laws, including income tax, property tax, and sales tax allows firms to provide clients with relevant tax planning strategies.

2. Estate Planning Laws: Familiarity with estate planning laws, including wills, trusts, probate, and inheritance taxes, to offer compliant estate planning guidance.

3. State Specific Retirement Accounts: Knowledge of state-specific rules for retirement accounts like IRAs and 401(k) plans, helping clients optimize their retirement savings.

4. State Programs and Incentives: Awareness of state programs and incentives related to tax planning and real estate investments, advising clients on how to utilize these opportunities.

5. Networking and Professional Connections: Having strong local connections within the financial and legal community in the region to collaborate with other professionals, such as tax and estate planning attorneys, who possess specific knowledge of state laws and regulations.

To Find The Right Financial Advisor, Near You, Follow These Steps:

1. Check for Locally Registered  & Certified Investment Advisors:

Look for financial advisors who are registered either with the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA).

These organizations provide databases where you can search for registered advisors in your area.

Additionally, you can confirm an advisor’s certification by visiting the Certified Financial Planner (CFP) Board’s website. Other reputable resources to explore include the National Association of Personal Financial Advisors (NAPFA), local Chambers of Commerce, and the Financial Planning Association (FPA).

Ensure they don’t have any disciplinary actions or complaints against them by checking with the SEC, FINRA, or state regulatory agencies.

2. Financial Directories:

Consider local financial directories such as SmartAdvisor Match by SmartAsset^TM, WiserAdvisor, FPA Planner Search etc to find top financial advisors near you.

If you’re specifically looking for fee-only or fee-first financial advisors, you can explore directories like Garrett Planning Network, Fee-Only Network, XY Planning Network etc.

3. Search Engine Maps

Use mapping services like Google Maps, Bing Maps, and others. Enter keywords such as “financial advisor near me” or “portfolio management firm near me” to conduct local searches.

Pay attention to ratings and reviews to assess the quality and reputation of financial advisors or firms in your area.

Additionally, reading online testimonials and recommendations from past clients can provide valuable insights into an advisor’s performance and client satisfaction.

For individuals with specific financial goals like real estate investments and tax planning, it is recommended to review their websites, brochures, or LinkedIn profiles to understand their areas of specialization and experience.

Explore our service areas near Maryland and Virginia :

• Financial advisor near Maryland
• Financial advisor near Virginia

Finding the Most Suitable Financial Advisory Firm Near You For Your Needs.

1. Check Credentials and Licenses:

Verify that the financial advisors you are considering hold the necessary licenses and certifications. Look for certifications such as Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC), as they demonstrate the advisor’s qualifications and expertise.

Additionally, ensure that your chosen advisor is a fiduciary, as this guarantees that they are legally obligated to act in your best interests.

2. Evaluate Disclosures and Negative Records:

As you narrow down your options, thoroughly evaluate any disclosures or negative records associated with the firms. It is essential to choose firms with clean records to provide you with peace of mind and confidence in their services.

3. Clients Per Advisor:

Prefer firms with a lower ratio of clients per financial advisor. A lower client-to-advisor ratio means that the advisor can provide personalized recommendations and tailored financial strategies that align with your unique situation.

Consider whether the firms primarily serve individual investors and have financial planners on staff.

Some major well known firms may prioritize serving corporate or institutional clients, which could impact the level of emphasis on individual investor needs.

4. Account Minimums:

Take note of the account minimums set by the advisors. Some firms may have no set minimums, while others may require a significant investment. Understanding these minimums will give you an idea of the types of investors the advisors typically serve.

5. Consider Fees and Compensation Structure:

Financial advisors may charge fees in different ways, such as hourly fees, flat fees, or a percentage of assets under management. Make sure you have a clear understanding of their fee structure and how it aligns with your budget and financial goals.

Pay close attention to the fee structure of each firm. Fee-only advisors, who earn money solely from client fees rather than commissions, tend to have fewer conflicts of interest.

Understanding how advisors earn money will help you determine if their fee structure aligns with your financial situation and goals.

6. Consider Firm History and Longevity:

Consider the history and longevity of each firm. Firms with a longer track record often offer a greater depth of experience and stability, which can be advantageous in managing your financial affairs.

7. Interview Multiple Advisors:

Lastly, schedule initial consultations or interviews with several financial advisors. During these meetings, ask questions about their experience, investment philosophy, fees, and how they will work with you to achieve your goals.

Pay attention to their communication style, willingness to listen, and their ability to explain complex financial concepts in a way that you understand.

By taking these factors into account and conducting thorough research, you can find the financial advisory firm that best suits your needs and goals.

Use our guide of questions that are essential to ask an advisor before you hire them.

20 Questions to Ask a Financial Advisor

Don’t make a mistake by working with the wrong financial advisor. Ask the right questions to determine if a financial advisor is right for you.

The Bottom Line

Some financial advisory services are much more hands-on and personal than others. When it comes to getting help with your financial situation, including managing your budget, making important financial decisions, and understanding your overall financial health, it’s important to find a financial advisor who will take the time to really get to know you.

This might involve meeting in person to talk about more complicated or sensitive topics that require a deeper level of understanding and trust.

On the other hand, if you just need someone to keep an eye on and make occasional adjustments to your conservative, long-term investment portfolio, you may not need as much personal interaction.

This type of oversight can often be done without a lot of in-depth conversations or face-to-face meetings.

Ultimately, choose a financial advisor whom you feel comfortable with and trust to handle your financial matters. It’s important to have a good rapport and open communication with your advisor, as you will be working together to achieve your financial goals.

We are a fee-only, fiduciary wealth management firm in Rockville, Maryland. Offering a range of services from investment management to personal financial planning, retirement planning, and everything in between.

If you have any questions about our firm, our services, or how our expert fiduciary advisors can help you achieve your financial goals, call us today at ​301-670-0994.

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