Fee-Only Financial Planning
Sparrow Wealth Management offers fee-only financial planning services, which may include a detailed review of your personal and financial goals, a cash flow analysis, tax planning, education planning, retirement planning, an insurance analysis, estate planning, and an investment evaluation. We offer new clients the opportunity to do comprehensive financial planning, which covers all of the areas above, or the flexibility to do financial planning on an hourly basis, as needed.
Personal and Financial Goals
The first step in our financial planning process is to help you to think about and write down your personal and financial goals. If you don’t know where you want to go, you will not arrive at your desired destination. By setting your personal and financial goals, you are making decisions ahead of time about where you want to go with your life. Your comprehensive financial plan is the roadmap that guides you towards achieving your personal and financial goals. Think about how your financial plan would be affected by your answers to these questions:
- When would I like to retire (assuming that money is not a concern)? Is this a realistic goal given my current financial situation? What do I need to do to make this possible?
- What do I really want to accomplish with my life?
- How can I balance my time between work and home life? Do I really need to work this much to reach my financial goals?
- Can I afford to stay home and be with my children? What impact would this have on our ability to reach our financial goals?
Cash Flow Analysis
Like most successful businesses, financially sound individuals and families should have positive cash flow. Cash flow statements indicate whether you are living within your means, and if you have surplus cash that may be invested for future growth. Most problems that people have with debt and bad savings habits are caused by a lack of understanding about their cash flow. We help you to gain a better understanding of your cash flow situation.
In addition, analyzing your cash flow is an important step in preparing for a happy and comfortable retirement. Your cash flow requirements today continue to grow (due to inflation) during your retirement years. If you are currently living beyond your means today, you may be in for a big surprise when your reach your expected retirement age!
As everyone knows, government taxes are usually the largest expense in your budget. Sparrow Wealth Management offers tax planning, which is far more valuable than tax preparation. Tax preparation is limited to “making the best” out of what has already occurred. Tax planning, on the other hand, involves searching for and taking advantage of legitimate opportunities for tax reduction. Tax planning includes structuring investments using the most tax-efficient mutual funds. We believe that tax planning will reduce your tax bite significantly over the long run.
The costs of sending your children to private school and college continue to increase more rapidly than the rate of inflation. Sparrow Wealth Management works with you to coordinate your savings for your children’s education and saving for retirement. While both are important, you may need to make some tough decisions regarding how to prioritize your savings dollars. With the passage of the 2001 tax act, Section 529 Education Savings Plans and Coverdell Education Savings Accounts offer you two different ways to reduce taxes while saving for your children’s education. We can help you to decide which of these plans meets your needs.
Like most people, you are probably concerned about whether you will be able to maintain your desired standard of living during retirement. If you have already retired, you want to make sure that you will not run out of money. Sparrow Wealth Management has developed its own proprietary software to provide you with sophisticated, customized answers to your retirement questions. Unlike many firms who use canned software, we build customized scenarios that help you to understand what your choices are. The answer to your retirement questions is never just a simple YES or NO. Instead, we show you the likely outcome of different scenarios so that you can choose the option that makes the most sense for you.
Because of the many risks that may jeopardize your health, income, and wealth, Sparrow Wealth Management analyzes your current insurance coverage and makes appropriate recommendations. We review your need for the following types of insurance—life, health, disability, auto, homeowners, long-term care, and personal liability (umbrella). In some cases, you may have too much insurance in one area, but not enough insurance in another. We help you determine what risks you can afford to bear, and we recommend that you purchase insurance protection for the risks that you cannot self-insure. As a fee-only financial advisor, we do not sell any type of insurance products, which allows us to always give you unbiased advice.
Since most people have no idea when they might die, estate planning should be a high priority for those who do not have a current estate plan. There is a widely believed misconception that estate planning is for the wealthy. In fact, it’s not! Estate Planning involves a lot more than setting up a common will to dispose of your assets upon death. One of the most important functions of a will is to designate guardians and backup guardians for minor children. In addition to wills, estate planning involves creating a health care directive (or living will) and durable power of attorney for each spouse. A good estate plan will help you to accumulate wealth, minimize estate tax, and provide a legacy to those whom you care about most.
While we do not have the legal capacity to implement an estate plan, we can help you discuss your estate planning desires and make sure that they fit into your financial plan. Then, we will make sure that you work with a competent estate-planning attorney to complete the work.
Sparrow Wealth Management begins your investment evaluation by reviewing basic investment theory with you. Our unique investment philosophy is firmly rooted in the conviction that markets are efficient. We help you to understand why it is important to build globally diversified portfolios using passively managed funds as building blocks.
Next, we review your current investment portfolio to make sure that it provides you with the best probability of achieving your short and long-term financial goals. Part of this review process involves analyzing how your assets are currently allocated across the various asset classes. We help you to understand how diversified your current portfolio is.
Then, we help you to establish your investment objectives, investment time horizon, and risk tolerance. We use this information to help you develop a written Investment Policy Statement, which clearly shows how your money should be reallocated. Finally, we make specific recommendations about what changes you need to make in your portfolio.