Frequently asked questions

Lighthouse Financial Planning, LLC

Trusted financial guidance for the long term

FAQ

      Frequently Asked Questions

Question 1: What can professional, objective, fee-only, fiduciary financial planning and investment management do for me?

Question 2: Why can't I do my own financial planning and asset management? What resources can help me?

Question 3: What should I consider in choosing a financial advisor?

Question 4: Why should I select Lighthouse Financial Planning, LLC as my financial planner and investment advisor?

Question 5: What is the financial planning process?

Question 6:   How much will it cost?

Question 7: What if I still have other questions?


                                             Our Answers

Question 1: What can professional, objective, fee-only, fiduciary financial planning and investment management do for me?

Setting and meeting financial goals and addressing financial issues is a significant challenge. Invariably, individuals who contact us need additional direction in their financial planning or investment strategies. Many are expecting a transition in their life that affects their fianacial situation. Some typical shortcomings or issues include:

Failing to save enough for retirement, including not optimizing contributions to and investments in retirement plans such as a 401(k), 403(b) or TSP employer plan or IRAs.

Having an assortment of investments, often located with high cost providers, without a coherent investment plan or clear idea if they are saving enough to meet their goals.

Inadequately managing transitions, such as marriage, having children, saving for college, purchasing a home, divorce, becoming widowed, inheritances, and retirement.

Failing to address contingencies that could derail plans, such as inflation, taxes, mismanaged cash flow, job loss or changes in health status.

Competent, objective planning can help to address these issues, producing tangible and intangible benefits that far exceed the cost. For example, just investing in low- fee no-load mutual funds or index funds can often save 1% or more in investment costs, resulting in significant additional asset accumulation over time. In addition clients gain peace of mind that their financial situation is under control.

Back to Top of Page

Question 2: Why can't I do my own financial planning and asset management? What resources can help me?

The reality is that most Americans do undertake their own financial planning and asset management without the assistance of a professional advisor. However, as noted above, this often leads to gaps or shortcomings that produce disappointing results.  Truthfully, there is a lot of complexity in this area and it requires knowledge and time to do it right.

Most people simply can't be expected to be expert in all of these areas any more than they can be expert in medical diagnosis or taxes. Even if they are interested and try to stay informed, they are unable to devote the time needed to stay abreast.   Many of those who are making a sincere effort are likely to make investment mistakes that are costly, often overreacting to ups and downs of the market, trying to pick winning stocks, and trading frequently. Therefore, as many studies have shown, the returns of average investor are far below the performance of the market.

Beyond investing, the issues mentioned in Question 1 are some of the critical elements in your financial life that a professional advisor can help you address.  In the end, the cost of professional help may be returned many times over. Lighthouse Financial Planning, LLC, is prepared to help individuals avoid mistakes and achieve those important financial goals. We offer engagement options ranging from quick check-ups to comprehensive planning and asset management.

For those who want to increase their personal knowledge, we have listed below for your information links to some tools and resources that may be helpful. Lighthouse Financial Planning, LLC uses most of these in its practice. These citations are not meant as endorsement or as a complete list for your unsupported use. Without adequate training and experience, the information provided may be misapplied.

For modeling different planning scenarios, LFP usually uses Money Tree Software.
For determining your risk tolerance, LFP often uses Finametrica's instrument.
For educational information on investing, and ratings of mutual funds Morningstar offers a valuable resource.
For educational information from a publicly available mutual fund family with a broad array of low cost funds try Vanguard.
For insights into investing, explore Dimensional Fund Advisors' investment library.
For information on how you can provide emergency access to your Health Care Directives check out the services of Docubank.

Again, while most individuals go through life without a professional financial advisor, it is our belief that Lighthouse Financial Planning, LLC's services will be a very cost-beneficial approach for most. Contact us to see how we can be of specific help to you or for suggestions on additional public resources and financial calculators.

Back to Top of Page

Question 3: What should I consider in choosing a financial planner?

Thousands of individuals and companies hold themselves out to prospective clients such as you. They call themselves financial counselors, financial advisors, financial planners, senior specialists, investment advisors, investment specialists, trusted representatives, etc.  How do you find the right financial planner and investment advisor from among the multitude of competing providers?

It is important that you find someone who is trained and certified with qualifications necessary to offer financial planning. Some titles that are used have few or no educational or experience requirements behind them. It is also important to know what rewards the person or firm receives for their recommendations to you. A person who sells a type of product is likely to recommend that product because that is how they and their firm make money. Make sure they disclose and you understand the specific compensation or the incentives they have for recommending one action, investment or insurance product over another.

A Certified Financial Planner™(CFP®) must meet stringent educational and experience requirements in order to be certified by a National Board of Standards and must adhere to a stringent code of ethics. A member of the National Association of Personal Financial Advisors (NAPFA) operates on a fee-only, fiduciary basis, free of the conflicts that can arise from commissions associated with recommending particular investments, insurance or other products. A fiduciary is a person or organization that owes to another the duties of good faith, trust, confidence and candor. Simply put, it means putting your interests first, without the influence of outside interests. Lighthouse Financial Planning, LLC,s principal is a CFP® and is a member of NAPFA.


                                                                Back to Top of Page

Question 4: Why should I select Lighthouse Financial Planning, LLC as my financial planner and investment advisor?

Lighthouse Financial Planning, LLC,s principal is a Certified Financial Planner™. As a member of NAPFA, LFP operates on a fee-only basis and, as a NAPFA-registered financial advisor, is bound by a fiduciary oath.

Among the relatively small pool of fiduciary financial planners, LFP prides itself on the personal attention it provides its clients. We also focus on educating our clients, and integrating them into the financial planning process to help ensure that they meet their goals.  LFP tries to serve as a "general financial manager" encouraging implementation and maintenance of each client's plan.  We provide advice, expertise, experience, education, discipline and a process -- critical inputs that can not easily be acquired on one's own.

LFP can either advise you on how to allocate you investments, or can manage your investments for you (on a descretionary or non-discretionary basis) as agreed in your investment plan. Our investment approach is grounded in accepted academic research. We recognize that returns are closely tied to risk and that appropriate asset allocation, broad diversification and low fees are critical to success. LFP does not attempt to time the market or try to predict the future. We are not short term traders. We believe that sound, prudent, disciplined, long-term investment guided by a financial plan provides our clients with the best chance of realizing their goals.

Where necessary, LFP will draw on specialized planning expertise outside of its own organization. LFP can help clients identify possible options for other firms or professionals to support plan implementation and then assist in evaluating the various options.

We believe that every client is unique. Whether you are well on your way to financial security or just starting out with a saving and investment plan, LFP can help you address the financial issues in your life. Whether you are knowledgable and simply want additional guidance or an individual overwhelmed by the complexity of financial issues, we view the financial planning process as a joint effort of LFP and you, our client. This means that we must be partners in the process. We ask you to inform us of your financial situation, your goals, thinking, needs and concerns. If you are motivated, open to new information and ready to take action, contact LFP to learn how we can help you.

                                                 Back to Top of Page

Question 5: What is the financial planning process?

Lighthouse Financial Planning, LLC follows a broadly accepted financial planning process. This usually includes:

Outreach and inquiry: we want to meet you and make sure our services can meet your needs.
Entering into an engagement agreement for financial planning and/or investment management: all of our work involves a written agreement.
Exploration of your goals, values and risk tolerance: these are key to a successful outcome.
Data gathering: yes, you have to provide us with accurate, complete information.
Analysis and development or recommendations: we develop customed recommendations, not cookie-cutter approaches.
Education and presentation of recommendations: we want you to understand each recommendation.
Implementation and follow-through support: we are an ongoing partner.

Note: for Unbundled Financial Planning engagements (e.g, special projects and hourly work), some of these steps may be abbreviated or skipped. More detail and explanation in LFP's disclosure brochure and engagement templates is provided on the Client Resources page.

Lighthouse Financial Planning, LLC (LFP) prefers to initiate client engagements with development of a financial plan. LFP's planning fees are a function of a client's assets and income with a minimum fee of $2500. LFP's fees reflect the complexity of the engagement, and fee concessions may be available. Fees for ongoing financial planning and asset management also start at $2,500.

LFP is also committed to serving individuals just starting out or with limited resources, and as such also offers hourly or project engagement options, priced around $250 per hour. Clients starting with a limited amount of capital will often elect to manage their own assets subject to our guidance (minimum fee of $2000 and $100,000 of assets).

Potential clients are encouraged to think about LFP's services in terms of net value (the extent to which benefits exceed costs). Clients are not buying a product, but are buying a professional service (think medical or legal advice -- although we certainly do not offer either of these.) LFP is confident that no matter what a client's situation, they will find significant value in our services, and we invite you to contact us to discuss your specific situation. More information on LFP's fee structure and approach can be found in the ADV.

Although LFP strives to develop long-term relationships, clients are never locked into a long-term commitment with LFP. LFP does not charge individuals or offer any specific advice except under a written engagement agreement. (See Client Resources Page for sample engagement agreements.) LFP treats all client information as confidential, so there is no cost for you to explore the value of selecting LFP as your personal financial planner.


                                      Back to Top of Page

Question 7: What if I still have questions?

We are happy to answer any questions you may have. Please go to our contact form. In the comment box please ask your questions or let us know how and when you would like us to contact you.

                                     Back to Top of Page

    Lighthouse Financial Planning, LLC<>1515 Allview Drive<> Potomac, MD 20854<>301-996-7044

                                        bkorb@lighthousefp.com