Comprehensive Planning and Prioritizing Goals a Must for Investors

 They rarely consider financial defense, however, and as a result many can be left in the lurch by unexpected events, market downturns, or taxes.

9605967 xxl“You could have the best … Retirement plan, earning 10 percent a month,” said John T. McCarthy III CFP®, manager of John T. McCarthy LLC. “But if you don’t have umbrella insurance, you can be sued and lose it all.”

The John T. McCarthy firm provides comprehensive financial planning services to clients who want more than a glorified stock-picker to manage their hard-earned money. For McCarthy, providing good service means approaching client finances from several angles, prioritizing goals over returns, and not requiring clients to meet a minimum investment.

“My approach revolves around taking only as much risk as needed to reach client goals,” McCarthy said, adding that his comprehensive planning process considers taxes, saving for childrens’ educations, and various types of insurance. “I don’t focus as much on alpha as I do on clients reaching their goals.”

McCarthy said, however, that the recently implemented U.S. Department of Labor (DOL) fiduciary rule will complicate client services. Clients already have tools, such as Morningstar, to tell fact from fiction when speaking to prospective advisors, McCarthy said.

“As long as clients know upfront what they’re paying for, then they can decide on their own if that’s right for them,” he added.  

McCarthy, who is a fiduciary, said he’s concerned about how the DOL will enforce the new rule, which mandates that advisors receive “reasonable compensation,” but fails to specify what “reasonable” means. The regulation also could expose more advisors to lawsuits. If the regulation produces enough negative fallout, then clients at the low-end of the market, who can’t meet firm investment minimums at bigger advisories, might find themselves with fewer advisors to choose from.  

McCarthy offers a holistic approach to financial planning. He meets with clients as often as needed to revamp their plans as life changes occur. He also considers issues such as the need for long-term care planning — he cautions that long-term care insurance, recommended by many advisors, is helpful, but that premiums can double once policy holders reach a certain age.

McCarthy stresses that advisors should concentrate on comprehensive planning, not chasing returns, if they want to provide the best service.

“Advisors just need to focus on having clients reach their goals, then they’re going to provide better client service,” he said.

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