Gantt Financial

Helping Your Wealth Grow and Thrive

Merry Christmas

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It’s Christmas Time!

            What a wonderful time of the year. I remember when I was growing up it seemed like Christmas would never get here. Now, it seems to come in ever increasing frequency.

We all tend to get caught up in pursuing the perfect Christmas present for our friends and loved ones. We are “encouraged” by the omnipresent commercials and sales ploys that a Merry Christmas means we buy lots of stuff. We may even succumb to peer pressure from seeing our neighbors with the latest “toys”. We all know we need the latest in electronics or shiny new baubles. Maybe it’s a new fishing rod or shotgun. Don’t get me wrong, as a financial advisor I have a great deal of satisfaction from helping my clients have the ability to get fun things.

There’s nothing wrong with having fun things, because they are quite simply, fun. But do all the fun things we get bring satisfaction or peace to our hectic, fast paced lives? Sometimes our new fun things require a great deal of maintenance and upkeep that can can really wear us out.

Maybe the real gifts are not always things that require maintenance. Giving can mean a lot more than material things. How do we give? I submit we give of ourselves to each other in our relationships. Our friends and families, in the great scheme of things, are of much more value than any material thing. Relationships are not easy, and require lots of work. It takes courage to risk rejection when we reach out to others. When friction or disappointments occur, grace and forgiveness are required in abundance. Is there someone you need to reconcile with this Christmas season? Be brave and take the first step to reconciliation. You’ll be surprised how free you feel.

Our relationships make life so rich, but there are other ways to give of ourselves. There are those all around us who are less fortunate than us. Finding a way to help make a difference for those in need around us can make all the difference in their lives. And maybe in our life too, because it helps us gain perspective and beat back our selfish tendencies.

I guess what I’m leading up to is the spirit of Christmas is really all about love inspired from above. We have an example of love in action for us to follow. It is about the greatest gift that we, and the world, could ever receive. “For unto you is born a Savior, he is Christ the Lord.” My hope and prayer is that we all will let the love and hope of the Christmas story fill our hearts and minds and inspire us to action. It can make all the difference in our lives and those around us, and make Christmas meaningful all year long.

 

Disclosures

The views provided on this website are intended to provide the investor with an introduction to the company and its investment strategies.

Gantt Financial Advisors, LLC is registered in Alabama only. Nothing on this website should be construed as a solicitation or offer, or recommendation, to buy or sell any security, or as an offer to provide advisory services by the company in any jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Information on this website is intended only for United States citizens and residents. Nothing contained on this website constitutes investment, legal, tax or other advice, nor should be relied upon in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. A copy of the company’s current written disclosure statement discussing Gantt Financial Advisors, LLC business operations, services, and fees is available from the company upon request.

Are All Advisors the Same?

Are All Advisors the Same?

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It seems like these days nearly everybody in the financial world claims to be an “advisor.” But can there a difference from one advisor to the next? You betcha, and you need to be aware of the differences and how you may be.

Financial advisors are held to one of two main standards: fiduciary standard or suitability standard.

 

Fiduciary Standard

First are advisors who are held to the Investment Advisors Act of 1940. These types of advisors are usually known as Registered Investment Advisors and are supervised by the Securities Exchange Commission or their state securities commission (if they have less than $100 million in assets under management). This type of advisor must act as fiduciary. To act as a fiduciary means an advisor is legally obligated to act in their clients’ best interest, not their own.

 

Suitability Standard

The second type of advisor is held to a suitability standard. Suitability means the advisor is not required to put your interest ahead of their own, and the transaction only has to be suitable for the situation.

These advisors are regulated by the Financial Industry Regulatory Authority (FINRA) and are generally known as retail brokers. The first type of retail brokers can include insurance agents and traditional brokerage accounts in which the agent is licensed to sell you a financial product. The second type of brokerage account is called a managed account. In this type of account, the advisor is compensated by a fee and is subject to the Investment Advisor Act of 1940. However, the advisor is limited to the list of investment products approved by their firm. It’s possible the products on the list are there because they are more profitable to the company, which also means they are more costly to you.

 

UNDERSTANDING ADVISOR COMPENSATION

Commission-based. If the way your advisor is compensated is by commission, then their solution for you may be motivated by the sale of a financial product (a transaction). This could lead to what is known in the financial world as a conflict of interest. In other words, the sale of a product may or may not be the best solution for your particular needs.

The legal obligation for the broker is only that the transaction be “suitable” for you.

Fee-Only or Fee-Based. In contrast a Registered Investment Advisor is usually compensated via an hourly fee or percentage of assets under management. A Registered Investment Advisor is required to disclose how they are compensated, whereas a broker is not obligated to disclose how they are compensated. An RIA is required to be transparent about their fees.

By definition, the RIA firm is built around a relationship in which advice is offered for a known fee. In addition, the RIA’s list of investment options is not there because it is another profit stream for the firm because the firm is compensated for advice, and that advice must be in your best interest. That’s why many RIAs­­­­­ use low cost index funds and ETF’s that are less costly to own than more expensive products that may not produce any better return.

 

AN EXAMPLE OF THE DIFFERENCE BETWEEN A FIDUCIARY ADVISOR VS SUITABILITY ADVISOR:

To help illustrate the difference between the fiduciary standard certain financial advisors are held to and the suitability standard of other types of financial advisors, I’ll share with you an analogy written by Peter Lazaroff, an online contributor to Forbes magazine:

Imagine you need a new car, but you don’t know much about different options. You head to the closest car dealer, which happens to be a Ford dealership. The dealer asks you to describe what kind of car you need, and you begin listing features and attributes that are best described as a Toyota Highlander.

Under the suitability standard, the dealer could say, “A Ford Explorer would meet all of your needs and we have some of those right over here.” The dealer makes the sale and gets the commission. You have a car that is suitable for your needs, but it isn’t necessarily what’s best for you. Since you don’t have a great deal of knowledge about the auto market, you are in the dark.

Under the fiduciary standard, the dealer would be obligated to say, “It sounds like you are describing a Toyota Highlander. We don’t sell those. In order to get exactly what you described, you would have to do down the street to Toyota and ask for a Highlander. I can sell you a similar model called a Ford Explorer. It’s more expensive, and it isn’t exactly what you described.”

In this scenario you have more information about your options and the conflicts driving the dealer. The Ford dealer has a clear conflict of interest in this situation. He can only sell Fords and will lose the opportunity to earn a commission if you buy a Toyota Highlander. Under the suitability standard, you end up with a product (Ford Explorer) that isn’t the best fit given your situation, and it costs more than the better-fitting product (Toyota Highlander). Worst of all, you probably wouldn’t know that the dealership wasn’t putting your interests first.

 

CONCLUSION

By now, I hope you see that financial advisors are held to two distinct and different responsibilities to you: fiduciary or suitability. It may seem a little confusing trying to distinguish between the two, but there is a way to know. Simply ask your financial advisor if they are a registered representative.  If they answer yes, then you know they are a broker, and not completely independent.

If your financial professional has accepted the higher responsibility of being a fiduciary to you, then they have set out with the expressed goal of always acting in your best interest. For the financial advisor, it’s the road less traveled, but it can make all the difference to you, the client, receiving financial advice.

 

Disclosures

The views provided on this website are intended to provide the investor with an introduction to the company and its investment strategies.

Gantt Financial Advisors, LLC is registered in Alabama only. Nothing on this website should be construed as a solicitation or offer, or recommendation, to buy or sell any security, or as an offer to provide advisory services by the company in any jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Information on this website is intended only for United States citizens and residents. Nothing contained on this website constitutes investment, legal, tax or other advice, nor should be relied upon in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. A copy of the company’s current written disclosure statement discussing Gantt Financial Advisors, LLC business operations, services, and fees is available from the company upon request.

How to Manage Your Finances After the Loss of a Loved One

How to Manage Your Finances After the Loss of a Loved One

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Many people are simply not prepared to manage their finances after the loss of loved one. This is especially true if the deceased family member was the person who typically paid the bills and managed the investments for your household. There’s nothing to be ashamed of if you suddenly find yourself in this position, but as difficult as it may seem at a time like this, you may need to assume control of your financial dealings to avoid disaster.

Here are the financial steps to cover if you experience the loss of a loved one:

  • What to do first (financially) after the loss of your loved one
  • How to establish yourself as the primary financial manager of your household
  • Tips on maintaining your finances over the long term

What to Do First

There’s no question that conditions will be emotionally and pragmatically chaotic immediately following the death of your close loved one. Having your finances organized beforehand is ideal, but even if they aren’t, here are some things you can address first to help make the financial aspect of this difficult season a little more manageable.

  • Contact your financial professional(s). Your financial advisor will be able to begin organizing all your financial accounts and beneficiary information. It’s your financial advisor who will walk you through any necessary actions and paperwork so that you can navigate the financial complexities successfully.
  • Recruit the help of a supportive family member. If you have someone who can be an objective and strong support person during this difficult season, consider letting them help you. Decision-making can be extremely difficult when you are (understandably) overcome with emotion. However, recruiting the help of a child, sibling, or other close family member may reduce how overwhelming finances can be after losing your spouse.
  • Notify the appropriate people and agencies. These individuals will likely include your accountant, attorneys, insurance agents, and bank executives. Moreover, you will also need to schedule time to contact your mortgage company, credit card companies, investment brokers, and pension plan provider. Your financial advisor may contact some professionals on your behalf, or may let you know when it’s the appropriate time to contact them with what needs to be done.
  • If possible, make sure that your essentials needs are taken care of the next 60-90 days. This includes things like paying the utilities, the mortgage, and any insurance premiums as quickly as you can. Take care of any regular financial obligations right away so you can manage everything else. A supportive family member is ideal for helping to make sure your mail is collected and bills are paid on time.
  • Gather and organize any documentation that’s connected with your financial affairs. This includes bank statements, insurance policies, stock certificates, ledgers, deeds, etc. If you have this information organized in advance, it will be a welcomed convenience in the midst of a difficult time. If not, do the best you can to sort and work through the assembly of these important documents.

Establishing Yourself as the Primary Financial Manager of Your Household

Here’s a sampling of how to proceed after you’ve started managing your own finances:

  • Modify your insurance coverage. While meeting with your insurance agent(s), discuss ways you can decrease costs or the amount of coverage you maintain.
  • Make a comprehensive assessment of your finances. When you speak with your accountant and/or financial advisors, apprise yourself of both your current financial situation and your future prospects.
  • Make the necessary adjustments. Based on the information you’ve gleaned, start to make whatever adjustments are necessary to ensure that your financial needs are taken care of going forward.
  • Consider the possibility of downsizing or relocating in order to make up for lost income. Seek the counsel of a financial professional who has your best interest in mind to help you determine if this is a consideration for your specific circumstance.

Once you begin to take these steps, you will have transitioned into this new stage of managing your finances after the loss of your loved one.

 

Managing Your Finances Over the Long Term

  • Here are just a few more tips to help you maintain your finances for the long-term independent of your lost loved one.
  • Continuously educate yourself on matters of personal finance, investment options, and tracking the market.
  • Create and adhere to a reasonable budget. You can start by tracking your expenses closely for 2-3 months and allocating resources appropriately.
  • Schedule regular meetings with your financial advisor, to keep yourself abreast on your financial situation and future.

Conclusion

While it is true you should not make big decisions immediately after the loss of a loved one, it is important that the day to day management of home finances continue. While addressing your financial situation might understandably be the last thing you want to grapple with while grieving, with the right support from family and financial professionals, you can navigate through this difficult time.

 

Disclosures

The views provided on this website are intended to provide the investor with an introduction to the company and its investment strategies.

Gantt Financial Advisors, LLC is registered in Alabama only. Nothing on this website should be construed as a solicitation or offer, or recommendation, to buy or sell any security, or as an offer to provide advisory services by the company in any jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Information on this website is intended only for United States citizens and residents. Nothing contained on this website constitutes investment, legal, tax or other advice, nor should be relied upon in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. A copy of the company’s current written disclosure statement discussing Gantt Financial Advisors, LLC business operations, services, and fees is available from the company upon request.