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FAQ

Frequently Asked Questions

Do you only work with healthcare professionals?

No. About half of our clients do not have any affiliation with the field of medicine. Our clients include individuals of all professions as well as small business owners. We do feel, however, that we have some extra insights into some of the financial circumstances typical of physicians.

How does the process work?

We start with a complimentary in-person or telephone/video conference consultation to discuss your needs and goals, and also determine if we are a good fit for each other. This typically takes 15-45 minutes.

During this initial meeting, we’ll help you determine what types of material and data to collect for us to do a preliminary review, and we’ll give you an idea of how we can benefit you. We’ll discuss exactly what types of services you wish, and then provide you with an estimate of the hours involved and prepare a written contract. Once officially engaged, we’ll continue to help you with the data gathering process until we have all necessary information related to your questions. Then we’ll present to you a short term, medium term, and long term plan (as desired). You can then decide if you would like to implement any part of the plan on your own or with another professional, or if you would like to retain our services for help in putting any part of your plan in action.

After an initial engagement period is completed, we are also available for a periodic checkup, or to discuss any new issues or life changes which have come up. One benefit of an hourly arrangement is that you pay only for the services you actually use, and only when you need them.

What is the difference between financial planning and investment management?

Financial planning involves all aspects of your financial life:  income, expenses, spending and retirement goals, tax considerations, insurance needs, ability to save or invest, and the best avenues or accounts in which to direct your savings. Investment management on the other hand, is more specific, and refers to the selection of investments within your investment accounts, and then the ongoing review of these investments if there are changes in your financial plan.

While some financial planners also select and manage investments, most investment management firms will provide only limited financial planning, particularly for questions or issues not directly related to the investment accounts they oversee. 

What is the “Form ADV”?

Officially known as the “Form ADV Part 2A: Firm Brochure” the Form ADV is used by Registered Investment Advisory firms to register with the Securities and Exchange Commission and state securities authorities. Part 2A is the “plain English” portion which contains information such as the types of advisory services offered, the adviser’s fee schedule, disciplinary information, and conflicts of interest. The brochure is the primary disclosure document that investment advisers provide to their clients and is required to be made available to a client prior to working together.

Although much of the language on the Form ADV is somewhat boilerplate, it is an important legal document which should be reviewed by anyone who is considering hiring any financial planner or investment advisor. Our Form ADV can be downloaded here.

What if my spouse/partner and I disagree about finances and have very different philosophies towards money?

Attitudes about finances are strongly tied to one’s personality, upbringing, and beliefs. Although financial planning relies heavily on “math”, the practical aspects of money management can be inherently emotional and affected by personal feelings and biases. Differences in attitudes among couples can strain a relationship and lead to poorly executed plans, or no plan at all. By necessity, financial planners must create a plan which both parties find acceptable.

We have substantial experience in working with couples, and find that our financial planning process results in frank discussions which can lead to mutual understandings in the relationship and a unified financial plan.

Do you prepare taxes only for your financial planning clients?

No. We prepare taxes for many people who do not also need or want any financial planning or investment management.

What sorts of tax-prep do you do?

We perform tax-preparation services for individuals, couples, and families with relatively straightforward situations. In general, we recommend that anyone who has non-routine tax situations work with a CPA, enrolled agent, or other such professional. We are currently licensed as tax-preparers in South Dakota and New York State, but can prepare taxes for residents of most states.

Is tax-preparation included in your services? What are your rates?

Tax-preparation is billed separately from our financial planning and investment management services. Tax-prep is billed on a fixed-fee basis, and depends on the complexity of your situation.

We also do “tax-preparation tutoring” where we can work with you “side by side” (with tax software of your choice) and prepare your taxes together as we explain how various rules affect your current taxes and tax planning. The goal is to provide education, and hope that you learn enough to confidently prepare your own taxes the following year.

I’m researching advisors and compensation methods, what are some pros and cons of paying for hourly services?

Hourly or fixed-fee services are considered the most conflict-of-interest-free method of pricing financial services. Clients pay only for the work performed, and pay for professional experience and knowledge directly applied to their situation. There is no financial incentive to the planner to suggest any particular investment or course of action. Also, all clients are treated equally, as the hourly rates are the same for most clients. On the other hand, clients are billed based on time, and may be hesitant to incur fees when they have issues, questions or new situations.

What are some pros and cons of working with an advisor with an assets-under-management (AUM) fee structure?

With an AUM arrangement, fees are based as a percentage of the value of the managed accounts, and are deducted from a client account on a quarterly basis. Some clients find this automatic fee-deduction to be convenient. One can ask questions to the advisor regarding your investments throughout the year, and the time for this advice is “pre-paid” in the form of the fee deductions. Thus, one gets (theoretically) “non-metered” amount of time for the AUM fee. Also, there is some incentive for the advisor to pick successful investments for the account, because the advisor fee is based on the account value.

There are several potential conflicts-of-interest related to AUM fees, however. An advisor has an incentive to attract your assets and keep them invested. Thus, there is an inherent bias against giving advice which may result in fewer assets in your accounts (and thus fewer AUM fees), such as whether you should pay down your mortgage or other loans, give to charity, or give gifts or other asset transfers for estate planning purposes. Also, since the largest client accounts pay the largest fees, there may be a bias towards preferentially giving time or attention to clients with the most assets, at the expense of clients with smaller accounts. Finally, an AUM agreement results in the advisory firm getting paid throughout the year regardless of the amount of work performed. In many cases, those fees charged can buy a lot of hours of personalized financial planning and hourly investment management.

What is a “fiduciary”?

When used in the context of a Registered Investment Advisory (RIA) firm such as ours, a fiduciary is a person or firm who has a legal and ethical obligation to put the client’s financial interest ahead of their own. All RIAs are required to operate in a fiduciary capacity. In contrast, most stock brokers and insurance agents who sell investments are not bound by a fiduciary standard. Make sure that any financial planner or investment manager you hire is an RIA working under a fiduciary standard.

Although the fiduciary standard is currently the highest standard which applies to the industry, it is still a fairly weak legal standard and by no means protects clients from conflicts of interest. Thus, separate from any legal requirements, we also pledge to work under a higher ethical standard, sometimes referred to as a stewardship or optimum standard. This is not a legal concept, but is instead a moral principle that compels STK Planning to protect and promote the financial well-being of others through ethical behavior and prudent decision-making as we provide leadership and guidance of clients’ financial affairs. Our chosen standard of conduct is higher than ordinarily required and encountered in commercial business.