4 reasons to work with professional fiduciary

Financial Planning Dentist

As an investor, it’s important to work with someone who has your best interests in mind. That’s where an Accredited Investment Fiduciary® (AIF®) comes in. An AIF® is a financial professional who has undergone specialized training in fiduciary responsibility and investment management through the Fi360 Designee process which is accredited by the American National Standard Institute (ANSI).

The fiduciary role is an essential aspect of financial advising, requiring a high level of ethical responsibility to prioritize the interests of the client above all else. However, simply claiming to be a fiduciary is not enough. The process associated with being an Accredited Investment Fiduciary® (AIF®) elevates fiduciary responsibility to a science, complete with a rigorous process and discipline essential to the act of truly being a fiduciary. By undergoing specialized training and adhering to strict standards of due diligence, risk management, and regulatory compliance, an AIF® provides a level of expertise and commitment to their clients that goes beyond simply claiming to act in their best interests. The AIF® designation represents a proven commitment to the science of fiduciary responsibility and a dedication to helping clients achieve their financial goals.

Here are a few reasons why it’s important to work with an AIF®:

Fiduciary Responsibility

An AIF® is held to a high standard of fiduciary responsibility. This means that they are legally and ethically obligated to act in their client’s best interests. This includes putting your financial goals and interests ahead of your own. By working with an AIF®, you can have confidence that your investments are being managed in a way that aligns with your long-term goals.

Specialized Training as a Professional Fiduciary

To earn the AIF® designation, financial professionals must complete specialized training in investment management and fiduciary responsibility. This training covers topics like investment due diligence, risk management, and regulatory compliance. By working with an AIF®, you can be confident that your financial advisor has the knowledge and expertise to help you make informed investment decisions.

Objective Advice

An AIF® is committed to providing objective advice to its clients. They are not incentivized to sell specific products or investments, so you can trust that their recommendations are based solely on your needs and goals. This can help you avoid conflicts of interest that can arise with other types of financial advisors.

Peace of Mind

Investing can be complex and overwhelming, especially if you’re not familiar with the world of finance. By working with an AIF®, you can have peace of mind knowing that your investments are being managed by a qualified professional who has your best interests in mind.

We know working with an Accredited Investment Fiduciary® (AIF®) can provide many benefits for investors. From fiduciary responsibility to specialized training, objective advice, and peace of mind, an AIF® can help you make informed investment decisions that align with your long-term goals. So if you’re looking for a financial advisor, be sure to consider working with an AIF®.

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Kevin Taylor

Should you own Zombie Apocalypse Insurance?

Should you own Zombie Apocalypse Insurance?: Four risk mitigation disciplines to get familiar with Zombie Insurance exists…yes really, if only as a marketing ploy for insurance shops. But it gives us a great reason to discuss the different types of risks, and the disciplines that exist to mitigate the given risk set. Zombie Apocalypse Risk is both an unmitigable risk, there is little if anything you can do to avoid an apocalypse. And it’s also not cost-effective, the replacement of anything lost in the apocalypse is unlikely – the insurer after all is very likely a zombie in this scenario. So it’s an easy “don’t buy it” recommendation. But how about others’ risks? Tax, fire, disability, market, etc. all exist daily, and all have nuanced methods for handling them. Cost-Effective Not Cost-Effective Mitigable Homeowners Insurance (Buy it) Annual Downside Puts for Market Protection (likely don’t buy it) Unmitigable Life Insurance (Buy it sometimes) Zombie Insurance (come on?!?!) Effective risk mitigation requires understanding both the financial risk at play and the full length of consequences that result from the strategy a person or family chooses. Tax Risk is a great topic to think about. Most investors “Accept” Tax Risk and pay their taxes at the end of each year depending on their income and gains from the year before. You bought the stock, it went up 20% forgo 5% as a cost of doing business and pay your income and gains tax on it. Some Investors might “avoid” tax risk by using investment strategies, 401ks, IRA’s, or other legal means of tax avoidance. Further, still, some may limit their tax exposure by using several different investment strategies and holding strategies by spreading out the tax risk over time or using income streams that are taxed in different ways. Further still, some may use tax risk transference through trusts, gifting, and other asset location strategies to manage it. Tax risk is just one flavor of risk, but almost every conceivable risk can be filtered through the strategies below to make the existence of risk far more tolerable. Risk Acceptance There are several risks you “accept” every day regardless of the calculus. The risk of an airplane part striking you at a wedding is really low, so you simply accept that risk and head outside. The risk of a single down month in the stock market is high, and so is the cost to insure against it. Risk acceptance as a strategy is about balancing the likelihood of that risk happening, the financial impact it would have, and properly pricing the below strategies to handle the risk. Risk acceptance does not reduce any effects however it is still considered a strategy. The “acceptance” strategy is a common option when the cost of other risk management options such as avoidance or limitation may outweigh the cost of the risk itself. A company that doesn’t want to spend a lot of money on avoiding risks that do not have a high possibility of occurring will use the risk acceptance strategy. Traditionally, risk acceptance can be the key to investment upside. The performance of the S&P 500 is a great example. If you simply accept the risk you will have more up years than down years, and the result will be net returns of about 9% year over year. If you used financial products to mitigate the financial consequence of a down year, it could cost you between 8-10% of the return to fully inoculate the risk. Leaving you with little to no return. So there are several times where risk acceptance is the more rewarding outcome. Risk Avoidance The risk management effort is a process to target and control the damages and financial consequences of threatening events, risk avoidance seeks to avoid compromising events entirely. This is equally an activity you likely engage in regularly. You, like me, may not attempt amateur base jumping daily for a myriad of reasons. This simple act of not participating is a risk management strategy. When determining how you will approach risk, it’s important to not confuse the strategies of risk avoidance and risk acceptance with a very different concept “risk ignorance.” Risk ignorance stems from two very different but connected problems. The first is a knowledge gap, this is a problem with risk-takers’ understanding of a market, investment, process, etc. where they simply don’t have the skill set required to uncover and handicap all of the potential risks. When I don’t work on the inner workings of my vehicle it’s an acknowledgment of that knowledge gap. The second gap, and likely harder to uncover, is a competency gap. This is the knowledge that the risk exists, but poor reconciliation of an investor or person’s skill to overcome the difficulties. Think about new building construction. The builder might know that the risk of financing can fall through, so they have crossed the knowledge gap, but if a project still falls through because of a lack of coordination, effort, or something else entirely it fell victim to mispricing of the competency gap. Risk avoidance is one of the least understood methods used by investors and as a result drives two negative behaviors. Rationalization or compartmentalization. In this first, investors fall in love with an idea, stated returns, or a story and begin down a path they believe is “risk avoidance” but is actually rationalizing them into risk ignorance. The second “compartmentalization” is a form of risk avoidance but for the wrong reasons. An investor may not understand a product or service and as a result, shut down a whole category of strategies. A great example is in derivatives, many people attribute the financial crises to derivative products and thus write off the whole group regardless of other tactics that might support their goals. A lack of sophistication and understanding of risk is a common source of aversion, failure to change advisors, or even seek investment advice in the first place. Risk Limitation Risk limitation is the most common strategy.

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Kevin Taylor

Financial Plan Principles For Dentists

Dentists have a unique professional path so they should have a unique financial plan. They can double as a full-time practitioner and a CEO of the practice at the same time. With this opportunity, they can have a rewarding career and secure their financial future. However, as a dentist, you can only have the financial future you desire with proper financial planning. This is not rocket science. Nothing special can be built without proper planning and management. By Kevin T. Taylor AIF® and Peter Locke CFP® Dental professionals have the responsibility to learn the key principles of financial planning and wealth accumulation for themselves, their family, practice, and staff. For these priorities, dentists should work side by side with a dental-centric financial advisor. A dental financial advisor can help you create a financial plan and provide you with a perfect place to start your journey of financial stability and prosperity. 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Whether you’re doing this yourself (we don’t recommend) or delegating it to a third party, understanding what’s happening on a monthly basis can mean a huge difference in your tax liability.  Understand your estimated tax number so you can utilize your cash in more effective ways than paying Uncle Sam early or being stuck with a huge tax burden at the end of the year.  Wouldn’t you rather pay yourself, practice, employees, or family? You must consider the total impact on your investment strategy to avoid eroding your returns. Tax planning helps you to learn what is worth investing in, and how best to impact the trajectory of your financial plan. Seek professional advice to polish your Financial Plan Dentists have lots of opportunities in their tax strategy and in investment options. Both determining what your tax strategy looks like in retirement and in the current tax year are important leading indicators of financial success. 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