It's always the time for clear financial thinking, planning

By Thomas V. Bona

BusinessRockford.com

Kristine Scott is a senior financial consultant for Waterside Financial Advisors LLC. With eight years’ experience in the field, she is responsible for assistance with investment planning, financial planning, and strategic portfolio allocation for individual and corporate clients. The certified financial planner has a bachelor’s degree in accounting and organizational management from Western Illinois University. She recently was named to the 2008 list of America’s Top Financial Planners by the Consumer’s Research Council of America.

Waterside Financial Advisors is a second-generation locally owned and operated investment advisory firm that has been at the Waterside Center, 124 N. Water St. in downtown Rockford, since 1985. For more information, call 815-963-0461 or visit watersideadvisors.com.

Who should work with a financial planner?
For an individual, it depends. Usually, it’s harder for younger professionals because they have less accumulated wealth, not to say that their needs aren’t as important. They usually have college loans that they’re paying for, they may have young children, they have a home with a mortgage. They have a minimum amount of their income set aside for savings because much of their income goes to debt servicing and living expenses.

Usually people from their mid-40s on up can benefit from financial planning because they’re at the point where their children are older and they’ve been at two or three jobs. If you have 20 years until you retire, you’re thinking, ‘How am I going to get where I want to be? What are my priorities?’ Most pensions have gone away. It’s all up to the individual to be responsible for their own retirement.

For these individuals, this is the most important time to really focus, especially for retirement planning, where you have to minimize mistakes along the way. I would say no later than age 55 should they sit down with an adviser.

But financial planning is important for everyone, even if it’s just basic or preliminary guidance. When we have an economic slowdown, there are still opportunities in what can be done in a planning and an investment standpoint.

What should someone look for in a financial planner?
Someone who has integrity, who is independent and not tied to any one company. That the adviser is working for the client. The adviser has to have the knowledge and experience to do the best job possible for the client.

For some people, it’s a feeling. It’s the questions the client asks and the information gotten back, the willingness of the adviser to answer the client’s questions. The adviser should have the patience to answer the client’s questions each time they are brought forth.

Another point is that the client doesn’t feel that he or she is being sold. If you feel you’re being sold something, it’s always at the back of your mind. We are very upfront about what the costs and the fees are. We let the client know every year, ‘This is what you pay. At any time you can walk away without a separation fee.’

Good customer service in financial planning means being proactive with your clients. It is taking good notes, getting to know your clients so you understand them and their goals, and make sure everybody’s on the same page.

We’re not here just to sit and give all this information to you so you can walk out of here with no input. When we meet, 20 percent to 30 percent of the meeting is reviewing information and where we are in the plan. The rest of it is spent educating the client, where we are with the economy and specific principles related to investments.

We encourage our clients to come with specific questions, specific concerns, and not just when we have meetings. They can pick up the phone at any time and call. We have to work harder to make sure the client is happy to retain a long-lasting relationship.

People may be worried about their retirement plans or investment portfolios during this time of economic uncertainty. What would you say to them?
With the companies we work with, we spend a tremendous amount of time doing one-on-one meetings with employees, explaining the highs and lows of the market, giving them a better sense that there are going to be highs and lows. The important part is that they “dollar cost average” into their retirement plan, every paycheck they are consistently putting money into the plan, averaging the highs and lows over time.

Market research indicates that 80 percent of annual returns are based on 20 trading days a year. I don’t know when those 20 trading days are going to occur, nobody does, but it doesn’t behoove you to try to time the market and move in and out of cash when you think the time is right.

There are opportunities with investing, even with the current economy. We need to think globally. If we’re having a downturn in our economy, that’s not necessarily happening around the world. You have to look at it as a whole to see the best mix of investments.

The hardest part, when it comes to investing, is the emotional side. We know the market is going to pull back at some time, but when you see that the market is down 8 percent for the year, it’s difficult to look at your statements. This is when we spend more time talking to our clients about their type of portfolio, based on their risk tolerance. The closer to retirement you are, the more conservative you usually want to be.

At 55, if you have a more aggressive mix so close to retirement, you have to start minimizing the downturns. If you have 70 percent of your portfolio in stocks (equity mutual funds) and 30 percent in bonds (fixed-income mutual funds), we might change the portfolio to 60 percent stocks and 40 percent bonds, even more if appropriate for the individual.

What should business people be looking at in terms of financial planning?
When we take a look at retirement planning, we also take a look at their business, what happens to it when they retire, do they have a succession plan? We want to make sure that if the unknown happens — all the best-laid plans in the world aren’t perfect — at least we have had the discussion and brought up ideas to consider.

If you’re in manufacturing, when we have downturns in the economy, that obviously makes a change to some of their goals and some of their planning. There will always be a downturn at some time, and there will be a rebound. When we meet with our clients, we make sure to talk about making those subtle adjustments to the plan. You have to think long term.

Staff writer Thomas V. Bona may be contacted at 815-987-1343 or tbona@rrstar.com.

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