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How to Choose a Financial Planner

February 15, 2018 By Lauri Salverda, CFA, CFP®, AIF®

The search for a good financial planner should be exactly that: a search. This is a person who is going to get to know a lot about you, so don’t just pick the first one your search engine kicks back.

First, take some time to identify between three and five people you want to interview. Before someone makes your short list, be sure they are a certified financial planner. How do you know? In their biography or on their website, look for CFP® following their name. For no cost, you can visit www.napfa.org or www.letsmakeaplan.org to find qualified planners.

CFP® professionals, when providing financial planning, are required to act as fiduciaries as a condition of their certification. Why does that matter? Simply put, it means they’re bound to put your interests first when offering advice. And only those with certain certifications are required to do this!

What to Ask a Financial Planner

After you’ve got your list of qualified (on paper) candidates, it’s interview time. Make a list of questions and bring some notes about yourself. Do you know what you’re looking for in a financial planner? “I’ll know it when I see it” isn’t very helpful, so be concrete and think about your values and your situation. Do you want someone experienced with locally-based investments? Someone who shares your values around philanthropy? Someone who works with a lot of single parents?

As you sit down with each planner for an interview, look up from your notes long enough to check that the individual is really listening to you. Are they multitasking? Or are they focused on you, and even taking notes themselves? Second, how does the conversation make you feel? Are you instantly comfortable, trusting and excited about working with this person? If there’s no rapport, you should keep looking.

As you’re keeping tabs on those less concrete aspects of the interview, you can run through the 10 questions to ask provided by letsmakeaplan.org. For example, ask about their experience, qualifications, services, costs, and how the office runs their client relationships. Take notes, take the answers away and consider if they match what you’re looking for. With solid information about each person you’ve interviewed, choosing the right planner should happen almost automatically.

What You’ll Learn About Lauri

We look forward to a productive conversation with all potential clients, where we can get to know one another better. Here’s a brief sneak peek into what you’ll learn about how Lauri operates as a CFP®:

- She knows her clients personally. Lauri will get to know your likes, fears, comfort level with financial conversations, values, goals, and how your needs are changing over time. This way, when you call her with an issue, she hones her advice to what’s most important to you.
- She educates her clients. Lauri believes you should feel empowered to make your own decisions, not be told what to do. For example, if an advisor recommends you roll your 401k into an annuity, you should understand why, on top of knowing the other options.
- She understands that all areas of a client’s life are interrelated. Your values influence who you are and what you need. For example,
  - If a person is philanthropic, giving is important to them. How does this impact their retirement goals?
  - If a family has an active lifestyle that includes boats, trampolines, and other recreational items, their insurance coverage should reflect that.
  - If a couple is making decisions about putting their kids through college, their values come into play. Perhaps their parents didn’t pay for college, so they value teaching their kids the discipline of working through school. How do changes in today’s rising college costs influence the reality of this?

Take your time, make your list, and come to your interviews prepared. We’ll be here when you’re ready.

Managing the Emotional Side of Finances

January 15, 2018 By Lauri Salverda, CFA, CFP®, AIF®

In our experience, one emotion new clients often bring to our first meeting is guilt. We have heard apologies from folks who think they should have made their appointment months ago, who feel they aren’t organized enough when they come in, and still others who are dwelling on past mistakes. Our first piece of advice in cases like this: acknowledge the emotions that are present, so you can manage them and move forward towards a more productive financial future.

An empowered financial future

While the title on our office door may say “financial planning”, we do more than just crunch numbers. We work with clients to replace their guilt with a sense of empowerment. Before we can make a solid go-forward plan, it’s vital that clients forgive themselves and move away from any negative emotions clouding their decision-making. It doesn’t matter what happened in the past; it can’t be changed. Instead, we help our clients learn how to focus on what can be done from this moment forward.

Easy actions make a big impact: Take Control of Your Finances

The way forward will vary some from person to person, considering individual goals, aspirations, history, current income and investments, and more. However, we have a go-to list of easy actions anyone can take to start on the right foot for the future. We can almost guarantee that after you make just a few adjustments, your feelings about your financial future will be better and brighter.

- Automatically send money to savings. You won’t miss what you can’t see. Even a small amount going into your savings account every month will add up faster than you think.
- Put pay increases towards retirement. Every time you get a raise, put that amount into your 401K. Your take-home income will look the same, and you’ll painlessly increase your retirement income. You’ll be amazed at how this small addition compounds over time.
- Be realistic about spending. If debt is weighing on you, start a new monthly check-in practice. Always pay off what you spent that month, the interest, and a little more. If you’re not doing that, you’re spending too much.
- Eliminate impulse purchases. If credit cards are causing your debt to rise, leave that card at home! If you have to make an extra trip to buy that special something not in your budget, or on your list, you’re much less likely to follow through.

Start today

If feelings of guilt, or hesitation, or uncertainty have been keeping you from your financial goals, its time to make a change. Take stock of what is preventing you from moving forward, acknowledge it and let it go! There are simple things you can start doing today that will alleviate feelings of being overwhelmed, unsure or unprepared. You can become an empowered, intentional person who is achieving goals and laying the groundwork for a bright financial future. We can help.

Holiday Gift Ideas from a Financial-Advisor Mom

December 1, 2017 By Lauri Salverda, CFA, CFP®, AIF®

No matter your religious or spiritual traditions, chances are good your family gives gifts during November and December — or gets barraged by ads talking about them. As a mom to four adult children, I’ve sometimes experienced a certain panic around finding the “right” gifts for my family, including my children, nephews, nieces, and other relatives.

In our busy society, it’s easy to default to buying gift cards or throwing last-minute toys on the pile. But as I got further into my career as a financial planner, I realized I could give gifts with a long-term impact instead. Rather than simply spending money, I wanted to go deeper and teach my kids the value of it. I realized that like many adults, young people need to be taught how to spend wisely. Delaying gratification, planning ahead, and being intentional are important values I wanted to instill in my family.

7 Holiday Gift Ideas from a Financial-Advisor Mom

If you’re feeling overwhelmed by the prospect of buying gifts this holiday season — or if you want gift ideas for any time of year — consider this list. It comes from my own playbook as a mom (who also happens to be a financial advisor).

Think about your family as you read. Is there someone you know who might benefit more from a long-term legacy than a short-term thrill? The ideas below will continue to serve the recipient long after the excitement of the holidays passes.

At some point over the years I’ve given every gift on this list with great success! Now it’s your turn.

Gift idea #1: Write a Blank Check for Charity.

Give kids a check with the “pay to the order of” blank so they can choose a charity to support. If it’s local, take them there to give the check in person. (You might consider making arrangements first with a contact there, so the connection can happen at a good time.) The trip will show your youngster what a great feeling it is to give to others. Experiences like this can create lifelong memories. Make it a tradition!

Gift idea #2: Invest in a Roth IRA.

If a young person has worked and has earned income that will receive a W-2, no matter the age or amount, put some money in a Roth IRA in their name (see minimum and maximum contribution limits). For those under 21, you can set up what’s called a custodial Roth IRA. This means you’ll manage it until the individual turns 21. Whether or not they see the value today, as the years pass they’ll thank you a million times over.

Gift idea #3: Set up a Brokerage Account.

To teach children about investing, set up a brokerage account and purchase one share of stock. Remember this isn’t about you: the company has to be one the youngster wants to watch over time. When I did this with my kids, they chose companies that matched their interests: Disney, Sony, John Deere, and Electronic Arts. Follow these steps:

Start with a product, restaurant, service — something tangible that’s caught your loved one’s attention. (Bonus: This is a great opportunity to get to know your family in a new way. The bond that can form from this shared experience may surprise you both!)
Do some research. You might have to dig to find out the parent company. Embrace the learning opportunity and do it together!
Talk about the company. Figure out why it intrigues your child, and ask: Do they think it will continue to do well? Does it need to develop new ideas, change with trends, or does it serve an ongoing need? If the company has other products, how are they doing? Give your child some homework/research they can do on the company over the internet. Maybe they can even earn another share by making a persuasive argument.

Gift idea #4. Purchase a Stock in a Dividend Reinvestment Plan.

Another option is to set up a Dividend Reinvestment Plan (DRIP) directly with your selected company. These plans can provide advantages not available when opening a brokerage account, such as buying shares without paying a commission and automatically having the dividends reinvested in additional shares of the company.

While every company’s policy is different, there are many companies that offer free plans. Others charge fees or have minimum investments. Possibilities children may recognize include General Mills, Kellogg, 3M, Polaris, Toro, Johnson & Johnson, Foot Locker, and Dr. Pepper Snapple Group.

Gift idea #5. Play the Stock-Market Game.

Sometimes experiences make the best gifts. Bring fun and learning to your family by playing the virtual stock market through an experience from Best Prep, an organization founded to teach Minnesota students business skills.

For less than $15 per team, play for your choice of three, six, or twelve months. You pick the teams: cousins, parents versus kids, random pairings, family friends, or neighbors are all fun options. It’s up to you! (Note: This gift involves more advance planning, but the effort is worth it.)

If playing for bragging rights doesn’t appeal to your family, sweeten the pot by offering a prize to the winning team. Game winners receive imaginary money, but your prize can be anything you decide. Consider a monetary gift, or — my personal favorite — a gift to a charity of their choice.

Gift idea #6. Participate in a Microlending Campaign.

It can be great fun for older kids to make a decision as to whom they would like to lend money and for which projects. An excellent site is the nonprofit Kiva. For as little as $25, anyone can make a loan to a help people around the world create opportunities for themselves, their families, and their community.

Gift idea #7. Piggy Bank Sets: Share Save Spend.

This concept was started by a local Minnesotan, Nathan Dungan. Start younger children out with an allowance and three piggy banks. Label the banks Share, Save, and Spend. Shopping for the banks themselves can be fun (and if your kids like crafts, this paint-your-own piggy bank could be a great activity to do together)! You can adapt this gift for older recipients by increasing monetary amounts and replacing the “piggy bank” with setting up checking accounts.

For inspiration and family-friendly tips about these concepts, check out Share, Save, Spend: Money + Meaning. I highly recommend the site for young people and adults who are learning to understand the importance of money and the role it plays in our lives.

Now that you’re equipped with some new concepts to inspire your holiday giving, give one a try! Whether you use these “out of the box” or as starting point for your own ideas, you’re on track to give your loved ones the gift of deeper financial capability. I’m a firm believer that it’s never a bad idea to combine education with generosity.

As you decide what gifts you give this winter, I wish you and yours all the happiness that the holiday season has to offer. Happy gifting! Contact us >

Time for Women to Become Invested

December 10, 2016 By Lauri Salverda, CFA, CFP®, AIF®

By Lauri Salverda |

Women are smart, savvy, and wise. Partnered with the fact that most women outlive their spouses by five years, it’s a wonder that so many women take the back seat when it comes to managing their financial future.

A study by Fidelity Investments found that when couples interact with a financial advisor, men are 58 percent more likely than women to be the primary contact. In a similar study by Prudential, 78 percent of women rated themselves either as beginners or as needing help in many financial areas, compared with only 53 percent of men. These are rather large gaps, but it’s not surprising that we got here.

An Anecdotal History

When I was in junior high school, the girls took Home Economics and the boys took Shop—a well-tread dichotomy of the time. In Home Economics, I learned how to cross-stitch a heart, sew a pillowcase, make three different kinds of refrigerator cookies, and grocery shop. While the importance of snickerdoodles cannot be understated, the irony was that we barely touched on economics. The closest to financial education was learning how to clip coupons to make your shopping list come in under budget. Conversely, in shop class, boys got to play with lots of cool woodworking tools and they learned how markets moved with supply and demand and what stocks and bonds were. Life was truly unfair.

This uneven playing field was a sign of the times. (Remember, that until 1974, banks required single, widowed or divorced women to bring a man along to co-sign any credit application, regardless of the woman’s income.) We’ve come a long way, but many women have been left in the dust.

Investing is not a difficult thing to understand and we would love for more women to feel confident and empowered about their financial futures. The easiest way to get started is to learn the differences between a few key investment options. For example:

Stock – A share of ownership in a company.

Bond – Lending money to a governmental entity or company.

Certificate of Deposit – A savings certificate that entitles the owner a specific interest rate and has a specific maturity date

Mutual Fund – An investment in a group of stocks, bonds or a combination managed by an individual or group of individuals.

ETF – Exchange Traded Fund is marketable security that tracks an index

Large Cap – Large companies typically with a market value of over $10 billion

Mid Cap – Mid-sized companies with market value between $2 and $10 billion

Small Cap – Smaller companies with market value of under $2 billion

Working with an Advisor

I had a couple in my office not too long ago. Let’s call them “Mary” and “Jim” for the sake of this story. Right off the bat, Jim made it very clear that he only made this appointment with a female advisor to appease Mary and he had no intentions of working with a female planner. (We were off to an interesting start, no?) While we were talking, I asked the couple about who handles the money in their household. Mary proudly answered, “I do.” Jim quickly put her in her place and said, “No Dear, you pay the bills. I handle the money and the investments.”

Well since I had nothing to lose, I couldn’t resist. I said, “Okay, you are telling me that Mary, you pay all the bills, make sure the appropriate amount of money is in each account when needed and that everything is paid on time.” Mary nodded in agreement. I then looked at Jim, smiled and said, “After Mary does all the work, you get to shop.” Well, you can imagine how well that went. The point is that investing is simply shopping for a safe place to put your money so it will work for you and be available when you need it.

I liken it to the selection process of buying a car and going through different steps before you make a final decision. You need to know your budget, how much is available for the down payment and monthly lease or loan payments. You also need to identify for what the car going to be used—short distances, hauling a trailer, or reliable transportation to and from work. Finally, you need to prioritize what is important to you, whether it be gas mileage, maximum seating (or minimum if it is you child’s car!), comfort, reliability, resale value, or color. Selecting investments is a very similar process.

You and your advisor should walk through these steps for investing your assets:

What is the purpose of the assets? Is it for everyday use? Is it to be covered in case of an emergency? Is it to buy a home, send kids to college, or your retirement? Determining the need for the money will help you determine what type of investment would be most beneficial.

How long is it until you need the money? If you need the money within the next three years and you need it to be there, a savings account or a certificate of deposit is the best alternative. If the money is not needed for three to six years a high-quality bond or a certificate of deposit may be your best options. If it a longer time period then you may want to think about investing in the market.

If it is a longer period of time there are other questions that need to be asked:

Do you need the money to provide income and/or to maintain its purchasing power in the future? Will the income from investing the money be sufficient to live off of or do you need the money to keep up with inflation so its value in today’s dollars will be able to purchase the same amount in the future? Or are you counting on that money to grow to fill a bigger need?

How comfortable with market movements? Can you sleep at night if the market is up 1% one day and down 1.5% the next? Would the temptation to get out of the market when it is low be too great? Or could you sit back and not listen to the doomsayers and buckle in for the long haul? In an analysis done by Dalbar, the average investor earned an average 2.1% over a twenty-year period while the S&P 500 earned 7.8%. The reason for this is that investors get nervous, sell all their positions and only reinvest once the market has shown continued improvement—thus missing the majority of the gains in the market.

The best thing to do, if you have a longer time horizon and you can withstand some market movements, is to invest in a diversified portfolio of mutual funds or ETFs—diversified meaning exposure to many different markets, such as large, mid and small capitalized US and international companies, US and foreign bonds, commodities, and real estate. The reason for having a diversified portfolio is to protect us when different markets move up and down at different times.

How Women Can Seek Advice

There are thousands of trusted advisors out there. Selecting an advisor can be quite the undertaking in and of itself. But, truly you just need to know the appropriate places to look and some simple questions to ask:

What is the advisor’s background and training? If they have initials after their name, ask them what they mean, how did they earn them and do they require continuing education and if so, how much.

Are they a fiduciary? This means that they have to work in the client’s sole best interest as opposed to suitability, which is a looser guideline. (Something can be suitable, but not necessarily in the client’s best interests. It could be cost the client more and pay the advisor more.) If they are a fiduciary, will they put it in their contract?

How are they paid? Are they paid solely by their clients or do they receive commissions or kickbacks from investment companies or their parent company for selling certain investment or specific products?

Women have great instincts and should have no problem finding a trusted financial planner. From my point of view, it’s always advantageous to interview a few of advisors before making a decision. You have to be very comfortable with the person you hire. After all, they are going to take an intimate look at your finances.

Finally, there has to be mutual trust. The advisor needs to trust that you are providing them with the correct information and just as you need to trust that your advisor is acting in your best interest. Three excellent sources for finding someone to help you on your journey to financial independence are www.NAPFA.com, www.FPAnet.org, and www.FeeOnlyPlanners.com.

If you are a woman, and decide to work with a financial advisor, make sure your voice is heard and your input is considered as you drive towards your financial future, confident and empowered.

Lauri Salverda is an award-winning Certified Financial Planner and the owner of Castle Rock Financial Planning in Mendota Heights, Minnesota. She has been helping individuals and families reach their financial goals since 2001.

An Important Consideration for Parents of Adult Children

November 10, 2016 By Lauri Salverda, CFA, CFP®, AIF®

By Lauri Salverda |

As parents, we do everything we can to get our children prepped for college. We keep an eye on the ACTs, SATs, and the AP classes. We feel the stress of the early decisions and early admissions. We’re there for all the tears and the triumphs—knowing that we’ve done everything in our power to send our little adults into the world as ready as they can be.

As a financial planner, it may be expected that I delve into the many new fiscal responsibilities young adult children will face. Learning how to minimize student debt, manage a budget, and avoid impulse credit card applications are important touchstones. I encourage these conversations with all my heart. However, I’d like to discuss something that is oft overlooked. Something that had never occurred to me until it was right in front of my nose.

My daughter, the eldest of four, went to college halfway across the country. The distance, in and of itself, is enough to wrack some nerves. But we confident that we had done everything we could to get her ready for her adult wings. (And we kept our fingers crossed tightly for those first few months.) Her roommate was in a similar situation, attending college far away from home, but was not quite ready.

This particular young woman had health issues that ballooned exponentially in those first few months of college. She had issues with alcohol dependence and an eating disorder. Both were serious issues on their own, but the combination led to a complete physical and mental breakdown within a few months.

Fortunately, her friends intervened and notified the medical staff at the college. She was admitted on a Friday night to a local hospital, against her will, for a psychological evaluation. It was being viewed as a life-or-death situation. Her parents were notified by the college and were on the first flight out.

Once her parents arrived on the scene, they were confronted with an unexpected truth. Their daughter was an adult in the eyes of the law, leaving them powerless to intervene or even visit with their daughter. This is a terrible place for loving parents to be. By Monday, they were able to meet with a judge and receive a health care power of attorney for their daughter. It was a simple piece of documentation that allowed them to legally care for their daughter and make decisions about her health care in her best interest.

As parents, there are legal and medical things to consider when your child becomes an adult that are commonly overlooked. There are some simple things that can safeguard your child as he or she transitions into adulthood. These documents can also begin a meaningful conversation and open the lines of communication.

A Healthcare Directive or Power of Attorney for Healthcare allows a parent to act on the child’s behalf in case of a medical emergency. This simple document can be found online from many state and hospital websites. After a quick trip to a notary, you will be able to assist your child in medical decisions when they are deemed unable.

A Durable Power of Attorney for Finance is another important document. This gives financial power to the parents or another third party should something happen to your child and they cannot freely manage their finances. We see this commonly used when a child is studying abroad or heads across the border for Spring Break, but it can be equally handy when they lose their wallet. Consider it a backup plan for when there is an obstacle between them and their funds.

Knowing what we do now, each of our children will be sent off to college with more than their shower shoes and extra-long sheets. We’ll nudge them out of the nest knowing that their parents are legally prepared to act in their best interest should the situation arise.

Lauri Salverda is a Certified Financial Planner with an office in Mendota Heights. She has been working with individuals and families to help them reach their financial goals since 2001. She has been a devoted mother since 1991.