Client Priority Financial Advisors LLC

I am pleased to be celebrating the 10th anniversary of Client Priority Financial Advisors LLC, my hourly, fee-only financial planning business. I created this business to offer an alternative to other advisers who too frequently offer advice that prioritizes their own fees over what is best for their clients. So many advisers either sell investment products with high commissions, that often are better for the adviser than for the clients, or take an exorbitant 1% of a client’s assets every single year directly out of their portfolio and may discourage you from taking money out of your account (perhaps to pay off your high-rate mortgage) when it will reduce the fees they earn from your account each year. I wanted to create a business where clients get personalized and high-quality advice without wondering if I am considering their best interests. A client paying 1% on a $1,000,000 portfolio may lose over $150,000 in the first 10 years from the fees themselves and the loss of growth on that money that is no longer working for them. Very few people would think that huge number is a reasonable amount to pay and don’t usually realize how much it is adding up to. I don’t want clients being sold commission-based products that might cost them $55,000 or more taken out of that $1 million account on day 1 when they are put into a product that might not even be good for them. I established this business to give clients advice that is completely unbiased based on the fee structure and where I can always consider what is in their best interests. Some advisers don’t have to legally act in their clients’ best interests and instead only have to sell “suitable” products even if not the best investment for the client’s circumstances. Others call themselves fiduciaries where they do have to act in your best interests but still put clients in high-fee investments when they know other options are available with lower fees or better prospects for success. Financial planning journals give advice on how to ignore all clients with portfolios below a certain threshold so they can give more attention to anyone with large portfolios. But if you are paying $10,000-$20,000 per year for an adviser to manage your $1-$2 million retirement account, don’t you deserve some attention? A true fiduciary will strive always to consider what is in the clients’ best interests and my hourly advice model allows me to be unaffected by many of the biases other advisers face when they want to earn higher fees at your expense. My clients know that I care about them and they never have to wonder if I am suggesting a strategy that somehow benefits me instead of them. On this 10th anniversary for Client Priority Financial Advisors LLC, I am pleased to see how my business model has always allowed me to focus on creating the greatest value and service for my clients.
Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com
Blog: clientpriority.blogspot.com
Hourly, Fee-Only Financial Planning and Advice.
No Commissions. No automatic, annual fees.

With another year of investing coming to an end, did your adviser help you or hurt you? Many advisers boast about a year where they achieved a 10% return on your investment portfolio, or maybe a more-impressive 12%? Before you send out a thank-you note, those returns may be far less than you should have earned. A simple investment in the Vanguard Target Retirement 2040 Fund (for those around age 50) returned over 18% in 2023. The 2030 Fund (for those around age 60) earned around 16%. While your circumstances and risk profile may be somewhat different than others who are the ages mentioned above, this comparison may put your 2023 performance in perspective. These Vanguard target date funds are static, low-cost portfolios without a manager guessing what to buy and sell. Many advisers claim they have a special ability to give you extra returns but quite a bit of research suggests that very few advisers beat the markets after their high fees are taken out. And what’s worse, many guess wrong on market direction and cost you a fortune in lost earnings. This year, most advisers started the year telling you the stock market would fall and kept clients below their typical target allocation for stocks which has cost you money. Money not earned for guessing wrong is just as bad as money lost when the market falls. If you are 50 and paid 1% of your assets in fees to an adviser for a 10% return this past year, then your $1 million portfolio may have earned $80,000 less than it should have and then you paid $10,000 in fees on top of that for poor advice. If you earned returns this year that were well below those provided by Vanguard target retirement funds matching your horizon, then you might want to question your adviser’s investment strategy and why you are paying such high fees for someone who shouldn’t be gambling with YOUR money. Consider speaking to a new adviser who doesn’t time the market or make false claims that he or she has a crystal ball. (Past performance may not be an indicator of what to expect in the future and your individual circumstances should be considered in any investment choice. 2023 market returns were higher than historical averages.)
Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com
Blog: clientpriority.blogspot.com
Hourly, Fee-Only Financial Planning and Advice.
No Commissions. No automatic, annual fees.

Should you buy a portfolio of individual stocks recommended by the most-respected minds on Wall Street? Or should you buy a diversified portfolio of stocks that you can get in an UNmanaged, low-cost index mutual fund? One year ago today, a business channel ran a story about the top individual stock picks recommended by some major investment banks. When you look at the performance of these recommended stocks, it has to be compared to the overall stock market and what you could have earned if you simply bought all stocks instead of just one recommended stock. The US stock market is up around 20% over the last year. So how did these #1 recommended stocks do? One giant investment bank chose Northrop Grumman as their top pick and this stock is DOWN 12% in one year. A different giant investment bank chose Bank of America as their top pick and this stock is up only 6% over the last year, 14% less than the U.S. market overall. These major investment firms try to create an aura of knowledge to convince you to pay them 1% of your portfolio per year to have them manage your money. But you won’t hear them a year later tell you that an unmanaged index fund would have been a better investment. Some level of stock ownership is right for most people if you have a long-term horizon and even people on the verge of retirement have 30 more years of life to plan for. Hiring an investment professional to help you create the right portfolio for you and create a long-term plan can be very beneficial but you don’t have to pay tens of thousands of dollars per year for false promises of superior performance when many advisers charge a flat fee or by the hour. (Past performance may not be an indicator of what to expect in the future and your individual circumstances should be considered in any investment decision.)
Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com
Blog: clientpriority.blogspot.com
Hourly, Fee-Only Financial Planning and Advice.
No Commissions. No automatic, annual fees.

The stock market does an amazing job of quickly processing all the information available to us and fairly pricing assets each second. It is incredibly hard to find assets to buy that are cheap and sell assets that are expensive and profit by it. This is proven by the fact that the vast majority of actively-managed mutual funds underperform their benchmarks over long periods of time. Stocks generally go up over the long run although you never know which days or months will give us strong returns. Research tells us that in order to succeed in the stock market, you need to sit tight so you are in it when the upward moves happen. At the beginning of this year, we were told by most market analysts and business channel pundits that a recession was obviously coming and we should reduce our position in stocks. What they didn’t discuss is that the markets were already pricing in the expectation of a recession, and that prices were already lower than they would be if we believed a booming economy were coming. Well, guess what. All of those analysts and pundits were wrong and the economy never contracted in the way they predicted and the US stock market is now up around 20% for the year. Listening to the so-called experts would have cost you quite a bit of money by being out of the market. It is worth repeating that the markets always reflect what we already know so your actions to buy or sell will never get ahead of the existing data. There are never any guarantees in the stock market, but someone with a long-term perspective will be best suited by ignoring the short-term expert advice, as proven by another year where the pros got it completely wrong. (Past performance may not be an indicator of what to expect in the future and your individual circumstances should be considered in any investment decision.)
Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com
Blog: clientpriority.blogspot.com
Hourly, Fee-Only Financial Planning and Advice.
No Commissions. No automatic, annual fees.

“It’s a stock picker’s market!” That’s what you can hear constantly from overconfident pundits on the financial TV and radio channels. But is it really? When the market is volatile, they say it is a stock picker’s market. When the market is highly priced, they say it is a stock picker’s market. When the market is falling every day, they say it is a stock picker’s market. If you believe them, it is always a stock picker’s market even though they imply that this time it is particularly true. But if it is a stock picker’s market now and many other times, why is it that most stock pickers perform worse than their benchmarks after fees over long periods of time? The SPIVA Scorecard from S&P Dow Jones Indices keeps track of how actively-managed mutual funds perform against their unmanaged index benchmarks. Actively-managed mutual funds are the kings of stock pickers. However, the SPIVA Scorecard reveals that over 91% of large-cap stock managers performed WORSE than their unmanaged benchmark over the past 10 years (as of 12/31/22). Why? Because they couldn’t add just a small amount of extra value per year to offset their high fees. If we are constantly in a stock picker’s market, then why didn’t they pick the best stocks and beat their benchmarks? Maybe they just want to scare you into paying them 1% of assets when times are volatile even though in actuality, they are unlikely to provide you with added performance. When they will collect $10,000 from you on each $1 million in managed assets, even if they perform far worse than the market overall, it is no wonder they want to convince you to pay big money for a false promise. What to do? Keep your fees low, stick with your long-term plan, and tune out the false hype being sold daily from speakers with a vested interest in talking you into something that’s good for them but bad for you.
(Past performance may not be an indicator of what to expect in the future and your individual circumstances should be considered in any investment decision.)
Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com
Blog: clientpriority.blogspot.com
Hourly, Fee-Only Financial Planning and Advice.
No Commissions. No automatic, annual fees.