For most of us, retirement is not simply a goal but also a state of mind. How best to enjoy one’s retirement? With confidence, enthusiasm and peace of mind.  Simply put, to retire “worry-free.”  This article explores best practices in relation to financial and retirement planning for those individuals and families saving for retirement, approaching retirement or already retired.

Low-cost institutional investing

Commissions (or loads) are a real and significant drag on a portfolio’s performance.  Commissions are common with actively managed retail mutual funds and are often classified as Class A, B or C.  These fund designations have nothing to do with the quality of the funds or its performance and instead it merely signifies how the commission will be paid to the adviser/broker.  This commission is paid on top of the annual expense charges of the mutual fund or exchange-traded fund (ETF).  We have similar thoughts and, to be certain, even more heightened concerns with annuities and limited partnerships.

An annuity is an insurance product that, with limited exception, we do not recommend to investors.  We encourage investors to review the State of Michigan Office of Financial and Insurance Services unambiguous warning letter to the public on annuities entitled: “Seniors Beware: Variable Annuities May Not Make Sense For You!” As for limited partnerships, with limited exception, we do not recommend to most investors.  LPs are often expensive and very difficult to exit and should be purchased rarely, if at all, and then only by sophisticated investors working with niche professionals who have substantial education, training and experience with these esoteric instruments or their underlying investments.

The best practice for low cost investing is passive institutional investing (wholesale) as opposed to retail investing described above.  The problem for investors is that most advisers have limited or no access to passive institutional investments.  Investors should seek out fee-only fiduciary advisers who offer 100 percent passive institutional investments that are no-load, penalty-free investments.

Tax management of investments

Tax management consists of designing investment portfolios utilizing an optimal balance between investment performance (including expected return and risk characteristics) and the attendant tax consequences specific to a particular investor.  It is the systematic and continual application of evolving tax strategies based upon new information, changing tax rates and laws, and the needs peculiar to the investor. At its core, tax management concerns itself with after-tax returns over time. Tax management is not a product. It is a process that comes directly from applied research found in professional journals and academic literature.

If your current wealth adviser is not a CPA or lawyer, then you may be missing opportunities to reduce taxes beyond simply the subjects concerned herein; for example, tax loss harvesting and HIFO accounting methods.  Ask your fee-only CPA Investment Adviser about these and other tax-saving strategies.

Estate planning

The modern estate plan consists of a revocable living trust, pour-over wills; durable powers of attorney for property, healthcare and mental healthcare. A more involved estate plan arrangement for tax planning would include the use of A/B trusts, irrevocable trusts, qualified gifting strategies, family limited partnerships, or a family foundation. Regardless of the type of estate plan that you have or will require, it is vital that your estate plan and retirement plan are seamlessly connected and kept up to date. Without excluding other well-qualified advisers, we recommend working with wealth advisers holding law degrees to best coordinate efforts with your estate lawyer. After all, a wealth adviser with a law degree speaks the very same language as your estate lawyer.

The wealth adviser of choice

A fee-only fiduciary adviser is an adviser who has the highest legal duty to his client, and accordingly, can have no conflicts of interest with his client, offering only objective and truly independent advice, who must operate with complete transparency and disclosure to the client of all fees, costs, expenses, expected rates of return, risks and so on. A fee-only fiduciary adviser is not a broker whose limited duty is merely “suitability.” Investors receive far more utility in an adviser who must, by operation of law, put his client’s interest first and not his fee.

There is simply no substitute for substantial education, training and experience. An adviser needs all three to be truly successful for his client. For wealth adviser educational credentials, we recommend advisers holding a JD, PhD, DBA, MS, MBA, CPA, PFS, and/or CFA. Indeed, it is probably best that the adviser hold some combination of the above degrees and designations.  Such sentiment has been echoed by many academics and practitioners especially in recent years as the complexity of finance, law, accounting and taxation has turned financial advising into a rigorous profession.

In his well-regarded and top-selling book The Millionaire Mind, Dr. Thomas J. Stanley, professor and prolific author on the affluent, makes clear that today wealthy investors almost always look to investment advisers who are lawyers and/or CPAs and seldom engage financial planners and brokers.

The best practice in the industry is to have a multidisciplinary team approach, which has the wealth adviser working with the investor’s lawyers, CPAs, insurance professionals and so on, to develop an integrated and comprehensive retirement, tax, and estate plan. If your wealth adviser is a lawyer and CPA, this takes the multidisciplinary team approach to a whole new level of expertise and efficiency that is demanded by today’s high net worth investors.

		Stephen L. Hicks, JD, MS, CPA and Roger L. Millbrook, JD, CPA/PFS, are fee-only fiduciary investment advisers and principals of Siena Capital Management, LLC. Part of a larger Siena team, both professionals are lawyers and accountants and hold other degrees or designations in the area of financial services.  Siena was recently listed by CPA Wealth Provider Magazine as one of the Top Investment Advisory Firms in the United States.  Siena is the only investment firm headquartered in mid-Michigan to make the exclusive list. Siena advisers can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it '; document.write( '' ); document.write( addy_text46182 ); document.write( '<\/a>' ); //--> This e-mail address is being protected from spambots. You need JavaScript enabled to view it .