Financial advisers: Early retirement means complicated planning
Friday December 20, 2013
Executives and small-business owners who want to exit stage right earlier than traditional retirement age need to plan ahead and actively manage assets with their goals in mind. Even high-net-worth individuals aren't guaranteed they'll have the assets they need to do what they want to do, local financial advisers said.
Dauphin County-based Roof Advisory Group Inc.'s business is focused on clients who first come to it when they are between about 45 and 62 years old, said E. Jeffrey Roof, president of the company. Clients tend to be two-income couples who are executives or business owners, and Roof does not feel this demographic with diverse and extensive assets is adequately served by the greater financial services industry.
They are people who have been successful and want to transition into the next phase of their lives, whatever that might be, he said. "We don't even call it retirement anymore," Roof said. "It's more of a change of life where they aren't working for income anymore."
At the same time, what they are dealing with compared with people in their 20s or 30s, or even their 60s or 70s, is generally more complex, he said. They might still have kids in school or are dealing with elder care issues, for example, Roof said. The first step the firm takes is a step back to see whether a person is actually in a position financially to do what they want to do, said Bradley R. Newman, senior adviser and director of new business for Roof Advisory.
With higher-net-worth individuals, their assets might be substantial, but the assets needed to sustain a person who retires early are great, Newman said. Figuring out the best way to coordinate all of the moving parts, from second houses to stock options, is one of the most important parts of the process, he said.
"It requires planning upfront and ongoing, disciplined execution," Roof said. "It's not a decision that's made and then it's put to bed." Another important factor coming into play for early retirees is the increased likelihood of market downturns occurring during the longer period of time they are living off investment assets, he said.
Owners: What Good’s a Wealth Manager?
Sunday December 1, 2013
Not long ago a business owner’s outside team of professional
advisors had four seats: one each for an accountant, banker,
lawyer, and insurance pro. They were the go-to bench for testing
and shaping strategic planning. They brought a detached and reasonably
objective voice to influence the business’s longer-term direction.
It’s changed to not only add an additional chair to that council of
outside sources of influence [to include a wealth manager], but to
rearrange their seats.
[But what do business owners need…] There is one consensus among company owners:
they want to move through events frictionlessly.
Wealth management’s driven to accumulating enough wealth upon its
owner’s retirement from diversified portfolio of assets, many of which
are independent of an owner’s company value. Valuation, by the way, may
not be the company’s sale price. Jeffrey Roof, president of the Roof Advisory
Group points out that it might be a lot more than one number, meaning its fit
within the entirety of an owner’s personal worth. “Without knowing the end-game
it is not worth moving to liquidation without knowing the objectives and what the
owner wants to accomplish.” In a word: the aspirations.
One set of terms, liquidity event, or company valuation aren’t adequate to cover
the aspirations of every owner. It’s because the personal wealth managers are
uniquely privy to what will satisfy an owner that they’ve become key among the
owner’s outside sources of professional influence. Take for example that question
of company value … its selling price. Jeff Roof says that wealth managers are
positioned to ask, “What is the end result to be when this event takes place?
No one else can drill down into the real-life consequences with actionable steps
that are applicable.”
A company’s selling price is an emotional button, Jeff Roof concludes, the
owner’s lifestyle much less so. Tried another way, he’s noted that owner emotions
are negotiable while owner needs not so much. Inevitably since 2007, owners have
discovered a gap between their idea of their company’s market value and the
market’s cold conclusion. So the wealth manager becomes a negotiator to explain
a total package that satisfies the owner’s aspirations in a deal.
Banks, financial groups weigh in on government shutdown
Friday October 4, 2013
While the stock market dips from the federal government shutdown, investment advisers are preaching avoidance of quick reactions to extensive media coverage.
"Viscerally, it's very upsetting," said Bradley R. Newman, a certified financial planner at Roof Advisory Group Inc. in Harrisburg. "But the fundamentals haven't changed dramatically. The real key is avoiding a knee-jerk reaction. It's critical to take a step back and take a look at how this impacts me — if at all."
Newman said his group hasn't gotten any calls from worried clients since the shutdown occurred.
"This is clearly different from 2008-2009," he said. "That was a snowball rolling down a hill that was quickly growing out of control. This is an event-specific issue."
Financial Services Consolidation
Friday July 12, 2013
The recent departure of 12 partners and nearly 100 other employees doesn't mean bigger trouble is in store
for Philadelphia-based ParenteBeard LLC.
Accounting professionals and industry consultants saw the migration as just another cog in the wheel of
"I think the trend is there, not just in accounting but legal and financial, from a consolidation standpoint,"
said Bradley Newman, a certified financial planner with Harrisburg-based investment management firm Roof
Advisory Group Inc. "That is certainly driven by the benefit of economies of scale. In all three industries,
there is more pressure for growth. (And) growth by acquisition is certainly faster."
Should The Dow’s All—Time High Impact My Investment Decisions?
Wednesday March 06, 2013
M. Diane McCormick
The Wall Street bell rang out loud and clear on Tuesday, heralding a record - high Dow Jones closing of 14,253.77. So with the market in high gear, it’s time to jump into the fray and make buckets of money, right? Not so fast, say midstate financial advisers.
Though the spike can be a sign of confidence in the economy, the Dow is a number that has little bearing on typical investors, they say. Still, as the economic outlook turns sunnier, this is a good time to review financial goals and position portfolios to grow along with the markets.
“You should structure your portfolio and the investment policy you use based on y our particular circumstances, not what’s going on in the stock market or bond market,” said Bradley R. Newman, CFP, of Roof Advisory Group, a fee - only investment management firm in Harrisburg.
Keep this point in mind:
Instead of focusing on the level of the Dow, reevaluate the “character” of your portfolio as it relates to your circumstances, based on elements such as fixed income duration and equity sector exposure, Newman said. Each can be affected by outside events – the federal deficit, sequestration, inflation, rising interest rates.
The question is, “What’s the impact on my portfolio if these things occur? Then evaluate how your portfolio is structured currently, and whether you should be making changes to avoid potential downside, or to capture potential upside.” he said.
Investment Advisers See Reason for Optimistic Outlook in 2013
Friday January 4, 2013
Between the “fiscal cliff,” Hurricane Sandy and Mayan doomsday prophecies, one could have been excused for wondering if the U.S. economy would even make it to 2013. But now that we’re here, the investment outlook is brighter than you might think, local advisers said.
Jeffrey Roof, president of Roof Advisory Group Inc., a fee-only investment advisory firm based in Harrisburg, said finding a solution is critical. “If we go over the cliff, January is going to look rather ugly,” he said.
Roof Advisory had prepared no fewer than four contingency plans for portfolio management and was ready to implement them at a moment’s notice, depending on how the fiscal cliff negotiations developed, he said. Three scenarios involved reducing equity exposure in case an impasse roiled markets, he said. The fourth, anticipating a solid deal that markets like, increases exposure.
The fiscal cliff aside, advisers agreed that the Federal Reserve’s ongoing commitment to low interest rates will be a major factor shaping 2013. Low rates mean low bond yields, meaning investors must look to stocks for their returns.
Roof said people feel safer in bonds, but “you can lose some significant money” if the inflation rate creeps higher than the rate their holdings are paying. Roof Advisory does not see inflation “spiking,” but over time it is likely to return to historic norms. Investors will want to transition out of bond funds early in that transition, he said.