Frequently Asked Questions
- How do we know if Townsend is acting in our best interest?
You need to know that your financial advisor is always working in your best interests – and only your best interests! Our staff prides themselves on their integrity, in where all services provided are in your financial best interests. In fact, we have a legal obligation to do just that (called a “Fiduciary Duty”). Our fee structure is totally transparent, and we freely share it with you. Any potential conflict of interest is disclosed prior to your making any decision. Bottom line: Our fundamental commitment is to you and your financial well-being.
- What should be included in our financial plan?
Your overall financial picture includes more than just a plan for your financial investments. At Townsend we work hard at guiding you through all aspects of your financial plan – which includes your estate plan, risk management, tax information, Social Security and Medicare along with health insurance during retirement. Our goal is to educate and prepare you for all aspects of your retirement years. Townsend works diligently to have clients understand how all elements of their plan have to be in place in order to help avoid any devastating financial surprises in the future. We have relationships with professionals in all the above disciplines who are eager to direct you through each retirement tangent, helping you to create another rock-solid long-term plan.
- Why do we need to invest in securities?
If you want or need to earn more than what you might make in a bank savings account or CD, you will encounter some level of risk and volatility. You can minimize this risk/volatility by how you are diversified between various asset classes but you can’t eliminate it.
Before you invest, it’s a good idea to know what you can reasonably expect from the stock market. History (over the past 100 years) tells us that on average, one can expect three 5% declines per year, one 10% decline every two years, and a 20% decline every three and a half years. However, after every decline, the market has recovered 100% of the time and has gone on to reach new highs. It’s also good to know that during the same time period the market is up three out of the four years.
You will want to know that your financial advisor has the investment acumen to invest your life savings in such a way that allows you to sleep at night. It’s crucial to be patient as an investor. Rather than focusing on the returns over a short period of time, perhaps a year, try to consider the bigger picture such as your returns over an entire market cycle, which could possibly be seven to ten years. As Warren Buffet once said, “The market is an efficient mechanism for transferring wealth from the impatient to the patient”.
Investing is typically necessary to maintain your lifestyle in retirement and can be a very emotional journey. At Townsend, we help educate you on the hows and whys of investing, and work hard at tailoring an investment portfolio that you can be comfortable with.
- Why isn’t Townsend a good fit for everyone?
You need to know the truth about your financial situation good or bad. At Townsend, we deal in facts and financial reality. And then, within that reality we will help you embark on the financial course needed to meet your long-term financial objectives and retirement goals. Townsend advisors are required to make decisions that put the interests of clients first. This is known as the Fiduciary Rule. In rare cases, we discover a prospective client’s needs or investing temperament really does not fit the Townsend philosophy. If that’s the case, we structure an open conversation and share how our objectives differ. When we see a prospective client wanting something that Townsend simply does not believe in, we have no issues communicating that their needs are better met through a different financial firm.
- Why does Townsend use an independent custodian?
There are some corrupt advisors (remember Bernie Madoff?) that have bogus client account statements that purport to show a client’s current account balance. Clients are unable to independently check the actual status of their accounts in those situations, and must rely solely on the statements provided to them. And in some cases (think Ponzi schemes), the account statements are worthless. These situations can be disastrous for the client later when they find out the accounts they thought held significant value are – in fact – worthless. With Townsend, you can always check your account balances with the reputable custodians who actually hold your money.