Q: What does "fee only" mean?
Being a Fee-Only firm means that our clients pay for our services, according to an agreed-upon fee. We serve only our clients. We do not sell products or receive commissions or other compensation from third parties, which could bias our recommendations. We neither pay for nor accept referral fees. All professionals are required to act in the best interests of clients at all times. Our clients trust that our advice will be objective and in their best interests, which is essential for their peace of mind.
Q: What is the “Fiduciary Standard of Care” and how does it affect me?
Fiduciary standard of care is the highest degree of business responsibility one person can have to another. It means that those who provide you with advice always put your interest ahead of their interest. A federal law, the Investment Advisers Act of 1940, requires Registered Investment Advisors to meet this fiduciary standard of care.
Be aware that many people who provide investment advice are not Registered Investment Advisors, and therefore are not required to adhere to this important standard. Instead, they follow a lesser standard called the “suitability standard” which simply means that, although a particular investment may not be in your best interest, if it is deemed suitable for someone in your circumstance, they can sell it to you. No matter whom you select to provide you with investment advice, we recommend that you require them to agree, in writing, to meet the fiduciary standard of care provided for by the Investment Advisers Act of 1940.
Q: What do the acronyms CPA and CFA Charterholder mean?
CPA stands for Certified Public Accountant. The Certified Public Accountant designation is a national professional certification but practitioners must be licensed in any state in which they work. The State Boards of Accountancy determines the laws and rules for each state. Educational requirements vary by state. Candidates must pass the Uniform CPA examination and ethics exam. Most states also require a minimum of one year of experience in public accounting or its equivalent.
In order to maintain a CPA license, states generally require the completion of continuing professional education hours every three years. Additionally, all AICPA members are required to follow a rigorous Code of Professional Conduct. The vast majority of state boards of accountancy have adopted the AICPA's Code of Professional Conduct within their state accountancy laws or have created their own.
CFA® stands for CHARTERED FINANCIAL ANALYST, and it is typically something that a professional money manager looks to obtain. CFAs are expected to have an in-depth knowledge of the investment industry, and are typically portfolio managers or analysts at big investing firms or money management groups. These are not typically individuals that specialize in personal finance. Instead, they are running mutual funds, or serving as portfolio managers for large investment institutions.
If you already have acquired a material amount of wealth, and are looking for a money manager, then you want to make sure that whomever is managing your money is a CFA. Not only is the testing process very arduous, but CFAs have to go through continuing education to make sure that they stay up to date on all the nuances of the investment world.