Actually, we believe that integrated tax and wealth management firms are the future of the financial services industry (in the positive sense.) CPA’s already have a sense of responsibility to their clients, and are used to dealing with the sometimes uncomfortable details of clients’ financial lives. Further, taxes, investing and financial planning are so intimately related that it is hard to imagine a good financial plan that didn’t include competent tax-coaching. All of our wealth management clients receive a discount on their taxes, and at a certain level of assets the tax services are free. Most of our clients find it very efficient to receive tax coaching and financial coaching from the same firm.
As former Supreme Court Chief Justice William Rehnquist said, “There is nothing wrong with a strategy to avoid the payment of taxes. The Internal Revenue Code doesn’t prevent that.” We certainly aim to help our clients minimize their tax burden. However, the IRS should not be seen as an enemy or an antagonist, and we don’t recommend looking for gray areas in the tax code to exploit. Most people want to minimize their tax burden, but they also want to avoid getting unnecessarily audited, and if they do get audited, they want to know that they will pull through it without getting in trouble.
We have experience in several states (including California and Alaska) with very complex tax situations, audits, and returns of all kinds, for businesses and individuals. The best way to deal with the IRS is not by being aggressive, but by pro-actively planning and staying informed.
Our clients are a pretty diverse group. We seek entrepreneurs, small business owners of all kinds, but also professionals like doctors, teachers, accountants and engineers. Many of our clients come to us as retirement approaches, but others start working with us very early on. We have clients who embarked on multiple careers, dedicated themselves to public services, or free-lanced their way through the economic wilderness. There really isn't a "type" of client that needs financial planning.
We have no stated minimum, and we can accept smaller clients that would be given call-center "services" from the larger wire-house firms. Accumulators, in particular, often find our services useful even if their accounts are small. We hope to find people who understand our philosophy, and that is the more important than the size of the account.
With all the scandals of the last year, I am skeptical. How can I be sure I won’t get ripped off?
This is a good question. Most of the scams that you have heard about involved investment advisors who were acting as the advisor, the fund company, and the custodian of the funds all in one. Such arrangements should be avoided.
We use a triangle of trust to keep our clients’ funds safe from fraud. We are the advisors, we use Free Market mutual funds, and we hold those mutual funds at custodians like Trust Company of America. Each of us is independently audited, and we all watch each other to make certain there is no wrongdoing.
No, we are fee-only fiduciaries, so we do not sell any products and we do not receive any commissions. We charge hourly fees for tax coaching and tax services, and we charge a percentage of assets under management for wealth management. This structure puts us in the same boat as our clients, and allows us to meet the needs of each individual.
While we are licensed to sell insurance, we no longer do so. If a client’s financial plan requires a new insurance strategy, we are more than happy to recommend an insurance specialist with whom we have much experience and in whom we have complete confidence.
I know you use mutual funds as your basic investment vehicle. What would happen if the mutual fund failed?
A mutual fund is just a method of pooling enough dollars to be able to efficiently invest in stocks or bonds. When you own a mutual fund, you actually own a small percentage of each of the securities in the fund. Therefore, if the mutual fund company fails, your investments do not go to zero. Either some other company will take over the fund (in which case you might choose to sell the fund), or the fund will simply be liquidated and you will be cashed out.
No one can guarantee you against loss if you invest in stocks and bonds, or in any asset classes that have expected returns similar to stocks and bonds. Many insurance products promise the potential for stock-like returns hedged by “guarantees” against losses. Such guarantees are never what they appear to be at first and, in any case, they are only as good as the insurance company making them.
The initial consultation is free. We aim to find out about you, why you are investing, and where you want to end up. We will give you a general idea of how you might get to where you are going, but we don’t make specific recommendations at the first appointment.
Even though the initial consultation is a relaxed meeting, we want to make it as valuable an experience as possible for you. To make the meeting as productive as possible, it helps if you bring your most recent tax returns, brokerage and 401k statements, copies of your will if you have one, and insurance documents. That way we can get a full picture of your financial situation.
Fee-based investment management and hourly fee planning are offered by W Curtis Erickson, PS Inc. dba -Erickson Wealth And Tax Management, CPAs and a Washington State Registered Investment Advisor.
