If I told you that you’re about to read a blog about financial planning, investing and retirement, would your eyes glaze over? Would you click out of this page? How old are you? Have you thought about it? I’m about to turn thirty, and I know I’ve never thought about it. It confuses me. It gives me anxiety about the future. I don’t want to worry about it yet. I haven’t saved much so I don’t have anything to invest. I’ve just avoided it at all costs. And I think a lot of people in their 20s and 30s would probably say the same thing.
Panoramic Financial Advice, a local startup firm, is looking to change that. Owner Andrew McFadden, who is in his early 30s, wants to make financial planning accessible, understandable and practical for people of his generation. He had such a desire to change the way financial planning works that in May 2014 – with a one-year-old daughter and a wife who had just quit her job – he left the major firm he was working at to start out on his own with no income and the little savings that he had. Since then, his expertise has already been featured in several national publications and websites. Most recently, Panoramic has begun focusing on helping the many young medical professionals in the Valley who have finished medical school and residency, and are now dealing with massive amounts of debt contrasted with a big, sudden jump in income.
Andrew is not like your parents’ financial advisor. There’s no suit and tie, no paper statements, no swanky and intimidating office. He works out of the Hashtag Collaborative Workspace at Bitwise South Stadium in downtown Fresno. (The shared conference room I met him in had cool neon chairs that I coveted.) He has no filing cabinets and uses cloud-based software so you can access your financial information anytime, anywhere. He’ll videochat with you so you don’t have to hire a babysitter or take time off work to meet with him. But most of all, as a Certified Financial Planner, he really is qualified to give you the kind of financial advice you really need but didn’t know about.
“Certified Financial Planner requires you to pass five different courses,” Andrew said. “And then once you’ve gone through all five of them, then you take a big test. Currently, it’s a six-hour test that you sit for, and so long as you pass, as well as have a four-year college degree, as well as have three years’ experience actually doing financial planning, then you become a certified financial planner.”
In contrast, most financial advisers at investment firms (Andrew estimates 90 to 95%), only have the license that is required by federal law, which is much, much easier to obtain.
“All that the government regulates is that you pass what’s called a series test – series 6, series 7, series 63,” Andrew said. “You’ll hear people tell you this if you go to a Merrill Lynch. ‘Well, how are you qualified?’ ‘Oh well, I have my series 6 license.’ Sounds impressive. Literally, all it takes is maybe 2 to 3 weeks worth of study. And you can buy one of those CDs you put into your car and just listen to it to and from work every day, and by the end of a month, you would absorb enough of the knowledge you needed to to pass that test.”
In addition, many of those financial advisers at the big firms work off of commission, which means the more they sell you in terms of investments, the more they make – a serious conflict of interest.
“They’re incentivized to sell products, to sell investments, and so at the end of the day, their interests lie with themselves, not their clients,” Andrew said. “They’re just trying to say, ‘Hey, buy this mutual fund.’ Oh by the way, it pays me more than this other one that might be more appropriate for you, but if I can get you to buy it great.”
You might be thinking by now, “Great Joanne, this is all nice information, but I don’t have any money to invest.” Or you’re still deep into paying off student loan debt and aren’t in a position to start thinking about the future yet. Well here’s another important thing that sets Andrew and Panoramic Financial apart. While other advisers (including many of his fellow Certified Financial Planners) will only work with clients who have at least $100,000 in investable assets and charge a fee based on a percentage of your portfolio, Panoramic operates on a monthly subscription basis (currently $99 a month). And they actually specialize in debt consolidation and student loans, wanting to help you to get to the place where you can actually start saving and planning for the future. Plus, they’re there to help you answer all of life’s big questions.
“Certified Financial Planners … they’re more like consultants. They’re not sales people, they don’t have a basket of products to give you,” Andrew said. “They’re there to truly help you answer the questions that you have. How much should I save for retirement? How much insurance coverage should I have in case I die and I leave my family behind? Is there anyway I can be saving on taxes? Given my lifestyle and what I’m doing, can I be getting more deductions or what can I do to lower my tax burden? Things like that – normal, everyday questions that people have. … And even if you don’t have the questions, they’re gonna help you think about those things.
Panoramic Financial also wants to help you dream toward “a life better lived.” Whether it’s saving and investing enough to start a business, take a great vacation every year, send your kids to the best colleges or have money in retirement to travel the world, Andrew and his team want to make sure you get there.
So what are the basic things you can be doing now in your 20s and 30s to ensure you’re protecting yourself and your future? I asked Andrew for his top tips, in order of what you should do first.
- Pay Off All Of Your Credit Card Debt: “Credit card debt typically carries a high interest rate. … If somebody could be paying me a 24% return on my investments, I would be the happiest person in the world and everybody would want to be me. And that’s exactly what you’re doing to the credit card companies. You’re paying them 24% interest just to have a little bit of money up front. And so before you invest, before you do anything, that would be the first thing I focus on is getting credit card debt paid off.”
- Have An Emergency Fund: “Have three months of your pay set aside. … The biggest reason you’d want that is if you lost your job. … But washing machines break, cars break down, things like that, and if you don’t have that set aside, then you’re gonna go to your credit card to purchase those things, and you don’t want to have to do that, so having that emergency fund is something that’s really important.”
- Start Saving For Retirement: “The number I’ll throw out, it’s very generic, but at least save 10% of your income. That’s kind of the golden rule that you pretty much should be saving at least that much.” If you’re counting on Social Security, don’t. Andrew says that at best, it will replace only 40% of your income.
- Have the Appropriate Life and Disability Insurance: “The best time to get these coverages is when you’re young and healthy, because as you get older and less healthy, the premiums go up and up and up. … And everybody needs disability insurance whether you have dependents or not, ‘cause you’re dependent on your own income and if you become disabled somehow … nobody’s gonna give you disability insurance anymore. … So that’s why you need to get that stuff young when you’re healthy.” Andrew stresses that you need to know how much life and disability insurance you realistically need. He gave me a very important lesson on why you should never get “whole” life insurance that’s too long to explain in this blog, but it’s all something Panoramic Financial can help you with!
- Write a Will: “Just having a will to say where you want your stuff to go when you die, and for parents, who you want to watch your kids if something happened to you, to be their guardians.”
Phew! I covered a lot of stuff in this blog today! I’m sure you have questions. I sure did. Panoramic Financial would be happy to meet with you to see if their services can help with your needs. You can find out more about the company here and contact Andrew McFadden here.
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