Expert Interview with Robert Henderson
Preparing for retirement is not as simple as it once was, with very few working professionals staying with one company for their entire career, uncertain and unstable economies, and a whole host of difficult-to-predict variables.
A dedicated team that understands all the ins and outs of retirement can be a major boon to have in your corner.
Lansdowne Wealth Management is a financial planning firm that specializes in retirement and divorce cases. LWM’s Robert Henderson took a moment to share some insights on how to prepare for your retirement, no matter what stage of your career you’re in’ as well as how to get and stay out of debt and what to look for in a personal loan.
Can you tell us a little bit about LWM Wealth? Where are you based out of? What inspired you to start the company?
Lansdowne Wealth Management is a fee-only registered investment advisor based in Mystic, Connecticut. We provide financial planning and investment management services on a fee-only basis, primarily to investors that are starting to think seriously about their retirement assets. In addition, we have particular expertise in working with women that are going through divorce or are recently widowed.
Who are your main clientele, and what are some ways that their unique needs are met by LMW Wealth?
Our core group of clients is between the ages of 50 and 70 (when brought on board with our firm). Most clients have been successful in their professional careers or businesses and are looking for someone to manage their retirement professionally. One of the areas that we excel at is developing a suitable plan for each client before recommending how to invest their money. For some clients, the planning process is fairly simple; while for others, there are personal or professional complexities (i.e. family businesses or complex real estate) that require more in-depth knowledge and planning.
As a Certified Divorce Financial Analyst, I know that working with clients throughout the divorce process can be a very emotional, complex, and extensive experience. There are numerous factors that need to be considered when dealing with divorce, and having the professional training, experience, and knowledge of the divorce process is critical to providing the absolute best recommendations for divorcing clients.
One of the main services that you offer is Wealth and Asset Management. First of all, how do you go about measuring someone’s financial status? Secondly, what are some reasons why this is important to do so?
Every single client is unique. While many of our clients may have similar financial circumstances on the surface, there are more often some very unique circumstances that need to be factored into the planning process. For example, some clients may anticipate having to support parents or adult children (or already are). Others may have debilitating health conditions that need to be considered, or have specific plans or dreams of how they want to live in retirement.
Typically, we go through an “interview” process with every potential client. It starts with an introductory meeting where the client has the opportunity to ask any questions they have to get themselves more familiar with our firm, how we operate, and what we can do for them. At the same time, we are evaluating if this individual would be an appropriate client for our firm. Some clients simply have expectations that don’t match what we provide as advisors.
If the client chooses to move forward after that initial meeting, we will meet a second time where we will gather client documents and financial data, and ask a series of questions about their personal lives to better evaluate their situation. At a third meeting, we will go over their plan, present what we propose for a solution, and discuss any changes that may need to be made. Subsequent to that, we will meet to open new accounts, sign paperwork, etc.
One of your main reasons for offering the services that you do is to provide individuals with the “same level of sophisticated management as institutional investors.” What are some resources and methods that institutional investors might have access to than an individual might not?
As a professional advisor, we have access to research and planning tools that most everyday investors do not have access to. While there may be SOME tools that individuals can access, many of those tools can be quite expensive (if available to individuals at all), and most individual investors lack the knowledge of investments to know where to seek out proper information. Additionally, we have access to many investments that are only available to professionals. Many of these investments lower the overall cost (i.e. institutional share classes of mutual funds), or provide access to investment managers that are only available to professional advisors.
Retirement planning is one of your main services. What are some things people should be doing to prepare for retirement, no matter what point in their career they’re at?
We all know that everyone should be setting aside as much as possible into retirement accounts. However, in my experience I have found that what is FAR more important in preparing for a comfortable retirement is to develop a sustainable lifestyle. I see too many clients building a very expensive lifestyle (expensive cars, big houses, 2nd homes, lots of travel, etc.) that they simply can’t sustain in retirement because they have not saved enough. More thought needs to be put into how much your lifestyle is going to cost when you commit to many of these lifestyle choices. And this planning should really start in your 50s (or earlier), not a year or two before retirement.
Financial assessment and planning are another of the main services that you offer. Have you noticed any common oversights or misconceptions that a lot of people make when going over their finances? Are you aware of how much money an individual could stand to save by optimizing their finances and having a solid plan in place?
Absolutely. Most people underestimate the value of social security and pensions, don’t properly account for the changes (typically reductions) in income/payroll taxes, and also don’t account for some of the reductions in expenses in retirement (i.e. no longer funding a retirement account, paying for certain employee benefits, or the fact that their mortgage will be paid off shortly). To put it simply, most people assume they need to replace 100% of their gross incomes in retirement, when that is usually not the case. I find that most people can continue their same lifestyles on about 60-70% of their “working” gross incomes. Obviously this is a generalization, but it tends to hold true in most cases.
Do you have any advice for people creating budgets to get their loans paid off? Why should they do this?
Budgets can be simple or hard. I usually opt for the “simple” route. I don’t ask people to record every nickel they spend. That’s impossible (other than for those rare few). Instead, I ask people to record all of their monthly bills (this is a 30 minute exercise): mortgage, rent, utilities, cable, internet, credit cards, cell phones, groceries, insurance, gas, taxes, etc. – all of the regular recurring bills. Then record how much you are setting aside in savings and investments. The difference is simply what you “spend” every month on everything else – dining out, entertainment, gifts, lunch, coffee, etc. Then you know that every month you have X dollars you can put towards paying down more debt. Once you know those numbers, it’s very easy to determine where you might be overspending and where you could make reductions. Then you can make decisions on redirecting funds towards debt payoff every month, rather than just seeing what’s left in your bank account.
For someone who’s considering taking out a loan, do you have any general best practices or rules of thumb to keep in mind?
First off, decide if taking out a loan is even necessary. You need to be absolutely certain you will be able to pay it back, even if you technically “qualify” for the loan. Then, make sure you do your homework. You want to get the best rate possible, but also don’t want to get locked into onerous loan terms that will come back to haunt you. Pay careful attention to the fee versus the term of payback. While some fees might seem small, if you have to pay them back very quickly, then the annualized cost may be very, very high.
If people are taking out a loan right now for whatever reason, could you give us an example of what would be a good deal? What’s an example of a low interest rate? And again, how much can someone stand to save by finding the best possible deals?
Personal loan terms are all across the board. The best way to find a good deal is to do your research. Look at many different lenders including online lenders, payday lenders, banks, credit unions, etc. Obviously, better deals will go to those with better credit scores and financial situations. The amount that can be saved will be significant, especially if you can avoid payday lenders that charge exorbitant fees.
Do you have any advice on how to go about looking for the best possible loans? What are some things they should look for? Any particularly good places to find that kind of thing?
Start with the internet and do as much research as possible. It is best to stick with lenders that have a decent history and a good reputation.