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Frequently Asked Questions and Our Responses

  1. What are the steps in the financial planning process?
    a.  Establish a relationship.  We will explain our financial planning services and define each of our responsibilities.  Along with compensation, we will discuss how long the professional engagement will last and how decisions will be made. 
    b.  Gather your data and establish your financial goals.  You will gather your financial documents and we will talk about your current financial situation.  Together, we will define your personal and financial goals, including time frames.  We will also discuss your comfort level when it comes to taking financial risks. 
    c.  Analyze and evaluate your financial status.  We will consider all aspects of your situation to determine what you need to do to meet your goals.  Depending on what services you've asked for, we may analyze your assets, liabilities and cash flow, current insurance coverage, investments and/or tax strategies. 
    d.  Review recommendations.  We will go over financial recommendations, explaining the rationale so you can make informed decisions.  At this stage, we will discuss any concerns you may have and make revisions to any recommendations as necessary. 
    e.  Set your course.  We will need to agree on how the recommendations will be carried out.  For an additional charge you may want us to assist you with the implementation of your plan or just serve as your coach or implementation advisor. 
    f.  Benchmark your progress against the financial goals you established.  As you work toward your goals, periodic monitoring of your plan should take place.  If you chose Lamke Financial LLC to be a part of the monitoring process, it is at this time, that we will schedule the various review meetings. 


  2. Is it always this involved?
    Absolutely not!  The steps outlined above are those that we would go through for a comprehensive financial plan.  If you have a specific financial issue, or a question, the process would be much simpler.  In fact, we provide a service that gives you a high level review of your current financial position that is simple and economical for a fee of just $1,000 - $1,500.  That is the great thing about our approach to advice.  When you ask for our help, you choose what you want to do and we will get to the right solution in the simplest and most economical way possible. 


  3. Who would benefit from your services? 
    Anyone who has financial goals and a desire to secure a brighter financial future can benefit from the services we provide.  We serve clients:
    - with all levels of net worth, income levels and professions
    -who might just need a brief financial consultation or second opinion to those that require a comprehensive financial plan.


  4. I have never had a financial advisor before.  How do I know when it is appropriate to contact you?
    You can contact us whenever you have a financial question or concern, but clients are especially encouraged to reach out when they experience a significant life event such as: 
    a. getting married
    b. a change in employment
    c. birth of a child
    d. buying a home or any other significant financial event. 


  5. If you do not sell financial products, how will I obtain them? 
    Typically, clients already have established retirement or brokerage accounts.  If you do not have brokerage accounts, we can give you instructions regarding how to open them.  It is important to note that all of the securities you own will be controlled by you, not Lamke Financial LLC.  One of the advantages of working with an independent firm like ours, is that you can typically implement most or all of our recommendations in your existing accounts.   Likewise, if you need to purchase insurance, find an estate planning attorney, purchase an annuity, etc., we can refer you to those resources. 


  6. Will you perform the plan implementation?
    As part of the plan review, we will give you detailed implementation instructions and will answer any questions at that time in order to ensure your success.  However, if you prefer, we can work with you to actually perform the implementation.  This will typically take several hours to complete and will entail an additional fee that will be discussed and agreed upon before moving forward. 


  7. Why don't you believe in the Asset Under Management (AUM) model for fees?

Unlike some fee only advisors, our fees are never based upon a percentage of your Assets Under Management (AUM).  We do not believe this model is in your best interest for the following reasons:

A) The AUM model has come under criticism for possible conflicts of interest.  An advisor who is paid primarily for asset management, has little motivation to advise in areas that could reduce the AUM balance.  For example, paying off a mortgage or other debts, or the purchase of an income annuity, reduces the AUM balance and therefore, their fees.

B) The AUM model can result in excessive fees and may not be well correlated with the value you receive from the advisor.  Let's illustrate why we believe this is the case with a hypothetical example of a typical AUM fee structure:

                       AUM               Fee              Annual     

                    1st $500K        1.00%           $5,000               


                    2nd $500K       1.00%           $5,000              

                    Next  $1M          .80%           $8,000               


                    Next  $1M          .70%           $7,000               

As you can see, in this example, a client with assets of just $500K under management would pay $5,000 per year, every year, in fees.  A client with $1M under management would pay $10,000 per year, a client with $2M under management would pay $18,000, and a client with $3M under management would pay $25,000 annually. 

Let's make a few observations about this situation:

Although considerable thought needs to be given up front regarding the appropriate asset mix for a client, the basic approach employed typically remains fairly consistent from year to year, requiring only periodic re-balancing or adjustments as life situations and goals change.  Do these types of incremental adjustments justify the substantial recurring fees shown?  It is our opinion that they do not.

Likewise, isn't the basic approach, expertise, and degree of effort expended to manage a $500K portfolio similar to a $2M?  Even if there is a certain degree of extra effort, does it justify an additional $13,000 in annual fees, or $130,000 for 10 years?  Again, in our opinion it does not.

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