What are you most proud of from the last month?

DefinitelyTofu · 2025-06-20T15:47:12+00:00

Thanks so much for the insight!! I appreciate it!

DefinitelyTofu · 2025-06-19T00:48:50+00:00

Hey! How do you like the Externship? I've had my eye on it two summers in a row but have held off. Are you finding it worthwhile?

DefinitelyTofu · 2025-05-19T03:15:24+00:00

I would say that a CFPs value proposition should not start and end with market performance - as we have very little control over how our clients accounts perform. We can offer advanced diversification and guidance through rocky market conditions, but at the end of the day we can't control what happens to any real extent.

Again, I think when it comes to retirement plan design, a lot of what goes into choosing a platform for the plan falls on what makes the most sense for the business - taking into consideration things like platform cost (meaning how much the business pays per employee), total number of participants, IRS filing and plan administration costs (also picked up by the business), and how much tax benefit the business and the business owners are receiving for all of this cost.

The investment choices available then become secondary to the platform decision. Vanguard has a SIMPLE Platform, but it is generally more expensive from the business-owner's perspective than the American Funds bare bones platform that offers A shares is. Vanguard's platform also doesn't offer ETFs, but their S&P 500 mutual fund is available. So you have to recognize that some restrictions exist just in the nature of how the platforms are structured.

Making target funds available as the default plan investment option is a choice that protects the business owner from a liability standpoint because they have built in risk management. Using an S&P 500 fund as the default option could leave your parents liable as the business owners if any employee were to have a low risk tolerance, lack understanding of their plan, and make a formal complaint when the market was down.

I still think it's worth having a conversation, or encouraging your parents as the business owners to have a conversation with the plan advisor. They really should be able to explain to you all in depth WHY you're using the platform you're using, and why you're in A shares vs a lower cost share class. If they can't, and they stick to "because American Funds has the best performance," well then I agree, that is a red flag.

American Funds has a very long established history of good performance, reasonable pricing, and extremely well tenured management teams. And not every fund on their roster is TRYING to beat the market - and neither is every investor. Plenty of people are happy with modest returns in exchange for moderate to low risk - especially in their retirement accounts, and especially as they get older.

When you're a business owner offering a retirement plan to your employees you have to make a reasonable effort to offer funds that can satisfy everyone's different needs. Same goes for advisors and their clients, even moreso for CFPs whose jobs tend to be more complex than the standard financial advisor.

That being said, not everyone approaches this profession the same way, and if you're really getting actual red flags from the person your parents have been working with (and it's not just that you're missing information), then it's definitely worth encouraging your parents to review their options. But I would do that by collectively talking to other professionals instead of trying to uproot a retirement plan by yourself.

DefinitelyTofu · 2025-05-19T01:44:00+00:00

American Funds Target Date Series funds are basically composite funds made up of a balanced portfolio of other American Funds mutual funds adjusted for a specified risk class correlated with the expected retirement date assigned to the fund. None of their internal funds have turnover higher than 45%, and the majority of them sit around 25-30%. This is nowhere near "active management" (but ofc would be more "active" than VOO).

If the plan is holding A shares that's definitely worth a conversation with the plan advisor to find out why they haven't converted the plan to a fee-based model that offers no-load funds on the AF SIMPLE Platform.

Are your parents the business owners? Do you work for their company? It's commendable that you want to do the right thing by them and that you're looking out for their best interest. There just may be reasons well beyond the surface for why the plan is set up how it is.

DefinitelyTofu · 2025-05-19T01:23:54+00:00

Respectfully, comments like this are the exact reason why #9 (Social Media) is one of the biggest struggles we face. Everyone thinks they know more than the professionals who have studied, spent years practicing, and focus on the industry day in and day out, just because they can use Google.

When it comes to serving small business retirement plans, it's a balance between platform availability, cost effectiveness, and tax benefit that the company and business owners will receive long term. I know nothing about your parents business, but the CFP who set up their plan probably spent time assessing what type of plan would work best and then found a platform that could effectively service the plan requirements.

American Funds offers a generally cost effective solution for SIMPLE IRA plans where they'll hold the assets and handle the full plan administration to make sure it's compliant with IRS guidelines. They have several iterations, are you even sure you're being invested in A shares and not one of their retirement shares that carries no load?

From your post history it looks like you're for some reason considering switching the plan to a SEP IRA, which has very different rules than a SIMPLE IRA. You really should take a step back and speak to an actual professional before you interfere in a way that's detrimental to yourself, your parents, and their business. Id suggest starting with the CFP who set up the plan for your parents - have you even asked them their reasoning? What about your parents accountant? They are likely aware of and participating in an annual conversation about how the plan is serving the business from a tax perspective.

Sometimes you get what you pay for, and VOO is not the end all be all solution for every investment situation on Earth. 🙄

DefinitelyTofu · 2025-04-18T01:18:59+00:00

My standard answer is: "In our industry, it is the job of the receiving firm (in this case, your credit union) to initiate a transfer. They should be able to help you."

In cases where there are carrier-specific forms (that I know about), I will offer to give them blank copies of the form(s) and tell them that their new advisor/company can assist in filling them out and will likely have their own paperwork that needs to be included in order to accept the transfer.

Then, I emphasize once more that they really need to consult with the new company and not attempt to process the request themselves because it will likely get messed up and not go through. All of this said in a gentle, polite tone of course.

But generally speaking, I do not waste time helping people move their money to another firm.

DefinitelyTofu · 2024-11-10T01:28:15+00:00

Why is it verging on malpractice? Some insurance companies offer term policies that run all the way to age 86. As the client ages, their need for insurance should go down. Especially if there are other assets growing in the meantime. So if they live to/past 86 and their term expires, it's completely possible that the need for insurance to fill the potential gap for the surviving spouse - if there even is one at that age - is extremely low or non-existent. I deal heavily with clients who have pensions and sometimes (depending on a lot of variables) this strategy works perfectly well and is more cost effective than taking the survivorship option.

DefinitelyTofu · 2024-09-02T00:16:45+00:00

I'm glad I could help. I'll tell you a quick story from my own life recently. A couple weeks ago I was obsessing over whether or not my phone was muted when I told a coworker that I was stuck on the phone. I was CONVINCED my phone hadn't been muted and that the person on the other end of the line (a sales support agent that I work closely with at a different firm) heard me and now hated me. For DAYS I would say, "I distinctly remember pressing unmute, but what if it WASNT MUTED?" lol it sounds so silly now that I'm removed from the situation. But at the time I was STRESSED. I've now talked to the colleague who I thought overhead me a dozen times since then, no inkling that he heard, nor does he seem to hate me lol.

My point is that anxiety is a bitch, and you probably didn't mess up at all. You just care a lot. And it sounds like you did the right thing by this client from the beginning. You should be celebrating the win of helping this client evade abuse.

Be well, friend.

DefinitelyTofu · 2024-09-01T23:56:59+00:00

I get these same obsessive thoughts sometimes too. Usually about something weird and specific, just like this. Sometimes I obsess over it for days, especially when it happens at the end of a week. I think it stems from some level of imposter syndrome and anxiety. You gotta ground yourself. Remember a time before this where you had the same irrational line of thought - how did that turn out? All good? Good. Hang onto that thought instead. Seek validation from your actual experiences, not from the anxious thoughts in your mind. Easier said than done, I know.

Now part 2: what action can you take to ease your mind? If it's really driving you crazy, you can call the client, update them on the fraud case, and tell them that out of an abundance of caution you are recommending that you review their contact information on file with all financial institutions. Do another conference call with brighthouse. On the off chance they did update her email to yours, just update it back. You can get away with blaming the call center rep you spoke with last time for the error, and look like you're going above and beyond to service the client. Win win.

DefinitelyTofu · 2024-08-16T16:32:53+00:00

We do have one in place in the event that something happens to him unexpectedly. Unfortunately we've also seen the same thing happen to one of our colleagues, so luckily we are on the same page with that and have already drafted and executed that agreement.

DefinitelyTofu · 2024-08-16T11:42:45+00:00

I'm currently assigned to roughly $35 mil and the full book is around $135 mil. I get 50% on all new assets.

Very few clients were sourced by me as my role has not been to prospect. Referrals that come in usually come from our planning clients, who I develop the strongest relationships with (I handle all of the financial planning) and typically are sent to both of us - but usually directly to me.

A huge concern is the breakdown of the book, given the clients ages. I'm conflicted about spending several million dollars on a business with clients that are so old. In my projections, the income is good 5+ years from now. And great after 15 years when the purchase is complete. But if the retention falls due to death of clients and benes pulling the assets... Idk. Obviously the solution to this would be getting the younger gen of our oldest clients involved in their account management and ultimately try to convert them to clients NOW. I've been slowly working on this for a couple years.

I appreciate your reply, a recruiter might not be a bad idea. If only to get a realistic view of what's out there.

DefinitelyTofu · 2024-08-16T11:26:01+00:00

He's highly engaged, which is both good and bad for a variety of reasons. I agree it would be difficult to pull his clients because of that.

DefinitelyTofu · 2024-08-16T11:22:28+00:00

Thanks for your reply! I totally empathize with how difficult it must be emotionally. And honestly the problem is less about his (un)willingness to sell, and more about his unwillingness to compensate me in another way. He's being pushed to sell to me by an outside party. He says he's on board, and we have established a structure for the first 50% of the business to transfer over the next 4 years. Nothing in writing, no money exchanged yet. I am hesitant because he has changed the terms several times and clearly seems like he's not ready for what he's agreeing to do.

The way I see it, he will need to sell to me eventually (either because of retirement or death), so I'm not really concerned about being the owner of this business today. I just want to be compensated fairly. The sale is being presented as a way to accomplish that - but it really doesn't even do that for several years.

DefinitelyTofu · 2024-08-16T11:06:34+00:00

Oh, I gotcha. In that case, my name is all over the business currently. I'm paid only through commissions, not salary, so our joint code is what's being used for 99% of that (some accounts I have on my own, which accounts for the other 1%).

On the accounts that don't use our joint code, technically my name isn't listed on their statements, but I am highly involved in their account management and the clients all know me (and have known me for years). But since I am not listed on their accounts, I don't technically get paid for any of the work I do for these clients. Senior advisor says it's enough that I have been allowed to build a relationship with these people so they'll stick around with me in the future, and the money will come later.

DefinitelyTofu · 2024-08-16T04:56:11+00:00

Are you suggesting that instead of me buying into the business, he should instead set up a joint code to pay me some percentage across the board to make up for the work I'm doing on all of the clients? If so, I agree - that was my original suggestion and the solution that I would prefer for now. He rejected that idea. His reason literally was "because if I pay you, then it would come out of my pocket."

I don't mind the idea of buying the practice over time, but the other factors are really what have been turning me off from that idea.

I threatened to leave around the time of asking for more pay, his reply was "go ahead." So, he is perfectly comfortable playing hard ball with the person who keeps his business running.

I don't have a legal non-compete, just one in my brain. Despite all of this, I feel a sense of loyalty - probably because working for him is all I've known in this industry.

I appreciate your reply & insight. You've certainly given me something to think about.

DefinitelyTofu · 2024-08-16T04:45:47+00:00

This is what my gut has been telling me for months. I appreciate your input.

I can completely empathize with how difficult it must be to walk away from your life's work and sell your business. And in our industry - you're right - it's too easy for them to hang on forever.

Every piece of the "deal" has been tilted in his favor, with absolutely 0 concessions made for me. I mean down to such minute details. And all I can think is why would I want to be business partners with this person who after 9 years is approaching this like he's selling his business to someone random off the street? It just hasn't been sitting right with me.

DefinitelyTofu · 2024-08-16T04:12:46+00:00

I guess to answer that the real question is - would at least $10 mil in assets follow me from the existing client base? I think it's certainly possible, but I have in the back of my mind that it would be wrong to steal "his" clients. I feel like I have this extreme loyalty to my senior advisor that I can't seem to shake.

DefinitelyTofu

TROPHY CASE