Wisconsin's affordable Financial Advisor

How much does a Financial Advisor cost in Wisconsin?

Most firms are aloof about this because they are so expensive!  Fees vary greatly, but a typical financial advising fee is 1% of your assets per year.  That might sound like a low percentage, but it is actually a very high fee.  Many people are surprised to learn how much they are paying their financial advisor as it is often buried in the fine print of their account statements.

At Kopp Financial you can get a professionally managed portfolio for just 0.15% of assets managed.

You can save thousands of dollars as compared to financial advisors from Edward Jones, Merrill Lynch, Ameriprise, or really any financial advisor you'll ever meet.  Kopp Financial is simply the best value, period.  The Kopp Financial Pricing Page has more details.

J.D. Kopp, Chief Financial Advisor
Founder of Kopp Financial
Learn More About J.D.

Do I need a Financial Advisor?

Maybe.  If you feel confident in your ability to invest your savings, stick to a budget, responsibly manage your debts, and you have a plan for your income needs in retirement, then do it yourself.  Consider the statements below.  If you can agree to all of them with confidence, then skip the financial advisor.  On the other hand, if they give you doubts, those are red flags and it is best you work with a professional financial advisor.

I enjoy reviewing my financial statements.
I understand investments such as stocks, bonds, mutual funds, and ETFs.
I can build a diversified portfolio that is appropriate for my risk tolerance.
I know the difference between a traditional IRA and a Roth IRA.
I know when to take my Social Security benefits.
I know when I can withdraw money from my retirement accounts without paying penalties and unnecessary taxes.
I understand how much income I will need in retirement and I have a plan for my retirement income.

How much should I save for retirement?

For most people, you should save lots more than you are currently saving.  The personal savings rate in the United States was just 7.6% at the beginning of this year.  This is down from a peak of 17.3% in May 1975.  These days Americans are generally carrying too much debt and not saving enough for the future.  Kopp Financial encourages clients to save 10% of gross income for retirement at a minimum, with a goal of working up to 20% over time.  If you find yourself below these targets, consider three helpful strategies:

  1. Bank your raises.  If you receive a raise at work, even if it is a modest cost of living adjustment, add it to your savings.

  2. If you can retire a debt payment by paying off a car loan, your student loans, or a mortgage, take the value of your monthly payment and allocate it towards your savings.

  3. If you receive a tax refund, don't spend it!  Put in it in your retirement account instead.

Speaking of tax refunds, what can I do to maximize my refund?

This is an interesting question, and the answer is counter-intuitive.  Tax refunds are bad.  If you typically get large tax refunds, don't walk, run to your HR department and work with them to update your W-4 withholding.  You are paying too much in taxes through your payroll deduction and you are missing an opportunity to boost the size of your paycheck.  Instead, you loan your money to Uncle Sam and he pays you back eventually via your tax refund.  The problem is, he pays 0% interest.  Not very fair, right?  Don't let him take advantage of you and work with your tax preparer or financial advisor to setup a better strategy.

This doesn't mean you shouldn't look for opportunities to minimize your tax liability.  Work with your tax preparer or financial advisor to make sure you aren't paying more in taxes than your fair share.

What should I do with my 401(k) if I leave my job?  When I retire?

Most 401(k) plans have limited investment choices and charge high fees.  If you are getting ready to retire or are just changing employers, it is usually a good idea to roll over your 401(k) to a platform that provides better choice and lower fees.  You can do this yourself by opening an account through a brokerage firm's website, or you can work with a financial advisor for assistance.

How do I save for my child's college education?

The best option to save for a child's college education is to setup a 529 college savings account.  Wisconsin residents should open accounts with Edvest to realize savings on their state income taxes.  When you setup a 529 account you set it up in your name, and you name a child as the beneficiary.  Any withdrawals from the account are tax free as long as you use the funds on higher education expenses for the beneficiary.  You can change the beneficiary at any time, so if junior's college plans change you can redirect the funds to a sibling or anyone else that will have higher education expenses.

On very important thing to consider before you start saving for a child's education is your own retirement security.  You should not short change your retirement savings to save for college - retirement should always come first.  There are a few reasons for this.

  1. Savings can grow significantly over time, and the most important time to save is early in your career when your child is still young.  You need to take advantage of multiple decades to grow your retirement account, and if you put things off to prioritize college savings, you miss out on these most critical years.

  2. If you need to you can borrow money for a college education.  Student loans are a thing, but there is no such thing as a retirement loan.  This is because lenders understand you are unlikely to pay back a loan after your retirement, as you will be dead!

  3. Your child can help pay for college.  This can come in many forms such as a part-time job, scholarships, or student loans.

After (and only after) you are saving enough for your own retirement needs, start saving for college.  A prudent strategy is the rule of thirds.  Plan to save one third of the cost, pay for another third out of current income when your student is in college, and have your student fund the final third through a mix of loans, scholarships, or a part-time job.  If you own your home, this strategy works best if you can pay off your mortgage at about the same time as your first child enters college.  You may even be able to avoid any student debt all together.

How much money do I need to retire?

One rule of thumb to help with this question says that you should have 10-12 times your annual income saved before you retire.  The answer depends on several factors, however, such as how much you have already saved and when you plan to retire.  The most important thing to consider is how much money you will spend in retirement.  This varies widely for each individual and is an important part of the conversation you should have with your financial advisor.

How should I invest my money?

The definition of investing is to spend money now to make more money later - assuming everything works out and you don't lose money on your investment.  So how do we do this?  It depends.  The first thing to consider is your risk tolerance.  You can earn a couple percentage points by depositing your money in the bank with very little risk.  The only way you can lose that money is if your bank fails and the United States government fails (assuming your bank is FDIC insured).  Pretty unlikely, right?  So putting money in the bank is a low risk investment.  The only problem is that a couple percentage points isn't that great a return, especially when you consider inflation.

So how can we do better?  By putting your money at risk.  Instead of investing your money in a bank, suppose you lend it to a business to get a higher return.  It is much more likely that a business will fail than the U.S. government, but still unlikely if we select an established, healthy business.  When you buy a corporate bond, you are essentially lending your money to a business that promises to pay you back with interest.  You can expect to earn a higher interest rate than your bank account, but you have the added risk of the company going out of business and defaulting on your loan.  If you want to seek even higher returns, you could purchase an ownership stake in the business and receive a share of future profits.  This is what you are doing when you invest in the stock market.  But what if the business doesn't earn a profit?  Now we lose money because the stock price will probably go down.

For most investors it is appropriate to invest money in a mix of these different types of investments.  Your tolerance for risk will determine how much you should hold in cash, stocks, bonds, or other types of investments.  The more comfortable you are with risk, the more you should invest in the stock market to realize the potential of higher returns over a long period of time.

What is Kopp Financial's investment philosophy?

Many advisors group their clients into specific profiles such as "parents with young children" or "couples over 60" and give them cookie cutter portfolios.  At Kopp Financial we believe that approach is entirely inappropriate, so each client receives a personalized portfolio with assets appropriate for each investor's unique circumstances.  Client portfolios may contain investments such as stocks, bonds, cash, and real estate.

Stocks

For the stock portion of a portfolio, Kopp Financial prefers companies that consistently make money, pay dividends, and are reasonable priced.  Diversification is important and achieved via low cost index funds.

Bonds

For the bond portion of a portfolio, Kopp Financial prefers a strategy of purchasing individual bonds and holding them to maturity rather than investing in bond funds.  Bond funds are still used, however, for clients that have smaller sums to invest in the bond market as this helps to achieve cost effective diversification.

Cash

It is important to have at least 6 months of living expenses set aside in cash.  This could be in a checking account, a savings account, or a certificate of deposit (CD).  Depending on your risk tolerance, you may also need to have some cash investments in your retirement accounts.

Real Estate

For many investors, a primary residence is the only real estate investment in the portfolio.  Kopp Financial generally discourages purchasing investment properties, with exceptions for clients that have a background in real estate or construction.  Real estate investment trusts (REITs) are sometimes recommended as part of a strategy for investors within their retirement accounts.

How does Kopp Financial make money?

Kopp Financial makes moeny through only one source, the fees described on the Pricing page.  Some financial professionals earn sales commissions on specific investment products that can cause conflicts of interest.  This is not the case for Kopp Financial, as our firm is held to a fiduciary standard which means all investment advice must be given in the best interest of the client.

Should I get a reverse mortgage?

Probably not.  While a reverse mortgage can provide a nice monthly check to provide for living expenses, they are very expensive loans that you must pay back.  Closing costs for reverse mortgages are steep, and you give up a portion of your home equity.  First consider selling your home and moving into less expensive housing (either buying or renting).  Downsizing lets you stay debt free.

However, sometimes keeping a home that you've lived in for decades is extremely important to you.  If this is the case, and your only source of wealth is the equity in your home, then a reverse mortgage could function as a last resort.  Be very careful with the terms of the agreement, especially the timeframes for when you receive payments and when the loan must be repaid.  Also keep in mind that it will likely be your heirs that need to settle your estate and pay off this loan, so you need to have conversations with them about your situation and how to handle things after you pass away.

A registered investment advisor in the state of Wisconsin.

3190 Olde Hickory Trail, Green Bay, WI  54313

Tel: 920-315-0121