Redefine Your Path

Your financial freedom depends on it.


Most people with whom we talk want to do the right thing in their financial lives, but struggle to first understand and then to decide what exactly the “right thing” means.  In many cases, they have also come to the realization that they are paying too much for financial help and are becoming increasingly concerned about the conflicts inherent in the financial advisory business.

Their common need is to better understand what’s really going on.  We can help!

Our commitment to you is very simple: to provide you with the insight necessary to own your financial future.  Through an educational process, we simplify the intentionally complex to help you redefine your path forward.

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Understanding Conflicts

Let’s start by defining the titles used in the financial advisory business.  It’s important to note: Not all “Financial Advisors” are truly advisors.

You see, the financial advisory business is largely dominated by insurance and investment companies that rely on an extensive sales force to market their products (insurance policies, annuities, mutual funds etc.) Just like time share marketing companies, the insurance and investment companies’ sales force is compensated through commissions earned when they sell you their particular product.

It stands to reason that with this apparent conflict comes the high probability that the product these sales people sell you is the one that pays them the most rather than the one that fits your specific needs.

While these sales people are required to disclose this compensation as well as any conflict associated with the product they are selling you, we find that very few of the people that come to us for an Objective Second Opinion™ have any idea how their “financial advisor” gets paid.  We believe this is due to the fact that these sales people often fall back on the fine print (which very few consumers actually read) to provide the required disclosures rather than coming right out and telling you what they earn from your purchase of the product they’re selling that day.

Who’s Who in The Insurance & Investment Business

Let’s clarify who’s who in the insurance and investment business:

Insurance Broker

Insurance Brokers sell insurance products and receive a commission for doing so (annuities, life, health, disability, long term care etc.)

Investment Broker

Investment Brokers sell investment products and receive a commission for doing so (stocks, bonds, mutual funds etc.)

Fee-Based Advisor

This is where it gets a bit tricky by design.  The term “Fee-Based” has come to mean many things, but Fee-Based Advisors generally charge an annual, quarterly or up-front “planning fee” and, to the extent insurance or investment product recommendations surface from their “planning”, they get paid sales commissions like Insurance Brokers and Investment Brokers to implement the products.

Fee-Only Advisor

By law, “Fee-Only” Advisors are fiduciaries and receive only fully disclosed, previously agreed upon fees for the initial and/or ongoing management of your overall financial situation.  Fee-Only Advisors receive no compensation beyond what you pay them and engage you in a written agreement clearly detailing all compensation.


Is The Confusion Intentional?

It is our opinion that the confusion within the advisory business is intentional.  Insurance Brokers, Investment Brokers and Fee-Based Advisors cannot act as fiduciaries, placing your interest ahead of their own, while earning commissions for the products they sell you.  The conflicts are inherent in the compensation model.  Of the four types of “Financial Advisors” we’ve outlined above, just the Fee-Only Advisor is a fiduciary— earning only what is fully disclosed in writing and avoiding the product compensation conflict associated with Insurance Brokers, Investment Brokers and Fee-Based Advisors.


We use the terms Insurance Broker, Investment Broker, Fee-Based Advisor & Fee-Only Advisor throughout this educational site.  Refer back to the Who’s Who in The Insurance & Investment Business section if you need to refresh your memory on these terms. 


With a better understanding of the conflicts in the advisory business, we can now proceed with the simplification as promised.   

Simplifying the Process

We strive to simplify the intentionally complicated process of building and preserving your wealth into three foundational elements:

1. Save more, spend less
2. Preserve and prudently grow your accumulated wealth
3. Reduce the cost of the advice you are receiving

While difficult in practice, ‘save more, spend less’, is a broadly accepted concept.  However, many Insurance Brokers, Investment Brokers and Fee-Based Advisors will actually argue the latter two points.  It has been our experience that these Insurance Brokers, Investment Brokers and Fee-Based Advisors promise higher than achievable long-term returns to justify their high fees and commissions.  Insurance Brokers, Investment Brokers and Fee-Based Advisors often do so on the basis of their “unique” ability to pick investments.  We would suggest you be very skeptical here as it is our belief that few, if any, can actually deliver on these return promises consistently. 

The other, often-ignored component is the risk associated with the pursuit of these high returns.  Are these Insurance Brokers, Investment Brokers and Fee-Based Advisors considering and properly aligning the risk of your investment portfolio with your measured preference for risk and your capacity for risk?  Has your preference for risk ever been formally measured?


Consider for a moment why your preference for and capacity for risk are not the primary driver for all of your investment decisions.  Could it be that the commission received by the Insurance Brokers, Investment Brokers and Fee-Based Advisors is driving the decision-making process?  

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What’s The Difference Between My Preference For & My Capacity For Risk?

Your Preference for Risk is the degree of variability in investment returns and investment value you are willing to tolerate.  In essence, this generally translates into how large a loss you think you can withstand before freaking out.  Your Capacity for Risk is slightly different but in a very important way.  This is your ability to sustain the variability of investment value that your preference for risk indicates you’re willing to tolerate.  In essence, this means how much you can actually afford to suffer before your financial well-being is significantly damaged. 

Consider an Objective Second Opinion™

Consider reasons why Insurance Brokers, Investment Brokers and Fee-Based Advisors might profess high returns should be your primary goal rather than preservation of your capital followed by prudent growth.  


Consider also why Insurance Brokers, Investment Brokers and Fee-Based Advisors might attempt to obscure the cost of the “advice” they are providing rather than clearly conveying their compensation in writing.  Could it be that they are placing their interests ahead of yours?


It has long been our opinion there are many inherent conflicts of interest baked into much of the advisory business.  So much so that the federal government recently formulated the so-called “Fiduciary Rule”, a regulation that essentially says ‘where retirement guidance is concerned, “financial advisors” must act in their client’s best interest’.  


But why stop at just retirement guidance?  Why not insist on a fiduciary standard that always places client interests ahead of the Insurance Broker’s, Investment Broker’s and Fee-Based Advisor’s interests?  In our opinion, this is largely due to the financial interests of the Insurance and Investment companies themselves.  Again, just like time share marketing companies, the insurance and investment companies depend upon their sales force to sell you their products. Without these product sales, how else could they afford to put their names on skyscrapers and football fields all around the country?

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Hidden Underlying Investment Expenses

What’s actually under the cost covers of the investments within my portfolio?


Beyond the advisor compensation we’ve detailed above, there are many other fees and costs hiding within your investment holdings that are somewhat harder to see— again, in our opinion, this is by design.  These include:

Underlying Investment Management Fees

Most “financial advisors” don’t actually buy and sell securities themselves; rather, they “outsource” this to other managers through the purchase of mutual funds and exchange traded funds within your accounts.  And this outsourcing isn’t necessarily a bad thing.


There are a variety of ways to select managers and funds – some allocate actively (meaning they try to weigh certain holdings more heavily than others in an attempt to beat their benchmarks) whereas others allocate passively (meaning they seek to deliver the performance of a chosen index, the S&P 500 for example).  It is important to recognize that, again by design, you cannot invest directly in an index.  You must instead pay an index fund’s underlying investment management fee to invest in the index for you. 


Neither is inherently better, but there are a number of variables that can affect cost and ultimately the resultant performance over time.


Also called “sales loads”, Insurance Brokers, Investment Brokers and Fee-Based Advisors receive commissions when they sell you products marketed by insurance and investment companies they represent (mutual funds, life and disability insurance policies, annuities, long term care insurance, etc.).  These commissions can be 15% or more (and no, that’s not a typo) and clearly create incentives that may induce the Insurance Brokers, Investment Brokers and Fee-Based Advisors to sell you a product that is not the most effective solution for you. 

Other Ongoing Charges

Many insurance and investment products marketed by Insurance Brokers, Investment Brokers and Fee-Based Advisors also contain embedded costs that are charged on a recurring basis.  These include you helping the insurance and investment company market their products to others (check your mailbox for your thank you letter—we’re sure it’s on its way).  Really?  Come on!  They’re asking you to pay their ongoing marketing expenses?  Yes, these are referred to as 12b-1 fees which are embedded within your mutual funds.  Insurance policies, beyond the nasty 12b-1 fees, also include “mortality and expense” (M&E) charges to really layer it on.  Beyond those, minimum account charges are also generally assessed as well as custody fees—the list goes on and on.  Some of these ongoing charges can really make you feel like you’re being “nickeled and dimed” (which of course you are) and can serve to diminish your wealth rather than help you preserve and prudently grow it.

A Deeper Awareness of Investment Risks

Most investors have a cursory understanding of investment risk— the fact that investments can both gain and lose money and that there is no guarantee of performance.  

These disclosures are everywhere.  Where investor understanding falls short in our experience is in the area of how these vehicles actually work and what that actually means to their well-being.


There are many risks beyond normal market action that can affect your financial outcome.  Mutual Funds and Exchange Traded Funds are not all created equal and there are important differences in investment objective, trading style, manager restrictions, initial fees, on-going fees, capital gains, taxes, liquidity….the list is almost endless!

Why is this Important?

You ultimately are responsible for your finances and we cannot stress enough that you fully understand what you own, why you own it and how you expect it to behave the next time the market takes a beating.


We believe it’s time to redefine your path.

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It’s Time for a New Approach

It’s time for an approach that focuses on educating you as a consumer instead of deceiving you with all-too-common insurance and investment sales tactics.  

It’s time to eliminate the 60 page so-called ‘financial plans’ the Insurance Brokers, Investment Brokers and Fee-Based Advisors themselves cannot explain.  

Let’s boil all these concepts down to a simple, on-going conversation that begins with an understanding of where you are today, progresses through actionable items that will help you redefine your path forward and adds a layer of accountability ensuring you remain on track.

Now, we may be among the first to tell you that your goals are way too lofty, but that’s our commitment to you – to tell you the truth about where things stand.  A key part of our Wealth Management Oversight™ approach is to be completely honest with you about where you are and assess the likelihood of you reaching your goals.  We might just be the first to tell you some hard truths about your current spending habits, your investment expectations, the risks you are currently bearing, what your advice is currently costing you and the impact all of this may have on you achieving your future goals.  If you don’t care to hear these truths, that’s fine too– there’s an abundance of Insurance Brokers, Investment Brokers and Fee-Based Advisors who will be happy to serve you lunch at their upcoming seminar while you learn all the benefits of the annuity they’re dying to sell you.  

If you’re willing to engage in a realistic discussion about what likely lies ahead for you individually, read on.

The Landscape is Changing

We find ourselves in uncharted waters.  Since the Great Recession of 2007-2009, governments around the globe, including ours here in the United States, have been conducting economic experiments to undo the financial damage done: zero-interest rate policies, negative-interest rate policies, currency buy-back programs, quantitative easing, financial stimulus, the list goes on.  These are new approaches to try and kick-start economic growth, with disappointing results to date.  New administrations are trying new approaches and maybe they’ll get better outcomes, but there are 3 important big-picture issues that we’d like you to keep in mind as you consider your economic future:

1. Pensions are underfunded
2. Healthcare costs are rising
3. Social Security isn’t viable

These are all systemic issues that require your attention to limit their damaging effect on your financial well-being.  However, first, you must understand them.  Let’s start with a simple lesson in economics.  

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A Simple Lesson in Economics

There is a single common thread that runs through the 3 issues above regarding the pension system, rising healthcare costs and the viability of social security:
There will soon be more retirees in the United States than employed workers. 
Historically, there have been 3-5 workers for every pensioner; this ratio has been sufficient to keep pension and social security programs solvent.  As our life expectancies have grown over time, this ratio has begun to shrink and soon there simply won’t be enough worker money flowing into pension plans and the Social Security system to allow them to continue making payments to recipients.  

Put simply, the system, as currently constituted, is bankrupt.


Here's a great article from WSJ —  Why America is Going Broke

The past 35 years have seen private companies almost entirely shift from traditional pensions (also called “defined benefit” plans) to “defined contribution” plans like 401(k)s and 403(b)s.  This has largely contained the pension liability for most corporations.

A more significant problem rests with government pensions, particularly municipal pensions.  These are still primarily defined benefit pensions and are proving to be very costly to maintain given the smaller number of workers for each pensioner.  These pensions also largely depend on real estate tax revenue for survival.  This is where we now see the iceberg emerging in places ranging from New Jersey to Illinois to California. 


More on the State of Pensions —  

Low Rates = Large Negative Consequences for Pensions and Private Foundations

Pension Funds Still Making Promises They Probably Can't Keep

You see, with public pension retirees soon outnumbering employed individuals, two things occur:
1. Contributions from current employees to these pension plans are increasingly outweighed by distributions to current pensioners

2. To make up this gap, municipalities must raise revenues through increased real estate taxes, which hits retirees particularly hard, as in many cases they lack sufficient income to sustain these ever-increasing taxes
So what happens?  Let’s use the Northeast as an example.  Retirees from the Northeast move to Florida and elsewhere in the Southeast in search of both warmth and a lower cost of living.

The result?  For many in the Northeast, it’s a classic bind– fewer taxpayers must support the higher tax burden, resulting in ever-more people choosing to move away, which just ratchets up the pressure further.  We know, depressing right?  Ready to feel better?  

Here's a Refreshing Approach

You must maximize your ability to extract yourself from this negative feedback loop.  But how?  

We’ll answer that question by sharing some perspective you probably don’t hear much: more than 90% of all millionaires and billionaires created their wealth through real estate and private enterprise.  This means that less than 10% created their wealth in the traditional investment markets.  

And where are you trying to create your wealth?  The investment markets.  Why?  Because Insurance Brokers, Investment Brokers and Fee-Based Advisors make the lion’s share of their money selling you market-based investments. 

Part of our “hard-truth” approach is to convey the following:
1. You will most likely retire on the money that you save
2. The investment markets may help or hinder you in your pursuit of wealth creation
You see, the amount you save is the primary driver of what you will have in the future, not some magic investment product or insurance policy.  The pace at which you save coupled with how soon and how long you save determines your financial legacy.

Seems pretty simple, right?  Unfortunately, many are unwilling to take the long, slow path to success because it is hard and demands patience and discipline.  It’s neither easy nor sexy.  There are no magic shortcuts.

A Word about Advisory Fees

Well, six words: You’re probably paying way too much!

Determine how much Wealth Management Oversight™ and Proactive Tax Management™ could save you in advisory fees alone.

Cut My Fees In Half

Who’s providing my Objective Second Opinion™?

Fieldstone Financial will provide you with our trademarked, patent-pending Objective Second Opinion™. Fieldstone Financial is a 20-year-old Fee-Only financial advisory firm headquartered in Foxboro, Massachusetts.  While we generally provide our Objective Second Opinion™ reviews by leveraging our technology, our strategic alignment with tax professionals throughout the United States provides us with a unique ability to service your needs all around the globe.


Our process is simple: we seek first to understand you and what you are trying to accomplish and only then provide you with an objective set of observations that will help you see and redefine your path more clearly.  After you understand our observations, a determination can be made if and to what extent you would like to have us help you going forward.  There is no catch, no cost and there are no surprises.  Good luck!   

We’re here to help you redefine your path.  

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