Our Investment Philosophy
Inspiration Financial Planning believes that the best way for individual investors to be successful is to focus on low-cost, broadly diversified, easy to understand portfolios. Clients should invest appropriately based on their time horizon and risk tolerance, and plan to ride out market highs and lows over the long-term.
Inspiration Financial Planning helps clients with their investments in three distinct ways.
Clients with a company sponsored retirement plan
For these clients, IFP assists in determining the appropriate asset allocation based on the results of the Risk Tolerance Questionnaire. Once that is determined, IFP researches available options within the plan that will fit the asset allocation, while also taking into account the following criteria:
- Global Diversification
- Simplicity of managing over time
- Investment fees
In some cases, IFP may also recommend an allocation and investments within the plan that, when coupled with accounts outside the plan, achieves these objectives at a household level instead of an account level.
Clients with assets outside of a company sponsored plan
For these clients, IFP primarily recommends working with First Ascent Asset Management (FAAM), a third-party investment manager that IFP collaborates with. FAAM is a Registered Investment Adviser registered with the SEC that works only with other advisers to help them serve their clients.
FAAM functions as the investment “back-office” for IFP in terms of investment, economic, and market research, portfolio construction, account trading and rebalancing, and account opening and maintenance activities. Actual accounts and investments are held with TD Ameritrade as the custodian, and all investments are publicly available securities.
FAAM has three types of portfolios available to IFP clients: passive-only, core passive plus active satellites, and factor select. Each type of portfolio has various versions to match client risk tolerance/allocation needs, and also has a tax-sensitive version for those accounts subject to taxation each year. IFP assists clients in selecting the appropriate allocation, portfolio series, and type of account for their needs.
IFP has chosen to work with FAAM for several reasons:
- IFP and clients sit on the same side of the table when examining the investment options
- Outsourcing for professional management of portfolios is a cost-effective way for IFP to provide this service to clients
- Low fixed-cost structure for investments compared to other alternatives
- Various portfolio options for different types of investors
For clients choosing this option, they will sign a separate Investment Management Agreement with FAAM, and pay FAAM directly for the Investment Management services. Clients may also have the option of deducting their IFP fees from their investment accounts held at the custodian and managed by FAAM.
Clients who choose to manage their investments themselves
For clients with assets outside of a company retirement plan that wish to maintain investments themselves, IFP recommends clients consider the services of a “robo-advisor”. This is a type of investing service where a company such as Vanguard, Betterment, Charles Schwab, Fidelity, TD Ameritrade, etc offers similar services to FAAM, for a fee, usually calculated as a % of assets under management. The company usually has a set number of portfolios from which to choose, offers rebalancing and tax-loss harvesting, and manages the accounts and trading processes.
IFP will assist with selecting the appropriate asset allocation, types of accounts, and help clients understand the fee structure of a particular robo-advisor. IFP will also work with clients to make sure their household investment picture is appropriately structured based on the robo-advisor the client chooses, and types of accounts the client has.
Under this option, clients are responsible for choosing their own investment manager, maintaining their accounts, and paying investment management fees that are separate from and in addition to IFP Ongoing Comprehensive Planning fees.
IFP does not make individual investment recommendations in outside accounts.
Make sure you understand all the fees you could be paying on any investments you have.