Taking Charge of Your Personal Finances
NEW YORK—Judged purely from the outside, Arthur Flores looks like just another finance guy. What sets him apart, however, is his motivation for doing business.
“I want to help people with their personal finances so they have time for other important things,” says Arthur Flores, Certified Financial Planner (CFP), of Flores Financial Planning.
“My end goal is to help people with their financial concerns and questions—to diagnose and provide solutions and recommendations—similar to a doctor. You go to a doctor, they help you, and they charge you a fee,” explained Flores.
“I have a responsibility to act in our clients’ best interests.”
Unlike other financial planners, Flores puts his money where his mouth is. After 17 years of working for the likes of Citigroup and Morgan Stanley, he left his senior position and went independent—to focus on what’s most important in his opinion.
“I could have chosen other careers in the financial industry, but I felt fee-only planning was the right way to service clients,” he said.
As a fee-only planner, his clients get unbiased and objective financial advice. While big corporations and affiliated agents also work to provide value to the client, they sometimes have conflicting interests.
For example, a large broker-dealer might benefit from selling the client one of its own products, rather than a lower cost alternative, to collect commissions or fees associated with the sale.
“I don’t get paid by commissions or a third party, so this helps to minimize any conflicts of interest,” Flores said.
“I work with clients on a fiduciary basis, meaning my only loyalty is to you, my client, not a brokerage firm or a mutual fund company.”
“I don’t sell products like mutual funds, insurance, or annuities, but they may be part of my recommendations. For those types of services, we outsource them or work with your investment, insurance or tax specialist,” he said.
When it comes to compensation, everything is clear-cut. “We discuss a fee up front. I give you an estimate. There is a client service agreement involved. Everything is transparent. The fees and the process itself are transparent. There are no hidden costs,” Flores said.
Because Flores is not focused on specific transactions or certain affiliated products, he can take the whole life of his client into consideration when designing a plan.
“That’s what fee-only planning does, I get to know that person before we start recommending anything,” he said.
He starts by assessing the clients’ personal situation, examining different risk factors from retirement to taxes.
He then goes on to determine the client’s needs—both short-term and long-term goals—and then devises a plan on how to reach them, with an emphasis on retirement planning. Within his big picture framework, Flores also offers investment management services. He can partner up with other professionals such as accountants, lawyers, and tax advisers.
“Helping you see the big picture is what a financial planner does,” he said.
Epoch Times met Arthur Flores in New York to discuss his unique approach to financial planning.
Epoch Times: Why did you become a fee-only financial planner?
Arthur Flores: People are busy and juggle many responsibilities, like helping their kids with schoolwork, managing a business, and working full time. I have seen how planning can make a difference in people’s lives.
Epoch Times: How do you measure success then?
Mr. Flores: My success is measured by client feedback and by tracking their progress in reaching their goals. Clients come to me with very little understanding of their financial picture. At the end of the process, my goal is to educate them about their finances. If I can achieve that then I have achieved my goal. I’m there every step of the way.
If everything goes well, my clients gain peace of mind and a sense of control over their financial situation that justifies the effort and the money spent on planning.
Epoch Times: How does a person begin?
Mr. Flores: I start with a no obligation and complimentary in-person or telephone meeting. I get to know the individual or couple first before we talk about their finances. I then ask if there are other individuals in their lives that they take care of, like children or aging parents.
Once I understand who these important people are in their lives, I move on to another category, and that is health. Health can have an impact on some financial planning goals.
We then move on to discuss their goals and fears. Lastly, we talk about their assets and liabilities.
Epoch Times: What do you feel is the most pressing financial issue that people should be concerned about today?
Mr. Flores: Retirement. I feel people are not prepared or even worried about retirement. Whether retirement is five years away or even 20 years away, I strongly feel that people should start planning today, and it’s never too late to start.
What people don’t know is retirement can be very long, like 30 years, and their hard-earned savings is the only thing that’s going to really pay for their day-to-day expenses. Of course, there is social security, but it may not be enough.
I also find that many financial advisers out there are not experienced in working with retirees and managing their retirement portfolio. Creating a paycheck to meet retirement expenses from clients’ investments is very different from managing a portfolio in pre-retirement years. There is a new set of risks involved, like health care costs and inflation.
Epoch Times: If I’m working with a financial adviser now, what questions should I ask him or her?
Mr. Flores: I would start with how do they get paid, and whether they are acting as a fiduciary. Then I would follow with their investment philosophy, professional designations, and experience. I also help people in this area by providing them with a second opinion on the planning that has already been done by another adviser.
Epoch Times: How do you measure your investment return?
Mr. Flores: My investment philosophy is to keep it simple and to keep it low cost when possible. That means using investments such as index funds or ETFs. The second part is being diversified by having an asset allocation that matches your risk tolerance and time horizon.
Every individual gets their own performance benchmark. And their benchmark is really the expected rate of return they may need in order to achieve their personal goals.
If we are talking about retirement for example, I might say that you need an expected rate of return of 6 percent per year. Your personal benchmark will help you to monitor your progress in meeting your financial goals. We also factor in other variables such as inflation and taxes into your plan. Of course, there are never any guarantees that your portfolio will generate the expected rate of return.
Epoch Times: And your compensation?
Mr. Flores: As a fee-only planner I am compensated solely from fees paid by my clients, and I do not accept commissions or compensation from other sources. My fees can be structured in many ways, such as a flat fee or retainer, an hourly fee, or a percentage of assets under management. Before any financial planning engagement is started, we discuss fees and services to be provided to the client.
Epoch Times: Mr. Flores, thank you very much for the interview.
Arthur Flores, CFP®, is a Certified Financial Planner with Flores Financial Planning, which is based in New York. For more information, visit www.floresfinancialplanning.com or call Arthur at (917) 740-3898.
The interview has been edited for brevity and clarity.