FAQ for Blue Chip Partners for Investment and Financial Management - icon-charitable-giving Financial Advisor Relationship 

Your life and finances are inextricably linked. As your fiduciary, Blue Chip Partners is required to act in your best interest. We take the time to learn your motivations, priorities, and desired outcomes in life. Here are some questions to consider when you evaluate your relationship with your advisor:

  • Does your advisory team have the experience and credentials to provide comprehensive wealth management advice?
  • Do you feel comfortable sharing highly personal information that is important to your family’s financial situation?
  • Do you receive personalized recommendations that demonstrate that your advisor actively listens to your concerns?
  • Do you feel that the amount of communication you have with your advisor matches your expectations?
  • Do you feel that your advisory fee is appropriate for the level of service provided?

FAQ for Blue Chip Partners for Investment and Financial Management - icon-investment-management Investment Management

Few investment advisors actually manage their client’s investments. The traditional approach is for the advisor to build a portfolio of the best managers and to manage the managers. It is not uncommon for clients to have portfolios of 20 or more managed investments. Under this approach, the advisor delegates the investment function to third parties who have no direct relationship with you. The weakness of this approach is that (1) there is an additional layer of fees, and (2) the ability to efficiently manage the tax impact of buy and sell decisions is significantly reduced. Blue Chip Partners’ investment approach is significantly different. We manage a portfolio of high-quality companies with a track record of paying and growing their dividends. Instead of investing in the whole market, we focus on owning “Blue Chip” businesses. When evaluating an advisor’s approach to investment management, the following questions should provide valuable insight:

  • Does your financial advisor have a defined, understandable investment strategy?
  • Does your advisor manage your investments, or is he/she a manager of managers?
  • Do you understand the total costs you are paying for investment advice, including outsourced investment managers (i.e. Mutual Funds, ETF’s, Separate Account Managers)?
  • Does your advisor evaluate your personal tax situation when considering investment buy and sell decisions?
  • How does your advisor demonstrate that he/she routinely reviews your investment portfolio?

FAQ for Blue Chip Partners for Investment and Financial Management - icon-estate-planning Estate Planning

You spend your entire life accumulating assets, but there is a good chance you have not given appropriate attention to planning for those who will receive them after you pass. Estate Planning is much more complicated than it appears. While you hopefully have up-to-date estate planning documents, you may be unaware that these documents only become fully effective when assets are retitled as recommended by your attorney. You may be even more surprised to learn that if you have retirement accounts and life insurance where you have named individual beneficiaries, these assets will pass outside of your estate plan. In addition, if you have an account or asset that is jointly owned with another person, these assets likely will also pass outside of your estate plan. Your advisor can play an important role in ensuring your estate plan reflects your wishes:

  • Do you fully understand the important aspects of your estate plan?
  • Has your advisor confirmed that you have taken the actions recommended by your attorney to ensure that your estate plan is implemented?
  • Does your advisor understand the importance of properly titling bank accounts, investment accounts, and real estate and how asset titling can greatly change the fairness of your estate plan?
  • Does your advisor understand the important role that beneficiary designations play in your estate plan, and have they confirmed your designations are up to date?

FAQ for Blue Chip Partners for Investment and Financial Management - icon-retirement-planning Retirement Planning

Most people view retirement as an event when it is actually a chapter of life likely to last longer than the time spent in school. Your financial advisor should be able to help you determine when it is appropriate for you to retire and how to best maximize your financial assets throughout retirement. Most people focus on accumulating a certain amount of assets in order to retire. A better approach is to focus on how much cash flow you will need each year of retirement. It is crucial that you understand the following questions, ones that Blue Chip Partners can help you navigate:

  • Do you know how much cash flow you will need on an annual basis during retirement?
  • Do you have a written plan of how you will generate the cash needed to fund your retirement?
  • What role will social security play in your retirement, and have you considered available claiming strategies that will maximize benefits?
  • Do you understand how distributions from retirement plans are taxed, and are you taking steps to potentially reduce the tax impact of required minimum distributions?
  • Do you understand the importance of saving in non-retirement accounts to produce cash flow that is taxed at more advantageous rates during the distribution stage?

FAQ for Blue Chip Partners for Investment and Financial Management - icon-tax-planning Tax Planning Strategies

Minimizing income taxes is an important part of wealth planning. It is critical for your advisory team to have personal income tax expertise and/or a direct line of communication with your tax consultant. Tax saving opportunities are often extremely time-sensitive so waiting until return preparation is often too late. Tax changes occur with increasing frequency and it is important that your advisor is committed to staying abreast of the changing landscape. Make sure that your financial advisor is evaluating these for you:

  • Do you feel confident that your advisor understands your tax situation sufficiently to provide valuable, proactive advice?
  • Does your advisor review your tax return each year?
  • If you use a tax preparer, does your advisor have a line of communication with the preparer to discuss tax-saving strategies?
  • Does your advisor understand how the new tax law impacts you and are they recommending strategies to minimize taxes?
  • Does your advisor proactively recognize capital losses and consider the tax impact of portfolio changes?
  • If you are retired, is your advisor giving appropriate attention to whether distributions should be taken from retirement accounts or nonretirement accounts?

FAQ for Blue Chip Partners for Investment and Financial Management - icon-tax-planning Executive Compensation

Stock-based compensation tends to accelerate as executives climb the corporate ladder. Unfortunately, few executives understand the true value of their equity awards, including the Time Value component of option grants. An accurate understanding of this figure can play into retirement projections, estate planning, and negotiations when transitioning to a new company.

The overall value received by equity awards occurs when an option is exercised or restricted stock vests. A reactionary approach to monetizing equity awards, such as selling company stock simply to cover a family expense, is suboptimal. Having a defined strategy, such as a 10b5-1 plan for liquidating shares, can be the key differentiator. Executing a proactive plan for equity awards greatly enhances their impact on overall net worth.

  • Have you considered the implications of a highly concentrated position in company stock?
  • Do you understand the Time Value component of your stock options?
  • How are you deriving the price targets for your 10b5-1 plan?