What does CFP® mean?

CFP® means CERTIFIED FINANCIAL PLANNER. CERTIFIED FINANCIAL PLANNER™ practitioners are required to complete coursework in five different content areas which include: retirement, insurance, estate, investment, and tax planning. Once all five courses are completed with an acceptable level of competency, the individual is eligible to take the CFP® Board Exam. Many professionals compare the CFP® Board Exam to the Bar Exam or the CPA Exam in terms of difficulty. Yet, passing the exam is not enough as the candidate must possess at a minimum a Bachelor’s Degree and also have three years of experience in financial planning or a related field before the he/she can be licensed to use the mark. The CFP® Mark is licensed by the Certified Financial Planner Board of Standards in Denver, Colorado and Washington, D.C. Working with a CERTIFIED FINANCIAL PLANNER™ practitioner guarantees that you are working with someone who has a high level of expertise in the field of financial planning and, equally, is held to a fiduciary standard of care.

What does 'fiduciary capacity' mean?

We hold ourselves out as operating in a fiduciary capacity. Everything we do must be in the client's best interest. We are placed in a position of trust. You trust us to do what is best for you, and that is truly what governs our firm. Every question that arises in our firm is answered by first asking ourselves the question, "What is best for the client?"

What does Fee-Based mean?*

Laguna Wealth Advisors, LLC is a fee-based financial planning and investment advisory firm located in Aliso Viejo, CA. The revenue of our firm is derived from professional fees we charge our clients for services rendered much like a physician, lawyer or accountant. These fees are usually a percentage of the assets under management (AUM), billed quarterly in arrears. We do not receive compensation from transaction-based commissions. We strongly believe in fee transparency and will always disclose to our clients and prospective clients the professional fees for services requested of us prior to our engagement.  

How can I find a Financial Advisor that I can trust in the Southern California area?

The best way to find a Financial Advisor that you can trust is to seek a referral from a friend or associate who is happy with and being well-served by the person he or she uses. When selecting a financial advisor look specifically for someone who is a Certified Financial Planner™ Practitioner and has a fee-based or fee-only business model. This will help ensure that you are dealing with someone who is a professional, operating in a fiduciary capacity and not trying to earn a commission by selling you a product. CFP® practitioners operate in a fiduciary capacity - they always put the best interests of their clients first – and are held to the highest ethical standards.

Another way to find a Financial Advisor you can trust is to use the referral website the Certified Financial Planner Board of Standards, Inc (www.cfp.net). The CFP Board is the governing and licensing body of all CFP® professionals.

How do you manage investments?

We manage your investments by carefully allocating them among many different asset classes to provide you with investment diversification. Your portfolio is carefully monitored and quarterly reports are sent to you to update you on the performance of your portfolio.

  • Throughout the year we determine what percentage of portfolios to allocate to various asset classes such as international, large US stocks, small US stocks, commodities, real estate, bonds, etc...
  • We review all asset classes at least quarterly and the current approved investments are compared with other investments in the same asset class or peer group at least quarterly.


How often do you buy and sell assets?

We generally sell investments when they no longer meet our investment criteria or your needs. The proceeds are normally invested in a suitable replacement. Furthermore, throughout the year and at year-end in taxable accounts, we will harvest tax losses if available, as well as evaluate the impact of capital gains distributions on your portfolio, possibly avoiding such distributions if necessary.

How often do you review my portfolio?

Your portfolio is reviewed at least four times per year to make sure it is line with your designed allocation. We will also review your portfolio when you deposit or withdraw cash, if we change the overall allocation, or if an investment in your portfolio no longer meets our criteria. 

Do you require discretion over my investment accounts?

While not required, having trade discretion on accounts is preferred. When you first meet with us, depending on the complexity of your financial planning process and the services you ask us to perform, we will provide you with a recommended investment strategy and portfolio for your review and approval.  Discretionary authority grants the advisor the ability to make specific security changes when necessary without having to contact you for specific trade instructions. Once these adjustments are made to your Portfolio(s), the Custodian (usually Charles Schwab & Co) will send trade confirmations to you for verification.

How do you follow up with me? How often will we meet?

In the first year we recommend meeting two to four times. Thereafter, we allow you to determine how often we meet. For some people, annual or semi-annual meetings are sufficient, while other people prefer quarterly meetings. We can meet in person or by phone. The bottom line is, if you feel the need to talk with us, call us and schedule a meeting. If we need to talk to you, we will call or email you to set up a meeting to discuss your situation.

In terms of follow up, generally we will verbally check with you quarterly to make sure all financial planning assignments have been completed or implemented and will provide you with an updated checklist should that be necessary. As part of our planning initiatives, we will arrange meetings for legal or tax consultation or implementation if you desire us to. We will also accompany you to these meetings or we will arrange for them to be here at our office. We set a schedule of tasks that need to be accomplished to fulfill your planning implementation, and periodically follow up to measure your progress or whether you are running into any stumbling blocks that we can help you overcome.

What are your fees?

The fee for stand-alone financial planning is $250 per hour, and a plan typically ranges from $500 to $1,500. The amount of the fee is driven by your specific financial planning needs. Financial Planning fees are paid bi-weekly in arrears with the balance due at the presentation of the Plan to the client.

The annual fee for investment management of up to $500 thousand is 1.50% of the assets we manage on your behalf. It is billed quarterly, in arrears. For example, at the end of each quarter, we bill 0.375% against your account balance as of the close of the last day of the quarter.

On amounts between $500 thousand and $1 million, the annual fee is reduced to 1.25%. On amounts between $1 million and $3 million, the annual fee is 0.90% and on amounts greater than $3 million, the annual fee is 0.65%. We bill your account directly so that your rate of return is always net of our professional fees.

When my account goes down, do I still pay you?

Yes, whether the markets are moving up or down, we are working diligently to manage your money in accordance with your Financial Plan, your Investment Policy Statement parameters and, more importantly, your goals and objectives for the future. Your Portfolio(s) may decline because we have set up a program for you to withdraw funds systematically from your account or because of adverse market conditions. We want your Portfolio(s) to grow, however we also want to preserve your investments in a down market; therefore, we design plans to be sure your investments are properly allocated and diversified to reduce your concentrated exposure to volatile asset classes. We are here to advise you for the long run to meet your current and future spending goals.

Asset allocation and diversification does not assure a profit nor protect against loss.

When can I retire?

When you have enough money to meet your long term goals. Of course the age you can retire is contingent upon a number of factors such as life expectancy, the level of income desired during your retirement, your current age, the amount of money you have saved, future inflation rates, projected investment returns and the amount of money you plan to contribute to your retirement fund/401(k). This is a tough question to answer as it is unique to everyone. Through a collaborative planning process we will strive to answer this question for you.

What retirement plan is best for my business?

The type of business you are in and your goals and objectives will determine the retirement plan most suitable for your business. Your company's demographics will also factor into which retirement plan is most appropriate, including the average age of your workforce, salaries, etc. We specialize in designing retirement plans for small to medium businesses and professional offices.

Can you help me set up or improve the retirement plan I have for my business?

Laguna Wealth Advisors specializes in the conversion and management of small to mid-size Pooled-Account Profit Sharing plans into participant-directed accounts.  This conversion will allow the participants’ investment account to be better aligned with the needs, goals, and risk tolerance of each participant.

How much life insurance do I need and what type?

The amount of life insurance you need depends on the promises you have made or wish to make to your loved ones. We can determine exactly what amount of life insurance you will need to fulfill these promises.

You only need enough life insurance to cover any promises you have made. For example, if you have children to educate or a mortgage to repay you will need life insurance to keep these promises to your loved ones. Likewise, and equally as important, you will need to consider the replacement of your income should you not be here to enjoy this with your loved ones.

We can help you determine the appropriate amount of life insurance you will need to fulfill your promises. The appropriate amount of insurance is the difference between the amount of assets you have already accumulated and the amount of assets needed to meet your commitments. The type of life insurance you may need can range from term insurance to a more permanent type of insurance depending on your individual circumstances.

What other forms of insurance are most useful to me?

Other forms of insurance that may be useful to you include, but are not limited to: disability, long-term care, health, liability, home and auto. Having adequate coverage in each area is an important part of staying on track to meet your financial goals.

What estate planning documents do I need?

The estate planning documents you need depend upon your specific circumstances. However, most estate planning documents generally include a will, trust(s), medical directives, durable powers of attorney, and HIPPA documents. It is advisable to work with an estate planning attorney to draft the appropriate estate planning documents you require and we can help guide you in these matters.

How can I save on income taxes?

Taxes can be saved in a variety of ways ranging from simple measures such as, reviewing allowable deductions, gifting appreciated stock, maximizing contributions to an IRA or a qualified retirement plan, to more complicated strategies such as reviewing your business structure or employing family members.

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

One of the most popular college savings vehicles in place today is a 529 College Savings Plan. Each State has their own 529 Plan and the benefits vary by State. However, there are many other savings vehicles such as the Coverdell Education Savings Account (ESA), custodial accounts and other accounts that can be useful when saving for college.

We can guide you in choosing the right account for your education funding needs. Also, we will happily calculate the savings required for your child's education based on expected rates of return, years and type of education to be funded, and inflation of college costs.

However, rule number one is to save for retirement first, children's education second. You will potentially spend millions of dollars in your retirement and hundreds of thousands of dollars on your child's education. Your child has many years ahead of him/her to pay college debt at reasonable rates, however, upon retirement, you are out of time and you better have saved enough money.

How can I prepare for college funding?

Start saving for your children's college education as early as possible. You will need to determine what type of college you would like your children to attend and how much of the cost you are willing to support. Two to three years prior to your child starting college, you need to learn about FAFSA (Free Application for Federal Student Aid), and college funding from federal sources, state sources, and scholarship programs. Do not pay for scholarship search engines. They are free. 

Can I withdraw money from my retirement accounts prior to age 59 ½ and avoid tax penalties?

Under limited circumstances you can withdraw money from certain accounts and avoid the 10% early withdrawal penalty. It is important that you work with your Certified Financial Planner™ or tax accountant to confirm that you qualify for one of the exceptions prior to taking a distribution.

  • For a Qualified Plan, exceptions to the 10% early withdrawal penalty are:
    1. Distributions upon death or disability of the participant;
    2. Distributions after separation from service that are part of a series of substantially equal periodic payments over the life of the participant or the joint lives of the participant and the beneficiary;
    3. Distributions after the participant's separation from service, provided the participant reached age 55 before separating from service;
    4. Distributions to a non-participant under a qualified domestic relations order
    5. Distributions not exceeding deductible medical (determined without regard to whether deductions are itemized);
    6. Certain distributions by ESOPs of dividends on employer securities;
    7. Distributions made on account of the IRS's levy against the participant's account;
    8. Qualified hurricane distributions;
    9. Qualified reservist distributions; and
    10. Certain loans from the Qualified Plan.
  • For an IRA account, all of the exceptions listed above apply, except #3. There are also some other exceptions to the 10% early withdrawal penalty that apply to IRA's only:
    1. Distributions used to pay medical insurance premiums of unemployed individuals;
    2. Distributions used to cover qualified education expenses for you, your spouse, child or grandchild;
    3. Distributions of up to $10,000 in your lifetime to cover First-Time Homebuyer Expenses; and
    4. Distributions representing the return of non-deductible contributions.
    5. Distributions according to Rule 72-T of the tax code. {link to http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments }

Why and when should I rollover my 401k and how do I do it?

Many employer retirement plans have fairly limited investment options available to employees. These limitations protect the employer from liability. From the employee's standpoint, such narrow investment choices may limit your ability to reach your retirement goal. By rolling your 401(k) to a Self-Directed IRA you can further diversify your portfolio in accordance with your goals or help sustain it through a rocky market.

  • A rollover is typically initiated as a result of retirement or separation of service from your Employer. Therefore, it is considered a life-event and should be considered within the context of a Financial Planning engagement so the appropriate election is made based on your goals and objectives for the use of these resources. You can avoid taxes by opting for a direct rollover (aka Trustee to Trustee transfer).
  • Sometimes it might be advisable to roll your 401(k) to your new employers plan or leave your 401(k) at your former employer altogether (there are new rules that allow you to withdraw money from your 401(k) between age 55 and 59 ½ without incurring the 10% early withdrawal penalty). You should always check with your advisor before initiating a rollover to make sure that a rollover is appropriate given your specific circumstances.