Frequently Asked Questions
General
How is financial planning different than investment management?
Financial planning is a process that maps out the many facets of your financial life (e.g. income, savings, expenses, loans, assets, etc.) in relation to your life goals. This map—the financial plan—guides you on your journey towards achieving your goals, laying out a path with the highest probability of success.
Investment management is the process used to manage your assets in concert with the financial plan and your goals. Effective investment management helps ensure you have the resources you need, and when you need them.
What’s the difference between a fee-only advisor and a broker? Which type are you?
Fee-only financial advisors earn income exclusively from the fees their clients pay them. Fee-only advisors are held to a fiduciary standard which means every decision they make must put their clients’ best interests first. Since they cannot earn commissions for selling investment products, fee-only advisors are incented to select best-of-breed investment products for their clients.
Brokers earn income from commissions that investment product companies pay them. Brokers are held to a suitability standard that simply requires they direct clients to products that fall within their risk tolerances, without consideration of other factors, such as cost and quality. This compensation plan can create conflicts of interest since brokers may direct clients to investment products that pay higher commissions, rather than products best for their clients.
Mandala Financial Advisors is a fee-only financial advisor.
Do I need to have a minimum amount of investments to work with you?
No. Unlike most financial advisors, we do not have an assets-under-management (AUM) minimum. We offer our full services at an affordable flat fee for those who have $250,000 or less of investments for us to manage.
I manage my own investments. Can I engage you for financial planning, only?
Yes. Our services and fees are structured so you can engage us for holistic financial planning, alone. We’ll assess your investment risk tolerance and recommend an investment asset allocation designed to maximize your plan’s success. You can then take that information and craft your own investment portfolio. Most of our clients do engage us for investment management as it brings them peace of mind knowing an experienced professional is managing their assets.
Do I need to sign a long-term commitment to work with Mandala Financial Advisors?
No, there are no long-term commitments. All agreements you sign with us specify services may be terminated by you with a 30-day advance notification to us in writing.
Can you work with clients in all 50 states?
Yes, we are able to work with clients regardless of their state of residence.
Do you work with institutional clients such as family offices and charitable foundations?
Yes, we work with family offices and charitable entities.
Very often family offices do not have in-house expertise or man-power to offer personal financial planning services to individual family members. We are brought in to provide comprehensive financial planning services to individuals and family segments, working in concert with trustees and the family office CFO and/or CIO. Family offices also use our investment management services to manage individual and pooled family portfolios.
We also provide investment consulting for nonprofits and foundations where there is an interest in leveraging our expertise in ESG, socially responsible, and impact investing strategies. We are able to service a variety of needs including asset allocation, investment manager search, and implementation of the investment program.
Financial Planning
What are the benefits of ongoing financial planning versus a one-time-only financial plan?
A one-time-only financial plan provides you a valuable map. Yet keep in mind the financial plan is static and can soon become outdated as your life circumstances and goals evolve.
On-going financial planning is dynamic; we’ll update your plan as your life and the world around you evolve. We follow a service calendar and review the facets of your financial life regularly. We provide financial coaching that guides you towards developing good financial habits. You are able to reach out to us with any question you have in the moment at no additional cost. Most of our clients end up using ongoing financial planning services because they appreciate knowing we are proactively looking out for their financial well-being and helping them stay on the path to success.
I’m a small business owner. Does my business become part of the financial plan?
Yes, your business is an important part of our holistic financial planning process. We understand the challenges that come with business ownership such as managing variable income, cash flow, and tax impact. Some of our business owner clients also engage us for add-on projects that include reviewing their business plans, holding business strategy meetings, and providing a list of recommendations to help maximize the financial and emotional benefits their businesses provide them.
I’m very busy. Will the financial planning process require a lot of my time?
The initial stages of the financial planning process leading up to the initial plan is the largest single-concentration of time you’ll need to invest. You should plan on committing 6-8 hours of your time over a 6-week period. Once the initial plan is completed, your time commitment is closer to an hour per month.
Can you help me pay less taxes?
Most of our clients emerge from the holistic financial planning process paying less in total taxes. We apply a variety of tax planning strategies specific to your situation.
I see a lot of value using a professional for financial planning, but my partner/spouse doesn’t feel the same way. Do you have any suggestions?
It’s not uncommon for one partner in a relationship to want to tackle financial planning as a DIY project. People with business degrees often feel obligated to manage their own finances. Others view a financial advisor fee as an expense that eats into investment returns rather than as an investment in greater long-term results.
We admire people who are actively engaged in their financial future and encourage this behavior. Yet most people don’t have the time and tools to create a comprehensive financial plan that could answer a question such as, “If we buy this bigger house now, how could it affect our ability to retire at 60 years old.” A spreadsheet cannot handle the complex interplay among factors that go into answering that question. A financial advisor, with the right experience and tools, can provide an answer in minutes. Having the support of an expert can save you from making critical decisions based on incomplete information. We suggest encouraging your partner to join you on a complimentary introduction call with us.
Investment Management
Almost all my savings are held in my employer’s retirement program (e.g. 401k, 503b). How would you work with me on investing those assets?
Your investments held in your employer-sponsored retirement program are an important part of our holistic financial planning process. While we would not directly manage those assets, we would advise you on how to best allocate your assets among the funds available in the plan, as directed by your goals and your risk tolerance.
Do you invest client portfolios in mutual funds, exchange-traded funds (ETFs), or individual stocks & bonds?
We use funds and individual stocks & bonds in our clients’ portfolios. We customize the types of investments in each client’s portfolios to their particular financial circumstances (e.g. fee sensitivity, tax exposure) and level of intentionality to create environmental and social impact.
Should I expect lower financial returns by using sustainable investing strategies?
The strategies we use operate under a dual mandate – positive long-term financial return AND positive environmental and social impact using research and shareholder engagement. In most cases the sustainable investing strategies we use are designed to meet or beat the returns of traditional funds and benchmarks that don’t operate under a sustainability mandate. We aim for win-win scenarios for our clients.
In certain cases, clients elect to invest in assets that have a high degree of environmental or social impact with the understanding the returns will likely be lower than traditional investments.
I’m just one person. Can I really use my investment portfolio to make an impact on environmental and social issues important to me?
Your vote counts in an election for a candidate who supports issues important to you. Similarly, each dollar you invest in sustainability is a vote of support for those businesses advancing your environmental and social justice values. Businesses are becoming more and more aware of their sustainability ratings and how that affects investor sentiment. Also, the managers of investment funds used in our client portfolios leverage their position as major shareholders, encouraging companies held in their funds to improve their sustainability transparency and policies.
What is greenwashing? How is it related to ESG investing?
Greenwashing is a term used when businesses or investment fund managers have overstated the positive environmental and social impact of their policies and strategies. As more businesses and investment managers have recognized the high interest and demand amongst the public in supporting sustainability, some have attached the ESG (Environmental Social Governance) and other sustainability labels to their organizations and investment products even where there’s little or no measurable environmental and social impact.
The investment industry recognizes this is an issue. The Securities and Exchange Commission (SEC) has begun to establish a set of standards designed to help weed out the sustainability imposters. We welcome these standards.
We apply a strict due-diligence process when selecting investment managers and strategies. We don’t trust labels; there’s no substitute for looking under the hood. We work with investment managers and funds that demonstrate both strong performance history and strong ESG intention and impact.