How much should you save? We’ve attempted some general recommendations, but the most important rule of thumb is to save as much as you can. Your current self needs most of your income, but your future self also needs some love. You will never talk to a 65-year-old who says, “Gosh, I wish I had saved less for retirement.”
This was an unexpected honor in Arkansas Times’ Best of Arkansas issue. Our clients are the best. We’re thrilled that they support our business model. Our clients would love to see the industry move toward flat fees and no conflicts. We have a cult following across the country, but it's great that folks in our backyard are noticing. Thank you!
Many of us at Aptus have experience in stock research. We’ve seen how the sausage is made on Wall Street and we can say with some confidence that you can’t beat the Street—you are much better off investing in broad index funds. It’s just extremely hard for the average investor to consistently and systematically pick a portfolio of individual stocks that beats a simple index fund over time. There are many reasons why this is the case, including market efficiency, competition from professionals and positive skew.
Aptus partner Tim Quillin’s op-ed discusses the retirement crisis, legislation to address it and the need for a grass roots effort to Save 10 and Run a 401k. “I ask everyone to commit to save at least 10% of their gross pay for retirement. I don’t take this lightly and I know it will be a real challenge for some families to save 10% of their income. But I also know it’s a struggle for retirees to make ends meet on just social security income. Second, I ask that every business owner in America “Run a 401k.” It sounds more exhausting than running a 5k but trust me, it’s not. Set up a 401(k) plan for your business.”
Our clients are intelligent, savvy, curious, confident, humble and a little bit punk. Our business is subversive. We exist as a reaction to the status quo: a financial services patriarchy charging high fees for overly complex solutions. We teach our clients to manage their own money, simply and effectively, so more of it stays in their pocket. This is dangerous.
Many of our clients use credit cards prudently and accumulate rewards while staying within their budget. They pay off their credit cards in full each month and go on vacations with their reward points. The evidence is pretty strong, though, that people are inclined to spend more when using credit cards rather than debit cards. The 1%-2% you get back in reward points may not be worth it if you spend 10% more than you would without the credit card.
Paying for your children’s college education is both a philosophical and financial challenge. Set goals, start early and be creative. And, of course, adjust based on your children’s aptitudes and attitudes.
At Aptus, we often work with clients who carry high-six-figure or even low-seven-figure student loan balances. The good news is that folks with postgraduate degrees and high levels of student debt can usually manage it down relatively quickly. It can seem overwhelming, but there are many effective approaches to slaying student debt, typically involving the federal Public Service Loan Forgiveness (PSLF) program, refinancing or both.
If the stock market seems especially risky, that probably bodes well for future returns. We believe the global economic system is self-healing over the long run. When there’s a fissure in the system, the components of the system identify, respond and fix the system. We encourage our clients to “set it and forget it.” Focus on what you can control and stay the course with your investment strategy.
Aptus founder Sarah-Catherine Phillips Gutierrez's commentary in Arkansas Business makes a simple ask. This holiday, talk to your loved ones, your co-workers, your friends, your community about money. Urge them to resolve this New Year to call up their HR department and request that 10 percent of their pay go to savings. They might just do it.
Parenting is hard. We get it. We live it. Our primary mission is to love our children, and for most of us it’s mission accomplished on that front. What’s more challenging is nurturing, protecting, educating and encouraging our children so that they eventually become independent, productive, happy adults. We sure don’t have all the answers, but we offer a few [mostly] financial tips for parents.
Many people who give financial advice have business models that make it hard for them to work solely for you and in your best interests. We believe you’re better off—and will have a greater sense of financial control—if you do it yourself with the guidance of a flat-fee or hourly rate financial planner. Avoid those asset under management (AUM) fees, which many investors overlook because they are automatically deducted from their account. If a 1% AUM fee seems like a tiny slice of your nest egg, think of it instead as a 20% chunk of your annual investment returns—now that’s meaningful.
Aptus partner Tim Quillin's guest post on the White Coat Investor blog discusses how to push for change if your employer offers a subpar 401(k) plan with "high, hidden fees, poor investment choices, and conflicted or non-existent financial education." Tim suggests that with "a little self-education and a proactive, cooperative approach, you can help make your plan better."
We believe small business 401(k)s can be less expensive than feared, relatively simple to manage and provide significant long-term benefits to both owners and employees. For high-earning small business owners, the ability to defer taxes on a significant chunk of income each year—more than is possible with a SIMPLE IRA—and avoid the pro rata rule on “backdoor” Roth IRA contributions make 401(k) plans attractive, especially over the long run.
At Aptus, we believe simple beats complex almost every darn time. Find a job you love [or at least don’t hate], spend less than you make, save for rainy days and retirement, and invest simply and wisely. Easy, peasy, lemon squeezy. When we present this concept to clients, we often caveat it by saying we can’t really help them find a job. There are limits to the scope of our work, right? Well, we’re not a staffing firm but we do have some thoughts on finding a job you love.
Arkansas Business published an interesting, well-written story on the FIRE (Financial Independence/Retire Early) movement. There are many great points in the article, but the most important notion is to spend less than we make, pay down debt and save for retirement. Building net worth can liberate us from dead-end jobs and lead to financial freedom.
Tim and Sarah Catherine debate the merits of the FIRE movement (Financial Independence/Retire Early). Is it sparking a generation to save more, or is it setting the bar unrealistically high? And what are ICE and WARM?
Aptus partner Tim Quillin’s op-ed highlights the ongoing regulatory efforts to force brokers to act in their clients’ best interests. “…this is probably not an issue that will be solved by government intervention. Folks, we need to assume that many of the people who give financial advice are not always looking out for us. In the financial world, we need a healthy level of cynicism. If you have the right personality and disposition, you're better off managing your own money.”
Our dream is to help create great employer retirement plans. It's how we can reach ordinary folks who would never otherwise get a financial advisor who is truly only interested in what’s best for them and getting them to save more money. We imagine a world where people get to retire. With dignity. On their own terms.
Whether you develop a financial plan on your own or work with Aptus, it’s important to consider the multitude of contingencies in your life and how to best address each. A coordinated approach to risk will not only provide peace of mind but should also help reduce your spending on expensive insurance and increase your ability to save for retirement.
Aptus founder Sarah-Catherine Phillips Gutierrez's op-ed highlights a critical issue in financial wellness. We think the biggest barrier to saving for retirement is buying too much house. The payments and repairs crowd out the ability to save. The problem is that current rules of thumb encourage people to aspire to unaffordable homes
As we highlight in our Hierarchy of Financial Needs, your retirement outcome is more likely to be determined by your savings rate than it is to be driven by clever stock picking or crafty asset allocation decisions. The first step in investing, then, is to determine how much you can save. The next step is following a tax efficient waterfall. The last, and probably the easiest, step in investing is buying an appropriate mix of stocks, bonds and others assets.
At Aptus, we believe that financial success, happiness and freedom hinges on spending less money than you make (see Our Cash Flow System Makes Budgeting [Relatively] Cool). A good cash flow plan should help you determine the best balance of spending on important things like education and travel while saving enough for an emergency fund, paying off debt and building up retirement savings. Our recommended cash flow system is a relatively foolproof method of regulating and optimizing spending, but the devil's in the implementation.
Aptus founder Sarah Catherine Gutierrez collaborated on a paper recently published in the Journal of Graduate Medical Education. The title is “What Should I Do With My Student Loans?” The paper provides an excellent overview of the options available to physicians with educational debt.
New doctors getting their first contract out of residency are typically going to have a big, one-time jump in income while also being saddled with a mountain of student loan debt. Their negative net worth makes it hard to hire financial advisors that charge a percent of assets. Their high income makes them targets for less reputable advisors, often selling complex, opaque and expensive permanent life insurance policies. We offer 10 financial recommendations to these new doctors.
Aptus recently provided education, counseling and enrollment assistance for a new 401k plan with around 2,000 eligible employees across several states. Participation in the plan increased more than 30% and savings rates improved meaningfully as well. We were excited to see the positive impact on the plan, but we were most surprised by the lessons learned along the way. We discovered new ways to think about courage, skepticism, trust, shame, leadership, communication, culture, empathy and life.
Interesting article in TheStreet by Ellen Chang on the many reasons to part ways with traditional financial advisors. '"Some advisors are not fully disclosing their inherent conflicts which make it difficult for them to provide truly unbiased advice," said Tim Quillin, a CFA and partner at Aptus Financial, a Little Rock, Ark.-based financial planning firm.
Aptus Partner Tim Quillin wrote a guest column in Arkansas Business on 401(k)s. "If you’re a small-business owner or executive, please go through a formal review of your 401(k) plan. Chances are you can do better. A high-quality 401(k) plan shows employees you care about their long-term future and often provides peace of mind that makes your workforce healthier and more productive. It matters."
After doing plans for over 250 clients, with an average income of $300,000, we can say with confidence that of all the important things we do for clients—from tax planning to investment planning—absolutely nothing is as important or life changing as cash flow planning. One of our greatest challenges at Aptus has been finding a cash flow system that works universally for our clients. And we have it.