Frequently Asked Questions (FAQ)

7) What type of Investor am I?
Listed below are four (4) general investor types grouped by age.  Notice that each investor type has specific issues associated that are very important to consider in the overall construction of an investment plan.  These are the types of issues we consider when working with our clients and managing their investments.  It’s important to understand these different life stages and how they impact investment strategy.

Early Accumulation (Age 25-39)
These clients face the challenge of developing careers, purchasing first homes, raising families and starting a disciplined saving and investment program.  This period sets the stage for future financial stability.  We find that much benefit is gained when these clients engage in a small amount of financial planning to help set and prioritize goals.  Risk assessment and insurance needs are often part of the planning associated with this phase.

Middle Growth (Age 40-54)
As clients enter their peak earning years they are often confronted with managing more assets along with larger expenses such as college, second homes etc.  Portfolio management during this phase is primarily to promote maximum growth without over-exposure to risk.  It is important that assets are properly managed to provide a solid base for the shift toward more conservative investments in later years.  That shift is more difficult if the assets accumulated are not sufficient to generate the income needed.

Later Growth with Income (Age 55-64)
With retirement approaching and the investment time horizon getting shorter, the portfolio must now shift into a more conservative style that emphasizes some growth, with a greater degree of income generation.  This mix of investments provides a less volatile portfolio while maintaining the potential for inflation-beating returns.  Retirement planning is now more relevant than ever and these clients are often asking the question “Do I have enough money to retire?”

Retirement with Income (Age 65 and up)
These clients face the challenge of maintaining their lifestyle without the earned income to which they are accustomed.  Having substantial savings can provide a reliable and steady income, but often there is need to use some amount of principal to augment the income generated.  Portfolio management is critical in this phase as it can be the longest phase of a person’s life.  Being too conservative and forcing frequent principal distributions can result in the rapid exhaustion of savings, while over exposure to risk can result in excessive loss of principal.  This phase may also present the need to plan an estate for asset protection and transfer.  Many people find that as they get older, leaving a legacy to their heirs or charity is more important to them than ever before.  Careful planning is needed to make sure that goals are understood and plans implemented to best meet them.

8) What is a CERTIFIED FINANCIAL PLANNER^TM Professional?
To become a certified CERTIFIED FINANCIAL PLANNER^TM Professional an individual must fulfill the certification and renewal requirements of the CFP Board. The CFP^® certification provides a sense of security by allowing only those who meet the competency and ethical requirements the right to use the CFP^®certification marks.

9) What does AWMA^® mean?
AWMA stands for Accredited Wealth Management Advisor^SM, a designation earned from the College for Financial Planning in Greenwood Village, Colorado.  The course consists of 15 modules, each pertaining to a specific portion of financial advising.  Each module contains explanations of situations, issues and solutions when dealing with that aspect of financial planning.  The module texts total over 1,800 pages of information and analysis.  The course concludes with a 5-hour, closed-book test covering all of the following course modules:

• Asset Management
• Investors, Policy & Change
• Risk, Return & Investment Performance
• Asset Allocation
• Investment Strategies
• Taxation
• Investing for Retirement
• Investments for Small Business Owners
• Deferred Compensation for Key Employees
• Insurance Products
• General Estate Planning
• Regulatory & Ethics Issues
• Risk Management Issues
• Income Tax and Benefits Strategies
• Estate Planning Strategies

This course and the designation are designed to provide a broad overview of the situations often found in the world of financial advising.  We have our own library of reference materials, articles and of course the Internet to provide more detail when needed.

10) What is Investment Risk?
At Barron Financial Group our primary risk consideration is volatility.  Volatility is the potential for principal loss at any time while holding an investment.  Different asset classes such as US stocks, bonds, cash and international investments have different levels of volatility risk.  Volatility can be quantified from historical data by using standard deviation, a common measure used in statistics.  Larger standard deviations represent greater volatility or risk.  Managing asset class allocations the associated risk is the essence of our portfolio management process.

11) How does Barron Financial Group manage Investments and Risk?
This question goes to the root of our investment process.  We manage risk by using asset allocation and the risk and return associated with various asset classes.  We understand how to use the natural fluctuation of asset class returns to create well-diversified portfolios.  We select and allocate asset classes in an attempt to optimize the return for a given level of risk.