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The following is an excerpt from the May 27, 2016 issue of the Birmingham Business Journal which featured managing partner DeLynn Zell. 

Q. How can I create an ideal financial plan for the different stages of my life?

Zell: There is no way to create a plan one time that is suitable for every stage of life. A plan isn’t something you do once, put on a shelf and follow it for the rest of your life. We want a plan to be a document that is constantly updated and adjusted for each change that somebody goes through in their lifetime.

Q. What is the top challenge people face when trying to craft a financial plan?

Zell: Sometimes, the biggest challenge is just getting started. People have a hard time getting organized and getting their information to us. Another challenge is with couples who have not really talked to each other about their goals. Sometimes that meeting with us in the first time the couple has ever really articulated what their goals are, and they are not on the same page.

Q. What is  your top advice for someone looking to improve their long-term financial situation?

Zell: I often work with people who are getting ready to retire, and the best thing they can do to improve their situation is reduce and control their debt. That is the one thing we see that can derail long-term security, especially for people in that age group. They enter into retirement with large mortgage payments and debts. The other thing we see – and this is a newer trend that I’ve seen more in the past ten years – is clients’ long-term security eroded by supporting children much longer than our parents of my generation. That often expands to helping with grandchildren’s education expenses.

Q. There have been some recent ups and downs with the stock market. How should that impact my financial plan?

Zell: A large majority of our clients go through a comprehensive planning process, so we try to let that plan drive our actions. When the market goes down and people call, I remind them that we have already planned for market volatility. Because if you have a good, solid financial plan, it should take into account the ups and the downs. We use software simulations that help project what the long-term looks like, factoring in varying ranges of return. Educating clients about market volatility and the impact of making emotional decisions when the market drops is key.

Q. What are some of the reasons an individual or family should use a CERTIFIED FINANCIAL PLANNER™?

Zell: There are numerous reasons. Unfortunately, we are in an industry where anyone can call themselves a financial advisor, financial planner, wealth advisor, or any other term they can come up with. The fact is if you are working with a CFP®, you are working with somebody who holds themselves to a different standard in terms of higher education, experience and ethics, which is really important. For example, a CFP® not only has to have a BS degree, they also have to have an advanced financial curriculum with course work in retirement planning, investments, taxes, estates, and insurance. It is a difficult two-day, ten-hour comprehensive exam, and right now the pass rate of that exam is about 55 to 60 percent. So when you are working with a CFR®, you are working with someone who has held themselves to a much higher standard of education and experience. In addition, another very important distinction is the CFP®s are required to hold themselves to a fiduciary standard, which is critical. We feel so strongly about this that we require everyone in our firm to have a CFP® or CFA. Is is really the gold standard.

Q. What are some questions you should ask before choosing a financial planner?

Zell: Questions about qualifications and credentials are equally important. I would also ask about the advisor’s experience in working with others in similar circumstances. For example, if you are a high-net-worth client, you want to work with an advisor who has experience in planning techniques geared to them. If you are a retiree, you probably want to work with someone who has experience and understands the concerns retirees face – such as income distribution, social security, and elder care planning. I would also ask a question that many people don’t think to ask, which is to ask the advisor if they work alone or in a team. For example, my clients have a team assigned to them because we believe it is hard to be an expert in every area. So having involvement from others in our planning department and investment department as well as with a member of our service team in important. I would ask about the frequency of meetings and calls, as well as how often the planning is updated. And if the advisor charges differently for asset management and financial planning – or are those all wrapped up together.

Q. What are some of the most important trends affecting the financial planning industry?

Zell: One, clients are living longer. So, we are focusing more on the end-of-life. We don’t run projections out to age 90 anymore, we run them out to 100. The other trend we are seeing is the commoditization of asset management. More and more advisors are focusing on financial planning and giving advice. Because if everybody is doing the same thing on asset management, you have to differentiate yourself in some way. I think you will see more people charging separately for planning/coaching and asset management. Fund fees will continue to decline. Another trend I am pleased to see is the growth of the number of women entering our profession. Far more than when I started.

Q. What are some tips for building a strong financial plan that can withstand the fluctuations of the economy?

Zell: It is almost the same answer as for the stock market: When we do a plan, we factor in market fluctuations and prepare for unexpected events such as job loss or early retirement. But again, it goes back to that plan. If we have planned well for the ups and downs, they should be able to withstand economic fluctuations.

Q. What are some components of financial planning that are often overlooked?

Zell: One component that is probably not getting addressed enough is really dealing with Medicare planning and elder-care planning. Really understanding what their costs are going to be for medical care going into retirement. That is a big deal.

Q. How do taxes affect the financial planning process?

Zell: It is a very important component. We use software that helps us factor in the taxes. Because tax rates change at different points of life, especially when you go into retirement. We spend a lot of time educating people that they may not have the same gross income in retirement that they do while they are working, however, their net may be about the same because they are not paying money into the 401(K) and other things. So thinking about income after tax is critical in a financial plan.

Q. The Department of Labor’s fiduciary rule has been the center of the financial world’s attention for the past year. What impact will the rule have on consumers and the financial planning industry?

Zell: I think it is probably one of the best changes I have ever seen happen in our industry. There has been a great deal of push-back from the brokerage world, but in the long run it is great for consumers. It allows for more transparency and clients better understand how they are being charged for retirement assets and what they are getting for what they are paying. And they understand that the person they are working with on their retirement plan is legally required to put the client’s best interest first. That has not always been the case. The biggest impact on the industry will be on those is the brokerage industry who have not had to operate under the fiduciary standard. I think clients are going to be surprised to have to sign something called BIC – the Best Interest Contract – if a broker or advisor elects to utilize a product that pays commissions or a proprietary product of the wirehouse or insurance company. The contract is basically going to say that the advisor is being paid commissions and may have conflicts of interest. It is going to be interesting to see how investors react and how it is enforced.

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Bridgeworth is now a part of Savant Wealth Management as of 11/30/2023. Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois.