Finance 101

Managing your money can seem like a whirlwind of confusion, numbers and spreadsheets. Break down the complexity and turn to local financial experts for everything from choosing an advisor to tips on how to prepare for next year.

By Peyson Shields | Illustration by Morgan Church, Photos by Brandon Alms, Kevin O’Riley & courtesy Missouri State University

Nov 2015


The Credentials Decoded

In the world of financial advisement, the copious amount of letters following a professional’s name can sometimes cause more confusion than clarification. Lucky for us, experts in the field help us understand the mumbo jumbo. 

AAMS: Accredited Asset Management Specialist

An accredited asset management specialist is a designation from the College of Financial Planning that allows advisors to assist clients with building a roadmap for the future. Someone with the AAMS designation has completed coursework on investments, insurance, tax, retirement and estate planning. As well as passing an exam, they agree to Standards of Professional Conduct and to meet continuing education requirements.— Gregory Sullivan, AAMS and senior vice president—investments at Benjamin F. Edwards & Co.


CFP: Certified Financial Planner

A certified financial planner has gone through the rigorous training to look at the overall aspect of a client’s finances. To receive the CFP designation, planners must have at least three years of experience in the financial industry, take required courses and pass a comprehensive, two-day exam. A client looking for their finances to be managed in conjunction with other factors in their life, such as their investments and insurance, can benefit from the services of a CFP. —Jeffrey Kohls, CFP, CLU, ChFC and financial consultant at Thrivent Financial


CLU: Certified Life Underwriter

When you get into various aspects of finance, saving and preparing for the future, life insurance is normally uncomfortable, but it’s a necessary thing to think about. This is where a Certified Life Underwriter comes into play. A CLU, a designation from the American College awarded after passing a series of courses, mostly deals with various aspects of life insurance and annuities.—J.K.


CHFC: Chartered Financial Consultant

After passing a series of required coursework, a financial advisor can use the designation of chartered financial consultant. Through the ChFC designation, advisors aim to help their clients with concerns like retirement accumulation and distribution, income tax strategies and estate planning.—J.K.


CPA: Certified Public Accountant

Chances are, if you’ve ever done your taxes, you’ve heard of—or even used—a certified public accountant. CPAs in Missouri have completed their bachelor’s degree in the equivalent of a major in accounting, gone through additional coursework, passed the CPA examination and had a year of accounting experience to help their clients with everything tax related—from filing each year and  auditing to representing clients in front of the IRS. —James Philpot, CFP, Missouri State University associate professor and Director of Financial Planning Major


EA: Enrolled Agent

If you’re seeking help with tax advice, preparation or planning, an enrolled agent can represent taxpayers before the IRS. An exam administered by the IRS over the tax code as well as a background check, must be passed for a professional to become an EA.—J.P.

Keep it Simple

Andrea Batey, executive vice president of Walnut Capital Management, helps us understand financial governing bodies, the importance of saving and how to prepare for your meeting with a financial advisor.


Broker-Dealer vs. Financial Planner 

When it comes to choosing between a broker-dealer and a financial planner to help you manage your money, there are a few differences to take into consideration. Batey explains that financial planners and advisors work under a Registered Investment Advisory firm. The RIAs are governed by the Securities and Exchange Commission (SEC), while broker-dealers are looked over by the Financial Investment Regulatory Association (FINRA). 

Because of fiduciary responsibility, RIAs are required to put their client’s interest above their own. “They are also required to monitor client accounts throughout the year to make sure the holdings remain suitable for the client,” Batey said. “Broker-dealers are responsible to make sure recommendations are suitable for the client at the time of recommendation.”

And Batey explains that unlike broker-dealers, RIAs are not allowed to be paid commissions for transactions and financial products. They normally charge a fee that encompasses all aspects of the client’s financial planning.


It’s a Marathon

In a generation of instant gratification, saving can be tough. Batey recommends making it a monthly habit and being disciplined with your saving habits. Even though it can be hard to keep saving, Batey gives the example of a snowball effect. If you start at zero saving $100 each month, it can take a while for you to see results. Once you reach your first $100,000 and it earns 10 percent, then you’re at $110,000, and that growth won’t go unnoticed.

When choosing a financial advisor, Batey recommends finding someone who is going to keep you accountable to reach those goals—similar to how a personal trainer would help you prepare for a marathon. “You want someone that’s going to work with you every year and make you do your goals, make you save,” says Batey.


Before You Meet With An Advisor

Walking into a meeting with your financial advisor unprepared is like walking into an interview without researching the company. Batey recommends three steps to follow, before you sit down with an advisor.

1. Seek out referrals from friends and family to get you started.

If you don’t already have a financial advisor, ask trustworthy friends and family whom they’ve had success with. Then conduct interviews acting as your own human resources department. 

2. Run your credit report.

Checking your credit report annually helps you stay aware of your finances. Watch out for scam sites, and instead visit 

 3. Create a budget.

When you meet with your financial planner, they are going to want to know your monthly budget so they can help you determine how much to allocate to savings and investments. 

Red Flags

When it comes to finding a financial advisor, trust is an important fundamental. Learn to be aware by looking out for a few red flags, suggested by Gregory Sullivan, senior vice president—investments at Benjamin F. Edwards & Co. 

1. They ask you to write a check at the first meeting.

2. They answer the question, “What’s a good investment right now?” before knowing enough about you to know what meshes with your financial goals and fits well with the other holdings in your portfolio.

3. They tell you about a “special deal” between only you two.

4. They pressure you to act on a particular investment. “There are two things that make an investment a good investment for you,” says Sullivan. “One, there’s a good chance that it will work together with the other investments in your portfolio to help you achieve your financial goals. Two, you’re comfortable with it.”

 5. A deal that seems too good to be true.

 6. They hold themselves out to be independent, and you can’t find a lot about where the investments are held. “It’s a lot like politicians,” Sullivan says. “The more transparent the process is, the better.”

7. An investment purports to give a much better return than other very similar investments.

8. They press you on time. “If you are urged to ‘act now’ be very wary,” he says.

9. They hesitate when it’s time to talk about fees. “You’re the one that’s paying the fees, so you should know upfront what it’s going to cost you,” says Sullivan.

What About Next Year

Managing your finances is all about planning. With 2016 just a calendar page away, Brent Singleton, CFP, AIF, partner and financial advisor at Heim-Young and Associates, gives tips to help you create goals for the new year. 

It’s good to know...

How much money it’s going to take to retire comfortably. Knowing your “number” can help you set and reach your retirement goals.


Plan it out

Following a written retirement plan can allow you to have a stream of income you won’t outlive.


In the Long-Term

When it comes to saving for the future, don’t let short-term news affect your overall goal. Knowing the growth rate you need on your investments and keeping your money invested, regardless of daily news headlines, can help keep you on track.


Think it Through 

If a tragedy like death or disability occurs, plan to make sure your family’s income will stay the same.


More than Alphabet Soup

Cashing in your paycheck goes beyond groceries and rent. The financial circuit of investing, saving and spending can be a tricky game of Mancala. When it comes to deciding where and how to distribute your funds, a financial advisor can help you make the right move. 

Michelle Smith, private banking officer at Arvest Bank

Choosing a financial advisor can be almost as tough as choosing the right assets to suit your goals. The umpteen professionals who classify themselves as financial advisors all have different specialties and titles—so the decision is not an easy task. Even though credentials are an important thing to consider, they shouldn’t be your only decision-making factor. 

Michelle Smith, private banking officer at Arvest Bank, and Katie Thieman, AAMS and financial advisor for Edward Jones, help stress the importance of compatibility when it comes to you and your financial advisor’s relationship.

An advisor you’re comfortable with, according to Thieman, and an advisor who’s looking out for your best interest, according to Smith, should be why you choose to do business with that particular individual.

Katie Thieman, AAMS and financial advisor for Edward Jones

Thieman read a study finding that after your family, money is the most intimate thing to you. “Not because you love your money, but because it’s what you pay your bills with and how you live your life,” Thieman says.

When it comes to intimacy and sharing those details, you don’t want to talk to Joe Schmoe just trying to make a sale. You want to look for someone who has a toolbox of connections, understands your needs and can help you reach your goals. “You’ve got to be able to feel comfortable asking questions of your financial advisor, regardless of their title,” Thieman says.

Trust is imperative because you’re not only sharing information about money. “You’re also sharing aspects of your personal life and your family dynamics,” Smith says. 

Deciding whether or not you want to start college funds for your children, beneficiary designations and even monthly spending all relate to your overall goals. Smith explains that every advisor should be reviewing your portfolio at least yearly, but she likes to take it a step further by also reviewing life changes that may have happened in the past year. This helps check to see if accounts need to be retitled or changes made regarding your beneficiaries. If you’re not paying attention to the details, “life changes and life’s situations can throw [financial plans] askew real fast,” Smith says.

Having your family involved in the process helps you be aware of where your money is going and prepares you for the future. 

A financial advisor is there to help you make those decisions, but Thieman suggests that no matter whom you’re working with, it’s important for you to be engaged in what your money is doing.

When it comes to deciphering Morse code, go beyond the business card and work with someone you trust, mesh with and even want to talk about your day with.

“Finance to a lot of people can be so intimidating,” Thieman says. “If you don’t really know a lot about it, that’s fine. That’s why we are in the business—to teach you.”