Financial Planner, Financial Advisor, Investment Manager: What’s the Difference?

Financial Planner


What’s in a name? That which we call a financial planner
By any other name would smell as sweet.

(with the profoundest of apologies to William Shakespeare)

Are you looking for some financial guidance? Do you wish you could find a trustworthy, competent professional to help you invest your 401(k), save for retirement or a new home, navigate your employee benefits?

In other words, are you looking for a financial planner? Or is it a financial advisor? Hmmm… maybe an investment manager?

How can you find such a person if you don’t know what to call her? (Heck, we can’t even agree on a spelling: is it advisor or adviser?)

Even for those of us in the profession, the terminology is nuts. I wish it were standardized so that people needing financial guidance and those of us providing that guidance could speak the same language. Less room for confusion, no time wasted explaining terminology or working with a professional who ultimately doesn’t provide what you want.

What Financial Planner, Financial Advisor, and Other Names Mean

There are many names, and precious few of them have any legal meaning. Registered Investment Advisor and Investment Advisor Representative do have legal meanings. If you see those terms, you know that the SEC or state equivalent has authorized that person or firm to provide investment advice for pay.

That authorization does not imply any approval or endorsement of how the person or firm operates. It simply means that the person has passed a basic investment test and the firm conforms to certain standards set by the SEC or state.

Moreover, those names do not tell you nearly enough to help you figure out if the advisor is right for you. For example, Registered Investment Advisors can sell products for commission or get paid by the client on a monthly retainer. They can focus exclusively on managing your investments or advise you on your insurance needs.

Beyond those terms, however, the names mean very little. I could call myself “Money Wizard to the Stars” and that choice doesn’t affect what I offer to my clients. (For the record, I call myself a Financial Planner.)

You could be happy with a:

  • Financial Advisor
  • Financial Coach
  • Financial Planner
  • Investment Manager
  • Investment Advisor
  • Wealth Manager
  • Investment Advisor Representative
  • Registered Investment Advisor
  • And more…

Choosing Between All the Titles

So how do you know which one to choose? Ignore their titles. Many of us do choose our titles in an effort to concisely convey what we offer and what value we provide.

But how much can you encapsulate in two or three words? (For simplicity, I’m going to use “advisor” here on out.)

Instead, figure out:

Who does the advisor work with or specialize in? If it’s entrepreneurs and you’re not, move on. But if it’s teachers, and you’re a teacher, bingo! There’s a lot to know in the world of personal finance.

Professionals can’t know everything that applies to everyone, so look for someone who focuses their time and energy on issues that are relevant to you.

How does the advisor bring value to their clients? Are these things that resonate with you?

What services does the advisor provide? Are you looking for one-time advice on your investments, or continuing management? Do you want to get your whole financial life in order? Make sure you find an advisor who can give you the specific service you’re looking for.

What is the advisor’s investment philosophy? Many people go to advisors for help managing their investments. Trust me, everyone who manages investments has firm beliefs about how to invest money, and you’d better like their story if you plan on working with them.

Do they use mutual funds or individual stocks? Do they trade a lot or infrequently? Do they think they can beat the market or do they aim only to match the market return? Why?

What’s their investment “story”? Also, does the advisor invest their own money they same way? If not, why not?

How independent is the advisor? Some advisors can give any advice they want (within the law, of course) about finances or investments. Other advisors are affiliated with a larger company that might constrain their advice, especially on investments and insurance, to products that the larger company sells. Which would you rather have?

How is the advisor paid? Based on products they persuade you to buy (insurance policies, investments) or based on the advice and service they give you (hourly or project fees, monthly retainer, as a percentage of your assets under management)?

I submit that, while you can’t eliminate conflict of interests, paying an advisor for advice significantly reduces the conflict of interest compared to having an advisor who gets paid based on the products they sell you.

What professional designations does the advisor have? There are a lot, I mean a LOT, of professional designations out there. Some require a little work to get (a short exam, a couple months of weekend classes); some require a lot (many classes, years of experience, rigorous exam). Some are broad in focus (financial planning); some are focused (insurance).

If your advisor is advertising credentials after their name, ask what they mean. What was necessary to get that credential? How does that credential help the advisor help you? (Investopedia also has a helpful article that breaks down different credentials.)

What licenses does the advisor have? To give investment advice, you need only the Series 65. If the professional has Series 66, Series 7, insurance licenses, and so on…why? What does that do for YOU, the client? Again, Investopedia helps breaks it down.

What education does the advisor have? Holding yourself out as a financial advisor doesn’t require a certain level of education or ongoing education. (Some professional designations do.) Does your advisor’s educational background matter to you? How does your advisor keep abreast of the ever-changing financial landscape?

What questions are meaningful to YOU? How do you figure this out? Look at the advisor’s website. Ask the advisor. If you are considering entrusting your investments or your financial future to this person, you have every right to grill them. (Be nice, of course.)

Ultimately, a name isn’t enough. You need to understand how the advisor operates and what value you should receive. You also need to find an advisor whom you straight-up like. Even if the advisor does everything “right,” if the vibe just isn’t there, move on. You need to trust and enjoy the relationship if you’re going to get real value out of it.



About the Author: Meg Bartelt is the President of Flow Financial Planning, LLC, a fee-only virtual firm that provides financial guidance and support to working mothers in high tech. Learn more on her website and on her blog




How to Choose Your Next Credit Card

How to Choose Your Next Credit Card (1)

A credit card can be one of the most useful tools you have in your wallet. But with so many different options in the marketplace, how do you know that the one you’re using is the right one?

If your current card is not getting the job done, choosing your next one will require some research and a solid game plan. So as you search for your next credit card, here are a few things you should consider:

When You Choose a Credit Card, Start with This Number

The first thing to look for when you choose a credit card: the interest rate. Even if you plan to pay your credit card off in full and on time each month — and therefore, won’t be charged interest on your balance — it’s smart to look into this number.

There’s no way to know whether or not you’ll ever have a situation where you do carry a balance on your card for a little while, so the interest rate is important. A lower rate will save you money if interest is ever charged.

When you compare the interest rates of all the cards you’re considering, make sure you look at how long that rate lasts. Some cards offer low interest rates to attract customers, but the rate jumps later after the introductory period.

Don’t Forget About Fees

Also, be on the lookout for annual fees. Many cards have no annual fees, but other cards can run you several hundreds of dollars in fees to carry the card. Those cards may provide additional benefits, so be sure to read all the fine print to see if it’s worth it for you.

The Best Options for Your Situation

Depending on your career and lifestyle, your credit card can offer some serious incentives. Frequent traveler? Look critically at the frequent flier options. If you’re more of a moderate traveler, it could be worth it to look into cards with a solid cashback program as opposed to flight miles.

Some cards give 2 percent back on all purchases, while others give a slightly higher percentage back for specific purchases. Take a look at your spending history and use that to dictate which cards would give you the most bang for your buck.

Need comparison help? Take a look at NerdWallet, Mint, or Magnify Money. All of these sites offer comparison tools to help you choose a credit card based on your unique specific situation.

Note that these sites make money when you sign up for a card through their site — and XY Planning Network has no affiliate relationship with any of these outlets. The rankings and comparisons are extremely useful when you’re shopping around, but it’s important to understand what happens when you apply for a card directly through one of their links.

Credit Card Red Flags

When looking through credit cards, it’s important to know what to look out for an avoid. Here are some of the big red flags to be aware of:

Very low APRs: Card companies will offer very low APR’s to draw in customers, so make sure you check into if/when those rates will give way to much higher percentages.

Excessive fees: Everything could look great on paper, but if you read more into it, how many fees will this company charge you? Between annual fees, maintenance fees, and activation fees, you could be getting more than you bargained for.

Lack of a grace period: Most credit cards will give you some time after a purchase before the interest fees begin. Make sure that the card you’re considering offers that grace period.

With responsible use, a credit card can be one of your best financial tools. With a thorough comparison, you should be able to find one that will give you the best return on your spending.


Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

How Much Should I Spend on an Engagement Ring?

Deciding to propose is a huge step — and so is buying an engagement ring! No one needs a ring to propose. But if that is part of your plan, you need to consider the practical aspects of your decision.

Yes, that means understanding the finances and deciding how much you should spend on an engagement ring. Use these 5 guidelines to help you (and your budget!) feel comfortable with whatever you choose.

1. Discuss Engagement Rings with Your Partner

Engagement rings are not limited to diamond solitaires, and they come at every possible price point. You don’t have to follow the old “three months salary” rule to find a ring that suits you and your partner.

It’s a symbol of your relationship, so it can be any stone, cut, size and design that you would like. Have a discussion with your fiancée-to-be about what they like, and use that to help guide your shopping decisions.

2. Do Your Homework

Whether your partner wants a diamond, emerald, or pearl ring — or even a simple gold band — get a feel for the price variety so you know what to expect. There can be a massive difference in same size stones depending on the cut and clarity, so be aware that if you’re looking at one-carat diamonds, you might face price tags with differences in the thousands.

If you opt for a diamond alternative, be aware that many precious stones are much more delicate. You may have to replace them from time to time, so consider that when you’re setting a budget.

3. Set an Engagement Ring Budget

Let’s say your partner wants a white-gold ring with a diamond solitaire. There are some different factors to consider here when you’re setting your budget.

You will save money by opting for a plain band, and you can put that toward a better quality diamond. But if you’re set on a more intricate band, you might have to cut down on carat size.

The cost of your overall ring will vary immensely depending on where you go, when you’re buying the ring and whether or not you’re buying a designer band, so keep all of that in mind when you’re figuring out a budget.

If you have your eye on a designer ring that’s outside your price range, ask if a local jeweler can find a similar style or create a custom ring at a better deal.

4. Create Your Savings Plan

Once you’ve picked out the ring, you may be required to put down a deposit. Ask about that ahead of time.

Again, the ring should be something you can reasonably afford, so create a savings plan you can live with. “Reasonably afford” should probably mean avoiding going into any kind of debt to make the purchase.

While you’re saving for the ring, you might want to consider the costs of the proposal if you’re planning something more expensive than your typical date night. That way you won’t feel a serious wallet crunch when the time comes.

5. Remember the Big Picture

This is not the time to worry about impressing other people, and neither is your wedding day. You don’t want to kick off a marriage with remaining debt from the celebration or the ring.

Be honest with yourself and your partner about what you can afford. And there is nothing wrong with buying your partner a beautiful ring or spending thousands of dollars on a wedding day — as long as it’s something you can truly afford, and it’s what both you and your soon-to-be spouse want.

For that matter, there is also nothing wrong with a simple wedding band and a courthouse wedding.

You get a marriage out of this whole process, so whenever you feel overwhelmed by the price tag of it all, try to remember what’s really going to matter in the end. Relax and get excited — you’ve found the love of your life, so the hard part is over!

Stick to a savings plan you can afford while ring shopping, and you’ll avoid being in the hole when your first wedding deposits roll around.


Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

7 Tips for Sticking to Your Financial Goals

7 Tips for Sticking to Your Financial Goals

Tis’ the season to set some big goals! With the new year comes new potential milestones, especially those concerning your budget. Most people think about their bank account when coming up with New Year’s resolutions.

Last year, the third most common resolution was “spend less, save more.” However, considering less than 10 percent of people actually achieve their resolutions, something must not be working after January 1.

If you want to finally achieve your financial goals, you have to start with the goal itself. Here are 7 ways to hit the mark in 2016:

1. Understand Your Values

Your goals need to resonate with you and your values if you have any hope of sticking to them. Avoid setting goals because you think it’s something you should do.

Try to find your big-picture dreams and use that as a framework for your resolutions. Whenever you feel yourself veering off course, this will help you put aside that meaningless expense to save for your big life goals.

2. Work as a Team

If you’ve fallen off track year after year, don’t get down on yourself. Get an accountability partner instead.

Recruit your spouse, money-savvy friend or a financial professional to help get your money in order. A fee-only financial advisor can be an invaluable resource in helping you identify important goals, creating an action plan and holding you accountable as you progress.

3. Make SMART Goals

One reason so few people achieve their “spend less, save more” goal is its simplicity. A goal that vague doesn’t give you any guidelines to measure your success along the way.

S.M.A.R.T. (specific, measurable, achievable, realistic, time-bound) goals are easier to stick to because you have a roadmap to get you there. Actionable S.M.A.R.T. goals include the following:

  • Specific: Narrow your goal as much as possible. A clear-cut goal allows you to visualize and take the appropriate steps.
  • Measurable: Set mini-milestones as you go so that you know you’re on the right track.
  • Achievable: Don’t make your goal too lofty. It should take some effort, but not be so out of reach that you give up before you really try.
  • Realistic: “Win the lottery” is not a good goal to set for yourself. Also, make sure you take the potential risks and changes in your life into account. Avoid setting goals that will only work out in the best-case scenario.
  • Time-bound: Give yourself a deadline. This can be as strict or fluid as is necessary, but don’t let yourself slide too much here. Only change deadlines if it’s absolutely required.

4. Visualize Your Financial Goals

Create visual representations of your goals. Whether you’re paying off debt or saving for a house, find images that immediately remind you of your goal.

Put them wherever you’ll see them often. That could be in your office, on your fridge, or even folded up in your wallet right in front of your credit cards.

5. Create a Budget

The budget is the backbone of any financial goals you plan to set. You need some way to keep track of what you’re spending and how much you’re allowed to spend in different areas.

Create a spreadsheet, download an app, or label envelopes and fill them with cash for your monthly spending. Whichever method works for you, a budget will keep you on track.

6. Keep Things Bite-Sized

Don’t get so amped up on New Year’s celebrations that you set your sights sky high. Think about the financial goals you have achieved, as well as the ones you’ve missed. Look for where or when you tend to veer off track.

That will help you set your sights on goals you can achieve. You can also break down your goals into monthly, weekly or even daily checkpoints. Do whatever you need to do to make this the year you can check that resolution off your list.

7. Put Your Financial Goals on Autopilot

If you’ve ever looked at your income over the past year and wondered where all your money went, there’s a good chance it was eaten up by lattes, drive-thrus, or impulse buys. It’s those little things that can really kill a budget.

One way to correct that is to automate your payments and savings contributions, so that a portion of your paycheck is immediately going where you want it to.

If that money isn’t sitting in your account, you can’t spend it mindlessly. Without doing anything other than setting up that one time automated transfer, you’re accruing savings where they need to be.

There are endless opportunities to improve your financial health, but the key to getting there lies in the baby steps that seem small along the way. Make this the year you finally check every resolution off your list.


Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

5 Great Financial Resolutions for 2016

5 Great Financial Resolutions for 2016

The new year is a perfect excuse to check in with whatever needs revamping in your life, and your finances are no exception. Health and finance are the two most common resolution categories, but considering only about 8% of people achieve their resolutions, there’s a good chance your resolutions aren’t working for you.

Most people stick to vague, overarching resolution ideas, but don’t have the details to make them happen. Here are five of the best resolutions you can try this year, including the steps to make them happen. Cheers to 2016!

Set a Budget You Can Stick To

The budget is the backbone of your entire financial plan. If you set one resolution this year, this should be it.

But don’t stop at “set a budget.” That’s a surefire way to fail by mid-January. Take action and get specific with your plan!

Create a spreadsheet with percentage breakdowns of what goes where each month. Use the cash-only envelope system. Look into using a budget app like Mint to help you track your spending.

Whatever you decide, come up with savings goals and specific percentages to help keep you from overspending.

Create a Debt Repayment Plan

“Pay off debt” is another resolution that needs an attack plan to be effective. It helps to come up with a debt payoff timeline that you can hold yourself to, and then funnel money at your debt accordingly.

Start with smaller debts first and work your way up. Or choose specific debts to pay off within the year, like your car or credit cards. Don’t forget to look at each interest rate for the specific debt you have, because that can help you decide which to tackle first.

Again, keeping it detailed will help you stick to the goal you’ve envisioned.

It also helps to have a clear reason that you’re paying off your debt. This works for any resolution, but especially when putting your money toward debt instead of something you want to buy.

What drives you to get the debt paid off? What will it feel like when you’re debt-free? Keep those motivations in mind when you’re feeling hopeless about paying off your debt.

Save More Money

The is one of the most common financial resolutions people set, but there’s a reason people don’t stick to it. Once again, it lacks actionable steps!

At the end of the year, really take a look at where you are financially and where you need to be to feel more comfortable. Maybe you’d like to add more money to a 401(k), create your kids’ college funds, or cushion your emergency fund.

Figure out your goal, break it down into monthly savings goals, and factor that into your budget. Then see the next resolution below to ensure your goals are being funded.

Automate Your Finances

This is a simple step that can make a massive difference a year from now. First of all, automating your payments will keep you from missing payments and accruing late fees and penalties.

Second, you won’t be able to drag your feet on those payments. They are automatically coming out of your account, so you can’t delay them to buy something else.

And third, you can set up automatic transfers into your savings account. If you have money coming right out of your paycheck and going to your savings, you won’t look at it like spending money. Even a small amount every month will add up.

It’s helpful to figure out how much you’ll have in a year, as well. Saving $100 might not seem like it’s worth it at first, but if you keep in mind that it will be $1,200 at year’s end, you might be more motivated to keep it going.

Review Your Credit Report (and Maintain a Strong Score)

This is a given each and every year, but it’s also easy to forget about if you’re not making any major purchases. You can check your credit report for free once a year at

This shouldn’t just be on your radar if you’re buying a house or shopping for a new car, either. Look up your credit report to make sure everything checks out. You’ll want to monitor it for suspicious activity or debts you didn’t realize you had.

You also want to maintain a good credit score. The best place to start is by consistently paying your bills, and then checking over your debts. Aim to keep your credit card balances low (ideally 30% or lower) and pay down your loans as much as possible. Also be mindful of how many lines of credit you have open; be careful not to open or close too many simultaneously!

Keep balances low, pay bills in full and on time, don’t open (or close!) too many accounts at once, etc)

Staying conscious of your overall credit health can help guide your New Year’s resolutions for a much stronger financial 2016.


Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

How to Afford Your Dream Wedding Without Going Into Debt

How to Afford Your Dream Wedding

It’s easy to get wrapped up in the Pinterest wedding culture. As soon as you’re engaged, there are endless sources of inspiration to get you started on your planning.

Before you know it, your online wedding includes a photo booth, signature drinks, five kinds of desserts, three different wedding dresses, and a string quartet at a French winery.

There’s no requirement that a wedding has to cost the same as a couple of years at a private university, but it can start to feel that way. If you get engaged this season, don’t let your wedding planning get out of hand. Here are some tips on choosing a budget, sticking to it — and still having a wedding you love to look back on.

Stop the Comparisons and Set a Budget

You know a friend who had an open bar, the hottest band in town, and 300 people at her downtown wedding. How are you going to top that?

Here’s the thing: you don’t need to compete with her big day — or anyone else’s! Do you even want something extravagant and expensive, or are you getting caught up in someone else’s ideas of what you “should” do?

Be honest with yourself about what you want, and always ask: do you want those things because they matter to you, or because you want to impress people? Don’t forget that a wedding is really just about you and your future spouse, and everything else is just extra.

It’s nice to throw a party your family and friends will be impressed with, but you also don’t want to start your brand-new marriage with a mountain of debt. Consider what you can really afford, what kind of help you are getting, and what you feel comfortable splurging on. Use that information to set a realistic budget.

Do Your Homework

Speaking of realistic, make sure you study up before envisioning your dream day. Go into it understanding average costs of venues and vendors in your area. Don’t get hooked on an idea that you could never afford.

Also look into peak times and potential discounts. You can get better rates by having your wedding on a Friday or Sunday rather than Saturday afternoon, or by choosing “off” months that most people overlook.

Prioritize Your Wants and Needs

There’s nothing wrong with wanting to splurge on a designer dress or luxe reception venue. But to keep it realistic, you probably want to choose one or two big things that you want to prioritize.

After you know your budget and average costs, then you can determine what matters most to you. If you want the best photographer in town, maybe you forego that photo booth you’d been eyeing. Or if you book the most gorgeous venue, you go easy on the decorations to let the space speak for itself.

You can have what matters most to you if you’re willing to be flexible on other areas.

Make Strategic Cuts

The number one area that can save you money is the guest list. If you’re wanting to save money, take a hard look at who you’re inviting. Are you inviting people because you want them there, or because you feel obligated to include them on the guest list?

You can also look into extras like welcome bags, favors and other sneaky little costs that add up fast. The alcohol you’re offering is often an enormous cost — and it’s not necessary to have a fully stocked, open bar with signature cocktails. Most people are just fine with complimentary beer and wine.

Keep Things in Perspective

Whenever you feel pressured to go over budget on a wedding expense, consider whether that’s really going to matter to you ten years down the road. Would that money be better spent elsewhere, like on a down payment for a house or on a honeymoon?

A wedding is ultimately about you and your soon-to-be spouse, so treat it that way. Throw the party you’re comfortable with, as big or small as you’d like it to be, in the budget you feel good about.

If you’re relaxed and happy on your big day, that is going to matter so much more than extra costs you thought you had to pay. At the end of the day, it’s the people you care about most coming together to celebrate your happiness as you start your life together with the one you love.



Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

Unexpected Costs of Buying Your First Home


Unexpected Costs of Buying Your First Home

It’s no secret that buying your first home is expensive. But for many first home seekers, the new homeowner fees can feel crippling. It’s not like it is on TV: potential homebuyers find a home they love, put in an offer, then magically find themselves lounging in their new living room.

There is far more paperwork — and expensive fees — than shown on TV.

The main budget consideration for most people is the down payment. How much should be put down, and what percentage of the house price is acceptable? The down payment is certainly the biggest chunk of change upfront and it’s one you’re probably already familiar with. But don’t forget these other costs that can add up quickly:

Home Inspections

Some are required, some are optional, but they all cost money. The home inspection alone costs about a couple hundred dollars, and costs will vary depending on the inspector you choose, where you live, and the type of property you’re looking to buy.

On top of that, you might have termite, electric, radon or lead paint inspections. Whether or not you’re required to have an inspection, it’s a smart move to make. It is an unexpected cost up front — but a qualified professional can unearth serious problems in the home you’re looking to purchase which could save you exponentially more down the road.

Closing Costs

Closing costs include a broad variety of fees, all paid at your closing. It includes underwriting fees, charges for pulling your credit report, recording fee, appraisal fee, and more.

The cash you need to pay out of pocket at closing will vary from property to property, but you should be prepared to put a few thousand extra dollars on top of your down payment money. A general rule of thumb is to budget your closing costs to add up to about 4% of the final purchase price.

The Cost of Moving

Buying a house may be expensive, but the actual move isn’t cheap, either. First you’ll have to stock up on boxes, tape and bubble wrap — and that can get pricey, fast!

If you can, track down boxes from others who have recently moved. You can also check with retailers and grocery stores and ask if they have any cardboard boxes you can take. You can also wrap breakables in your clothes, which you’d have to pack anyway.

Don’t forget to account for costs like renting a moving truck or hiring movers. It’s going to be very different if you’re moving in town or across the country, so do your homework ahead of time to avoid a surprise massive fee. These costs are fairly easy to research if you can map out each step of your move (whether it’s 5 minutes down the road or 500 miles across the state).

Movers might be expensive, but consider how much stuff you have and how long it would take to move everything. There’s an opportunity cost in play here, too. How much of your own time are you spending if you do it yourself? Could you invest that time elsewhere? Are you risking hurting yourself if you move without professional help?

Evaluate your situation, and then plan to include the costs you plan to take on into your overall budget.

Super Sneaky Unexpected Costs: Meals Out!

Here’s an unexpected costs that many first-time home buyers don’t anticipate: the cost of meals out you’ll purchase while getting settled!

Your first couple days at your new house, there’s a good chance your kitchen won’t be put together. Pots and pans might still be hidden in boxes, plates and cups won’t be washed, and your fridge will be mostly empty. Beyond that, you’ll be slowly stocking up on staples that run up your grocery bill, so be prepared for food expenses beyond your usual.

Once you’re in your home, you will have other expenses to consider as well. There will be lawn upkeep, garbage bills, heating and cooling costs, and subscription expenses you may not have had before buying a home.

The best way to cope with the change is to track everything, mark down when bills are due, and adjust your budget as you get used to your fluctuating home expenses. Soon your upfront costs will level out and you will be used to the financial changes that come along with homeownership.



Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

What’s the Difference Between Active Investing and Passive Investing?

Getting to Know Active and Passive Investing

Ready to navigate your way into the foreign lands of investing? Great! One of the first topics to cover is the difference between active investing and passive investing. Which one will be right for you? Let’s dig in and find out!

What Is Active Investing?

Active investing, as its name suggests, involves an active approach to selecting your investments. The idea behind active investing is that by conducting a careful analysis of the investment options (for example, stocks and bonds), you can make an informed choice about what’s most likely to do well within a given market and then reap the benefits.

There’s often research and analysis involved — so if you’re into macroeconomic analysis, technical analysis, or any other kind of analysis, you might be interested in hand-picking your own investments. You can also hire a financial advisor to help you manage investments, if that’s more your style.

What Is Passive Investing?

Passive investing is a much less involved approach to investing. Rather than picking and choosing individual pieces of a market or fund and trading them frequently, you go in on the whole shebang. You’re investing in the total outcome of the entire market or fund. The main task is to choose the index funds that make the most sense for you and your goals over the period of time you’re planning to invest.

How Does the Difference Look in Real Life?

If the difference between active and passive investing is clear as mud for you, here’s an example to help: Ever heard of the S&P 500? Its full name is the Standard & Poor’s 500, and it’s a collection (or an “index”) of 500 individual American stocks.

As an active investor, you may want to study all the companies represented in the S&P 500 and put together a mutual fund that invests in the best 100 individual stocks. As a passive investor, you’d invest in an S&P 500 index fund, which covers all the stocks in the S&P. You’re investing in the entire market.

To make it a sports analogy, active investing is like studying all the MLB teams in the preseason and betting on your pick for which teams would be in the playoffs at the beginning of the season; passive investing is like owning all of Major League Baseball. A winning pick might get you a huge return, but owning the proceeds from ticket sales and licensing is a lot more reliable.

Can I Get a Point-Counterpoint?

There are pros and cons to each type of investing. Let’s break down the key points.

Active investments typically come with higher fees because active management requires a lot more time and movement in the market. You’re actively choosing to buy and sell. The big risk in actively management investments is that they involve a choice, and they require that you have utmost confidence in the chooser (whether it’s yourself or the professional you hire).

Choose well, and your hand-picked mutual fund could outperform the market. Choose poorly, and your returns may fall below what you would have made by sticking with a passive strategy.

Passive investments, on the other hand, are associated with lower fees (because there’s a lot less hands-on work to do). They’re also associated with lower capital gains distributions, which are reported on your taxes; lower distributions mean lower tax bills. Passive investments also carry less risk, because the return is effectively the average return over the investment period. In other words, the proverbial apple cart is much larger and therefore more difficult to tip. This is especially true in the case of long-term investing.

Studies that look into the comparative performance between actively managed investments and passively managed ones show that there’s no major difference in returns over the long haul, due in large part to the higher costs associated with active investments. That’s not to say that every single actively managed portfolio will end up in the same place as a passive fund in the same market; it just means the likelihood isn’t necessarily a given.

All of that said, generally speaking average investors are better served by a passive approach. A single blog post can’t tell you what’s right for your financial future, but having a basic understanding of passive vs. active investing should help you find the right direction. It’s critical to speak with a financial advisor when you’re making investment decisions.


Ashley GainerAbout the Author: Ashley Gainer is a writer and business coach who makes great content for entrepreneurs and small businesses and teaches other writers how to do the same. You can find her online at or on Twitter at @AGEditorial, and join her work-at-home tribe of parent-preneurs who are committed to being parents first.

Credit Report Versus Credit Score: What’s the Difference?

Credit Report Versus Credit Score

Whether you’re buying a house, saving for a new car or planning for your financial future, you need to be aware of your credit background. This involves your credit score and credit report, both of which are used to give information about you and your spending habits.

If you don’t understand the difference between the two, you might be surprised when it comes time to apply for a loan or a new place to live. Here are the key facts you need to know when thinking about your credit report versus credit score:

Understanding Your Credit Report

Your credit report sums up your entire history with credit. It collects data from your interactions with lenders, landlords, credit cards and utility companies, to name a few. Information comes from the major credit-reporting companies: Equifax, TransUnion and Experian.

The data these companies collect include:

  • Basic information, like your name, address, birth date and social security information
  • The types of credit you use and when you opened them
  • Balances and availability on lines of credit you opened
  • Payment history on bills and balances
  • Collection agencies you have been sent to, if applicable
  • New credit you have recently opened
  • Tax liens, bankruptcy or court judgment records that are in your name

Your credit report gives a comprehensive picrure of your credit history, but it doesn’t include the number that represents all that data. And that’s where your credit score comes in.

Know Your Credit Score

A credit score takes all of your credit report information into consideration, puts it all through a mathematical formula, and produces a number. The FICO score is the most common and widely used credit score formula.

A FICO score ranges from 300 to 850, with below 400 being a poor score and above 700 being a healthy score. If you have a high score, lenders are more likely to offer you a loan because you have a history of making your payments on time and not taking on too much debt.

Here is what is taken into consideration in a FICO credit score:

  • Your payment history – 35 percent
  • How much you owe – 30 percent
  • Length of your credit history – 15 percent
  • Types of credit in your history – 10 percent
  • Any new credit you have opened – 10 percent

How to Request Your Information

You can order a free credit report once a year from That will allow you to read through your entire history and watch for any suspicious activity. But accessing your credit score this way will usually cost you anywhere from $7 to $12.

Some companies like Credit Karma will give you a credit score for free, but that will only be an estimate — or it will be a number pulled from one of the credit bureaus and won’t be your actual FICO score. Yes, you have more than one score! Each entity generates its own score, but they’re usually fairly close to each other (so it’s okay to use a service like Credit Karma, because it provides a good estimate).

When you check your credit report, you might notice multiple credit inquiries listed. Those inquiries come from lenders obtaining a copy of your credit report after you apply for a line of credit. You might also find inquiries from companies you don’t know. Luckily, your credit will only be affected by reports pulled from the credit you apply for.

That doesn’t mean you should be worried about applying for any credit. The greatest risk to your credit is opening several new credit accounts in a short amount of time, so try to space them out as much as possible.

Keeping Your Credit Healthy

Whether there is a major financial purchase in your near future or not, healthy credit is something you should always strive for. Here are some tips to keep in mind:

Watch your credit balances. Pay down your balances and try to keep them at 30 percent of the credit limit or lower.

Don’t look like a risk. For example, paying less on your debts, suddenly charging up more balances, or generating lots of inquiries during a small window of time are red flags to lenders. If you want to purchase a house, for example, don’t go out and spend $10,000 in credit cards on furniture. That could affect your ability to secure your mortgage and may prevent you from getting the best interest rate available if that activity dings your score.

Be aware of your credit. Don’t forget to request your report once a year and make sure everything lines up with your own records.

When it comes to your credit, knowledge is power. Understanding your credit score and becoming familiar with what’s in your report helps you prepare yourself for major life decisions and purchases, and lets you know when you’ve veered off track. Keeping an eye on your history and preparing for the future are the best tools you have for a happy, successful financial future.


Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.

Why Fee-Only Financial Advisors Are Different

Fee-Only Financial Advisors

When you’re looking for a financial advisor, it can be confusing to figure exactly what kind of professional is the right fit for you. You’ve worked hard to earn your money — and you don’t want choosing the wrong person to cost you.

One way to ensure that you’re working with someone who has your best interest at heart is to work with a fee-only financial advisor. But before we tell you exactly why we think it’s so important to work with a fee-only financial planner, let’s go over the three ways financial advisors are paid for their work.

How Advisors Get Paid

There are three ways for financial advisors to be compensated for their services: commission, fee-only, and fee-based.

Financial advisors who are paid on commission make their living by selling financial products like life insurance, annuities, and investment products. While they do not charge a fee that directly comes out of your pocket for their advice, they get paid through fees wrapped into the products they sell.

Fee-only financial advisors are only paid by their clients, and receive no other money from commissions or product sales. Some advisors charge an annual fee while others charge based off the assets they manage. Others charge an hourly fee or a monthly retainer, similar to that of a lawyer or an accountant.

Fee-based advisors are compensated by both client fees and product commissions. Fee-based is not the same as fee-only. Fee-based advisors have many of the same conflicts of interest that commission advisors face.

The Fee-Only Financial Advisor Difference

At XY Planning Network, we believe it just makes sense that advisors are paid directly by the client for the financial planning advice they receive, and not through commissions on product sales. There are a number of conflicts of interest between client and planner when compensation doesn’t come directly from the client.

Here are two reasons we believe it’s essential to receive fee-only advice:

Fee-Only Advisors Must Provide the Best Advice

With fee-only planning, when a client wins, the financial advisors wins. When the financial advisor gives great advice, the client remains a client.

Compare this to someone who is compensated by product sales. If one mutual fund pays more to the advisor than the other, the advisor will bring more money home to their family. But as a client, you’ll pay more for the investment even when a comparable product exists. This isn’t a small matter. One of the best predictors for investment performance over the long haul is investment cost.

If your advisor is providing you great advice, they should be compensated for their services. But when a financial advisor is paid directly from the client, the fee is transparent, and the client and advisor’s interest are aligned.

Ultimately, when an advisor works for a broker-dealer that sells investment products, an insurance company, or some other company, their loyalty is to their employer. As a fee-only planner, our loyalty is with you, the client.

Fee-Only Financial Advisors Are Held to A Higher Standard

Fee-only financial advisors are held to a higher standard than other advisors. Fee-only financial advisors are held to a fiduciary standard, where they must make recommendations that are in their client’s best interest. They are sworn to put the client’s interest above their own.

Financial advisors selling products are held to a lesser standard — the suitability standard. They aren’t allowed to sell you a product that’s wrong for you, but there’s no obligation to sell you the best product. If one product puts more in their pocket, but costs you more, it still meets the suitability standard.

There are many competent, trustworthy advisors doing honest work that operate on a commission or fee-based model. But it may be more difficult to find these professionals on your own.

Choose the Right Advisor for You

Choosing to work with a fee-only advisor is only one aspect of the selection process. You’ll also want to make sure that an advisor is the right fit for you and your life. Ask yourself:

  • Does the advisor have experience working with people like you?
  • Do you agree with the advisor’s financial philosophy?
  • Do you like how the advisor uses technology?
  • Do you want to work with advisor directly, or would you prefer to work with a larger team?

XY Planning Network members specialize in working with Generation X and Generation Y clients, regardless of how much money they do (or don’t) have. We help our clients build wealth and create the life they want. Since advisors who are part of the Network work on an on-going basis, all members offer a monthly retainer service like you’d pay for a gym or a cell phone bill to best serve you.

If you’d like to find a fee-only advisor that’s the right fit for you, check out our Find An Advisor Portal. You’ll find experienced, fee-only advisors that work with people like you.

jv-7515-webAbout the Author: Jenna VanLeeuwen is a freelance writer who enjoys helping others make the most of their money to create a life they love. Connect with her on Twitter @JennaVanLeeuwen to join the fun.