The Wealth Management Experience: The Peace of Mind That Comes When Your Financial Roots Are Strong

By Jim Hatton

Creating a comprehensive plan for managing wealth can be as enjoyable and satisfying as designing a dream house or planning a trip around the world.

Jim Hatton-Vice President of Hatton Consulting-provides the blueprint and itinerary you need in this guidebook to growing and managing your wealth. Learn how to:

evaluate the current state of your finances and set goals for the future; develop a target rate of return for your investment portfolio; create a portfolio of mixed assets to meet your objectives and match your risk tolerance; avoid missteps that can lead to underperformance; follow a process that adheres to a fiduciary standard of care; blend all areas of wealth management; investment, retirement, estate, tax, insurance, asset protection and charitable giving into one cohesive plan; ensure all your advisers are working as a team on your behalf.

Jim Hatton has provided a comprehensive and well-written guide to help individuals achieve financial security and plan for a fulfilling lifestyle in retirement so that continued work is an option, not a necessity.

Burton G. Malkiel is the author of A Random Walk Down Wall Street, 11th edition paper, 2016.

If I could recommend one book every investor should read it would be The Wealth Management Experience by Jim Hatton. The book details a prudent step-by-step plan for managing your wealth which leads to financial security and peace of mind.

Len Templeton, Founder and President, Templeton Financial Services

• Language: English
• Publisher: Archway Publishing
• Release date: Feb 2, 2016
• ISBN: 9781480823655

Jim Hatton

Jim Hatton is vice president of Hatton Consulting in Phoenix, Arizona, and has been advising clients on wealth management issues for more than fifteen years. He is a Certified Financial Planner®, Accredited Investment Fiduciary™, and a member of the Financial Planning Association.

Book preview

Copyright © 2016 Jim Hatton.

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

Archway Publishing

1663 Liberty Drive

Bloomington, IN 47403

www.archwaypublishing.com

1 [phone]

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

For information, please write: Permissions Department, Hatton Consulting, Inc., 5090 North 40th Street, Suite 160, Phoenix, AZ 85018-2116, USA.

This publication contains the author’s opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the author, publisher, and Hatton Consulting, Inc., are not engaged in rendering legal, accounting, investment-planning, or other professional advice. The reader should seek the services of a qualified professional for such advice; the author, publisher, and Hatton Consulting, Inc., cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, legal or tax advice, and/or product made reference to directly or indirectly in this book will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for the reader’s portfolio. Due to various factors, including changing market conditions, the content herein may not be reflective of current opinions or positions. Moreover, the reader should not assume that any discussion or information contained in this book serves as the receipt of, or as a substitute for, personalized investment advice from Hatton Consulting, Inc. To the extent that the reader has any questions regarding the applicability of any specific issue discussed in the book to his/her individual situation, he/she is encouraged to consult with the professional advisor(s) of his/her choosing. A copy of Hatton Consulting’s current written disclosure statement discussing our advisory services and fees is available upon request.

ISBN: 978-1-4808-2363-1 (sc)

ISBN: 978-1-4808-2364-8 (hc)

ISBN: 978-1-4808-2365-5 (e)

Library of Congress Control Number: 2015919343

Archway Publishing rev. date: 2/1/2016

CONTENTS

Preface

Introduction Wealth Management: A Superior Approach to Managing Your Financial Life

Part 1: The Wealth Management Process

CHAPTER 1 The Discovery Process: The First Step to a Secure and Meaningful Financial Life

CHAPTER 2 Creating an Investment Plan: The Second Step to a Secure and Meaningful Financial Life

CHAPTER 3 Make Your Commitment and Implement Your Plan: The Third Step to a Secure and Meaningful Financial Life

CHAPTER 4 Checking In: Regular Progress Meetings and the Importance of Advanced Planning

CHAPTER 5 Putting Wealth Management to Work: A Case Study

Part 2: The Wealth Management Experience

CHAPTER 6 Sources of Retirement Income: A Closer Look at Your Options

CHAPTER 7 Key Calculations: Finding Your Work-Is-Optional Number

CHAPTER 8 Get It in Writing: A Sample Investment Policy Statement

CHAPTER 9 Advanced Planning Strategy #1: Tax Planning

CHAPTER 10 Advanced Planning Strategy #2: Estate Planning

CHAPTER 11 Advanced Planning Strategy #3: Insurance Planning

CHAPTER 12 Advanced Planning Strategy #4: Asset Protection

CHAPTER 13 Advanced Planning Strategy #4: Charitable Giving

CHAPTER 14 The Deciding Factor: Getting the Help You Need

Notes

Author’s Acknowledgments

Acknowledgments of Permissions

About the Author

Endnotes

To my parents,

Dr. Richard L. Hatton and Elaine M. Hatton

PREFACE

I am passionate about helping people achieve financial comfort, security, and peace of mind, and about managing their wealth so that they can lead lives full of meaning and purpose. All of us owe it to ourselves and the people we care about to use the tools that give us the best chance of reaching our most important financial goals. I feel that it is my duty to share these tools. That’s what this book aims to do.

My mission to help others as a financial advisor has been driven by the values that were instilled in me as the youngest of eight children. I had plenty of people around me to teach me about respect, honesty, hard work, and love—and they deserve my utmost thanks.

My father was a general practitioner in our town, and he handled everything, from office visits for the common cold to labor and deliveries in the middle of the night. When necessary, he would refer patients to specialists (such as radiologists and oncologists) and consult with those experts to help patients with their advanced challenges. Working together, they would create, monitor, and update plans for patient care. The respect and dedication he showed to his patients was inspiring.

On the day he retired, at age seventy-four, instead of throwing himself a big party, he invited patients to come meet the doctor who would be taking over for him. That day—a cold winter day in Okemos, Michigan—the line of patients waiting to shake my father’s hand and thank him stretched around the office building for hours. I remember seeing him talk with a woman who had come with her daughter and granddaughter—both of whom my dad had delivered. Three generations of a family were there to say thanks.

My father also was honest and forthcoming, to a fault. Once when he was trying to sell his car, he made a point to tell the prospective buyer about all the car’s problems and things he had fixed over the years. The details that most sellers would try to hide were the details my dad made sure to share, without being asked. Why? Because he felt it was important to act with integrity, honesty, and complete transparency in his dealings. I saw him act on those values, and it left a lasting impression on how I wanted to live my own life.

There were many mouths to feed in our house. My parents had to make smart choices about money throughout their lives together. The first of my siblings began arriving in the 1950s—my mother had four children in just thirty-eight months, while she taught high school and my dad attended medical school. As more of my siblings arrived, she became a stay-at-home mom. That meant she served as the chief executive officer, chief operating officer, and chief financial officer of the house. As CFO, my mom was a master at budgeting and at juggling cash flow to satisfy all the family liabilities. From her, I learned the importance of planning, living below your means, and being conservative with your money.

I also saw first-hand the value of dedicated effort from watching my siblings. My parents scrimped and saved to pay for our educations—and, as a result, all of us attended college. However, we all knew that on the day we graduated, we’d be on our own financially. That knowledge motivated us to study diligently, get jobs lined up, and make it on our own. Seeing my brothers and sisters navigate all that inspired me and gave me the confidence that I could achieve great things if I worked hard and made smart choices.

My path to becoming a financial advisor taught me crucial lessons that I carry with me today. After college, I worked for seven years at a large medical technology company, rising through the ranks to become a manager. The firm’s culture was wonderful—they cared deeply about helping customers and treating employees well. Later, I went to work for another medical company (one that turned out to be significantly less employee friendly) that merged with a competitor. As part of that merger, I saw employees in the prime of their careers laid off after being with the company for decades.

In talking with many of these employees, I learned that some had made prudent decisions about their money during their careers. As a result, they were confident about their prospects and knew they would land on their feet. Others, however, were ill prepared financially when their careers were cut short. I vowed to never end up in the situation that so many of those workers were in: middle aged and left wondering where —or in some cases if—they might work next. So for the next few years, I worked harder than ever and travelled constantly for the business, until I burned out.

Right about that time, my brother, Tim, called me to discuss working together as business partners. After years at a large Wall Street financial firm, he was disillusioned by the ways in which the financial services industry put its own needs above the needs of its clients. He had recently started Hatton Consulting, and we joined forces with a shared vision: to build a firm that clients could trust to deliver honest, objective investment advice and wealth management services.

It was an opportunity to take some of the most important values in my life—integrity, honesty, financial prudence, and hard work—and, as my mom and dad had done, draw on those values to help generations of families achieve their dreams. Professionally, it’s immensely gratifying to work so closely with families and help them get on the right path to financial comfort, peace of mind, and security. Many of our clients have retired well and are realizing everything that is most important to them. Personally, it is hugely rewarding to be in business for myself and guide my own destiny after many years of working for other people. Together, with my brother and colleagues at Hatton Consulting, we have shaped the culture of our firm to adhere to a commitment to putting the needs of our clients above everything else.

That commitment is foremost in everything I do as a financial advisor. Like my dad, I work closely with clients to address a wide range of issues related to their financial health. When necessary, I consult with a team of specialized experts in areas like taxation, law, and insurance to coordinate clients’ entire financial lives and help solve their most pressing challenges. And, remembering my dad and that car he sold, if the smartest move a client can make involves investing money independent of our firm, I say so—upfront and without being asked. Whatever is best for the client is what I will recommend at each and every step.

That lesson has been my parents’ ultimate gift to me: Do the right thing, always, and over time, everything will work out well. It’s an idea that I urge you to consider as you read this book and as you take charge of your financial life now, and in the decades to come.

INTRODUCTION

Wealth Management: A Superior Approach to Managing Your Financial Life

If you are like most investors today, you have a long and seemingly ever-growing list of questions and concerns about your finances. As someone with substantial assets, you have decisions to make—from how to invest your wealth so you can afford your ideal retirement lifestyle, to how to minimize taxes, to how to ensure that your heirs and other important people in your life will be well taken care of. You might be seeking to protect your wealth from being taken