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Guiding You On A Path Forward

frequently asked questions

What is Financial Planning?

Financial planning can be broad based and integrated, where all elements of your financial affairs (like retirement planning, investments, insurance and college funding) are brought together into a coordinated, cohesive plan. Or it can be very specific, focusing just on a single issue of importance or concern to you. In either case, financial planning is a multi-step process that provides you with two important deliverables. First, an in-depth review of your current situation (either comprehensive or specific, depending on your planning objective) and secondly, a roadmap that provides clear direction on how to achieve your planning goal(s). It is important to remember that financial planning is a dynamic process, not a single, one-time event. The economy, your planning objectives, and earned income can all change, necessitating a revisit of the roadmap.

What is a fee-only financial planner?

Fee-only financial planners are paid only by their clients. They never receive any commissions, sales incentives, bonuses or special perks paid by insurance companies or other financial service entities for selling their products. Kuleck Financial Planning is a true fee-only financial advisory firm. Knowing this, you can approach me with the full knowledge that I will only make recommendations that are in your best interest. You do not have to worry that I will need to “sell you something” in order to be paid for providing you advice.

Do I need to live in your immediate area to work with you?

Thanks to modern technology, it is generally not essential to have in-person meetings. Frequently, work may be accomplished for distance assignments through the use of video conferences, online data collection and other tools. The choice of a distance assignment is really determined by a client’s comfort level with working with someone who is not in the immediate area. Even for those who live and/or work in north central Pennsylvania or other nearby areas, it has been a major convenience to use these tools due to busy work/family schedules, commuting demands, etc.

What is your investment philosophy? 

    The following principles and convictions will inform the investment recommendations that I present to clients:

    A. Asset allocation is the most significant factor in determining your long-term investment performance. Asset allocation refers to the way you divide your investments between stocks, bonds, cash and other investments.

    B. I believe that investing in stocks requires a time horizon of five years or longer. Investors who will need access to their funds within five years should not be in the stock market. As we experienced from 2000 to 2010, stocks are capable of delivering little or nothing in terms of returns for an entire decade.

    C. I do not believe in market timing, which is a strategy that seeks to move in and out of the market in anticipation of either upward or downward market movements. Few (if any) investment professionals have over a long period of time demonstrated their ability to consistently add value beyond a buy and hold strategy. I believe in controlling risk through prudent asset allocation strategy, not by attempting to time the market.

    D. I believe that there is a role for both active and passive investing strategies. To clarify, “active” management is an investment approach where fund managers choose securities based on research, judgment, and financial analysis. “Passive” management is a buy and hold strategy that seeks to provide broad market exposure and typically tries to replicate the returns of the designated index (like the S&P 500). Passive investors make no attempt to exclude or include stocks in their portfolios based on criteria used by active managers. For many investors, I recommend a core plus satellite investing model. Conventional wisdom holds that the purpose of core portfolio holdings has been to harness the long-term appreciation potential of traditional assets such as large-company stocks and high quality bonds. The goal of asset allocation has been to strike a balance between these two low correlation asset classes that optimizes their risk-adjusted returns. However, following the economic crisis of 2008 and early 2009, I believe that there are three key factors that need to be considered in constructing the core portion of investors’ portfolios. These factors are: historically high volatility, historically low interest rates, and renewed awareness of the potential for historical correlations to break down. In this environment, traditional holdings — especially long only stocks — may be too volatile for many investors, especially those nearing or in retirement. I believe that post-crisis core portfolios may benefit from some revisions to traditional asset allocation, and believe that hedged equity, global fixed income and risk managed alternative investments may be appropriate for many investors.

    E. I believe that fees and expenses have a very negative impact on a client’s wealth over a long period of time. For example, if two investors with $100,000 are able to earn an average of 9% per year over a 20 year time period, but one investor chooses a higher cost investment that assesses an extra 1% per year in fees, the investor with the higher costs will have $94,345 less at the end of the 20 year period. Expenses and fees must be carefully managed.