By Jen Khedaroo
Financial planning is a vague term that is often thrown around when people start to think about their future. But what exactly is it?
Michael Terry, founder and president of Merit Financial Partners, explains.
“Financial planning is basically how do you get, financially, from one point to another,” said Terry, who also serves as executive vice president of the Maspeth Chamber of Commerce. “It’s a roadmap. Involved in all of that are questions such as where are my investments, how much should I be putting aside, how should I invest it, what’s the right allocation and how do I pay for that?”
The certified financial planners of Merit Financial Partners manage about $70 million for various clients.
The company undertakes financial planning first, and then the investments, including mutual funds, stocks and bonds and exchange-traded funds (ETFs), are done in order to fulfill those goals.
Most of their clients are individuals, though a few are charitable groups. Each client has a different goal, whether it’s to save as much money as possible to leave behind for their loved one or retire in a certain amount of years and still have enough money to live a full life.
“First, we figure out what the goal is and then we figure out what the time frame is,” Terry said. “All of our clients want to get as much return with as little risk as possible.”
Currently, there is a lot happening in the financial industry. What sets Merit Financial Partners apart is their focus on the client rather than a bigger warehouse. As registered investment advisors, Merit Financial Partners has a fiduciary responsibility to the client. This is contrary to being a broker in a larger corporation such as Goldman Sachs, Morgan Stanley, and J.P. Morgan Chase,
“If I’m a broker working for Morgan Stanley, my fiduciary duty is to Morgan Stanley, my employer,” Terry said.
The Department of Labor’s fiduciary rule, initially created under President Barack Obama’s administration, states that advisors have to act in the best interests of their clients and those interests above their own. That means that advisors can not conceal potential conflict of interests, and that all fees and commissions must be clearly disclosed. The rule, which was supposed to be phased in sometime in April, is currently delayed.
Another way Merit Financial Partners stands out from other companies is how they are paid. Financial planners are paid by commission and direct fees. Merit Financial Partners get paid by direct fee. As a fee-only company, Merit Financial Partners don’t have any products to sell customers, it’s all about the appropriate investments.
“I don’t get more in selling you this one and putting you in that one, whereas the brokerage firms they basically work on either a percentage or a commission basis,” Terry said. “It’s in his best interest to put you into the product with the highest commission.
“It makes sense because it makes more money if I sell you this than that,” he added. “For me, it doesn’t make any difference because I’m not making money. My job is to put you in the best product for you, not necessarily for me.”
Merit Financial Partners is located at 69-64 Grand Avenue in Maspeth. The firm specializes in financial planning and money management services.