+ Who is HWM?
Hendershott Wealth Management, the leading financial advisory firm for women, was founded by Hilary Hendershott, a fiduciary financial advisor and Certified Financial Planner with over 17 years in the industry. The firm has also earned the NAPFA Seal, a 3rd party objective approval of our fiduciary status. Ignite Investing is the newest investment program from Hendershott Wealth Management (HWM). With Ignite Investing, your relationship is with the HWM advisory team who will be guiding you toward achieving your financial goals, answering your financial questions, and taking care of needs related to your investment accounts. HWM makes available (through our relationships as a financial advisory firm), the investment and technology solutions you will be using in growing your wealth.
+ Who is Schwab? Who has my money? Who is the custodian?
Hendershott Wealth Management does not take custody or possession of your savings. Your money will be in an account registered to you at Charles Schwab Institutional.
+ Who is Loring Ward (LW)?
Loring Ward manages more than $13.5 billion in investor savings and their Investment Committee brings with it more than 100 years of industry experience. We have proudly partnered with Loring Ward to ensure your investments continually meet your future needs and create a better wealth experience for you. They are the backbone of our service model, providing you with valuable account viewing and intellectual capital so that we can best serve your needs.
+ How will HWM communicate with me?
You can expect to hear from us regularly through emails and virtually at our annual Check-in meeting. When your account(s) is opened and funded, you will receive a Personalized Financial Action Checklist with our recommendations of other things you should do to enhance and protect your financial life. You will also be given access to a portal containing the Financial Learning Center.
+ What if I don’t live in the San Francisco Bay Area?
No problem. We have long-standing client relationships with investors in every US time zone. We meet regularly with our clients and are available to meet in person and remotely via Skype or Zoom, telephone, email and more. As long as you live in the US, you’ll be well taken care of.
+ Can my account balance fluctuate?
Yes, it will fluctuate daily. Your account will be invested in mutual funds that invest in stocks.
+ How do I choose which account to open?
We will help you determine the most appropriate type of account to open at the point in the process that you have completed the Ignite Investing Data form and have uploaded statements for your current investment accounts.
MISCELLANEOUS INVESTMENT ITEMS
+ What’s a mutual fund? What is a fund of funds?
Think of it as a bucket that holds other investments like stocks and bonds. By purchasing the mutual fund, you are purchasing the bucket and everything in it. A Fund of funds is a mutual fund that holds other mutual funds – like a caddy that you can put all of your buckets in.
+ What does Fiduciary mean?
Simply put, the fiduciary relationship is one of trust. Hilary’s oath to uphold the highest level of integrity and impartiality in the financial planning relationship means she is bound to put your interests first, both ethically and legally.
It’s her promise to put her clients’ best interests even before her own.
To ensure there are never any conflicts of interest, we do not represent any financial product that pays a commission. Our compensation consists only of fees paid by our clients and reported transparently to you. There are never any surprises or conflicts of interest. This is how we’ve always done business, and how we always will.
+ Why work with an independent, fiduciary advisor?
When it’s your financial security at stake, you deserve to know exactly who’s advising you. Even more, you want to be confident your advisor isn’t tied to any entities that could present a conflict of interest. Truly independent advisors aren’t entangled by ties to banks, brokerages, or insurance agencies that could restrict their ability to maintain absolute objectivity.
We become your Chief Financial Officer, giving you great advice that significantly increases the chances you’ll end up with more money even after fees. First, the DFA fund earns higher returns than its benchmark over the longest periods of time. Second, we are going to provide you with guidance and accountability to save more, earn more, and preserve your wealth. Simply put, financial mistakes are expensive and we’ll help you avoid them.
Here is some objective evidence that people with comprehensive financial advice end up with more money and more peace of mind than people who don’t have them:
Vanguard released a paper in 2014 that found a financial advisor can add as much as approximately 3% of value in net portfolio returns per year through smart financial decisions. A study by Morningstar found that advice from a financial planner can add 29% more wealth through retirement. And a recent study by John Hancock Retirement Plan Services found that 70% of those who work with a financial advisor or planner are on track or ahead in saving for retirement, compared with 33% of those not working with an advisor.
Financial advisors add value in many ways that are harder to quantify. With retirement, declining cognitive skills associated that come with aging will make it increasingly difficult for one to self-manage investment and withdrawal decisions. For households where one person takes primary responsibility for managing finances, surviving household members will be especially vulnerable to making mistakes when they outlive the primary financial decision-maker. Developing a strong relationship with a trusted financial planner can help in both regards.
In 2008, two researchers named Michael Fink and Terrance Martin reported differences in savings outcomes for four sets of people, aged 43 to 50. Those four sets were:
- people who don't have an advisor and don't estimate their retirement needs,
- people who don't have an advisor but did estimate their own retirement needs,
- people who have a non-comprehensive financial advisor—someone who just focuses on investments to the exclusion of other goals, and
- people who have a comprehensive financial advisor.
During the period between 1994 and 2008, those four groups of people grew their own investments with the following results:
- those who have no advisor and no plan ended with $50,000,
- those who had estimated their own retirement needs but had no advisor in the picture, grew their money to $100,000,
- those who had a financial advisor focused only on the investments grew their assets to just under $150,000,
- those with a comprehensive financial advisor grew their assets to more than $200,000 on average.
You don't formulate your own prescription medicine, you don't fly the airplane, and you don't perform your own surgery. You hire experts, and you really should work with an expert inside your investment portfolio.
+ What am I paying?
The one-time application fee (no matter how many accounts you are opening) for Ignite Investing is $299 if you have between $25,000 and $399,999 of investable assets or $199 if you have between $400,000 and $499,999 of investable assets. The expense ratio for the DGEIX mutual fund is 0.30% annualized. The expense ratio is deducted from the performance of the mutual funds, so you will never see this dollar amount deducted from your account.
Management fees are deducted from your account at the end of each quarter and are based upon your account balance on the last day of the quarter (March 31, June 30, September 30, December 31). The fee to HWM is 1% annually (or .25% quarterly) of your account balance. The fee to Loring Ward is .55% annually (or .1375% quarterly) of your account balance. These fees will be reported on your Schwab account statement and on your Loring Ward performance report. For example, if your account balance is $50,000 at the end of the quarter, your fee would be $125 to HWM and $68.75 to Loring Ward. As your account value changes, so do the fees. We align our incentives with yours. So we prosper when you prosper and we suffer when you suffer. When the account value grows, we earn more. When the account value falls, we earn less. Our fates are tied.
+ Are there costs to buying and selling investments in my account?
Schwab charges $9.95 per buy and sell. They do offer free trades for the first 60-days that your account is opened with us. One reason you are investing in a fund of funds until your account balance is $500,000 is to minimize trading costs. We typically trade when you deposit $1,000 in your account, so the total trading cost is .1% of the account balance or less. If you deposit $200 per month, we’ll trade every 5 months.
+ Are there fees for withdrawing money from my account?
HWM will not charge fees for withdrawing money from your account. There may be fees for selling the investments in your account to generate the cash to withdraw, and withdrawing money from tax deferred accounts can generate both penalties and income tax depending on your situation. Also, if you want the funds wired, Schwab will charge your account for the wire.
+ Are there fees with closing my account?
HWM will not charge fees associated with closing your account. Please refer to your account agreement with Schwab for details on their charges associated with closing your account. If you terminate our relationship, you won’t be able to buy more shares of the DGEIX mutual fund.
WHAT’S EXPECTED OF YOU
Willing and able to make contributions on a monthly or quarterly basis to your investment account(s). This may be contributing to your employer sponsored 401(k) plan, and if that’s what’s appropriate for you, that’s what we’ll recommend. The reason this requirement is here is to encourage you to grow your net worth. The recommended amount will be based upon your income and what works for your cash flow.
Diligently work on the items on your Financial Action Checklist
Keep your eMoney portal current and provide HWM with the most up to date documents ahead of your annual meeting.
OPENING YOUR ACCOUNT
+ Does it cost me money to move my money over to your management?
There should not be any fees, costs or penalties associated with switching financial advisors. If you have after-tax investment accounts, there may be capital gains taxes associated with selling investments that have grown in value since you purchased them. That tax would have to be paid eventually, however, so it’s merely a matter of paying it now versus paying it later, and the benefits of getting into the right portfolio of investments far outweigh costs like these.
+ What account types are available?
- Traditional IRAs
- Roth IRAs
- Rollover IRAs
+ What will my money be invested in?
The money in your new account(s) will be invested in the Dimensional Fund Advisor Global Equity mutual fund (DGEIX) which invests in other mutual funds. It invests in US companies (stocks), international companies (stocks) and emerging markets companies (stocks). Retail investors may not purchase Dimensional’s mutual funds as they are only available through fee-only, fiduciary advisors like us.
For more information on this fund, please refer to:
+ Is there an option to avoid investing in companies whose products I don’t support?
The financial industry calls this Socially Responsible Investing (SRI) or values-based investments. And it’s more difficult and costly to implement in your investments than you might think. The portfolio you get with Ignite contains 10,000+ stocks and the really wonderful thing is that you own all of those companies with just one “buy.” So, at this time, no customization for values-based choices is available.
+ What’s the account minimum?
$25,000 is the account minimum.
+ Can you manage my employer sponsored 401(k)? Is my account balanceincluded in the minimum to work with HWM?
If you are employed with the employer sponsoring the 401(k) plan, we cannot manage this account for you and the balance is not included in the minimum to work with HWM. We will not charge on your 401(k) plan balance.
FUNDING YOUR ACCOUNT
+ Do I have to set up contributions?
Yes, we expect you to be willing and able to make contributions on a monthly or quarterly basis to your investment accounts. If these contributions are best suited to go into your employer sponsored retirement account, we ask that that account is linked to your eMoney portal so that we can see you are committed to growing your wealth and adding money to your investment accounts. We will work with you to complete the forms to create a link between your bank account and your investment account to add money to your investment account. For many clients, we set up monthly contributions that happen automatically.
+ What’s the maximum I can put into my account in 2019?
- Traditional and Roth IRAs: $6,000 of new contribution dollars. If you are 50 or over, you are eligible to contribute an additional $1,000. Eligibility to contribute to your IRA is dependent upon having earned income and that income being under specific thresholds. The dollar amount you can rollover into these accounts from IRA to IRA or Roth IRA to Roth IRA is not limited.
- 401(k)s, 403(b)s, 457, and Thrift Savings Plans (not available with HWM, but for your reference only): $19,000 of new contribution dollars. If you are 50 or over, you are eligible to contribute an additional $6,000. The dollar amount you can rollover into these accounts or into your IRA if you leave your employer is not limited.
- Joint and Individual accounts: Unlimited
+ What happens after my money goes into my account?
If your money comes into your account in the form of other investments, like other mutual funds, stocks, bonds, etc. those investments will be sold and the proceeds invested into DGEIX - DFA Global Equity Portfolio. If your money comes into your account in the form of cash it will be invested into DGEIX.
+ Can I roll a 401(k) into my account?
You can rollover a 401(k) account when you leave an employer, retire, or are laid off.
+ Can I transfer other investment accounts into my account?
You can, as long as they have like registrations. We can review this with you and provide a recommendation.
+ Can I change, add or cancel my monthly deposits?
Ignite is a program for people who are growing their wealth! As such, we expect you to be willing and able to make contributions on a monthly or quarterly basis to your investment accounts, and the best place for your ongoing contributions may be your employer's 401(k) plan and that works just fine. You may change your contributions or increase them at any time, though we do ask that you don’t change them with us more than once or twice per year. We understand that certain circumstances necessitate needing to pause contributions for a short period of time. Should you need to cancel the monthly or quarterly contributions for a period of time, we would expect you to start contributing again within 6 months. Should you not start contributing after 6 months, HWM may deem you to not be qualified to participate in this program and may remove themselves as the Investment Advisor on your account.
AFTER YOUR ACCOUNT IS OPEN
+ How do I update my personal information with HWM?
It is imperative that we have current address and email information for you. If Schwab sends mail to your home address and it gets returned, both your and our access to your account(s) will be restricted. You will be asked to login to Schwab to update your personal information with them. We ask that you then email us so that we can update our records and with Loring Ward.
+ What if my account balance falls below the minimum?
If the balance of your account falls below $25,000, HWM may remove themselves as the Investment Advisor on your account.
+ How do I see what’s going on in my account?
You will have access to several account logins – Charles Schwab, Loring Ward’s portal, and eMoney. You can login to these 24/7 to see what’s going on in your account.
+ How often do I get statements?
Monthly statements from Schwab are available through your Schwab login. Quarterly performance reports are available through your Loring Ward portal.
+ Will I pay taxes on my investments?
The money you withdraw from your IRA is considered taxable income and is subject to tax. If your account is a joint or individual account (non-retirement account), you may be subject to taxes when you sell investments in your account or when the investments pay dividends and interest into your account.
+ Can I choose my investments?
When you sign up under the Ignite Investing strategy, you agree to be invested in the DFA Global Equity mutual fund (DGEIX). By selecting this program, you understand that that is what you will invest in and that you won’t be selecting your own investments outside of that in the account(s). It is designed to be a comprehensive solution with more than 10,000 companies or stocks in the mutual fund.
+ Who will be managing my account?
Hendershott Wealth Management (www.hilaryhendershott.com) is a Registered Investment Advisory firm and will be managing your account.
+ What happens to any dividends that are paid on my investments?
They are reinvested into the DGEIX DFA Global Equity Portfolio.
YOUR ANNUAL STRATEGIC REVIEW
+ How often will a HWM advisor meet with me?
Annually, unless you select additional services at additional charges.
+ How often will my financial plan be reviewed and updated?
You will be contacted to set up your Annual Check-up review meeting in the first 6 months of the calendar year. Should you like to set up a Financial Planning Session outside of this time, you can request any of the following:
- Financial Planning Session (basic) - $500
- Client will pay with credit card and sign the Financial Planning Agreement ahead of any HWM time spent on the planning
- Investor will have to input all variables into eMoney and upload any other documents to the portal ahead of the meeting
- Submit request for what they are looking for
- (HWM time) 30-minute review of the inputs
- 30 minute phone call/Zoom meeting together to go over the plan
- Financial Planning Session (detailed) - $750
- Includes everything from basic session
- HWM inputs the data into eMoney ahead of the 30-minute phone call to review
- Complete Financial Plan - $1500/plan
- Additional time over 1-hour - $250/hour
- 401(k) recommendations - $299
Saving for Retirement:
|Retirement Accounts:||Traditional IRA||Roth IRA|
|Tax Benefits||Lowers your taxable income in the year you put money in your account. Pay taxes on what you withdraw from your account.||Does not lower your taxable income when you put your money in. Avoid taxes when you withdraw your funds.|
|Age Requirements||You must be under age 70 1/2 with earned income to contribute.||No age restriction|
|Income Requirements||Not available if income exceeds $74,000 for single filer or $123,000 for Married filing Jointly. Reduced if income exceeds $64,000 for single filer or $103,000 for Married filing Jointly. If you don't participate in an employer plan and your spouse does, not available if income exceeds $203,000 and reduced if income exceeds $193,000||Not available if income exceeds $137,000 for single filer or $203,000 for Married filing Jointly. Reduced if income exceeds $122,000 for single filer or $193,000 for Married filing Jointly.|
|Withdrawal taxes||The dollar you put in has not yet been taxed. It grows without you paying taxes on it or its growth. When you withdraw money from, you will pay income taxes on what you withdraw.||The dollar you put in has already been taxed. Neither the growth nor the withdrawals from the account are taxed.|
|Early-withdrawal penalties||Withdrawals before age 59 1/2 are subject to income tax plus a 10% tax penalty.3||Contributions (not earnings) can be withdrawn penalty and tax-free at any time. At age 59 1/2 and at least 5 years after your first contribution, you can withdraw the earnings without paying taxes.|
|Required Minimum Distributions (RMD)||You are required to begin taking distributions from your IRA at age 70 1/2. The amount is a percentage based upon your age and the balance of your account.||No RMDs|
|What's the Same|
|Catch-up if you are over 50||$1,000||$1,000|
|Contribution deadline||Tax Filing Deadline||Tax Filing Deadline|
1. Be sure to consider all your available options and the applicable fees and features of each before moving your retirement assets.
2. A distribution from a Roth IRA is federally tax-free and penalty-free provided that the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, qualified first-time home purchase, or death.
3. For Traditional IRAs, penalty-free withdrawals include but are not limited to: qualified higher education expenses; qualified first home purchase (lifetime limit of $10,000); certain major medical expenses; certain long-term unemployment expenses; disability; or substantially equal periodic payments.
4. For a Traditional IRA, full deductibility of a contribution for 2019 is available to active participants whose 2019 Modified Adjusted Gross Income (MAGI) is $103,000 or less (joint) and $64,000 or less (single); partial deductibility for MAGI up to $123,000 (joint) and $74,000 (single). In addition, full deductibility of a contribution is available for working or nonworking spouses who are not covered by an employer-sponsored plan whose MAGI is less than $193,000 for 2019; partial deductibility for MAGI up to $203,000. For 2018 full deductibility of a contribution is available to active participants whose 2018 Modified Adjusted Gross Income (MAGI) is $101,000 or less (joint) and $63,000 or less (single); partial deductibility for MAGI up to $121,000 (joint) and $73,000 (single). In addition, full deductibility of a contribution is available for working or nonworking spouses who are not covered by an employer-sponsored plan whose MAGI is less than $189,000 for 2018; partial deductibility for MAGI up to $199,000.
5. You must be at least 18 years old to open an IRA with Charles Schwab.
6. At least one spouse must have employment compensation to use a Traditional IRA.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Click here for a prospectus or, here for a summary prospectus containing this information. Read it carefully.