Frequently Asked Questions
What does "fee-only" mean?
"Fee-only" planners are compensated solely through fees paid by their clients and do not accept commissions or compensation from any other source. Cambridge fee-only planners do not gain financially when a client purchases a recommended product. We prefer to remain fee-only because we believe that planners who are not fee only face a significant conflict of interest.
"Fee-only" is a licensed trademark of NAPFA - the National Association of Personal Financial Advisors.
What other forms of compensation are used by financial planners?
Some planners work exclusively on a commission basis; they are paid only when clients buy a product they sell. Others, referred to as "Fee-based" or "Fee-offset," charge a fee and receive commissions from selling products.
What is "Middle America" or "middle income"?
These terms refer to a broad range of income and net worth levels. Essentially, you are categorized as "middle income" or "Middle America" if you have to work for a living.
What is comprehensive financial planning?
Comprehensive financial planning focuses on all areas of your financial situation and develops a course of action to help you achieve personal goals. Comprehensive planning includes:
Analyzing your existing situation
Defining your goals
Creating a plan that considers all the financial aspects of your objectives
Assisting you in implementing the recommendations
Periodically reviewing and revising the plan to adjust to changes in either the financial environment or your goals
What is the Cambridge SystemTM*?
The Cambridge SystemTM* is a package of financial planning services specially designed for and targeted to the needs of Middle America. Financial advisors who use the Cambridge SystemTM* are able to provide premium-level services in a cost-effective manner, thus making their services affordable for middle-income clients. The brainchild of Bert Whitehead, MBA, JD and his financial planning firm, Cambridge Connection, Inc., the Cambridge System TM* has been under development for over 25 years and continues to evolve and adapt to the ever-changing profile of Middle America.
What does it mean when an advisor is authorized to use the Cambridge SystemTM* ?
Before being authorized to use the Cambridge SystemTM*, advisors first meet certain requirements and then must participate in an intensive one-year training program. Advisors must be Certified Financial Planners (CFPs) or hold comparable designations (e.g.: CPA, CPA/PFS, ChFC). Most Cambridge advisors also hold one or more advanced educational degrees (e.g.: MBA, PhD, JD). In addition, advisors must comply with federal and state investment advisor regulations, have significant professional experience, participate in extensive continuing education, and be committed to the fee-only philosophy and to serving Middle America.
Does the advisor have any fiduciary responsibility?
Yes. Advisors who use the Cambridge SystemTM* are registered investment advisors and have a fiduciary duty to their clients. Their clients' best interests must be placed before those of the advisors.
What is a Registered Investment Advisor?
Individuals who proclaim themselves financial planners or who provide investment advice are required to be registered with either the federal Securities and Exchange Commission or with comparable registries in the states in which they offer and provide services. Although requirements vary from state to state, most states require advisors to pass one or more exams; to make full disclosure of their background, education, experience, services, fees, and other relevant information on Form ADV Parts I and II; to update this information in a timely manner as needed; and to abide by all laws and regulations of the state and regulatory authority. An advisor who does not comply with state or SEC regulations is subject to suspension or revocation of his or her status as a Registered Investment Advisor and may be the target of civil or criminal action.
What is an ADV Form Part II?
Part II of Form ADV provides information about the investment advisor and advisor's business for the benefit of his or her clients. Investment advisors are required to provide Form ADV Part II or an equivalent document to prospective clients at least 48 hours prior to the signing of a contract for advisory services. This is known as the "brochure rule."
What does the financial press have to say about fee-only planners?
NEWSWEEK - Jane Bryant Quinn
"Financial Planners who take commissions have a built-in conflict of interest…even with disclosure, my choice would be a fee-only planner."
MONEY MAGAZINE
"Start with the general practitioner…a Financial Planner (whose) compensation should be from fees alone."
FORBES
"The most important matter is how the planner is compensated. Hire the planner who…has no financial stake in (your) investments."
What does "fee-only" mean?
"Fee-only" planners are compensated solely through fees paid by their clients and do not accept commissions or compensation from any other source. Cambridge fee-only planners do not gain financially when a client purchases a recommended product. We prefer to remain fee-only because we believe that planners who are not fee only face a significant conflict of interest.
"Fee-only" is a licensed trademark of NAPFA - the National Association of Personal Financial Advisors.
What other forms of compensation are used by financial planners?
Some planners work exclusively on a commission basis; they are paid only when clients buy a product they sell. Others, referred to as "Fee-based" or "Fee-offset," charge a fee and receive commissions from selling products.
What is "Middle America" or "middle income"?
These terms refer to a broad range of income and net worth levels. Essentially, you are categorized as "middle income" or "Middle America" if you have to work for a living.
What is comprehensive financial planning?
Comprehensive financial planning focuses on all areas of your financial situation and develops a course of action to help you achieve personal goals. Comprehensive planning includes:
Analyzing your existing situation
Defining your goals
Creating a plan that considers all the financial aspects of your objectives
Assisting you in implementing the recommendations
Periodically reviewing and revising the plan to adjust to changes in either the financial environment or your goals
What is the Cambridge SystemTM*?
The Cambridge SystemTM* is a package of financial planning services specially designed for and targeted to the needs of Middle America. Financial advisors who use the Cambridge SystemTM* are able to provide premium-level services in a cost-effective manner, thus making their services affordable for middle-income clients. The brainchild of Bert Whitehead, MBA, JD and his financial planning firm, Cambridge Connection, Inc., the Cambridge System TM* has been under development for over 25 years and continues to evolve and adapt to the ever-changing profile of Middle America.
What does it mean when an advisor is authorized to use the Cambridge SystemTM* ?
Before being authorized to use the Cambridge SystemTM*, advisors first meet certain requirements and then must participate in an intensive one-year training program. Advisors must be Certified Financial Planners (CFPs) or hold comparable designations (e.g.: CPA, CPA/PFS, ChFC). Most Cambridge advisors also hold one or more advanced educational degrees (e.g.: MBA, PhD, JD). In addition, advisors must comply with federal and state investment advisor regulations, have significant professional experience, participate in extensive continuing education, and be committed to the fee-only philosophy and to serving Middle America.
Does the advisor have any fiduciary responsibility?
Yes. Advisors who use the Cambridge SystemTM* are registered investment advisors and have a fiduciary duty to their clients. Their clients' best interests must be placed before those of the advisors.
What is a Registered Investment Advisor?
Individuals who proclaim themselves financial planners or who provide investment advice are required to be registered with either the federal Securities and Exchange Commission or with comparable registries in the states in which they offer and provide services. Although requirements vary from state to state, most states require advisors to pass one or more exams; to make full disclosure of their background, education, experience, services, fees, and other relevant information on Form ADV Parts I and II; to update this information in a timely manner as needed; and to abide by all laws and regulations of the state and regulatory authority. An advisor who does not comply with state or SEC regulations is subject to suspension or revocation of his or her status as a Registered Investment Advisor and may be the target of civil or criminal action.
What is an ADV Form Part II?
Part II of Form ADV provides information about the investment advisor and advisor's business for the benefit of his or her clients. Investment advisors are required to provide Form ADV Part II or an equivalent document to prospective clients at least 48 hours prior to the signing of a contract for advisory services. This is known as the "brochure rule."
What does the financial press have to say about fee-only planners?
NEWSWEEK - Jane Bryant Quinn
"Financial Planners who take commissions have a built-in conflict of interest…even with disclosure, my choice would be a fee-only planner."
MONEY MAGAZINE
"Start with the general practitioner…a Financial Planner (whose) compensation should be from fees alone."
FORBES
"The most important matter is how the planner is compensated. Hire the planner who…has no financial stake in (your) investments."
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