Creative Planning believes there’s a richer way to wealth. Their team of CFP professionals, CPAs and attorneys work together to create clear customized plans to maximize your wealth, all in one place. Their award-winning in-house services span a variety of financial disciplines, including comprehensive wealth and investment management, insurance, tax prep, trusts, estate, financial and retirement planning. Founded in Overland Park, they have since branched out across the globe, gaining a national reputation that has earned them numerous prestigious awards, including #1 wealth management firm in America by Barron’s, CNBC and Forbes.
President and CEO Peter Mallouk shares his wealth of knowledge with approachable financial advice.
“I was born and raised in Kansas City,” says Mallouk. “When we started Creative Planning in 2004, I never thought we would get the instantaneous reception that we did. It took off on day one and never stopped. Being based in Kansas City was quite by accident, but staying has been very intentional. We have so many wonderful, educated people in the region and we are centrally located, allowing us to serve clients coast to coast. This has worked out well for us given some of our largest client bases are in California, New York, Florida, Texas and Illinois. We now have about 1,000 employees with offices in dozens of states serving tens of thousands of clients across the country. We couldn’t be better situated to serve our clients."
Two issues coming together at once inspired the creation of Mallouk’s business.
“My dad was a physician frustrated with his financial advisor who sold him products and didn’t really explain things well, and I was an estate attorney that saw a full view of the advisory world and thought there was a better way to deliver the all around experience. Ultimately, that led to Creative Planning offering investments and planning as well as legal and tax advice in a very approachable, consultative way.”
Mallouk has written several books, including 5 Mistakes Every Investor Makes and How to Avoid Them, and has cowritten Unshakeable: Your Financial Freedom Playbook and The Path: Accelerating Your Journey to Financial Freedom with Tony Robbins.
“People are generally fearful of investment and feel the market is too low or too high at any given time."
When there is a correction (a drop of 10% or more), people generally stay on the sidelines or sell their stocks, fearing the market may collapse and stay lower—there have been over 100 corrections, usually about one per year, and they have all ended with a full recovery. Some of these corrections turn into bear markets, a drop of 20% or more, and all have ended with a full recovery. On the other end of the spectrum, many are worried about investing when the market is at an all time high. This is actually completely normal and happens about once every nineteen days—in other words, all the time! We aren’t surprised when a Hershey’s bar, box of cereal or ticket to Disney World costs more, but somehow are shocked when the market hits an all time high. It’s normal, and inflation has a lot to do with it.”
For those with a 401(k), Mallouk says to do everything you can to contribute.
“Some 401(k) plans have an employer match, meaning for every dollar you put into the 401(k), the company will match—it usually applies to the first 3%. It’s a guaranteed 100% rate of return, and there is just nothing else you can do that is going to be as good as that."
"If you have the ability to contribute the max do that as well, but for sure take advantage of the match.”
When faced with the choice to either invest or pay off debts first, Mallouk says to start with focusing on the interest rate.
“All debts aren’t created equal—if you have credit card debt where you are paying 10% or more in interest, then paying off the debt before doing anything else other than a 401(k) match is the way to go. If your only debt is a home mortgage at 2-4% or so, then investing over a long period of time is very likely to yield you a far better outcome than making extra debt payments.”
Life insurance and its role with investing has been a hot topic of financial planning. While Mallouk believes it’s a terrible investment, he believes it’s a necessity.
“The best purpose for life insurance is the reason it was originally created: to provide money to loved ones if you die. Buy a simple, inexpensive life insurance policy which lasts for a term, say 10 or 20 years. Find out what your family needs to live a quality life if you are gone, and insure for that amount. This best fits families that don’t have enough in investments set aside to maintain a lifestyle in the event of the loss of a breadwinner, which is most people under age 60. Life insurance can also make sense when it comes to estate planning for the wealthy. Life insurance as an investment though is a terrible idea and not a good way to invest for future retirement goals.”
When planning an estate, it’s crucial to have a healthcare and financial power of attorney and a will or trust.
“A healthcare power of attorney names someone to make healthcare decisions for you in the event you can’t make them for yourself. A financial power of attorney names someone to make financial decisions for you if you can’t for yourself. Lastly a will or a trust both name who will handle things for you in the event of your death, and who will oversee and inherit your assets. Trusts tend to make more sense for wealthier individuals as it can bypass the probate court system, which keeps things private, allows for a faster transfer of assets after death, and because it skips the court system, settling the estate is much less expensive.”
When looking for a financial advisor, find the right one by asking the right questions.
“Most don’t realize that the vast majority of financial advisors don’t have to act in the client’s best interests. A minority of financial advisors are fiduciaries and operate under laws that share similarities with doctors and lawyers, meaning they do have to act in their client’s best interests. First, ask your advisor if they are registered as a broker or are dually registered. If they say yes to either, that means that part or all of the time, they don’t have to act in your best interests. There are thousands of advisors that will act in your best interest, so take the time to find one. Second, ask your advisor if their parent company, or the ownership of their parent company, own investment vehicles. If the answer is yes, don’t be surprised if some of those investment vehicles find their way into your portfolio. Essentially you may find yourself paying an advisor to then put you in a fund where the company collects another fee. There is no need to accept this conflict. Find a fiduciary that is not dually registered and that does not own their own investment products. At that point, you at least have someone that is incented to act on your behalf all the time. From there, look for education, credentials and experience with people like you.”
Creative Planning’s approach to private wealth management sets them apart from the rest.
“Our clients have been our greatest allies and have really helped us grow our practice. I attribute that to the quality of our people, that we don’t own any investment products so clients know we are never trying to sell them an investment. We are always on their side of the table. I also think our clients really appreciate how far we will go to solve their problems, especially because we have the specialists to handle most issues in-house.”
Managing approximately $100 billion in assets, this leading independent firm attributes its success to putting pieces together that people were desperately looking for.
“First, people want a fiduciary, a strong team and are looking for experience. Second, we are planning led, meaning we get to know our clients very well prior to giving them advice. Third, all our portfolios are customized to help clients accomplish their goals, rather than being constructed based on age or risk tolerance. We have seen a lot of investment success with our clients, and that goes a long way. Fourth, we were the industry pioneer and still the industry leader in delivering the family office to clients, giving them advice and implementation across all their key financial needs, from investments to planning and from legal to tax. Finally and most importantly, we have been very successful at attracting and retaining the best in the business. This is a people business and having the best people is key to delivering the best advice.”
As for the future, it’s never looked brighter at Creative Planning.
“It’s an exciting time—we can do more for our clients today than at any point in our history. In many ways, it feels like we are just at the starting line.”
For more information, visit creativeplanning.com.