Fruition Advisors LLC
Certified Financial Planner
Alison Davies established Fruition Advisors LLC in 2013 after working with an independent investment advisory firm since 2010. She has a comprehensive knowledge of financial planning and investment management issues, having worked closely with individuals and families to find personalized solutions for simple to complex financial challenges.
Alison is a CFP® (Certified Financial Planner™). This mark is the gold standard of the financial planning industry and indicates that Alison has fulfilled the rigorous experience, examination, and ethical requirements in order to receive this designation.
Alison also holds a Certificate of Completion from the Professional Sequence in Personal Financial Planning Program at the University of California, Berkeley Extension, a Series 65 license from the Securities & Exchange Commission (SEC), and she is a member of the Financial Planning Association (FPA) East Bay Chapter.
As a comprehensive financial planning firm, Alison and her team's goal is to completely understand each client’s unique financial circumstances. Their approach is to carefully analyze clients’ financial situations, provide individualized recommendations for clients to meet their financial objectives, and monitor progress. Alison's emphasis is on realistic goal-setting and the promotion of long-term financial health. She believes that everyone deserves peace of mind and security when looking toward their financial future.
Prior to entering the financial industry, Alison earned a Bachelor’s degree in American Studies from Williams College in 2000 and a Master’s degree in Literature from the University of California, Santa Cruz in 2005.
BA, American Studies, Williams College
MA, Literature, University of California, Santa Cruz
Professional Sequence in Personal Financial Planning, University of California, Berkeley Extension
Let’s start with the basics. What is a mutual fund and what is an ETF, and how do they work?
A mutual fund is a pool of money received from investors managed by an investment company. Mutual funds issue and redeem shares at their net asset value (NAV), the price at which you can buy or sell a share that is calculated after the market closes for the day. ETF stands for exchange-traded fund and is a collection of assets that tracks an index. ETFs are traded throughout the day at their current market price and offer more trading flexibility than mutual funds.
The tax considerations are quite different. When capital gains and dividends earned in the mutual fund are paid out to investors, investors are liable for taxes on this income. ETFs are more tax-efficient because they do not pass taxes on to investors.
The cost considerations also vary widely. Mutual funds are relatively expensive. Since they are managed by an investment company, the company incurs an array of fees that cuts into returns. ETFs are significantly cheaper. ETFs are sold through brokers, rather than directly from the fund, and have lower sales and marketing fees that cut into returns. ETFs are also more accessible because they don’t have minimums, whereas mutual funds can have minimums. However, ETFs can have a brokerage commission.
Then there's the investment strategy to consider. Mutual funds are run by professional money managers who do the research to make the buying and selling decisions within the fund. The goal of this active management is to beat the market. For some investors, the allure of outperforming the market justifies the higher cost of owning the fund. ETFs are overseen by professional money managers who try to match the ETF’s performance to its benchmark index. The goal of this passive management is to track the market and not risk underperformance. For some investors, the perceived safety of a passive strategy is more desirable than the heightened uncertainty of an active strategy.
For more information, please see my article on this subject: http://www.investopedia.com/advisor-network/articles/021417/deciding-between-mutual-funds-and-etfs/
The way I think about life insurance is that fundamentally, it serves the purpose of income replacement. Therefore, you only need coverage for as long as you and your spouse are working. I see a lot of people who have been oversold on their life insurance policies and have coverage until they are in the 80s or beyond, and in my financial planning world the only person who benefits from this scenario is the agent who sold the policy and received a higher commission for a longer term. Your retirement plan should include income streams such as Social Security, pensions, and portfolio withdrawals that will preserve your lifestyle for as long as you need.
Some sophisticated estate planning techniques use life insurance policies to reduce the size of the taxable estate or distribute wealth to beneficiaries more effectively, but these situations are relatively rare. Nor is life insurance a good investment vehicle, as many "cash value" policies such as whole or variable life claim to be. The raft of fees associated with cash value policies often negate any benefits they may have, and professional investment management of this same money often yields higher returns. Without seeing the details of your policies and knowing your personal financial situation, it does seem like you should consider cancelling any policy you may have!
The best strategy for loans is often to compare interest rates and pay off the highest rate loan first. This saves you the most interest in the long run and keeps more money in your pocket. You can certainly pay the minimum payment, but if you do have extra cash to comfortably pay down the loans (again, highest rate first), I would highly recommend doing that over saving. In general, I don't think it's prudent to leverage personal debt in order to save or invest. Get rid of the debt first if you can, sleep better at night knowing that it's gone, and then work on your nest egg!
I agree with Adam and Michael, you should not put $70,000 of 401(k) funds into an annuity, no matter the type. The reasons are long and varied. The person who sells the annuity often benefits the most by getting a nifty commission. When you buy an annuity, you are locked in and subject to copious fees, and it's very hard to take your money out without incurring a hefty surrender charge. An annuity's fixed payments lose value over time due to inflation, and when you die the annuity stream halts, unless you purchase an additional "guaranteed period certain" benefit that allows payments to go to a designated beneficiary for that period. Annuity payouts are considered ordinary income, so you take a tax hit there as well, where if you invested the money instead any withdrawals could be organized to be taxed at lower long-term capital gains rates. Overall, you could probably do better with an investment account that is more transparent, more flexible, and less compromised by fees.
Please see my article on variable annuities for more specifics on that product: http://www.investopedia.com/advisor-network/articles/just-say-no-variable-annuities/