Financial Pathway Advisors, LLC
James Kinney is the founder and owner of Financial Pathway Advisors of Bridgewater New Jersey (Somerset County). Financial Pathways also has a branch office in Flanders (Mount Olive), serving Sussex, Warren, and Western Morris counties.
Jim is a Certified Financial Planner and a NAPFA registered fee only financial advisor. Fee only advisors are committed to maintaining a compensation model that eliminates the potential conflicts of interest which may result when parties other than the client are paying for advice. Fee only advisors are not permitted to accept commissions, referral payments, or any other form of compensation from investment firms, insurance companies, or other professionals.
Jim is a strong believer in the power of financial planning, when done with the clients’ best interests in mind, to improve lives, reduce stress, and achieve goals. Both Jim and Luba have analytical backgrounds (both have spent time working in IT, as well as business and finance), which are demonstrated in the care and attention they pay to even the smallest detail in their clients’ financial plans.
In addition to retirement planning and investing, Jim has specialized training in planning for college, while his partner, Luba works with many single and divorced women on financial planning issues.
Jim believes that investment risk management should be at the core of every financial plan. Again, his analytical approach is on display as the firm carefully creates, for each client, portfolios that are optimally diversified to balance investment risk vs. the need for positive returns. There are no cookie cutter investment solutions at Financial Pathways. Each client’s investment recommendations are unique and based on his or her carefully considered financial plan.
Jim lives in Califon New Jersey with his wife Laura. They have four adult and college age children. Jim earned his bachelors degree in Business Administration from Drexel University in 1984, his MBA from Fairleigh Dickinson University in 1990. Prior to beginning his current career, Jim had been a successful entrepreneur, founding and growing a successful international manufacturing and data management company from 1990 to 2003. He started his financial planning career in 2004, founded Financial Pathways in 2007, and earned his CFP® certification in 2008. Luba Globerman joined his practice in 2009. Jim is a member of the Financial Planning Association (FPA) as well as the National Association of Personal Financial Advisors (NAPFA). He has been an active adult leader in the Boy Scouts of America for 18 years, and enjoys camping, hiking, fly fishing, running and the outdoors.
BS, Business Administration, Drexel University
MBA, Fairleigh Dickenson University
Assets Under Management:
Financial Pathway Advisors is a Registered Investment Advisor in the State of New Jersey. Advisory services are offered only to residents of the State of New Jersey, except as permitted by applicable state and federal securities regulations.
I sense your motivation here is that the IRA is not performing well. If this is the case, as others have alluded to, it is not the fault of IRA vs. 401k. It is likely the fault of the investment strategy and/or fees associated with the account.
If you put $100,000 in a 401k and $100,000 in an IRA and invested both in a total stock market index fund, the return should be exactly the same - minus any difference in fees or commissions on the accounts. Most large company 401ks have fairly low fees. Some small company plans have higher fees, due to fewer employees to share recordkeeping costs. You can research your plan at www.brightscope.com.
As for your IRA, I sense that you have an advisor managing that account for you. If so, of course they have a vested interest in telling you to keep it where it is, and not rolling it into your 401k. And of course, the advisor is getting paid, which is a drain on your investment returns. But if you are getting really good advice and direction regarding your investments (and the rest of your financial life) from the advisor, maybe the fees are worth it.
Bottom line, you need to find out WHY your IRA performance is diappointing. Is it the markets? Is it the selection of investments (too much in bonds would have inhibited performance this year with increasing interest rates)? Is it fees or expense load in the investments?
If you are unsure, you can look for an independent CFP who charges by the hour to help analyze your accounts and steer you in the right direction. You can find such an advisor at www.napfa.org.
Fees are not really insignificant - they can add up. What is important to measure is what will you get for the fees you pay in terms of service, and also to consider investment philosophy.
As an example, many brokerage firms will take your money, charge you a substantial fee to buy and sell investments, and that is about all.
Other firms - in my experience typically independent financial planners - will provide a similar service at a similar fee - but will also include detailed financial planning and non investment financial advice.
Furhtermore, some brokers will charge you a fee for investment management - and then build into your portfolio products that pay a commission as well. Just my opinion, some will object - I think if you pay someone to manage your investments they should a) put your interests first above their own - i.e. be a fiduciary and b) should be seeking out the very best (often but not always lowest cost) investments on your behalf, rather than choosing investments that will enhance their own income.
I would agree that the fee is worthwhile to the extent you don't have time, interest, or patience to really learn about how to be a good investor. (hint: it has more to do with what you DON"T do (panic when the market falls, trade frequently, make emotional decisions, etc.)
Consider looking beyond the brokerage channel and consider finding a fee only financial planner and compare levels of service, fees, and approaches. You can find fee only financial planner near you on www.napfa.org.
It's never too early. However, it is also important to ask a few questions first.
1. Before saving for your child, how is your own financial situation? Are you debt free (other than mortgage)? Are you on track with your retirement plan? If not, then it is more important (and beneficial to your child) to get your own life in order first.
2. If the saving is for college, it may be more beneficial to consider 529 college savings plans.
If all is in order with your own life, then feel free to put some money in your childs name in a UGMA or UTMA account. Before doing so, realize that once they reach the age of majority, they can do anything they like with assets in these accounts - and you may not approve. I know it is hard to imagine your little baby may be a foolish and impetuous teenager someday - but trust me, it happens! This is one reason we like 529 accounts - where the child is merely the beneficiary and you retain ownership of the account. You can also open a special account in your own name, but which you understand is for their benefit, then you can gift or use the money for them as appropriate in the future.
I will start by saying I am not an expert in this field. First, as an ex-pat US citizen, you will still need to file taxes in the US and report income. Taxes you pay in Germany will typically be credited against you US liability, so you may not owe anything - but you still have to report income and file a return. Since you will be earning income, you likely still qualify to make Roth contributions. (not sure if someone expert in this area can confirm).
As for as German pension plans - be careful here! What happens after 8 years? Can you take your balance with you? What will be tax consequence? i doubt there is an ability to rollover to a US instrument such as an IRA. I would search out a CPA or CFP who specializes in working wuth expatriates and inquire as to this question. Be very careful before putting money into the German pension plans until you know the answer to what happens if you leave the company, or move back here.
If this repayment is made under Public Service Loan Forgiveness, it is NOT taxable by the IRS. Most other loan forgiveness or loan repayments ARE considered as taxable income.