Introduction
Lighthouse Financial Management, LLC ("Lighthouse") is an independent, "fee-only" advisory firm
located in Westerly, Rhode Island, that guides individuals and families in the building, preserving, and
transferring of wealth. Our mission is to assist clients in making informed decisions regarding all aspects
of their financial life. Established in 2004, our firm provides personalized financial planning services for
individuals, families, trusts, and small businesses.
Our core services include the following:
1. Investment Management: Lighthouse develops a customized investment strategy that
matches each client's willingness, need, and ability to accept market risk. We use an initial
questionnaire, discussions, and an interactive program based on behavioral research to
determine the client's desire to take on market risk. Then, we provide ongoing management to
keep the portfolio consistent with the risk profile by rebalancing the securities that deviate
from the target weighting. In addition, we adjust the portfolios' allocation as the client's goals,
cash needs, and individual tax circumstances change. Lighthouse will also consider
modifications to the portfolio to take advantage of and respond to risks associated with the
market and economic conditions.
2. Income Tax Planning: Lighthouse provides tax planning services designed to help our clients
manage their tax liability and implement tax savings opportunities.
3. Income Tax Preparation: Lighthouse's affiliate firm, Stephen C. Poplaski, PhD, CPA, CFP®,
prepares individual income tax returns at no additional charge for clients who meet asset
minimums.
4. Retirement Planning: We help our clients determine the savings needed to provide financial
independence and adequate resources for their retirement. After retirement, we use tax-wise
strategies for income distribution while monitoring and managing portfolio risk throughout
the distribution period.
5. Risk Management and Insurance: We evaluate current insurance policies for the adequacy of
income and wealth replacement, current and long-term medical care, and liability claims.
Depending on client needs, Lighthouse also assists with the following:
1. Cash Management and Budgeting: The financial planning process often helps clients
formulate and implement a spending plan consistent with their needs and available resources.
We can assist our clients in establishing a reasonable budget and identifying trouble spots in
spending patterns.
2. Estate Planning: Lighthouse helps clients find an attorney if they wish to have their current
wills updated or need to put new plans in place. Once the plan is in place, we assist clients in
implementing the attorney's instructions. As we are not attorneys, we do not draft legal
documents.
3. Employee Benefits and Stock Options: Many clients need assistance choosing employer-
sponsored benefit plans consistent with their overall financial plan. We help manage the taxes
associated with employers' various stock options, i.e., restricted stock units, incentive stock
options, non-qualified stock options, employee stock purchase plans, and employee stock
ownership plans.
4. Funding Education Costs: We advise our clients on how to use tax-wise strategies to provide
college funding for children or grandchildren, along with choosing other sources for funding
college expenses.
The Planning Process
The planning process begins with a comprehensive interview where the advisor and client discuss
immediate needs and establish a financial direction. Along with the interview, each client completes a
Goals Clarification Worksheet to define other specific areas of concern and a Risk Profile Questionnaire
that provides an initial insight into their financial attitudes, values, and motivations. In addition, the client
is responsible for providing the advisor with quantitative
data such as account statements, past income tax
returns, net worth details, spending history, insurance policies, and existing wills and trusts.
Once the advisor understands the client's personal and financial circumstances, an Investment Policy
Statement is developed in conjunction with a financial plan that addresses the client's specific goals and
objectives. The Investment Policy Statement will outline how the advisor will manage the client's
portfolio, set a target allocation, describe ongoing management and rebalancing procedures, and list any
restrictions the client wishes to place on the portfolio. The advisor will have discretion over the amount
and specific securities purchased in the portfolio, relying on the Investment Policy Statement for guidance
and will be responsible for the quarterly monitoring of the portfolio.
The advisor will also work with the client on an ongoing basis to develop a financial plan containing the
client's net worth, cash flow projections and specific goals. The client should keep in mind that the
advisor relies on the client to provide accurate and complete information to make the projections in the
financial plan. The financial plan analysis also depends on the advisor's assumptions, such as inflation and
investment rates of return. As a result, there will be differences between the projected and actual results
because specific events and circumstances do not occur as expected.
It remains the client's responsibility to promptly notify the advisor if there is ever any change in their
financial situation or investment objectives. The advisor and client will then update and adjust plan
recommendations or investment policy as appropriate.
Financial Software - eMoney
Lighthouse utilizes eMoney Advisors, a web-based financial and wealth planning system. In addition, the
financial software provides a separate client website that allows for:
• Vault storage for client documents such as tax returns, wills, insurance policies, etc.
• Financial Connections (allowing aggregation of multiple accounts with daily updating of linked
accounts); and
• Income and Spending Summaries
You will be provided with a unique username and password and can monitor your portfolio performance,
track spending, and store/view important papers and documents.
Written Acknowledgement of Fiduciary Status
When we provide investment advice to you regarding your retirement plan or individual retirement account,
we are fiduciaries within the meaning of Title I of the Employee Retirement Income Security Act and/or
the Internal Revenue Code, as applicable are laws governing retirement accounts. However, the way we
make money creates some conflicts with your interests, so we operate under a special rule that requires us
to act in your best interest and not put our interests ahead of yours. Under this special rule's provisions, we
must:
• Meet a professional standard of care when making investment recommendations (give prudent
advice);
• Never put our financial interests ahead of yours when making recommendations (give loyal
advice);
• Avoid misleading statements about conflicts of interest, fees, and investments;
• Follow policies and procedures designed to ensure that we give advice that is in your best
interest;
• Charge no more than is reasonable for our services; and
• Give you basic information about conflicts of interest.
Business Model
Our firm provides services to approximately 119 families and employer-sponsored retirement plans. We
have $ 158,088,598 under management as of December 31, 2022.
As a "fee-only" advisory firm, we do not receive commissions from clients or third parties for investment
or product recommendations. We do not receive a fee or other compensation based on a client referral to
our business. We do not participate in wrap-fee programs that combine fees for services with
commissions.