Episode 134 – Mutual Funds vs. ETFs: Understanding the Differences That Matter to Your Portfolio

Insights from Last Paycheck Podcast Episode 134

If you have invested at any point in your life, chances are you have owned a mutual fund, an exchange traded fund, or both. These two investment vehicles dominate retirement accounts, brokerage portfolios, and employer plans. Yet despite their popularity, many investors do not fully understand how they differ or why one may be more appropriate than the other in certain situations.

In Episode 134 of the Last Paycheck, hosts Archie Hoxton and Rob Hoxton, CFP professionals at Hoxton Planning & Management, break down mutual funds and ETFs in a clear, practical way. Rather than treating one as inherently better, they explain how each works, where each excels, and how thoughtful investors and advisors often use a combination of both.

A Shared Goal: Diversification for Everyday Investors

Mutual funds were created to solve a fundamental problem. How can an ordinary investor gain diversified exposure to many stocks or bonds?

Instead of needing hundreds of thousands of dollars to buy dozens of individual securities, investors could pool their money. A professional manager would then build and manage a diversified portfolio according to a stated investment objective. This innovation made diversification accessible to everyday investors for the first time.

ETFs share that same goal. Both vehicles allow investors to gain broad exposure to markets, sectors, or strategies with a single investment. The differences lie not in the objective, but in the structure.

How Mutual Funds Work

Traditional mutual funds have been around since the early twentieth century and became formally regulated under the Investment Company Act of 1940. Historically, most mutual funds were actively managed. Investors would contribute money, and a fund manager would select securities based on a defined strategy.

Mutual funds are priced once per day, after the market closes. When investors buy into a fund, the manager uses cash to purchase securities. When investors redeem shares, the manager must sell securities to raise cash.

This structure works well in many respects, but it comes with tradeoffs, particularly when it comes to taxes in non-retirement accounts.

The Tax Surprise Many Investors Do Not Expect

One of the most eye-opening parts of this episode centers on capital gains distributions.

During periods of market stress, such as the 2008 financial crisis, many investors watched the value of their mutual funds decline sharply. Despite those losses, some investors were still required to pay capital gains taxes at year-end.

How does that happen?

As investors panic and redeem shares, fund managers are forced to sell holdings to meet redemptions. Those sales can trigger realized capital gains inside the fund. By law, those gains must be passed through to remaining shareholders, even if the overall value of the fund has declined.

For investors in taxable accounts, this can be both confusing and frustrating.

How ETFs Are Structured Differently

Exchange traded funds were developed later and use a fundamentally different mechanism.

Instead of buying and selling directly with the fund company, investors trade ETFs on an exchange throughout the day, just like stocks. When one investor sells, another investor buys. The underlying securities usually do not change hands.

Behind the scenes, ETFs use what is called in-kind trading. Large institutional participants exchange baskets of securities for ETF shares. Because securities are swapped rather than sold, capital gains are generally not triggered.

This structure makes ETFs significantly more tax efficient in taxable accounts.

Cost and Efficiency

ETFs initially gained popularity because they were often designed to track indexes. Index-based investing reduced management costs, which led to lower expense ratios across the industry. That cost pressure ultimately benefited mutual fund investors as well, driving fees down across both structures.

Today, both mutual funds and ETFs can be low cost, particularly when tracking broad indexes. However, ETFs often retain a slight advantage in terms of tax efficiency and intraday pricing flexibility.

Active vs. Passive Management

While ETFs were once almost exclusively passive, that is no longer the case. Actively managed ETFs now exist across many asset classes. That said, mutual funds still offer a wider universe of active strategies simply because they have been around longer.

Rob Hoxton explains how advisors often use both vehicles strategically. In highly efficient asset classes , such as large U.S. companies, low-cost passive ETFs may make the most sense. In less efficient asset classes, such as small-cap stocks or emerging markets stocks, active mutual funds or active ETFs may provide an advantage.

This is not about choosing sides. It is about choosing tools.

Other Practical Differences to Consider

There are additional nuances investors should understand.

Mutual funds trade once per day, which can be beneficial for investors who prefer simplicity and are less concerned with intraday price movement. ETFs trade throughout the day, offering flexibility but also requiring more attention when placing trades.

Mutual funds can also be more forgiving if a trade error is made. ETFs behave like stocks, where timing and pricing matter.

The Bigger Picture

As Archie and Rob emphasize, neither mutual funds nor ETFs are inherently superior. Each has strengths and weaknesses. The right choice depends on the type of account, tax considerations, investment goals, and the role each investment plays within a broader financial plan.

The most important takeaway is that investment vehicles should support your plan, not drive it.

Your Next Step

If you are unsure whether your current investments are structured in the most tax-efficient and strategic way, clarity is the first step.

Hoxton Planning & Management offers a Retirement Readiness Checklist to help you evaluate how your investments, accounts, and income strategy fit together. It is a practical tool for identifying gaps and asking better questions.

You may also choose to schedule a complimentary conversation with the Hoxton team to review your portfolio and understand how mutual funds and ETFs are being used within your plan.

Move from information to intention.

Download the Retirement Readiness Checklist or schedule your meeting.
Download the Checklist
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.

Episode 133 – Big Brand or Independent Advisor? How to Choose

Insights from Last Paycheck Podcast Episode 133

Choosing a financial advisor is one of the most consequential financial decisions you will ever make. Yet many people start in the same place. They open a browser, search for “financial planner near me,” and are immediately faced with a confusing choice.

Do you work with a large, nationally recognized firm?
Or do you choose a local, independent advisor?

In Episode 133 of the Last Paycheck, Rob Hoxton and Jimmy Sutch, both financial planners at Hoxton Planning & Management, unpack this question in a practical, transparent way. Rather than positioning one option as universally better, they focus on what clients should understand before deciding who to trust with their financial future.

Understanding the Two Models

At a high level, most financial advisors fall into one of two categories:

  • Advisors affiliated with large firms such as banks, wirehouses, or broker-dealers
  • Advisors working at independent Registered Investment Advisor (RIA) firms

While both can provide competent advice, the structure behind each model affects how decisions are made, how advice is delivered, and whose interests are prioritized.

How Large Firms Operate

Large financial institutions offer scale, brand recognition, and extensive research capabilities. For many advisors, they provide a structured environment with built-in compliance, oversight, and predefined investment platforms.

Rob Hoxton brings a unique perspective to this discussion. Over his 30-plus-year career, he has operated both as an independent advisor and as part of a large Wall Street firm, that experience revealed a key distinction.

In large organizations, many investment decisions, recommendations, and guardrails come from centralized committees. These committees may be far removed from the day-to-day realities of individual clients, especially those living outside major metropolitan areas.

This does not mean advisors at large firms are ineffective or untrustworthy. In fact, Rob emphasizes that many excellent advisors work in those environments. However, the structure itself limits how customized and locally responsive advice can be.

What Independence Really Means

Independent advisory firms operate differently.

At independent firm, decisions are often made at the local level with the specific client in mind. There are usual no centralized product mandates dictating what advisors can or cannot recommend.

Jimmy Sutch explains that many clients value this independence because it aligns incentives more clearly. Advisors are accountable directly to the client, not to a corporate hierarchy. In smaller communities, that accountability is amplified. Advisors see their clients at the grocery store, at community events, and at their children’s baseball games.

That proximity creates trust and responsibility in a way no national brand can replicate.

Fiduciary vs. Suitability Standards

One of the most important distinctions discussed in this episode is the difference between fiduciary and suitability standards.

A fiduciary is legally obligated to act in the client’s best interest at all times. Suitability, by contrast, requires only that a recommendation be appropriate, not necessarily optimal.

This distinction becomes murky when advisors operate in environments where they may act as a fiduciary in some situations but not others. Rob points out how confusing this can be for clients trying to determine when advice is truly conflict-free.

Independent RIAs typically operate under a fiduciary standard across all aspects of their work. For many clients, this clarity is a deciding factor.

Custody, Safeguards, and Misconceptions

A common concern when choosing a smaller firm is safety. Clients often ask whether independent advisors can offer the same protections as large institutions.

Rob and Jimmy address this directly. Independent advisors do not normally hold client assets themselves. Instead, assets are custodied at well-known third-party firms such as Fidelity or Charles Schwab. These custodians provide the same safeguards, reporting, and protections clients expect from large institutions.

This separation between advisor and custodian is intentional and plays a critical role in protecting clients from fraud or misuse of assets.

Conflicts of Interest and Transparency

No financial relationship is entirely free of conflict. Even an independent advisor wants a prospective client to say yes. The difference lies in disclosure and transparency.

Rob and Jimmy explain that commissions can still exist in certain products, particularly insurance solutions, even within a fiduciary framework. The key is that compensation is clearly disclosed and aligned with the client’s best interest, not hidden behind opaque structures.

Clients should feel comfortable asking how their advisor is compensated and why specific recommendations are being made.

The Changing Landscape of Independence

The episode also explores a newer trend. Private equity and consolidation are reshaping the advisory industry. Many firms still market themselves as “independent” while operating at a massive scale that closely resembles traditional broker-dealer models.

While these firms may technically qualify as RIAs, important decisions are often centralized, reducing the very independence clients believe they are getting.

Rob draws a clear distinction between independence in name and independence in practice.

What Should Clients Take Away?

This episode is not about steering everyone toward one model. Instead, it equips listeners with the right questions to ask.

  • Who ultimately makes decisions about my financial plan?
  • Is my advisor acting as a fiduciary at all times
  • Where are my assets held and who safeguards them?
  • How transparent is the compensation structure
  • How customized is the advice to my life and community?

Understanding these factors helps clients make confident, informed choices rather than relying on brand recognition alone.

Your Next Step

If you are currently evaluating financial advisors, or wondering whether your current relationship truly aligns with your best interests, clarity is the first step.

Hoxton Planning & Management offers a Retirement Readiness Checklist designed to help you evaluate your financial picture objectively. It can also serve as a useful framework when comparing advisory relationships.

You may also choose to schedule a complimentary conversation with the Hoxton team to ask questions, understand their process, and determine whether an independent approach is right for you.

Start with clarity.

Download the Retirement Readiness Checklist or schedule a meeting with us!
Download the Checklist
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.

Episode 132 – Fun Facts About the Stock Market That Matter for Retirement

Insights from Last Paycheck Podcast Episode 132

When most people think about the stock market, they focus on headlines. Is the market up or down today? Should I wait to invest? Is this time really different?

In Episode 132 of the Last Paycheck, hosts Archie Hoxton and Rob Hoxton step back from the noise and share a series of data-driven “fun facts” about the stock market. While some of the statistics are surprising, the real value lies in what they reveal about long-term investing, retirement planning, and how everyday investors actually benefit from participating in the market.

These are not trivia points. They are perspective builders.

Below are the most important takeaways, and why they matter to your financial future.

1. The Stock Market Has a Strong Long-Term Track Record

Since the end of World War II in 1945, the S&P 500 has delivered an average annual total return of roughly 13 percent. Even more striking, about 79 percent of all years since 1945 have been positive years for the market.

That means in any given year, the odds favor positive returns roughly four out of five times.

This matters because many investors hesitate to invest due to fear of short-term losses or uncertainty about what comes next. History shows that market declines are the exception, not the rule. Long-term participation has consistently rewarded patience.

2. “This Time Is Different” Almost Never Is

It is human nature to believe the current market environment is unprecedented. Political events, economic uncertainty, rising interest rates, global conflict. Every generation feels like they are facing something entirely new.

The data tells a different story.

Markets have endured wars, recessions, inflation spikes, bubbles, crashes, and recoveries. Despite all of it, the long-term trend remains intact. What feels unique in the moment is often just another chapter in a very long book.

This perspective is critical for investors who are tempted to abandon their plan when emotions run high.

3. The S&P 500 Evolves, and That Is the Point

Many people assume the S&P 500 represents the same companies decade after decade. In reality, the index is constantly changing.

Since 1999, only 193 of the original 500 companies remain in the S&P 500 today. The rest have been replaced due to mergers, acquisitions, declines, or loss of relevance.

This constant turnover is not a flaw. It is a feature.

Owning the S&P 500 means owning an evolving collection of leading U.S. companies, not clinging to yesterday’s winners. It allows investors to benefit from innovation and economic growth without needing to guess which individual companies will succeed next.

4. Time in the Market Beats Timing the Market

One of the most powerful illustrations shared in this episode centers on a simple example.

If you invested $1,000 in the stock market in 1945, stayed fully invested, and reinvested all dividends, that investment would be worth approximately $7.3 million today.

However, if you tried to time the market by only investing during certain months or skipping periods you thought were risky, the results change dramatically. In some scenarios, that same $1,000 would grow to only a few hundred thousand dollars.

The lesson is clear. Missing even relatively small windows of market participation can drastically reduce long-term outcomes.

5. Dividends Are Not a Side Detail. They Are a Core Driver of Growth

One of the most overlooked components of investing returns is dividends.

When dividends are reinvested, they significantly amplify long-term growth. In the example above, removing dividend reinvestment reduces the ending value from millions to a fraction of that amount.

Dividends represent real profits paid by real companies. Reinvesting them means continuously buying more ownership in productive businesses over time. This compounding effect is one of the most powerful forces in long-term investing, yet it is often ignored in casual market conversations.

6. Everyday Households Own Most of the Stock Market

Many people believe the stock market is dominated by hedge funds, institutions, or billionaires. In reality, U.S. households own more than 50 percent of the public equity markets.

That ownership happens through retirement accounts, pensions, mutual funds, ETFs, and individual brokerage accounts. Hedge funds, by comparison, account for only a small percentage of total market ownership.

In other words, the stock market is largely owned by people saving for retirement, education, and long-term financial goals. Participating in the market means participating in the growth of the broader economy, not competing against it.

7. Efficient Markets Support Retirement Success

The United States has one of the most efficient capital markets in the world. Businesses can raise capital directly from investors, and investors can participate in business growth without needing insider knowledge or complex strategies.

This efficiency is a key reason the stock market has been such a powerful tool for retirement planning. It allows long-term investors to grow wealth systematically, transparently, and at scale.

As Archie and Rob emphasize, the goal is not speculation. The goal is participation.

Bringing It All Together

These stock market facts reinforce a simple but powerful message. Successful investing is not about predicting the next market move. It is about having a plan, staying disciplined, reinvesting intelligently, and aligning your strategy with your long-term goals.

Markets will rise and fall. Headlines will come and go. What matters most is whether your financial plan is built to endure all of it.

Your Next Step

Understanding how the market works is only useful if it connects to your personal retirement plan.

If you want to assess whether your current strategy is built for long-term success, we recommend starting with Hoxton Planning & Management’s Retirement Readiness Checklist. It helps you evaluate income sources, investment alignment, risk exposure, and planning gaps that could impact your future.

Alternatively, if you prefer a more personalized conversation, you can schedule a complimentary, no-pressure meeting with the Hoxton team to review your situation and next steps.

Take action today.

Download the Retirement Readiness Checklist or schedule your meeting Schedule a meeting with us!
Download the Checklist
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.

Episode 131 – How Financial Planning Helps You Live More Meaningfully

Weekly wisdom to help you retire—and stay that way.

At Hoxton Planning & Management, we often say financial planning is about more than money—it’s about helping people live lives that are rich in purpose, security, and joy. In this episode of The Last Paycheck, hosts Archie Hoxton and Rob Hoxton share two powerful, real-life stories from their careers as CERTIFIED FINANCIAL PLANNER™ professionals. These tales—one a cautionary lesson, the other an inspiring example—highlight the emotional, relational, and life-altering power of thoughtful financial planning.

Story One: When a Friend's Advice Costs More Than Just Money

Archie opens the episode with a sobering story from early in his career. A client, newly assigned to him after her previous advisor retired, was nearing or already in retirement and relying on her investment portfolio to fund her lifestyle. Despite Archie’s prudent advice to maintain a diversified portfolio—including bonds and other risk-adjusted assets—she was swayed by a friend in an investment club who encouraged her to move all of her funds into high-growth tech stocks, the so-called FANG stocks (Facebook, Apple, Amazon, Netflix, Google).

Her friend’s rationale? “These are the only stocks that matter. Everything else is holding you back.”

Unfortunately, just months later, the market took a sharp downturn, and those same stocks lost nearly half their value. Because the client was living off her investments, that loss meant selling significantly more shares at depressed prices to meet her income needs—or worse, panic-selling and locking in catastrophic losses.

The lesson is clear: financial planning isn’t about chasing returns—it’s about designing a strategy that matches your stage of life, risk tolerance, and real-world goals. Investment advice from well-meaning friends or headlines rarely considers the whole picture. And as Archie puts it, “Be careful who you take advice from. Most people don’t know what they don’t know.”

Story Two: Giving While Living—Leaving a Legacy that Matters

Rob follows with a story that strikes an entirely different emotional tone—one that illustrates the life-changing potential of financial planning done right.

He tells the story of a long-time client couple with no children. The wife, a former reading teacher, had a deep love for their local public library where she regularly volunteered to read to children. The couple had always intended to leave a significant portion of their estate to the library to expand its small children’s section—ideally with a reading room named in her honor. But when she was diagnosed with a terminal illness, the couple worried that giving money away too soon might leave the surviving spouse financially insecure.

Rob ran the numbers. And what the planning revealed was that they didn’t need to wait. They had enough assets to fulfill their philanthropic goals and ensure long-term financial stability.

The result? Before her passing, she was able to see the new children’s reading room built and named after her. She spent her final months doing what she loved—reading to children in the space she helped create.

This story exemplifies what’s possible when financial planning is approached not just as a numbers game, but as a way to help people live more richly, with clarity and intention. The wife’s legacy lives on, and the husband’s peace of mind was preserved through careful planning.

Take the Next Step Toward Financial Clarity

These aren’t just anecdotes. They’re proof that working with a trusted advisor isn’t just about retirement income or minimizing taxes—it’s about transforming financial uncertainty into peace, possibility, and purpose.

Whether you’re navigating retirement, weighing a gift to your favorite charity, or just trying to avoid a costly mistake, a solid financial plan provides the clarity you need to make decisions that align with your values.

As Rob puts it, “Financial planning helps people live their lives more richly.” That richness isn’t always measured in dollars—it’s measured in impact, legacy, and peace of mind.

Take the Next Step Toward Financial Clarity

If you’re wondering how prepared you are to create your own version of a meaningful life, take our free Financial Freedom Score assessment. In just a few minutes, you’ll gain insight into your financial health and areas that might need attention. Or, download our Retirement Readiness Checklist—a simple but powerful tool to help you evaluate your goals, timelines, and needs as you prepare for life’s next chapter.
Download the Checklist
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.