From time to time I’m asked, Glenn: there are plenty of financial guys out there. They’ll do financial planning for free. So why should I pay you guys?
Good question, and not unexpected in these days of free resources online. To answer it, let me give you a little background.
Back say, 50 years ago, if you needed professional financial advice, from whom could you get it?
What’s the issue about taking advice from these providers? It is the potential for conflict of interest. What do I mean by that? Well, the banker wants to open time deposit accounts and initiate loans. The stockbroker wants to trade stocks in your account. The insurance agent makes a living selling policies. The accountant, on the other hand, focuses on preparing financial statements and doing tax returns. See my blog post about the advice industry here.
Short answer: because no one can hit a moving target. The financial plan informs all financial decisions: how to invest, what to save and where, and what insurance should I purchase or drop.
At the time you made your appointment you would have discussed your concerns with one of our associates. After determining if you would be a good fit to work with us, you have been given a list of documents to upload for the financial planners to view before your meeting.
When you come in we’ll meet in one of the conference rooms at our Miami office. We’ll give you a bit of personal introduction and will be interested to learn how you came to us.
From there, we listen and ask questions. We want a general snapshot of your financial position, and we’ll really want to understand your specific concerns and goals for our engagement.
Toward the end of this initial...
Getting financially organized before retirement can be a daunting task. There are many unknowns and it can be hard to know where to begin. For that same reason people often wait too long to address retirement needs and, unfortunately, don’t achieve the financial freedom for which they long. When people get serious about retirement, many start by analyzing their investment account(s) (or lack, thereof). Ideally, they’ll meet with a CERTIFIED FINANCIAL PLANNER™ professional to get them on track.
Financial organization starts by identifying and prioritizing what is most important to you. This is the beginning of a goals-based financial planning approach.
I start by asking clients to list what is most important to them and help them identify what they’d like to accomplish. Spending more time with family, traveling, volunteering, reading, relocating, starting a new...
Do you have a Flexible Spending Account available to you through work? These can offer tremendous tax savings. As you do your research, note that FSAs are of two sorts: The Healthcare FSA and the Dependent Care FSA.
A flexible spending account (FSA) is offered as an elective benefit by many employers. This is part one of a two-part series. Here I describe the healthcare flexible spending account. You’ll find my post on the dependent care FSA here.
This account allows workers to contribute, through payroll deduction, to accounts that are designated for qualifying medical or dental expenses not covered by insurance. All amounts contributed are pretax and funds are not taxed when spent on qualifying health care costs – this is a big tax advantage. The FSA owner can use the funds for deductibles, co-payments, and co-insurance for the employee’s...
All financial planning begins with cash flow planning – your budget, in other words. Sometimes people recoil from that word - budget. To them the word is fraught with negative connotation: I can't spend! Not in my budget! I'll have to deny myself! Life will become intolerable!
Turn this around, though. If you have a cash flow plan, i.e budget, you have freedom within the form. This spending plan keeps you focused on working toward achieving your financial goals. You know exactly how much you can spend on eating out this month, in other words, and still achieve your monthly savings goal to retire with an income of $X at age 67.
Think this through carefully: How much do I need in my emergency fund? How much debt do I have to repay? What interest rates am I being charged? How much should I accumulate in my retirement...
In this post I’d like to give a little history and background on the advice industry. It may not grab you right off as being the most compelling reading, but please stick with it. I have some valuable points to develop. In Part II I go into some of the changes in our regulatory environment.
When I was a young teen I remember going with my father to visit his stockbroker. Dad used the occasion to teach me what owning common stock means (an ownership stake in a publicly-traded company). He explained that the broker brings buyers and sellers of securities together, and facilitates trades. For this service there is a fee on each trade – a fee on both the buy and the sell, paid by the customer to the broker.
Looking back on it, Dad was explaining to me that I, the buyer, and the broker, had a conflict of interest. My interest was getting the cheapest price for the shares. The brokers interest was...
One of the most popular ways to save for retirement is in a Roth Individual Retirement Account. Roth IRAs was first made available in 1997, after they were championed by former Senator William V. Roth of Delaware.
Tax-wise, a Roth IRA is like a Traditional IRA in reverse. It may help to compare the two registrations.
In a Traditional IRA, as well as in a 401k, most people get tax deductions for contributing dollars up to certain limits every year. The account accumulates funds over time, perhaps generating some nice earnings, tax-deferred. When it’s time to retire, the full amount of the distribution is taxable at your marginal tax bracket at that time. Using simple math, if your tax bracket at retirement is 24% and you distribute $100 from your Traditional IRA you will get to keep $76. Remember, distributions from a Traditional IRA are fully taxable. Contributions are made before tax.
The IRS tax code sets forth rules and regulations under which US taxpayers remit monies to the federal government. Our taxes, along with borrowing, supply the US government with its operating funds. The tax code also encourages certain behaviors, and discourages others. For example, it encourages charitable giving through generous tax deductions. Clearly it discourages speculation by taxing short term gains at one’s marginal tax rate rather than at the more favorable long term gains rate.
In this blog piece I want to describe some of the charitable giving strategies available to the affluent. I as an advisor would be remiss if I didn’t bring this conversation up to a client. Is there a church or synagogue you wish to favor? A university? A specific charity? The opera guild? There are many favorable ways to give, which can also produce a guaranteed income for the giver.
As a Millennial, you are in a unique position to start strong when it comes to your money. Financial planning for millennials looks very different than planning done for Baby Boomers, and requires special attention.
In a nutshell, these 3 are the heart of financial planning for Millennials.
Not many financial planners take on younger clients because millennials rarely meet advisor’s investment asset minimums. In other words, who wants to work with a Millennial with no money? While this may be true in most cases, their are financial planners who specialize in helping Millennials manage their money. Look for advice-focused, CERTIFIED FINANCIAL PLANNER™ professionals who focus on debt payoff strategies, wealth building rather than...
According to CNBC, there is more than $1.2 trillion in outstanding student loan debt, owed by 40 million borrowers, who have an average balance of $29,000. * Do you have student loan stress?
Large student loan balances can be a significant cause of stress. Stress over loans can lead to resignation. “I’ll have student debt forever” is a refrain I hear from some clients. Resignation leads to denial and even inaction. Are you in this progression? Does this sound like you or someone you know? Are you a number of years out college or graduate school, yet it doesn’t seem like your loan balance is coming down?
Your mindset about student loans is crucial. Most importantly, own it. The loans are yours. You chose to make a strategic investment in yourself by taking on student loans. Accept this fact, and make a plan of attack to repay the loans. The #...