Finance

Hiring a financial planner? 3 things they don’t want to hear from new clients.

Published

1 year ago

August 12, 2023

Hiring a financial planner? 3 things they don’t want to hear from new clients.

The first call to a new financial planner is difficult enough for many people, because asking for help often is. Don’t complicate their initial impression of you or future relationship with these opening lines:

1. ‘I retired last month and am trying to figure my financial situation out.’

Like planning and preparing for a career, the more done ahead of time, the smoother the transition into retirement. This is a new chapter, not an end point. Retirement is a major change in lifestyle and income. If and when you are thinking of retirement, the time to consult a financial person is five years before the anticipated date of leaving your job.

Read: Here’s how you can save money on capital-gains taxes when you sell your home

Once you have left a company, there are fewer options for saving or strategizing a successful retirement. It’s better to consider all options while still employed. There are many possibilities around saving, pensions, catch-up contributions, investment withdrawals and housing choices. All of your decisions impact taxes and your Medicare premiums. Think ahead and plan ahead to maximize your retirement income.

Read: There is more to picking a place to retire than low taxes — avoid these 5 expensive mistakes

Samantha had retired and came to me looking for advice. However, at age 60 she was so excited about her ability to retire and claim her pension that she jumped on the opportunity without digging into some important details. The questions she forgot to ask left her retirement finances in jeopardy. Her medical insurance was only partly covered by her former employer – leaving her wanting for medical insurance until she could claim Medicare at age 65. Her options were to live on less or withdraw more from her IRA, or go back to work for an employer that would pay her medical insurance.

She chose to go back to work but because she had already been collecting a pension, she had to look for a job with benefits outside of her company. Just when she thought her time was her own, she was faced with learning new skills, meeting new co-workers, and challenging herself in new professional ways when she would have rather been traveling.

Read: Medicare and HSAs don’t mix — what near-retirees need to know

Although I as much as I wanted to say “too late,” I didn’t, because “better late than never” is also true. Tweaks can be made but some major decisions are unchangeable.

2. ‘My spouse/partner did all the financial stuff and died suddenly. Can you help me?’

Of course, a financial professional can help in the above situation. This becomes like piecing a puzzle together while educating the surviving partner. All of this has to happen at the pace of the grieving partner who is already overwhelmed. Many are not ready to make decisions and instead defer to a CFP, dead spouse’s way of doing things or another friend. They are unprepared to sort through a lifetime of money history and make their own financial choices.

The real issue is how any couple operates while they are both living. Every adult responsible for earnings, spending or investments should know their monthly debt, savings in the bank and investments. All of your and your partner’s financial life may fall in your hands due to death, disability or divorce.

Partnerships create shared responsibilities. Build into the relationship a time to review and understand together – even if one person takes care of the day-to-day details.

Often the person who does not take care of the finances has a sense of what is going on financially – at least they know what they spend and perhaps what the family owns. But they also need to meet the accountant and the investment adviser while understanding the assets and responsibilities of the family.

One couple I worked with divided their financial life. When the wife had a minor stroke and started donating monthly to a charity she had previously given the same amount annually to – the husband never noticed, because, “she has always managed the checkbook.” He wanted her to be back to normal and never considered looking at what she was doing in the past or post-illness.

I heard other stories of once sharp businessmen falling prey to Ponzi schemes, women giving money away or men buying cars when they no longer had a valid license. Be prepared by being in the know.

Don’t have a partner? Be sure your estate plan is up to date, and you leave an easy accessible trail to follow if you are ill. One client sent a sealed envelope to his brother every year who was his executor and financial power of attorney. The brother was ready with the information.

3. ‘I just need an hour of your time.’

A good adviser needs to know a person’s financial and personal life. As a financial professional, insurance, investments, debt, tax, and estate planning are all a part of the review. This takes more than an hour to understand and appreciate where you are financially.

In the interest of saving money today, I understand the desire not to spend much money or time meeting with a financial professional; however, most times a CFP will help you see the full picture and improve your financial situation.

Some financial do-it-yourselfers cannot see their own blind spots. Many are great at investments but may have overlooked their estate planning. Or without a deep understanding of their tax situation they end up paying so much more each year in taxes. Financial planners can not only help you save money, but also be sure you are spending your money more effectively. So, the cost of more than one session may actually save you money.

Read: Can I afford to retire? Not before you know the answer to this big question

On rare occasions, there are not many meetings involved. One client, Maura, stands out who was so well organized and had done her research that after two meetings, I could say “Come back in a couple of years or if anything major changes.” She had done her legwork and did not have a complex situation or many assets.

After decades of learning financial planning and studying and understanding people and legal changes, that simple opening can be bothersome. The words display a lack of understanding of the work we do. Think of calling a dentist and saying “I just need one cleaning and one dental overview – I have been brushing my teeth for years.” There is more to finances and health.

In all of these situations, financial professionals can help you. Just remember, to take care of yourself now and understand we have made a career learning the financial world so we can help you.

CD Moriarty is a Certified Financial Planner, a MarketWatch contributor and a personal-finance speaker. She blogs at MoneyPeace.

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Finance

Personal finance guru Dave Ramsey warns over 'mind-blowing' Christmas debt

Published

5 hours ago

December 22, 2024

Press Room

Personal finance guru Dave Ramsey warns over 'mind-blowing' Christmas debt

Personal finance expert Dave Ramsey joined ‘Fox & Friends’ to discuss the Federal Reserve possibly cutting interest rates and how Americans can avoid overspending during the holidays.

Holiday spending is putting a big strain on American wallets and leaving some in debt well past the holiday season; however, personal finance expert Dave Ramsey said ‘mind-blowing’ debt can be avoided.

“The average over the last several years has been that people pay their credit card debt from Christmas into May,” The Ramsey Solutions personality shared during an appearance on “Fox & Friends” on Wednesday. “So it takes them about half the year to come back, and because they don’t plan for Christmas… it sneaks up on them like they move it or something.”

According to a study conducted by Achieve, the average American will spend more than $2,000 for the 2024 holiday season, breaking down the outflow of cash into travel and holiday spending on hosting parties, food, clothing, and other gifts.

STOP OVERSPENDING OVER THE HOLIDAYS AND START THE NEW YEAR OFF FINANCIALLY STRONG

Another recent survey by CouponBirds indicated that parents will spend an average of $461 per child and that 49% of parents will go into debt to pay for this Christmas.

Ramsey Solutions’ Dave Ramsey says “you won’t overspend” if you stick to a Christmas budget. (Getty Images)

The Ramsey Solutions personality balked at the amount of money shelled out for the season while explaining that the holiday should not come as a shock, and that spending for it should be planned out.

“Those numbers are mind-blowing when you look at the averages there. That’s a lot of money going out,” Ramsey added, “all in the name of happiness comes from stuff, and it doesn’t.”

He also weighed in and agreed on advice from fellow expert, Ramsey Solutions personality and daughter Rachel Cruze, who suggested making a list of people to shop for and noting how much to spend on each.

FOX Business’ Lauren Simonetti details the holiday shopping season on ‘Cavuto: Coast to Coast.’

“You know, I’m old, and I met a guy from the North Pole,” the expert joked. “He said ‘make a list and check it twice,’ so Rachel’s right.”

Ramsey followed up by expanding on his daughter’s suggestion: “If you do that, and you put a name beside it, and then you total up those dollar amounts, you have what’s called a Christmas budget.”

“If you stick to that, you won’t overspend,” “The Ramsey Show” host remarked.

National Retail Federation CEO Matt Shay reacts to the latest report that holiday spending is expected to reach $989B this year.

The money guru pointed out what he sees as problematic with the holiday season – not taking a shot at Christmas itself – but referring back to the spending issues.

“The problem with Christmas is not that we enjoy buying gifts for someone else. That’s a wonderful thing,” he reassured. “The problem is we impulse our butts off, and we double up what we spend because the retailers make all their money during this season.”

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Ramsey concluded by advising shoppers to be wary of retailers and to not be ensnared by their marketing strategies.

“They’re great merchandisers,” he warned. “They’re great at putting stuff in front of us that we hadn’t planned to buy.”

READ MORE FROM FOX BUSINESS

Ramsey Solutions personality Jade Warshaw breaks down the latest economic data that shows consumer credit card debt is piling up amid a jump in spending.

Finance

Can AI Solve Your Personal Finance Problems? Well …

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13 hours ago

December 22, 2024

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Can AI Solve Your Personal Finance Problems? Well …

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Finance

5 smart ways to use a year-end bonus

Published

21 hours ago

December 21, 2024

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Are you expecting a year-end bonus? If so, you’re probably dreaming up all the ways you could spend that windfall.

The average bonus was $2,447 in December 2023, according to payroll company Gusto. That’s a sizeable chunk of change — one that could put you in a better place financially in 2025 with proper planning.

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If you expect a bonus to land in your account soon, it may be tempting to splurge. And that’s perfectly fine. After all, you deserve a reward after working hard all year.

However, before you make an impulsive purchase, consider a few ways you could use those funds to improve your financial situation.

In today’s high interest rate environment, it’s expensive to carry debt. And the higher the interest rates you’re paying, the faster that debt balance can grow.

So, consider using your end-of-year bonus to pay off some of your debts. Not only does this clear your balance faster, but it also saves you money in interest over time.

For example, say you have $3,000 in credit card debt at 21% APR. If you took 12 months to pay off that debt, you’d pay $279 per month and spend about $352 in interest (assuming you don’t make any new purchases on the card).

Now let’s say you receive a $2,000 bonus and use it to pay down your credit card balance to $1,000. In this case, you’d only need to pay $93 per month to eliminate your balance in one year. And you’d pay just $117 in interest — a savings of $235.

Read more: What’s more important: Saving money or paying off debt?

If you’re not sure what to do with your bonus money, you shouldn’t feel pressured to use it right away. You can set it aside in a bank account while you decide. However, if your money is going to sit in the bank, you should at least earn interest and help it grow without any work on your part.

Following the Federal Reserve’s recent rate cuts, deposit account rates are on the decline. Still, there are plenty of high-yield savings accounts, money market accounts, and certificates of deposit (CDs) that pay upwards of 4% APY (or even more). Take some time to compare today’s rates and account options and put your bonus in an account that will help it grow.

See our picks for the best account options today:

It’s important to have a financial safety net in the event of a financial emergency, such as a car repair or job loss. An emergency fund can help you keep your budget intact and avoid taking on new debt to cover a surprise expense.

It’s typically recommended that you keep enough money in your emergency fund to cover three to six months’ worth of living expenses, though you might need more in certain situations. If you don’t already have an adequate emergency fund in place, a year-end bonus could help you get started.

Read more: How much money should I have in an emergency savings account?

One of the best things you can do for Future You is invest for your golden years. In particular, retirement accounts such as 401(k)s and IRAs are a good option because you can contribute pre-tax dollars, which allows you to lower your tax bill in April (or get a bigger refund), as well as defer taxes until you make withdrawals.

For the 2024 tax year, you can contribute up to $23,000 in a 401(k), and an extra $7,000 if you’re age 50 or older. If you haven’t prioritized saving for retirement in the past, or you want to take full advantage of an employer match, you can ask your payroll department to direct some or all of your bonus to your account.

Read more: 401(k) vs. IRA: The differences and how to choose which is right for you

As we mentioned, there’s no harm in splurging once in a while, as long as your financial obligations are squared away.

If you don’t want to feel like you’re depriving yourself, set aside half of your bonus for a “responsible” purpose and use the other half however you’d like. This can give you the momentum you need to stay the course when it comes to your financial goals, while still enjoying the fruits of your labor.

Read more: How much of your paycheck should you save?