How To Choose A Financial Advisor

Financial Advisors

Be specific and go with the advisor who will meet your particular needs.

If you have decided it is time to involve an expert in the handling of your assets, what questions should you ask before selecting that expert?

What are your charges and how do you calculate them? This information may be on the potential planner’s website, but be clear if he/she charges an initial fee, whether charges are based on assets under management and if he/she stands to benefit from any products they may want to sell you. That would create incentive for the advisor to sell your particular products.

What licenses, credentials or other certifications do you have? There are four main types of financial advisors: certified financial planner designation is harder to achieve than chartered financial consultant. The former requires a comprehensive board exam. The latter does not demand the test, but uses the same curriculum. If you need someone just to manage money, you might opt for a registered investment advisor. If you have high income or own a small business, a certified public accountant may be your choice. A CPA may also qualify as a personal financial specialist through additional training.

What services does your firm provide? This question may screen out services you may NOT expect to receive from a particular provider. Some financial planners focus on retirement, insurance, estate planning or tax planning. Be specific and go with the advisor who will meet your particular needs.

What types of clients do you specialize in? Some financial planners have a niche, serving clients with particular interests such as charitable giving or socially responsible investments or the problems related to marriage or divorce. As a professional factor, most financial advisors tend to relate best to people within 10 years of their own age. Those who are closer to retirement, for instance, can relate to clients facing the same challenges.

May I see a sample financial plan? There is a lot of variation among plans. If you are provided a complex stack of pages complete with graphs and charts regarding things you don’t understand, likely you wouldn’t relate to your own plan any more easily. A sample might guide you in choosing an advisor whose approach meets your specific needs.

What is your investment approach? If you already have a firm preference about how to invest, you need to know if the advisor you are contemplating is on the same track. If you prefer low-cost funds, ask if the advisor would use actively managed funds or passive investments. If you are willing to be risky in hopes of a large return, say so. Discuss risk tolerance and goals.

How many times will you expect to meet? After an initial planning meeting, some advisors do not see the client again for a year. Some clients need more support than that. How much control are you willing to cede to your money manager? Some surveys suggest that more frequent meetings result in the most satisfaction for the majority of clients.

Will I work directly with you or with team members? Often, you will meet annually with the advisor you select, with additional contacts during the year with a team member. Companies differ on this issue. One approach is not better than the other if the bottom line is to serve your needs. But the more you know before you make a commitment, the more satisfactory the relationship is likely to be.

Why should I choose you to handle my financial affairs? If the answer comes close to “I’m your savvy best friend, financially,” you are on the right track.

After a conversation with a potential advisor, ask the next questions of yourself: Did he or she talk most of the time? Does he or she appear genuinely interested in my circumstances and not just the numbers? Am I sure he or she will act based on my goals, financial background and philosophies about money? Based on these answers, make your choice.

Three Ways To Stop Worrying About Money

Stop Worrying About Money

Worry about the markets seems to be a common stressor, regardless of the amount of the individual’s assets.

Things look pretty rosy on the American economic front, with slow but steady improvement in the measures experts use to gauge such things and a stock market that is definitely on the upswing. So how come about half of Americans, even those with six-digit incomes, still say they worry about their personal financial security? Money is, in fact, the number one source of arguments between partners.

What’s in the wallet is not the only measure of monetary comfort. And in today’s world, despite the positive signs, real incomes are not rising much, college costs are off the charts and retirement lasts longer on average. Those are all areas for concern, Marguerita Cheng, a financial planner in Rockville, Md., offers these three ways to keep money concerns reasonable:

Pay less attention to the markets. Worry about the markets seems to be a common stressor, regardless of the amount of the individual’s assets. If you believe more wealth would free you from that concern, forget it. A survey among people with $5 million to $25 million in assets showed they worried too. Psychologists call this “loss aversion.” People tend to fret more over a dip in the portfolio than they celebrate an uptick. A diversified strategy can help you to avoid these lopsided perceptions. Don’t dwell on the market. Do check your portfolio once a quarter. You can be assured that your asset/allocation balance is okay and hopefully fend off obsession with unimportant ups and downs.

Tell someone “Thank you.” People who develop an “attitude of gratitude” for the things they have report themselves to be happier. Try writing a note of appreciation to someone who has given your life a lift at some point. Make it beyond a simple “thank you” card. Be specific about the “gift” you received. People who study such matters report that those who take the time for such niceties are happier. Putting gratitude into writing makes it more real, they say, and takes the writer’s mind off what they do not have in favor of what they do have.

Spend socially. Psychologists report that few people ever arrive at a point that they have enough. And accumulating more and more doesn’t lead to happiness. Strong relationships are more important, whether it is with a spouse, family members, friends or a religious group. Direct some of your spending to others. Plan a family vacation, donate to a charity or simply buy a gift for a friend. In one study, participants were given a $10 Starbucks gift card with instructions to use it, give it to a friend to use or to take the friend to Starbucks and share the gift card. The final choice produced more happiness, the survey said. Giving is a way to boost a sense of well-being.

(These suggestions are adapted from “Never Worry About Money Again,” by Carla Fried, Ian Salisbury and Taylor Tepper. Their article appeared in the July 2015 issue of MONEY Magazine.)

Don’t Overlook These Credit Card Benefits

Credit Card Benefits

Wisely used, your credit card could help with your holiday expenses.

Wisely used, your credit card could help with your holiday expenses. The trick is to control your spending and to use your credit card “extras” to make your credit go farther.

First off, consider “zero liability.” Identity theft is a serious problem today and protecting your information is imperative. A credit card or cards that offer zero liability can be one step toward that goal. They allow you to quickly freeze your account if you have any hints that things are not right. With some cards, this protection is built in if the issuer detects purchases that seem out of step with your usual practices. The inconvenience that you might suffer if they are wrong in refusing a purchase on your card is nothing compared with the damage that can be done by a thief using your card.

If travel is part of your holiday plans, you can get collision damage insurance on a rental car at no cost. It is included if you use your credit card to pay for the rental, according to the Department of Insurance, Securities and Banking. Otherwise, you may be charged $10 to $20 per day for the insurance. Consumer Reports notes that rental companies can hold drivers liable for anything that happens to the vehicle during the rental period. If something happens to the vehicle after you have returned it to the rental company but before they have done their inspection, you could be charged for that damage. Using a credit card to complete the transaction before driving off the lot prevents such an event. Decline the rental company’s collision damage waiver coverage.

Visa credit card holders also have a pay-per-use option for roadside dispatch in the event of a problem. If you are stranded while traveling, you’ll save money with this option. For $69.95, you are assured towing, tire-changing, jump-starting, lockout service, fuel delivery or winching services.

Most credit cards offer perks such as a rewards program. That’s especially attractive during the increased shopping that most people do during the holidays. Look for such perks when you choose a charge card. Caution: Don’t let the fact that you get a small cash rebate on credit card purchases push you into buying more than you had planned. It’s too easy to let the shopping get ahead of you.

Long-Term Care Costs Complicate Retirement

Long-Term Care Costs

A person who is 65 can expect to incur $138,000 in long-term care costs, according to a 2017 Bipartisan Policy Center report.

When retirement looms and you have to give serious thought to your changing personal finances, don’t forget to add the potential costs of long-term care to the mix. It’s a fact that many retirees will at some point need long-term care, but too few people facing the end of their working careers make that reality part of their planning.

It’s rare that a family does not have one or more parents, spouses or even children suffer debilitating illness or injury. In one way or another, it’s a problem that virtually every American family faces, said a spokesman for the SCAN Foundation, which researches such topics.

Among people aged 65 today, some 70 percent will need long-term care before they die, according to U.S. government studies. In many cases, the need will not be for medical care, but for assistance with such daily tasks as bathing, food preparation, shopping and other necessary chores. Often, these needs arise after a medical event, such as injury in a fall or a major illness.

The costs of such care can quickly outstrip what has been saved for retirement. A person who is 65 can expect to incur $138,000 in long-term care costs, according to a 2017 Bipartisan Policy Center report. Other studies determine that few people in the 40-year age range have included provision for such care in their retirement plans.

The AARP, which serves people 55 and older, has a long-term care calculator that shows average costs for different types of services by state and metropolitan region. The most expensive is nursing home care, which now averages $97,000 per year, according to a 2017 survey conducted by Genworth Financial. Assisted living facilities average about $45,000 per year. Adult Day Care centers charge an average of $70 per day.

Too many people facing retirement believe that Medicare will pay for such services. But the federal medical program does not pay for nursing home stays or non-skilled living assistance, which make up the majority of the services needed to care for the elderly. More than 50 percent of those who need these services end up paying out-of-pocket, according to the Policy Center report. The figure rises to 70 percent for those who have more severe long-term needs. Saving are quickly depleted.

Many of the elderly are forced to turn to state Medicaid, programs that supplement health care costs. Rules vary from one state to another, so a review of what your own state provides should be part of your retirement planning. You may be required to spend down your savings to qualify.

Only 11 percent of older Americans have private long-term care insurance. Premiums are prohibitively expensive for most people, the Policy Center said Insurance companies have found that their estimates of how lucrative such policies would be were not correct and the number of companies offering the policies has declined dramatically.

Bottom line: Begin early to look realistically at your retirement provisions and don’t get caught flat-footed when the time comes. If you begin early to purchase long-term care insurance, your premiums will be lower. But you must consider how tight your retirement income will be post-retirement if you expect to continue to buy the insurance when it is most likely to be needed.

Who Are the Leading Female Financial Advisors

Female Advisors

These women and an increasing number of others are making their mark, managing billions of dollars and educating others in financial issues as well.

There are no long lists of woman whose expertise in financial advising is readily recognized beyond limited circles. Many are doing well, but it tends to be in a less flamboyant manner than their male peers.

Two whose names are readily recognizable are Suze Orman and Melody Hobson. They are the media darlings, quoted when financial questions arise. Orman started as a stock broker, while Hobson climbed the leadership ladder at Ariel Capital Management to become president. Neither of these industry leaders holds the Certified Financial Planner credential which is recognized as the financial planning standard.

Orman’s accomplishments include a clutch of books, kits, calculators, tools and a resource center. Among her dozen or so how-to financial books are “Young, Fabulous and Broke,” “You’ve Earned It, Don’t Lose It” and “The Laws of Money.” Her business flows over into television and media appearances.

Hobson, just 10 years after graduation from Princeton University, had climbed from intern to president in Ariel. She is a contributor to Good Morning America’s money segments and is a fierce advocate for African American financial literacy. In 2015, she was on the Time Magazine list of 100 most influential people in the world.

Third on the list is Karen McDonald of Morgan Stanley. Barrons ranked her No. 1 in its 2014 survey. She has $21.2 billion in assets under management and heads a team of 15 that serves corporate clients, many of them in the top Fortune lists. She specializes in employee benefit solutions and other employee issues such as educating workers to become better money managers.

Susan Kaplan, top financial advisor, according to the Barrons 2013 survey, is president of Kaplan Financial Services in Newton, Mass. Her $1.4 billion in managed assets includes many accounts in the $3.5 million range. Her average client has $10 million net worth. She has contributed to Louis Rukeyser’s Wall Street and Mutual Fund publications as well as various financial journals and appears on Bloomberg News, CNBC, WGBH and other media outlets.

Gillian KYU of Morgan Stanley Securities in San Francisco, earned the No. 2 spot in Barron’s list in 2013 and No. 6 in 2014. Her $3.5 billion assets under management typically range in the $20 million neighborhood. Her clients average $50 million net worth. She is licensed as both a financial advisor and a broker. She was reared in Taiwan and is fluent in English, Mandarin and Taiwanese and serves many clients with Asian ties in both their Asian homelands and in the United States.

Elaine Meyers ranks fifth in the 2013 Barron’s survey’s overall financial advisor category and third among the women on the list. She manages $2.63 billion, with a typical account size of $30 million. She is managing director of Credit Suisse (USA) Private Banking North America in San Francisco. She has prior experience with other international investment firms as well and has been influential in the financial advisory field for several decades.

While women still lag males in financial advisement, these women and an increasing number of others are making their mark, managing billions of dollars and educating others in financial issues as well.