Getting Started and Taking a Step Back: Financial Planning

In our world of ubiquitous financial information, it is easy to get caught up in short-term trends when thinking about our money:
* What are the hottest stocks?
* Which mutual fund managers have the best performance this year?
* What is Jim Cramer telling me to sell today?
* What is Suze Orman telling me to do this week?

However, turning your hard-earned cash into more cash is only the tip of the iceberg. 

Knowing how to manage and budget your spending, income and saving is crucial, and in the long run trumps returns of any size.  This is where financial planning comes in. 

Think of stars like M.C. Hammer, Michael Jackson, and Mike Tyson.  Each of these individuals made tens (if not hundreds) of millions of dollars, and had access to high-end investment solutions – yet managed to wind up broke and bankrupt before the middle age of 40.  Why? Because of a lack of financial planning!

Contrary to popular belief, the easiest way to become rich is not to start a company or win the lottery, but instead to start saving from an early age and create a financial plan that maximizes tax efficiency and suits your lifestyle needs.

If you begin saving for retirement at 25, putting away $2,500 per year, you will have an astonishing $700,000 by age 65 (assuming annual growth of 8%).  By contrast, if you put away $2,500 per year, but wait until age 35 to start, you will have only $306,000 by age 65 (assuming the same growth rate). That is the magic of compounding and saving – or as Warren Buffet likes to call it, the “snowball” effect.

So… instead of chasing the latest financial trend, start by choosing a financial planner or a financial advisor who provides this service.

Financial advisors or a financial planner will examine your situation individually, create a customized financial plan, and help you achieve the future you desire.  Financial planners typically charge an hourly or fixed fee for their services; some financial advisors offer financial planning solutions in-house as well. 

Don’t expect this kind of personalized help and service from a mutual fund!

NOTE: Experts recommend contacting 2-3 financial advisors or financial planning firms, in order for an individual to contrast and compare each financial advisor or firm; thus making the best-qualified choice for their unique situation.

AllFinancialAdvisors.com is an online resource of financial advisors, financial planners and wealth managers.  It is a independent 3rd party directory of Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

We have selected only the top financial planning professionals in the U.S. with which to work.  The Financial Advisors in our directory are all independent, Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

Financial Advisors have varied experiences, education, and specializations.  Finding the right financial planning firm and/or financial advisor takes the right research.  It takes trust in the source.

Our financial advisors take fiduciary oaths and pledge to uphold the highest standard of ethics.  Many of the financial planners within our directory explain how their financial planning process works within their profiles.  After reviewing their profile pages, you can request a fee schedule, more detailed information and/or a meeting.

Many of our advisors are members of the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning) and the Financial Planning Association (FPA).

Using the services of a qualified financial advisor and/or Wealth Manager (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

What Do Women Want from Financial Advisors? 
(and is it really that different from what men want?)

Earlier this month, Ameriprise Financial® released the results of its New Retirement Mindscape II study examining gender differences in attitudes toward, and planning for, retirement. Of particular interest to All Financial Advisors: What women want in their financial advisors.

The study found that 46% of women have sought retirement advice from a financial advisor; only 38% of men have. And the more time their financial advisors take to educate them, the happier women are: 63% say that is a highly important attribute in a financial advisor, while only 52% of men say the same.

Even more women — 69% — want a financial advisor who “provides a knowledgeable point of view,” and 58% of women are looking for financial advisors who will coach them on reaching their goals for retirement. Finally, 55% of women want a financial advisor to tailor financial guidance specifically for them.

The portion of the Ameriprise Financial study dealing with attitudes toward financial planners seems to clearly indicate women want to work with comprehensive financial advisors — just like those you can find here at All Financial Advisors. A comprehensive financial advisor will typically take time to educate clients on financial matters pertaining to them, coach them on defining their retirement goals and on following a financial plan, and provide a customized plan of action.

How about you? What are you looking for in a financial advisor? It’s the perfect time of year to think about your financial goals — and to find the right financial planner for you! Start today. Find a financial advisor in your area and get ready to start the new year off right!

It appears girls aren’t the only ones that just want to have fun.  In fact, according to TD Ameritrade Holding Corporation’s annual New Year’s Resolutions Survey, released late last week, 67% of Americans say their New Year’s resolutions for 2011 are to “have more fun” and to “relax/reduce stress.” Coming in at a close third was “save more money.”

Two years ago, when the economy was spiraling downward at an alarming rate, the majority of survey respondents resolved to “save more money” in the New Year; that resolution came in ahead of “spend more time with family” and “relax/reduce stress.”

Even more telling: 27% of those surveyed this year said they’re less likely to make New Year’s resolutions about their finances in 2011 than they were in 2010. 50% of survey respondents said their health and wellbeing are more important this year; another 39% said they’re doing better financially this year than they were in years past.

The survey reflects a more optimistic attitude toward the economy, but in a statement about the results, Stuart Rubinstein, managing director, investment products, TD Ameritrade cautioned against forgetting the importance of having a long-term financial plan.

AllFinancialAdvisors.com wholeheartedly agrees with Mr. Rubinstein’s advice.

Having a more relaxed, positive attitude toward finances is a great way to start 2011. And one way to cultivate that attitude is through working with a capable, experienced financial advisor. Which of the following two scenarios gives you more time and energy to have fun and relax in the New Year:

• You decide to tackle your financial goals head-on, so you read up on investing, retirement planning and estate planning, revamp your budget, and begin putting money into the stock market.
• You decide to tackle your financial goals head-on, so you interview a few financial advisors, choose the one you feel comfortable working with, and meet with him or her. When your financial advisor presents you with a comprehensive financial plan, complete with saving and investment advice, you simply follow the roadmap that’s been laid out for you.

 
We think most people would choose option 2.  Financial advisors have the skills and expertise to determine the most effective course of action for taking control of your finances.

In contrast, learning about financial planning, coming up with your own plan, and then staying on top of your portfolio as you engage in trial-and-error financial management doesn’t sound fun or relaxing in the least.

So what about you?  What are your resolutions, financial or otherwise, in 2011?  Do you agree with the results of the TD Ameritrade survey, or would your top resolutions be different?

And finally, have you considered working with a financial advisor in the New Year?  Leave a comment below and let us know!

Important Beneficiary Designation Considerations

Although you may have a formal estate plan established with a trust or will — make sure beneficiary designations on all accounts are consistent with your goals. 

Accounts having beneficiary designations will control who receives the assets.  Common assets with beneficiary designations are:

• Annuities
• Individual Retirement Accounts (IRA)
• Life Insurance
• Qualified Retirement Plans (401K, 403b, 457, SEP, SIMPLE, Pension, ESOP)
• Employee Benefit Plans (Group Term Insurance, Stock Option, Stock Purchase, Non Qualified Retirement Plans)
• Transfer on Death (TOD) Accounts

Additional items to consider:

• Update designations for life events such as birth, death, marriage and divorce.
• If you make changes to your will or trust ensure beneficiary designations are up to date.
• Name contingent beneficiaries
• Use caution when naming a trust as beneficiary, get a legal opinion from a estate planning professional
• Consider naming a charitable organization as a beneficiary

Beneficiary designations are a powerful tool allowing for efficient transfer of assets to heirs.  Consult with an estate planning specialist to ensure beneficiary designations have been recognized and completed throughout all assets.

Contact a qualified estate planning financial advisor within our free and secure directory — to discuss your exact needs.  SEARCH HERE.

Thanks for using AllFinancialAdvisors.com

401K and 403(b) Plans Explained

Company sponsored retirement plans, such as the 401K, are becoming an increasingly important component of the retirement planning process.

Has your current financial advisor explained to you the various components of your 401(K) or 403(b) plan?

401(K) plans are one of the most common retirement plan types. A 401K plan offers eligible employees an opportunity to establish an investment account and allows the employer to deposit funds deducted from employee paychecks. Once deposited into the account most plans offer a variety of money management choices such as mutual funds, stocks, bonds, and cash. At the employers discretion a plan can operate pre-tax as a Traditional 401K or post-tax as a Roth 401K.

Additionally, employers have the option to make contributions into employee accounts in the form of matching contributions (for active participants only) or non-elective contributions (all eligible employees receive same contribution).

Collectively, these contributions can add up to a substantial amount and creates a tremendous amount of tax savings.

Just to clarify, a 403(b) plan is also a qualified retirement plan that is offered to employees of hospitals, higher-education institutions, and non-profit companies and organizations.  Each 403(b) plan can be compared to various 401(K) plans, because they share similar characteristics: i.e. contribution limitations, various tax exempt rules, withdrawal penalties, and investment alternatives.

It is highly recommended to conduct an annual review [at the very least] of your company’s retirement plan with your financial advisor or financial planning firm — to learn how to get the most out of your plan.

Thanks for visiting AllFinancialAdvisors.com & we hope this article helped.

Financial Advisors have varied experiences, education, and specializations.  Finding the right financial planning firm and/or financial advisor takes the right research.  It takes trust in the source.

We have selected only the top financial planning professionals in the U.S. with which to work.  The Financial Advisors in our directory are all independent, Registered Investment Advisors (RIAs) managed by FINRA and the SEC (United States Securities and Exchange Commission).

Our financial advisors take fiduciary oaths and pledge to uphold the highest standard of ethics.  Many of the financial planners within our directory explain how their financial planning process works within their profiles.  After reviewing their profile pages, you can request a fee schedule, more detailed information and/or a meeting.

Many of our advisors are members of the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning) and the Financial Planning Association (FPA).

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

Retirement planning is not something you can forecast and then reconstructed when financial assumptions fail.  Unfortunately, many people often underestimate the amount of money needed in retirement. As a result, many retirees are forced to adjust their lifestyle to meet budgetary constraints. To avert these unwanted lifestyle changes in retirement; here are a few practices to consider (provided by our Best Financial Advisors):

• Try to save at least 10-15% of annual income. 
• Prepare to spend 70-80% of pre-retirement income during retirement.
• Working part-time, during retirement, to supplement living expenses.
• Recognize all income sources (Savings, Social Security, Retirement Plan Accounts, and Business Income) when calculating financial assumptions.
• Reduce household expenses as much as possible before retirement.

 
Often these items are overlooked since most investors have not established a comprehensive financial plan.

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably too!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

What Is Full Disclosure?

Bernard Madoff, yet another reason to know more about your financial advisor. 

Mr. Madoff’s previous experience as Chairman of the NASDAQ combined with posting unusually high investment returns helped his investment firm garner unwavering faith by many investors. In fact, it became “bragging rights” to say, “My money is with Madoff” a club-like experience. The Madoff portfolio was treated as a “sacred cow” by many investors who neglected to investigate the investment strategy because they were making money and were told he can be trusted.

As the world’s largest Ponzi scheme began to unravel it became evident his investors neglected to ask pertinent questions of Mr. Madoff and his firm. Several simple questions can be asked of your advisor and the firm he/she represents to prevent getting blindsided by a Madoff like event.

When signing the necessary paperwork to open your account, ask if your advisor if he/she has authority to make withdrawals from your account for anything other than fees. Make sure you see it in writing!

Ask the advisor who has custody of your money? Is the custodian the investment firm you are personally working with or a larger third party financial institution. A large third party institution helps create an arms length distance between your money and the advisory firm. Should anything seem weird with the advisory firm you can call the third party financial institution to inquire.

Transparency, Reporting and Liquidity are three other vital factors.

You need to be aware of what exactly is being held in your account, when statements are scheduled to be sent to you and how long does it take to sell-off the entire account in the event of an emergency.

An honest advisor should be happy to review all of this information with you upon your request. It is very easy to focus on other things and get distracted from the basics. Armed with answers to these questions you should be able to make an informed decision that will let you sleep at night.

We hope you find the best financial advisor or financial planning firm for your needs.