Category Archives: Retirement Planning

401(k) Employer Matching: What You Don’t Know Might Hurt You

Retirement Planning

By Chris Alman, CFP®

It’s common to hear that you should contribute enough money to your company’s 401(k) or 403(b) plan to receive the employer’s match if there is one. It’s good advice as it typically results in “free” money being contributed towards your retirement. However, what if you are planning to maximize your contributions ($19,500 in 2020)? Does the timing of your contributions affect your employer’s match? Could you be leaving “free” money on the table?

calculator and woman sitting at computer
Photo by Charles on Unsplash

The answer to this question is tricky. Let’s begin by looking at a simple scenario that we can build upon.

Base Scenario: Contributing enough to receive the match

You currently earn a base salary of $100,000 and are paid monthly which results in a paycheck of $8,333. In addition, your employer will match 100% of your contributions up to 6% of your gross pay each month. To get the full match, you contribute 6% ($500) of your paycheck each period. This results in annual contributions of $12,000 (Your $6,000 + Employer’s $6,000 match). You’ve received your employer’s full match.

Base Scenario | Salary: $100,000
Month Payroll % Contribution Amount Match up to 6% Employer Employer YTD
1 $8,333 6% $500 100% $500 $500
2 $8,333 6% $500 100% $500 $1,000
3 $8,333 6% $500 100% $500 $1,500
4 $8,333 6% $500 100% $500 $2,000
5 $8,333 6% $500 100% $500 $2,500
6 $8,333 6% $500 100% $500 $3,000
7 $8,333 6% $500 100% $500 $3,500
8 $8,333 6% $500 100% $500 $4,000
9 $8,333 6% $500 100% $500 $4,500
10 $8,333 6% $500 100% $500 $5,000
11 $8,333 6% $500 100% $500 $5,500
12 $8,333 6% $500 100% $500 $6,000
$6,000 $6,000

 

Scenario #2: Maximizing your contributions

Now, let’s say you plan to maximize your retirement contributions for the year ($19,500). Instead of contributing 6%, you now contribute 19.5% per paycheck or $1,625. Your employer still matches the first 6% ($6,000) of contributions so you end the year with $25,500 of total contributions. As with the base scenario, you have received the full employer’s match. All is well.

Scenario #2 | Salary: $100,000
Month Payroll % Contribution Amount Match up to 6% Employer Employer YTD
1 $8,333 19.50% $1,625 100% $500 $500
2 $8,333 19.50% $1,625 100% $500 $1,000
3 $8,333 19.50% $1,625 100% $500 $1,500
4 $8,333 19.50% $1,625 100% $500 $2,000
5 $8,333 19.50% $1,625 100% $500 $2,500
6 $8,333 19.50% $1,625 100% $500 $3,000
7 $8,333 19.50% $1,625 100% $500 $3,500
8 $8,333 19.50% $1,625 100% $500 $4,000
9 $8,333 19.50% $1,625 100% $500 $4,500
10 $8,333 19.50% $1,625 100% $500 $5,000
11 $8,333 19.50% $1,625 100% $500 $5,500
12 $8,333 19.50% $1,625 100% $500 $6,000
$19,500 $6,000

Scenario #3: Receiving a bonus and maximizing your contributions

Because you did such a great job last year, your employer tells you that you will be receiving a $10,000 bonus in January. Since your overall compensation is now $110,000, you do the math ($19,500/$110,000) and decide to lower your monthly contribution from 19.5% to a little under 18%. Your first contribution for the year is $3,250 and the rest are $1,477. At the end of the year, you have maximized your contributions and received the full employer’s match $6,600 ($110,000 x 6%).

Scenario #3 | Salary: $100,000; January Bonus: $10,000
Month Payroll Percent Amount Match up to 6% Employer Employer YTD
1 $18,333 17.73% $3,250 100% $1,100 $1,100
2 $8,333 17.73% $1,477 100% $500 $1,600
3 $8,333 17.73% $1,477 100% $500 $2,100
4 $8,333 17.73% $1,477 100% $500 $2,600
5 $8,333 17.73% $1,477 100% $500 $3,100
6 $8,333 17.73% $1,477 100% $500 $3,600
7 $8,333 17.73% $1,477 100% $500 $4,100
8 $8,333 17.73% $1,477 100% $500 $4,600
9 $8,333 17.73% $1,477 100% $500 $5,100
10 $8,333 17.73% $1,477 100% $500 $5,600
11 $8,333 17.73% $1,477 100% $500 $6,100
12 $8,333 17.73% $1,477 100% $500 $6,600
$19,500 $6,600

At this point, you may be wondering why the answer to the original question was “tricky.” So far, things have been pretty straightforward and, in each scenario, you’ve managed to receive your employer’s full match. That’s about to change.

Scenario #4: Contributing your entire bonus in January

Upon learning you will be receiving a bonus, you decide to leave your monthly contribution rate at 19.5% and contribute your entire bonus to your 401(k) in January. Now, your first contribution of the year is $11,625, the next four are $1,625, and the last one is $1,375. You maximize your contributions by the end of June and are excited because starting in July you won’t have to make any more contributions and your take-home pay will be much higher. That sounds great, but you find out at the end of the year that your employer only contributed $3,600. How could that be? Where is the other $3,000?

Here’s where things get tricky. Many employers only match contributions on a per period basis. In these scenarios, the periods are monthly. This means that each month the employer looks at the compensation for that month and contributes up to 6% of that amount. Even though you contributed $11,625 in January, your employer could only contribute up to 6% of your pay for that period or $1,100. Your employer continued to match each of your other contributions ($500/period), but after six months, you were no longer contributing; therefore, the employer had nothing to match.

Scenario #4 | Salary: $100,000; January Bonus: $10,000
Month Payroll % Contribution Amount Match up to 6% Employer Employer YTD
1 $18,333 63.41% $11,625 100% $1,100 $1,100
2 $8,333 19.50% $1,625 100% $500 $1,600
3 $8,333 19.50% $1,625 100% $500 $2,100
4 $8,333 19.50% $1,625 100% $500 $2,600
5 $8,333 19.50% $1,625 100% $500 $3,100
6 $8,333 16.50% $1,375 100% $500 $3,600
7 $8,333 0.00%
8 $8,333 0.00%
9 $8,333 0.00%
10 $8,333 0.00%
11 $8,333 0.00%
12 $8,333 0.00%
$19,500 $3,600.00

Scenario #4 isn’t the only time this could happen. If your income is high enough, it may result by simply setting your contribution percentage too high for the year—which would also cause your contributions to stop before year-end.

 
Luckily for some, not all employers make contributions in this way. Many retirement plans have provisions that allow the employer to look back at an employee’s income and contributions over the entire year and make an additional contribution so that the percentage of compensation matched aligns with the annual compensation.

In Scenario #4, a provision like this would have allowed the employer to make a $3,000 contribution at year-end—bringing the total contribution to $6,600.

If you aren’t sure how your plan is structured, be sure to ask your plan provider. Don’t miss an opportunity to increase your retirement contributions.

Planning With Purpose

Financial Health, Retirement Planning

By Chris Alman, CFP®

“Discover a purpose that gives you passion. Develop a plan that makes you persistent…” -Israelmore, Ayivor

Are you living the life you intended or is life happening to you?

Time and again clients come into our office looking for financial guidance, which is understandable. Most people spend more time planning a vacation than they spend on their finances in a year. They are usually seeking answers to legitimate questions regarding their money.

  • Am I saving enough for retirement?
  • Should I be contributing to my Roth IRA?
  • What investments should I choose for my 401(k)?
  • Will my family be taken care of if something were to happen to me?
  • Should I start a 529 plan for my kids’ college?
  • Which retirement plan should I implement in my business? A Simple IRA, a SEP IRA, or a 401(k)?

All of these questions are important and should absolutely be addressed. However, what is often overlooked is WHY these things are important. It’s not typically because you love trying to figure out whether U.S. Large Cap Value will outperform Large Cap Growth over the next 10 years or because you aren’t sure if you’ll have enough tax-free income during retirement. No, most of the time, the reason why these things are important isn’t related to money at all. Rather, the purpose stems from our desire to feel a sense of well-being, comfort, and assurance that we and our loved ones will be okay. We want to know we have the ability to do the things we most enjoy in life without hindering our ability to meet our basic needs.

planning checklist
Photo by Glenn Carstens-Peters on Unsplash

So, do you have a plan that ensures your comfort, well-being, and security? Are you making it a point to do the things you most enjoy? Or, are you like most everyone else…letting life happen to you? You go from one day to the next, putting out fires and always hoping tomorrow will give you that much needed breakthrough. You have so many places you would like to see, people you would like to spend time with, and things you would like to do, but there’s never enough time—and resources are always less than you would hope. You think, “one day I’ll have a chance to make these things happen.”

A successful plan isn’t about having a fixed path

Instead of staying in this cycle of waiting on tomorrow, why not make a change? Discover what you are passionate about and what you want most out of life. Then, build a plan that you feel confident will help you fulfill those goals. A successful plan isn’t about having a fixed path to your goals. It’s about going through the planning process over and over as your circumstances change. Each time, you make the necessary adjustments to point you back towards your goals. There’s always going to be the unexpected setback. If there wasn’t, there would be no need for planning.

Make a decision to live with purpose

Don’t let life happen to you. Make a decision to live with purpose. Set your focus on what is most important to you. Then, as you are faced with decisions about how much life insurance you need, how much money to save for your kids’ college, which investments to choose, or which account type would be the most tax-efficient, you can consider each one of those questions in light of your goals. Maybe you need to buy more life insurance, maybe not. Your goals will help you determine the steps to take.

If you’ve discovered “…a passion that gives you purpose,” but you you’re still trying to “develop a plan that makes you persistent,” maybe it’s time to consider working with a financial planner. Let us show you potential strategies for reaching your goals so that you can find the plan you are passionate about and can be persistent in your efforts.

6 Financial Planning Mistakes Small Business Owners Make (and How to Avoid Them)

According to the Bureau of Labor Statistics, for the 10 years ending March 2018 21% of businesses failed in their first year, 49% failed in their first 5 years, and 66% failed in their first 10 years.1 This means that only 34% of small business owners prepared well enough to survive over the long term.

So let’s suppose you are one of the few that have made it beyond 5 years. At this point your business is profitable, you have a better outlook on your fixed costs, you’ve likely hired a few employees, and you’re (finally) starting to pay yourself a decent income. Now that you feel all of your ducks are in a row and you aren’t running scared, you start mapping out a plan to maintain your customer base as you expand. Here’s the question…

During these first five years, did you ever focus on your personal financial well-being, or were you like most small business owners—you never felt like you had enough money, let alone time, to even think about it?

If you answered like most small business owners, you’re not alone. This is a common theme among many small business owners, even those who have been extraordinarily successful. Too often their time and talent is focused so intently on growing their business that they neglect their own personal financial planning. As a result, they experience success within the business but become prone to making mistakes that hinder their financial future.

Here are some of the most common mistakes small business owners make and what you can do to address them.

  • They do not establish a business disruption plan.

    Unfortunately, many small business owners are the sole “key” to the success of the business. If something were to happen that keeps the owner from working for an extended period of time, there is nothing in place to help cover overhead expenses such as utilities, rents, employee salaries, equipment, insurance premiums, or hiring additional help during this time.

This is where having Business Overhead Expense insurance and Key Person Disability insurance can prevent your business from failing. These types of insurance policies pay benefits to your business to keep things running while you are unable to work. It’s also important to consider who you would like to step in to temporarily fill your role.

  • They do not provide protection for their families should an unexpected disability or death occur.

    Have you considered how long your personal savings would carry you if you became disabled? Your personal expenses won’t stop just because you’re unable to work. Having a disability insurance policy in place makes sure you and your family are cared for while you’re out of the workforce.

What happens if you pass away unexpectedly? Is your thought that your family would be able to sell your business to successfully provide for their future? Many business owners feel this way. However, have you considered that your business may be worth far less without you there? It’s important to have the right type and amount of life insurance to provide the best outcome for your family.

photo of desk with notes and plans
Photo by Helloquence on Unsplash

  • They do not consider the value of adding benefits plans.

    As your business is getting started, you are often running lean and adding benefits for you and your employees may be cost-prohibitive. However, as your business grows, it is important to add benefits such as health insurance, disability insurance, life insurance, and retirement plans early on. These benefits will not only help you retain employees, but they will often allow you to save on costs and reduce your tax liability.

Flex spending accounts (FSAs) and Health Savings Accounts (HSAs) allow you to pay for medical expenses more efficiently, and implementing the right retirement plan allows you to maximize your retirement savings while accounting for variations in cash flow. Not only can you maximize your savings with the right retirement plan, but you can also drastically reduce your income tax liability.

  • They do not set aside savings outside of their business for future goals.

    As you are pouring money into your business so it can grow and prosper, are you neglecting to save for your own financial future? Many business owners enjoy a very comfortable lifestyle while the business is successful and assume that once they are ready to retire they can sell the business and live on the proceeds. They use this as motivation to continue to put money back into the business. However, doing so may lead to heartache should the business suffer a setback or fail altogether.

It’s important to balance personal savings with capital reinvestment. By considering your personal goals alongside the goals of the company, you can be proactive in drawing funds from the business when it’s profitable and directing those funds towards your personal goals. 

  • They do not consider their business as part of a diversified investment portfolio.

    Similar to the previous mistake, looking at your business as your sole means of wealth is dangerous. As the adage goes, “don’t put all of your eggs in one basket.” You should consider your business an investment just as you would an investment in stocks, bonds, mutual funds, and other investment vehicles.

While you may have more control over your business, you cannot control outside events that might have a significant impact on it any more than the next business. By diversifying your portfolio, you greatly reduce the risk of losing everything and not being able to retire. 

  • They do not develop an exit strategy or succession plan.

    As many business owners get close to retirement, they begin to think about what they are going to do with their business. They have spent much of their lives building their business into a successful enterprise. They have nurtured it, pruned it, and poured their blood, sweat, and tears into it. Now, they are not sure how to let it go. Many times, this realization comes at a time when they “need to” retire rather than being something they’ve planned for. At that point, there is often less control over the outcome which could result in not being able to provide the retirement income they were counting on.

Instead of waiting until there is an urgency to figure out how to part from the company, you should put a plan in place now. Decide whether you want to sell to a child, employee, competitor, or someone outside the industry. Develop a plan you feel comfortable with and make sure you have a clear vision for your life beyond the business. You’ll be glad you did.

business owner working with team
Photo by Helloquence on Unsplash

If you find yourself neglecting your own personal financial planning, like many business owners do, stop for a moment and decide you are going to be successful—not just in your business, but with your personal finances as well.

Consider partnering with a fiduciary financial planner to help you evaluate your options. A knowledgeable planner will help you choose appropriate workplace benefits and analyze retirement plan options that align with both your personal savings goal and your business’s cash flow. He will also work with you to create a 360° view of your finances so you always know where you stand. 

If your life currently revolves around your business and you want to alleviate some of the chaos, contact us today. When your circumstances are most chaotic, that’s when good guidance can have the most impact.

Source: 1 https://www.bls.gov/bdm/us_age_naics_00_table7.txt

How to Find a Fiduciary Financial Advisor

Fee-Only, Financial Health, Investing, Retirement Planning

By Scott McLeod, CFP®, ChFC®

 

In 2016, the Department of Labor shocked the investment world by starting the process of requiring investment advisors who provide services to retirement plans (like IRAs and 401(k)s) to act in a “fiduciary” capacity. The term fiduciary, as defined by Merriam-Webster’s is “held or founded in trust or confidence”.1 In other words, the DOL submitted a set of rules to require advisors to be legally bound to act in the best interest of their clients. While the implementation of the rules has been stalled by Congress, the idea has thrown the world of investment advisors into a tailspin.

If you are like most, the idea that it is legal in the United States for financial advisors to act in any capacity OTHER than a fiduciary capacity is surprising. Unfortunately, it is true. You, like most, may believe that every advisor is required to place your interests above his or her interests at all times. Unfortunately, they are not. Even worse, the definitions are so convoluted that it is difficult for the average consumer to identify a fiduciary from a non-fiduciary. I hope this post helps.

Not All Advisors Are Created Equal

When it comes to narrowing the field to advisors who truly have your best interest at heart, there are essentially three different types of advisors and advisory firms in the U.S.:

•  Investment Advisor Representatives (IAR): IARs are employees of independent, Registered Investment Advisor firms that are regulated by the SEC or state securities commissions. These advisors must always act as fiduciaries and must prove compliance to their regulating bodies. These advisors are generally compensated by a fee paid directly from the client (not commissions or compensation that comes from their affiliated company) and are often known as “Fee-Only” firms. IARs generally offer full pricing transparency and full disclosure of any conflicts of interest. This is easily the smallest segment of the investment advisory profession, accounting for fewer than 20% of the advisors in the U.S.

•  Registered Representatives: Registered “Reps” are employees of brokerage firms and are regulated by FINRA. Registered Reps are held only to a “suitability” standard which simply requires the advisor to determine whether the investment is suitable for the client; not necessarily the best for the client, not necessarily the least expensive and without the disclosure of any conflicts of interest. These advisors are generally compensated by a commission that is charged on the sale of the products they sell. This is the largest segment of the advisory profession.

•  Dually Registered Advisors: Dual registration means that the advisor may be registered with the SEC or the state securities commission as well as with FINRA. This allows the advisor to claim the standard of fiduciary at one moment and then, when the time is right, sell products on a suitability standard and charge a commission without full disclosure. Yes, amazingly, it is legal in the U.S. to call yourself a fiduciary while only serving in that capacity part of the time. It seems that most of the IARs in the U.S., who should be trusted as fiduciaries, are dually registered, making them non-fiduciaries when it is expedient.

How Can I Find a Fiduciary Financial Advisor?

As you can probably already guess, finding a true fiduciary financial advisor can be difficult, especially with the specter of dual registration. It is possible to identify the true fiduciaries by looking at their registration documents with the SEC or state securities commissions but the documents can be hard to understand and you must know exactly what to look for. Alternatively, you can conduct your own investigation by asking a few, very simple questions to eliminate the non-fiduciary advisors:

“How are you and your company compensated?”

•  A flat fee, hourly fee or a fee as a percentage of assets ONLY = fiduciary

•  Commissions or “I am paid by the company, you don’t pay me anything” = non-fiduciary

•  Fees and Commissions, Fee-based, Hybrid fee and Fee Offset = dually registered

“Do you receive ongoing income from any of the products you recommend in the form of 12(b)1 fees or trailing commissions?”

•  Yes = non-fiduciary

•  No = maybe a fiduciary

“Is your firm registered as an Investment Advisor and do you have an ADV Part II disclosure you can provide?”

•  Yes = fiduciary (but may be dually registered)

•  No = non-fiduciary

“Are you willing to sign a Fiduciary Oath?”

•  Yes = fiduciary

•  No = watch your wallet

For a more comprehensive tool to compare advisors, click here to access the National Association of Personal Financial Advisors Financial Advisor Comparison Tool. This is a free checklist and answer key to help you know the right questions to ask.

Feel free to present this questionnaire to Brown Financial Advisory. We have always been an independent, SEC registered, Fee-Only, fiduciary company. And since it is the right thing to do, we plan to keep it that way.

Source: 1https://www.merriam-webster.com/dictionary/fiduciary

Retirement Planning: More Than Just Numbers

Retirement Planning

By Chris Alman, CFP®

If you are like many people that are finishing up their last few weeks, months, or year of work; chances are you have a lot on your mind as the first day of retirement approaches. How do you feel? Are you excited? Anxious? Worried? What thoughts are swirling around in your mind? Are you thinking about freedom and relaxation, or are you unsure what you will do with yourself when the day comes and you no longer have to wake up at 5 AM to get ready for work? Regardless of how you feel or what you’re thinking about, you are not alone.

We hear stories from retirees each day about what their step into retirement looked like. For some, retirement fits like a glove. It’s as if retirement is a long lost friend with whom they have just reunited.

For others, they had big plans for all of the things they were going to do to keep them busy. They were going to golf every day, lounge by the pool, or spend time in the garden. Once they realized they couldn’t or didn’t want to do these activities every day, it was difficult finding new things to fill up their free time.

Still, there are others who never thought about retirement until they walked out the door on their last day of work. Many of them managed to figure out how to fill their time, but some couldn’t quite come to terms with being retired and decided to rejoin the workforce.

From what we have gathered, each of these three experiences correlates with how much planning the individual had completed prior to retirement. Those that truly thought through what they wanted to achieve during retirement had the least amount of difficulty transitioning. Those that never considered what retirement would be like had the most stress and anxiety as they made their way.

So, what can you do to prepare and ensure you have a smooth transition into retirement? There are many things to consider, but here are some ideas to get you started.

  1. Ask yourself what you will do with this newly found “free time.” After you come up with some ideas, ask yourself what you will do if and when those things aren’t enough to keep you busy. From what we hear, it happens quite often.
  2. Think about the people you normally spend time with during the day. For most of us, it’s our co-workers. Now that you are not seeing them each day, think about who you want to spend your days with. This will also help you determine where you want to live. Some prefer to be closer to town and social events while others prefer being further away. Maybe you want to move closer to children or grandchildren.
  3. Begin experimenting with things that will help you feel a sense of purpose or self-worth outside of your work. What skills do you have that you can contribute to others? Do you want to volunteer, be a mentor, or help take care of family? Don’t wait until you are retired to get started. Getting involved in these things now will also help you form relationships you can carry into retirement. This may just be the most important aspect of transitioning into retirement
  4. Map out your goals and future endeavors. As you get closer to that day, it will give you peace of mind knowing that you have a plan in place. No more worrying about what you’ll do. It’s already laid out.

Don’t let that first day sneak up on you. Start trying on your retirement shoes today. Each step today will help you feel more comfortable when you finally take that first step into retirement.

If you would like to know how we can help you think through these things and uncover your life’s goals, give us a call or click here.

Depression just after Retirement

Retirement Planning

By Scott McLeod, CFP®, ChFC®

So, are you REALLY ready for retirement? Psychology may undermine your health and happiness.

It has been 30 or so years since you first started your career and after such a long time, it seems that now may be a good time to consider retiring. You have put your time in, there are a number of things that you would like to do while you are still young and your savings should provide all you need for the next 20-30 years. After all, you have been wanting to travel more, to spend more time with your children (and who’s kidding whom, it’s really your grandchildren that you want to see) and to have more time to pursue some of the things you have put off all these years. Yes, this certainly must be the right time.

But wait a minute: are you really ready for retirement? There is an interesting and often unexpected phenomenon that occurs as many people transition into retirement. What is it? Post-retirement depression.

Your response (if you haven’t already decided to stop reading because it couldn’t possibly apply to you) is likely similar to many of my clients’ responses: “I don’t think I will experience anything like that because I have been so tired of working for so many years. I’m really ready for retirement.” “That won’t happen to me because I have all of these projects lined up that will keep me very busy after retirement.” or the most common, “I’m sure that it won’t happen to me. After all, you know how much I like to (play golf, sail, travel, garden, etc.) and now I will finally have enough time to do it as much as I would like.” Uh huh, it all sounds perfectly logical and, to some extent, even ideal. But watch out, there could be a freight train coming.

In 2013 a study was released by the Institute of Economic Affairs and Age Endeavour Fellowship that suggested that retired people are “40% less likely to describe themselves as in very good or excellent health than working people of the same age. Mark Littlewood stated that many working people look forward to retirement, however, retirement is often connected with a downturn in health.” [Source]

I witnessed a great example a few years ago. One of my clients retired from a successful career in finance. He had enough accumulated to retire comfortably and was very active in his life, his community and his church. He had many friends and was one of the most upbeat people I have known. Then he retired. After three months he had fallen into such a deep depression that he sought counseling to help himself out. He had lost his purpose and it took months before he fully recovered and returned to “normal.” He wasn’t prepared for the dramatic changes that occur at retirement and the loss of purpose, drive, inter-personal connections and sense of achievement all caused him to suffer an uncomfortable transition.

So what is one to do? In preparation for retirement there are a number of ideas for making the transition successfully. First, create a plan for your finances that allows you to take your focus off of the day-to-day financial concerns and place it back on the things that give you the most joy. You want to know that you can live the life you hope to. So how do you achieve your goals? Start with a plan.

Second, consider easing into retirement instead of quitting “cold turkey.” Most people jump into retirement when they would be much better off working part-time during the early retirement years and gradually transitioning out of the workforce. Part-time work keeps your mind and body engaged and helps offset some of your expenses early on. Think of it as a way to pay for all the fun you will have while you are not working!

Next, consider one of life’s most basic needs, to belong, as part of your plan. What interests do you have and how might you fit into a community of people with similar interests? Maintaining a community around you is a critical part of a happy life and it couldn’t be more important that just after retirement.

Finally, stay fit both mentally and physically. Make a plan to keep moving and to keep your mind and body active. By exercising regularly and continuing to learn, you will keep focused on positive developments and not the void of the things that may feel like they are missing from your work life.

Once you settle in, retirement will be great. With a little advanced planning, you can make the transition work well, too. If you feel you need help, please feel free to give us a call.

Three Questions To Ask When Searching For A Financial Planner

Investing, Retirement Planning

By Scott McLeod, CFP®, ChFC®

When it comes to filtering through financial planners to find the right one for you, there are some critical questions to ask the firm and yourself throughout the process.

What kind of clients does the firm specialize in?

It is a good idea to search for a planner that serves a demographic that is largely similar to you. Although you should avoid firms that feel like experts instead of teachers, your firm should be familiar with the concerns and scenarios common to your demographic while custom tailoring his advice to suit your life.

What services do they provide?

In asking this question, you are able to find out what the firm will not do for you. Some firms seek to simply be investment advisors, while others offer a far more comprehensive approach (retirement, insurance, estate, tax planning, etc.). The investment advice you receive may be good, but if other factors of your finances are ignored it may not be best for your unique situation.

How personal is my experience with the representative?

This measurement can often tell you if you are interacting with a salesman, expert, or teacher. It is important for the experience to feel like a conversation, not a lecture or a sales pitch. If you find yourself listening 90% of the time, you are not being counseled, advised, and informed, you are being told.

What makes this firm unique?

Be sure to schedule an interview with the prospective planner to find out what the true aim of their firm is for your money. Some firms will be better at maximizing your investments, while others will focus on protecting your hard-earned money in a wise way. If something doesn’t feel right, keep looking.

Learn more about Brown Financial Advisory

A Fee-Only registered investment advisor, Brown Financial Advisory, was founded in 1986 and is located in Fairhope, Alabama. Learn more about our distinctives, and services, or get started on your journey to live with more purpose.