WHEN I RETIRED, I was surprised by how many of my friends and former colleagues had a financial advisor. My thought: Why would folks pay someone else to manage their money when they could easily do it themselves?
But I found out early in retirement that hiring an advisor was a good idea. There’s a big difference between investing while drawing a paycheck and investing without one. When I retired, I realized that the money I was investing was all the money I’d ever have,
ONE PERCENT is the average annual cost charged by actively managed stock mutual funds. One percent is also the typical fee charged by financial advisors for managing a client’s portfolio. Paying 1% means keeping 99% for yourself. What’s the harm in that?
Here are some pictures of Lower Manhattan. It’s dotted with the skyscrapers that comprise the financial district, home to some of Wall Street’s largest firms. Just the seven largest U.S. banks together are worth more than $1.5 trillion (yes,
A CLOSE FRIEND’S long career in the motion picture business recently came to an end when the studio eliminated her job. Even before the pandemic, the industry was changing, so she wasn’t surprised or, for that matter, especially sad about getting laid off. She was lucky to receive a good severance package and is now ready to do something different. But finding the right job will likely take time, so carefully managing her cash through the transition period is crucial.
MY FATHER-IN-LAW William retired from Duke University after teaching there for more than 30 years. He had a good pension, which—along with Social Security—covered all his expenses at the continuing care retirement community (CCRC) where he spent most of his retirement. Almost to the end, he was mentally sharp. I saw no need to inquire about his finances. I was mistaken.
In summer 2014, my wife noticed that William, then age 96, had left a large check for a matured life insurance policy on his desk for a couple of months.
SOME FAMILY MEMBERS recently asked me to help them find a financial advisor. As luck would have it, soon after, Barron’s published a perfectly timed article, “America’s Best RIA Firms,” which listed 100 highly ranked registered investment advisors (RIAs). Similar lists are available from CNBC and the Financial Times.
It was time for me to get to work. Who wouldn’t want to recommend a “top” firm to his or her family?
IF YOU ASKED everyday Americans to define a financial plan, chances are they’ll talk about investment strategy. And for many people who call themselves financial advisors, that’s what a financial plan amounts to.
But a real plan is so much more than that.
To be sure, investment strategy will form part of a financial plan. But a strategy that isn’t moored to each individual’s goals, risk tolerance, financial situation, family circumstances and values isn’t really a strategy at all.
WHAT ARE PEOPLE paying for when they seek out a financial planner? Where’s the real value? The answers may surprise you.
Financial planners typically tout their advice on asset allocation, retirement planning, cash flow analysis, insurance, wealth protection, estate planning and so on. But is that really the benefit they bring to consumers?
Consider an entirely different business. When you take your car to get serviced, what are you paying for? Brake repair, transmission diagnosis,
WHEN FINANCIAL planners are asked at parties what they do for a living, many hesitate to be specific. Why? Because the inevitable follow-up questions relate to where they think the stock market, the dollar, interest rates or the economy are headed.
It’s a myth that dies hard—the idea that a financial planner is a market prophet with special powers for foreseeing the next big boom or bust. To be sure, some advisors position themselves as smart forecasters or market timers.
“NICE OFFICES,” offered the 30-something investor, as he cast a wary eye across the corporate art, barren desks and empty bookshelves.
“Yeah, we asked management if they could put us on the 12th floor, so our suite number could be 12b-1. Funny, right?” The financial salesman winked.
“Not sure I get it.”
“It’s a joke, but clients never get it, they pay it.”
“What qualifications do you have?”
“See those initials after my name?
AFTER TAKING the Series 65 exam in February, I set a goal for 2019: Help 10 friends and family members with their finances. Instead of giving specific investment advice, I wanted to educate them on money matters. I knew that they would benefit from one-on-one discussions, well-regarded books, educational videos and credible websites. But I also suspected that some might hesitate to talk to me about their finances. Nonetheless, I gave it a try.
I HAVEN’T BEEN feeling myself lately. Until now, I didn’t understand what had brought this on. You see, I have this different attitude toward money—and it’s changed the way I behave.
Before, it seemed like money was always on my mind. I used to love to read Barron’s every week. Now, I just pick it up in front of my house and toss it in the garage, where it joins 20 other unread copies.
WHEN YOU NEED expertise, you hire an expert. Water leak? Call a plumber. Electrical issue? Call an electrician. But when it’s a financial issue, the choice may not be so clear. Do you go to a CKA, a GFS or maybe a C3DWP? Chances are you haven’t heard of these designations.
I have 10 letters in my name. I also have 10 letters after my name: CPA, CISA and MBA. What do they mean?
MY BIGGEST INITIAL mistake as a financial planner: underestimating the power of emotions. My office is located near top universities such as Harvard, MIT and Boston University. I assumed my well-educated clients, many with strong quantitative backgrounds, were simply looking to me for additional analytical insights.
Instead, my clients proved to be as human as everybody else. One top academic statistician, who claimed to be frugal and cautious, shared with me an annuity policy he purchased from a close friend at his church.
I’LL NEVER FORGET my first interaction with Wall Street. I was in my early 20s and just getting started in my career, when I was introduced to a stockbroker—let’s call him Eddie. He was a pleasant fellow with a good reputation and all the trappings of success, including a DeLorean in the driveway. He seemed like a safe choice.
My interactions with Eddie were straightforward. He would call from time to time with stock ideas.
“YOU’RE FIRED” was made famous by Donald Trump as host of The Apprentice. Imagine my surprise when my broker delivered the same message to me two years ago.
In 2015, my job was transferred to Texas. I opted to become a long-distance commuter, while my family stayed in Maryland. Around that time, we moved homes, so our son could attend a better high school. In addition, I was helping to launch two huge long-term work projects.