Many advisors today are commission-based, a model that has long existed. If you buy something from them, they receive a fee for services based on a percentage of the dollar amount of the sale. That’s how the majority of insurance products and investments such as mutual funds still are handled.

As for those advisors who tell you that they work for you at no charge because their company pays the commission, ask yourself this: If they do all that work for you for nothing, how do they feed their kids and pay the mortgage? You have to buy something for the commissions to flow, and you may hear recommendations that will compensate them.

Fee-based planners make their money by creating a financial strategy for you. Those who also sell products or manage assets would like you to implement that plan with them, but you are free to take the plan elsewhere to put it into action. The licensing of fee advisors requires that they act in a fiduciary capacity—that is, in your best interest as would be considered prudent according to a court of law.

That’s why you may want to pay separately for planning services. The advisor has no vested interest or bias. He or she gets paid for the work, and you can implement the strategies as you please, if at all. Thinking it might be time for a second opinion on your financial plan? Go to www.mysecondopiniontoday.com for a free consultation and portfolio review to see if you are headed in the right direction.

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A lot of people in our industry sell stuff, but they may not do financial planning. Retirement planning may be more complicated than investing to accumulate assets. A good planner needs to analyze the client’s expectations and finances and understand all the major risks that retirees face. As you head into retirement, you should search for somebody who cares about your unique situation. See our previous blog post about this.

And that somebody isn’t likely to be the stockbroker who wants to direct you to all those hot mutual funds. The United States has about 1.3 million licensed stockbrokers and insurance agents, and they may call themselves financial planners, but there are only about 25,000 Certified Financial Planners™, or CFPs, who have completed the CFP certification process.

The post Seeking the Right Advisor For Your Financial Future appeared first on Distribution Land.

It’s important to understand the difference between taxable, tax deferred and tax-free investing. Let’s take a look at how each would affect a typical account. Suppose you started with $100,000 and added $10,000 each year for 20 years. Let’s presume a rate of return of 4 percent and a tax bracket of 25 percent.

• On a tax-free account, the account value after 20 years would be $516,893.
• On a fully taxable account, your rate of return is effectively only 3 percent. After 20 years, the account value would be $449,315.
• On a tax-deferred account, your account value after 20 years would again be $516,893. However, you have only postponed taxes. If you now paid them all, you would be left with an account value of $462,670.

A financial advisor can help you determine which is best for your individual needs. Here is some simple advice though: You should only pay taxes on money you are withdrawing as money to spend. Otherwise, there may be better ways to manage it. Visit www.familywealthadvisory.com for more resources and start uncovering what tax strategy works best for your situation.

Mutual of Omaha Investor Services, Inc. and its representatives do not provide tax advice. Consult your tax advisor for advice regarding your particular situation.

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But how about first taking a good look at the picture on the cover of the box? Before you start working on the pieces, you need to have the big view.  You should work with an advisor who will make sure you get the perspective you need so that your investment strategy makes sense for you and is designed to advance your goals. 

Finding an advisor you can trust to give you direction, not just do what you ask, may result in a much more secure retirement future. Is your puzzle pieced together with the big picture in mind? Consider getting a second opinion on your current investment portfolio and schedule a free consultation at www.mysecondopiniontoday.com

The post Piecing Together Your Retirement Big Picture appeared first on Distribution Land.

Thinking through these matters of finances, dreams, priorities and concerns is paramount, particularly as you and your spouse plan together. A good advisor should strive to understand his or her client’s and even help to uncover priorities and goals before crafting a financial plan for retirement. An advisor should help you identify how you feel about money and what you believe it should accomplish.

The right questions that you should be asked examine your past, present and future as well as at the roots of your relationship with money. What were your first experiences with it? What was it like in the household where you grew up? The advisor should ask to hear from both husband and wife. This helps to ensure both are on the same page and helps to see areas where each thinks about money differently so the advisor knows how to approach building a plan that works.

I have seen it all – couples that have had all the right discussions and know what the other wants and others who through the process learn a lot. For example, as I talked with one couple, the husband told me about his dream of cruising around the Keys in a sailboat and visiting the islands. “I’m not doing that,” his wife said. “I get seasick. No way.” Wouldn’t you think they would have already talked about that? But it’s not unusual for one spouse to look at the other and say, “I never knew you thought that.”

Start with your priorities, individual and shared. It will help you and your spouse make the right financial decisions later on and allow the advisor to structure your retirement around those shared priorities.

The post Who Is The Client, You Or Your Money? appeared first on Distribution Land.

1. Does the advisor have a CFP Designation? Those with a designation of CFP (Certified Financial Planner) are required to follow a code of ethics. They are subject to regulation by various federal, industry, and state agencies. Your best choice is to limit your risk and work with somebody with an obligation to abide by a code of ethics—a Certified Financial Planner.

2. Who Holds Your Money? It seems like a simple thing, but it’s easy to overlook. You want to have your money held by a custodian, like Pershing, LLC or Fidelity Institutional Wealth Services. If you were to have an advisor named, for example, Bernie Madoff, you don’t want to see “Bernie’s Excellent Investment Firm” stamped on your statements. Be aware of just who has your money.

3. Can the advisor provide a copy of his/her ADV Part 2B? This disclosure form holds a few key indicators. It will help you distinguish whether the advisor is fee-based or not. This report also discloses if there has been certain disciplinary history. Be sure to utilize other resources, such as SEC (www.sec.gov/investor/brokers.htm) and FINRA (www.finra.org/Investors/ToolsCalculators/BrokerCheck/), to run checks for complaints against the advisor whom you are considering as well.

4. Is the advisor an employee of a financial firm or working independently? Some advisors who work for a firm offer proprietary products, and they may have to sell certain products and meet minimums. Their primary objective may be to make money and limit their own risks. Look instead for independent advisors. That doesn’t mean they don’t have relationships with certain firms, but they are paid as independent contractors.

5. Does the individual have a specific process or approach to advising? If the advisor can’t produce a process, or if it’s all investment related and focused on money, be wary. What you want to see is a process that is centered on you, with the money there to support you.

The post 5 Key Questions to Help You Find a Trusted Financial Advisor appeared first on Distribution Land.

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Ideally, you need to know if you have enough assets and investments to retire happily and safely. Here are the first three steps you and your financial advisor should take:

Step 1: Estimate how long retirement income will be needed. How many years must the assets last? Are you and your spouse healthy? Is there a history of longevity in your family?

Step 2. Identify and manage the numerous risks, such as inflation, longevity and healthcare expenses, just to name a few. then try to reduce the risks, as much as possible,

Step 3. Start to convert resources into income, regularly updating the plan. Converting assets for lifetime income is the fundamental strategy in the retirement income planning process.

To get a ballpark figure, you can use this standard approach to calculating income needs: (1) figure average monthly expenses, (2) add up any lifetime income such Social Security and pension, and (3) subtract the monthly income from the expenses to determine any gap. To see if the gap can be filled, add up all financial assets and multiply by an expected annual rate of return, then divide the result by 12 for a monthly income stream. If it fills the gap, you can retire.

If it doesn’t fill the gap, look at some other approaches. You have various options: Increase your returns where possible; find other lifetime income sources; spend less in retirement; work full or part time; postpone the start of Social Security or pension payments; increase your savings; or tap into your home equity.

Of course, your financial advisor is there to help you determine the best course of action for maintaining your income stream or uncovering ways to increase that income stream for the right retirement plan for you.

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