When meeting with a client for the first time, I often outline the two most basic things I try to achieve for them: (1) Help them get the best rates of return, commensurate with their individual risk tolerance (2) to provide them with a confidence in regards to their current situation now and into the future.
Many times, I’ll ask potential clients, “Has your current advisor spent the time with you in the past to build a financial plan and confirm you’re on the right track or help you course correct, if you’re not?”
This, in my opinion, is part of what you’re paying that investment professional to provide to you – so let’s look at what you should expect from your financial advisor.
The first part of a good financial plan is to determine where you’re at today. You need to have a good picture of, not only the assets, but also the liabilities that make up your balance sheet. Assets, of course, but why liabilities?
Well after being in this industry for 10 years one of the main factors for reducing stress in retirement is managing wealth to eliminate debt – that’s right it’s possible and achievable to be debt free and a well-managed financial plan should help show you the path to debt freedom.
After you’ve accounted for the assets and liabilities on your balance sheet, a financial plan should help you determine how you need to build upon those assets.
Each individual’s savings rates are going to be different based on what goals you’d like to achieve (how much do you want to spend in retirement, when do you want to retire, tired of those Ohio winters so let’s winter in Palm Beach errr…. ok maybe something more realistic like Sunset Beach, North Carolina, where my family used to visit each summer).
Our general rule of thumb, would be to help clients think through how much they need to contribute to their company retirement plan AND an independently held retirement account, for instance, a Roth IRA. Roth IRA’s grow tax free but, unlike your 401(k), their distributions are tax free because tax is paid when contributing to a Roth IRA. A Roth IRA may help you to better manage your tax bracket in retirement.
You may need to be saving in other vehicles like a taxable investment or savings account for a home, vehicle or other purchase that may be on a shorter term horizon.
Finally, you’ll want a plan that projects all these assumptions into the future for you. It’s no good to gather all this data if you can’t see what it means 20, 30 or 40 years down the road. Of course, projections are just that – projections! So you’ll want to ensure, you have a plan to update and review it on a regular basis. And at the end of the day – what does this do? It helps provide confidence that what I’m doing today is likely to create a successful outcome for me in the future. That is well worth the price of your advisor however if you’re not getting that service, what exactly are you paying for?
About the company
John-Mark Young, Financial Planner, 3524 Commerce Parkway Wooster, Ohio 44691, 419-564- 6659. Opinions expressed are not necessarily those of Raymond James Financial Services, Inc. Member FINRA/SIPC.
Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk and you may incur a profit or loss.
No investment strategy can guarantee success. Past performance may not be indicative of future results. Forward-looking statements are subject to uncertainties that could cause actual developments and results to differ materially from the expectations expressed.
Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James & Associates we are not qualified to render advice on tax or legal matters.
