Be sure to make your fi­nan­cial plan

The Times Herald (Norristown, PA) - - FEATURES -

Did you cel­e­brate the re­cent World Fi­nan­cial Plan­ning Day by cre­at­ing a fi­nan­cial plan? I’m guess­ing that the an­swer is no, be­cause ac­cord­ing to the 2018 Charles Sch­wab Mod­ern Wealth In­dex, only about a quar­ter of Amer­i­cans have a writ­ten fi­nan­cial plan.

Re­spon­dents who do not have a plan, cite the age-old cul­prits: think­ing they do not have enough money, not know­ing how to get a plan or never con­sid­er­ing one. But with the ad­vent of tech­nol­ogy, cre­at­ing a plan may be eas­ier than most think.

On­line plat­forms, such as Wealth­front and Per­sonal Cap­i­tal, old school play­ers like Van­guard, Charles Sch­wab and Fi­delity and their more ex­pen­sive cousins in the bro­ker­age world, have all ex­panded their dig­i­tal ser­vices to in­clude in­vest­ing and ad­vice.

If you have a more com­pli­cated sit­u­a­tion or sim­ply like deal­ing with a hu­man be­ing, these ser­vices have started to com­bine tech­nol­ogy with real peo­ple to help you out. The fees are usu­ally rea­son­able, with most rang­ing from 0.25 to 0.5 per­cent an­nu­ally, though some go as high as 1 per­cent.

Of course, if you are a per­son of a cer­tain age (ahem, like the one writ­ing this col­umn), af­ter you visit the web­sites of these plat­forms, you might no­tice that they seem to be geared to­ward younger users. That’s not an ac­ci­dent. The ser­vices started with users “who are com­fort­able us­ing a dig­i­tal in­ter­face with min­i­mal to no hu­man con­tact,” ac­cord­ing to a re­cent ar­ti­cle from Knowl­edge@Whar­ton.

Con­sid­er­ing that those over 50 hold about 80 per­cent of in­vestable as­sets and that this group is likely to face a dizzy­ing ar­ray of re­tire­ment and So­cial Se­cu­rity de­ci­sions, as well as wor­ry­ing about their ag­ing par­ents and adult chil­dren, the hy­per fo­cus on the tech­savvy, un­der 35 crowd could be a mis­take.

For those of you who want to en­gage an ad­viser, whether on­line or the hu­man va­ri­ety, you should still be ask­ing im­por­tant ques­tions.

1. Do you put your clients’ in­ter­ests first at all times?

This is also known as the fidu­ciary stan­dard and most on­line plat­forms ad­here to this im­por­tant, le­gal con­cept. As of Oct. 1, 2019, the CFP Board will broaden the fidu­ciary stan­dard for CFP pro­fes­sion­als -- ef­fec­tively re­quir­ing them to put a client’s in­ter­est first at all times.

That said, there’s no need to wait a year be­fore en­gag­ing some­one who puts you first at all times. Many CFPs al­ready ad­here to the stan­dard at all times, as do CPAs with the Per­sonal Fi­nan­cial Spe­cial­ist (CPA-PFS) cre­den­tial, CFAs and those fi­nan­cial plan­ners who are mem­bers of the Na­tional As­so­ci­a­tion of Per­sonal Fi­nan­cial Plan­ners.

2. How will I pay for your fi­nan­cial plan­ning ser­vices?

Plan­ners can be paid in sev­eral ways: through as­set man­age­ment or hourly fees, com­mis­sions or a com­bi­na­tion of both. As part of your writ­ten agree­ment, your plan­ner should make it clear how she will be paid and should es­ti­mate what those costs are likely to be for your spe­cific cir­cum­stances. 3. What ser­vices do you of­fer? Some plan­ners pre­fer to work with clients whose as­sets fall within a par­tic­u­lar range or fo­cus on spe­cific ar­eas, like re­tire­ment or ed­u­ca­tion fund­ing or tax plan­ning. Be sure that your needs match the ad­vi­sor’s ex­per­tise.

Ad­di­tion­ally, is the firm a on­estop shop, where you will re­ceive com­pre­hen­sive ad­vice and the pur­chase of in­vest­ment or in­sur­ance prod­ucts? If not, ask un­der which cir­cum­stances the plan­ner might bring in an­other pro­fes­sional, such as a sales­per­son, an at­tor­ney or a CPA. Jill Schlesinger, CFP, is a CBS News Busi­ness An­a­lyst. A for­mer op­tions trader and CIO of an in­vest­ment ad­vi­sory firm, she wel­comes com­ments and ques­tions at askjill@ jil­lon­money.com.

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