What should I know (and ask) before hiring a financial advisor?

In lieu of my usual weekly post, I thought it would be helpful to share some content from The National Association of Personal Financial Advisors (‘NAPFA’).

The financial advising world is full of different ways of making money from clients, with some ways more transparent than others.  Some advisors use commissions from investment sales to primarily pay themselves (sometimes up to 8%!) and others use a percentage of assets (AUM) only.

NAPFA is kind enough to offer resources to the public detailing great questions to ask potential advisors, how to obtain a full picture of your advisors compensation, and what is important about having a fiduciary in your life.

If you are considering a financial advisor, take advantage of these resources HERE.

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The above discussion is for informational purposes only. Recommendations are of a general nature, not based on knowledge of any individual’s specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services.
If you live in a state with it’s own form of state AMT, this further complicates the matter. AMT calculations can be difficult and you may need professional help, such as that of an accountant, tax attorney, or someone experienced in complex tax returns.

Minimizing Risks in Your Home

Minimizing Risks Baby

My daughter is closing in on crawling/walking and grabbing anything new and different.  Inevitably, this means anchoring shelves, TVs, and other climbable items to the wall.  Taking a fresh look at my home makes me think about the other potential risks we just don’t think about often.

The potential accident risks that exist inside and outside your home may go unnoticed in your day to day. Here are some simple steps to help convert your home sanctuary into a safer environment for family members and house guests to enjoy:

· Make sure your smoke alarms are tested regularly and ensure batteries are working.

· Check rooms, hallways, and stairs and remove any clutter, objects, cables, or loose rugs that someone could trip over. Remember to put non-slip rubber mats or self-adhesive strips on your bathroom tub or shower floors to help avoid slips and falls.

· Use brighter light bulbs to illuminate staircases and foyers. Install night lights that turn on automatically after dark. Also, keep the exterior of your home well lit, particularly during the fall and winter months with fewer daylight hours.

· Children or pets should never be left unattended in a room with a burning candle. Keep matches and lighters out of reach at all times. Place candles away from papers, curtains, and rugs or any other combustible items.

· Put socket covers on all electrical outlets in your house to prevent electrical burn or shock. Teach your children to switch off and unplug appliances when not in use, and not to touch electric appliances with wet hands or when near water.

· When entering or backing out of your driveway or garage, always look out for children and pets that may be difficult to see under or near your vehicle.

Remember, being consistent with safety behaviors is key to helping maintain an accident-proof home environment for your family, friends, and pets.  Minimize risks where you can.

Another item to consider is costly risks above your homeowner’s coverage.  As children grow up and have friends over, or you rent out a room for a few months on AirBnB, people who do not live in the home may encounter costly accidents.  For example, a friend may fall down the stairs or slip on the drive way.  If you have a trampoline, pool, etc then your liability risks only increase from there!

An umbrella insurance policy may prove helpful to minimize risks of a costly accident.  Generally, $1 million coverage can cost only $180 a year!  Talk with your insurance agent or financial advisor to find out if this works well for you.

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The above discussion is for informational purposes only. Recommendations are of a general nature, not based on knowledge of any individual’s specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services.

Building a financial plan is like building a home

Buying a home

As a financial planner, we talk in numbers and make it sound so simple.  If you want X in the future, you have to give up $Y now in spending.  

Are those choices easy to make though?  

Financial plans are based on assumptions, and the outcome of the plan can seem distant and uneasy to grasp.  So I compare it to building a home.

Where will you build? How many bedrooms? Two floors or one? With a pool?  Before you can hire the architect to put together a design, there are a ton of questions to ask yourself.

In the financial plan process we start with defining and thinking about all the angles of your financial life and what you want.

By identifying your current, mid-term, and long-term goals, you set the blueprint for what the house looks like.  You proverbially map out room sizes, doorways, and other details.

With this information, the builders can start their work. Determining how much cement is required for the foundation, how many beams are needed to create the walls based on the floor plan, etc.

Your goals will inform how much in savings and investments you need to make now to complete your goals later.

Once the builder knows how many pieces are required to complete the home, you receive a basic cost outline for the structure.  Can you afford the basics?  Maybe once you’ve seen the outline you decide you don’t really need a second guest room.  How often will you have guests over anyways?

Next comes the interior designer.  You chat about cabinet finishes, wood flooring, and whether brushed bronze door knobs or the standard silver will do.

Knowing the costs now help you prioritize what you value most in the home.  

What do you value about building your own home?  Was it about the location?  Did all the other homes have two bedrooms but your family needed a third bedroom?  

Then, if you get a bonus or raise later, you can decide where to add flexibility.  Maybe you will start with carpet and standard silver door knobs, and then upgrade to wood floors and brushed bronze door knobs.  If it happens, great – but if not, it doesn’t affect your most important value of being in that location.

Every decision you make is a trade-off between current and future expenses.  Future expenses are the savings and investments you make now to be ready for these expenses later.  

You are always making these decisions.  Even not making a decision is a decision in the end.

Financial plans start with knowing your values, identifying your goals, and establishing priorities.  What kind of life do you want to build?  

Schedule a consultation to see how we can help.

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The above discussion is for informational purposes only. Recommendations are of a general nature, not based on knowledge of any individual’s specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services.

Signs You Need a Financial Planner

Financial planner Seattle

Financial Planners Help Build Better Experiences

Sometimes it’s hard to tell if you need professional help for a problem or if you can handle it yourself. Whether it’s taking care of a common cold, fixing the sink, changing the oil in your car or doing your own taxes. The same question often arises about finances.

It happens all the time – financial questions pop up that you consider silly or stupid so you feel like you must handle alone and you don’t seek help. This is not the best course. As happens often in life, not reaching out to a professional can delay you reaching your goals and cause you to incur more out-of-pocket expenses and lots of headaches.

Here is the thing: there are no stupid questions when it comes to your finances. Don’t ever sit on the sidelines and fear asking a question or think you’re unqualified to go to a planner. Solid and respectable planners let you know if they can’t help you and refer a professional who can. They also let you know if they think you can plan your finances yourself.

Here are signs you may need a financial planner:

You recently married

To merge or not to merge finances is a huge question: emotions to contend with, forms to update, cash flow to track, debts to pay down, goals to lay out and spending habits and needs to reorganize and prioritize.

Communication during this transition helps you navigate possible questions about taxes, investment allocation updates, selecting benefits, joint roles in management of the household, deciding whether to maintain separate bank accounts and more.

You make a career change

Job or career transitions also bring changes in income and benefits. As a tech employee, you have a little more complexity than the average bear.  Stock compensation can make a huge difference in your overall compensation.  Make sure you maximize your company benefits, leave no retirement accounts behind and ignored, plan appropriately for income fluctuations, take into account future job growth or career prospects and consider the transition’s overall influence on your lifestyle.

You own a business

Whether considering starting your own business or a long-term entrepreneur, you likely need to know how to prioritize goals, pay yourself while keeping the operation running and the best way to manage cash flow on an income that fluctuates monthly.

Not to mention saving for retirement, obtaining health insurance and protecting you and your family against a loss in income from death or disability.

Your family is growing

A baby comes with a slew of considerations: ensuring you have an emergency fund of three to six months’ expenses adjusting your spending for child care, groceries and medical costs and updating your estate plan and insurance coverage in case something happens to you, among many other needed updates.

At the End of the Day

The first step in asking for help always seems the hardest. The assistance and feedback may surprise you when you open up to the idea that you need not handle all financial questions solo.

And it makes the experience much more enjoyable.

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The above discussion is for informational purposes only. Recommendations are of a general nature, not based on knowledge of any individual’s specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services.