We often face difficult decisions when we reach retirement. Where should I live? What is the best way to spend one's time? These decisions are mostly personal. You can ask your family and friends for advice, but ultimately you will have to make the decision. If your financial situation is complicated, you might want to seek professional advice on the financial aspects of retirement. This includes how you will get income from your assets once you stop drawing a steady salary. There are many personal financial advisors available, who will be happy to help you. A financial advisor will meet with you to assess your financial situation. This includes any income from investments, pensions, property, debts and financial obligations. An advisor can help you make informed decisions about insurance and estate planning. They will also weigh the tax implications. Your advisor will help you create a plan to ensure that your income is sufficient, provide adequate insurance and pass your estate on a beneficial basis. What are the key qualities you should look for in a financial adviser? Credentials are the first thing to look for in a financial advisor. This field is vast and can be marketed by people of all backgrounds. CFP (Certified Financial Planner) is one of the most respected credentials. This credential is earned by completing half a dozen courses and passing multiple exams, including ethics training. It also requires three years of work experience. CPA (Certified Public Accountant), CPA/PFS, a CPA who has been trained in financial planning, ChFC (Chartered Financial Consultant) and CRPC [Chartered Retirement Planning Counselor] are other designations. A CFP, however, will have the most extensive training fee only financial planners. Fiduciary responsibility is another important consideration. Fiduciary responsibility is another important consideration. Credentialed financial advisors are required to provide advice that is best for their clients' interests. A broker, on the other hand is not required to offer financial advice to clients about which products to buy. Instead, they are only allowed to recommend products that are "suitable for" a client's portfolio. There is a huge difference between "best interests" and "suitable" and brokers will often sell their clients investment products that they make the highest commissions. They justify the purchase by saying these products are as "suitable as" any other products. As of May 2011, new legislation is being considered that would apply the same fiduciary standard for brokers as it does to credentialed financial advisors. However, you should not seek financial advice from brokers until that legislation is passed. The payment structure of your planner is another consideration. If you have a simple situation and only require a few sessions to improve your financial plan, you'll likely pay an hourly or per session fee. You may require multiple sessions with an advisor if your finances need major overhaul. These sessions can last several weeks or more. An advisor will charge a flat fee to perform such an overhaul. You may also wish to retain an advisor for the long-term, having him/her review your situation annually and making adjustments as needed. Advisors may charge a percentage of the assets they manage for long-term arrangements. Some advisors earn commissions for products they recommend, such as load funds or annuities. While this may be good, it is important to ensure that your advisor offers a wide range of financial products. For example, there is no reason to buy a load fund, which typically involves paying 4.5 percent in sales commission. No-load funds are just as good and often perform better. You must feel at ease with your advisor. You will need to share information about your financial, estate, and insurance matters. Some of these may be personal. It is important that you do not withhold any information as it will make it difficult for your advisor to create a plan that suits your needs. You should interview at least three advisors before you settle on one that you feel is right for you. This will ensure you have a happy and stress-free retirement.
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October 2021
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