The best relationships are based on honesty and trust. That's true for your personal relationships as well as your relationships with professionals who help you with your problems. You shouldn't keep your symptoms a secret from your doctor, and you shouldn't withhold pertinent information from your lawyer. Doing so can lead to unfortunate consequences. This same idea applies to your relationship with your financial advisor.
It's important that you're upfront and honest when meeting with your financial advisor. Here are the top 5 secrets I've seen clients keep to themselves over the past 25 years.
'I'M THINKING OF DIVORCING MY SPOUSE/GETTING MARRIED'
Many clients feel that a change in their marital status has no impact on their financial plan. That's simply not true; a change in marital status can affect future generations.
A well-designed financial plan will address prenuptial agreements, beneficiary designations, transfer-on-death designations, inheritance distributions, blended family concerns and legacy planning. If the financial advisor is kept removed from your plans of divorce or marriage, they won't be able to implement these considerations into your financial plan.
'I HAVE A LOT OF CREDIT CARD DEBT'
A few thousand dollars here and there on credit cards might seem irrelevant if you're able to make the minimum payments, but the cost of this consumer debt can be astronomical over time. For example, it could take you about 30 years to pay off a credit card with a $10,000 balance and 20 percent interest - even if you pay the minimum monthly amount. And, you will have paid $16,000 in interest to the bank.
Do yourself a favor, and let your financial advisor know about your credit card debt. He or she can help you figure out a credit card debt reduction plan so you can avoid paying a large amount of interest.
'I'M GOING TO BE A CAREGIVER'
While a client might not have a health issue, they might find themselves in a caregiver role or being financially responsible for the care of someone. Inform your financial advisor if you're going to be a caregiver so they can create a comprehensive financial plan that includes liquidity needs, risk management measures and anything else you might need to prepare for the expected and unexpected needs.
'I CARRY LARGE DEDUCTIBLES'
Many people have recognized that carrying large deductibles can keep home and auto insurance as well as health insurance premiums low. During your meeting with your financial advisor, they should ask why you're carrying large deductibles, but in the event that they don't, let them know that having this level of liquidity is important. You don't want to have to surrender a variable investment on a down-market day.
'I DON'T FULLY UNDERSTAND RISK'
A good financial advisor will know their client's risk tolerance. But unfortunately, some clients agree to a more aggressive portfolio design that they don't fully understand. Never be timid to ask questions. It's your money, and you're paying for the advice in some fashion. Don't walk away from your hard-earned money without knowing how it's going to be handled - especially in volatile markets.
Chip Hollingsworth writes for GOBankingRates.com (), a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt.
It's important that you're upfront and honest when meeting with your financial advisor. Here are the top 5 secrets I've seen clients keep to themselves over the past 25 years.
'I'M THINKING OF DIVORCING MY SPOUSE/GETTING MARRIED'
Many clients feel that a change in their marital status has no impact on their financial plan. That's simply not true; a change in marital status can affect future generations.
A well-designed financial plan will address prenuptial agreements, beneficiary designations, transfer-on-death designations, inheritance distributions, blended family concerns and legacy planning. If the financial advisor is kept removed from your plans of divorce or marriage, they won't be able to implement these considerations into your financial plan.
'I HAVE A LOT OF CREDIT CARD DEBT'
A few thousand dollars here and there on credit cards might seem irrelevant if you're able to make the minimum payments, but the cost of this consumer debt can be astronomical over time. For example, it could take you about 30 years to pay off a credit card with a $10,000 balance and 20 percent interest - even if you pay the minimum monthly amount. And, you will have paid $16,000 in interest to the bank.
Do yourself a favor, and let your financial advisor know about your credit card debt. He or she can help you figure out a credit card debt reduction plan so you can avoid paying a large amount of interest.
'I'M GOING TO BE A CAREGIVER'
While a client might not have a health issue, they might find themselves in a caregiver role or being financially responsible for the care of someone. Inform your financial advisor if you're going to be a caregiver so they can create a comprehensive financial plan that includes liquidity needs, risk management measures and anything else you might need to prepare for the expected and unexpected needs.
'I CARRY LARGE DEDUCTIBLES'
Many people have recognized that carrying large deductibles can keep home and auto insurance as well as health insurance premiums low. During your meeting with your financial advisor, they should ask why you're carrying large deductibles, but in the event that they don't, let them know that having this level of liquidity is important. You don't want to have to surrender a variable investment on a down-market day.
'I DON'T FULLY UNDERSTAND RISK'
A good financial advisor will know their client's risk tolerance. But unfortunately, some clients agree to a more aggressive portfolio design that they don't fully understand. Never be timid to ask questions. It's your money, and you're paying for the advice in some fashion. Don't walk away from your hard-earned money without knowing how it's going to be handled - especially in volatile markets.
Chip Hollingsworth writes for GOBankingRates.com (), a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt.
No comments:
Post a Comment