When someone asks me how much I charge for the work I do, I’m never quite sure how to respond.
I can explain that it depends on the investment and insurance products I offer, or the advisory services I’m providing, and we can discuss how it all breaks down in dollars or percentages.
But I’ve found that what most people really want to know is if I’m less expensive than their guy — and that’s a more complicated answer. Sometimes their guy is with a firm that’s strictly doing investment management. Or it’s a robot — what some call a robo-allocator — again, doing investment planning only.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The person who’s asking — maybe it’s a friend or perhaps just an acquaintance — might even be managing his portfolio by himself. You can’t get much less expensive than that.
But it’s apples to oranges.
So we end up in a conversation about fee comparison and online trading and intense pricing competition, when what we should be talking about is what it’s going to cost him, and his family, if he doesn’t have the guidance of an adviser who strictly focuses on retirement and financial planning.
In the same amount of time it takes to explain how fees work, I could share three ways an experienced, knowledgeable adviser earns his money — especially when a client is closing in on retirement.
1. Tax planning.
Unless you’re working with a financial professional who offers comprehensive planning, you aren’t going to get a forward-looking tax strategy that deals with the money within or outside of your retirement accounts. Both have their consequences. The money in your IRAs will be a factor when you retire, because it can affect your tax bracket in a way you don’t expect. Your taxable accounts already may be causing problems you don’t even know about, if they’re actively traded. Either way, an adviser can help keep taxes down on money you aren’t using as income.
2. Health care, long-term care and estate planning.
Maybe you’re doing your own planning, or using a very low-cost mutual fund company. If so, you likely aren’t going to get any advice regarding the future costs of health care or long-term care, or help with providing a legacy for your family when you pass away. Many people overlook these issues until it’s too late — and these “unexpected” costs can devastate a family.
3. Income planning.
You may be working with a financial professional who’s doing a good job accumulating money for your retirement — but if you don’t have a solid distribution plan in place, you still could come up short or lose a large chunk of your money to inflation, taxes or too much risk. I often meet people who have no systematic strategy for withdrawing money based on their assets. They have no idea when to file for Social Security. And they’re stressed out because they don’t have any other cash flow coming in.
There’s no question that in this business, or any business, you must be competitive. But consumers should be aware that, particularly going into retirement, they benefit from a higher level of help.
A retirement plan is a complex puzzle that needs to be put together properly. Just like any puzzle, if you’re missing even one piece, it’s not complete. And that gap could cause the whole thing to fall apart.
Investment advisory services offered through Global Financial Private Capital, LLC. Bryan Slovon does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.>/i>
Kim Franke-Folstad contributed to this article.
-
5 Historic Philadelphia Homes for Sale NowPhiladelphia is a goldmine of historic properties that rival the best in New York, London and Paris for charm and opulence. Here are five gems you can own.
-
When to Sell Your StockKnowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
-
The Home Stretch: Seven Essential Steps for Pre-RetireesThe decade before retirement is the home stretch in the race to quit work — but there are crucial financial decisions to make before you reach the finish line.
-
Three Options for Retirees With Concentrated Stock PositionsIf a significant chunk of your portfolio is tied up in a single stock, you'll need to make sure it won't disrupt your retirement and legacy goals. Here's how.
-
Four Reasons It May Be Time to Shop for New InsuranceYou may be unhappy with your insurance for any number of reasons, so once you've decided to shop, what is appropriate (or inappropriate) timing?
-
Before You Invest Like a Politician, Consider This DilemmaAs apps that track congressional stock trading become more popular, investors need to take into consideration some caveats.
-
How to Put Together Your Personal Net Worth StatementNow that tax season is over for most of us, it's the perfect time to organize your assets and liabilities to assess your financial wellness.
-
Bouncing Back: New Tunes for Millennials Trying to Make ItAdele's mournful melodies kick off this generation's financial playlist, but with the right plan, Millennials can finish strong.
-
Early-Stage Startup Deals: How Do Convertible Notes Work?Some angel investors support early startups by providing a loan in exchange for a convertible note, which includes annual interest and a maturity date.
