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Guarding Your Wealth for Senior Citizens
About-to-Retire Boomer Has Questions about Financial
Planner's Advice
By Jeffrey D. Voudrie, CFP
July 8, 2006 - I recently received a question from
a reader in Florida who is taking an early retirement. Like many
investors, he was confused after meeting with a couple advisors. My
advice to him might save you from making a wrong decision, too.
“Phil”, (not his real name), has the option of
taking either a lump sum payment or a monthly pension from his employer.
He goes on to detail his financial situation: 401k, money market
accounts, house paid for, no debt, low monthly expenses. Phil has lived
beneath his means, saved his money and achieved financial freedom.
Phil writes: “I met informally with 2 CFP's. They
are working with people at (my company) but they seem to only push
annuities. After reading your articles on annuities I am cautious. I
have always been conservative with my finances, but I realize that to
retire at 55 I might have to expose myself to the equity markets. I
would like to talk with an advisor who will show me multiple options and
talk straight, with no fluff.”
Here’s a shortened version of my actual response:
“You are in one of the most important times of your
life and are facing what may be your biggest financial decision.
Whatever you do, be careful.
It looks like one of your initial questions is
whether you should take a lump sum. Generally speaking, I feel that
people should take the lump sum because it gives them greater control,
flexibility and access. It also becomes an asset that can increase in
value and be passed on at death to your heirs.
There is risk in doing so, though. Many retirees
have been duped by advisors into investments that weren't in their best
interest and ended up losing large portions of it as a result. You have
to be willing to invest some time and energy finding the advisor that is
right for you. Even then, you will want to keep track of what is going
on at least on a monthly/quarterly basis so you can alert the advisor if
you become concerned.
There are several things to keep in mind regarding
choosing an advisor.
First, you aren't going to know if the advisor (or
investments) you've chosen is the right one for you until probably 6-12
months down the road. Commission-based salespeople with their packaged
products needlessly force you to make a 7-10 year time commitment.
That's why it is VITAL that you not be in a situation where it will cost
you thousands and thousands of dollars to make a change.
On the other hand, fee-based advisors like me only
get paid for the time you use our services. There's no commission, no
time commitment and no automatic surrender penalty. This gives you
significant control and flexibility. You remain the boss. If I don't
keep you satisfied then I'm not going to keep you as a client.
Second, beware of the advisor that promotes buy and
hold. They're the ones that tell you to 'just hang in there' while they
watch your account drop in value--and do nothing.
The diversification I use combined with the
technological safeguards I’ve created result in my clients being
comfortable going for the growth because they know I'll take action
should things not go as expected.
Third, don't feel pressured to make a decision by
anybody. There's no investment that is so great that you need to rush
into it. You can take your time to find someone you feel comfortable
with. Talk to their references (existing clients). Even then, only start
with a portion of your nest egg and let the advisor prove him/herself.”
Like I told Phil, you too need to beware of
financial salespeople pushing pre-packaged solutions. If it’s designed
for the masses it’s not designed for you. Don’t give in to sales
pressure. Take your time-- this may be the biggest financial decision of
your life. A wrong move is costly.
Just because someone has the right initials behind
his or her name doesn’t mean they will act in your best interest - most
won’t. Be very skeptical. Do some independent research.
It didn’t cost Phil a penny to get my opinion. It
won’t cost you anything either. If an investment is being recommended
that you aren’t sure about, I’ll be happy to provide a second expert’s
opinion.
If you have a specific question or would like more
information give me a call toll-free at 1-877-827-1463 or go to
www.guardingyourwealth.com. You can also reach me by email at
jeff@guardingyourwealth.com.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Please
visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive.
Guarding Your Wealth for Seniors are
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens. Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For booking information, email e-mail
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