You Better Contact A Financial Advisor If…

November 03, 2015

As a former financial advisor turned financial educator, I enjoyed my relationships with my former clients. I watched my former clients go from single, to married, to having kids and unfortunately in some cases, to divorced. I have cried with them over divorces, job losses, and deaths of a spouse or parent and cheered with them at the announcement of a child, a promotion or the start of a new business. The earlier a client told me about their situation, the easier it was for me to strategize the most cost-effective way for them to transition into their new situation. In many cases, I would find out after the fact.

I remember one client who had a very expensive high-deductible health care plan. She contacted me a year later to tell me that she was married and about to give birth. She was very concerned over the estimates she received on her out-of-pocket maternity expenses.

After reviewing her and her new husband’s plans, I realized that had I known about the marriage in advance, I would have recommended that she switch to her husband’s much better and much cheaper health care plan. This would have save her thousands of dollars in healthcare costs due to the medical issues she and her child experienced. Don’t make a similar mistake. If you experience the following life changes, please contact your advisor:

Marriage: When you get married, you are adding a new person to ALL areas of your life. A financial advisor can assess you and your new spouse’s healthcare insurance to determine the most cost-effective way to get coverage. An advisor can walk you through beneficiary changes and help you decide if re-titling property jointly makes the most financial sense for your situation. An advisor can guide you in contacting your auto and home insurance companies to let them know of your new addition, which may mean upgrading insurance coverage and adding a fine jewelry rider for your wedding rings.

Having children: A new baby requires a complete re-assessment of financial goals. College planning becomes important as well as estate planning to make sure you plan for who will take care of your child if you are not around. An advisor can also help you budget for your new arrival so you will not go into sticker shock like I did. There is a reason why I bought my daughter a onesie that said “my little mortgage payment.”

Job loss: Losing a job typically means a loss of benefits like healthcare unless you choose to continue your coverage, which can be expensive. I always encouraged people to find out the last day of their employment and get every medical exam they ever thought of doing completed. An advisor can assess your situation and advise you on the best strategy for benefits you can keep after you leave a job. Some group life insurance policies are portable, which means you may be able to take them with you if you lose your job.

Death of a spouse or child: The death of a loved one is traumatic. It can also bring about changes to 401(k) and life insurance beneficiaries and estate-planning documents like wills and trusts.

Starting a new business: I have worked with many people who started a new business without planning, thinking that every single expense could be deducted from their taxes. An advisor can give you guidance on expenses that can and cannot be deducted. An advisor is oftentimes a great referral source for other financial professionals such as business consultants, lawyers and tax professionals. An advisor can also help you come up with strategies to save for retirement.

Job change: Job changes bring up financial decisions such as what to do with your old retirement plan. Promotions that involve bonuses or stock options typically come with tax liabilities a financial advisor may be able to mitigate with tax planning strategies.

Inheritance: Inherited IRAs and retirement accounts may have tax consequences for withdrawals. There may also be tax consequences with inherited property you plan on selling. An advisor can guide you on the best course of action.

Your advisor is one of your best resources to effectively navigate through life changes.When in doubt, call them. You can even make it a habit that on your birthday you will contact your advisor with any changes in case you forgot. Otherwise, you and your family could find yourself making a costly mistake.