When Should You Go the DIY Route?

October 24, 2016

Have you ever wondered, “when does it pay to have a professional do it versus doing it myself?” My fellow planner, Cyrus Purnell, CFP® and I were chatting about our funny home improvement adventures. Then the conversation turned to other areas where sometimes it’s better to go it alone and sometimes to get help. Here’s what he told me:

A couple of weeks ago, I saw an Instagram post of a buddy of mine with his face buried in his hands and a pair of car keys with the hashtag #failmomentoftheday. Apparently, he tried to program a new key for his wife’s car and managed to deprogram both keys. The result was hiring a tow truck to haul the car to the dealership – what he was trying to avoid in the first place.

I spoke with him afterwards and he mentioned he was convinced to go the DIY route after watching YouTube videos. If alcohol is liquid courage, YouTube is definitely digital courage. My own failures after a little digital courage include: various attempts to fix my car and lawnmower, burnt pieces of meat offered up to the grill gods and a Craigslist’s furniture fixer upper which now resides in my attic.

I can now laugh at these DIY disasters. However, sometimes doing it yourself may not be a laughing matter. At what point does the cost of making a rookie mistake outweigh the price of having someone else do it?

When does it make sense to hire a financial advisor to help guide you in decisions related to your nest egg? Should you try to write your own will? Can you find the best insurance and mortgage rates on your own? Here are some thoughts on the value of hiring a professional:

When should you hire a financial advisor?

The value of a financial advisor is found in their ability to work with you to build a portfolio you can tolerate during the inevitable ups and downs of the market. Time in the market generally beats timing the market and a good advisor can help you stay on track in this area. Additionally, once your nest egg is in place, a good financial advisor helps you design a strategy which allows you to take income.

If you want to invest outside of your employer’s retirement plan and retirement is more than 10 years away, DIY investing can make sense. There are a lot of low cost investment options to consider or robo adviser options which can function as an “advisor lite.” If you are simply not comfortable going alone or you are nearing your investment goal, it may be time to interview an investment advisor.

Financial advisor is a generic term so you may want to look for someone reputable and with training specific to your needs. My colleague Erik Carter wrote a blog post that explains exactly what to look for in a trusted adviser: https://www.financialfinesse.com/2012/10/04/can-you-really-trust-your-financial-adviser/. Doing your due diligence is so important my CEO wrote a book about it: What Your Financial Advisor Isn’t Telling You: The Ten Essential Truths You Need to Know About Your Money. That’s a good place to start to see if you really need one.

When do you need a professional to assist with estate planning?

An estate plan can direct where your assets such as a car, home, business, savings, etc., will go in the event of your death. Our own mortality is not the most pleasant topic, but it is one we all deal with it. A well thought out estate plan can make it much easier for those we leave behind.

If you have a blended family or assets across multiple states, professional assistance is especially helpful. If you think a trust might be necessary, you will certainly need to have an attorney to establish one. If you are looking for an attorney that practices estate planning law in your area, a great resource is your local estate planning council: http://www.naepc.org/. Also consider looking into whether your employer offers a legal assistance benefit.

Do you feel your situation does not merit hiring an attorney? Then it can make sense to find a tool to help you put a will in place. Websites like nolo.com offer wills which conform to the laws of your state.

When do you need to hire a tax professional?

If you are filing a 1040EZ or you are not claiming deductions beyond your home and your kids then using tax software will typically do a good job of filing your taxes at a minimal cost. There are cases when a software program may not be the right fit though. If you own a small business, collect income from rental property or if you are settling an estate, hiring a certified public accountant or an enrolled agent can be a very prudent investment.

If you are going to pay someone to help you, hiring a CPA, EA or an attorney would be preferable because they can speak to the IRS on your behalf if you are ever audited. Not only can these professionals help you file your taxes, but they can also give you advice regarding how to run your business to take maximum advantage of the tax rules. The IRS actually offers a site to find qualified professionals in your area: https://www.irs.gov/tax-professionals/choosing-a-tax-professional

When should you work with a mortgages or insurance broker?

From personal experience, I can suggest the more “plain vanilla” your circumstance is the more likely you can save some time and money online, but the more complex your circumstances are, the better off you may be with a seasoned professional. What is not “plain vanilla?” In the case of life, disability, and long term care insurance, if you have a health condition that could be viewed as negative or uncommon, it may pay to talk to an insurance broker. They can point you to the right companies that will insure you in spite of that condition. In the case of a mortgage, if you have some instances which merit explaining on your credit report, it may pay to have a mortgage broker shop and find the bank or mortgage company that would look more favorably on your situation.

Knowing whether to hire someone or DIY can be tricky. Hopefully this gives you an idea of when to call someone. Otherwise, you may experience your own #failmomentoftheday.

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can follow me on the blog by signing up here, and on Twitter @cynthiameyer_FF.

Why I Do What I Do

August 12, 2016

As my kids and friends are far too familiar with, I’m a bit of a news and political junkie. That’s why it’s so surprising to everyone I’ve shared this with that I didn’t watch a single minute of either the Republican or Democrat conventions this year. I saw some “highlights” the next day on the news and heard people talking about highs and lows from each convention (depending on which side of the aisle they most consider their political home). I just couldn’t do it this year.

So many people that I talk with (and judging by the scroll on my Facebook home page, most of America) will be upset with our next President regardless of who wins. Both candidates from the major parties have greater than 50% negative ratings. A recent poll had Clinton disliked by 55% of voters and Trump disliked by 63% so either way we slice it, over half of the country will be unhappy on the day after Election Day. The overwhelming sentiment on my Facebook scroll is “THIS is the best we can do???”

One of the other areas of life where there is overwhelming agreement that we need to do better is in the world of banking and financial services. There is a lot of distrust of the big banks. Wall Street is unpopular with Main Street and criminals like Bernie Madoff give the financial advisory world a big fat black eye. When I look at the world through the political lens right now or through the lens of how most of America feels about the overall financial industry (painting with a very broad brush here), it’s easy to feel like there isn’t much positive to hang on to. But then I get up every morning and do what I do for a living, and my soul gets restored. Here’s why:

I’ve spent the last 3 weeks on the road and have spent only a sparse few nights in my own bed in the month of July. I’ve been at our client company sites and at our home office in California for some internal meetings on how we can do what we do better. While the travel and hotel beds had me a bit out of my workout rhythm, I’ve been able to meet dozens of individuals in one-on-one settings at their employer and talk about their lives.

I wasn’t there to sell them anything, manage their money, or offer them a loan. I was there simply to talk to them, hear their story and suggest a few ways that they can get closer to their goals. Some have been in great shape financially, others on the verge of disaster. But the thread that weaves them all together is that they were all in search of progress.

In the last several weeks, I’ve heard about engagements that are about to happen (before the future fiancée is in the loop!) and have recently happened, weddings, births, job changes, promotions, significant pay increases, and happy retirement decisions. I’ve also heard about massive credit card debt, huge student loan burdens, ugly divorces, and layoffs. It’s been a time of highs and lows emotionally.

Regardless of the issue, it appeared to me that each person I met was truly happy that their employer offered a financial wellness benefit. The feedback I’ve gotten via email has made me realize how much they valued a person who was there to help them and not sell them anything. It’s also made me realize that I am doing exactly what I was meant to do. The ability to help people, see them change their lives for the better and be there along the way to coach them as they hit speed bumps is about as close to perfection in a role that I’ll ever find.

I usually like to close out a blog post with a bit of a financial lesson, so I’ll give you this: At different times in our lives, we are going to need help. Knowing where to go for that help before it’s a crisis situation can be incredibly valuable.

Line up your experts and trusted advisors now. If you don’t have access to a financial wellness program at your employer, ask them to investigate one. If you don’t have someone that you can trust to help you reach your goals and coach you along the way without their interests coming before yours, ask your family, friends and colleagues if they do. You can also search for a financial advisor through the CFP(R) Board, and here are some questions you can ask any prospective planner. Most importantly, find someone who loves what they do for the right reasons.

Choosing Investments is Like Choosing a Pizza

April 20, 2016

When financial planners talk about how to invest your money in the market, we often discuss dividing it up among stocks, bonds and cash (also known as your asset allocation). But then when you actually go to make your investment choices, there’s a chance that not one of the options will have the word “stock” or “cash” in it. One of the most confusing things about investing and financial instruments is the fact that there are so many words that mean the same thing. For example: stock, equity, share, capital, blue chip, mid cap, small cap, large cap …they all generally refer to the same thing: ownership in a public company. Likewise, bonds, fixed income, municipals, T-bills, etc. are all referring to similar debt instruments used by companies and governments to finance operations and projects.

I often think that if more people understood that many of the financial terms we hear refer to the same thing that there would be a lot less stress around investing and everyone would feel more comfortable taking advantage of the growth that investing in the markets can offer. So I thought I’d try instead to describe a metaphor that is near and dear to my heart to try to make it easier to understand the different options out there: pizza. When it comes to pizza, there are four main options for how to get a delicious pie onto your plate (on a sliding scale of cost and effort) similar to the options available for investing for long-term goals:

Make your own from scratch
Buy pre-made frozen
Pay someone to deliver it to you, ready to go
Have it served to you at a restaurant

Each level requires a different amount of money and effort. Choosing how to invest money in the market is similar. Here’s how it compares:

1. Make your own from scratch. Making your own pizza requires skill, knowledge and practice, but once you know what you’re doing, it’s the least expensive and can be the most delicious. My husband has mastered the art of homemade pizza, starting with dough he makes from scratch, but it took a couple of years and LOTS of practice (and worthless pizza) to get it right.

To me, this is similar to researching individual stocks and mutual funds and buying them through a discount broker. You have to know what you’re doing or you can end up with nothing, but people who know what criteria to look for and how not to take too much risk can really grow their money. For investors looking to learn the art of DIY investing, start with money you can afford to lose and start reading. The book “Grande Expectations,” was what brought home to me how the stock market really works and why buying the hottest name stock or fund isn’t necessarily the best investing strategy.

2. Buy pre-made frozen. Putting a frozen pizza in the oven and knowing exactly when it’s done (and exactly how long to let it cool so that it doesn’t burn the roof of your mouth) requires some skill and it’s still a pretty cheap way to go. The investing equivalent would be using index funds or ETFs to create your own investment mix. This requires that you understand how to create an asset allocation that is appropriate for your timeline and risk tolerance, but with a little understanding of what the different indices are, it’s pretty simple to put together a decent mix. The trick is knowing when to make changes as time progresses and also knowing when NOT to make changes (for example, not selling when the market tanks and re-balancing even when the market is hot).

3. Pay someone to deliver it to you, ready to go. Minimal effort but a little bit more money. You have to pay to get it to your door, after all.

The investing equivalent would be target date funds. You don’t have to do anything but pick one and let it ride. No pizza or investing knowledge required, you just pick the one that fits you the best (for target date funds, that’s the year that you expect to need the money such as your retirement age).

4. Have it served to you at a restaurant. Paying for someone to make your pizza and serve it to you piping hot along with beverages is similar to paying a financial advisor to manage your investments for you. You can describe what flavors you like and your server will help you pick the best pizza combo.

It’s the same thing with your financial advisor. She’ll listen to your goals and risk tolerance and then suggest an investment mix that is appropriate for you. Along with that, your financial advisor should look at how your investments fit into your overall goals and make suggestions for any changes to support those goals, much like a server at a restaurant might suggest the best beer pairing or salad to start. This is definitely the most expensive option, but if you want a little more hand-holding with your investing, it’s worth it.

In my experience, most people are delivery-types (target date funds will do the trick) but because they’ve heard you should diversify and not just hold one thing, they often think that means they need to choose more than one fund. It’s important to know that a target date fund is already diversified. Just like a pizza is the perfect assembly of crust, sauce, cheese and toppings, a target date fund can be broken down into the perfect mix of large cap, mid cap, small cap, international, fixed income, money market and sometimes even commodities – the fancy way of saying stock, bond and cash funds. But instead of you having to figure out how much of each to select, that decision is made by experts who specialize in asset allocation – just like the pizza chef knows the best mix of ingredients according to the type of pizza you ordered. Now, who’s hungry for pizza?

Meet Brian Kelly, Money Coach

November 23, 2015

I recently had the chance to sit down with Brian Kelly, CFP®, an expert “money coach” and one of our more recent additions to the financial planner team and the Think Tank at Financial Finesse. I asked him a series of questions designed to find out more about how he became interested in joining our group of financial planning professionals who are committed to providing unbiased financial guidance to employees in the workforce. Here is a summary of our discussion with some unique insights about how an experienced financial planner uses an unbiased perspective to help others learn how to take control of their financial future: Continue reading “Meet Brian Kelly, Money Coach”

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. Continue reading “You Better Contact A Financial Advisor If…”

Why I Came To Financial Finesse

October 02, 2015

As a financial planner at Financial Finesse, I do a lot more than just financial planning. I write blog posts here, contribute to Forbes, participate in our Think Tank, am involved in recruiting and interviewing, and lots of other things. Our plates are always full. Continue reading “Why I Came To Financial Finesse”

Permanent Life Insurance or Mortgage Payoff?

August 20, 2015

We recently received a question on our Facebook page from a couple in their 50’s who are trying to decide between a fixed universal life insurance policy with a quoted return of “7% minus fees” vs paying off a mortgage with a 3.5% interest rate. This combines two common question topics: using permanent life insurance as an investment and paying off a mortgage early. Let’s take a look at some things to consider: Continue reading “Permanent Life Insurance or Mortgage Payoff?”

The Top 3 Reasons I Have The Best Job

August 19, 2015

For my inaugural post on the Financial Wellness @ Work blog, I thought I’d give a little insight into how I landed at Financial Finesse. Here are the top 3 reasons I LOVE my job: Continue reading “The Top 3 Reasons I Have The Best Job”

How Are Financial Advisors Like Congress?

June 24, 2015

If you voted for your congressman then they’re great but the rest are bums and if you voted against him then he’s a crook like all the rest. The same feelings are often held about financial advisors. How can the industry have such a bad reputation if so many people think that they have the only good one? Continue reading “How Are Financial Advisors Like Congress?”

The “Hidden” Sales Charge

June 17, 2015

I received a call recently from an investor that was a little confused about differences in mutual fund share classes. It seems this individual opened an IRA with a financial advisor a few years ago and purchased an “A” share mutual fund. Then, just a few days ago, they received a letter from the custodian informing them that “B” shares would no longer be available for purchase. The investor had never heard of a “B” share and wasn’t quite sure what this meant, so they decided to call the Financial Helpline. Continue reading “The “Hidden” Sales Charge”

Do You Understand Your Advisor’s Recommendations?

April 21, 2015

I recently spoke to a friend who wanted to ask my opinion about her current financial advisor. Knowing that I have a slight addiction to chocolate, she offered me her homemade Godiva Hot Chocolate with a chocolate coated bottom for my trouble. Of course I would have offered my opinion at no cost, but who am I to turn down her homemade hot cocoa? As I listened, she started to describe how she was referred to him though a family friend so she did not feel the need to do a background check or ask him questions about how he gets paid. She took it on faith that if her family member recommended him then she would be fine. Continue reading “Do You Understand Your Advisor’s Recommendations?”

Conflating and Misremembering

February 13, 2015

It’s been hard to not pay attention to what is going on in the news business lately.Jon Stewart is leaving the Daily Show. Brian Williams has stopped reporting the news and has become the news. Continue reading “Conflating and Misremembering”

A Time Tested Approach to Financial Advisors

February 10, 2015

Years ago, I had a brilliant WWII veteran as a client, one of the smartest women I had ever met. She told me that she was so glad that women were finally advisors because it took her almost a decade to find the right advisor when she started looking in the 1950s and I asked her why. Her answer was that her due diligence saved her from many “Bernie Maddoffs” over the years. Her process can be almost a textbook case for how to look for and work with an advisor: Continue reading “A Time Tested Approach to Financial Advisors”

How Buying Clothing is Like Investing

May 29, 2014

Last week, I wrote about how I was able to buy a new set of clothes without breaking the bank. In the process, I realized something else too. It turns out that putting together a wardrobe is a very similar to putting together an investment portfolio. Here are some lessons I learned and how they apply to investing: Continue reading “How Buying Clothing is Like Investing”

How I Became a Financial Educator

October 10, 2013

For the past week, each of us has been writing about our careers as financial educators and how we got here. My interest in personal finance started at a really young age when my father, who was a stockbroker at the time, gave me the “Dean Witter Guide to Personal Investing” in the 4^th grade and I actually read it. (Linda, you’re not the only finance geek.) I can’t say that I understood all of it but I got the importance of saving as much of my measly allowance as I could and starting the magic of compound interest as early as possible. Continue reading “How I Became a Financial Educator”

My Second Career as a Financial Educator

October 09, 2013

If you would have told me in 1994 that I could make a living helping people with their finances without the pressure to sell financial products, I would have thought you were joking. Back then, there was a certain esteem associated with financial professionals, and as the stock market began to rise to records levels, the idea of NOT being an investment sales professional seemed silly. So attractive was the prospect of being successful as a financial advisor that I left my first job as a 401(k) enroller after six years to pursue a life as a personal financial advisor. Continue reading “My Second Career as a Financial Educator”

Introducing Our Newest Planner: Doug Spencer

August 19, 2013

When it comes to choosing a financial advisor to help get you closer to your financial goals, it’s important to ask some tough questions. We have a pretty rigorous hiring process here at Financial Finesse and only about 2% of potential candidates make it on board our team of unbiased financial educators. Recently, I had the chance to sit down with Doug Spencer, CFP®, one of the resident financial planners and a recent addition to the Think Tank at Financial Finesse. I asked him a series of questions trying to pick his brain and find out more about how he became interested in joining a growing group of financial planning professionals who are committed to providing unbiased financial guidance to employees in the workforce. Here is a summary of our discussion with some important resources included for anyone seeking an unbiased perspective on how to take control of their financial future: Continue reading “Introducing Our Newest Planner: Doug Spencer”

My Best and Worst Investment Decisions Ever

July 08, 2013

If you are considering working with a financial advisor, you need to ask some important questions when deciding if a professional is qualified to help you reach your financial life goals. Last year, I was asked a simple but powerful question that appeared in an interview for a Forbes.com article. It was actually a two part question that was framed as things that everyone should ask their financial advisor. Continue reading “My Best and Worst Investment Decisions Ever”

Confessions of a Former Financial Advisor

June 05, 2013

I began my career as a financial educator 18 years ago, only they didn’t call me an educator. I was a 401(k) enroller and my job was to educate employees on the benefits of participating in their employer-sponsored retirement plan. I very much enjoyed speaking to the many different groups of people that made up the workforce but I wasn’t a big fan of the travel — and neither was my young, new bride. Continue reading “Confessions of a Former Financial Advisor”