Is Your Financial Advisor a Doctor or a Pharmacist?
by Greg Hammond
How financial professionals can get in the way
Many advisors unwittingly (or in some cases, not so unwittingly) tap into or add to people’s already existing fears. They don’t explain the difference between voluntary and involuntary philanthropy. When people regularly respond, “Well, no, we’ll need that money for us and the kids,” many financial professionals conclude that the conversation is over. Additionally, they feel this is a conversation that just isn’t worth having unless the client brings it up.
At the risk of introducing another profession to make an important analogy, we’d ask you to consider whether the best advisors should act as pharmacists or physicians? Should your advisor just dispense the prescriptions or solutions to the issues you bring to him or her? Are you expected to depend on the answers you receive, without question? Or do you want your advisor to be ready, willing, and able to have the kind of courageous conversations that a good physician should be free to initiate?Read More
What to do With Required Minimum Distributions You Don’t “Need”
By Greg Hammond
Some individuals simply don’t need their full Required Minimum Distribution (RMD) amounts for living expenses; they’d rather keep the money invested, so that it can compound and grow. Of course, most would no doubt like to keep deferring the tax bill on their IRA assets, too. Although it’s impossible to circumvent RMDs without incurring big penalties, there’s nothing saying you have to spend that money, either. Instead, you can keep at least some of your distribution working on your behalf. The following strategies can help you maximize the RMD proceeds you don’t need for living expenses.
Look for a Roth Opportunity
If you have unused RMDs, steer a portion to a Roth IRA. You can contribute to a Roth at any age, and your withdrawals will be tax-free provided you meet certain criteria. The catch is that you or your spouse must have enough earned income to cover the amount of your Roth contribution–unearned income such as your pension, IRA withdrawals, income from other investments, or Social Security benefits don’t count.
Fund a Tax-Efficient Wealth Replacement StrategyRead More
Don’t Chase a New Job, Attract a New Career Opportunity
by Landon Taylor
When people tell me they are busy emailing their resumes to companies blindly looking for a job or posting their resume online, I usually shake my head a bit and think to myself, what a waste of time and talent.
There are so many people competing for jobs today, it’s virtually impossible to stand out if your submission is simply another resume in the pile of thousands. Therefore, it is vital for you to strategically position yourself as the answer to problems that are keeping the hiring manager up at night.
You do this by matching your authentic passion and superior skill level with a problem that an employer is trying to solve or opportunity that they are trying to capture.
In this way, you will shift away from being a common job chaser. Instead, you will strategically attract career opportunities that ignite your passion and enable you to put your greatest gifts and natural talents to work in the marketplace.
The first thing I do when people come to me for advice on getting a new job is to ask them two critical questions:Read More
The Need for Life Insurance
By Greg Hammond
Let’s examine some uses for life insurance, the only asset class that can ensure the completion of proper funding for a myriad of unique planning needs – regardless of the state of the federal estate tax.
Income Replacement (“How will my family eat if I die?”)
Even if your estate is not subject to estate tax, life insurance can replace lost income if you die unexpectedly (more policies pay out for income replacement than for liquidity to pay estate tax). For example, people with young children might consider using life insurance to ensure that there are sufficient funds available to pay for child rearing or college and post-graduate expenses in the event of a parent’s premature death. For these income replacement policies, the estate tax, including the possibility of estate tax repeal, has no significance.
Planning Tip: Consider life insurance to replace income from the premature death of a primary income-earning spouse or parent.
Wealth Creation (“What if I die before I build an estate for my family?”)Read More
How Financial Professionals Can Get In The Way
By Greg Hammond
In the world of financial professionals, a major obstacle to getting people to do more is, unfortunately, the professionals themselves. Frequently, professionals such as attorneys, investment advisors, insurance professionals, and accountants tell us their clients aren’t interested in charitable giving but instead want to minimize taxes and maximize the wealth that their family and heirs will receive.
How does the financial professional industry in general come to this conclusion that people don’t want to support personal causes and organizations? The most common basis for this assertion is: “I asked them, and that’s what they told me.” When questioned about how they asked, we usually hear some variation of this not-so-creative or sophisticated question: “Do you want to leave money to charity?” And the response they usually elicit is about what you’d expect.
Such a blunt question seems to dredge up those primal concerns in people about whether there’s enough for them and whether there’s likely to be anything left for the family. Even if those are not direct concerns, there is rarely any explanation or education to clarify the common misconception most people have: That a charitable legacy means the family will receive less than it would otherwise.Read More
The Peace of Mind Account by Greg Hammond
Generation X & Y
If you were hit with an unexpected expense today how would you pay for it? Do you have money saved up and set aside for unexpected expenses or would you end up charging it to a credit card and then stress and worry about how to pay for it? This is where a Peace of Mind account comes in.
Do you have a Peace of Mind account? If not, you should. A Peace of Mind account or emergency savings account should be the cornerstone of your finances and is the first step in building a strong financial future.
A Peace of Mind account gets its name from the fact that it provides you just that, peace of mind. There aren’t many things in life that can be guaranteed, besides death, taxes, and the fact that unexpected financial events and needs will occur in your life. Whether it is an unforeseen car repair, unexpected health or dental bill, or a sudden job loss, various unforeseen expenses will happen. When they do happen wouldn’t it be nice to have the money set aside in a savings account just for unexpected expenses? This is what a Peace of Mind account is all about. No matter what unexpected expense may come your way, you can calmly address the problem because you have adequately saved money in a secure, liquid and accessible account.Read More
by Thomas Hadley
When you really think about it, “fear” isn’t something you ever want to overcome. Fear is a great ally of ours. If we didn’t have fear, there would be nothing to stop us from jumping off of a 10 story building. It is fear that prevents us from making a foolish error in such a case. It is fear that keeps us from doing something illegal even when we are very upset and not thinking rationally. Of course if you are success minded, you do not live your life “trying not to get into trouble,” but when we are under great stress, we do things that are irrational. So a fear of consequences of foolish action is a safeguard for us.
What we do want to eradicate is being afraid when we should not be. We shouldn’t be afraid to make that phone call to help a loved one that will very likely result in conflict. We shouldn’t be afraid to say “No” when asked to join in on a project when we know it is not the best use of our time. We shouldn’t be afraid to step out and make changes in our lives that are for the best because we are afraid of what our friends and family may think. However, all of these can be a challenge. The question is, “How do we overcome fear in these situations?”Read More
Lack of a Financial Plan
by Greg Hammond
Many people spend more time and care planning their vacations than they spend on their financial and estate planning. They will pore over travel guides and find the best rates online, all in anticipation of a week or two in their future. Probably because of our human impulses, planning for short-term fun can trump long-term gain. With the future uncertain, risks to be managed, a retirement for which we fear we may not have saved enough, and worse yet, death and taxes, many of us understandably lack the requisite enthusiasm and courage to address this area of planning with commitment, energy, and urgency. If you don’t know where you are going, any road will get you there. To plot a course for a significant legacy, you first need a plan for yourself. Only then will you have the confidence and clarity to plan for others.Read More
7 Things You Must Know About Designating Beneficiaries
When it comes to estate planning, reviewing your beneficiaries periodically is extremely important. Even if you’ve recently met with an attorney to review your will, or completed a revocable living trust and have a big binder with all of the detailed documents, it’s important to review your beneficiary forms. No matter what kind of estate planning you’ve done, the only document that matters to the custodian of your IRA, 401(k) or other retirement account is the beneficiary designation form.
1) Your will or trust or any other legal document will not supersede the beneficiary designation form. Illustrated by a story in the New York Times titled “Pension Pickle,” the article is about Bruce and Anne Friedman. The Friedmans were happily married for nearly twenty years when Anne, a former city school principal, died suddenly of a massive heart attack in September 2001. At the time of her death, Anne had saved into a retirement account with the New York Teachers Retirement System. It was worth a little over $900,000. After morning the loss of his wife, Mr. Friedman thought that he would receive the retirement funds. However, officials at the Teacher Retirement System could only find one beneficiary designation form that was filled out 27 years ago, four years before the couple met. It indicated that Anne’s mother, uncle and sister were to receive her retirement funds. Since Anne’s mother and uncle had predeceased her, the entire account went to Anne’s sister. Her husband for over twenty years was left without a single cent. The sister would not give him anything.Read More
By Greg Hammond
A potential injury or illness could prevent you from doing your job, causing you to lose your paycheck. Even a short-term disability could be financially devastating. This doesn’t need to be the case if you plan for this potential risk by purchasing disability insurance.
Many individuals overlook the need for disability insurance as part of their financial picture. A poll of 1,200 private sector U.S. workers by the non-profit Consumer Federation of America found that two-thirds of them did not have disability insurance coverage. Individuals often don’t see a reason to purchase additional insurance for something they don’t think they will need. This is understandable, but many of us don’t realize the many ways we could become disabled.
When mentioning the term “disabled,” many of us think of someone in an accident who has lost the use of their legs, eyesight or other bodily functions. Few of us think about becoming disabled due to illness or various other health conditions. The non-profit Council of Disability Awareness notes that 90% of disability claims in the U.S. are unrelated to workplace injury. Rather, most claims are filed for acute or chronic illnesses or health conditions. Musculoskeletal disorders, such as arthritis, spine and joint disorders, fibromyositis and back pain, represent more disability claims than any other condition.Read More