Long Term Care

Posted on January 20, 2011 by AdvancingWealth

The discussion of Long Term Care has been put off by many of us for far too long. Maybe the hesitation is because sometimes its just easier to put these discussions and decisions off.

I’m writing this article to share my thoughts on the value of Long Term Care coverage, should you eventually need Long Term Care services. Every day in the industry of personal finance I’m surrounded by the topic at hand. I’ve experienced the effects of needing Long Term Care within my client base, but also within my own family. I wouldn’t be surprised if its crossed your mind, and I’m well aware of how overwhelming the costs of care can be on a monthly basis.

Long Term Care is something I strongly recommend each of my clients take a hard look at. I could tell you story after story of individuals I’ve come across that have completely depleted their entire life savings all due to the fact that they weren’t covered or were covered for too short of a period. Consider managing the risk to your retirement assets by at least looking into Long Term Care coverage.

If you’re in your late 40’s or early 50’s it’s not too early to consider this coverage. It only gets more expensive with age. Of the policies I recommend, all of them allow the insured(s) to stay in their home and receive benefits for care provided at home. These polices don’t only pay out if you go to a nursing facility.

The bottom line is this…if you could cover the risk, why wouldn’t you? Why leave it to playing the averages? Isn’t the very nature of an average that an equal amount fall short of the likelihood as do exceed it? Which are you going to be? Are you going to be the one who exceeds the average? The truth is… you can’t answer that question; none of us can. What we can do is plan for it. Believe me, I hope you never need to file a claim. I hope you pay premiums and never benefit from them. However, please don’t think that paying for a policy that you may never use is a waste of money. It’s an investment in protecting all that you’ve worked for and are still working for. My job is to implement strategies to protect and advance wealth for my clients. Long Term Care is in many cases a cost effective way to do that. We all have dreams for what we’re saving for and I’ve yet to come across the client that hopes to one day spend all their savings on the cost of their care.

Long Term Care coverage can relieve you of many of the stresses down the road. Stresses that you or your loved ones may be faced with like….

* If I don’t get coverage, will my money last assuming I need care?
* Do I want my children to be in a position to have to spend down their assets to cover the costs of my care?
* Do I want my money to go toward that care anyway? Did I have different plans for my nest egg? Charity, funding college for my grandchildren, setting up a foundation, etc.

Many projections show that even if you get coverage, with good cost of living riders, and don’t need it for 30 years, if you, in that 31st year, did begin to need care, you would make up all of the money you had spent in premiums over that 30 year period within the first year of care received. That’s a powerful realization.

Posted in Insurance, Long Term Care Insurance | Leave a comment

What to look for when hiring a Financial Advisor

Posted on January 17, 2011 by AdvancingWealth

• Independence- Choice has a value: The value of flexibility that comes with having options. When looking for a financial advisor to work with, be sure they are an independent. Independent advisors have the flexibility to offer their clients the things they need. All too often I come across clients that have portfolios built around the needs of their former advisor’s broker/dealer. If your broker/dealer offers their own line up of investments and insurance products, there also presents itself a potential conflict of interest. Not only is the advisor an employee of the firm they My feel pressures or incentives to put their clients in those proprietary products of their firm. Advisors should be focused on their clients and not on the agendas of their firm. Consider independence.

• Relationship – The financial advisory business is about relationship just as much as its about financial management. No plan will work if you can’t trust and feel comfortable with the person you’ll be hiring to walk along side you and your family as you progress toward your financial goals. Interview your advisor, check his/her references, and follow your instincts. Don’t work with people you don’t like, regardless of how successful they may be or appear to be. Find an advisor with honesty, integrity, and transparency and let them earn your trust.

• Compensation Structure - Make sure you understand how your advisor gets compensated. There are basically two structures common in the industry: commissions and fee for service. The commissions structure compensates the advisor on a transactional basis (buys, sells, etc.) The fee style of compensation pays the advisor based on an agreed upon percentage tied to the assets they manage. I believe that the fee structure puts the advisor and the client on the same side of the fence. If the assets they manage grow, the amount generated from the fee increases. If the value of the assets fall, the compensation paid to the advisor falls. The asset based fee also offers the most transparency of the two compensation structures. However, in the commissions structure even if the asset values are falling, as long as the transactions stay up, the compensation will stay level for the advisor. I believe this presents a conflict of interest.

• Passion – the importance of working with an advisor who loves what they do is key. It is important in the initial meeting and thereafter to get a feel for whether or not the advisor is in the business to help or to simply push products. An advisor who truly cares about the things that are important to their clients are easy to spot. They go that extra mile. They excel in the little things. Do they call when they say they will? Do they followup and keep you informed in the progress of your financial goals and plans? All too often clients get pursued in the initial phase of the relationship only to later be left wondering if their advisor even remembers them or is up to date with what is going on in both their lives and finances. You don’t have to feel like you’re going it alone. Look for an advisor who enjoys being there every step of the way in your journey. It will make all the difference.

• Qualification – Qualification is paramount. What sets your advisor or potential advisor apart? Have they gone the extra mile to prepare themselves to be in a place that can offer you an edge. Too many advisors do the bare minimum required to be in the business. Look for a CERTIFIED FINANCIAL PLANNER™ certificant. The CFP® is one of the most elite and respected financial planning designations in the industry. My 9 years in the industry has shown me the value of good advice. There are a bunch of individuals out there using the titles of wealth manager or financial advisor. However, the designations they hold are the exact same held by normal stock brokers. What sets your advisor apart? If all you’re looking for is somebody to trade stocks and bonds for you, then you probably don’t need to look much further than a stock broker who is series 7 registered and may also hold their insurance license. However, if you want a planner who can intelligently discuss portfolio allocation, tax planning, estate planning, liability planning, insurance planning, and retirement planning, a CFP® can meet your needs. An individual who has earned the CFP® mark of distinction has met the education, examination, experience and ethics standards established by the Certified Financial Planners Board of Standards (CFP Board).

It’s your financial future… why settle?

Posted in Investing, Personal Finance, Retirement | Leave a comment

Should I consider a Roth IRA even if I can’t write it off?

Posted on January 15, 2011 by AdvancingWealth

I believe the Roth IRA is the most powerful savings vehicle on the planet for retirement savings. Not everyone qualifies for a Roth IRA due to their Adjusted Gross Income (AGI), but for those that do, its something each of them should strongly consider. Consider the power of tax free growth. There is a big difference in tax fee and tax deferred. Under the traditional IRA structure, an individual contributes and gets to write off the amount contributed against their taxable earnings for the year. Those contributions and future growth then grow tax deferred until retirement. At retirement, those monies are then taxed as they are taken out in retirement and are taxed at the tax bracket you are in at retirement. However, under the Roth IRA structure, the money goes in after tax but the future growth isn’t only tax deferred, its tax free.

Theoretically, if you turn a $5,000 contribution into a portfolio that 20 or 30 years later is valued at $200,000, all that growth from the original $5,000 investment is tax free when you take it out. Under the traditional IRA structure, all the gain on that initial investment would be taxed. That’s a huge difference. A large part of investing is later being able to keep as much of the gain as possible. The Roth allows for incredible potential.

Remember: You have till April 15th, to make your prior year IRA contribution.

*The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Posted in Personal Finance, Retirement | Leave a comment

Top 5 Strategies to Advance your Wealth in 2011

Posted on January 5, 2011 by AdvancingWealth

1. Define what Wealth means to you and your family. Take a minute and ponder this. Wealth isn’t about the money, it’s about those things that deep down inside make us feel truly wealthy and blessed. Wealth is about what we truly value for all the right reasons. What does True Wealth mean to you?

2. Understand where your money goes every month. Track it, study your prior spending habits, understand your cash flow and what you spend your money on.

3. Understand where your time goes.

4. Determine what you are willing to give up in order to Advance your Wealth this year.

5. Make a plan – you can’t track or even recognize progression if you don’t have a written plan for where it is you are trying to go, and what it will take to get you from where you are. Make sure the plan is a SMART plan. S= Specific, M= Measurable, A= Attainable, R= Realistic, T= Timely.

Now is the time to take action and implement your plan for 2011.
Remember: Your plan is only as good as your intention of working toward it.

Posted in Personal Wealth | Leave a comment