Eleven Ways to Help Yourself Stay Sane in a Crazy Market

Keeping your cool can be hard to do when the market goes on one of its periodic roller-coaster rides. It’s useful to have strategies in place that prepare you both financially and psychologically to handle market volatility. Here are 11 ways to help keep yourself from making hasty decisions that could have a long-term impact on your ability to achieve your financial goals.

  1. Have a game plan

Having predetermined guidelines that recognize the potential for turbulent times can help prevent emotion from dictating your decisions. For example, you might take a core-and-satellite approach, combining the use of buy-and-hold principles for the bulk of your portfolio with tactical investing based on a shorter-term market outlook. You also can use diversification to try to offset the risks of certain holdings with those of others. Diversification may not ensure a profit or guarantee against a loss, but it can help you understand and balance your risk in advance. And if you’re an active investor, a trading discipline can help you stick to a long-term strategy. For example, you might determine in advance that you will take profits when a security or index rises by a certain percentage, and buy when it has fallen by a set percentage.

  1. Know what you own and why you own it

When the market goes off the tracks, knowing why you originally made a specific investment can help you evaluate whether your reasons still hold, regardless of what the overall market is doing. Understanding how a specific holding fits in your portfolio also can help you consider whether a lower price might actually represent a buying opportunity.

And if you don’t understand why a security is in your portfolio, find out. That knowledge can be particularly important when the market goes south, especially if you’re considering replacing your current holding with another investment.

  1. Remember that everything’s relative

Most of the variance in the returns of different portfolios can generally be attributed to their asset allocations. If you’ve got a well-diversified portfolio that includes multiple asset classes, it could be useful to compare its overall performance to relevant benchmarks. If you find that your investments are performing in line with those benchmarks, that realization might help you feel better about your overall strategy.

Even a diversified portfolio is no guarantee that you won’t suffer losses, of course. But diversification means that just because the S&P 500 might have dropped 10% or 20% doesn’t necessarily mean your overall portfolio is down by the same amount.

  1. Tell yourself that this too shall pass

The financial markets are historically cyclical. Even if you wish you had sold at what turned out to be a market peak, or regret having sat out a buying opportunity, you may well get another chance at some point. Even if you’re considering changes, a volatile market can be an inopportune time to turn your portfolio inside out. A well-thought-out asset allocation is still the basis of good investment planning.

  1. Be willing to learn from your mistakes

Anyone can look good during bull markets; smart investors are produced by the inevitable rough patches. Even the best aren’t right all the time. If an earlier choice now seems rash, sometimes the best strategy is to take a tax loss, learn from the experience, and apply the lesson to future decisions. Expert help can prepare you and your portfolio to both weather and take advantage of the market’s ups and downs

  1. Consider playing defense

During volatile periods in the stock market, many investors reexamine their allocation to such defensive sectors as consumer staples or utilities (though like all stocks, those sectors involve their own risks, and are not necessarily immune from overall market movements). Dividends also can help cushion the impact of price swings. According to Standard and Poor’s, dividend income has represented roughly one-third of the monthly total return on the S&P 500 since 1926, ranging from a high of 53% during the 1940s to a low of 14% in the 1990s, when investors focused on growth.

  1. Stay on course by continuing to save

Even if the value of your holdings fluctuates, regularly adding to an account designed for a long-term goal may cushion the emotional impact of market swings. If losses are offset even in part by new savings, your bottom-line number might not be quite so discouraging.

If you’re using dollar-cost averaging–investing a specific amount regularly regardless of fluctuating price levels–you may be getting a bargain by buying when prices are down. However, dollar-cost averaging can’t guarantee a profit or protect against a loss. Also, consider your ability to continue purchases through market slumps; systematic investing doesn’t work if you stop when prices are down. Finally, remember that your return and principal value will fluctuate with changes in market conditions, and shares may be worth more or less than their original cost when you sell them.

  1. Use cash to help manage your mindset

Cash can be the financial equivalent of taking deep breaths to relax. It can enhance your ability to make thoughtful decisions instead of impulsive ones. If you’ve established an appropriate asset allocation, you should have resources on hand to prevent having to sell stocks to meet ordinary expenses or, if you’ve used leverage, a margin call. Having a cash cushion coupled with a disciplined investing strategy can change your perspective on market volatility. Knowing that you’re positioned to take advantage of a downturn by picking up bargains may increase your ability to be patient.

  1. Remember your road map

Solid asset allocation is the basis of sound investing. One of the reasons a diversified portfolio is so important is that strong performance of some investments may help offset poor performance by others. Even with an appropriate asset allocation, some parts of a portfolio may struggle at any given time. Timing the market can be challenging under the best of circumstances; wildly volatile markets can magnify the impact of making a wrong decision just as the market is about to move in an unexpected direction, either up or down. Make sure your asset allocation is appropriate before making drastic changes.

  1. Look in the rear-view mirror

If you’re investing long-term, sometimes it helps to take a look back and see how far you’ve come. If your portfolio is down this year, it can be easy to forget any progress you may already have made over the years. Though past performance is no guarantee of future returns, of course, the stock market’s long-term direction has historically been up. With stocks, it’s important to remember that having an investing strategy is only half the battle; the other half is being able to stick to it. Even if you’re able to avoid losses by being out of the market, will you know when to get back in? If patience has helped you build a nest egg, it just might be useful now, too.

  1. Take it easy

If you feel you need to make changes in your portfolio, there are ways to do so short of a total makeover. You could test the waters by redirecting a small percentage of one asset class into another. You could put any new money into investments you feel are well-positioned for the future but leave the rest as is. You could set a stop-loss order to prevent an investment from falling below a certain level, or have an informal threshold below which you will not allow an investment to fall before selling. Even if you need or want to adjust your portfolio during a period of turmoil, those changes can–and probably should–happen in gradual steps. Taking gradual steps is one way to spread your risk over time as well as over a variety of asset classes.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Verizon, Bank of America, Northrop Grumman, Raytheon, Hughes, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may be reached at www.theretirementgroup.com.

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The Advantages of HSAs

Health Savings Accounts offer you tax breaks & more.

Why do people open up Health Savings Accounts in conjunction with high-deductible insurance plans? Well, here are some of the compelling reasons why younger, healthier employees decide to have HSAs.

#1: Tax-deductible contributions. These accounts are funded with pre-tax income. Your annual contribution limit to an HSA depends on your age and the type of insurance plan you have in conjunction with the account. For 2015, limits are set at $3,350 (individual plan) and $6,650 (family plan). If you are older than 55, those limits are nudged $1,000 higher.1,2

#2: Tax-free growth. Under federal law, the money in an HSA grows untaxed. Some HSAs even have investment options.3

#3: Tax-free withdrawals (as long as withdrawals pay for health care costs). Distributions out of an HSA are tax-free as long as they are used to pay qualified health-care expenses. The is the federal tax treatment, and most states treat HSA distributions in like fashion.3

Add it up: an HSA lets you avoid taxes as you pay for health care. Additionally, these accounts have other merits.

You own your HSA. If you leave the company you work for, your HSA goes with you – your dollars aren’t lost.4

Do HSAs have underpublicized societal benefits? Since HSAs impel people to spend their own dollars on health care, the theory goes that they spur their owners toward staying healthy and getting the best medical care for their money.

Additionally, the HSA is sometimes called the “stealth IRA.” If points 1-3 mentioned above aren’t wonderful enough, consider this: after age 65, you may use distributions out of your HSA for any purpose, although you will pay regular income tax on distributions that aren’t used to fund medical expenses. (If you use funds from your HSA for non-medical expenses before age 65, the federal government will hit you with a 20% withdrawal penalty in addition to income tax on the withdrawn amount.)2,3

How about the downside? HSA funds don’t pay for all forms of health care. You also can’t use HSA funds to pay for a Medigap policy or Medicare supplemental insurance, in case you are wondering about such a move. In the worst-case scenario, you get sick while you’re enrolled in an HDHP and lack enough money to pay medical expenses.5,6

Even with those caveats, younger and healthier workers see many tax perks and pluses in the HSA. If you have a dependent child covered by an HSA-qualified HDHP, you can use HSA funds to pay his or her medical bills if that child is 18 or younger. (This also holds true if your dependent child is a full-time student 23 or younger or is permanently and totally disabled.)2

Who is eligible to open up an HSA? You are eligible if you enroll in a health plan with a sufficiently high deductible. For 2010, the eligibility limits are a $1,300 annual deductible for an individual or a $2,600 annual deductible for a family.3

Your employer may provide a match for your HSA. A full or partial match (or other form of employer contribution) can occur. Sometimes this is contingent on an employee’s participation in a wellness program.3

In a recent Fidelity survey, 62% of Americans confessed they didn’t understand how HSAs worked. As more and more employers are offering them to employees, perhaps people will become more knowledgeable about them – and their intriguing features.3

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – health.usnews.com/health-news/health-insurance/articles/2014/10/21/health-care-costs-expected-to-rise-in-2015-are-you-ready [10/21/14]

2 – shrm.org/hrdisciplines/benefits/articles/pages/2015-hsa-limits.aspx [4/24/14]

3 – tinyurl.com/lqw4pkq [10/11/14]

4 – forbes.com/sites/investopedia/2012/06/19/comparing-health-savings-and-flexible-spending-accounts/ [6/19/12]

5 – irs.gov/uac/Affordable-Care-Act:-Questions-and-Answers-on-Over-the-Counter-Medicines-and-Drugs [1/9/14]

6 – bcbsm.com/index/health-insurance-help/faqs/plan-types/health-spending-accounts/how-to-use-hsa.html [6/19/12]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Glaxosmithkline, Merck, AT&T, Qwest, ExxonMobil, Chevron, Hughes, Northrop Grumman, Raytheon, Pfizer, Verizon, Bank of America,  Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

Lump-Sum Distribution from Inherited IRAs and Retirement Plans

What is it?

A lump-sum distribution is the withdrawal of the entire balance of an inherited traditional IRA or employer-sponsored retirement plan account in one tax year. It is this one-tax-year time frame, not the number of distributions, that determines a lump-sum distribution. A lump-sum distribution can take the form of a single distribution, or multiple distributions taken over the course of the tax year. This distribution option is generally available to you when you inherit a traditional IRA, and may be available to you when you inherit a retirement plan account (if the terms of the plan allow it). If you are not the sole primary beneficiary of the IRA or plan, the lump-sum distribution option will apply separately to your share of the inherited funds.

As an IRA or retirement plan beneficiary, you will generally be subject to federal (and possibly state) income tax on a lump-sum distribution for the tax year in which it is taken (to the extent that the distribution represents pretax or tax-deductible contributions, and investment earnings). For this and other reasons, a lump-sum distribution is generally not regarded as the best way to distribute funds from an inherited IRA or plan. Other options for taking post-death distributions will typically provide more favorable tax treatment and other advantages.

This discussion does not apply to Roth IRAs or Roth 401(k), 403(b), and 457(b) accounts. You can take a lump-sum distribution from an inherited Roth IRA, or an inherited Roth 401(k)/403(b)/457(b) account, but since qualified distributions from these plans are tax free (and nonqualified distributions are taxable only to the extent earnings are distributed), the considerations are quite different.

Requirements to take a lump-sum distribution

To be eligible to take a lump-sum distribution from a deceased IRA owner’s or plan participant’s account, you obviously must be a beneficiary of that account. Being a beneficiary of an IRA or retirement plan account generally means that you are designated by name as a primary beneficiary in the IRA or plan documents. You could also become a primary beneficiary of the IRA or plan if you are named as a secondary beneficiary (also known as a contingent beneficiary), and one or more of the original primary beneficiaries disclaims (i.e., refuses to accept) the inherited funds or predeceases the account owner.

In the case of a retirement plan account, you can only take a lump-sum distribution of the inherited funds if the plan offers this distribution option. Most plans do permit account beneficiaries to take lump-sum distributions, but you should check with the plan administrator to make certain.

Advantages of taking a lump-sum distribution

You receive all of the funds now

The main attraction of taking a lump-sum distribution from an inherited IRA or retirement plan is that you receive a sum of money in one tax year to use for your own benefit. The amount that you ultimately receive could be substantial depending on the size of the account, your share of the funds, and the portion that is lost to taxes. Once the funds are distributed to you, you generally have complete discretion over their use. You could use the money to pay your medical bills, finance your children’s education, or fund the down payment on a home, or for any other purpose.

Special tax treatment may be available

With inherited retirement plan accounts, another potential advantage of taking a lump-sum distribution is that such distributions may be eligible for special income averaging treatment (if you were born before 1936). This can reduce the income tax liability on the inherited funds, but the availability of this special treatment is limited. In addition, special capital gains rules may apply to a portion of a lump-sum distribution attributable to pre-1974 plan participation. Special rules may apply to lump-sum distributions that include employer securities.

In many cases, the drawbacks of taking a lump-sum distribution from an inherited IRA or retirement plan will outweigh the perceived advantages.

Disadvantages of taking a lump-sum distribution

There may be adverse income tax consequences

As noted, when you take a lump-sum distribution of your inherited IRA or plan funds, you receive all of the funds in one tax year. This distribution must be reported as taxable income on your federal income tax return for that year. (If there were ever nondeductible or after-tax contributions made to the account, a portion of the distribution would not be taxable.) Depending on the size of the distribution and your federal income tax bracket, the portion of the funds that is lost to taxes may be substantial. This may be especially true if the distribution pushes you into a higher income tax bracket, causing the funds to be taxed at a higher rate.

To make matters worse, your lump-sum distribution may be subject to state income tax as well as federal income tax. You should check the laws of your state for information regarding the tax treatment of IRA and retirement plan distributions.

If you want to minimize income taxes on the inherited IRA or plan funds, a lump-sum distribution is probably not the appropriate distribution option. Other methods of taking post-death distributions from the IRA or plan may be available, and will typically provide more favorable tax treatment.

The distributed funds will miss out on tax-deferred growth opportunities

Another major drawback to taking a lump-sum distribution from an inherited IRA or retirement plan is the loss of tax-deferred growth opportunities. When you take a lump-sum distribution, you are removing all of the IRA or plan funds from a tax-deferred environment. You may take the money from a lump-sum distribution (what is left of it after taxes) and invest it elsewhere, but the earnings will generally be subject to tax. Even if you immediately reinvest your lump-sum distribution in another tax-deferred vehicle, such as an annuity, you will still have to pay tax on the distribution itself.

How to take a lump-sum distribution

Contact the plan administrator to confirm that a lump-sum distribution is an option.

Consult a professional advisor: Before taking a lump-sum distribution from an inherited IRA or plan, speak to a tax advisor or other professional regarding your distribution options and the tax and estate planning considerations. Your advisor should be able to tell you whether a lump-sum distribution is appropriate in your case. In many cases, it will not be.

Contact the IRA custodian or plan administrator: If you decide to take a lump-sum distribution, you will need to contact the IRA custodian or the plan administrator to request the necessary form for withdrawal. Return the form along with any necessary documentation (such as personal identification and/or a death certificate), indicating that you want to receive a lump-sum distribution.

Report the distribution on your tax return: You must enter the taxable amount of your lump-sum distribution on your federal income tax return for the year of the distribution. Remember, not all of the distribution will be taxable if part of it represents nondeductible or after-tax contributions. Determine whether special averaging or other special tax treatment is available.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Merck, Pfizer, ExxonMobil, Glaxosmithkline, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon,Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Albert Aizin is a Representative with FSC Securities and may be reached at www.theretirementgroup.com.

How Is Health Care Reform Affecting the Federal Deficit?

Some analysts think it is helping reduce the deficit; but others wholeheartedly disagree.

Has the Affordable Care Act actually cut Medicare spending? The numbers from the Congressional Budget Office make a pretty good argument for that, and suggest that the ACA has had a distinct hand in the recent drop in the federal deficit. Detractors of the ACA say that statistical argument doesn’t tell the whole story.

Medicare has been a major factor in the deficit’s expansion. Its cumulative cash flow deficits came to $1.5 trillion in the first decade of this century, according to the Congressional Budget Office; across the current decade, those cumulative cash flow deficits are projected to hit $6.2 trillion as more and more baby boomers become eligible.1

Admirers of the ACA contend that its technical changes (reductions in payments to some providers, simplified payment systems geared to holistic care, discouragement of hospital readmissions and greater use of generic drugs) are holding Medicare costs in check. These changes have led the CBO to hack 12% off its estimate for Medicare spending across 2011-20. In 2014 dollars, the federal government spent about $12,700 on Medicare per recipient in 2010; the CBO sees that declining to about $11,300 in 2019.2

In the big picture, the savings projects to $95 billion in Medicare’s 2019 budget. That is more than the projected 2019 federal outlay for welfare, unemployment insurance and Amtrak combined. It also means Medicare’s trust fund will now last until at least 2030 according to the Medicare Trustees.1,3

Does the ACA deserve all the credit? Not really, say its detractors. They argue that while health care spending and Medicare spending have slowed in the past few years, it isn’t because of the ACA’s changes. The counterargument posits that Medicare spending lessened as a consequence of the recession (and the shallow recovery that followed) and higher-deductible health plans that meant greater out-of-pocket costs for consumers.1

Another contention: lawmakers could have done much more to reduce Medicare spending all along, but backed off of that opportunity. When Congress passed the Balanced Budget Agreement in 1997, it authorized cuts in federal payments to doctors who treat Medicare patients. These cuts (which would have significantly reduced Medicare spending) were supposed to occur in 2003, but Congress has postponed them 17 times since that date.1

Hasn’t the federal deficit declined anyway? It has, and it is also about to grow again. By the CBO’s estimate, the federal deficit for the current fiscal year will be $506 billion, equivalent to 2.9% of U.S. gross domestic product. At the turn of the decade, the deficit was above $1 trillion, corresponding to 9.8% of GDP. The CBO thinks that the deficit will rise again in two years, however, as an effect of increasing federal spending. As for the federal debt held by the public, it has risen 103% during the current administration.4

The deficit aside, the self-insured may pay cheaper premiums in 2015. Preliminary research from the non-profit Kaiser Family Foundation estimates that the mean premium on “silver” plans (the popular and second-cheapest choice among standard plans) will decline 0.8% next year. The KFF’s per-city projections vary greatly, though. For example, it forecasts “silver” plan premiums dropping 15.6% in Denver next year and rising 8.7% in Nashville.4

Bottom line, the CBO sees less Medicare spending ahead. That will contribute to a reduction in the federal deficit, and whether the projected decline is attributable to economic or demographic factors or the changes stemming from the ACA, that is a good thing.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – forbes.com/sites/gracemarieturner/2014/10/07/its-time-to-end-the-doc-fix-dance-and-move-on-to-real-reform/ [10/7/14]

2 – nytimes.com/2014/08/28/upshot/medicare-not-such-a-budget-buster-anymore.html [8/28/14]

3 – washingtonpost.com/blogs/plum-line/wp/2014/08/27/yes-obamacare-is-cutting-the-deficit/ [8/27/14]

4 – msn.com/en-us/news/politics/obama%E2%80%99s-numbers-october-2014-update/ar-BB7PQFw [10/6/14]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, AT&T, Raytheon, ExxonMobil, Qwest, ING Retirement, Chevron, Hughes, Northrop Grumman,Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

Getting Help from a Financial Professional

Are you suddenly on your own or forced to assume greater responsibility for your financial future? Unsure about whether you’re on the right track with your savings and investments? Finding yourself with new responsibilities, such as the care of a child or an aging parent? Facing other life events, such as marriage, divorce, the sale of a family business, or a career change? Too busy to become a financial expert but needing to make sure your assets are being managed appropriately? Or maybe you simply feel your assets could be invested or protected better than they are now.

These are only some of the many circumstances that prompt people to contact someone who can help them address their financial questions and issues. This may be especially true for women, who live longer than men on average and therefore may face an even greater challenge in making their assets last over that longer life span. In fact, one study found that women often value advice from a professional in their financial decision-making even more than men do.*

Why work with a financial professional?

  • A financial professional can apply his or her skills to your specific needs. Just as important, you have someone who can answer questions about things that you may find confusing or anxiety-provoking. When the financial markets go through one of their periodic downturns, having someone you can turn to may help you make sense of it all.
  • If you don’t feel confident about your knowledge of investing or specific financial products and services, having someone who monitors the financial markets every day can be helpful. After all, if you hire people to do things like cut your hair, work on your car, and tend to medical issues, it might just make sense to get some help when dealing with important financial issues.
  • Even if you have the knowledge and ability to manage your own finances, the financial world grows more intricate every day as new products and services are introduced. Also, legislative changes can have a substantial impact on your investment and tax planning strategy. A professional can monitor such developments on an ongoing basis and assess how they might affect your portfolio.
  • A financial professional may be able to help you see the big picture and make sure the various aspects of your financial life are integrated in a way that makes sense for you. That can be especially important if you own your own business or have complex tax issues.
  • If you already have a financial plan, a financial professional can act as a sounding board, giving you a reality check to make sure your assumptions and expectations are realistic. For example, if you’ve been investing far more conservatively than is appropriate for your goals and circumstances, either out of fear of making a mistake or from not being aware of how risks can be managed, a financial professional can help you assess whether and how your portfolio might need adjusting to improve your chances of reaching those goals.

When should you consult a professional?

You don’t have to wait until an event occurs before consulting a financial professional. Having someone help you develop an overall strategy for approaching your financial goals can be useful at any time. However, in some cases, a specific life event or perceived need can serve as a catalyst for seeking advice. Such events might include:

  • Marriage, divorce, or the death of a spouse
  • Having a baby or adopting a child
  • Planning for a child’s or grandchild’s college

education

  • Buying or selling a family business
  • Changing jobs or careers
  • Planning your retirement
  • Developing an estate plan
  • Receiving an inheritance or financial windfall

Making the most of a professional’s expertise

  • You’ll need to understand how a financial professional is compensated for his or her services. Some receive a fee based on an hourly rate (usually for specific advice or a financial plan), or on a percentage of your portfolio’s assets and/or income. Some receive a commission from a third party for any products you may purchase. Still others may receive some combination of fees and commissions, while still others may simply receive a salary from their financial services employer. Don’t be reluctant to ask about fees; any reputable financial professional shouldn’t hesitate to explain how he or she is compensated.
  • Even if you’re a relative novice when it comes to finances, don’t be afraid to ask questions if you don’t understand what’s being presented to you. You’re not being rude; you’re simply trying to prevent misunderstandings that could backfire later.
  • Don’t let yourself be pressured into making a financial decision you’re not comfortable with or don’t understand. This is your money, and you have the right to take whatever time you need. However, give yourself a deadline for your decision so you don’t get caught in “analysis paralysis.”
  • If you think your financial life simply needs a checkup rather than a complete overhaul, you’ll need to clarify the areas in which you’re looking for assistance. That can help you decide what type of advice you’re looking for from your financial professional, though you should also pay attention to any additional suggestions raised during your discussions. Your plans should take into consideration your financial goals, your time horizon for achieving each one, your current financial and emotional ability to tolerate risk, and any recent changes in your circumstances.
  • Don’t assume you have to be wealthy to make use of a financial professional. While some do focus on clients with assets above a certain level, others do not.
  • Think about the scope of the services you’ll need. Do you want comprehensive help in a variety of areas, or would you be better off assembling a team of specialists? Do you need an ongoing relationship, or can your needs be taken care of on a one-time basis? If you’re a relative novice or having to deal with decisions you’ve never had to make before, someone with broad-based expertise might be a good place to start.
  • Even if you feel you need detailed advice from several different specialists–for example, if you own your own business–consider whether you might benefit from having someone who can coordinate among them. A financial professional can sometimes be a gateway to other professionals who can help with specific aspects of your finances, such as accounting, tax and/or estate planning, insurance, and investments.
  • If you want comprehensive management, you may be able to give a financial professional the independent authority to make trading decisions for your portfolio without checking with you first. In that case, you’ll likely be asked to help develop and sign an investment policy statement that spells out the specifics of the firm’s decision-making authority and the guidelines to be followed when making those decisions. If you feel that consulting an expert might be helpful, don’t postpone making that call. The sooner you get your questions answered, the sooner you’ll be able to pay more attention to the things–family, friends, career, hobbies–that an organized financial life could help you enjoy.

*June 2014 study of affluent individuals conducted by Spectrem Group, a research/consulting firm focused on the affluent and retirement markets.

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This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Albert Aizin is a Representative with FSC Securities and may be reached at www.theretirementgroup.com.