Being Smart With $$ -- Is your or your parent's trusted advisor really trustworthy?

Just because your parent trusted their financial advisor, doesn’t mean YOU should.  Many parents know no more about finance than their kids even though we think our parents know everything.  (Or if you’re a teenager, you think they know nothing.)  You may think your parents are in good hands with a trusted, long-term advisor.  You may even inherit money from your parent and stay with the trusted advisor.  But perhaps it’s time to find out.  Is the advisor trading daily in your account and generating commissions for him/herself?  Is he/she recommending appropriate investments that you can hold for the long term?  Are you being moved from one “load” fund to another that generates a fee every time?  Read this article for a cautionary tale.

https://www.nytimes.com/2018/08/24/business/brokers-excessive-trading-retirement.html

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com

Being Smart with $$ -- You Can Go Broke

You can go broke no matter how rich you are.  Kyrie Irving of the Boston Celtics seems to know that which is why he drives a $29,000 Jeep Wrangler even though he’ll make over $20 million this year (per GoCompare and CNBC).  He may have heard that 60% of NBA players are broke within 5 years of retirement and it’s similar for players of other sports (per a 2009 Sports Illustrated story).  How does it happen? The easy answer is that they spend too much.  Their situation is no different than for any of us; only the numbers vary.  Figure out how much you have, how much you make and how much you’ll need when you retire (whatever your retirement age is) and then you can determine how much you are able to spend.  Spend more than that and you’ll go broke. Spend less and you’ll probably be okay.  Whether you have $100,000 in savings or $10 million, the math is the same.  So follow Kyrie Irving’s example and remember that the future is expensive and it’s best to plan ahead.

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com 

Being Smart With $$ -- Poverty is More Fun Than Being Rich...But....

Being Rich is No Fun! In many cases, we have the option to be rich but many of us choose to be poor because it is far more fun! Poverty is more fun if it means spending all your money on everything you want day to day. Being rich often means foregoing all those great toys and experiences we are offered. What does it mean to be rich? It varies in opinion but let’s say it’s having $2 million or more saved. If you power save starting at age 40 and invest $25,000 a year in the stock market earning 8% annually, by the time you retire at 67 you’ll have almost $2.2 million. VOILA! You’re rich! But only at the expense of missing out on that big house, fancy car and awesome vacations your peers may have had. So why would we want to be rich? So that in retirement you can maintain your normal standard of living and not have to work until you’re 90 (if you are even able to).  Reaching the age of 60 in a panic and realizing you have nothing saved is a high price to pay for enjoying decades of self-imposed poverty. Going from lobster today to Spam in retirement won’t be easy.  30 years of retirement requires a lot of money and a lifetime of saving can get you through it. And no matter how old you are and how far behind you may be, now is the time to create a plan to get you to your goals.

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com 

Being Smart with $$ -- Investors Make Mistakes but Guidance Helps

Investors make so many mistakes. We panic and sell at the wrong time, we jump on a hot sector often right at the end of its hot run, we fail to diversify properly and we time the market mistakenly believing we can generate excess returns when research shows that usually the opposite happens. A good financial advisor can help you avoid making these mistakes. My clients tell me that sensible guidance and having a voice of reason helps keep them on track. Consider if you are making mistakes and whether you need some guidance to achieve your long-term financial goals.

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com 

Being Smart with $$ -- Street Fair Visitors Understand the Benefits of an Hourly Financial Advice Model

Great Needham Town Fair yesterday and good conversations at the Client Priority Financial table.  Visitors understood the benefits of an Hourly, Fee-Based Financial Planning and Advice model.  No commissions.  No automatic, recurring fees.  No poorly-performing, in-house products.  Only your best interests are considered.  And an adviser who has studied or worked in finance for 30 years.  When choosing a financial adviser, always ask what the total fees will be over 5 years.  Ask about any payments or compensation the adviser may receive when choosing an investment for you (such as will he or she win a vacation for selling a certain product.) And ask about the adviser’s background.  Then you will understand the benefit of the hourly model and experience offered by Client Priority Financial.

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com 

Being Smart With $$ -- What Kind of Adviser is Right For You?

The Editor in Chief of Kiplinger’s Personal Finance Magazine was seeking a financial planner.  He dismissed planners who work on commission because some push high-cost products.  So he spoke to three fee-based planners.  The first was an adviser who charges 1% of assets but realized that can add up to thousands of dollars in year-after-year fees.  He spoke to an advisor who charges a large up-front sum and dismissed that idea as too expensive. Then he settled on a third advisor who was just what he was looking for: an Hourly, Fee-Based Financial Planner with no minimum time requirements and who acts as a Fiduciary, only considering what is in his family’s best interests.  The advisor keeps her overhead low and therefore does not need to charge you thousands just to cover expensive office space.  What kind of adviser is best for you? (Kip Mag 05/2018)

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com

Hourly, Fee-Based Financial Planning and Advice.

No Commissions, No Automatic, Recurring Fees.

The Client is Always the Priority.

Being Smart with $$ -- Rent or buy a home? Renting is NOT throwing away money compared to buying.

Rent or buy? When you ask this in public, you are sure to hear someone ask why you would throw away money on rent when you can build equity through ownership.  In fact, one real estate firm has a marketing piece saying that you are throwing away $240,000 over 10 years if you rent for $2,000 per month.  But that completely misses the point that ownership costs money too.  If you buy something for $500,000 (that is similar to what you might rent for $2,000 per month) then you might pay $200,000 over the same 10 years for interest costs that you don’t get back.  Plus, you’ll likely pay $60,000 in real estate taxes that you don’t get back.  This doesn’t even get to the annual cost of maintenance and repairs when you are an owner.  And the recent tax law changes might mean you don’t even get the tax deductions from ownership anymore.  So is renting really throwing away money and owning is not?  Apparently not. The difference may come when or if the value of your home rises and in the long run, it likely will.  But real estate can also fall in value.  Today, real estate research firm CoreLogic said that half of the country’s top 50 markets are overvalued so that may be an ominous sign for future price gains.  Whether you pay cash to buy a home or take out a mortgage or use some combination, the calculation is about the same.  Homeownership can be wonderful but it is not all “win” versus all “loss” for renting, like many people insist on a daily basis.  Ask me about the math if you’re not convinced.

Larry Pike, CFA
www.clientpriority.com