Archive for the 'Uncategorized' category

Property Taxes

Dec 23 2023 Published by dayat under Uncategorized

During the current market many homeowners property value has gone way down. While there property value has dropped significantly there property taxes have stayed the same, or in some cases they have actually increased. Even if property owners pay their mortgage on time every month they are still at risk of losing their home if they fail to pay their property taxes.

mediaimage
Many homeowners have been taken by surprise when the value of their home suddenly seemed to hit freefall. However, it would certainly seem as though there should be one advantage to dropping home prices. Many homeowners assumed that when the value of their homes fell, their property taxes would as well. This has not been the case in many areas though.

In some cases; homeowners have been shocked to discover that not only have their property tax bills not decreased, but they have actually increased. This has been quite a surprise for homeowners as they struggle to understand why they are paying more in taxes on homes that are not worth as much as they were just a year ago.

The reason for this relates to the complex manner in which property taxes are calculated in many areas. One of the biggest problems, especially in Nevada, is the fact that property tax increases were capped during the housing boom. During this time home values skyrocketed rapidly. Today, the values of homes in these same areas are falling; however, the decreases have not actually been enough to compensate for the increases of just a few years ago. Consequently, the values of homes would need to decrease sharply over a short period of time in order for property tax bills to decrease. While declining property values have certainly been a problem, they simply have not decreased enough in many areas to provide any relief from property tax bills.

As the rate of defaulted loans and foreclosures continue to soar in many locations, numerous counties have discovered that the rate of unpaid properties taxes is also on the rise. The metro Detroit area, in particular, is experiencing a record high rate of unpaid property taxes. Detroit is currently considered to be one of the worst housing markets in the United States based on the decline of housing prices and increase of foreclosures. The lack of jobs and weak economy in the greater Detroit area are considered to be the primary factors contributing to the housing crash in the area.

Even if property owners are paying their monthly mortgage payments on time they could still be at risk for losing their properties through foreclosure if they fail to pay their property taxes for three years in a row. In such situations, the county would then take control of the home and auction it off to pay the balance of taxes owed. Counties in the Detroit area are currently struggling to recoup hundreds of millions of dollars in unpaid property taxes. The issue has had significant repercussions on counties in the greater Detroit area.

Property owners who find they are behind on the property taxes can take some steps to stave off foreclosure. The first step is to begin making payments on their taxes. Many homeowners make the mistake of thinking they are doomed if they cannot pay off all of the taxes owed and thus pay nothing at all. Keep in mind that making any payment, even if you cannot pay all of the taxes, is better than paying nothing at all. If you are not able to pay all of the taxes; at least try to pay off your oldest taxes first. Remember that taxes which remain unpaid for three years consecutively place you at risk for foreclosure. Pay off the oldest taxes first to combat this risk.

You might also check with your county to determine whether you may be eligible for an extension for property taxes which are unpaid. In some situations, the county treasurer may be able to grant you an exemption for your taxes if you are able to demonstrate extreme hardship. It is best to do this as early as possible; however, as there are commonly deadlines for the exemption applications.

In addition, check with your mortgage company or bank to find out whether they offer any type of program or loan that can provide you with the money needed to cover your taxes. It is never in the best interest of the bank to have the county take over the property, so they are often willing to work with the homeowner to avoid having this happen. Keep in mind; however, that when you do this will you will be taking on an increased debt burden.

Comments are off for this post

Rising Property Taxes

Jul 23 2023 Published by dayat under Uncategorized

During the current market many homeowners property value has gone way down. While there property value has dropped significantly there property taxes have stayed the same, or in some cases they have actually increased. Even if property owners pay their mortgage on time every month they are still at risk of losing their home if they fail to pay their property taxes.

mediaimage
Many homeowners have been taken by surprise when the value of their home suddenly seemed to hit freefall. However, it would certainly seem as though there should be one advantage to dropping home prices. Many homeowners assumed that when the value of their homes fell, their property taxes would as well. This has not been the case in many areas though.

In some cases; homeowners have been shocked to discover that not only have their property tax bills not decreased, but they have actually increased. This has been quite a surprise for homeowners as they struggle to understand why they are paying more in taxes on homes that are not worth as much as they were just a year ago.

The reason for this relates to the complex manner in which property taxes are calculated in many areas. One of the biggest problems, especially in Nevada, is the fact that property tax increases were capped during the housing boom. During this time home values skyrocketed rapidly. Today, the values of homes in these same areas are falling; however, the decreases have not actually been enough to compensate for the increases of just a few years ago. Consequently, the values of homes would need to decrease sharply over a short period of time in order for property tax bills to decrease. While declining property values have certainly been a problem, they simply have not decreased enough in many areas to provide any relief from property tax bills.

As the rate of defaulted loans and foreclosures continue to soar in many locations, numerous counties have discovered that the rate of unpaid properties taxes is also on the rise. The metro Detroit area, in particular, is experiencing a record high rate of unpaid property taxes. Detroit is currently considered to be one of the worst housing markets in the United States based on the decline of housing prices and increase of foreclosures. The lack of jobs and weak economy in the greater Detroit area are considered to be the primary factors contributing to the housing crash in the area.

Even if property owners are paying their monthly mortgage payments on time they could still be at risk for losing their properties through foreclosure if they fail to pay their property taxes for three years in a row. In such situations, the county would then take control of the home and auction it off to pay the balance of taxes owed. Counties in the Detroit area are currently struggling to recoup hundreds of millions of dollars in unpaid property taxes. The issue has had significant repercussions on counties in the greater Detroit area.

Property owners who find they are behind on the property taxes can take some steps to stave off foreclosure. The first step is to begin making payments on their taxes. Many homeowners make the mistake of thinking they are doomed if they cannot pay off all of the taxes owed and thus pay nothing at all. Keep in mind that making any payment, even if you cannot pay all of the taxes, is better than paying nothing at all. If you are not able to pay all of the taxes; at least try to pay off your oldest taxes first. Remember that taxes which remain unpaid for three years consecutively place you at risk for foreclosure. Pay off the oldest taxes first to combat this risk.

You might also check with your county to determine whether you may be eligible for an extension for property taxes which are unpaid. In some situations, the county treasurer may be able to grant you an exemption for your taxes if you are able to demonstrate extreme hardship. It is best to do this as early as possible; however, as there are commonly deadlines for the exemption applications.

In addition, check with your mortgage company or bank to find out whether they offer any type of program or loan that can provide you with the money needed to cover your taxes. It is never in the best interest of the bank to have the county take over the property, so they are often willing to work with the homeowner to avoid having this happen. Keep in mind; however, that when you do this will you will be taking on an increased debt burden.

Comments are off for this post

Where Does Your Money Go? Taxes

Apr 23 2023 Published by dayat under Uncategorized

Trying to stay within the theme of Budget Stretcher, I thought a series of articles on knowing where your money is going may help some of you understand just how much you pay on certain expenses.

mediaimage
I’ve decided to start this series of articles with information about the amount and type of taxes you pay. I won’t be able to cover all of the types of taxes that are paid by Americans because that would turn this article into a book. I’m just going to list a few of the most common taxes that most of us have to pay.How much do you pay in taxes every year? I can bet many of you don’t have any idea. You may think you can just look at your tax forms for last year and have the answer. I guarantee that would be just the beginning.Just take a look at the below list of various taxes and do the math yourself:Federal Income Taxes – Uncle Sam is currently taking between 15% and 39% of our Adjusted Gross Income to pay for what ever it is that they spend money on in Washington. The main point I want to make here is that many people feel that because they received a refund, they didn’t pay any taxes. For some people, this is true. However, the vast majority of people that receivea refund are just getting back the money they already paid in through withholding, minus the taxes they owed. HOW MUCH DID YOU PAY LAST YEAR?Income Tax Preparation – Yes, I consider the cost of having our taxes prepared by a professional as a tax. If the federal tax code was published in english, maybe more of us could prepare our own taxes.Social Security – 15.3% of your income goes directly to the federal government for social security and medicare and is conveniently deducted from your paycheck. The myth about your employer paying half is just that. If you weren’t required to pay social security, that is another 7.65% that your employer could pay you.Sales Taxes – Unless you live in a state that doesn’t have a state sales tax, this costs you around 6% to 7% of every penny you spend. Wouldn’t it be nice to buy something for $99.95, hand the clerk a $100 bill and get a nickle back.Property Taxes and Real Estate Taxes – These taxes can run intothe thousands of dollars a year. I know, there are some places you aren’t required to pay these taxes either, however, you can bet they get this money in other ways. Before you renters start smiling, remember that your landlord has to pay these taxes. Want to guess where he gets the money?The Other Guys Taxes – What do you mean “The Other Guys Taxes”? He can pay his own. For each item you buy, the manufacturers and distributors have expenses like the cost of production, packaging, shipping, etc. They also have to pay taxes. Who do you think actually winds up paying these expenses? If you buy it, you do. I have seen estimates that between 20% and 25% of the cost of most items is for taxes that they have to pay. To make a profit, all companies must pass all expenses they have along to the consumer.Gas Tax – With federal gasoline taxes over 18 cents per gallon and state gasoline taxes as high as 35 cents per gallon it isn’t hard to see that, with the price of gas currently under a dollar in most places, over half of the cost of your gas could be going for taxes.Self Employment Taxes – This is simply the way a self employed person pays their Social Security and Medicare. They are required to pay 15.3% of their gross income to cover these expenses. These are the people that really know how much taxes they pay. This is because they are required to write a check for them four times a year and, if they underpaid throughout the year, they may have to write another check on April 15th.When you look at your budget and wonder where all of your money is going, you may want to consider what you are paying in taxes. There are taxpayers in this country that are paying over 50% of their income in one tax or another.Here are links to a couple of other articles I’ve written on taxes:I Love That Big Tax Refundhttp://www.homemoneyhelp.com/taxrefund.htmlA 23% Federal Sales Tax!! But Wait!http://www.homemoneyhelp.com/fedsalestax.htmlI’m not trying to make a political statement here. I just believe that everybody should be aware of where their money goes. If you take a few minutes to think about it, I think you

Comments are off for this post

Health Fitness Tips That Help You Stay in Shape

Apr 11 2021 Published by dayat under Uncategorized

In this age of “information overload,” many Americans possess the knowledge to develop and maintain successful financial lives. Through a quick online Google search or by listening to so-called “financial talking heads,” Americans have access to split-second information to answer most any financial question. Yet regardless of easy access to financially sound advice, many are burdened with crippling debt, habitual overspending, and scarce savings. Perhaps the more recent financial ills of Americans may be attributed to the following financial choices made by consumers: (1) The lack of a monthly budget manifests into reactive buying habits instead of proactive spending habits. Put more succinctly, the average consumer might say, “Money just slips through my fingers and I don’t know where it all goes.” (2) Easy money through savvy financial marketing of credit offers facilitates unaffordable buying power. It’s also likely not an accident, that we have all grown accustomed to being referred to as “consumers.” It begs the question: Why are we not referred to as “savers” or “investors?” The very connotation of the term “consumer” assumes that Americans will buy and spend and not restrain and save. Since the main-stream American has easy access to information pertaining to sound financial choices, yet so many have not followed these principles, an apparent disconnect appears to exist between financial knowledge and the application of that knowledge into every-day financial lives. So it would appear that Americans perhaps suffer from a case of too much information and too little financial education. As an example, read about John, an 18-year old who is ready to depart for college.

Like many teenagers, John’s primary financial education has been nearly non-existent in the school classroom. Rather, John’s financial education has been shaped through marketing advertisements from print, online, and television media-which has bombarded him with messages of affording the unaffordable through so-called “easy” financial terms. Our story begins with John on-track to graduate with honors from high school. He is accepted to several colleges but forgoes a full in-state scholarship to attend his out-of-state choice, UNC Chapel Hill. To afford his dream college, John takes out $12,000/year in subsidized student loans. In his eyes, John’s choice was quite simple: He could stay close to home to go to college or attend his dream college at UNC Chapel Hill. Because of easy access to extreme amounts of student loan debt, John’s unaffordable dream is transformed into reality. And because the acquisition of debt is made so easy through student loan programs, the debt is not a major deciding factor in John’s choice. Before John leaves for college, he also buys a new car. The easy financing offer includes 72-month financing and no money down. His Dad cosigns the loan and Dad’s rationale is that he is helping John “establish credit.” In 4 years, John graduates from UNC Chapel Hill and his debt total is $58,000 ($48,000 from student loan debt and $10,000 remaining on car loan). John is keenly aware of his debt load and he also knows that his student loan repayment will begin promptly 6 months after graduation. So needless to say, he looks forward to his first paycheck.

Through his connections at UNC Chapel Hill, John lands a good first job but his excitement is turned to shock when he looks at his first paycheck. He takes the paystub to H.R. and asks, “Who is FICA and what did he do with my money!” Regardless of the hard lesson in taxes, John is excited to have his own money and he wants his apartment to look good. John visits the local furniture store and charges $3,000 to the store credit card-which promises 12 months “same as cash.” John has also grown tired of his “college car” and decides to trade it in for a new one. He learns what it means to be “upside down” when he goes to trade-in his college car but through the liberal financing terms of the dealership, he’s permitted to roll the negative equity of his trade into the new car loan. Whereas many of John’s financial decisions to this point have resulted in debt, John realizes that he needs to save some money as well. So he’s quite happy to learn that his company offers a matching contribution through a 401k plan. John signs-up and feels good that he’s saving money for the future and getting “free money” in the way of a company match.

But 6 months after graduation, the bills come due. John is faced with starting student loan repayments but in order to keep the payments low and afford his auto and credit card payments, John chooses the interest-only option, as advertised by the student loan company. The result of all this debt spending is that in only 4-5 years following high school, John’s financial condition is quite poor. But life seems fine to him-thanks in large part to the promise of easy financing of an unaffordable lifestyle.

Our story continues as John meets Mary, the girl of his dreams. They quickly fall in love and decide to get married. Rings and the honeymoon are bought on credit as the parents pay for the wedding (by taking out a loan on their own 401k plans). John and Mary also find the house of their dreams and are happy to learn that the financial terms of the mortgage company include no down payment. Even the closing costs are rolled into the mortgage-meaning John and Mary won’t even have to write a single check to move into their dream home. With their incomes stretched paper-thin, John and Mary decide to temporarily opt out of their health insurance plans. They plan to restart their health plans when their income increases from expected salary raises. With the accumulation of a mortgage payment, student loan repayments, credit card bills, and car payments, John and Mary begin arguing over their finances. Unable to afford all their minimum payments, John cashes-out his 401k but he elects not to have any taxes withheld upon withdrawal (401k withdrawals are subject to taxes and a 10% IRS penalty). When he files his tax return, he doesn’t have the money to pay the taxes and penalties. And to top it all off, Mary has news for him. She’s pregnant.

After reading John and Mary’s financial plight, this story may sound quite familiar as many stories have been written of homeowners who have been foreclosed or been forced into bankruptcy. And these occurrences were magnified during the Great Recession. The overuse of easy financing facilitates an unaffordable standard of living. And this “house of cards” easily crumbles through financial emergencies such as job loss. As mentioned earlier, it would appear that a lack of financial education, not financial knowledge is at least partly to blame for financial challenges faced by our young couple, John and Mary.

With the apparent need for financial education in our country, a man by the name of Dave Ramsey has heeded the call through his solution, known as Financial Peace University (FPU). FPU consists of a 13-week class taught through churches and community centers across the country. And the most important elements of the FPU class focuses on Dave Ramsey’s 7 baby steps. The following is a brief summary of the 7 baby steps taught through Dave Ramsey’s FPU class. But this summary is no substitute for attending FPU, which is highly encouraged.

Baby step 1 recommends a $1,000 savings for an emergency fund. This first baby step is the most important in my view. It represents a “line drawn in the sand.” It is a conscience decision to recognize that financial emergencies will occur again. Yet, with a $1,000 saved for emergencies, the emergencies perhaps won’t seem as pressing. Perhaps even more important, Dave Ramsey encourages the development of a preliminary, first-time budget. And he recognizes that the first-time budget is likely to fail. But through trial and error, he emphatically addresses the need to create a budget in order to faithfully plan how to spend and account for every dollar before pay-day arrives. Through diligent trial and error, Dave will encourage you to review the budget every month, especially between married couples. This type of systematic planning may eliminate many arguments over money-because both partners must first agree on the budget each and every month.

Baby step 2 recommends debt pay off using the “debt snowball.” This baby step constitutes several commitments. As the old saying goes, “If you find yourself in a hole, stop digging.” Regarding credit card debt, consider for a moment that your plastic credit cards symbolize the spade on the end of a shovel. Every time you use credit cards, that shovel digs a deeper financial hole. The solution is simple, but many resist this solution. Dave recommends that you cut up your credit cards. That’s how you “throw away the shovel” and stop the madness of digging a deeper financial hole. Dave believes that until you’ve made this commitment, your steps to financial peace will be made in vain. I agree that this concept may seem radical to some, and also, some “talking heads” are adamantly opposed to eliminating the use of credit cards. But it’s hard to argue with the sound financial principle that if you can’t afford something, you shouldn’t buy it. Eliminating credit cards and so-called “easy credit” offers from your financial life also eliminates the tool that facilitates an unaffordable lifestyle. Once you have cut-up credit cards, Dave then encourages you to begin your “debt snowball.” The debt snowball concept recommends that you pay off the lowest balance first. And once you have eliminated one debt, apply that payment to the next debt in order to pay it off more quickly. Through his FPU class, Dave claims that the average family eliminates $5,300 in debt while building $2,700 in savings (Source: Dave Ramsey’s Financial Peace University class). At the successful completion of the debt snowball (all non-mortgage debt paid off), Dave Ramsey encourages the use of an envelope system for your daily spending. So if you follow his teaching, your everyday spending should consist of: cash, automatic payments (for monthly bills) debited from your checking account, and lastly, a debit card.

Baby step 3 recommends saving 3-6 months of expenses. The age-old advice of saving 3-6 months of income is not a new concept. But rather than just state the obvious and leave it at that, Dave continually encourages the use of a budget in order to systematically accomplish any and all goals, including step-by-step savings to fully fund baby step 3. Regarding the 3 to 6 month question, I believe a good rule of thumb is to review the security of your employment to determine how much should constitute your emergency savings. A government job, for example, is generally more secure than a private sector job. For example, with a married couple, if the husband is a school teacher and the wife works for a technology firm, I would encourage them to split the difference and work to save the equivalent of 4 months of household expenses.

Baby step 4 recommends investing 15% of income into Roth IRAs and Pre-Tax Retirement Plans. This is where investing with a financial professional may be most advantageous. For some financial advisors, being assigned the #4 priority through Dave’s FPU class might not sit well. But it makes good sense. I’ve learned that long-term investment accounts such as 401ks and IRAs are raided when clients fail to save sufficiently for emergencies. But if baby steps 1-3 were fully implemented, then long-term investing using retirement accounts might better serve its purpose. I won’t spend time in this article detailing why Dave Ramsey encourages Roth IRA and Pre-Tax retirement plan investing, but I fully agree with this point and I’ve advised clients on this type of investing for my entire career. So rest assured that the benefits of retirement account investing affords tax advantages that may be financially beneficial to the investor.

Baby step 5 focuses on college funding. It’s quite important that college funding by parents/grandparents is ranked below other vital financial priorities. But it goes against the grain when compared to the media messages that are conveyed. Even colleges have a formula which dictates to parents how much they are “expected” to contribute to their children’s college education. So according to Dave, college funding may commence only upon successfully completing baby steps 1-4, and no sooner. On that note, there are several different investment account types designed for college funding, including the Coverdell Educational Savings Account (ESA), Uniform Transfer to Minors Act (UTMA), and 529 College Savings Plans. Each account type has advantages and disadvantages and prior to opening any of these type of accounts, a conversation with your Financial Advisor and CPA is warranted.

Baby step 6 recommends paying off your home early. With baby steps 1-5 fully implemented, it’s time to increase payments and pay off your home early. Also, if you find yourself in a 30-year loan, consider refinancing to a 15-year loan. With lower interest rates, you might be surprised to learn that the payments are not that much more expensive. And the interest savings for a 15-year loan vs. a 30-year loan can be substantial.

Baby step 7 states to build wealth and give. Wouldn’t it be rewarding to give more money to your favorite charities? Perhaps you have a loved one that was saved by the caring hands of a medical provider and you would like to offer your financial support for future families. Personally, my family will be forever indebted to the folks at the NICU at Northside Hospital in Atlanta for the love and care they provided to my daughter, who was born prematurely. Most every one of us has a similar story or passion. But there are simple needs as well. Do you enjoy the service of a long-time waitress from your favorite coffee spot-like the Waffle House? Imagine dropping a $100 tip to that sweet waitress who always warms your cup without asking. It would be worth the $100 tip just to see her surprise. Although we can give regardless of our financial position, it takes wealth in order to make generous and life-changing gifts to churches, hospitals, and other charities. But once you progress past baby step 6, your finances should permit you to “live like no one else, so that you can give like no one else” (Quote by Dave Ramsey through Financial Peace University class videos).

It is my hope that this summary of Dave Ramsey’s 7 baby steps will lead the reader to s

Comments are off for this post

The Secrets to Finding a Financial Advisor

Feb 11 2021 Published by dayat under Uncategorized

1. How often do they meet with their clients?

It is important to know how often your financial advisor expects to meet with you. As your personal situation changes you want to ensure that they are willing to meet frequently enough to be able to update your investment portfolio in response to those changes. Advisors will meet with their clients at varying frequencies. If you are planning to meet with your advisor once a year and something were to come up that you thought was important to discuss with them; would they make themselves available to meet with you? You want your advisor to always be working with current information and have full knowledge of your situation at any given time. If your situation does change then it is important to communicate this with your financial advisor.

2. Ask if you can see a sample of a financial plan that they have previously prepared for a client.

It is important that you are comfortable with the information that your advisor will provide to you, and that it is furnished in a comprehensive and usable manner. They may not have a sample available, but they would be able to access one that they had fashioned previously for a client, and be able to share it with you by removing all of the client specific information prior to you viewing it. This will help you to understand how they work to help their clients to reach their goals. It will also allow you to see how they track and measure their results, and determine if those results are in line with clients’ goals. Also, if they can demonstrate how they help with the planning process, it will let you know that they actually do financial “planning”, and not just investing.

3. Ask how the advisor is compensated and how that translates into any costs for you.

There are only a few different ways for advisors to be compensated. The first and most common method is for an advisor to receive a commission in return for their services. A second, newer form of compensation has advisors being paid a fee on a percentage of the client’s total assets under management. This fee is charged to the client on an annual basis and is usually somewhere between 1% and 2.5%. This is also more common on some of the stock portfolios that are discretionarily managed. Some advisors believe that this will become the standard for compensation in the future. Most financial institutions offer the same amount of compensation, but there are cases in which some companies will compensate more than others, introducing a possible conflict of interest. It is important to understand how your financial advisor is compensated, so that you will be aware of any suggestions that they make, which may be in their best interests instead of your own. It is also very important for them to know how to speak freely with you about how they are being compensated. The third method of compensation is for an advisor to be paid up front on the investment purchases. This is typically calculated on a percentage basis as well, but is usually a higher percentage, approximately 3% to 5% as a onetime fee. The final method of compensation is a mix of any of the above. Depending on the advisor they may be transitioning between different structures or they may alter the structures depending on your situation. If you have some shorter term money that is being invested, then the commission from the fund company on that purchase will not be the best way to invest that money. They may choose to invest it with the front end fee to prevent a higher cost to you. In any case, you will want to be aware, before entering into this relationship, if and how, any of the above methods will translate into costs for you. For example, will there be a cost for transferring your assets from another advisor? Most advisors will cover the costs incurred during the transfer.

4. Does your advisor have a Certified Financial Planner Designation?

The certified financial planner (CFP) designation is well recognized across Canada. It affirms that your financial planner has taken the complex course on financial planning. More importantly, it ensures that they have been able to demonstrate through success on a test, encompassing a variety of areas, that they understand financial planning, and can apply this knowledge to many different applications. These areas include many aspects of investing, retirement planning, insurance and tax. It shows that your advisor has a broader and higher level of understanding than the average financial advisor.

5. What designations do they have that relate to your situation?

A Certified Financial Planner (CFP) should spend the time to look at your whole situation and help with planning for the future, and for achieving your financial goals.

A Certified Financial Analyst (CFA) typically has more focus on stock picking. They are usually more focused on selecting the investments that go into your portfolio and looking at the analytical side of those investments. They are a better fit if you are looking for someone to recommend certain stocks that they feel are hot. A CFA will usually have less frequent meetings and be more likely to pick up the phone and make a call to recommend purchasing or selling a specific stock.

A Certified Life Underwriter (CLU) has more insurance knowledge and will usually provide more insurance solutions to help you in reaching your goals. They are very good at providing techniques to preserve an estate and passing assets on to beneficiaries. A CLU will generally meet with their clients once a year to review their insurance picture. They will be less involved with investment planning.
All of these designations are well recognized across Canada and each one brings a unique focus on your situation. Your financial needs and the type of relationship you wish to have with your advisor, will help you to determine the necessary credentials for your advisor.

6. Have they done any extra courses and for what reasons?

Ask your prospective advisor why they have done their extra courses and how that pertains to your personal situation. If an advisor has taken a course with a financial focus, that also deals with seniors, you should ask why they have taken this course. What benefits did they achieve? It is fairly easy to take a number of courses and get several new designations. But it is really interesting when you ask the advisor why they took a certain course, and how they perceive that it will add to the services offered to their clients.

7. Who will be meeting with you?

In future meetings will you be meeting with the financial advisor, or with their assistant? It is your personal preference whether or not you wish to meet with someone other than the financial advisor. But, if you want that personal attention and expertise, and you want to work with only one individual, then it is good to know who that person will be, today and in the future.

8. Are you the ideal client for the advisor?

Are your financial needs similar to many of their clients? What can they show you that indicates a specialization in your area and that they have other clients in your situation? Has the advisor created any marketing pieces that are client friendly for those clients in your situation, over and above what they offer other clients? Do they really understand your situation? Once you have explained your personal needs and the type of client you are, it should be easy to determine if you are an ideal client for the services they provide.

9. How many clients do they work with?

It is important to know how many clients your prospective advisor works with. Are you one of 100 clients or one of 1000? Based on your assets are you in the top 15%, or the bottom 15% of their clients? These are important things to know. Ask if you are one of their top clients or one of their bottom clients, if will you receive more attention or less attention?

10. Do they have a network of professionals that they trust and can refer you to when you have a need?

It is valuable for an advisor to have a strong network of professional individuals available to their clients, in which they have full trust. Your advisor should know and trust these individuals completely, so that if an issue arises with them, your advisor will be able to go to bat for you.

11. Ask the financial advisor for a list of clients that you can contact.

Are there any clients that have given testimonials and who would be willing to speak to you about the advisor and the services provided? Ask these individuals how they enjoy working with the advisor and their staff. Ask some of the questions that you have asked the advisor, such as, Who do they meet with when they have their meetings, the advisor or an assistant?

12. How does the financial advisor contribute to the community?

Whether or not this is important to you, it is a good question to ask. You will discover if the advisor has given back to the community and if they are doing things over and above the day-to-day job to give back and help others.

13. How do they feel they will best help you and support you in achieving your goals?

This may be a question that you want to ask the advisor in a second meeting, if you have a two meeting process. Ask: How can they bring value to the relationship? What do they feel they can help you with? What will they do to ensure that you achieve your goals?

14. Do they have any tools that they have developed specifically for their clients?

I have touched on this earlier as well. This is really where you can see if a financial advisor is pro-active and if they specialize in a specific area or a specific type of client. An advisor who is pro-active should be creating some tools or have some processes in place to support their clients in their target market. Some of the tools will be used behind the scenes, but should be able to be explained to you, and provided to you during your relationship, to help you achieve your goals and keep you on track.

15. Do they prefer to meet at their office or are they willing to come to your house and why?

It is a great idea to go to the advisor’s office to meet with them initially if you are able to do so. This will allow you to see their office and their working environment; and, it will give you a sense of what type of an advisor they are, and the clients, with which they work. In the same respect, if you do not live close to their office, you should question if they are willing to come to meet with you at your home. If not, you will want to understand why they want to meet only in their office. Likely, they believe that they can provide the best possible service where all of their paperwork and resources are readily available, despite which questions might arise. They may prefer to come to your home once to see your environs and to get a better understanding and feel for the type of client you are. But, if you are unable to get out to meet with them, or if your situation in this regard changes in the future, you will want to know how this will be managed.

16. Do they do financial planning, and if so, do they charge for it?

If you are looking for somebody who is going to look at your overall situation, and who is going to spend the time to help you plan how to meet your goals, you will want an advisor who is proficient at financial planning. If you are looking for a broker whom you simply want to be able to phone to have them place a trade for you, then you will not need financial planning. Understanding whether financial planning is provided is a key component. Be very careful that you are actually getting financial planning when you ask an advisor if they do financial planning. Also, you must understand whether or not there are any fees associated with the planning service. Some advisors may charge an additional fee for the planning on top of everything else that they do, while others will provide you with an actual financial plan at no additional cost.

17. Do they look at the whole picture or only one area?

It is important to know if the prospective advisor has a particular focus. Are they proficient with investments, insurance, financial planning, retirement planning, taxes, and estates? Will this one person be able to take over all of these areas for you? Will you be able to establish a relationship with one solid individual who understands all aspects of your financial situation? Or will they only help you with your investments and have someone else do your taxes, your insurance, your estate planning and retirement planning? Will you need to go out and find the others who do that? It is important to understand if the advisor can look at the whole picture or only one or two areas. You will be able to achieve your goals more quickly if an advisor can service your entire financial portfolio, because each of those areas mentioned, needs to understand and complement the others, while not undermining them, which may occur if various individuals are working on different aspects of your financial plan.

Things to think about during the process

Is it convenient to meet with the advisor? Are they able to meet with you at a time of your liking, or did you have to go out of your way to set up the initial meeting? Are you comfortable with them and their staff? Do you get a good feeling from what they do and what they say to you? Do you sense that they have your best interests in mind? Is their office setting efficient and comfortable?

Interview a number of different advisors before you make a change. This will help you to understand what each one does differently, and it will give you a good idea as to how they will help you to determine exactly what your goals might be. You might even come to realize that your present situation is the best for you at the moment. Talking to several potential advisors will help you to develop a path toward the achievement of the goals that are most important to you, and help you to understand who is best to

Comments are off for this post