Complete financial coverage for seniors

A good enterprise job used to be the key to a comfortable retirement. But as many people learned how hard that is true.

Organizations need not available to get rid of an employee who could be close to retirement.

Furthermore, for corporate pension schemes are financial in stocks and bonds worth often not the paper they are written, instead of relatively secure retirement savings that characterizes pension investments in the past.

Any business task has lost the cache, it had a fois.Si a company cannot provide an employee with employment and retirement security, they have little incentive to paste.

And jobs can be extremely stressful and difficult, trop.Un seller has approximately 90 days produce spectacular results, or they are toast in the business world.

And it's a dog eat dog world where lies and insinuations are standard, more than the exception.Your boss has been pretty ethical move forward in this world and you can expect that it will be bad, too.

My work ended rather abruptly company one day when my boss ordered point me blank to lie to my clients and my employees.

Did you know that the Supreme Court ruled recently that is lying to make a sale?He says everything about how we can trust that large corporations say to us.

But for senior workers, this kind of business environment is particularly dangereux.Même if you have retired, it may be unnecessary when you need to collect if you are lucky enough to keep your job.

And it is difficult for a person of more than 40 find jobs at all, much less one that should pay the Bills.

And youth employment prospects are pretty dismal, too.

But there is a way to make you more secure self and have a pension, too, and it does not work for a company without soul.

I've built a number of companies since I left corporate life as my wife has.We have some control on our own income, we don't commute to an Office, and we have developed many new skills.

These new skills is the best we can as we head for the pension insurance .j ' reluctant to reflect on what would be past us if we had not developed these new skills.

We do not have to worry about keeping our jobs .d ' one hand, there are many jobs that can help us to feel more in sécurité.Si failure have others to fill the gaps.

Nobody can trigger we as we get close to retirement just so that they can pump their my employer stock.Et price (me) don't steal my retirement or to allow an investment company to steal it.

But above all that we can run our business in the manner that we believe is ethically correct .it's is a good thing for our security and our bank account.

Self-employed is not easy, but it is more secure to many ways that work for someone else.

Paula and Ron Stone are the vie.Ils specialists have particular agency specializing in the final cost insurance or various entreprises.Pour funeral insurance insurance more information on their websites, final expenses insurance and funeral insurance

Make your account retirement Last - three steps to insure retirement security

Ten to fifteen years have been financially very good for most of us. With a little effort and a lot of tail wind market, our retirement accounts have increased at an incredible pace. With annual inventory returns as high as 20% or more, most of us who have private retirement investment accounts (savings, IRA, etc) have been feeling pretty good. In most areas of real estate U.S. values spiraled upwards and upwards. The combination makes good number of us owned houses and stock/bond paper millionaire investments. Then along comes 2008. Our values holding gross investment decreased by 35-40% and our position once fat equity in property passed quickly. Your retirement account no longer look so secure.

Here are three suggestions for making your nest egg last as long as you do so.

1 Take a legacy look at your present cash flow

It is best to do this on a monthly basis, as most of the expenditure and revenue are easily calculated on this basis. A financial software package is an excellent tool to help you to structure this part.

List your monthly income cash in detail by source, i.e. social security pensions, income from rental, etc. You can already be drawing a monthly fixed amount of your retirement accounts. If you're not, here is the place to decide what happens this amount and enter it as income. A word of warning here: be sure that you understand the rules regarding the IRA withdrawals and savings type retirement accounts.You can visit the Web of IRS for a prudent review.There, you'll find information about the rate required by IRS .the minimum withdrawal is you decide the maximum you want to remove.Most experts recommend that limit you the maximum annual amount of more than 4% of the outstanding balance. This is a good starting point. Use the greater of the two numbers at the moment, you can refine it later.

Then list your monthly expenses of trésorerie.Incluez everything you purchase as well as all réguliers.Cela payments will take some thought; it is easy to forget the little things like a casual meal or film, repairs of car, etc.Include some "unforeseen" as subscription, co-pays and other medical items drug expenses. At this point, it is probably easiest to expenditure which does not occur all months on average. If you do not include insurance or taxes in your monthly mortgage costs, make sure that they are included here.

If you use a financial software package, you can enter the above data in budgeting program part, and you now have a preliminary view of your monthly cash flow.

2. Develop a realistic cash flow budget monthly

If the preliminary budget than you came with prior step given a positive cash flow, you start from a good place.Go over your budget once, spending more accurate raffinage.Être, monthly cash detailing monthly expenditure than you average in step 1. You can create in a "canceled" account to earn cash for extraordinary items as other expenditure and auto repairs large which do not occur every month. Emergencies will occur always to less practical time, provide for them in your budgeting process.

3 Act now for transactions with negative cash flow

Review your monthly budget; research spending you can reduce or eliminate.Can you reduce large cable TV Bill by switching to the basic service, or remove that membership in the local gym?Perhaps shopping discount from Macy stores, etc. in unpleasant that it can be, you'll need to eliminate or reduce certain expenditure, including invoices which are not paid immediately.You will be surprised by the lenders how flexible can be if they know you have a good faith effort to pay, so get on the phone and negotiate a payment plan that you can live with.

If you have reduced the discretionary spending of the OS and always have a negative cash flow, you need to watch of revenu.Si difference is small, perhaps a slight increase in the amount of your retirement account withdrawal is in order.Especially if you think that the problem is in the short term (less than 3-5years).Be very careful here; more than 10% throughput is very likely to deplete your account retirement in 7 to 10 years.If you are not in a position to do this, it is time that you look more painful alternatives.

Perhaps a part-time job would be to make the difference.If you have a real estate or other tangible property, perhaps now is the time to think about selling.Consider "effective" in a cheaper House, or same rental during a certain temps.Le market is now depressed, but there are still buyers there .the price of this little house or condo has undergone the same decrease value yours a.Une "reverse mortgage" would perhaps good for vous.Toutefois I would not recommend that prior to obtaining professional advice.

If you can't work, to find a good CPA, award-winning firm financière.Ils planning services can give you a well rounded view of your options.Il is probably too late for a conventional financial planner help, in particular the planners "free" heavy rely on you sell something to earn a living, and the last thing you need now is to buy something again.

At about of the author: Burt Widener writes widely on issues relating to the website retraite.Son http://www.allthingsretired.com offers a range of articles and other resources from retirees find answers to common questions about the site retraite.Le is updated frequently to keep updated the contenu.Vous can contact Burt at: webmaster@allthingsretired.com.

Financial planning does not end the retirement

Financial planning is as relevant prior to and during retirement. Some aspects of financial planning may be modulated by the context of retirement however. This continuous need planning arises from the need to plan for 30 years of retirement. I've seen people comment that they either don't want or would not live as long. Unless you know your departure time, you must plan for thirty years. The uncertainty is what makes the necessary planning and difficult. It would have been easier to plan if we knew exactly how long the period of retirement would be. Even if you cannot properly plan, there may be some damage control that you can implement in retirement.

The first step for a financially secure retirement is to ensure that you have adequate health coverage. The need for health and critical illness coverage is particularly acute during retirement. Unfortunately, many medical plans provide coverage until a specific age. This age would generally around seventy, based on the fact that above of this age, the risk of disease would be much higher. Since it is logical to have coverage when you most need, a plan that provides coverage of life would be ideal. Fortunately, some insurers offer these plans. Another thing incredible on some of these plans is that they are affordable. I know a medical plan that offers a premium level of life.With a coverage in this area in particular, would help you maximize your savings by reducing the risks of liquidité.Cela facilitate investment in the high-back savings vehicles.

Your life insurance plan should be reviewed to retirement. Although some retirees may still have financial dependencies, a majority would need less. Life in this period would be instrumental in estate planning. In some cases, life does provide nor any significant income protection.Plans universal and whole life insurance are most appropriate successorale.La planning better idea isn't necessarily to deliver your life plans, once the role of income protection became redundant. You must make sure that your beneficiaries do not face additional charges with the estate taxes and legal fees created by internship.

Economies remain very critical during your retirement. Especially if you were not sufficiently diligent before retirement, you'll find that you need to continue saving considerably during your retirement. Some retirees have yet to find a job in this period. A high percentage of retirees receive lump sum retirement. You generally not spend more than 5% of the lump sum during the first year. If you really need to make these renovations, leave the scope of the renovation that inspiration. Always distinguish between needs and desires correctly.Also, try to avoid any investment in the portfolio remains essential to life stage thus conservateur.Diversification savings plan it. This is a myth that retirees must be ultra-conservative when you invest. Savings vehicles same conservator should provide competitive interest rates.

Life is happy and known achievement.Retirement should be a period where retirees enjoy more freedom and control in your life.They should ensure that they are involved in the family and community.Retirees should have learned enough over the years continued positive.Il contribution is would tonic to make interesting step a retirement positive.La contribution is not all about finances.Toutefois, taking care of finances permanently prevent additional concern and stress.retraités deserve do step to worry about losing their life savings.

Darrell Victor is a financial services sales professional who specializes in planning for retirement and benefits group.
Contact: darrell_victor_service@hotmail.com

Personal financial planning - planning for retirement

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Advances in medical science have resulted in people living longer. This increase in life expectancy makes retirement planning even more crucial.Furthermore, with better affluence, there is also an increase in demand for a better lifestyle during retirement.

The objective of retirement planning varied depending on circumstances, and normally includes:

-Maintaining a self sufficient pre-retirement standard of living
-Coping with increasing health care cost
-Protection of property and against personal liability
-Providing for dependents
-Estate planning

The process for retirement planning:

Step 1: Overcome Obstacles
Step 2: Determine Goals
Step 3: Measurement
Step 4: Reference Point
Step 5: Overall Plan

Overcoming The Road Blocks

There is only a limited period of accumulation and a continuous period of consumption.The first step is to overcome the many obstacles hindering retirement planning.These include spending beyond means, unprepared for unexpected expenses (like repairs), inadequate insurance (like property loss, medical bills), tapping into retirement funds for other purposes (like upgrading house, holidays), etc.

(1) Aim to save at least 10% of income and gradually increase it to 20% when it is nearer to retirement.This accumulates towards retirement funds and helps to accustom to a retirement lifestyle within the financial means.

(2) Establish an emergency fund of at least 6 months of income that is separate from the retirement plan fund.The will be used for risk retention, covering for unexpected expenses without drawing on the retirement funds.

(3) Have sufficient insurance.A major crisis will be a huge drain on all of the savings, it is best to transfer this risk by being adequately covered.

(4) Saving for other specific purposes should be saved for separately.It will derail the retirement plans due to the shortfall.

Determine Retirement Goals

Depending on the circumstances, the goals will vary from individual to individual.Some common areas to consider:

(1) Lifestyle.
-Housing: Sami house, mortgage ˜getting, upgrade, downgrade, migrate.
-Leisure: Pursuit of hobbies like golf, yoga, charity or religious activities.
-Travel: Overseas holidays, car ownership.

(2) The age of retirement.
-The last day to have to work or the last day to want to work.
-Early retirement due to from corporate, health, care giving concerns, etc.

(3) Health.
-Coping with increasing health care cost.
-Health screening.
-Dental care.

(4) Estate planning.
-Passing on the wealth eventually.

(5) Caring for dependents.
-Physical gold medical care for elderly parents.
-Providing for children not yet independent gold siblings requiring aid.

Measuring The Finance Required

From the above goals, the required amount needs to be quantified.

(1) Lifestyle and dependent expenses.An estimate is about 60% of pre-retirement income.
(2) Project the retirement age.The statutory retirement age is 62 years old.
(3) Health expenses.Total up the amount of insurance premiums and health screening cost.

In addition, some assumptions need to be made:

(1) Inflation rate.The average historical inflation rate in Singapore is about 1.5%.
(2) Investment returns.Depending on the choice of investment, this varied significantly.
(3) Life expectancy.A reference will be the natural death ages of great-grandparents, grandparents or parents. The average age is 78 for males and 82 for females, and this average is increasing.

Reference Point

The current position needs to be analyzed so as to determine the strategies to achieve the goals.

(1) Current age.Number of years to accumulate funds before retirement.
(2) Current health.Deteriorating health will be more of an immediate concern.
(3) Financial position.Amount of savings, assets, liabilities, income, current expenses.
(4) Existing plans.CPF, SRS, insurance and investments already in place.

Overall Plan

Depending on which stage on the retirement plan, the approach to arrête will be different.

(1) Accumulation Period
The period when one starts to save for retirement until about 10 years prior to retirement.The focus will be on the shortfall of funds required for retirement form the current reference point.The strategy will be hand on saving to invest.Investment will be covered in a later topic.

(2) Transition Period
The period about 10 years just prior to retirement.As retirement draws nearer, the goals become clearer.It is important to review if the desired lifestyle can be achieved with the funds or if more savings is required.The earlier will also need to be repositioned into less risky investments gradually accumulated funds.

(3) Retirement Period
This continuous throughout since retirement.The funds will be used to generate current income.Some considerations during this period:
-Purchase of tenements (CPF Life)
To provide a guaranteed income for life.Recommended to purchase to cover for the minimum monthly living expenses required.
-Maximize use of property
Reverse mortgage, downgrading, renting out spare rooms can be considered for additional income.
-Work
To perhaps work on a part time basis, as a consultant or run a business.

As with all plans, it will need to be continuously reviewed when personal circumstances change (like a newborn or divorce), external market conditions affecting investments, or introduction of new policies (like Exchange of statutory retirement age or CPF rules).

Use of the Present Value and Future Value calculations covered earlier will need to be used to give a better estimate of the amount needed.A simple example:

John Doe in good health, age 40, intends to withdraw at age 60, current income is $ 60,000 annually.

Package: Projected expenses at retirement is 60% of pre-retirement income, income will increase 3% annually, is 2% inflation, investment returns is 7%, life span will be till age 80, will carry on to stay at current residence.CPF contributions mainly used for housing and repayment of loan and has not started any retirement plans.

PV = 60,000, 1/Y = 3%, N = 60 / 40 = 20; FV = 108,367.
Therefore, pre-retirement income needed per year = 60% of FV = $ 65,020

PMT = 65,020, 1/Y = 7%-2% = 5%, N = 80-60 = 20; PV = $ 810,293
Total retirement fund needed at point of retirement = $ 810,293

FV = 810,293, 1/Y = 7%, N = 60 / 40 = 20; PMT = 19,765
Amount needed to save per year is $ 19,765 Gold $ 1,647 per month.

Aaron Lau is an independent financial adviser in Singapore.He shares his awareness of good personal financial planning in areas of:
1. Financial Goals
2 Risk Management
3 Insurance
4 Retirement Planning
5 Tax Planning
6 Estate Planning
7 Investment
8 Reviewing
Visit http://anifaview.blogspot.com/2010/02/personal-financial-planning.html

He also shares insights into how to improve your physical and financial health and wealth.
Visit http://anifaview.blogspot.com/ to find out more and receive my free ebook "A Practical Guide To Financial Success" at no. loads.

Financial planning lessons

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My financial planning knowledge comes from 30 years of budgeting, tax planning and investment experience starting out poor and working my way up to my current financial status. I could not have accomplished what I accomplished without the financial planning lessons that I learned through experience.

I have worked in business for over 30 years and have been active in the investment arena for over 28 years. I mainly want to tell my story of how I executed my financial plan with hopes that you can gain some insight into what it takes to build a successful financial plan.

Retirement Planning is a Critical Piece of Your Financial Plan

One of the things we are all taught is to work and put away for retirement and in this financial planning lesson I have to tell you I truly believe that is a worthy and necessary goal because none of us wants to work for the rest of our life.

Your 401K May be Your Largest Income Producer in Retirement

If you are in the workforce and your company has a 401K plan your first step is to get involved with that plan and contribute as much as you can afford to contribute. This will have a tremendous impact on your finances. Most plans have a matching component up to a certain percentage and I urge you to contribute up to that percentage if at all possible. Otherwise you are missing out on free money. There are many plans that contribute 50% on the dollar up to 6% of your annual salary. Imagine you put in $500.00 the company puts in $250.00 plus you earn interest on the money, it's hard to find that kind of return on your money anywhere else.

The 401k is a form of investing for your retirement. Usually companies set up the 401K plan and allow employees to contribute up to 15% of their salary. You can choose to have the money taken from your check before taxes or after taxes. Investing the money before taxes helps you because you get the full benefit of your money before the IRS taxes you. The company will usually match what you put in up to 6% at .50 on the dollar.

You put in $500 the company will give you $250. That's an amazing return on your money, better than most investments and better than most pension plans. Investing your money this way is great because money that you would normally be paying to the IRS is sitting in your account earning interest.

I know it can be tough when you are first starting out but if you just invest 3% to start it's better than investing nothing and as you get pay increases you can put a part of the increase into the 401K plan until you reach 15%.

If you are earning $500 a week and are in the 28% tax bracket and you don't invest in the plan you will pay $140.00 in taxes. However, if you invest 3% ($15.00) of that $500.00 in a 401K plan you would only pay $135.80. Therefore, your 3% investment is only costing you $10.80 but you are investing $15.00. In effect the IRS is paying $4.20 on your behalf and on top of that the company is going to give you $7.50. Ok so you invested in effect $10.80 and now you have $23.00 that's 108% return on your money. I don't know about you but I don't know a lot of places where you can get this kind of a return on your money. If you do this right and leave the money in the plan and let it grow you shouldn't have to pay back the tax money because when you retire you should be in a lower tax bracket. Also you will earn interest on all your money.

In effect you are only spending 2.04% to invest in yourself. The truth is you can't afford not to invest in your future. The beauty of the plan is your money earns interest tax free causing it to grow faster than most other investments. You would have to pay capital gains tax each year on most other investments thus reducing your overall return.

The return that you get in this type of investment is phenomenal because of the compounding of the interest and the fact that you don't have to pay capital gains tax on it until you retire. The rule of thumb you can use to figure out when your money will double is called the rule of 72. To figure out when your money will double you start with 72 and divide it by the interest rate that you are earning. For example if you invest $5000 and you are earning 10% interest the formula would be; 72/10=7.2 years. In 7.2 years you would have $10,000.

You need to understand that this is truly a retirement plan and as such your money is tied up until retirement with the exception of a few special circumstances such as to pay for education, your primary home, or a hardship such as a serious illness (check with your tax preparer).

If you withdraw money before you are 59 1/2 you will have to pay a 10% penalty as well as normal taxes on the withdrawal. I strongly urge you to do everything you can to avoid a withdrawal because you give back most of the benefit you gained from investing in the 401K.

Some plans will allow you to take out a loan against your funds in the plan but there are rules that have to be followed. The loan generally has to be paid back within five years and if you leave the company you could potentially have to pay the money back in as little as 60 days. Again I urge you to use this type of loan as a last resort because your earnings in the fund are much greater than the interest you will be paying yourself when you pay it back.

I personally like the 401K better than a pension plan because I think you have more input than you do in a pension plan. Some pension plans don't require you to make a contribution so on the surface they may seem better because you aren't contributing but you really need to look at the long term return. However, usually when you don't have to make a contribution to a pension plan it simply means your income is reduced by this amount so in the long run the contribution amount is about the same in both plans. Again in my opinion you have more of a choice in a 401k than you do in a pension plan.

An IRA is a Great Substitute for A 40K If You Don't Have Access to a 401K

There is also IRAs that allow you to contribute tax free dollars and the government will allow a tax deduction if you meet certain criteria (see your tax professional for details). The IRA helps you because it allows you to receive payments for the rest of your life if you choose that option.

What is an Individual Retirement Account

An IRA provides you the ability to invest either tax free or tax deferred. There are many different types of accounts but the most common are the traditional and the Roth. The type of individual retirement account you choose depends largely on your investment goals.

Traditional Individual Retirement Account

The traditional individual retirement account allows you to invest tax deferred up to $4000 per year or $5,000 if you are over 50. The amount that you invest is deducted from your taxable income ultimately reducing your tax liability. When the money is withdrawn it is subject to normal taxes and a 10% penalty if withdrawn prior to age 59 1/2. The 10% penalty is waived if the money is used to purchase a house or for approved educational expenses, but you will have to pay normal taxes. The individual retirement account is a great investment tool and provides great flexibility for important expenses. I think the individual retirement account is a great tool for someone who doesn't have access to a 401K investment account.

The Roth Individual Retirement Account

Roth individual retirement accounts were created in 1997 primarily to help the middle class. The Roth is not tax deductible but the funds can be withdrawn without tax liability or penalty except for the interest earned. After five years all contributions including interest can be withdrawn without tax or penalty. You also get the same benefit for a home purchase and education as a traditional individual retirement account.

If you are single you can invest as much as you like in a Roth account if your earnings don't exceed $95,000 for the year. There are stricter limits on the amount you can contribute once you earn a $110,000 as a single filer. The limits for married couples filing jointly starts at $150,000 and gets stricter at $160,000 (see your tax preparer for complete details).

If you qualify for a Roth individual retirement account it has some very attractive features such as the higher limits on deposits, the flexibility of withdrawals, and the fact that you don't have to pay tax on the money when you withdraw it. If you decide to roll your traditional individual retirement account into a Roth individual retirement account you need to make sure you are prepared to pay the tax on the rollover because it will be treated as if you withdrew the money from your traditional individual retirement account. This is a decision you have to make based on your personal situation, your needs and your tax status. To invest in a Roth IRA you must have earned income. You can use a Roth IRA even if you have a 401K or other retirement plan. Contributions must be made by the tax deadline each year. You have the flexibility to invest in whatever investment vehicle you choose.

If You Don't Like The 401K or The IRA An Annuity May Be For You

If you don't have access to a 401K plan and you don't like the IRA then you may want to consider an annuity. An annuity is another tax advantage vehicle that allows you to invest your money before taxes as long as you meet certain criteria (consult your tax professional for details). An annuity gives you options to receive payment at retirement either in a lump sum or life time payments. This is a decision you can make based on your tax status at retirement time.

An annuity is a very important financial planning tool. Depending on your personal financial situation you may be interested in purchasing an annuity or you may have one and need to think about how to collect the money without paying too much in taxes.

What is an annuity?

It's an agreement for one entity to pay another a stream or series of payments. Usually insurance companies write them but a charity or a trust can.

Categories:

Fixed or Variable

Deferred or Immediate

Fixed Period, Fixed Amount, or Lifetime Qualified or Nonqualified Tax status

Single Premium payment arrangement or flexible premium payment

Features:

Tax Consequences

Most investments incur capital gains tax each tax year. However, earnings, capital gains and income from annuities aren't taxable until you withdraw money. 401Ks and IRAs offer the same tax deferral but there is a limit on the amount you can contribute on an annual basis. With an annuity there is no limit on the amount you can contribute. It's a lot easier to withdraw funds from them than from 401ks and IRAs.

Asset Protection

If you are receiving payments from an insurance company the best a creditor can do is collect the payments as you receive them because technically the payments that you made to the insurance company belongs to the insurance company not you. The creditor can't take the money you paid.

Some state laws and court cases also protect some or all of the payments. Your money in tax-favored retirement plans, such as IRAs and 401ks are generally protected.

Of course one of the best ways to protect your assets from creditors is to pay your bills on time. However, anybody can run into tough times when they have problems paying their bills. You have to be careful because when this happens to you there are many companies out there that promise to help you fix your credit but in reality they are just after your money. You can improve your own credit score by monitoring the three main credit bureaus. When you find a mistake you can file a dispute claim with the credit bureau to get it cleared up usually within 30 days. You can also get protection against identity theft. By monitoring your credit on a regular basis you will know if someone tries to open an account in your name.

Investment Options

You can invest in a fixed rate plan which would earn a fixed interest rate, just like a bank Certificate of Deposit (CD). A variable rate plan would invest in stocks, bonds or other mutual funds. Some may offer a feature that guarantees your investment will never fall below its value on its most recent policy anniversary. This would be referred to as a floor.

Income Options

Because these instruments are similar to life insurance policies you can receive payments for the rest of your life. They accomplish this by taking money from your investment, your investment earnings and from the money from other's who didn't live as long as you. Like insurance companies they use actuarial tables to forecast your average life span to determine how much to pay out. When they guess right they win and when they guess wrong the annuitant wins. Over the long run they always come out ahead. Don't get an annuity confused with a whole life insurance policy because there is a big difference. With a whole life insurance policy the interest you earn is very low so you primarily pay enough during your life so when you die your beneficiary receives the face value of the policy. However, this is not a very good investment.

Benefits to Your Estate

You can purchase a guarantee period with your annuity so in the unlikely event you die immediately after your payments start your heirs can still get your money for a specified period usually 10 to 20 years. Another benefit is annuity payments that pass on to beneficiaries are not subject to probate or a part of your will.

Financial Planning Lessons help you learn in a very easy to understand way how to create you own personal financial plan.

Want your own website but think you don't have enough knowledge or experience to create one? Well think again because with Site Build It you will get step by step instructions to guide you through every phase of creating your own website. Visit my your own website page.

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Calculator financial - Fears retirement of losing my money.

Will I have enough money to last the rest of my life? The number a fear to retirees is if they are going to have enough money to retire. Ironically, this fear exists independently of the actual value. Indeed, the active report of $ 10 million people are more concerned with having enough money than people who have 500 thousand dollars of assets. In fact, it is only when people report having more than 100 million dollars do they relax on their financial future.

How could be? The easy answer is what American of all income levels spend more that they do.As your wealth increase so does your expectations of your level life minimum.Quel's interest to have 10 million dollars in the Bank, you ask, if you cannot take advantage?

To answer the question where not, you'll have enough money to last the rest of your life, you discover what is fear. Is based on an assessment of your financial situation of fear or a psychological problem?

To understand the fear of not having enough money, you should consider two things. The first is to evaluate your actual financial situation. The second is to explore the fear of psychological problems.

The best way to minimize your fear about not having enough money for the rest of your life last is to spend less than you make.If you are removed and investment income, are you able to live only interest? (Financial advisors recommend that does no more than five percent of you portfolio each année.Il is assumed that the bad and the good years will be in balance.)(This withdrawal rate, you will have enough to last in your life.) Do you need to tap into the principle, on a regular basis? ideally, you want to leave the quiet principle and grow each year.

If you go into debt to pay for the current way of life, you have some legitimate concerns. If you are not willing or cannot reduce your expenses, explore ways, you can increase your income by working or start-up of an entreprise.Vous can see the work fills time that you would otherwise have used spending money.

Compile a budget so you know how comes in every month and how much goes. The most important aspect of the budget is to explore your fixed and discretionary expenses.Fixed expenses are what you spend each month on housing loans, and while most everything else circulation.La is discretionary.

Browse your discrétionnaires.Regardez spend how much you eat purchases off and unnecessary.Many people, especially women, store when they are bored. If you are bored and purchases to occupy your time, explore other activities which would commit your time. You could volunteer for Australian store. (spending money, your step.)

Many financial concerns are based to pay for the health care and other expenses in the future. Based on your income, you can purchase additional medical and long-term insurance.It is important to find a financial professional who can advise you on your financial situation current and projected and how best to plan your future as you age.

You've done everything you can prepare your future by seeking professional advice and understand your financial situation.You have reduced spending, and increase your income and you still have concerns with money, you may want to Explorer from a psychological perspective.Psychological problems of money mean that money helps resolve emotional needs.Examine your beliefs about money and possessions.Maintain a life of certain to impress your friends or family you concerned?Do you think you need to give your kids money when they ask for it? do you you need you can buy what you want, when you want to have a sense of self-worth?Do you use money as a means of manipulating your other concerns significant?

Another challenge of adult retirees is learning to live without earning money while working.Remember when you have children and asked your parents you buy a toy.They replied, "If you want the yo-yo, you will save money to buy."A large part of the identity of Americans has just being the employees and the fournisseurs.Cela is particularly true for men. ""."If I am over a supplier, what value should I?".This is a State of mind different let your money work for you.

The transition to the malfunction is a huge changement.Comprendre Dynamics varied your relationship with money will help determine the peace of mind you have in your years later.

(This article is not intended to provide financial advice, but only offer information to help you explore your economic situation.)

Cathy Severson, is a leading authority in planning lifelong retraite.Baby boomers understand that it is not your parents.Découvrez retired how do the rest of your life the best of your life with free ingredients e-book 7 for a retirement satisfies the http://tinyurl.com/8moymb

Financial planning for retirement life 101

After fifty years of work, the chances are that us locate the day where we can retire. We no longer have to wake up at 5 a.m., sit in peak traffic times or insist on unrealistic deadlines. These factors are very just the reason why we rely on the days of relaxation. While most people fantasize, majority of baby boomers are not aware that financial planning stops at 65. Retirement planning is critical, regardless of what stage you are.

It was always a common myth that people have step to save for their retirement until they sent their children to College have time to rest. This no longer far from the truth, as it is important to always anticipate, even if it means in your years. Unfortunately, we never will be around the corner.Due to problems of health or other questions, we have to retire earlier than we pensons.donc we must regularly save financial snacks burden is imposed on us.

The first thing you have to do is think of financial planning. Retirement planning is not easy, but it is possible, if you create a budget for your living expenses. After all, the more money you save each month, the luxury more that you can do once you stop working!You should be aware and each alternative that can be offered to you the savez.La most companies offer a certain percentage of the wage or pension packages go directly into a pension fund. This is a wonderful opportunity if you do, because it lets you create on your package of retirement planning.

If you do so on your own, you must make sure that you create realistic goals for yourself .for example, if your two children are away at College in one year, and you want to save the 50% of your pay retirement, chances are that this will not occur. You must make a list of your priorities and putting money aside for each one. Although the college education of your child may need more money for four years, you can assume that you can spend the rest of your salary on retirement after they have graduated schedule.

Another alternative is to colonies of insurance - life ends .beaucoup people eager to get rid of these policies due to a disease or a financial burden. Through the colonies of life, one can actually sell their insurance scheme to a third party. In doing so, the person acquires a large amount of money, and they are connected is more to life insurance. If you need extra money, many people feel that life insurance settlements are beneficial.

When we start to get older, we automatically receive worried for our future.With no steady income after age 65 or 70, it seems effrayant.Toutefois, as long as you make sure that you stay with your retirement planning, it should be no need to stress.There are hundreds of alternatives to earn money, including life insurance institutions and simply evenly distribute your salary.It is important to set goals and make sure you stay organized.The last thing you want to do is do not keep track of your argent.Si you do not, in 20 years from now, ensure you that will be kicking yourself.

Natalie Aranda writes about family and financière.Par regulations of life through planning, one can actually sell their insurance plan for a third partie.Ce forming, person acquires a large amount of money, and they are connected is no longer their vie.Si QA you need extra money, many people feel that life insurance settlements are beneficial.

Fitness Workout for your financial muscles

If you have purchased books from financial freedom, but your bank account has not yet enjoy? Consider this:
Your financial success can be developed as a muscle... and if you do not see the results, you can be in terms of bad "financial capacity".
You were running on a treadmill to adjust some fat. "?financial result?Your portfolio is "skinny." "You weren?t financial muscles of construction.Pourquoi not?
Much as a good muscle strengthening or program of exercises, you must expert training, inspiration and a "financial training", which is adapted to your specific objectives
Here are five more major financial challenges people typically face in their financial capacity challenge vie.Relever and see what muscles you need to start building!
(Note: Please consult a financial professional fitness before attempting any of these exercises.)
Challenge 1. "I'm afraid to take financial risks.
Solution financial fitness: expand your muscles of courage.
If you're sitting around waiting for the ?right? stock or real estate to invest in, you are dealing with the symptom, not the persons who have acquired wealth are not smarter source.considérer or only. They developed the financial muscle called courage. Courage means here, acting in spite of your fear. Get doesn?t smallest fear, your confidence grows. Measure your confidence grows... take your ability to make financial decisions that lead to increased wealth!
Challenge 2"I do just enough money to do what I want when I want."
Solution financial fitness: expand your muscles desire and belief.
There are many factors that are at the source will not be assez.Pour beginners, financial muscle to develop the desire and belief. The mere presence of your desire is proof that you have the ability to run. If you have the conviction that your desire is possible, then there is no question of "If", but rather ?how? and ?when?.How can I get what I want, and When you can see positive results begin? Plans laid best success begin with the belief that you can do and the desire to arrive!
Challenge 3. " "I am constantly concerned, emphasised and frustrated about money."
Solution financial fitness: expand your muscles of the action.
If I told you that you had a winning lottery ticket and the numbers would be called a day this year, would you be worried or happy?Most would say excited.The financial muscle exercise here is attention: where you spend yours?
Race car drivers are taught always look in the direction they want aller.Si you look at the wall, you will lead in the mur.Mettre your attention on what you want? and you?ll more of what you want to get.Stress, anxiety and frustration comes from research (now to what you want (in future) don?t) and believe that what do you want don?t actually will be.Get better control of your financial action muscles and start your finances of conduct to a State of continuous growth.
Challenge 4"I can only control my finances and expenditure.
Solution financial fitness: expand your muscles of the object.
Going on a spending ?diet? as a measure of "control" over your finances is limiting rather than behavior expansive.Le financial muscle to begin to develop here is best described as a goal.Your goal, for example, could be a plan long term for financier.Si meaning you have a broader scope than your daily financial survival, then won?t goal you must ?discipline? or ?control? on your expenses.Instead of thinking in terms of what you cannot do so, you begin to think opportunistically as to what you can do, as part of your utilisation.ainsi, you'll choose to spend according to what is more aligned with this object.
Challenge 5. ""I just can't get my finances in order."
Solution financial fitness: expand your muscles of integrity and responsibility.
Longer under-developed financial muscles associated with financial problems is the integrity and accountability. integrity and responsibility requires you to be responsible before the promises you make yourself and other .d ' loan and invoice payment are shapes that you apportées.lorsque promises you break these promises, you find in disorders or the footprint. develop muscles of integrity and responsibility financial to keep these promises and you will find an ordre.Ordre comes structure, and this is a plan of financial capacity for creating wealth in the long term, success and happiness!
You?ve you a step in a Fitness Workout for your Muscles? finances now?
This financial fitness plan is only a départ.Si point this was training for a marathon, you have just learned to the real source of your financial challenges exécuter.La 26.2 mile warm-up routine or success is your emotional relationship to money.
You have learned that certain truths on finances, and you might wonder how to develop these financial muscles and what?s, the next step in your financial training personally on the financial capacity.

Tax planning for retirement financially Secure

The only thing that is likely to be important but neglected, throughout the process of your planning for retirement, is tax planning for a financially secure retirement. It's easy to save on taxes and improve your total retirement income, simply to take informed, do a little judicious research and take appropriate action.

Consider a rollover IRA to a Roth IRA retirement funds
Defer income or accelerating deductions to qualify for the Roth IRA conversion
Consider an employer rollover, stocks and bonds to the IRA
Calculate the tax payable on the distribution of the lump sum of pension
Optimize the deferral of taxation through various methods of distribution for your IRA and annuities
Take the minimum distributions in low taxation years required for your IRA
Avoid the penalty tax on distributions from your IRAs.
Disability insurance premiums can maximize the non-taxable portion of disability benefits create IRA separate accounts for the beneficiaries in order to maximize the tax deferralHelps reduce or eliminate the federal estate tax on benefits of the beneficiary designations IRABienfaisance helps eliminate taxes on profits IRA

Various strategies for tax planning for a financially secure retirement, of which some are discussed below, are relatively simple and it can make a substantial difference to your finances in your example retraite.Par:

You can enjoy quite a solid long-term fiscal record if you transfer money from an IRA traditional to a Roth IRA. You can save taxes because you are on a lower tax bracket by the point where you would withdraw were given the funds transfer. You can also transfer assets to high-income to the Roth IRA, or pass your IRA funds to your heirs if there is a lot of remaining after the addition of die.In you, you can benefit from long-term due to differential tax rates tax savings.

Consider making transfer IRA to Roth IRA in the year especially when you have a tax loss or integrate a hook low tax, for any reason any. Although the amount transferred or any part thereof, is taxable income, it may be imposed on your tax losses. Otherwise, you will need to pay taxes on the Fund you are transferring to lower tax rates than those applicable to future distributions of IRA, providing tax savings in the long term with the differential tax rates, and pre-tax profit of the Roth IRA distribution.

Long term tax savings can also be grouped by asset income transfer high. IRAs regular usually have assets which can have a high income potential.Transfer these assets to IRAs Roth.Even if you need to borrow money to pay the tax on the transfer, the wages of the transferred assets is higher, the rate of interest on your loan, so there will be a fee for long-term substantial record.

Do not borrow from one can on line credit home equity to add to your savings, even if it qualifies for deductions on the interest you pay on the prêt.Vous can also use liquid funds low yield for the payment of tax on the transfer of the Roth IRA.

If you do not use your funds in retirement, IRA transfer to a Roth IRA, until your heirs inherit it.Advantage would be the fact that Roth IRAs do not make distributions during your lifetime, although that IRAs traditional minimum distributions when you reach the age of 70 half .Transfert to a Roth IRA avoids tax than you would pay on distributions.

Search, CPA professional help or do it and take the appropriate measures for tax planning for a financially secure retirement.

? 2008 Anna d. Banks, GCDF

Anna d. Banks, a defender impassioned of baby boomers by exploring their priorities, planning and setting goals for the next stage of their vie.Aider customers attract and build a professional and personal life compatible with their values is not only an objective of Anna, is its passion.Son work experience diverse in business, education and financial services allows you to help the population diversified of baby boomers with their lives, the needs and career coaching personnelles.Anna finance is currently auxiliary faculty in the County of Essex, College where she teaches Career Development & management.

Author's Note:
You have questions relating to career development or change of lifestyle for baby boomers, who you think than others, like you would like to know the answers? please put a post on http://www.annabanks.com or questions e-mail me at Anna@AnnaBanks.com

Wall Street exposed – you need to know your financial advisor now!

There is a simple but undeniable truth in the financial consulting and wealth planning industry that Wall Street has kept as a "dirty little secret" for years. That dirty little, and nearly always overlooked secret is THE WAY YOUR FINANCIAL ADVISOR IS PAID DIRECTLY AFFECTS THEIR FINANCIAL ADVICE TO YOU!
You want, and deserve (and consequently SHOULD EXPECT) unbiased financial advice in your best interests. But the fact is 99% of the general investing public has no idea how their financial advisor is compensated for the advice they provide. This is a tragic oversight, yet an all too common one. There are three basic compensation models for financial advisors - commissions based, fee-based, and fee-only.
Commission Based Financial Advisor - These advisors sell "loaded" or commission paying products like insurance, annuities, and loaded mutual funds. The commission your financial advisor is earning on your transaction may or may not be disclosed to you. I say "transaction" because that's what commission based financial advisors do - they facilitate TRANSACTIONS. Once the transaction is over, you may be lucky to hear from them again because they've already earned the bulk of whatever commission they were going to earn.
Since these advisors are paid commissions which may or may not be disclosed, and the amounts may vary based on the insurance and investment products they sell, there is an inherent conflict of interest in the financial advice given to you and the commission these financial advisors earn. If their income is dependent on transactions and selling insurance and investment products, THEY HAVE A FINANCIAL INCENTIVE TO SELL YOU WHATEVER PAYS THEM THE HIGHEST COMMISSION! That's not to say there aren't some honest and ethical commission based advisors, but clearly this identifies a conflict of interest.
Fee Based Financial Advisor - Here's the real "dirty little secret" Wall Street doesn't want you to know about. Wall Street (meaning the firms and organizations involved in buying, selling, or managing assets, insurance and investments) has sufficiently blurred the lines between the three ways your financial advisor may be compensated that 99% of the investing public believes that hiring a Fee-Based Financial Advisor is directly correlated with "honest, ethical and unbiased" financial advice.
The truth is FEE-BASED MEANS NOTHING! Think about it (you'll understand more when you learn the third type of compensation), all fee-BASED means is that your financial advisor can take fees AND commissions from selling insurance and investment products! So a "base" of their compensation may be tied to a percentage of the assets they manage on your behalf, then the "icing on the cake" is the commission income they can potentially earn by selling you commission driven investment and insurance products.
Neat little marketing trick right? Lead off with the word "Fee" so the general public thinks the compensation model is akin to the likes of attorney's or accountants, then add the word "based" after it to cover their tails when these advisors sell you products for commissions!
FEE ONLY Financial Advisor - By far, the most appropriate and unbiased way to get financial advice is through a FEE-ONLY financial advisor. I stress the word "ONLY", because a truly fee ONLY financial advisor CAN NOT, and WILL NOT accept commissions in any form. A Fee-ONLY financial advisor earns FEES in the form of hourly compensation, project financial planning, or a percentage of assets managed on your behalf.
All fees are in black and white, there are no hidden forms of compensation! Fee-Only financial advisors believe in FULL DISCLOSURE of any potential conflicts of interest in their compensation and the financial advice and guidance provided to you.
Understanding the conflict of interest in the financial advice given by commission based brokers enables you to clearly identify the conflict of interest for fee-based financial advisors also - they earn fees AND commissions! Hence - FEE-BASED MEANS NOTHING! There is only one true way to get the most unbiased, honest and ethical advice possible and that is through a financial advisor who believes in, and practices, full disclosure.
Commission and Fee-Based financial advisors typically don't believe in or practice full-disclosure, because the sheer magnitude of the the fees the average investor/consumer pays would surely make them think twice.
Consider for a moment you need to buy a truck specifically for towing and hauling heavy loads. You go to the local Ford dealership and talk to a salesperson - that salesperson asks what type of vehicle you're interested in and shows you their line of trucks. Of course, to that salesperson who earns a commission when you buy a truck - ONLY FORD has the right truck for you. It's the best, it's the only way to go, and if you don't buy that truck from that salesperson you're crazy!
The fact is Toyota makes great trucks, GM makes great trucks, Dodge makes great trucks. The Ford may or may not be the best truck for your needs, but the salesperson ONLY shows you the Ford, because that's ALL the salesperson can sell you and make a commission from.
This is similar to a commission based financial advisor. If they sell annuities, they'll show you annuities. If they sell mutual funds, all they'll show you is commission paying mutual funds. If they sell life insurance, they'll tell you life insurance is the solution to all of your financial problems. The fact is, when all you have is a hammer... everything looks like a nail!
Now consider for a moment you hired a car buying advisor and paid them a flat fee. That advisor is an expert and stays current on all of the new vehicles. That advisor's only incentive is to find you the most appropriate truck for you, the one that hauls the most, tows the best, and is clearly the best option available. They earn a fee for their service, so they want you to be happy and refer your friends and family to them. They even have special arrangements worked out with all of the local car dealerships to get you the best price on the truck that's right for you because they want to add value to your relationship with them.
The analogy of a "car buying advisor" is similar to a Fee-Only financial planner. Fee-Only financial advisor's use the best available investments with the lowest possible cost. A Fee-Only financial advisor's only incentive is to keep you happy, to earn your trust, to provide the best possible financial advice and guidance using the most appropriate investment tools and planning practices.
So on one hand you have a car salesperson who's going to earn a commission (coincidentally the more you pay for the truck the more they earn!) to sell you one of the trucks off their lot. On the other hand, you have a trusted car buying advisor who shops all of the vehicles to find the most appropriate one for your specific needs, and then because of his relationships with all of the car dealers can also get you the best possible price on that vehicle. Which would you prefer?
Truly unbiased financial advice and guidance comes in the form of Fee-Only financial planning. You know exactly what you're paying and what you're getting in return for the compensation your Fee-Only financial advisor earns. Everything is in black and white, and there are no hidden agenda's or conflicts of interest in the advice given to you by a true Fee-Only financial advisor!
The fact is unfortunately less than 1% of all financial advisor professionals are truly FEE-ONLY. The reason for this? There's a clear and substantial disparity in a financial advisor's income generated through commissions (or commissions and fees), and the income a financial advisor earns through the Fee-Only model:
Example #1 - You just changed employment and you're rolling over a $250,000 401k into an IRA. The commission based advisor may sell you a variable annuity in your IRA (which is a very poor planning tactic in most cases and for many reasons) and earn a 5% (or many times more) commission ($12,500) and get an ongoing, or "trailer" commission of 1% (plus or minus) equal to $2,500 per year. The Fee-Only financial advisor may charge you a fee for retirement plan, an hourly fee, or a percentage of your portfolio to manage it. Let's say in this case you pay a $500 retirement plan fee and 1.25% of assets managed (very common for a Fee-Only financial advisor in this situation). That advisor earns $500 plus $3,125 ($250,000 * 1.25%) or TOTAL COMPENSATION of $3,625 - FAR LESS THAN THE $15,000 THE COMMISSION (or Fee-Based) financial advisor earned! In fact it takes the Fee-Only financial advisor over four years to earn what the commission (or fee-based) advisor earned in one year!
Example #2 - You're retired and managing a $750,000 nest egg which needs to provide you income for the rest of your life. A fee-based financial advisor may recommend putting $400,000 into an single premium immediate annuity to get you income and the other $350,000 into a fee-based managed mutual fund platform. The annuity may pay a commission of 4% or $16,000 and the fee-based managed mutual fund portfolio may cost 1.25% for total compensation of $20,375 first year (not including the "trailer" commissions). The Fee-Only advisor would possibly shop low load annuities for you, possibly put the entire portfolio into a managed account, possibly look at municipal bonds, or any other variety of options available. It's hard to say how much the Fee-Only advisor would earn as their largest incentive is to keep you the client happy, and provide the best planning advice and guidance possible for your situation. BUT, in this case let's just assume that a managed mutual fund portfolio was implemented with an averaged cost of 1% (very common for that level of assets), so the Fee-Only financial advisor earns roughly $7,500 per year and it takes that financial advisor THREE YEARS to earn what the fee-based financial advisor earned in ONE YEAR!
The prior examples are very common in today's financial advisory industry. It's unfortunate that such a disparity in income exists between the compensation models, or there would likely be many more truly independent and unbiased Fee-Only financial advisors today!
Now consider for a moment which financial advisor will work harder for you AFTER the initial consultations an planning? Which financial advisor must consistently earn your trust and add value to your financial and investment planning? It's obvious the financial advisor with the most to lose is the Fee-Only advisor. A Fee-Only financial advisor has a direct loss of income on a regular basis from losing a client.
The commission or fee-based financial advisor however has little to lose. You can fire them after they've put you in their high commission products, and as you can see from the examples they've already made the majority of the commissions they're going to make on you as a client. They have little to gain by continuing to add value to your financial and investment planning, and little to lose by losing you as a client.
Wouldn't you prefer a financial advisory model where your financial advisor must continually earn your trust and add consistent value to your planning?
It's clearly more difficult to earn a living and run a profitable financial advisory firm through the Fee-Only financial planning and guidance model. For this reason, most financial advisors take the easy way and sell products for commissions and charge fees on assets managed - that way they can make a nice living on your investment portfolio and still have an ongoing stream of revenue every year. For this reason also, less than 1% of financial advisors are truly Fee-Only, yet it's that 1% that is truly objective and unbiased, and that 1% whose only incentive is to manage your financial plan, investments, and overall wealth to accomplish the goals you wish to achieve!
The real "dirty little secret" Wall St. has is the undeniable truth that the commission and fee-based financial advisory model has inherent conflicts of interest, and your advisor may be "selling you investment products" rather than "solving your financial problems"!

What Wall Street to know the independent broker want

The word independent can be described as autonomous, unbound by another entities force, direction or will, or perhaps and most importantly freedom. But in the context of your financial advisory relationship independence means much, much more. To understand just why the independent financial advisor model is so vital to your long term financial success, you must understand the difference in advisory models from the ground level up.
According to a survey by Cerulli Associates, an industry polling and research firm, the channels of financial services models can be broken down into roughly six major categories:
National Full Service Brokerage - These are firms such as Merrill Lynch, Smith Barney, Morgan Stanley and Goldman Sachs. A financial advisor at one of these firms works for their employer directly, but can provide financial advisor services and sell you insurance and investment products (maximizing profits and enriching company value). There are approximately 70,000 "financial advisors" at national full service brokerage firms.
Regional Full Service Brokerage - These are smaller geographically specific brokerage firms such as Robert W. Baird, Edward Jones, and AG Edwards. Regional brokerage firms are nearly identical to their national counterparts in business model, however they're smaller in size and typically geographically anchored to service a smaller segment of investors. There are approximately 15,000 "financial advisors" at these smaller regional full service brokerage firms.
Independent Broker-Dealers - These are firms such as LPL Financial (Linsco Private Ledger), Associated Securities Corp., Ameriprise and ING. A broker-dealer acts as either a sales organization selling consumers investment and/or insurance products OR as a buyer of securities. Some broker-dealers act in both capacities. There are approximately 100,000 "financial advisors" at independent broker-dealers.
Bank Brokerages - These are banking institutions who also offer financial advisor and investment management services to their banking customers. Banks such as Wells Fargo, Bank of America and Citigroup offer these services and employ roughly 15,000 "financial advisors".
Insurance Broker-Dealers - Firms such as New York Life, ING, AXA Advisors, Equitable, and Transamerica are involved in the exchange of insurance contracts and services from company to consumer. There are roughly 35,000 "financial advisors" in such firms.
Registered Investment Advisor Firms - There are roughly 25,000 Registered Investment Advisor Firms. A Registered Investment Advisor (RIA) is a firm registered directly with the Securities and Exchange Commission (SEC) or their state securities licensing division. My firm Red Rock Wealth Management is an SEC Registered Investment Advisor Firm. Nearly half of all Registered Investment Advisor firms are also working with or through a broker-dealer (at some level) however to facilitate investment and insurance transactions.
Removing the RIA's with broker-dealer affiliations this means roughly 5% of "financial advisors" are solely in the Registered Investment Advisor model.
The words "financial advisors" are in quotations because these firms hold their employees out to the public in a financial advisor capacity, yet they may or may not be true financial advisors depending on their employment status. In fact, they may be nothing more than facilitators of brokerage transactions for insurance and investment products.
Why is this industry knowledge important to you and your financial future? Because there are varying levels of DEPENDENCE in the first five models for financial advisors. The pure Registered Investment Advisor model with no broker-dealer affiliation is the only completely INDEPENDENT model.
To be clear, many financial advisors at independent broker-dealers like LPL consider themselves independent, and provide financial services in that manner. However there are still issues of reliance on the company that pays their commission checks. Outside of the RIA model however, the independent broker-dealer is the closest thing to a purely independent financial advisor practice.
To fully grasp why the national and regional brokerage firms, the bank brokers, the insurance brokers, and the independent brokers are not independent, simply look at who writes their paycheck. Unless you've never been employed, you understand clearly that your paycheck is contingent upon fulfilling your duties to your employer as your employer describes said duties, period - end of story.
If your employer is "calling the shots", to maintain employment and get your paycheck - you fall in line, you follow orders. You do so regardless of whether those shots the employer calls are in your clients best interests or not. To earn a living - you follow orders. This concept is clear and unwavering whether you're flipping burgers for McDonald's and must prepare food a certain way, or if your a Fortune 500 CEO and accountable to shareholders and a Board of Directors. If you work for someone else, you're dependent on fulfilling their idea of what your job description is.
If your financial advisor is beholden to their employer (and 95% of financial advisors are) they're dependent on that entity for income, benefits, and job security. If they're dependent on their employer, they must fall in line and follow company orders.
But that's not so bad is it? 95% of financial advisor representatives being dependent on the company they work for to earn a living? It is if the company they represent is in turn beholden to maximizing profits and increasing shareholder satisfaction. If the financial advice given to you is somehow influenced by corporate profits, how can you be certain it's in your best interests?
There are several reasons an INDEPENDENT financial advisor will have the upper hand when it comes to providing unbiased financial advice and guidance, but to name a few:
No Proprietary Products - Each of the first five models may create, manage, and sell their own investment and insurance products, or in many cases they have "special arrangements" with other firms to promote and sell "preferred" investment and insurance products. By "special arrangement" I mean kickbacks, a commission, compensation, additional business benefit, etc. The fact is, whether the products are truly proprietary or a special arrangement is made, if the company receives a financial benefit to sell certain investment and insurance products it's effect is proprietary in nature, as it clearly identifies a conflict of interest.
Highly Profitable Insurance and Investment Products - Perhaps the most common form of abuse with the dependency created in the first five practice models is promoting investment products with higher fees and commissions for higher corporate profits. Certain products, such as life insurance, variable annuities and limited partnerships, pay handsome commissions and fees to the financial advisor and their firm. With such a financial incentive - many advisors and their firms will "tailor" their financial planning advice and investment guidance, leading the consumer to believe these higher cost higher profit alternatives are the best solution for their financial problems. This practice lines their pockets while oftentimes picking your pockets clean!
Investment Banking Relationships - Take for example XYZ Company wanting to go public (a Wall Street machine revenue generator). Wall Street Firm A provides a channel to sell XYZ Company stock through their "financial advisors" (and other methods) to consumers. If Wall Street Firm A has an investment banking deal with XYZ Company, chances are even if XYZ Company is horribly run, unprofitable, and inefficient - they're going to take XYZ Company public with an incentive for their stock analysts to be kind in rating XYZ Company stock. Granted, there is supposed to be a "Chinese Wall" between the investment banking side of a firm and the retail outlets and stock analysts - however with the inherent conflict of interest it's naive to believe this doesn't occur at some level.
Promoting proprietary or higher cost investment and insurance options to consumers is in all likelihood nothing more than an effort to increase personal and company profits. This holds true with many investment banking deals as well. 100% of consumers can benefit from low or no-load investment and insurance alternatives. If a financial advisor's real underlying goal it to create a positive financial impact for their clients - why aren't these firms and their financial advisors implementing financial plans using the lowest cost most efficient and effective alternatives? Certainly high costs and fees cannot be a pre-requisite for good performance and financial goal achievement!
A Registered Investment Advisor Firm with no broker-dealer association is the only financial services industry model where the entire compensation comes from the client only - not from the "Wall Street machine". Those first five of six financial advisor models create an inherent dependence on behalf of their financial advisor employees directly to the company they work for. It's unfortunate that only 5% of financial advisors are practicing in the form of a Registered Investment Advisor.
Isn't it time you expected more from your financial advisor?