Choosing a Financial Advisor
“My family’s advisor knows all about the money so maybe I should just keep the status quo. Plus, it seems they’ve done right by my family so I guess they know what they’re doing.”
Just about everyone needs someone to help them create a financial plan tailored to their goals. The advisor who was right for your loved one may not be the best fit for you.
Your financial advisor should be able to explain things plainly, without jargon, and should put your goals first. I always encourage people to speak with several potential advisors to get a sense of who best fits their style and can help with your money goals. When searching for an advisor, consider the following tips in this guide on how to choose a financial advisor.
The National Association of Personal Financial Advisors (NAPFA) is also a great resource to find advisors who do not take commissions or sell products that may not be in your best interest. They publish a great list of questions to ask in the interview process. Remember, go with an advisor you understand (no jargon!) and who understands you.
Creating a Financial Plan
“I’ve heard stories about people who blew their inheritance in just a few years. How do I know how much money I can spend without running out? I’ve never had this much – can I retire early?”
Financial planning should be an integral part of your investment management. How you invest money should be closely tied to your unique goals and situation, not to the vagaries of the stock market.
Before you buy a fancy new car, rush to pay off your mortgage, or invest in something you don’t understand, make sure you are clear on what taxes you might owe on your inheritance (if any), and how best to prioritize your financial goals and obligations.
A financial planner can help you develop a road map for many paths: paying for college, having a tax strategy that won’t catch you by surprise, creating a fruitful investment portfolio that is as stress free as possible, and providing a clear idea of what you can sustainably spend and give to not run out. They can even help take care of boring but important matters like making sure you have enough insurance and planning for what happens to your assets when you die.
Arguably, everyone needs this help; but when you have new money you didn’t have before, it’s even more important.
Three Steps to Take Upon Receiving an Inheritance
Inheriting a large sum of money or assets can often be disorienting. In the moment, it’s not always easy to know what to do or where to start. Here are three key steps to take that can provide clarity, direction, and protection when you need it most:
- Make a list of goals for yourself and your loved ones, and take stock of what savings, assets, and debt you have.
- Contact several financial planners who can help you with more than just investing. Your advisor should take details of your whole life into consideration – not just the money part – so when you incorporate the financial piece of it, it can fold into one coherent strategy. Choose the person who makes you feel comfortable and answers your questions in a way that makes sense to you.
- Take it slow. Well-meaning friends and relatives may suggest certain things to buy or invest in, such as a business or life insurance. Make a comprehensive financial plan with an advisor first so you get it right.
By going slow and doing your due diligence, you’ll put yourself in a position to not make mistakes that could cost you down the road.
In Closing
Gaining sudden wealth can seem like a dream come true – and it can be. And yet, you want to be mindful of not only making your money last, but honoring the legacy of the loved one who trusted you with their life’s labors.
Many clients have told me, “I’m not sure why I didn’t have an advisor before. I feel like you have my back and I’m not going to stumble.” If you or someone you know is inheriting some money, you will probably want to feel this way, too.
Reach out to an Abacus advisor today and schedule a free consultation to see if we’re the right fit for your needs.
Disclosure
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Abacus Wealth Partners, LLC [“Abacus”]), or any non-investment related content made reference to directly or indirectly in this blog will be profitable, equal to any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Abacus. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional advisor of their choosing. Abacus is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Abacus’s current written disclosure brochure discussing our advisory services and fees is available for review upon request or at https://abacuswealth.com/.
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