Frequently Asked Questions

Whether at the beginning of your financial journey or evaluating that your plan is working its best for you, these frequently asked questions help start the conversation to making sure you have a financial plan that will help you meet your financial goals.

• What does a financial advisor do?

  I help individuals & businesses manage their finances.  My services include:

  • Create financial plans to meet both short & long term goals.  For many people, it’s not all about retirement.
  • Offer investment advice in terms of different investment vehicles & investment accounts.
  • Provide retirement planning & help with retirement account strategies.
  • Give advice on tax planning & strategies to minimize tax liabilities.
• How should I start saving?

  If you have a retirement plan through your employer, it’s usually best to start there. Most employer plans are inexpensive & since your contributions come right out of your paycheck, it’s makes savings easy. If your employer offers a company match, that’s a huge incentive to save through the employer plan.

  If your employer doesn’t offer a retirement plan, give me a call, & we can set up the type of account that makes the most sense for you. You can have a weekly or monthly amount deducted directly from your bank account & deposited into your retirement account. Most people aren’t good about writing themselves a check to deposit into a savings account so auto-pilot ensures you stay on track.

• How much should I be saving?

  It depends on your financial goals, income & expenses. A common guideline is the 50/30/20 rule:

  • 50% of your income for needs (housing, utilities, groceries).
  • 30% for wants (dining out, entertainment).
  • 20% for savings & debt repayment.

  While 20% might seem daunting, the key is to just getting started with an amount you’re comfortable with. Most people find they really don’t miss the money once they get started, & then increase the amount by a couple percent every year.

• What should I do with my 401k when I leave an employer?

  Generally, you will have 3 options:

  • Cash out the account
  • Roll the account to an IRA
  • Leave it in the employer plan (if allowed by the plan)

  In most cases, I recommend that you take your retirement account with you when you leave an employer. Employer plans change often, & if you’re not an active participant, your account will generally roll to their default fund. Almost more importantly, most plans are going paperless so you won’t receive quarterly statement to know where your account is & how it is performing. I’m sure many people are going to lose track of their accounts over the years without receiving paper statements.

  When you terminate from an employer, we can set up an IRA (Individual Retirement Account) & roll the funds into your new IRA. By rolling the funds, you defer the taxes on the money you have saved & not get a big tax bill when you file your taxes for the year. While you can just take a distribution, there is hefty tax implications. In most cases, you will owe full Federal & State tax & if you’re under 59 ½, there is an additional 10% premature penalty. If it’s a large distribution, it can easily throw you into a higher tax bracket for all of your income for the year. I highly recommend you get some advice before you cash in a retirement account. I can help explore your options.

• What’s the difference between a Roth IRA & a traditional IRA & which is best for me?

  A Roth IRA & a traditional IRA differ mainly in how they are taxed:

  • Traditional IRA: Contributions are usually tax-deductible which reduces your taxable income for the year. However, withdrawals in retirement are taxed as ordinary income.
  • Roth IRA: Contributions are made with after-tax dollars, so they are not tax deductible. The benefit is that withdrawals during retirement are tax-free, & you don’t pay taxes on any of the growth in the account.

  Which one is best for you depends on your current & expected future tax rates. Give me a call, & I can help guide you to the best account for your specific situation.

• What’s the difference between fee-only & commission-based advisors?

  Most advisors are fee-based & charge an on-going percentage on your investments. These fees generally range from 1% to 2% & are charged on a quarterly basis. With a commissioned-based advisor, you generally pay a one-time commission when you purchase a mutual fund or when you buy or sell an individual stock. The commission varies depending on the investment & the amount you are purchasing. .

  I am a commission-based advisor. My personal belief is fee-based accounts are well suited for active traders, but most of my clients are generally wanting to buy good solid investments & hold them. Since the fees are on-going & based on an appreciating asset, commission based investing is generally a better fit for my clients & more aligned with my investment philosophy of buy & hold.

• Do you help with health & life insurance?

  Yes – I can help with these types of insurance. I work with many insurance carriers so I can get you the most cost-effective policy based on your specific needs.