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Evaluating Your Financial Planner

If you’re currently behind on your finances, you may have sought help from a financial planner. You probably thought that you couldn’t handle your financial troubles on your own, and you needed the help of a trained professional to give you the financial advice you need to help you get things sorted out.

There’s No Shame in Getting Help

There is nothing wrong with seeking the help of a financial planner when you are trying to get back on your feet financially. Recognizing that you need help is the first step in making a chance with your problems.

You may have even sought out a financial planner because you believe they can help you see a boost in your investments. Financial planners are hired for a variety of reasons.

Many financial planners specifically specialize in helping people chart a course towards retirement. They claim to be able to help people find the best possible solutions to their financial concerns.

Make Sure You Can Trust Them

However, it is important to keep in mind that financial planners are trying to make a living as well. We as consumers need to be careful and be certain that we can trust our financial planner before we continue paying them for their services.

There are certain red flags you should be aware of when it comes to financial planners. If you notice or see any of these red flags, you should seriously consider switching financial planners.
Here are a few of these red flags so you can be informed and prepared to know if you can trust your financial planner. If your financial planner has a complicated history in regards to his or her career, then you should be wary.

Do They Switch Jobs A Lot?

If they have switched jobs often, it may indicate that they are not good at working with higher management and they may not be the best people to work with. If you notice a lot of turnover among a certain firm’s advisers, than you may want to consider going with a different firm.

Are They Interested in Your Personal Needs?

Another red flag to look out for is if your financial planner does not seem very interested in looking at the specific details of your situation. If they think they have a solution very quickly and without really knowing what’s going on with your finances, you may want to get a different planner.

These types of planners are usually just trying to make money rather than really trying to help you with your finances. They want to make you believe they know what they’re doing, so you don’t have to worry about how they’re doing it.

However, you and your planner are supposed to be working together on your finances, so it is very much your business what your planner is doing with your finances. If you notice that your planner has been operating with a one-size-fits-all attitude, you may want to seek help elsewhere.

Another Gimmick?

Another possible red flag is if you notice that your planner has been introducing a gimmicky product to you each time you meet with him or her. If they do not seem genuinely interested in helping you get back on your feet financially, you should be wary.

If your financial planner fails to specifically define a target return amount with you within your first couple of meetings, this is not good. A financial planner should always set up a specific target return with you so you are aware of what’s going on.

They should also talk about a standard deviation of this return with you as well. If they fail to do either of these things, than you should definitely notice.

There Should Be Constant Contact

Your financial planner should also be constantly updating you about what is happening with your finances. If they fail to contact you for an extended period of time, you should consider getting a different advisor.

The state of your finances is rapidly changing, and so you should be meeting with your advisor often to discuss how you need to shift your strategies and what changes you should be making. If you feel that your planner is not positioning you to get good returns in good markets, then you should probably get a different financial planner.

You should also pay attention to how you are interacting with your financial planner. If the relationship is polite and cordial and they seem very eager to help you, then this is good.
But if they are rushed and don’t seem to have the time to meet with you, then this is not good. You deserve a planner who has your best interests in mind and will work with you to make your dreams a reality.

That’s what you’re paying them to do, after all.

Tip of The Week: Don’t Bank on Financial Windfalls

One of the most common daydreams among people both young and old is having a large amount of money dropped in your lap out of nowhere. Whether it’s a sudden inheritance or a hefty tax return it’s easy to let yourself dream about all the things you could use a large financial windfall for, whether it’s a new car, larger house, home improvement projects or a dream vacation the list can go on and on. While it’s fun to dream about financial windfalls coming your way, it’s important to understand the difference between dreaming and reality when it comes to your budget.

financial windfalls

As a lot of people start working on their personal budgets they start daydreaming about how they can pay certain bills or mortgages off faster if they had a financial windfall come their way. Sometimes if people aren’t careful they’ll start banking on these financial windfalls coming their way and justify new purchases based on the hope that somehow they’ll get a bunch of money out of nowhere. Some of the most common windfalls that people bank on include:

Tax Return- This is by far the most common windfall that people seem to bank on. Tax returns can be an amazing way to quickly build up your savings but because of all the marketing directed at people on how they should spend their tax return people usually end up throwing away their tax returns on more consumer debt such as a bigger tv, new appliances, etc… While there are sometimes legitimate uses for your tax return such as fixing a leaky roof, vehicle repairs etc.. if you are truly trying to improve your financial situation you should use your tax return to either pay down your consumer debt or put the money into savings.

Salary Bonus or Raise- If you’re fortunate enough to have a job in this economy you should consider yourself lucky. If you are even more fortunate to work for a company that is doing so well that it has a surplus to offer as bonuses to their employees you are very fortunate. A downside to bonus or a raise is that it can lead people to irrational spending. If you know that a bonus or raise is coming your way it can lead you rationalizing big purchases with the thought that you’ll be able to pay for it once your big bonus comes through. The problem with that thought process is the fact that you never know for sure how much your bonus or hopeful raise is going to be, another thing that a lot of people don’t want to think about is that sometimes when bonuses are supposed to be released, companies will sometimes do layoffs instead because they’ve been looking at the numbers and they realize that they need to do something drastic to improve the numbers for the quarter. If you make several big purchases leading up to a raise or bonus and end up getting laid off instead it can put you in a very tough spot financially.

Unexpected Inheritance- Time and time again you’ll see this windfall used as the source for movie and television show storylines. The classic story of a distant relative leaving millions of dollars to you is a nice story but not likely to happen. With so many movies and television shows using an “unexpected inheritance” as a storyline it’s no wonder that so many people think that it could happen to them. While it’s fun to dream about, it’s just not realistic to spend irresponsibly with the hope that a distant relative is going to pass away and leave thousands or millions of dollars in your name. As crazy as it may sound, sometimes people don’t even bank off of a distant relative leaving them a large sum of money, sometimes people will dig themselves into a large financial hole thinking that their elderly parents or grandparents will pass away soon only to find out that there was little or no inheritance to be had. In addition to just being distasteful it’s a poor financial move as well.

Lawsuit Settlement- With this point we’re not discussing frivolous lawsuits, but the fact that sometimes people find themselves the victim of an accident or have been injured in some other way and are workings towards a settlement that will help them overcome the pain or injury caused by the accident. Sometimes people will look at a lawsuit settlement as a great way to get have some extra money but what they need to take a serious look at is that even though these settlements will cover the major medical bills, you’re most likely only rewarded money for “damages” if they feel that you’re going to have some ongoing pain or discomfort as a result of the accident which could mean future medical bills and other expenses. So while it may be tempting to spend your new found money on consumer products, set the money aside, maybe even in a different account to help pay for additional medical bills that may come in the future.

Regardless of whether or not you do find yourself the beneficiary of a financial windfall in the future, the key is to be disciplined and stick to your personal budget. If you have some money land in your lap unexpectedly, pay down your debts or put it in the bank and act like it never happened. That way you will be able to move closer to your goal of financial independence.


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