Is Your Financial Advisor Really Working For You? NAPFA Press Release

 

 

 

 

FOR IMMEDIATE RELEASE                                                                Contact:  Benjamin Lewis

                                                                                                                                     Perception, Inc.

                                                                                                                                    (301) 963-7555

 

With a few basic questions, consumers can find out if

their best interests are being protected by their advisor.  

 

ARLINGTON HEIGHTS, IL (April 22, 2009) – As the events of the last several months have made clear, it’s never been more important for consumers to act in their own best interests when working with a financial advisor. Consumers must ask the right questions when selecting an advisor, AND they must keep asking questions on a regular basis.

 

The National Association of Personal Financial Advisors (NAPFA) has been a vocal advocate for the consumer for more than 25 years and is currently working with other industry organizations, congressional leaders and regulators to encourage increased protection for consumers   However, even if new reforms are put in place, NAPFA encourages consumers to protect themselves by being proactive when establishing or engaging in an ongoing relationship with a financial advisor.

 

Regardless of which advisor is chosen, a consumer needs to ask the following questions:

 

  • Do you work with an independent custodian? Whether your advisor is managing your money or you are the person who signs off on each financial decision, your advisor should not be holding your money. Your money should be held by an independent custodian company. Make sure you know the name of the company; how to contact the company; and your account numbers.  Be sure to open and review your monthly statements and check on the accuracy of any trades and withdrawals in your accounts.

 

  • Will I be able to review all transactions that are made? When you receive your statements, be sure you carefully look at all transactions. Make sure you understand each purchase, sale, deposit and withdrawal and why it was made. If you have a question concerning a transaction, call your advisor immediately. If you aren’t satisfied with the answer you receive, call the custodian directly.

 

  • Will I be able to make checks payable to the custodian?  When making a deposit to your investment account, write the check to the custodian, not to your advisor.  Be careful of advisors who ask that checks to be made out to them.

 

  • Do you require a General Power of Attorney?  The General Power of Attorney document will allow your advisor to remove money from your accounts without your special consent.  Typically a Limited Power of Attorney, which allows the advisor to make trades on your behalf, is preferred.  You may want to discuss your personal situation with an attorney. 

 

  • Can I have copies of statements sent to a family member?  If you don’t understand your statements, tell your advisor to send copies to a family member or another professional who can help you.

 

  • Stay in contact with your advisor. Visit with your advisor at least annually, and stay in contact by e-mail or telephone. If your advisor is vague or evasive, ask for more information. Holding these regular meetings has the added benefit of making sure that you and your advisor are clear about your financial goals, risk tolerance, and investment strategy. In fact, poor communication between client and advisor is a more common source of dissatisfaction than any type of illegal activity.

 

“It is not good enough today to simply judge a financial advisor based on what you read on his or her website or in a brochure. You need to speak with them,” said Diahann W. Lassus, CFP®, CPA/PFS, national chair of NAPFA.  “Advisors who are going to act in your best interests will be forthright and honest about how they operate and will truly act in a fiduciary capacity at all times.”

 

Consumers who are still unsure after talking with an advisor should review the advisor’s Form ADV, which is always available upon request. Additional information about a firm may be found on the Securities and Exchange Commission’s Central Registration Depository website at http://www.sec.gov/answers/crd.htm. 

 

To obtain a longer list of questions to ask an advisor, use the Financial Advisor Diagnostic, developed by NAPFA. The Diagnostic is available for free at http://www.napfa.org/tips_tools/index.asp.

 

“Consumers who take the time to ask the right questions and do the necessary research will ultimately become smarter consumers of financial services,” said Ms. Lassus.

 

If you are interested in discussing consumer protection, please contact Benjamin Lewis at (301) 963-7555 or Benjamin.lewis@perceptiononline.com.

 

 

About NAPFA

 

Since 1983, The National Association of Personal Financial Advisors (NAPFA) has provided Fee-Only financial planners across the country with some of the strictest guidelines possible for professional competency, comprehensive financial planning, and Fee-Only compensation.  With more than 2,200 members across the country, NAPFA has become the leading professional association in the United States dedicated to the advancement of Fee-Only financial planning.

 

For more information on NAPFA, please visit www.napfa.org.

Ten Things You Can Do Now To Save Taxes in 2009

Jane M. Young, CFP, EA

Whew!! The 2008 tax season is finally over and we can relax. Well not exactly; this is a great time to prepare for 2009 taxes. A little effort now can help you save in 2009 and will make the process a whole lot smoother. Below are some ideas to help save taxes in 2009.

1. Create a folder for your 2009 tax documents and receipts. Create a file right now, and keep it somewhere convenient, to keep track of all those expenses and donations as they occur.

2. Start going through your old clothes and junk in the garage and donate it to a charity of your choice, if you itemize this can provide a sizable deduction. Remember, keep a log of everything you donate and get a receipt!

3. If you anticipate a substantial change in your 2009 income or if you owed a lot in 2008, now is the time to adjust your withholdings or your estimated payments. There is nothing worse than owing an unexpected $5000 at the end of the year.

4. Maximize your contribution to tax deferred retirement plans. Limits on the 401k, Simple and SEP have all increased this year. If you turned 50 this year you can now make catch-up contributions to your retirement plans including your IRA (assuming you are otherwise qualified).

5. Do you anticipate a decrease in income this year? You may be eligible to contribute to a Roth IRA or for a conversion from a Roth IRA to a traditional IRA. The recent drop in the stock market has made conversion to a Roth IRA very appealing. You can pay income taxes on your account now, while the balance is low. Then during retirement, when the market has recovered, you can take tax free withdrawals. In 2009 your AGI must be less than $100,000 to be eligible for a conversion.

6. Will you be paying college expenses sometime soon? If you live in Colorado you can invest the money you will be spending on college expenses in a 529 plan and deduct the contribution from your state income tax. If you have a couple kids in college this can be significant. Don’t worry; you can invest the money in something very safe within the 529 if you are worried about market volatility.

7. If you are a first time homeowner you may be eligible for a 10% credit up to $8000 if you buy a home by December 1, 2009. This is really more like an interest free loan because it must be paid back over 15 years. Additionally, it is subject to income limits. The credit begins to phase-out for joint filers with modified adjusted gross income of $150,000 or more.

8. Are you thinking about buying a new car? You may be able to deduct the sales and local tax if you buy the car this year. This is subject to an income phase out if your adjusted gross income exceeds $125,000. I know they take all the good stuff away from middle class wage earners.

9. If you own a business or work as a consultant, be sure to keep accurate and complete records. Don’t forget to track your mileage, the current deduction for business mileage is $.55 per mile. This is frequently overlooked or understated due to poor record keeping. Additionally, if you work in your home and have a dedicated work area you may want to claim a home office deduction.

10. Take advantage of the drop in the stock market to do some tax harvesting. Tax harvesting is taking advantage of a market decline to sell some of the dogs in your investment portfolio while taking a capital loss or reduced capital gain. Prior to the market drop, the sale of a particular security may have been prohibitive due to capital gains. Now you can take advantage of the drop in the market to clean up your portfolio or do some re-balancing of your asset allocation.