<p>2020 has been an eventful year so far. With the pandemic, political unrest, nationwide protests, etc., many people have suffered economically. Businesses have had to shut down, people are living on unemployment benefits, and the markets are showing a declining trend. The challenges have been plenty, and the panic is even higher. However, there are still ways in which you can turn your portfolio’s fate around. And a financial advisor can help you in this regard.</p> 
<p>Here are some ways in which financial advisors can deliver value in the face of 2020’s challenges:</p>
<ol>
<li><b>Understanding and revising the financial plan</b></li> 
<p>The times have changed so drastically that it now seems impossible to go on with older plans. With a drop in income and investment returns, you may find it hard to continue saving and investing. However, not continuing to save can result in insufficient savings in the future. If you are nearing retirement, you may have to work a few additional years to make up for this year’s losses. Even if you have enough savings, you may still need a new plan to ensure that you use these savings rationally, given the fact that the economic unrest of the pandemic will likely last for a few years. A financial advisor can help you strategize better.</p> 

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<li><b>Making budgetary changes</b></li>
<p>Most households have had to cut back on some expenses to accommodate the financial volatility of 2020. These budgetary cuts can differ for each family, depending on the number of earning members, dependents, their individual needs etc. For instance, for a family of two working parents and a pre-teen child, budgetary cuts may not be as drastic, even if one of the parents has received a salary cut in 2020. However, a family of one working parent with a child ready for college in the near future is likely going to make bigger adjustments to their budget. A financial advisor can advise you on the suitable level of changes required for your individual needs and family’s requirements.</p> 
<li><b>Considering Roth conversions</b></li> 
<p>Many people have been considering to make a Roth conversion in 2020. Generally, a Roth conversion is considered the most beneficial when the market is in a downturn, such as right now. A financial advisor can guide you in this decision. A Roth conversion can be carried out in different ways. For instance, if you pick the Roth conversion cost averaging method, you can evenly spread out the conversion over small payments through the year, instead of a big conversion at one time. You can also choose the 60-day rollover method, but this involves comparatively more risk. These options can be analyzed better by a professional financial advisor, and can then be taken up depending on your personal preferences, suitability, requirements, and risk appetite.</p> 
<li><b>Using the emergency fund</b></li> 
<p>The financial obstacles posed in 2020 has forced several people to use their emergency funds. While an emergency fund remains a viable resource of money, especially in such times, you should keep in mind that it is a limited pool of funds. The pandemic, on the other hand, is turning out to be a lengthy and arduous battle. The next step after your emergency fund dries up is not something that a lot of people have given much thought to. A financial advisor can help you understand other sources of money in the absence of an emergency corpus. There are several options available, such as a security-based loan or a loan against your employer-sponsored retirement plan. You can evaluate these and pick the one suitable for you, based on the advice of an expert.</p>
<li><b>Letting go of some payments</b></li>  
<p>It is a financial advisor’s job to find ways for you to cut your expenses. For instance, some states are offering relaxation on mortgage payments because of nation-wide income cuts. Some credit card companies have also offered extended timelines for paying back bills. Additionally, the rate of interest for federal student loans has been waived off for some time. These special provisions are being offered in many states to ease matters for people. A financial advisor can help you identify these cost savings opportunities so that you can concentrate on essential expenses for the time being.</p> 
<li><b>Updating estate planning documents</b></li>
<p>The increasing unpredictability of 2020 has brought about the need to update or remake estate plans and health care directives. There are many provisions of an estate plan that can require professional assistance, such as drafting a comprehensive will, setting up a trust, drawing directives and power of attorneys. The relevance and applicability of each of these things may not seem evident to you, but a financial advisor can help you decide the things you need. Estate plans are crucial if you want to safeguard your family’s future. Even minor lapses can sometimes end up in probates, causing disagreements and feuds amongst family members.</p>
</ol>
<h2>To sum it up</h2>
2020 has been largely unpleasant for most people in all aspects. The implications of the year are also likely to last for a long time and alter the course of the coming years. However, getting on board a wholesome plan with the help of an experienced professional can ease the journey. If you are struggling to cope with the financial after-effects of 2020, you can get in touch with <a href="https://www.financialadvisor.net/match-advisors/search-by-zip?cta=5-ways-financial-advisors-can-deliver-value-in-the-face-of-2020s-challenges">Financial Advisors</a> and secure yourself and your loved ones from further adversities. 


2020 has been largely unpleasant for most people in all aspects. 

5 Ways Financial Advisors Can Deliver Value in The Face Of 2020's Challenges

<p>Most Americans spend their lives working hard and saving for their retirement years. However, planning for retirement can be overwhelming. It requires strategic and focused preparation in terms of budgeting, savings, and investments, among other things. According to a recent poll, the average retirement age in America increased from 60 years in the 1990s to 66 years presently. Further, the life expectancy figures in the country are also rising. An average American is likely to live until the age of 78.7 years, which means a retirement span of over 12 years. However, for Americans older than 65 years, the average income is still $38,515, and the average net worth is only $170,516, per the U.S. Census.</p>
<p>With these numbers, saving for retirement can be challenging. More so, early retirement statistics in the country are steeply rising, especially after the COVID-19 pandemic. The steadily rising average retirement age among Americans since the 1990s is now stalled. According to a recent survey, almost half of Americans (approximately 49.9%) are likely to retire before the age of 62. One of the reasons why Americans are <a href="https://www.financialadvisor.net/articles/can-i-retire-at-age-60-an-investment-guide" target="_blank">choosing to retire early</a> is because of the recent public health crisis that altered their priorities. Older Americans are especially more skeptical about returning to the office because they face a higher risk due to COVID-19. Over 3 million retirees took up early retirement because of COVID-19 related reasons. In other cases, the unprecedented soaring stock market, booming real estate prices, and more are urging Americans to take a step back. A large number of people are also considering early retirement as they want to truly unlock their golden years so that they can better enjoy their 60s. The &lsquo;life is short&rsquo; mindset is pushing many people towards early retirement.</p>
<p>Alternatively, the early retirement age in America also varies by age group. The youngest - Generation Y - between the ages of 25 and 40 years wish to stop working by 59. Generation X, between 41 and 56 years, wants to retire by 60. Baby Boomers between the ages of 57 and 75 years are likely to work longer and retire by 68.</p>
<p>While there are multiple benefits of retiring early, such as more time to live your life, less stress, etc., the biggest risk is that you have to make your savings last longer than otherwise. Leaving the workforce earlier might put added pressure on your retirement savings. Apart from that, early retirement also affects your Social Security benefits. Social Security benefits for early retirement are much lower than if you take your Social Security withdrawals at the legal age (62 years) or until the full retirement age (FRA) (between 66 and 67 for a majority of Baby Boomers). If you delay your Social Security benefits until 70 years, Social Security adds an 8% credit to your projected monthly payout each year. You can <b><a href="https://www.financialadvisor.net/match-advisors/search-by-zip?kwd=early_retirement_impact_social_security_benefits&pagetype=articles">consult with a professional financial advisor</a></b> to assess if you have sufficient funds to opt for an early retirement and the steps you can take to ensure you build a comfortable retirement savings nest.</p> 
<p><b>If you are considering taking early retirement, it is critical to know how an early retirement impacts your Social Security:</b></p>
<h2>Impact of early retirement on Social Security benefits</h2> 
<p>Legally, you can take your Social Security benefits as you turn 62. However, the earlier you choose to take your Social Security benefits, the smaller your monthly checks will be. You could stand to lose as much as 30% more than you would have received if you waited until your FRA. To receive the full benefits, you should ideally delay your Social Security withdrawals until your FRA. If you further postpone your Social Security benefits until 70 years, you can increase your payout by 32% more than if you started withdrawing at your full retirement age. The delayed increase in Social Security benefits is more than you would have received through the cost of living adjustments (COLAs), an average of 1.5% per year, which Social Security beneficiaries have been getting since the last decade. The COLA enhancements often fall short to keep up with true inflation. Delaying your Social Security benefits until your FRA or even further is a much more beneficial choice. Even if you want to take early retirement, you could consider not withdrawing your Social Security benefits until your FRA or when you turn 70, if possible. According to a report, each year, people lose over $3.4 trillion in Social Security income because of claiming their Social Security benefits too early. </p>
<p>The Social Security Administration (SSA) uses your birth year to establish your FRA. Hence, your early retirement depends on the year of your birth. Here is a chart that can help you understand your full retirement year:</p>
<table style="border-collapse: collapse; width: 100%;" border="1">
<tbody>
<tr>
<td style="width: 50%;"><strong>Born On (Birth Year)</strong></td>
<td style="width: 50%;"><strong>Full Retirement Age </strong></td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1937 or before</p>
</td>
<td style="width: 50%;" width="319">
<p>65 years</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1938</p>
</td>
<td style="width: 50%;" width="319">
<p>65 years 2 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1939</p>
</td>
<td style="width: 50%;" width="319">
<p>65 years 4 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1940</p>
</td>
<td style="width: 50%;" width="319">
<p>65 years 6 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1941</p>
</td>
<td style="width: 50%;" width="319">
<p>65 years 8 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1942</p>
</td>
<td style="width: 50%;" width="319">
<p>65 years 10 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>Between 1943 and 1954</p>
</td>
<td style="width: 50%;" width="319">
<p>66 years</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1955</p>
</td>
<td style="width: 50%;" width="319">
<p>66 years 2 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1956</p>
</td>
<td style="width: 50%;" width="319">
<p>66 years 4 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1957</p>
</td>
<td style="width: 50%;" width="319">
<p>66 years 6 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1958</p>
</td>
<td style="width: 50%;" width="319">
<p>66 years 8 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1959</p>
</td>
<td style="width: 50%;" width="319">
<p>66 years 10 months</p>
</td>
</tr>
<tr>
<td style="width: 50%;" width="319">
<p>1960 or later</p>
</td>
<td style="width: 50%;" width="319">
<p>67</p>
</td>
</tr>
</tbody>
</table>
<br>
<p>When considering your birth year, the SSA considers those born on January 1 as born in the previous year. Hence, for someone born on January 1, 1957; 1956 would be considered as your birth year and full retirement year. Your Social Security calculator for early retirement assesses your FRA and accordingly estimates the percentage of reduced benefit.</p> 
<p>Apart from your birth date, your Social Security credits impact your benefits. While you are working, you pay Social Security taxes and, in return, earn credits towards your Social Security account. Your credits determine your Social Security benefits along with your birth year. A person born in 1929 or later needs 40 credits to be eligible for Social Security benefits; 40 credits are usually ten years of work. Your credits remain on your Social Security record for a long time. So, if you take early retirement, your credits remain on your record. When you resume your job after a break, the new credits are added to your record. However, you do not get Social Security benefits for early retirement if you do not have the minimum qualifying credits. </p>
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<h2>Consider deferring Social Security even when retiring early</h2>
<p>In other instances, you can take early retirement but not withdraw your Social Security benefits even after you retire. This means you can take early retirement while continuing to enhance your Social Security payout much until age 70. The SSA does not allow you to delay your withdrawals after the age of 70. However, if you consider retiring early without your Social Security, you have to use your assets or retirement savings to fulfill your retirement expenses. Even though this puts high pressure on your retirement nest egg, this method of deferring your Social Security benefits can substantially create a longer lifetime income than taking your paycheck early.</p>
<p>This strategy of postponing Social Security benefits is even more advantageous for married couples that want to leave a higher amount of Social Security sum for their living spouse and kids. In case of the demise of a partner, the person with the higher monthly benefit between the couple will determine the survivor benefit amount for the living spouse. The living spouse cannot claim both benefits.</p> 
<p>In this situation, if you want to increase your future survivor benefit, the higher earner from the couple can delay taking their Social Security withdrawals until the age of 70 to maximize the paycheck. The lower-earning partner can begin Social Security withdrawals early in life or take early retirement if they desire.</p>
<h2>The impact of pensions on Social Security for early retirees</h2>
<p>Pensions and taxes also affect social security benefits for early retirees. Some pension plans offer a much larger monthly sum if you take early retirement. However, the benefit automatically reduces when you start withdrawing from Social Security. It is important to understand how much your pension will reduce and how much you will owe in taxes when you start taking your Social Security withdrawals. It is not wise to assume that you will get a full pension and Social Security benefits.</p> 

<p>Further, if you are a government employee or work in the education industry, your Social Security benefits might differ from what you expected because of the government pension offset (GPO) rule. Your Social Security sum is set off for the time you get a pension but is not covered under the Social Security benefit plan. If you received a pension from a job where you did not pay any Social Security taxes, the policy reduces your retirement benefits because of the Windfall Elimination Provision (WEP).</p> 
<p>Apart from these aspects, taxes also affect your Social Security benefits for early retirement. If you have a provisional income higher than $34,000, you can expect to pay federal income tax on approximately 85% of their Social Security benefits. If you file a joint return, and your couple provisional income is between $32,000 and $44,000, you can likely pay federal taxes up to 50% of your Social Security benefits. However, in case your combined provisional income is higher than $44,000, up to 85% of your Social Security benefits may be taxable.</p> 
<p>When ascertaining Social Security benefits in early retirement, consider all aspects, including your pension plans, GPO, WEP, and federal taxes. Knowing what you will get every month if you take an early retirement can help you effectively plan for the future. If you already have a Social Security account, use it to know your personalized retirement benefit and understand how different retirement ages impact your benefit amount. If you do not have a Social Security account yet, you can create one at <b><a href= "https://www.ssa.gov/myaccount/">www.ssa.gov/myaccount</a></b> or use the online Social Security calculator for early retirement at <b><a href= "https://www.ssa.gov/benefits/retirement/estimator.html"> www.ssa.gov/benefits/retirement/estimator</a></b>.</p>
<h2>Impact of part-time work on Social Security early retirement benefits</h2>
<p>If you are taking early retirement from your full-time job but have plans to work part-time after retirement, you might want to check how your part-time work affects your Social Security payout. If you take early retirement and work part-time while withdrawing your Social Security benefits before your FRA, you might find your benefits are reduced because of the ‘Social Security earnings limit’ criteria.
In 2022, if you decide to take the ‘retire early’ option while working part-time, your earning limit is $19,560. For every $2 you earn above this limit, your Social Security benefits are reduced by $1. Hence, in 2022, if you have a part-time job that pays you $25,000 a year ($5,440 above the maximum income limit), the SSA will lower your Social Security paycheck by $2,720. If you reach your full retirement age in 2022, your earning limit is $51,960. In this case, $1 in benefits is withheld for every $3 earned over the income limit. This is applicable until the date you reach your FRA. Your benefits stop reducing once you reach your FRA, irrespective of how much you earn.</p>
<p>If you have your own business, your earnings are your net income. However, if you receive wages or income from an employer, your earnings limit is calculated according to your gross pay. The earnings cap is applicable only on income from work and excludes any investments, annuities, pension, and capital gains. Further, if your Social Security benefits are lowered because you earned above the specific limit, your spouse and children will receive the reduced sum, irrespective of their income.</p>
<h2>Consider a test retirement</h2>
<p>Early retirement Social Security benefits might not be ideal, especially if your retirement living expenses are likely to be primarily dependent on your Social Security paycheck. Hence, instead of paying the Social Security early retirement penalty, it is advisable to consider a test retirement first and assess if you can manage an early retirement.</p>
<p>Most people want to retire early but do not enjoy the non-working phase so much and eventually get bored. According to a recent report, 39% of workers aged 65 have already taken retirement once but returned to work later. Evaluate your retirement readiness before you take early retirement to check if you want to step back or step away from the workforce. You could take a long leave of absence and return to work after a test retirement phase. If you feel refreshed post the testing phase, you may be able to work longer than before and push your Social Security retiring withdrawals further in the future.</p>
<h2>To conclude</h2>
<p>On average, a retiree can substitute 40% of their retirement income through Social Security benefits, provided they retire at their FRA. If you are considering retiring early, reassess if your retirement corpus will be able to sustain your living expenses during the non-working years. Moreover, regardless of whether you take Social Security benefits early or later, your retirement nest egg should be sufficient to support your retirement.</p>
<p>As you make your retirement plan, know how much you would need to sustain your living expenses and check whether early retirement is feasible given your early retirement plans. If early retirement is possible, determine how much Social Security benefits you will receive and the remainder corpus you need to build to live a financially secure retirement. To get expert guidance in retirement planning, you can also seek advice from a professional financial advisor and create a solid foundation for your future.</p>
<p>If you’re looking for a financial advisor who can guide you on how to maximize your Social Security benefits and align them with your retirement plans, use the <b><a href="https://www.financialadvisor.net/match-advisors/search-by-zip?kwd=early_retirement_impact_social_security_benefits&pagetype=articles">free advisor match service</a></b> and get matched with 1-3 vetted financial advisors that can help you with your unique financial needs and goals. </p>

On average, a retiree can substitute 40% of their retirement income through Social Security benefits, provided they retire at their FRA.

How Does An Early Retirement Impact Your Social Security Benefits?

<p>When faced with a monetary problem, you often tend to turn to financial advisors for help. There is a belief that professional advice will provide the required solution and help you keep your financial plan afloat. But while the solution might seem easy, it is important to ensure that it is the best one for you. More than the advice, it is critical to be sure that it is coming from the right source. To ensure your financial advisor is the best suited for you, it is vital to check their credentials.</p>
<p>Here are some surefire tips to determine the suitability of your financial advisor:</p>

<ol>
<li><b>Assess registrations and regulators</b></li>
<p>Even though there are many regulatory bodies for financial advisory firms, certain authorizations are more respected than others. You should determine which authority the advisor is registered with and governed by. Ideally, most financial professionals are registered with FINRA (Financial Industry Regulatory Authority) or the SEC (Securities and Exchange Commission) FINRA. In case, the regulatory power resides with FINRA, the consultants must have a securities license along with other permits. You can visit FINRA’s official website to authenticate the person concerned. All financial professionals or brokers should be regulated by FINRA. Alternatively, if the advisors are regulated by SEC, the same can be searched on its website. In many cases, the advisor could be listed on both agencies – FINRA and SEC. This makes their credentials even stronger.</p>

<li><b>Verify professional licenses</b></li>
<p>A good financial advisor must qualify and possess the General Securities Representative license, also called the Series 7. This license is a confirmation that the person has a basic knowledge of investments and markets. It implies that the financial advisor understands market regulations and is qualified to provide an opinion. Financial experts should also have the Series 63 license (Uniform Securities Agent State license), which permits them to conduct business across different states. For other add-on products, such as insurance, a special license is required. Another important accreditation needed is the Series 65 (Uniform Investment Advisor Law exam), which allows them to charge a fee for the services rendered. These three authorizations are the most desirable in a professional. You must check the applicable permits in advance before you hire an advisor for any of these services.</p>

<li><b>Determine designations and certifications</b></li>
<p>Hiring the perfect investment advisor is a daunting task. You trust this individual with your money, life savings, and precious assets. That is why the selection must be based on the person’s expertise and experience. The first step in this regard is to know the designation of the expert and understand what it means. Today, the word advisor is used so liberally that you could end up entrusting an incapable person, and jeopardize your financial plan. Ideally, you should check for individuals who are CFP (Certified Financial Planner) designated. A CFP authorized financial professional has the necessary education, experience, and ethics required for the job. Alternatively, PFS (Personal Financial Specialist) is another authorization you can trust. The title is only awarded to CPA (Certified Professional Accounts) and is ideal for people who have advance tax-planning needs. For retirement assistance, you can check for an advisor who has an RMA (Retirement Management Advisor), RICP (Retirement Income Certified Professional) or CRC (Certified Retirement Counselor) certification.</p>

<li><b>Engage a fiduciary</b></li>
<p>If you want a lawful confirmation that the hired investment advisor will offer you the best suggestions possible, then always opt for a fiduciary. This would imply that the person you engage with has lawfully pledged to act in your best interest at all times. In other cases, the person handling your money is not under the pledge. Hence, you might be dealing with a sustainability standard. As per this standard, the person will offer you a suitable counsel but not necessarily the best or ideal one, based on your interest. For people hiring an expert, engaging with a professional who is an RIA (Registered Investment Adviser) or who works for one can be a great choice. These people have a fiduciary duty bestowed by the Investment Advisers Act, 1940, to act in the best interest of their clients. They also always place their client’s aim before themselves.</p>

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<li><b>Conduct a background check</b></li>
<p>Apart from all other factors, it is very important to conduct a deep assessment of the background of the financial advisor. The educational qualifications, valid credentials, legal contracts, etc. must be verified before finalizing the deal. You must also check for two extremely critical facts – any criminal convictions or if the person has been under investigation by any regulatory or legal authority. Moreover, know if there are any inquiries set up by an investment-industry group against the person concerned.</p>
<p>A background check on the credentials must also be done beforehand. This will help you be certain of all the professional designations, qualifications, and certifications the person claims to have. Check the validity and legitimacy of each certification and also verify the discipline history, conflicts of interest, etc. For checking all disciplinary records issued in 2005 or later, you can check the <a rel="nofollow" href="http://www.finra.org/industry/finra-disciplinary-actions-online">FINRA Disciplinary Actions Online database</a> Actions Online database. A lot of state regulators also maintain a discipline record. For specific insights into insurance agents, you can check the database maintained by the National Association of Insurance Commissioners. </p>

<li><b>Know the pay structure</b></li>
<p> Even though you are not directly connected with the pay structure of the financial advisor, it can hugely influence your monetary status. Typically, the professionals in this field charge commission from the clients or offer their services at an hourly or flat rate. A commission is paid every time the client executes a transaction (buys or sells an investment). It is important to know the pay structure of the advisor to be sure that you are being given unbiased professional suggestions and not being steered in any direction for the ulterior motives of the financial advisors. You should try to avoid commission-based pay since that will hold a risk of favoritism. Also, flat-rate professionals are not the best choice since they might offer advice that helps them increase their annual fee. For individuals with limited assets and non-complex plans, an hourly rate is the best suited.</p>

<li><b>Beware of overstating advisors</b></li>
<p> When evaluating the credentials of financial planners, you must assess their ability to understand the client and then devise solutions. A person who makes flamboyant claims about increasing your portfolio’s worth and promises to beat market movements, is not the ideal candidate for you. You want to entrust your hard-earned money into the hands of the person who is concerned about your financial goals, risk-capacity, time horizon, liabilities, etc., and provides sound advice across all financial concerns. Market beating claims might sound promising but involve a huge risk too, which could leave you with considerable losses if the market sinks.</p>
</ol>

<h2>To sum it up</h2>
<p>The role of a financial advisor stretches beyond just executing transactions on your behalf. They are a partner in your monetary journey, who help you achieve your desired financial goals. They lay the foundations of your adequately-funded future and hence, their selection must be made with utmost caution and prudence.</p> 
<p>For authorized, legal, and authentic advice, you can contact experienced <a href="https://www.financialadvisor.net/match-advisors/search-by-zip?cta=surefire-tips-to-check-your-financial-advisors-credentials">Financial Advisor</a> </p>




The role of a financial advisor stretches beyond just executing transactions on your behalf. They are a partner in your monetary journey, who help you achieve your desired financial goals

Surefire Tips to Check Your Financial Advisor's Credentials

<p>Engaging a financial advisor is like hiring someone who will be an anchor for your monetary decisions and who will lay the foundation for your investments. Not only yours, but the future of your loved ones also depends on how well your professional advisor can protect your current assets and build your future investments. So, try to be patient while selecting your ‘monetary in-charge’ and take each step of the process with calmness, consideration, and caution.</p>  
<p>To ensure you get the right candidate, here are 10 <a href="https://www.financialadvisor.net/articles/15-questions-to-ask-a-financial-advisor-in-2023" target="_blank">questions you must ask an advisor</a> before hiring them:</p>
<h2>Question 1: What certifications and qualifications do you hold?</h2> 
<p>You would not like to hire a person who is not eligible or worthy of providing advice. Your investments, assets, properties, retirement accounts, etc. are your precious savings for the future and putting them in the hands of an individual who is not qualified can prove detrimental. Hence, the first question you can ask a financial advisor is about their certifications. It helps to choose a Certified Financial Planner (CFP) since these professionals hold the necessary qualifications, education, experience, and ethics required for the job. You can also consider individuals that have the Personal Financial Specialist (PFS) designation. These people have expertise in advanced tax-planning and are qualified to provide monetary advice. Based on your age or particular goal, you can further narrow down your qualification search. For instance, an RMA (Retirement Management Advisor) or RICP (Retirement Income Certified Professional) may be adequate for retirement help.</p>
<h2>Question 2: What are your governing regulations and professional licenses?</h2>
<p>It is advisable to hire a professional who is registered with FINRA (Financial Industry Regulatory Authority) or the SEC (Securities and Exchange Commission) and holds relevant licenses. A good financial advisor should also have the General Securities Representative or the Series 7 license. This confirms that the individual has substantial investment knowledge and is qualified to provide opinions on financial matters. Check all applicable licenses required for the services proposed.</p>
<h2>Question 3: Do you work on a fiduciary relationship model? </h2>
<p>The third most important question is to know where the interest of the financial advisor lies. You can look for a person who is willing to offer unbiased suggestions that ultimately lead to better results. This is possible only when the concerned individual places your interest before their own and is not biased towards a certain product. Check if your financial advisor is a fiduciary. Fiduciaries pledge to act in the best interest of their clients at all times. They are different from other specialists who may provide counsel that suits their motives and not yours. You can choose to liaise with experts who work for an RIA (Registered Investment Adviser). These people have a fiduciary duty as per the Investment Advisers Act of 1940 to serve the best interest of their clients.</p>
<h2>Question 4: What is your expertise and what types of clients do you serve?</h2>
<p>If your goal is more comprehensive than investment management, it is advisable to assess if the person has expertise in other domains of financial planning. It is beneficial to know your advisor’s skills in wealth management, estate planning, retirement planning, etc. Some expert services that you may look for include:</p>
<ul>
<li>Retirement planning</li>
<li>Tax planning</li>
<li>Saving for higher education</li> 
<li>Cash flow planning</li>
<li>Trust and estate planning</li>
<li>Insurance planning</li>
</ul>
<p>Additionally, try to understand what kind of clients your advisor is linked to. This may help to determine their expertise and suitability.</p>
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<h2>Question 5: Have you been issued a warning or a disciplinary notice?</h2>
<p>No matter how qualified or certified an individual is, a background check is vital. Knowing things such as disciplinary actions, criminal convictions, or investigations authorized by regulatory or legal authorities – can be very critical. Moreover, it would be helpful to find out if there are any inquiries set up by an industry investment group. You can cross-verify with the <a href="http://www.finra.org/industry/finra-disciplinary-actions-online">FINRA Disciplinary Actions Online database </a>or other state discipline records.</p>
<h2>Question 6: What is your payment structure?</h2>
<p>An advisor’s fee can affect the type of advice and your budget. It is vital to know this to be sure that you are getting unbiased professional advice. Financial specialist should not steer you in a particular direction for their ulterior motives. Instead, help should be offered in good faith and by placing your interest above all other factors. A fiduciary relationship can ensure that you get unbiased financial advice.</p> 
<h2>Question 7: What will be the total cost?</h2>
<p>The hourly costs, commissions, and flat fees are not all that is likely to go out of your pocket. There are many other kinds of fees that financial advisors charge their clients for additional services., There are costs that may not be disclosed to a client, such as brokerage and fund fees, trading costs, etc. Hence, it is recommended to inquire about all hidden costs upfront to set the right expectations from the beginning.</p> 
<h2>Question 8: What is your guiding investment philosophy?</h2>
<p>An important factor to know about your financial advisor is their investment policy. Ideally, their policy should be in your favor, framed to suit your age, risk-capacity, current and future goals, time horizon, existing liabilities, possible stakes, etc. You could choose a risk-averse strategy or an aggressive mode. However, the crux is for both parties to be on the same page. You may also keep a tab on the asset allocation approach of your advisor. If you wish to have a diversified portfolio, you can ensure that your advisor chooses domestic and international stocks. It would also help to secure a well-balanced mix of large-cap, mid-cap, and small-cap companies.</p>
<h2>Question 9: What will be the structure of this relationship?</h2>
<p>Since you would be involved in a long-term professional relationship, there will be a certain pattern that your advisor will follow. This could include in-person meetings, frequent calls, email exchanges, etc. Generally, it varies from engagement-to-engagement and is dependent on the client’s preference. Hence, it is advisable to set the right tone of communication frequency and pick a mode that is suitable to your schedule. You can also inquire about your advisor’s availability at odd-hours or for emergency meetings. In addition to this, feel free to request modifications, wherever required.</p>
<h2>Question 10: What are the gains your financial services provide?</h2>
<p>Remember that you hire an advisor not to pay their expenses, but to reap better benefits from your investments. Hence, it is critical to know what value the advisor brings to the table. Ideally, try to understand an advisor’s investment benchmarks such as the S&P 500, etc. to set your expectations. Most advisors also provide individual estimations of where they expect to reach by the end of a particular period. Try to be wary of a person who makes flamboyant claims or assures an increase in your portfolio, or to beat market movements, or to secure you against market volatility. Such events cannot be accurately predicted and overstating claims such as these cannot be relied upon. It is recommended that you work with someone who understands your goals, risk-appetite, tenure preference, liabilities, etc. and then accordingly plans for your financial growth.</p>
<h2>To sum it up</h2>
<p>Selecting a financial advisor requires great trust. It is a critical decision made in the present that can either build or jeopardize your future. In this regard evaluations and considerations done with precision can help you be 100% sure of your investment choices.</p> 
<p>If you are looking to create wealth, qualified and trusted guidance from professional <a href="https://www.financialadvisor.net/match-advisors/search-by-zip?cta=10-questions-to-ask-a-financial-advisor">Financial Advisors</a> can be a secure way forward.</p> 


Selecting a financial advisor requires great trust. It is a critical decision made in the present that can either build or jeopardize your future. 

10 Questions To Ask A Financial Advisor

<p>A market is a dynamic place full of ups and downs. When you begin your investing journey, you open yourself to a certain degree of risk. No matter how cautious you are or how well-calculated or planned your investments are, there is always a risk component when it comes to investment. Despite being familiar with these basic concepts, as an investor, you are likely to experience stress, panic, and anxiety when your investments take an unfavorable turn. However, this is where the expertise and professional assessment of a financial advisor can help you.</p>

<p>If you are confused about holding or folding a poor-performing fund, it may be time for you to understand and discuss the following aspects with your financial advisor:</p>
<ol>
<b><li>Analyze the relative benchmark</li></b>

<p>All funds are susceptible to poor performance from time to time, depending on various market forces. Hence, it may not always be appropriate to be alarmed by a poorly performing fund. One way to be certain about how far the fund has fallen is to measure it with a relative benchmark. The S&P 500 index is one effective way to measure funds. The index is an indicator of the 500 biggest companies in the US. Conducting a comparative study on your fund with the S&P 500 index as a benchmark can present an accurate performance score. Passively managed funds are generally better at tracking the benchmark. However, a financial advisor too can help you understand your fund’s performance in relation to a benchmark.</p>

<b><li>Understand the ‘buy when low and sell when high’ fundamental</li></b>
<p>One of the first principles of investing is to buy when the stock is at a low price and sell it when the stock is priced high. Yet many investors start to panic when the value of their funds begins to fall. If you decide to fold your fund when the market is down, you may lose out on the chance to recover. If you consult a financial advisor on this issue, the advisor may suggest to invest more in the fund. When a fund falls, you should look at it as an opportunity to rebalance your portfolio by buying more units. You can sell these funds later, at a higher price to earn a profit. It also helps not to solely depend on the past performance of a fund while making crucial decisions. Past performances are often not accurate to predict the future of a fund. Concentrating on current trends and capitalizing on present opportunities based on your sensibilities can ensure a more wholesome way to ride out losses and earn more gains.</p>    
<b><li>Look at your portfolio’s asset allocation strategy</li></b>
<p>When you are looking at a poor performing fund, you must also look at your portfolio’s overall asset allocations strategy. Typically, a well-balanced and diversified portfolio contains a combination of stocks, bond, cash, and cash equivalents. Many investors keep a major portion of their money invested in safer instruments such as bonds. Their allotment to aggressive instruments such as stocks is comparatively lower. This strategy helps you ride out any market downturns by creating an equilibrium. While deciding to either hold or fold a fund, it is essential to move past, the past-performance of the fund. Moreover, instead of looking at the fund as an individual investment, you should try to shift your gaze to how the fund diversifies your overall portfolio. It also helps to ensure that your portfolio has a mix of large and small cap investments, short-term and long-term stocks, and growth and value stocks. In addition to this, you must understand that these asset classes are bound to follow market cycles of upward and downward trends. So, instead of looking at the performance of a fund separately, focus more on how to balance your overall portfolio to reduce risk. You can discuss suitable asset allocation strategies with a financial advisor.</p> 
<b><li>Evaluate the cost of the fund</li></b>
<p>While most investors look at the performance of the fund, they ignore the kinds of other costs involved. When looking to hold or fold, it can be more beneficial to calculate the overall expenses incurred over the investment. This can include annual administrative fees, management expenses, trading costs, etc. High turnover funds usually come with added hidden costs, rendering the returns of your investment worthless. Instead, it helps to invest in low turnover and low-cost funds and experience better returns. There have been several studies that show that low-cost funds offer better performance then high-cost funds. You can take assistance from a financial advisor to select the most ideal funds as per your budget, investment appetite, future and current goals, and time horizon. A fund’s turnover ratio is an important indication of its performance too. Make sure you discuss this with your financial advisor before finalizing any buying or selling.</p> 
<b><li>Calculate the involved taxes</li></b>
<p>When contemplating whether to keep or sell a fund, the money spent on taxes plays a crucial role. Sometimes a fund may have lost its value but could be costing you money in the form of taxes. Under such circumstances, it could make more sense to sell the fund and eliminate your tax burden. In the absence of capital gains, you can also withhold up to $3,000 worth of loss and carry it forward to the coming years. However, if you decide to invest in a similar fund within 30 days from the date of sale, you will not be allowed to benefit from this strategy. This is often referred to as the wash sale rule.  You can consider using the money from the sale to invest again in a similar type of fund. But it is important to wait for a minimum of 30 days.</p> 
</ol>
<h2>To sum it up</h2>
<p>Analyzing the performance of a fund is not a one-dimensional approach. You may need to look at various aspects and understand how they affect you in the long run. Management costs, taxes, benchmarks, asset allocation strategies, and diversification principles are all essential components that need attention and focus while assessing the performance of a fund. The decision to hold or fold also depends on where you stand in life and what your immediate and future goals are at a given time. Keeping in mind your time horizon, risk appetite, and portfolio’s overall vision, a financial advisor can advise you a suitable way forward.</p> 
<p>If you are still unsure on whether to sell or keep a poorly performing fund, you can get in touch with <a href="https://www.financialadvisor.net/match-advisors/search-by-zip?cta=holding-vs-folding-a-poor-performing-fund-points-to-discuss-with-your-financial-advisor">Financial Advisors</a> and discuss all your options.</p>


Analyzing the performance of a fund is not a one-dimensional approach.

Holding vs Folding a Poor-Performing Fund: Points to Discuss with Your Financial Advisor

Even though the current advisory fees tax deductible IRS status is non-deductible, with the expiry of the Taxes Tax Cuts and Jobs Act in 2026, the rules may change, and favorable tax benefits for financial advisory services can likely come into force.

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5 Ways Financial Advisors Can Deliver Value in The Face Of 2020's Challenges

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