You’ll want these three all-stars working for you
You can do it! This is the age of information and access. There has never been a better time to take control of your finances yourself than right now. You don’t need help! You can do it all yourself!
That sure sounds good, doesn’t it? But it’s a bunch of hype and it’s potentially damaging to your finances. Trust me; I’ve seen it many times.
But it’s cool if you are one of those DIY lone wolf kinds of guys. If you want to do a lot of it yourself, you definitely can, but just be open to help. It’s impossible to know and do everything. This stuff is too complex and there’s too much money on the table to mess around. It’s easy to get caught picking up pennies in front of a steamroller or whatever that saying is. I’ve been involved in finance, investments, and financial planning for nearly 20 years and I get help.
The question is what kind of help should you seek? There are a few different types of advisors that could be on your team – I call them:
THE ADVISOR TRIAD
- Legal. Why would you need an attorney? No, that’s not a rhetorical question. You’ll need an estate planning attorney to help you create your estate plan, which we’ll talk about later. You may need a tax attorney for tax matters, or maybe a general business attorney if you start a company
There are lots of different kinds of attorneys and there are many reasons you may need one from time to time.
Here’s a bit of trivia for you. What’s the difference between an attorney and a lawyer? A lawyer is someone who has graduated from law school. An attorney is someone who has graduated from law school and is licensed to practice law.
- Tax. Because taxes will most likely be one of your biggest expenses, it makes sense to get an expert on your team who can help you not just file your taxes, but also help you legally reduce your taxes. For this, you may work with a CPA or an Enrolled Agent. This person will be, or at least should be, a key member of your team. With just one simple strategy or suggestion, they can cover their fees many times over.
- Financial. Financial folks come in two flavors. There are the investment only guys. These are the people who don’t really care much about your taxes, won’t ask you many questions about your retirement goals, and will not spend any time on helping you make smart financial decisions. They are 100% focused on investments. If you have a question about asset allocation, they can answer it. If you have a question about the best retirement account to minimize taxes, you might as well ask Siri instead.
The second type of financial person is the comprehensive financial planner. This is the person who looks at your entire financial situation and can advise you on budgeting, estate planning, tax planning, retirement, and yes, most also can manage your investments as well.
If I had to choose, I’d always go with the comprehensive financial planner. Why? Because I am one and I’m biased. Besides that, I think to get the biggest bang from your finances and to make the best decisions, you need someone who sees how all the pieces fit together and who knows how what you do over here will affect what happens over there.
If you are in a high tax bracket and want to lower your taxes, should you invest in municipal bonds? True or false? If you recall, the unique thing about interest income from municipal bonds is that it is, what? Tax-free! So, true. You’d want to invest in municipal bonds. If your investment only guy isn’t aware of your tax situation, they may invest you in taxable bonds. It pays to have someone looking at and providing advice on everything.
Okay, so, what’s the lesson here?
The best and most successful professional athletes all have coaches, people they hire to help them perform better. When it comes to your finances, you might also benefit from hiring a coach or two. The three most common areas are tax, legal, and financial.
If you had to start with one, I’d suggest starting with a comprehensive financial planner, but with hundreds of thousands of people calling themselves financial planners, how can you find the right one for you? Is it possible that I keep asking these annoying rhetorical questions at the end of each lesson to keep you reading? Argh! Another rhetorical question. I can’t help myself!
The proceeding blog post is an excerpt from Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth, available now on Amazon.
About the Independent Financial Advisor
Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.