Get smart with your money
You can now manage most aspects of your money without ever consulting another human being. You can budget, borrow, save, invest, buy insurance, prepare your tax return and create a will — among many other tasks — by using apps, websites and software.
But technology still has limitations, especially when you’re facing a money situation that’s complex or involves judgment calls. In my latest for the Associated Press, when to consider consulting a human expert.
Dear Liz: I’ve read your advice and that of many others to only use a fee-only financial planner. However, we’ve never felt like we could afford that expense, and many of the planners I’ve found wouldn’t take accounts as small as ours anyway. We’re in our mid-40s and feel like we’ve wasted many years waiting to be “ready” for a fee-only planner. Is it really better to have zero financial planning advice, rather than just using a free planner?
Answer: A “free” planner is typically an advisor who is paid by commission. You may not pay for the advice directly, but you could wind up with underperforming, overpriced investments because the advisor is not required to put your best interests first.
You can find certified financial planners who charge by the hour at Garrett Planning Network, and the XY Planning Network represents planners willing to charge monthly retainers. Many discount brokerages and robo-advisors offer access to certified financial planners, as well. You might also consider an accredited financial counselor or financial fitness coach, which you can find through the Assn. for Financial Counseling & Planning Education. Whereas many certified financial planners cater to higher income people, coaches and counselors handle issues relevant to middle- and lower-income Americans, including budgeting, debt management and retirement planning.
Stock market crashes don’t just test investors’ mettle. Abrupt downturns also can reveal what kind of financial adviser you have.
Some people will discover, to their horror, that they’ve been dealing with outright crooks. Ponzi schemes are among the cons that fall apart when markets do, as investors try to pull their money out and discover it’s gone.
In my latest for the Associated Press, how to determine if your financial adviser is meeting your expectations.
Robo-advisers have been around long enough that the question is no longer whether you should turn your investment decisions over to a computer. Now the question is: Why wouldn’t you?
The success of Wealthfront and Betterment, two startups that helped launch the trend, led mainstream investment companies including Vanguard, Schwab and Fidelity to add robo-advice services in recent years. Depending on the robo-adviser, you may also have access to human financial advisers, socially responsible investments and tax-loss harvesting to help reduce tax bills.
This is not, and never really was, a niche product only for tech-happy millennials. From the beginning, investors of all ages spotted the significant advantages of letting computers run their portfolios. In my latest for the Associated Press, the advantages of robo-advisers.
Gaylen Rust must have seemed trustworthy to the people who gave him money.
Rust was a longtime businessman in Layton, Utah, where he ran a coin shop started by his father in 1966. Rust also founded a charity called Legacy Music Alliance that funded arts programs in schools. An admiring 2013 profile in The Salt Lake Tribune called Rust “the state’s biggest proponent of arts education.”
Federal and state regulators, however, say Rust was running a Ponzi scheme. Civil lawsuits filed late last year by the Securities and Exchange Commission , the Commodity Futures Trading Commission and the Utah Division of Securities say Rust, his wife and one of his five children persuaded hundreds of friends, customers and business associates across the country to invest more than $200 million in a bogus silver trading pool.
When scam artists target groups of people who know each other or have something else in common, such as religion, it’s known as “affinity fraud.” In my latest for the Associated Press, why you shouldn’t rely solely on recommendations from friends and family when choosing a financial adviser.
If you want money advice you can trust, your best bet is to hire a fee-only financial planner. The trick is finding a planner who’s willing to be hired for a reasonable fee.
Fee-only planners don’t accept commissions or kickbacks and are paid solely by client fees. Most use an “assets under management” model where they manage their clients’ investments and charge an annual fee of about 1 percent. To make the math work, these financial planners usually require people to have hundreds of thousands of dollars to invest. Otherwise the advisers would reap too little from their fees to justify the hours spent creating financial plans.
This is obviously a problem for people who don’t have enough assets. In my latest for the Associated Press, how to find financial advice that isn’t based on the size of your portfolio.
Today’s top story: Habits that can help you build good credit. Also in the news: Lessons from the oil boom and bust, replacing your financial adviser, and how to prepare for the new Obamacare tax form.
4 Habits That Can Help You Build Good Credit
Getting in the habit of building credit.
Five personal finance lessons from the oil boom and bust
What you can learn from the volitaile oil market.
Should You Replace Your Financial Adviser In 2016?
How to tell if you’re getting your money’s worth.
Are you prepared for new Obamacare tax forms?
New year, new tax form.
Today’s top story: What Yoda would say if he were your financial adviser. Also in the news: Why the IRA will audit you, why waiting for perfect finances is futile, and how your New Year’s Resolutions can actually hurt your credit.
10 things Yoda would say if he were your financial adviser
Save money, you will.
7 Reasons the IRS Will Audit You
Avoid hoisting these red flags.
When It Comes to Your Finances, Don’t Let Perfect Get in the Way of Better
Waiting for perfection will only dig a deeper hole.
3 New Year’s Resolutions That Can Hurt Your Credit
Yes, you read that correctly.
Today’s top story: The bills you need to prioritize when you’re short on cash. Also in the news: Divorcing your financial adviser before your spouse, what to do when you get an inheritance, and the potential drawbacks to buying a home with an FHA loan.
Prioritize These 5 Bills When You’re Short on Cash
Creating an order of importance.
Before divorcing your spouse, consider divorcing your financial adviser
You’ll need someone who’s only in your corner.
What to do when you get an inheritance
Besides tapdancing, of course.
The Drawbacks of Buying a Home With an FHA Loan
Knowing the potential downsides.
FTC Shuts Down 12 ‘Rogue’ Debt Collectors
The tactics they used to collect a debt will stun you.
Today’s top story: The most common used car buying scams. Also in the news: Saving an extra $1,000 by Labor Day, how to keep “funemployment” from draining your savings, and the qualities you should look for in a financial adviser.
5 of the Most Common Used Car Buying Scams
Don’t get taken for a ride!
How To Save An Extra $1,000 By Labor Day
Just in time for the beginning of holiday shopping.
Keep Funemployment From Draining Your Bank Account
It’s only fun if you can afford it.
4 Qualities a Financial Adviser Ought to Have
A combination of Yoda and Warren Buffett.