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Special Report

Money Matters

by DG Gridley

Financial planning is best done throughout one’s working life rather than at the end. Better late than never still applies to financial planning, however. As you have probably heard before, a person who finds themselves in dire financial straits in their golden years did not plan to fail. They failed to plan. Money, like water, is very fluid and must be contained (managed) or it will drip away. Retiring with sufficient funds requires a strategy, and to plan a strategy one must determine where one is currently and then decide where one wants to be. How to get from here to there is the challenging part.

Financial planners spend countless hours in the world of “how to best manage money” to make it grow and last and to protect it. There are many details written into an endless array of financial products which means that a financial planner must be a lifelong learner. Tests and continuing education credits are required for licensing. Financial planners are scrutinized carefully internally for compliance with company standards (unless they operate independently) and for compliance with several regulatory government entities.

The best way to plan for retirement is to meet with a financial planner regularly, at least once a year. Financial planners vary greatly in their qualifications and their method for charging clients, but most offer an initial consultation without obligation. Some planners charge a per hour or service fee, others work on a commission basis.  To find the ideal financial planner, it is wise to interview them for a good fit. After all, they will be working for you if you choose them, so you should do due diligence to make sure they will serve your needs. What is their experience? References? Education?

Another matter that must be considered in choosing a financial planner is their affiliation which may affect their recommendations.  A bank sponsored financial planner may not take your insurance coverage into account, for example, even though the Gramm–Leach–Bliley Act (GLB), also known as the Financial Services Modernization Act of 1999, (Pub.L. 106-102, 113 Stat. 1338), was enacted November 12, 1999. It repealed part of the Glass–Steagall Act of 1933, removing barriers in the market among banking companies, securities companies and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. With the passage of the Gramm–Leach–Bliley Act, commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. The legislation was signed into law by President Bill Clinton. Insurance coverage, or the lack of health, life, disability, long term care and property insurance can have a profound effect on one’s finances.

If you do not like the idea of disclosing your financial information with a financial planner because you do not have enough financial knowledge to feel comfortable with them, there are many books and audio books at the library to help you learn the basics of money management. Financial literacy is a skill set that is a combination of natural ability and education, therefore it is more difficult for some to learn than for others. In other words, it may take more effort and time for you to become financially literate than for your friend.

Of course, we have all heard of Suse Orman, Dave Ramsey, and maybe David Bach or Robert Kiyosaki. They have made their fortunes and have strong opinions about financial matters. One must remember that they are just that: opinions. When learning from them it is wise to distinguish between the facts they are telling us and the way they feel about those facts. We each have opinions too and we should learn as much as we can so that we have informed opinions. Each of us is an individual with different personalities, or in the financial world, risk tolerances. We make decisions accordingly.  In this age, the information age, we have no excuse for not seeking out the knowledge we need to best handle our money wisely according to our risk tolerances. With enough learning, of course, we would not need a financial planner; unless you believe, like me, that two heads are always better than one, and that is why I like the idea of meeting with a team of knowledgeable people rather than with just one financial planner. That way, in addition to the advantages of accountability, if something happens to one person, others will be there to carry the plan on to fulfillment.

In addition to reading or listening to books on the subject, take advantage of free seminars and classes. Attending classes and seminars on legal topics will also be helpful because financial and legal issues are often intertwined. Especially concerning elder law matters. As with insurance, the lack of certain legal documents can have a profound impact on one’s finances.

I have personal experience with a family who had a father who made poor decisions with his money in the early stages of Alzheimer’s, before the family was aware that he was suffering from dementia. The executive decision making function of the brain is the first to go. When the family realized that the father was unable to care for himself, it was too late. The family fortune that his wife had inherited was gone. If the father had met yearly with a financial planner along with his son or some other trusted family member, the loss of funds would have been detected in time, possibly. There is no reason to allow a family member to be swindled when simply accompanying them to meetings with a financial planner will prevent them from being taken advantage of. Elder financial exploitation is a growing problem, and financial knowledge is the power we need to combat it.

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