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FAQs

FAQs

What is a financial advisor and why do I need one?

Financial advisors can draw up plans or recommend specific investment products and vehicles to meet the needs of their clients. Some advisors charge a straight commission every time they make a transaction or sell you a product. Others charge a fee based on the amount of money that they manage, or an hourly fee.

Are financial advisors’ fiduciaries?

Financial Advisors are fiduciaries, they must disclose their fees and always do what is in the best interest of the client’s financial needs..

How are financial advisors compensated?

Financial Planners are paid in two ways, by earning flat fees or by earning commissions.

A fee-only financial advisor is paid a set rate for the services they provide rather than getting paid by commission on the products they sell or trade.

What would I take to my first meeting with a financial advisor?

The first meeting with a financial advisor establishes the relationship. It should give you a clear understanding of the needs, expectations, and goals of your professional partnership.

What is retirement planning?

Retirement planning determines retirement income goals and the actions and decisions necessary to achieve those goals. Retirement planning includes identifying sources of income, sizing up expenses, implementing a savings program, and managing assets and risk.

What’s the difference between putting money into a savings account and investment account?

There's a difference between saving and investing: Saving means putting away money for later use in a safe place, such as in a bank account. Investing means taking some risk and buying assets that will ideally increase in value and provide you with more money than you put in, over the long term.

What is the difference between qualified money and non-qualified money?

The difference between a qualified and non-qualified annuity is whether the annuity is purchased with pre-tax funds or not. Examples of untaxed, qualified annuities are 401(k) and IRA plans. Non-qualified annuities are purchased with money that's already been taxed.

What is the difference between an IRA and Roth IRA?

A Roth IRA is a twist on the traditional IRA. You'll contribute post-tax, which means you won't pay taxes on withdrawals in retirement. You can't contribute if you earn over a certain amount per year, and you can't deduct contributions on your tax return.

What do I do with my previous 401K plan from an old employer?

Keep your 401(k) with your former employer. Most companies—but not all—allow you to keep your retirement savings in their plans after you leave. Roll over they money into an IRA.

How do I start a SEP IRA for my employees?

A simplified employee pension (SEP) is an individual retirement account (IRA) that an employer or self-employed individual can establish with a financial advisor.

What is an I-Bond?

I bonds have an annual interest rate derived from a fixed rate and a semiannual inflation rate. Interest, if any, is added to the bond monthly and is paid when you cash the bond. I bonds are sold at face value; i.e., you pay $50 for a $50 bond.

How much money do I need to be able to retire?

Retirement experts have offered various rules of thumb about how much you need to save: somewhere near $1 million, 80% to 90% of your annual pre-retirement income, 12 times your pre-retirement salary.

Why do I need life insurance?

Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.

How much life insurance should I carry?

Calculate the amount of life insurance needed is to multiply your annual salary by the number of years left until retirement. For example, if a 40-year-old currently makes $20,000 a year, they will need $500,000 (25 years × $20,000) in life insurance.

If I have life insurance through my employer, why do I need it through somewhere else?

If you leave your job your life insurance coverage may end when you leave that job. It is also usually not enough coverage you need in life insurance.

What is the difference between whole life and term life insurance?

Term life is “pure” insurance, whereas whole life adds a cash value component that you can tap during your lifetime. Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—if you can keep up with the premium payments.

What happens if I get in a car accident?

If you were at fault in a car accident and you live in a fault state, you (or, usually, your car insurance) is responsible for the other drivers' damages. The other driver(s) will be entitled to file a claim with your insurance company.

How do I know if I have enough homeowner’s insurance?

For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local, per-square-foot building costs. (Note that the land is not factored into rebuilding estimates.)

What does an umbrella policy and why would I need one?

Umbrella insurance is extra insurance that provides protection beyond existing limits and coverages of other policies. Umbrella insurance can provide coverage for injuries, property damage, certain lawsuits, and personal liability situation.

Will I have to pay more for insurance because I’m young?

Yes, age is a factor in determining individual ACA insurance rates in most states. Older consumers pay higher premiums since they typically need more medical services. But insurance companies must comply with state and federal limits on age-based rate.