Financial Planners Ft Myers I Benefits of Hiring a Financial Planner

There are a number of benefits an individual or business can derive from the hiring of a financial planner that have little to do with the return on their investments. Most of us have a number of different duties, tasks, and responsibilities taking large chunks out of our available time. There are only 168 hours in a week, and the average American will spend approximately 100 of those hours divided between sleep, work, and their commute to work. For most of us this doesn’t leave much time for other equally important needs, necessities, and obligations such as…

Quality family time

Shopping

Meals (Preparation, eating, & clean up)

Grooming

Television

Exercise

Internet

Social life

…time is a valuable resource, and most people have far less of it than they think they do! To keep adequately updated and informed on a vast array of parameters related to one’s financial strategies and investments will require a significant portion of one’s time. A financial advisor will monitor and assess all factors relevant to your strategy (plan) and make certain the path you’re on addresses your objectives. For an individual to accomplish this in his “spare time” would seriously deplete any time he had left for other pursuits! Hiring a financial planner is good TIME MANAGEMENT!

Another benefit of hiring a financial advisor is the advantage of having access to an unbiased, objective analysis of one’s goals and the changes/adjustments needed to attain them. Often times budgeting/investing priorities look quite different from the perspective of an outsider looking in .. a valuable resource to any long term financial strategy.

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Financial Planners Ft Myers I The Three Financial Rules that you should have learned from 2008

Anyone invested in the markets through 2008 understands extreme volatility and the nervousness that tends to come along with it.  Three years later, investors are still worried about volatility, but now more and more about experiencing a double dip recession.

It is often very valuable in times like this to take note of lessons learned from the past.

Three important lessons for today:

1) Communication with your Financial Advisor is essential. 

Don’t be afraid to update your communication plan with your advisor.  For example, if you talk once a quarter, then it may be time to go to monthly conversations.

2) Understand what you own and what factors cause your investments to go up or down. 

This was a big problem in 2008 because most of the market became correlated to each other.  Always know what positions you own across your entire portfolio and don’t be afraid to ask if you are unsure about something.

3) Be aware of the liquidity of your investments.

Never put yourself in a position where it is difficult to access money you may need in the short term.  Be aware that certain types of investments may have lock up periods where it can be very challenging to access funds during times of increased volatility. 

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Financial Planners Ft Myers I Is it time to change Financial Advisors?

The hiring of a qualified financial advisor is a great first step in creating a sound road map to an independent retirement. Needless to say deciding which financial advisor is the right one for you is a choice worthy of much thought, time, and research. Once that decision has been made many investors tend to relax and maintain only a minimal, passive involvement in their investments, assets, and retirement planning…

...It’s Your Future!

Stay actively involved in the day to day management of your investments! Stay in regular contact with your financial advisor! Your financial planner should consider part of his/her obligation to you to be to serve as an educator in addition to helping you handle your financial affairs. Over a period of time, as world events, changes in the market, and new financial products or theories emerge you will have an opportunity to become quite knowledgeable regarding financial planning. Take advantage of these opportunities, and use your financial advisor as a source of information and as a sounding board for any ideas or questions you have.

If your financial advisor takes exception to these types of calls, or is reluctant to explain the rationale behind his/her recommendations, or is giving you answers you don't have confidence in it may be time to consider switching to another advisor.

Other signs a change in advisors may be in order would be...

Inaccessibility!

Doesn't return calls.

Doesn't schedule regular updates or reviews of your account.

Constantly wants you to purchase expensive proprietary products

Doesn’t seem focused on your goals.

Appears to be too busy to give you the level of service you require.

Stay actively involved in learning more about all factors that relate to financial planning in general, and your investments in particular. Make sure you and your advisor have a clear understanding of each other’s goals, strategies, decisions, and the reasoning behind these items.

To the extent that it is inadvisable to be too relaxed about your investments and your advisor, it is equally true that you should not feel you need to worry about the path you're on either. You should have sufficient confidence in your financial plan to be free of worries, fretting, or losing sleep.

It's your money, and your future ...IT"S YOUR BUSINESS!

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Financial Planners Ft Myers I Did my Investment just go Parabolic?

In this investing climate investors are often faced with very tough decisions with where to put their hard earned money. Most long term investors choose to diversify their holdings among many different asset classes to reduce their overall risk. However, there may come a time when depending on certain circumstances in the global markets that you may find yourself owning a parabolic investment.

Generally speaking the world parabolic refers to the concept of an investment continuing to increase in value over the course of several weeks, months, or even years. Wide spread speculation is usually to blame, but it can come from any number of factors. Eventually, it will get to a point where it has reached a peak and will revert back to the mean of more normal prices. This process can be painful if investors are caught on the wrong end of the curve. Many pundits on television often refer to commodities having the potential to experience these types of moves because of uncertainty in global markets and supply/demand issues.

A good example of a parabolic investment takes us back all the way to the mid 1630’s and the Dutch Golden Age. It was at this point in time that the tulip bulb was becoming quite the status symbol. Farmers and growers were willing to pay more than 10 times the annual income of a traditional laborer. They even developed a type of futures market where you could purchase contracts to buy bulbs at a later date. Needless to say, it wasn’t long after that the prices started tumbling to the ground and the great Tulip Mania would come to an end.

Please remember this is for informational purposes only and to always consult with your financial adviser regarding your specific situation. Past performance does not guarantee future results.

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Financial Planners Ft Myers I Should you Plan for a Low Probability Event?

The recent financial events of 2008 have caused many investors to be aware of the potential to expect the unexpected. Over the course of any major market cycle, a long term investor is likely to experience some kind of event that has the potential to provide extreme gains or extreme losses. In 2007, a gentleman by the name of Nassim Nicholas Taleb coined the phrase, “Black Swan Theory.” This referred to unexpected events of great magnitude that have the potential to play a prominent role in history.

Over the course of major cycles those who plan for these unexpected events often only do so as a hedge against other portions of their portfolios. This strategy is usually preferred because those who consistently do it tend to lose money because the events have such a low probability of happening. Every now and then you always read the stories of those lucky few who bet big on that rare event and actually are proven right. The most recent example of that happening would be the subprime housing crisis. They often say it only takes one trade to make an investors legacy.

The degree to which individuals plan for these events should be taken in the context of one’s own financial planning circumstances. It is always important to consult with your financial advisor to decide if planning for one of these “rare events” makes sense or not.

Past performance does not guarantee future results.

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