You Don't Need a Financial Advisor If...

September 11, 2017 | Paul A. Ruedi
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You don’t need a financial advisor if…

  • You are interested in the investing and retirement planning process

  • You have solid mathematical skills

  • You have mastered the basics of investment theory

  • You understand the concept of "expected return" 

  • You know what expected return is required to meet or exceed your retirement goals

  • You know how to divide your wealth among stocks bonds and cash so that your allocation is aligned with your goals

  • You know how the individual pieces of your portfolio will come together to form your overall portfolio

  • You know how to calculate the expected return of your investment strategy

  • You have a strong grasp on the laws of probability and statistics

  • You know which asset allocation has the highest probability of exceeding your goals with the least amount of unpredictability

  • You know when and why you will change your asset allocation over time

  • You have a deep knowledge of financial history and all the panics and manias that have taken place

  • You have the emotional ability and the faith, patience and discipline to execute your plan and maintain the plan during good periods and bad

  • You won't fall for the four word death song "it's different this time"

  • You can keep your head during such periods and utter the four words, "this too shall pass"

  • You recognize that your emotional needs and your financial needs are at war at all times

  • Your investments can make you wonderfully relaxed and worry-free or you can be financially secure during a two-to three-decade retirement; you cannot have both

  • You plan and invest in time frames of a lifetime and even multiple generations

  • You realize that savings accounts etc. will produce a negative return net of inflation

  • You know the optimal way to create a spending stream from your assets

  • You know how to coordinate your withdrawals from assets with your other income streams

  • You know the best social security claiming strategy for your retirement plan

  • You know how to coordinate your portfolio withdrawal strategy with social security claiming strategy to reduce or eliminate taxes on social security

  • You know whether following conventional wisdom is the optimal strategy when it comes to withdrawing from assets (spend taxable accounts first, tax-deferred next and then tax-free)

  • You know how much would your investment account values have to decline before you need to lower your spending

  • You know ahead of time how much you would have to reduce your spending if that happens

  • You know how much would your investment values have to increase before you can increase your spending

  • You know ahead of time how much you would have to increase your spending if that happens

  • You understand the sequence of returns risk and have a withdrawal strategy to reduce this risk

  • If you have to make a pension choice, you have already determined the optimal claiming strategy of choosing a lump sum or taking the pension payments

  • If you take the pension, you know the optimal choice as to survivor benefits

  • You know whether you are better off keeping your 401k account or rolling it over to an IRA

  • If you are younger than age 59 1/2, you are aware of all the penalty-free options prior to age 59 1/2

  • You can project your tax brackets will be during the first five years of retirement

  • You know whether or not you should convert some of your tax-deferred accounts to a Roth in the first three to five years of retirement

  • If you are going to perform Roth conversions, you know the optimal strategy or tax threshold 

  • You know when to tax-loss harvest

  • You know when to tax-gain harvest

  • You know which assets to keep in which types of accounts (taxable, tax-free or tax-deferred)

  • You know whether you should self-insure for potential long term care needs or buy a policy

  • If you have a long term care policy, you will know what to do if (when) you get a premium increase

  • You know exactly what will happen to your spouse if you pass away prematurely

  • You know whether or not you need life insurance, should keep what you have or whether to cash it in or convert it to a long-term care policy

  • You have created a framework for discussions with your family about cognitive issues

  • You have family members that know the warning signs of cognitive issues

  • You have a process for someone reaching out to other family members to get them involved when one of you is having dementia issues

  • You have someone positioned to help protect you against elder financial abuse

  • You have a plan to address the six areas of concern related to cognitive issues (physical, cognitive and psychological, family, financial, legal and legacy)

  • You have all of your beneficiary designations updated and accurate

  • You know life will never throw you a financial curveball

  • You know  there is no chance an adult child will need help

  • If a child or family member needs financial help, you know how much help you can provide without damaging your own financial well-being

And last but not least – you have to have the desire and ability to devote time and energy to managing everything in the list above.