Gary Lewis
Asset Design Center
Wouldn’t you agree that it’s important for each of us to visit our doctor and have a regular checkup? Having a checkup helps to identify problems before they become serious. Probably a good number of you visit your doctor on a regular basis.
But if I asked you, “How many of you have had a regular checkup with your financial planner, I would be willing to bet that few of you, if any, would raise your hand. But wouldn’t you also agree that having a clean financial bill of health is just as important? I believe that financial uncertainty causes stress and stress leads to sickness and disease.
There are many reasons why people do not visit a financial planner and develop a comprehensive financial plan. First, many people are not willing to invest the amount of time required to gather all of their important data that a comprehensive plan requires. Second, developing a financial plan might cost several thousands of dollars and few of us have “financial planning” insurance at work. Third, many of us are just downright scared to face our financial realities head-on.
But when you develop a comprehensive financial plan, you have a roadmap for the future. Each year you can see where you should be in terms of your financial position. If you are not where you should be, its probably because of one or all of three factors have occurred: either you did not earn as much as you expected, your expenses were greater than you anticipated or your investments failed to earn what was projected. By addressing these problems early, you can prevent your financial situation from getting out of control.
A comprehensive plan addresses other issues as well. These issues include income taxes, asset protection planning, investment planning, estate planning and other areas. While many will offer you a simple retirement or insurance plan, it is not enough. What would your retirement situation look like if you or your spouse became disabled before your retirement or if one of you required long-term care? Or worse, what if one of you should die? Only a comprehensive financial plan reviews all of these scenarios and provides solutions.
Until recently, a financial planner was just another word for mutual fund salesman. In 2005, things changed. Regulation 202 established a clear distinction between a financial planner and a registered investment advisor. There is a huge difference between the two.
Financial planners operate under a different code of ethics than do registered representatives. A financial planner has a fiduciary responsibility. Let me repeat, a fiduciary responsibility to provide advice that is in your best interest. The planner has the same responsibility as does your lawyer or doctor. A registered representative on the other hand has to merely do what is suitable for your situation and not necessarily what is in your best interest.
Another distinction is that a financial planner must charge you a fee for advice and must put the recommendations in writing so that anyone else can implement the strategies. In fact, if during the course of financial planning, the advisor talks about products, he or she is required to “switch hats” and make the distinction between his or her role as a financial planner and his or her role as a registered representative. Be wary of those who will tell you that they will provide you a plan for free. Their “plan” is an illustration developed in the course of their business of selling you a product. It must be disclaimed as such.
With so many trying to win your business, including your accountant, your attorney, investment advisors, insurance salesmen and so forth, how do you know how to choose?
Look for a planner who has obtained the Certified Financial Planner designation. This is the hardest designation that a planner can earn. In addition to having extensive formal education and years of experience in financial planning, certificants must past a grueling two day exam and follow a strict code of ethics.
The decision is up to you. Isn’t your financial health just as important as your physical health? How wonderful it will be if you can live past 100, as many of you in this room possibly will. How sad it will be though if you outlive your money. Take action and see your financial doctor annually.
