Frequently Asked Questions
Q: What type of advisor should I engage (choose) to help me with my money and investments? I’m just not sure whom I can trust.
A: Work with an advisor who mustact in a fiduciary capacity – in your best interests – not what is in the best interests of the advisor or the company that the advisor represents. NAPFA Registered Financial Advisors take a fiduciary oath when they become a member of the organization.
Q: What is the right way to invest today in light of what has happened in the financial markets?
A: That is a good question. There are many opinions on this since the financial crisis hit the financial markets so hard in 2008 and early 2009. Because people differ, and investment ideas and preferences differ, a universally “good” answer doesn’t exist. However, every investor should be comfortable with the philosophy of the advisor with whom they are working. If the philosophy can’t be understood – or is confusing to you – it is probably not right for you!
Q: Do all Fee-Only advisors have the same type of fee schedule?
A: Yes, some advisors charge hourly fees, some charge project fees and some charge retainers. In addition, some advisors will manage your money on an “assets under management” arrangement. Some people prefer one type of fee schedule, while others prefer another type. However, if an “advisor” can earn a commission if you buy a product (annuity, insurance policy, load mutual fund, etc.), the “advisor” is NOTa Fee-Only advisor.
Q: What kinds of Financial Planning Services do NAPFA advisors provide?
A: Sometimes planning is comprehensive in nature -- or it may be focused on a particular planning topic such as college, estate, retirement, small businesses, taxation, investing, insurance, or family issues. In any of these, people should make financial decisions considering the big picture of their financial situation – a good advisor will help them do that.
Q: How and where do I find a qualified advisor?
A: NAPFA’s website, www.napfa.org , is a good place to start. The “find an advisor” section on the website allows you to search your local area. Advisors are not able to contact you unless you specifically request to have them contact you.
Q: What is a Registered Investment Advisor? How do I learn more about the advisor’s business, and how do I protect myself?
A: Registered Investment Advisors (RIAs) are registered by either the Securities and Exchange Commission (SEC) or a state. Either way, they are required to provide you with a copy of their Form ADV, a disclosure form that ADVisers regularly update. This form basically states how they conduct their business, fees, background, and any conflicts of interest.
Q: Should I continue to invest in my 401(k) at work when I am losing so much of it to negative market returns?
A: One of the best times to invest is during down markets, and a qualified advisor can help you develop a proper asset allocation for your funds. Don’t choose an investment in your 401(k) based solely on how it has performed in the past. Do your homework!
Q: Is there a way to lower my taxes during the recession?
A: If you sell an investment at a loss, you may be able to use it to offset any capital gains this year as well as in future years. We recommend that you consult with an advisor who specializes in taxation planning.
Q: What percentage of my portfolio should I have in stocks, bonds, and cash?
A: The advice will be different for different individuals and depends on your risk tolerance, age, objectives, and many other factors. Again, a good advisor will be able to help you determine the mix that is right for you.
Q: When should I start taking Social Security?
A: The answer to this question depends on many factors and expectations. For example, are you single or married? Do you want to retire early and need to have the additional income that Social Security will provide? How long do you expect to live? An advisor can help you look at various scenarios and make a recommendation that is beneficial for you (and your spouse).
Q: How much money am I really going to need to be able to retire?
A: This depends on your circumstances. Consideration should be given to whether you have a pension, the expected amount of your Social Security benefits, how much money you have already saved, and the lifestyle that you and your family hope to enjoy in your retirement years.
Q: Is this a good time to buy real estate?
A: Perhaps, but it might be very difficult to get bank financing these days. It’s best to evaluate a real estate purchase very carefully – as you would with any other large investment or purchase.
Q: Are there local advisors who can speak to my group or provide input for an article or publication?
A: Yes, Fee-Only Advisors of the NAPFA – DelawareValleywould be happy to provide input or speak to your organization. Please contact us to discuss this option.