Choosing a FInancial Advisor

I'm Jan Dahlin Geiger, CFP®, MBA , author of "Get Your Assets in Gear! Smart Money Strategies." A Certified Financial Planner™ practitioner since 1988, I've been quoted in the Wall Street Journal, MSN Money, USA Today, Reader's Digest, and SmartMoney Magazine. I have been on the board of directors of the Financial Planning Association (Atlanta chapter) and practice as a fee only planner with a Registered Investment Advisor firm. Additionally, I am the financial expert on the cable TV show, "Living Life With Style" on WCTV-24 in Atlanta and the internet radio shows "Wall Street Chic" and "Women's Wealth Network."

To choose a good advisor, you want to look for 3 key things:

1. Are they a good "fit" as someone you enjoy talking with. Do you feel comfortable telling them your financial history?

2. Are they technically competent? Do they act as a fiduciary or as a broker? Do they have the background and experience to do a good job?

3. What is the scope of their service? Will they focus only on investments or will they do more comprehensive financial planning? Do they look at investments, insurance, estate planning, tax planning, retirement planning, cash flow planning, college fund planning and integrate it all or do they just look at one piece on a stand alone basis? (Typically investments.)

For item 1, don't be afraid to trust your instincts. You want someone you feel comfortable with. If someone seems remote or stiff, or else overly familiar and too casual, back off and find someone else.

For item 2, here are some questions I would ask:

1. How long have you been investing your own personal money? (I'd never do business with an advisor who had not been handling their own money at least 10 years.)

2. How much of your own money do you save as a percentage of your income? (You can't teach what you don't know. Any basic text teaches you must save at least 10% to be financially independent one day. If the advisor doesn't do it, beware!)

3. Are you a fiduciary or a broker? If a fiduciary, they are required by law to put the interest of the client first. If someone practices as a RIA, they are a fiduciary. Most advisors with the big brokerage houses are brokers, not fiduciaries and so it is buyer beware.

4. How do you choose and monitor the investments in my account? This question is so critical and I am shocked at how few prospective clients ever ask me this.

5. How long have you been in practice? (95% of all advisors go out of business in the first 5 years. Plus, if they have been practicing less than 5 years, they are learning with your money.)

6. Do you have your CFP designation? If not, why not?

7. Do you have any "yes" answers on your U-4? (This is the document filed with FINRA. A yes answer means they have done something wrong and been disciplined for it.)

8. Request 3 references to clients in a similar demographic, e.g. also a widow, also a business owner, also a young married couple, also retired, etc. You want references to match the demographic of the prospective client.

9. How do you charge me? If they say commission, buyer beware. A better model is a percentage of assets under management (typically in the neighborhood of 1% -- more for small accounts and less for larger accounts.) Another good model is a flat fee or an hourly fee. Typical is $200-$300 an hour - less in rural areas and more in CA and NY.

10. What is your backup? Who do I work with if you are on vacation or out sick?

You would be astonished to know how few clients ask me even basic questions like this. In my 20 years in practice, I have had exactly one person (a librarian who did her homework) ask me about question # 7.

For item 3, consider that many financial planners who offer comprehensive advice charge no more than straight investment managers, but they usually bring so much more to the table. An advisor who is well informed of your tax situation, your family dynamics, your cash flow situation, your retirement ambitions, etc. will often give you advice that is very different than someone who focuses solely on investments.

For example, I have a client who was in Europe and requested $50k from her IRA. If we had been straight investment managers, we would have taken her order, sold the securites, sent her the money and she'd have a tax bill of about 35% of the money. However, we knew all her details and knew she'd use the money to buy a house. We also know where all her money is, both with us and in bank CDs so we could advise her which account to use to get the best tax benefit and create the best cash flow situation based on how she handles her money. Her tax bill ended up being 5% rather than 35%.

If I can provide any additonal information, don't hesitate to contact me.

With best regards,

Jan Dahlin Geiger

Putting Together a Balanced Portfolio

I'm Jan Dahlin Geiger, CFP®, MBA , author of "Get Your Assets in Gear! Smart Money Strategies." A Certfied Financial Planner™ practitioner since 1988, I've been quoted in the Wall Street Journal, MSN Money, USA Today, Reader's Digest, and SmartMoney Magazine. I have been on the board of directors of the Financial Planning Association (Atlanta chapter) and practice as a fee only planner with a Registered Investment Advisor firm. Additionally, I am the financial expert on the cable TV show, "Living Life With Style" on WCTV-24 in Atlanta and the internet radio show "Wall Street Chic."

Diversification and asset allocation are both crucial to have an effective all weather portfolio. Diversification means having a number of different companies to invest in. That is most easily done with mutual funds. Asset allocation means having many different asset categories, e.g. large cap growth, large cap value, mid cap, international, mid term bonds, real estate, etc.

If you go with a big mutual fund family like Fidelity or Vanguard or T. Rowe Price, it doesn't cost an extra cent to be well diversified and well allocated. They typically will have a per fund minimum of $250 to $1000. Once you hit the minimum, you can be in that fund. So for example, a $10,000 investor could choose 10 different funds with $1000 in each one.

In my opinion, if you are a small investor, you don't belong in hedge funds, period! Any that are available in denominations small enough for small investors are pretty crummy after you consider all the fees and expenses. Most small investors don't understand them and like Warren Buffett wisely says, "I don't invest in anything I don't understand." Leave the hedge funds for the rich folks. I am worth many millions, I am a professional in this business, and I have no hedge funds in my personal portfolio.

If you are just getting started or you don't enjoy spending time on research, index funds are the way to go. The vast majority of investors would be so much better off if they just concentrated on asset allocation, chose a strategy that is a good match for their risk appetite, then stuck to it. Most investors hop in and out, always at the wrong time so that they typically buy high and sell low. In my opinion, 95% of the folks out there are way better off chosing mutual funds than individual stocks or bonds.

Right now it is really smart to begin looking at REITs for additional asset allocation. Buy low! They are good and low right now. Increase your allocation to large cap growth. It will outperform mid caps and small caps over the next year in my opinion. International is also a good place to go. Keep bond maturities short. If you are doing money markets, most investors would be way better off in muni money markets right now than taxable accounts. The after tax yield is far better.

If I can provide more detail, don't hesitate to let me know.

With warm regards,

Jan Dahlin Geiger

Is it smarter to get married or to live together after 45?

Is it smarter to get married or to live together after 45? It all depends on whether you want a contract or a commitment, in my opinion. If your attitude about marriage is it is a contract, that you will only stay in it as long as everything is going your way, then for sure you are smarter to live together, never get married, and keep all your money separate. All you have to do is consider the cost of divorce, as well as the emotional wreckage, to know it makes more sense to stay since and not comingle money.

However, if your attitude is that marriage is a commitment, and you are both committed to doing whatever it takes to make it work, it makes a lot more sense to get married and to combine finances. There is incredible synergy that I see with my clients who are happily married that you never ever see with couples that are in more of a contract situation. You definitely see 1 + 1 = 5. I have seen newly married 40+ couples who decide it is important to get out debt and start saving serious money and it is incredible how much they can accomplish in just 5 years working together.

Should you have a prenup? My opinion is it all depends on how much money is at stake and where you stand on the contract/commitment issue. If there is a disparity in assets of $1m or more and the couple is older than 40, a prenup can make sense. However, it is important to remember that the law of attraction is really powerful. Any prenup assumes you will probably get divorced and you are planning for it. I tell my clients if they think they need a prenup, they probably should not marry that person.

Of course if you are a billionaire like Paul McCartney, it makes sense to have a prenup for the simple reason that you will waste millions in legal fees otherwise.

There is a much, much easier solution that gives the same outcome for most people. That is, always keep any money you had prior to your marriage in separate accounts. Each person should prepare a net worth statement as of the day before the marriage. So say Sally has $300k in her 401(k), $200k in personal savings and $100k in equity in her house. Harry has $200k in his 401k, $100k in personal savings and $100k equity in his house. They each do a net worth statement to document this.

After the marriage, they each sell their homes. They use the $200k as a downpayment on the new house, which they own jointly. Sally continues to keep $200k in her own name, Harry keeps $100k in his own name. They begin a new joint savings account together with money they earn after the marriage. In the event of a divorce, all the money they had prior to the marriage is "off the table" in terms of negotiation, since they can document they owned it prior to the marriage. More than likely, what they accumulate after the marriage will be split 50/50 in the event of a divorce.

Likewise, if one of them gets an inheritence during the marriage, they should keep it in their name only and document the amount received. Divorce laws clearly state you keep you own inheritence, so long as it was never combined into a joint account.

If there are kids, there are a million issues that can't be covered in a brief email. Again, lots depends on how much money is at stake. If there is a lot of money, you need to be careful to set up your wills correctly. Most people will set it up so if they die, what they own separately will go into a trust for the benefit of their children, but will allow the income from the trust to be paid to the surviving spouse during their lifetime. Sometimes it makes sense to get a life insurance policy, put it in an ILIT (irrevocable life insurance trust) and have that money go to the spouse so that the assets can go directly to the children. There are a million variations on what you can do -- much depends on ages and the amount of money.

I remarried at 43. My prior marriage was miserable. This one is going on 16 years and it is beyond fabulous. We were really clear we wanted to make a commitment and do whatever was necessary to make it work. And we had to cash in on this commitment as we spent several years in counseling in the early years of our marriage. Our net worth today is 1000% of what it was 15 1/2 years ago when we married. Much of that is we really work as a team and we have a 1 + 1 = 7 or 8 or 9 marriage. We both bring out the best in each other. My husband today makes more than triple what he made when we married and he credits me with a lot of that -- nothing better than living with a full time encourager and cheerleader.

So much of marriage is what you decide to make it. Whatever you think about is going to grow. So if you don't trust the other person and think you need to be really careful about protecting your money, you are likely to create a divorce eventually. If you treat the other person like they are magnificent, most people will grow into that expectation.

I am not saying to be foolish. I definitely would document net worth prior to the marriage and I would never combine pre-marriage assets. However, there is a certain amount of acting like you trust the other person needed to really grow a healthy thriving wonderful marriage. The key thing is to be sure you are comfortable with the other person's character before you marry. If they tell you stories about cutting corners and trying to screw other people, it is just a matter of time until you are the screwee. If they tell you things and demonstrate things that show honesty and integrity, they are good marriage material!

How Ordinary People Can Survive the Tough Times

What people can do to survive the tough times is to develop the lifelong financial habits that will get them through this storm and every one that comes in the future. Here are some specific ideas:

1. First of all, junk the word "budget." For most people, it is worse than "diet" and means lack, scarity, crummy choices, deprivation. Instead, decide to have a spending plan, which is telling your money where to go instead of wondering where it went. If you study people who handle their money well, one of the things that pops up regularly is that they track their spending. Two steps are involved: first, decide how much you will spend in each category, then track your actual expenses. The easiest way to do this is on an index card you carry with you everywhere, either in your wallet or your purse. When you go to the ATM, enter ATM cash and forget tracking every cent. That is what really makes people crazy.

2. Saving v debt payment. In my opinion, go for paying down debt. You still have the capacity to "reborrow" later. Most people waste so much money on paying interest, particularly for credit cards! Right now credit cards carry an interest expense of typically 9-20% while savings accounts only pay 2-4%. Not only will you save on interest, but the psychological benefit is HUGE! You can't believe what a relief it is when people can say, "I paid off all my credit cards," or "I am out of debt completely except for my mortgage," or best of all, "I don't owe a cent to anyone for anything!! I am completetely financially free!" Debt really is slavery.

3. Most people spend double on grocery shopping what they have to spend if they would get serious about it. Shop from a list, never randomly walk the aisles. Pick generics, so long as they taste good (which is true about 95% of the time now.) Shop from the store specials, available in newspaper flyers and at the door of the grocery store. Plan your menus from the specials, not from what you are in the mood for. Stock up on things on sale. There's a great book called "The Grocery Store Game" by Janine Bolon that details all the ways people can cut their grocery bills in half. I recommend this book frequently.

4. The best protection in hard times is to do the little things right, day after day after day. Make sure that you are living on less than you make so that you can stay out of debt and save money every month. Learn to say no if saying yes means you have to take on more debt. Buying things with debt (credit cards or loans) simply means you are buying things you cannot afford. Participate in your employer's retirement program, whether it is a 401(k), a 403(b), a 457 plan or a SIMPLE IRA. At the minimum, contribute whatever your employer will match. Do a Roth IRA if you are eligible, particularly if you have no company plan.

In my opinion, the top of the list for getting on top of your finances is to track your spending. The reason this is so powerful is that most people are unconscious with their money. Their brain never gets in gear. They truly are not aware of how much they are spending or where they are spending it. Once someone begins to track their spending, the lightbulbs start to come on. You cannot change what you are completely oblivious to! Most people are oblivious to their spending choices until they start tracking their spending.

I have lost track of how many clients I have who have begun to track their spending after we began to work together. Without fail, within a year, every one of them has said it was the most powerful thing they have ever learned about handling money and that they feel like they are in charge of their money for the first time in their life. If you want much of the financial stress in your life to go away, start tracking your spending!

How to Stop Friends and Relatives from Borrowing Money

I'm Jan Dahlin Geiger, CFP®, MBA , author of "Get Your Assets in Gear! Smart Money Strategies." A Certfied Financial Planner™ practitioner since 1988, I've been quoted in the Wall Street Journal, MSN Money, USA Today, Reader's Digest, and SmartMoney Magazine. I have been on the board of directors of the Financial Planning Association (Atlanta chapter) and practice as a fee only planner with a Registered Investment Advisor firm. Additionally, I am the financial expert on the cable TV show, "Living Life With Style" on WCTV-24 in Atlanta and the internet radio show "Wall Street Chic."

Preventing friends and family from asking to borrow money is really, really easy. Just say no. It is no different than training children. Children will always ask for what is going to bring immediate gratification. They only way they stop doing this is to hear no over and over again. Friends and family will only ask to borrow if you say "yes" and reinforce that behavior.

If you have been saying yes in the past and now want to start saying no, here are some ideas to try to get through the transition.

1. Joe and I (Mary and I) have discussed this and we have agreed that we are not yet in a financial position to be providing loans at this time. (Then shut up! Do not explain, do not get them to buy into your logic. Just say no politely.)

2. I'm sorry, we can't do that, but I'll be happy to help you prepare a loan application for the bank/credit union.

3. I'm sorry, we can't do that, but I'll be happy to help you find a reputable credit counselor who can help you set up a plan to get out of debt.

4. I'm sorry, we can't do that, but I'll be happy to help you work on a spending plan that will work for you.

5. I'm sorry, we can't do that. I understand you are desperate right now, so we'll be happy to help you find a soup kitchen that can feed you or a church that could provide clothes or emergency shelter (or whatever the need is).

My husband and I are the most affluent in our families (by far) and no one asks for loans any more because they already know the answer is no. They already know we will offer to help them learn to fish, but we will never hand them a fish.

Wall Street Chic

Coming up next on Wall Street CHIC Live Talk Radio Show on www.WallStreetCHIC.com

Tuesday, February 12th, 2:30-3:30pm ET

Get Your Assets in Gear:
Smart Money Moves for Women

Listen live at WallStreetCHIC.com and call in with your comments or questions on money! Get answers from Wall Street CHIC's Personal Finance Coach, Jan Dahlin Geiger, a Certified Financial Planner and multimillioniare.

Jan Dahlin Geiger
Multimillionaire
Certified Financial Planner and MBA
Bestselling Author
Wall Street CHIC Personal Finance Coach