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You Don’t Have to Go It Alone


Your financial life can get complicated, and it can become a mess if you aren’t careful. Tax minimization, investment and estate planning, legal research, real estate buying and selling and numerous other parts of your financial life are no joke. No matter how smart you are, it’s almost impossible to focus on all of these areas while you work your full-time job and handle the other issues in your life. This is why you need to build a financial team to help you plan and work on each area. No person is an island.

When you forsake one area of your financial life, you may not notice this for a long time. However, at tax time you’ll know if your tax planning has gotten lax, because you’ll pay more. You may spend years blissfully ignorant if your legal preparation doesn’t pass muster, but you’ll be far more likely to run into legal problems down the road and will have to scramble to deal with them.

As well, you’ll find it far more difficult to purchase or sell your home if you don’t hire a certified real estate agent on your team. You should never have to hold your entire financial world on your shoulders alone.

You need to keep in mind that your needs are going to change as you move through life. The needs that a recent college graduate is likely to have are generally going to be far different than those of a more seasoned professional. By the time you reach retirement age, your needs are going to be dramatically different from those of a younger individual. And of course, all of this says nothing about what happens when you have children, as their needs then become yours.

There is no such thing as a one-size-fits-all set of financial professionals, so your needs will be unique based on your primary source of income. Being employed by a large company is different from being a freelancer or other self-employed individual. In the same vein, if you are the owner of a company, you will also need a different set of professionals than one of your employees or a part-time freelancer would. The differences are subtle, but you need to keep them in mind as you consider whom to add to your financial team.

How to Select a Financial Advisor

A financial advisor is supposed to be a person who directs you to good quality investments. Unfortunately, far too many financial advisors are simply glorified salespeople on a pure commission basis. This establishes a conflict of interest wherein the advisor wants to do nothing more than sell you a lot of financial products because he or she makes a large commission off of them. There are a large number of broker-dealer agencies that provide back office support and products to sell where the “advisors” are literally just salespeople. You need to be wary of these kinds of people.

A far better solution in many cases is to select a fee-only financial planner. This person will review your finances and charge you an hourly rate to discuss your financial plans and how you intend to reach them. This person receives no commissions, and is thus able to let you make purchasing decisions totally independently. The first and most important question to ask any kind of advisor is how he or she is compensated. If the advisor is fee-only, you are more likely to get objective and quality advice than if you deal with an advisor paid on commission.

Before you hire a financial advisor, make sure you vet this person through certification. Ask if your potential advisor has any certifications or is registered with the SEC or the Financial Industry Regulatory Authority (FINRA). Ask to see both sections of the person’s Form ADV and verify their registration online on the SEC’s website, here.

Financial advisors are not as important for students and retirees because of their relative lacks of income. However, a financial advisor is a crucial component of the life of anyone who owns a business or in any other way draws an income. Self-employed people are particularly in need of such an advisor, because they often have to “go it alone” due to not having an employer with an human resources department.

You may end up buying insurance or receiving loans through someone other than your financial advisor. This is perfectly acceptable, because your first duty is to getting the best possible terms and the lowest costs you can. Before you sign up for anything, you need to shop around to make sure you’re getting the best prices and the kinds of products you actually need. Always say “no” to a high-pressure pitch. 

Avoid Shams, Lies and Frauds

There are a lot of potential pitfalls to working with any kind of investment professional. Often, these people are compensated on a commission basis and are encouraged to sell as much as they can regardless of whether it actually helps you, the client. You need to keep clear of any company where the people working there have any kind of conflict of interest, because they will inevitably steer you toward what pays them the most.

One of the worst practices in the investment world is a process called churning. When your account is churned, your advisor encourages you to buy and sell a lot. Often there are “hot tips” that need to be acted on immediately in order to reap the maximum reward, but the reward for you is typically nothing more than paying a large amount of commission fees for mediocre returns. The largest killer of wealth is excessive fees and commissions.

Remember that any time a human being is compensated for doing something, that is what they will do. When your broker or advisor suggests you buy or sell anything, you need to be aware of what his or her relationship is to the product in question. If there is some kind of financial incentive to have you buy or sell, the advisor needs to disclose this up front. You need to make up your own mind, first, about whether you want to deal with a commissioned salesperson and, second, about whether the investment will actually help you to accomplish your goals.

Another pitfall you need to stay away from is the financial guru. Often, these are very charismatic people who have a lot of products to sell you. You can identify a guru by several factors. For one, their stories tend to be inconsistent with each other. For another, there is very little focus on how to achieve success other than “buy more products and join more groups” where every membership requires a fee. While there are people online who offer a lot of quality information for free and some that is paid, much of the paid material will lead you to taking unnecessary risks. Beware of anyone who offers you information as being from an “inside source” or being something that “they don’t want you to know.” Personal finance isn’t espionage. 

No matter what you do, make sure you perform some research on the people you trust. An investment professional may be clean, polished and articulate, but this says nothing about their credibility. Always make sure you check your investment advisor’s credentials and references, and do not allow a good appearance to fool you.

There are many red flags to watch out for when working with financial professionals. The Certified Financial Planner Board of Standards has published a number of tips in its “Consumer Guide to Financial Self-Defense,” which you can view here.

It suggests that investors be vigilant in the following ways:

Demand that your professional states in writing that she exercises “duty of care of a fiduciary” when providing services for you. This statement means that they have pledged to work with your interests in mind and that they could be liable if they do not.

Check all credentials a professional claims to have by contacting the school, certifying organization or government body and asking about them by name.

Never leaves blanks in paperwork that others could fill in. Never make a check payable to a person. Write what the check is paying for in the comment section.

Ask for copies of final documents. Store them in a safe place in case you need to use them as evidence of a discrepancy.

Demand regular copies of account statements and archive them. These statements should be issued and created by a source with a strong reputation that is independent of your financial advisor.

Seek legal advice if an investment professional requests custody of assets or power of attorney. Question any suggestion of a “guarantee.”
Know how your advisor is paid and evaluated as an employee. This can influence her behavior.

Politely ask for help if you don’t understand what a professional is saying. It’s part of their job to explain financial products and concepts to their clients.

How to Select a Tax Accountant

A good accountant can save you a lot of money. The most important traits to look for in a great accountant are integrity, attention to detail and experience in managing IRS regulations. Depending on how well you keep your records, you may also want to use your accountant to store information like your receipts. While such services usually cost extra, if you get audited this will more than pay for itself.

A good accountant knows the tax code very well, including the fact that it tends to change from year to year. It’s his or her professional responsibility to know based on talking to you what your deductions are and what you can do to minimize the taxes you pay while keeping every possible regulation satisfied. A good accountant will have a Certified Public Accountant (CPA) certification. This designation is administered at the state level and usually can be verified at state website listed here or on CPAverify. org. But, there is more to it than just the title.

A good accountant asks questions. This person will obviously ask about any real estate you own, your dividends and whatnot. But, beyond that, this person will help you plan your finances based on making the most of what you earn. They learn this through asking probing financial questions. A good accountant will also research the tax code instead of making guesses. When you find an accountant who is willing to do the research, you will be getting your money’s worth.

A very important thing to remember with regard to an accountant is that your need for one can vary considerably based on how you make your living. If you are a student who doesn’t earn very much money, your need for an accountant will be tiny. Filing your taxes may come down to the simple matter of filling out a 1040EZ, which is roughly as easy as its name implies. However, if you have a salaried position, your need will be substantially greater. If you are either self-employed or the owner of a business or multiple assets, your need for a good accountant will increase exponentially because of the greater complexity of your financial situation. The more complicated your finances are, the more you need to keep an accountant available to answer your questions and to help you navigate financial decisions.

How to Select a Lawyer

The law is complicated, and a good lawyer can help you avoid most problems. A good lawyer can help you with legal issues as efficiently as possible. Selecting a good lawyer comes down to finding someone with experience, dedication and attention to detail. The best way to figure out if a lawyer you’re considering is good for the job is to think through your needs and then pose questions accordingly.

The first question to ask any lawyer is what his or her specialty is. While there are general practice attorneys, these individuals are typically less qualified to handle specific issues that may come up if your situation is unusual. For example, a real estate specialist would have far less knowledge than a divorce lawyer in the case of family law. A patent attorney is an entirely unique specialty in itself, and is the right person to talk to if you have an invention you may want to patent.

Beyond specialty, you always want to check references. A good lawyer, like any good professional, will be happy to let you call their previous clients and ask how well the lawyer served them. Steer clear of any lawyer who claims that they cannot even give you a few phone numbers to call as references. There is no aspect of attorney-client privilege infringed upon by sharing a client as a reference. You can also check for whether a potential lawyer went to the school he or she claims to have graduated from by calling their school of law, and you can check whether a lawyer is part of the bar by checking with your state’s bar association. You can also ask your potential lawyer if he or she is a member of any professional associations.

There are two major kinds of professional associations that a lawyer might be a part of: the kind where membership is applied for and the kind that is invitation only. When an attorney is a member of the former type of organization, you can easily check this as a sign that this person takes his or her own legal practice seriously. If he or she belongs to one or more invitation only legal organizations, this is a sign of a relatively elite level of practice that signifies an even higher level of respectability. Regardless of the organizations your potential lawyer suggests that he or she is a member of, always verify these associations with the group in question.

A lot of people assume that only criminals need a lawyer, but this couldn’t be further from the truth. A good lawyer will do far more than help you to get out of trouble. Staying away from troublesome issues in the first place is a great, proactive use of a lawyer’s services. And the more operations you take part in, the more you need to occasionally consult with an attorney. Everyone can benefit from having an attorney in their list of saved numbers, but some people should have one more than others.

The people who most need to use the services of a lawyer are the people who own businesses, as this may concern many actions outside of your own. Any time one of your employees does something that may have legal impact, you can be held responsible for it. In many cases, a business owner keeping an attorney on retainer is a very wise decision. But, even if your primary income flow is from self- employment, you may still find that a lawyer’s input can help you tremendously.

How to Select a Real Estate Agent

Your real estate agent is one of the most important people you are ever going to take into your financial life. This person has the ability to make or break one of your principle sources of financial security, your home, and this is also the first person you should see if you ever want to invest in rental property. In order to be sure you’ve hired the right real estate agent, you need to make sure the person has good references, thinks the same way you do and is a good negotiator.

Every state has a certification process for real estate agents. You can visit or your state’s official websites and check your agent’s certifications. Every state has its own qualifications, and these vary in intensity according to individual state requirements. Some are relatively lax, while others are very strict.

Good references are worth a lot. If the person isn’t just starting out and has none, move on. If they have three, that’s a decent sign. The Donald Trump method of going for 10 good references is the gold standard, however. If the real estate agent you’re considering has that many solid references, he or she has to be doing something right. Just like with every professional, performing some research up front can save a lot of hardship down the line.

You also need to go with something less tangible; your real estate agent’s thought process has to mesh well with your own. If it doesn’t, you’re going to have a much harder time explaining what you want to this person. Just like with all of the financial professionals in your life, you have to get along reasonably well with your agent or the entire relationship will be more strained and difficult than it needs to be. If you and your agent are constantly at odds about what you want and how you want to go about getting it, this will cause a lot of strain in your relationship and will slow down the process of getting into the home or investment property of your dreams.

When you find a real estate agent who is a good match for you, you will notice that this person understands where you’re coming from with minimal explanation. Having a strong connection to your agent based on mutual trust and an understanding of where you’re both coming from is essential to having the base needed to grow your wealth through real estate. If you stay with the same agent long enough to eventually sell your home, having a good relationship will help you get the best sale price and transfer to your new home that much more easily.

If you have any desire to buy and sell real estate, you should have a reasonable association with a real estate agent. While this may not apply as much to students and retirees, professionals on a salary and self-employed individuals definitely need an agent. Self-employed individuals often need a real estate agent who is familiar with finding mortgage options and arrangements that will work for people with irregular or non-traditiontal forms of income. By the same token, business owners should always have an agent’s number handy.

The operation is different for business owners because you may have numerous different pieces of property. If you have your home, a few rental properties and a couple of business locations, being able to keep tabs on the market can open you up to a lot of profitable opportunities. Due to the large amounts of cash that business owners tend to accumulate, you can often use these opportunities to further grow your income.