For the righteous falls seven times and rises again, but the wicked stumble in times of calamity. Today, I wanted to talk about mistakes. We all make them. On my LinkedIn profile I wrote a post that said "In everything that we do, we are both the master and the beginner. There are things that we have mastered, and there are things we are still mastering." Forbes is a reputable publication. I was very excited when I saw that they wrote an article titled "Do I Need A Financial Advisor Or Should I Go It Alone? I'm like PERFECT! I think this is a question that is on a lot of investor's mind. Here is an excerpt from the article: Working With a Financial Planner Your role in the advisor relationship has three main parts:
You share your financial information and goals.
You evaluate and then accept or veto your advisor's recommendations.
You fund the recommendations you accept.
Before you choose a financial advisor, think critically about your ability to fulfill these responsibilities. Are you comfortable sharing your financial details, speaking up when you disagree, and investing money per your financial plan? Ideally, the answer is a resounding yes. If you’re not willing to be financially transparent and fund your choices, you may get limited value from an advisor. EXCELLENT!!! But they made ONE mistake. In the beginning, they did an excellent job explaining the differences between Financial Advisors and Financial Planners. But toward the end, they kept using the word advisor to reference them both instead of separating them with the title Advisors and Planners. Therefore, during parts of the article, you don't know if they are talking about Financial Advisors or Financial Planners. And the sad part is that they made the mistake at the most important part...THE MONEY PART!
FINANCIAL PLANNERS DO NOT CHARGE COMMISSIONS!!!! Remember this! Financial Planners do not receive any compensation from any 3rd party. The only payment they receive is from the client and it is for the service of managing their accounts. Also, one of the things I didn't like is that they made paying for a service a disadvantage. They made it seem as if somehow making a payment was something that was avoidable. Let me "re-write" it with a different example so you understand how it sounds to me. Grocery Stores Charge For Food: When thinking about buying food, the disadvantage of some grocery stores is that some charge you full price for buying apples, and others have them on sale. But, either way, buying apples will reduce your Net Worth. Sounds horrible, doesn't it? Grocery stores charging for food is not a disadvantage, and lowering your Net Worth is assumed when making ANY purchase. Can you imagine, if you read this before going shopping? You wouldn't want to eat apples anymore, or at least think twice before throwing two Honeycrisp apples into your shopping bag. You couldn't bite into one, without thinking that your Net Worth is dropping. And that is what this article is doing and I just wanted to point it out to you. Understand this. Planners do more than just make money in the stock market. They help you from making money-losing mistakes. I'm going to give you this one example and let you go.
The $8,000 401K Mistake
I once was covering for another advisor and someone was waiting in the lobby. He came in and said that he needed help making a withdrawal from the 401k that he had at his job. I asked him how old he was, and he said 47 years old. I asked him, was this his first time making a withdrawal and he said no, he has come in about 4 times to make these types of withdrawals. In my business, you try not to ask too many probing questions in a row because you don't want it to feel like an interrogation. So I obliged and called the company. As he is filling out the form, I asked him another question, well more of a "did you know...statement". I said, "Wow, it is surprising that the government imposes a 10% penalty for every withdrawal out of the 401k if you are not 59.5 years old...lol...that's crazy huh?" And his pen stops and he slowly looks up at me. "What do you mean a penalty?" And it was at this moment, that he knew he messed up. For the next 10 minutes, I explained to him that he was losing money every time he pulled money out of that 401k. What made matters worst, was that he was taking the money out and putting it into a savings account. Every quarter, he was taking a little bit out, just in case he went back to work for them, he had some money still there. But was in the process of putting it into "his name". And he figured after a year or two, if they didn't call him back to work, he would just take it all out. That thinking cost him $8,000 just in penalties because he was taking out ~$20,000 lump sums. So, I helped him roll his 401k into an IRA, that way, it was still in his possession, no withdrawal penalty, it stayed in his name, and could stay invested. I also let him know that if he returned to his job, he still could contribute to their 401k program. Now I couldn't save him from the $8,000 he already incurred but that one piece of advice potentially saved him $8,000 going forward. That is what a Financial Planner does. My suggestion to you is to go read that article. It will explain what we actually do at our firm. Because you may be making some financial mistakes that are costing you thousands. This past week, we just demonstrated how changing the way you pay your mortgage can save you thousands. And today, we showed you how changing how you manage your 401k withdrawals can save you money too. As we wrap up for the day, just know this. We all make mistakes. Even Forbes. But we learn from them and do better. What is the saying? "When you know better, you do better" Keep in mind, I didn't just change that man's life, I changed the lives of everyone in his life. Because he is going to share that knowledge with his friends, co-workers, and children. That is the power of good financial advice. Being able to help the world in which we live. So don't worry about your past financial mistakes. Just stay focused, get help, and keep walking the path of righteousness. If you need help, you know what to do, click the link and schedule a free consultation, speak with a Christian Financial Advisor, and start bringing your talents, your tithes, and your time back to the Kingdom of God. Until next time, God Bless
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About the blog:
Many Christians struggle with the seemingly conflicting views about our faith and the pursuit of financial gain. They were taught that poverty was piety and that a lack of money was the only way to truly detach themselves from the love of money. Our blog debunks some of those claims, teaches you that you can be rich and righteous, and at the same time fulfill your obligation to tithe and give to the less fortunate. We are dedicated to helping you become cheerful givers by organizing your personal finances, providing investment tips to help you create wealth, and encouraging you to create a gifting strategy that will make your family and God proud.
Meet the Author:
A.B. Ridgeway, MBA (firstname.lastname@example.org) is the owner and Christian Financial Advisor with A.B. Ridgeway Wealth Management. With a decade in the finance industry, his goal is to give believers clarity around the most confusing topic in the Bible, money, and tithing. A.B. Ridgeway helps tithing Christians become cheerful givers but unlocking their money-making potential, so they can prosper and be the great stewards of the wealth God has entrusted them with.
This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.