What is the Big Deal with Bitcoin?

I certainly wasn't surprised when I started getting the "should I buy Bitcoin" questions - the media attention alone drives people to it. The troubling part though, is in many cases these questions are coming from people who aren't following any of the basic personal finance principles.

I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
                                                   - Warren Buffett

Easily one of my favorite quotes from Warren Buffett and for good reason - investor behavior never fails!

"Cryptocurrency" is arguably the most popular buzzword in the global economy right now. While Bitcoin is currently the most well-known cryptocurrency, most people don't understand it beyond the hype and reported skyrocketing value.

The overarching goal of any cryptocurrency is to replace cash, credit, and electronic wire transactions with a digital medium of exchange that isn’t issued by any bank or backed by any federal government.

Small Transactions

Bitcoin was originally viewed as an ideal system for small online transactions, like credit card fees. However, because those online fees are too expensive for retailers—plus with a limited supply and varying demand—Bitcoin’s real-world application has been hampered. To date, only a few established retailers will accept Bitcoin as a form of payment. Among them, you'll find names such as Overstock, Expedia, Newegg, and Dish Network.

Scarcity

Bitcoin’s high level of scarcity has partly influenced its reported high market value. Although you can purchase Bitcoin using online cryptocurrency exchanges, Bitcoin was originally earned via a process known as mining, which is basically a lottery system using a specialized computer program. This lottery system favors those with the biggest and fastest machines, which means people will always need better programs and higher Bitcoin prices to make mining worthwhile—leading to its scarce supply.

The Influence of Cryptocurrency

At this time, it’s hard to tell how much cryptocurrencies are influencing the markets. There are currently at least six other forms of cryptocurrency worthy of attention in the marketplace—and in recent months and years, upwards of 3,000 other cryptocurrencies have been developed and released since Bitcoin was created. However, many of them died out due to a lack of interest and use.

The Future of Cryptocurrency

Governments around the globe are looking at the potential for regulating cryptocurrencies. At the moment, Bitcoin is controlled by a global network of computers that track all purchases and transactions through a system known as Blockchain.

Blockchain keeps Bitcoin decentralized, making it hard for governments and regulatory bodies to control it and other cryptocurrencies. The decentralized nature of Bitcoin, plus its surging value, is diminishing its chances of becoming a more widespread currency. At the moment, most people are turning to Bitcoin as a means of investing with hopes of a big payoff, rather than using it in commercial transactions.

Reports of investors who bought Bitcoin early and generated wealth has led to droves of people precariously investing in the cryptocurrency based on emotion and fear of missing out. As with any investment, there is risk involved with investing in cryptocurrency, and no one can predict its future value.

It’s important to keep an eye on your long-term goals, and before investing in cryptocurrencies, talk to a financial planner to make sure your investment aligns with your financial plan. 

 

This article is intended strictly for educational purposes only and is not a recommendation for or against cryptocurrency.

The Powerful Effects of Compound Interest

Getting an early start on your retirement savings may end up being one of the best financial moves you can make for yourself and your family. Thanks to the power of compound interest, you have the opportunity to make your money work for you and grow exponentially in many cases on a tax-deferred basis.

Think of interest as a fee paid for using borrowed money. The original amount of money in your  account (without added interest) is known as the principal. Compound interest is beneficial because it’s calculated based on the principal plus the interest, resulting in greater interest accrual over the life of the investment.

The benefits of saving early and often

Let’s look at the investing choices of two hypothetical investors, Amy and John.

 

Amy

Amy started investing at age 25. She invests $3,600 per year for 15 years at an 8-percent interest rate and then stops. At age 40 her account has grown to $104,500. By age 70 her investment has grown to $1,050,000.

John

John didn’t start investing until he was 40. He invests $3,600 per year for 30 years at an 8-percent interest rate. At age 40 he has $0 in his account. At age 70 his account has grown to $450,000

 

Clearly this is for illustrative purposes only.  The figures above do not represent the performance of any specific investment and assumes no withdrawals, expenses and tax consequences.

By now you're probably saying, “Okay, I get it. Saving earlier is better than later.” While this is a key point (and one you’ve probably heard before), many people don’t realize just how important it is until they fall into financial trouble. After all, many things can get in the way of retirement saving besides procrastination, such as paying off a mortgage, car loans, sending kids to college, and unexpected injuries or illnesses. The best way to be prepared is to kick off a pattern of saving and take advantage of compound interest as early as you can.

Retirement Readiness

Although retirement may be the furthest thing from your mind at this point, recognizing how costly it can be may help you stick to a savings plan. Here’s an overview of some of the expenses that may come into play:

 

Income taxes. When you begin withdrawing funds from retirement accounts, you may lose more of your financial “nest egg” than you thought possible to income taxes.

Everyday expenses. Groceries, home maintenance and insurance, utilities, and other basic living expenses can eventually start to chip away at your savings.

Travel and hobbies. Many retirees want to travel and take up new hobbies (after all, this is what retirement should be about). Unfortunately, such dreams may not happen if you haven’t saved enough to cover the more crucial expenses highlighted above.

 

Ready to start saving big?

Clearly, getting an early start on your retirement savings (and sustaining that habit over time) can greatly improve your future financial stability. To see how much your money could grow, schedule a free consultation with us here.

Emergency Fund: Preparing For The Unexpected

You’ve probably heard how important it is to establish and maintain an emergency fund. Unfortunately, most people don’t fully realize how important this is until a financial emergency strikes. Are you financially prepared for a leaky roof? How about a broken-down car? If you lost your job, how long would you be able to support yourself and your family until you got a new one? 

An emergency fund is money that you’ve set aside to be used in these critical situations, whether its to handle a minor home repair or to pay for something more serious, like medical bills. Despite the importance of having an emergency fund, however, more than three in five Americans have accumulated no savings for unforeseen expenses, according to a recent Bankrate report.

So what do you do? 

Set a goal

How much you need to save depends on a variety of factors. Generally speaking, your emergency fund should cover three to six months of living expenses. I always tell clients to start with three months and aim to work your way up to six months. There are plenty of free online tools that can help you figure out how much you should have on hand.

Keep your funds accessible

It’s important to pick a bank and a savings vehicle that will give you easy access to your emergency fund when you need it. Consider keeping a portion of your money in a regular savings account, as it will provide some return and you’ll be able to withdraw it at any time without penalty. Online banks such as Ally Bank offer significantly higher interest rates when compared to your local banks. For longer-term funding, you might want to use a savings vehicle with higher interest, such as a certificate of deposit (CD) or multiple CDs.  

Avoid savings pitfalls

Naturally, there may be obstacles to overcome as you build your emergency fund. Take a look at some of the most common pitfalls and ways to avoid them:

 

Using your credit card as an emergency fund.

Although credit cards may be convenient, there is a lot to consider before turning to plastic. Using your credit card will likely resolve the immediate need, but when you think about interest on the debt and possible penalties, it may not be worth it in the long run. 

Cheating other accounts to fund your emergency stash.

Withdrawing money allocated to other resources, particularly your retirement savings account, can do long-term damage to your financial picture. If you borrow from your retirement account and default on the loan, you could face serious tax implications and penalties. Think of it this way: taking cash out of your retirement account is like stealing from your future self.

Thinking that you can’t afford it.

The most common excuse for not maintaining an emergency fund is that you don’t make enough money to save. Although your budget may be tight, you don’t need to put away hundreds or thousands of dollars all at once. Starting small works just as well. You might try making your morning coffee at home instead of buying it or bringing your lunch to work instead of going out. The savings may not be dramatic initially, but it will add up.

 

Start today!

Establish your savings goal, figure out how much money you need to put away every month, and stick to the plan. Remember: it’s better to have an emergency fund and never use it than to face hard times with no means to support yourself and your family! If you have questions or want help, please don't hesitate to send me a message.

 
"It's not how much money you make, it's how you save it"
                                            -Anonymous
 

Six Reasons You Need More Than A Robo-Advisor

You may have read about the rise of so-called “robo-advisors”, online investing platforms that use computer-generated algorithms to create strategies and manage your money.

These platforms provide simple portfolio management with very little human interaction at rock-bottom prices. With the increasing popularity of these platforms, you might be asking yourself: Do I even need a financial advisor?

I think you do. Here are 6 reasons why:

 

Reason 1 | We Treat You like a person, not just an account number

We put you at the center of everything we do. Our meticulous discovery process thoroughly drills down into your unique personality, goals and needs. We think clients have better financial outcomes with custom-built strategies. Robo-advisors use algorithms to fit you into pre-existing strategies based on your age, risk tolerance, and investment horizon. They can’t fully understand your unique needs because they’ve never met you personally.

Reason 2 | We keep you involved in investment decisions

We emphasize ongoing, personalized communication because we believe informed clients make more intelligent financial decisions. We customize our level of communication to your desires and present you with as little or as much technical detail as you would like. Robo-advisors are targeted towards clients who prefer a hands-off approach to investing – one that does not allow for talking through things face-to-face.

Reason 3 | We coach, guide and hold you accountable

Everyone has different purposes for their money; we help you define it and hold you accountable to the strategies we create together. Think of us as a real-life financial coach. Robo-advisor algorithms are designed around simplistic variables like age, target retirement date, risk tolerance and income level. A computer doesn’t care if you reach your goals.

Reason 4 | We Make Sure Your Financial Strategies Keep up with your life

We proactively monitor your strategies and update them as your needs change. When you pass one of life’s important milestones, we’ll know and make sure your strategies keep up with your life. Robo-advisors use automated re-balancing algorithms to make changes to your portfolio. They don’t know when you get married, have a child, or buy a house.

Reason 5 | We provide knowledgeable answers from someone you know

We offer you easy access to an experienced professional who knows you and understands your situation. Whatever your issue, we can get you the answer you need, quickly and confidently. Most robo-advisors send you to a help forum or customer service center when you have questions. Even if there is a person assigned to your account, you could be just one of hundreds they speak with every day.

Reason 6 | Your life is about more than investing

We help our clients prepare for all of life’s important financial milestones: a house, paying off debt, funding a college education, a bucket list, vacation, as well as retirement. Robo-advisors are designed to focus mostly on investing. For our clients, comprehensive wealth strategies are about much more than just their investment portfolio.

 

The Bottom Line

The good news is that you don’t have to forego the benefits of working with an online investing platform when you work with us. Wealth Wise was designed to utilize robust technology to offer many of the same features and benefits that our online competitors do, but with human interaction you deserve.

Want to talk about how we can help you do more with your financial life?


Click here to schedule a meeting

with a REAL PERSON today.

8 Life Events that Require Financial Guidance

Almost everyone stresses over the daily obligations of financial planning, but many also neglect the significant life stages that require special attention and strategies. Here are 8 key life events that could benefit from professional financial guidance.

1. Graduating from College

College graduation marks the first major transition into adulthood. The progression from school to career is a significant milestone and the perfect time to get financial advice. Whether you or a loved one has graduated, this is also a great time to assess needs such as college debt repayment, savings strategies, or insurance.

Luckily, most recent graduates have time on their side. With the decades ahead and the power of compound interest, it’s the perfect time to have a discussion about the benefits of saving right now. The financial foundation built now will have a major impact on the rest of your financial life.

2. Marriage or Divorce

Professional finance advice is extremely beneficial at the time of marriage. Goals such as combining finances, handling credit issues or debt problems, and building a successful financial life with your spouse will be hard to establish without objective financial advice. Click here to download our helpful checklist for newlyweds.

On the other end of the spectrum, divorcees should ensure that they protect their finances. If you’re entering divorce proceedings, important tasks like updating your will, changing your insurance policies, and protecting your investment accounts need to be handled with care and are best managed by a professional.

3. Adding a Member to Your Household

The birth of a child is a miraculous event, but that new addition will bring huge financial and lifestyle changes. College funds will need to be created, wills and insurance policies need to be updated, and a whole host of new expenses will need to be managed. Make sure that your new bundle of joy is off to the best start possible by bringing in a professional.

4. Job and Income Changes

Whether you are starting a new job, changing careers, or accepting a well-deserved promotion, there are important financial considerations to address. During a job change, you’re better off with a financial planning professional who can help you minimize taxes by rolling over retirement accounts and making the most of your stock options. A professional can also help you adjust your financial plan so you start putting more money aside and preparing for a future of continued financial growth.

5. Buying and Selling Property

If you’re buying a home, a professional can help you review your situation in an effort to maximize your tax benefits, deal with capital gains exclusions and taxes, and find write-offs and deductions you might otherwise have missed. Buying and selling property is complicated, and it’s not worth tackling on your own.

6. Illness or Hospitalization

An unexpected illness or hospitalization can strike at any time, and when it does, your finances are soon to be impacted. If you find yourself hospitalized or stricken by a sudden illness, reaching out to a professional could minimize the financial impact and help you recover more quickly. A financial advisor will also help with long-term care options and disability insurance, estate planning, life insurance, and a host of other planning topics that will have an impact on your overall portfolio.

7. Inheriting Property

Dealing with an inheritance can also be complicated, hence why it made our list. If your inheritance comes in the form of a lump sum, it is important that you minimize the tax bite and address outstanding debts. If you are inheriting a retirement account like a 401(k) or IRA, you’ll definitely benefit from assistance with rollover options and investment advice.

8. Retirement

Retirement may be the most important transition in your life. From maximizing and managing benefits to developing a distribution strategy, the right professional can be an invaluable resource.

Everyone wants to feel comfortable by establishing long-term financial security, so it’s worth taking an honest look at your current financial situation and goals. Every day we take the complexity out of financial planning for our clients. We can make it simple for you too, so don't hesitate to contact us directly if you need someone to look over things with you.

Should You React To Stock Market Volatility

The best answer is "No", but that’s not always the easiest.

As you know the markets started 2018 with the wind in their sails, and we all watched as indexes continued their nearly straight-up trajectory from 2017.

Then, after the S&P 500’s best January performance since 1997, stocks took a dive at the beginning of February. On Monday, February 5, the Dow and S&P 500 each lost more than 4%, and the NASDAQ’s drop was nearly as significant. The next day, all 3 indexes posted positive returns.

I understand how unnerving these fluctuations can feel—especially as headlines shout fear-inducing statistics. My goal is to help you better understand where the markets stand today and how to apply this knowledge to your own financial life. 

Putting Performance Into Perspective

When markets post dramatic losses, many people wonder what causes the turbulence—and may assume negative financial data is to blame. However, that wasn’t the case with the recent selloff. 

No negative economic update or geopolitical drama emerged to spur the selloff. Instead, emotion-driven investing may have combined with computer-generated trading to fuel the decline.

While concerns about inflation and interest rates may be to blame for the market fluctuations, it may not be the only detail to focus on. Another key point is important to remember as an investor: Volatility is normal.

Volatility Facts

 

Average Intra-Year Declines: Since 1980, the S&P 500 has experienced an average correction each year of approximately 14%. But in 2017, the markets were unusually calm, fluctuating only 3%. Before this recent decline, the S&P had gone more than 400 days without losing over 5%—its longest span since the 1950s.

Takeaway: Markets fluctuate, and the recent lack of volatility is what’s truly unusual.

Percentages vs. Points: Many news articles mention that the Dow’s 1175-point drop on February 6 was its highest decline in history. While this statement may be true, it leaves out a key detail: The higher an index goes, the smaller a percentage of its total that each point represents. In other words, 1175 points doesn’t have the same impact at 25,000 that it does at 10,000.

Takeaway: Focus on percentages not points to gain a clearer view of market performance.

Recovery From Bad Days: The S&P 500 fell 4.1% on February 5, but within one day, the index regained 1.7%. This performance surpasses historical data. If you analyze the S&P 500’s 15 worst days—where the index lost an average of 8.16%—stocks were still in negative territory 1 day later. But, in 13 instances, stocks were back up within a year by about 21%; they were always in positive territory 5 years later.

Takeaway: Even when stocks lose more ground than they just did, they recover and positive performance returns.

 

Remembering The Last Market Correction

In August 2011, the S&P 500 lost 6.66% in one day. At that time, the European debt crisis was in full swing, the U.S. had lost its AAA credit rating, and the financial sector was reeling.

Facing that situation, impulses to leave the market and avoid further losses could have arisen. As is so often the case, however, staying invested paid off.

Only a year later, the S&P 500 had gained over 25%.

Knowing Where to Go From Here

Over short periods of time, the market trades on fear, anxiety, greed, and emotion. Over the long term, however, economic fundamentals drive the markets. The reality is that equities don’t move in a straight line. Even if volatility is here to stay, we know that price changes can provide new market opportunities.

I encourage you to focus on your long-term goals, rather than short-term fluctuations. Don’t allow emotions to derail your plans. You should feel comfortable in your financial journey. If you don’t have a financial plan in place – please feel free to contact me and I’d be happy to help you get started.

A New Year - A New Financial You

January means a New Year is upon us, bringing a fresh opportunity to consider your goals. For 2018, I am taking a different approach to resolutions. Instead of giving you a laundry list of tasks to accomplish, I want to encourage you to make this the year you really own your financial life. 

Imagine fast forwarding your life to December 31, 2018, and looking back on the year. What do you think you will have accomplished? How did your financial life change? What roadblocks did you remove? Answering these questions can help you identify your true goals for 2018.

If your vision for next year differs from where you are today, then you need a clear strategy for making changes—and a plan to follow along the way. It all begins with knowing how to define and reach your goals.

According to a study on the science of achieving goals, 3 key steps make you more likely to achieve what you set out to accomplish:

  • Written goals
  • Accountability
  • Commitment

Using these findings, I have created 3 steps to help you set—and keep—your financial resolutions for 2018.

 

1. Written Goals: Define and record what you want.

Financial worries keep 65% of Americans up at night. From paying for health care to saving for retirement, people’s concerns span an array of life events. Fortunately, writing down goals can improve your chance of reaching them and moving past these stressors.

When defining your financial resolutions, ask yourself which priorities matter most to you and would help create the greatest comfort in your life. Your financial needs are unique to you, and they should guide the goals you set for the coming year.

2. Commitment: Outline specific action items for each day.

Once you have defined your goals for 2018, you can outline the actions you will take to help make your dreams a reality. Create and maintain your commitment to the goal by building a clear strategy for bringing it life. For example, rather than saying, “I want to pay down debt,” define the exact amount of money you will pay toward your liabilities each month. Determine which steps you need to take to achieve your goal, and then build a schedule for accomplishing the necessary tasks each day.

3. Accountability: Share your goals and progress with someone else.

When studying goal-setting, individuals who shared their objectives and actions with another person had better results than those who did not. To help increase your chances of achieving your 2018 financial resolutions, share your plan with someone else, such as a spouse, family member, or friend. Make sure you give them a detailed account of exactly what you want to achieve—and the steps you will take to do so.

Once you’ve selected someone to share your goals with, keep them in the loop on your progress. In fact, sending weekly updates to your chosen accountability partner can make you significantly more likely to achieve your goals.

 

As you look to 2018 and what you hope to accomplish, I encourage you to follow these steps to start out on the right path. I am always here to guide your financial goals and help you create the future you desire.

Here’s to a happy, healthy, and fulfilling New Year!

Protect Yourself from Identity Theft

You, like most people, probably believe that identity theft is something that could never happen to you. Then, one day, you’re reviewing your monthly bank statement, and see a list of charges made to your account from a country you’ve never dreamed of visiting.  Just like that - you’ve become one of the millions of identity theft victims that occur in the U.S. every year.

I’m sure by now you’ve heard, hackers recently accessed the personal information of over 143 million people within Equifax’s database. Unfortunately, these hackers were able to access financial information putting many of us and the people we care about at risk.

Fortunately, there are many ways that you can protect yourself from potential identity theft and fraud. Most of these actions are common sense, but they’re often overlooked. Here are 7 tips you can follow to help protect yourself:

 
  1. Be wary of emails or social media messages asking you to log into a financial account. Your bank, mortgage company, investment account, or the IRS will never request personal information by email. Never click on links embedded in those emails; instead, always log into your accounts by manually typing the web address into your browser.

  2. Never give out personal information in response to a phone call from someone claiming to represent the IRS or a financial institution. If you get a suspicious phone call, hang up and call the organization directly for more information.

  3. Protect your sensitive information by collecting mail promptly and shredding documents containing account numbers, credit card numbers, or your Social Security number.

  4. Never use the same PIN or password for multiple accounts or websites. Doing so increases the risk that a single attack could compromise your identity or result in fraud.

  5. Monitor your financial and credit card statements carefully to identify suspicious activity. If you find fraudulent transactions, report them to the relevant institution immediately to reduce your financial liability.

  6. Check your credit report often. You can check your report for free at creditkarma.com. If you find fraudulent accounts or activity that you don’t recognize, immediately file a report with all three agencies.

  7. If you don’t anticipate purchasing a home, new car or opening a new line of credit, you may want to consider placing a security freeze with the three different credit bureaus. You can learn more about this by clicking here.

 

No one wants to be the victim of identity theft, and it’s up to you to control whether or not you are adequately protecting your personal accounts and information. By following these tips, you will be on the path to stronger security. If you would like to discuss ways to deepen your protection from identity theft, we are more than happy to help.

Ramping Up Your Retirement Savings

No matter where you are in your life, saving for retirement is likely one of your most important financial goals. But, even if you have professional guidance and a clear strategy for your desired future, you could still be missing some straightforward ways to maximize your savings.

The reality is: Most people do not save enough money for retirement. In fact, the National Institute on Retirement Security estimates that Americans have at least a $6.8 trillion gap between the amount they have saved and the amount they need.  Alarmingly, they found the gap could be as high as $14 trillion.

While we are always here to help you address major life events and financial changes, we also wanted to share some simple ways to increase your savings now.

 

Reevaluate Small Budget Items

Changing major aspects of your budget — such as your housing or healthcare costs — can significantly impact your savings potential, but may also take time to implement. To start saving more today, look at the little places where you spend money and see where you can trim your expenses. For example, do you eat lunch out every day or buy a specialty coffee most mornings? Do you have entertainment packages you aren’t really using, such as cable TV or online memberships? Saving a few dollars each day can add up to thousands of dollars over a year, which is money you can put toward your retirement.

Remember to Imagine the Retirement You Desire

Effective retirement strategies often focus on building a clear vision of how you would like to spend life after your career. As you go about your daily life and make financial decisions, how often do you reflect on this vision? Rather than only thinking about your retirement goals during financial reviews or major choices, start incorporating this picture into your regular decision-making process. For example, each time you make a purchase, ask yourself if you’d rather have this item or put the money toward the retirement you desire. You may discover that by grounding each purchase in this way, you spend less on items you don’t really care about — and have more money to put toward the retirement you’ve dreamed about. 

Capture Your Employer’s Full 401(k) Match

U.S. employees lose $24 billion a year by not saving enough in their 401(k) to claim their company’s full matching. If your employer matches your retirement contributions, make sure you contribute at least enough to claim what is essentially free money. And if you are age 50 or older, remember that you can contribute an extra $6,000 each year to your 401(k) on top of the $18,000 annual limit.

Invest Additional Funds

When you receive a raise, bonus, tax refund, inheritance, or other financial windfall, spending the funds can be very tempting. Instead, if you choose to invest this money into your retirement, you can boost your savings without affecting your current bottom line. In addition, if you put a bonus into a 401(k) or IRA, you may also enjoy tax benefits and not owe anything until you withdraw the funds.

 

Saving for retirement is a big responsibility, but it does not have to be a burden. With these simple changes — and support from professionals who care about your future — you can focus on creating a lifestyle that matches your dreams. We are here to help you at each step, so please let us know if you have any questions about these tips or the bigger strategies guiding your retirement.

Estate Planning Basics for Young Professionals

As a financial professional, part of my commitment to my clients is to help guide their financial affairs. One area that is particularly critical to get right, but is often overlooked is estate preparation and the protection of your loved ones from the unexpected.

I recently had the opportunity to sit down with Paul Yokabitus, an Estate Planning Attorney with NC Planning to get his input on some of the common estate planning questions I hear from clients.

 

Paul, let's start with something very basic. What are the key documents that everyone should have in place?

  • Will
  • Financial power of attorney
  • Healthcare power of attorney
  • Living Will

There are instances where a trust-based plan may be appropriate, but our job as the attorney is to get you to your desired solution in the easiest and most cost-effective way possible - that may or may not include a trust. If you have young children we would also be addressing guardianship designations during the planning process.

Often times the response I get when I ask young professionals if they have an estate plan in place is "No. We don't have any kids or significant assets yet, so we don't need one. Right?". What would your advice be to people that share that same belief?

 
 

What I often tell people is that estate planning isn't just about planning for when you die, it is about protecting yourself while you are alive. A lot of people don't realize that if they are seriously injured in an accident, without documents in place - it is very difficult for the people that care about them to make financial and medical decisions on their behalf.

Most people also don't realize that if they die without documents in place, the default distribution plan allocates a portion of their probated estate to their parents, even if they are married. I like to refer to estate planning as empowered planning. The idea is that you are taking initiative now to avoid the defaults from ever coming into play.

Something I've seen a lot throughout my career in financial planning is the use of online tools to take care of estate planning needs, often in an attempt to save on the cost. Is this really a good idea?

I always say that having some type of plan is better than having no plan. With that being said, these plans should only be considered when trying to cover a shorter period of time or if cost is a greater concern than the plan itself. They aren't designed to be a long term comprehensive plan. You also don't have the opportunity to establish a relationship with an attorney, which can be important when changes occur in your life or with the laws surrounding estate planning. Based on my experience most DIY estate plans fall short of what clients actually want to have happen. I've probated DIY wills and probably 9 out of 10 times there is an issue that makes the process longer or more expensive for the family.

What are some of the key things people should look for when deciding to work with an estate planning attorney?

  • There should always be a free initial consultation offered - the attorney shouldn't put a road block between you and your planning options.
  • You want to make sure there is a signed representation agreement that covers the terms and scope of the services, as well as the cost.
  • Look for a fixed fee estate planning attorney.
  • Read through their online reviews. This can be an excellent way of determining what you could expect when working with that attorney.
  • Responsiveness. You want to work with someone that is a good communicator and returns communications from you quickly.

What are some common mistakes you see people making when it comes to estate planning?

  • Not planning with alternatives. Many people only name one back up and that doesn't provide enough depth to a comprehensive estate plan. You want to have a "deep bench" if possible.
  • Not updating their plan. Estate planning has gone through many changes over time and will likely continue to change in the future. It is important to review and make changes to your plan when this happens.
  • Not coordinating your estate plan with your financial life. This means updating the titling or beneficiaries on your different assets. Working as a team with your financial planning professional can help ensure this is done properly.
  • Waiting too long to get something in place. Most people procrastinate until something happens and at that point it might be too late.
 

I want to thank Paul for providing us with great information. If you want to learn more about how he works with clients click here.

As you can see, in this month's blog, we've tackled some questions that I hope will help you think about your priorities and prompt a discussion with your loved ones. Please feel free to share this information with your friends and family; everyone deserves the benefit of professional recommendations and the confidence of knowing that their future wishes are protected.

If you would like to review your current estate provisions please call my office at 919-463-0018.