Is Your Financial Advisor Serving You Well?
When you hire a financial advisor, you purchase the invisible in many ways. They can offer a lot of promises, but how much of it is genuine, and how much is a sales pitch? In many circumstances, it isn't easy to assess how effectively your financial advisor performs until after the honeymoon period, which lasts six to twelve months. Even so, what criteria are employed to evaluate them? To know so, ask yourself these questions:
Do they go through your tax return every year?
If your advisor does not evaluate your tax return on an annual basis, they are most certainly overlooking something. Furthermore, they should be examining your tax strategy before the end of the year, taking advantage of charity schemes, Roth conversions, and tax-loss harvesting, among other ways to optimize benefits for that tax year.
Have they talked about how to escape the Social Security tax quandary?
Any advisor who works with retirees should be familiar with Social Security taxes and should be devising a strategy to avoid the Social Security tax burden. If you plan to receive any income in retirement other than Social Security (including pensions and RMDs from your IRA or 401(k) plan), you must plan for this tax. If you do not plan beforehand, you may be subject to a 40% to 50% tax rate.
Have they created a retirement income plan that protects a portion of your portfolio against losses in a down market?
In your portfolio, do you have standard stocks and bonds? How did you feel in 2022 when equities fell 20% and bonds fell 15%? The most pressing concern for most retirees is income, and any income strategy that includes withdrawals from potentially risky investments is vulnerable to a sequence of returns risk.
