I recently saw some social media thread comments where people voiced complaints about financial advisors. “Bunch of high-priced crooks” generally summed it up. I swiped passed without much thought. 

Later that evening, my wife recounted a conversation she had while serving jury duty, and it made me pause. She went on to say that while on lunch break, she and two others had brown-bagged for the day and had the usual conversation in the breakroom – “What do you do?” “Are you married?” “What does your husband do?” That last one turned out to be the bingo question. My wife said that I was a wealth manager and had my own company. Juror number seven asked, “how do you know if an advisor is a good guy, and how do you decide if they’re trustworthy?” He went on to say that his father-in-law had not one, but two bad experiences with brokers/advisors, and it had cost him a great deal of money. I was sad to hear that what I discounted earlier in my social media stream may be more legitimate than I had thought. Clearly, naive thinking on my part.  

I’ll confess, my wife thinks I’m a pretty good guy. (When she has doubts, I remind her she said yes!) The way she answered genuinely made me proud. She said that she had listened to me talk about my work and my work experiences so much over the years that she felt confident that her response was really the right one and the one that mattered most.  

“He always asks a lot of questions. He doesn’t ever assume he knows you or what problems you need help solving. It’s really important that you like each other and that it’s hard to have a good relationship if you don’t. That’s where the trust part comes in. And, it’s important that you understand everything that’s going, and he won’t move on until you do. I wanted to say, ‘he’s like his dad, who was the most generous person ever, and he genuinely likes helping people,’ but I couldn’t explain that part.”

Great answers!  

I understand the position I’m in and the importance my role plays in people’s lives. It’s serious business, and I treat it as such. I’ve learned many things in 22 years of wealth advice, but the top two things on my list that make people crazy are their kids and their money! Rightly so. Family is everything and family takes funding. Hence, the importance of hiring the right person. But, how do you know if an advisor is ethical and has your best interest at heart? If you can’t meet with my wife for a little due diligence, these tips may help.

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I’m not meant to be everyone’s advisor, and not everyone is meant to be my client. That is a fact. There are good reasons for that, and they’re not nefarious ones. Any good advisor should tell you the same. Being ethical and putting the client’s needs first are the minimum requirements you should expect and accept.  

There were lots of good, qualified candidates out there, but I did my due diligence and married the right girl. Do your due diligence, and you’ll have a better experience too.

Sadly, the headline article in the Wall Street Journal reads “Decade of Job Gains Erased in April.” The article went on to say the April unemployment numbers hit a record 14.7% and payroll numbers dropped by 20.5 million workers. No one knows for sure, but unemployment estimates during the Great Depression are around 25%. I’ve not seen any commentary that would suggest we would match the tragedy of the 1930s, but there’s no certainty. We can all hope that the numbers are at a peak, and as the country begins to reopen, more Americans will return to work. It’s a difficult time for everyone and undoubtedly compounded for those that are furloughed or have lost their jobs. 

With so many issues to address during this most unusual time, tending to your 401(k) may not be a priority. When I initially meet with clients more often than not, I discover they have a trail of 401(k) assets strewn across multiple employer plans. I don’t mean to imply that it’s inherently bad if this is the case. I do find some clients have been very diligent in keeping up with multiple accounts. But I also find that many times they’ve been neglected and are not positioned to best represent the risk budget of the client or the current economic environment. Whether you’re an employment victim of COVID-19 or maybe you’ve had a robust career and have changed employers multiple times, you should take the time to evaluate your options.

401(k) Options After Job Loss or Changes

When employment terminates, employees are no longer eligible to contribute to the retirement plan. While you aren’t required to close your account, you do have options.  

1. Cash it out
2. Leave it in the old plan
3. Transfer it into the new plan (if you’re in a new plan and they allow transfers into the plan) 
4. Roll it into an IRA Rollover account. 

I do have strong words of caution for the first option. Cashing out your plan may result in substantial taxes due.  Keep in mind your contributions have been made pre-tax, and distributions will be taxed as ordinary income. You may also be subject to early withdrawal penalties.  

Determining what to do may not be as simple as you think. Or it may be as simple as, “I want all of my assets under one roof.” There are many variables to consider; the biggest being everyone is a unique individual, and there isn’t a general answer that fits everyone. I encourage you to champion your cause (assets) and take control. That may mean meeting with someone like me to see how this best fits your overall financial plan. Maybe you don’t feel comfortable deciding on your own; perhaps you don’t have the time to dedicate appropriately; or reasonably so, you don’t want to do it yourself—all good reasons to schedule a visit.

That said, let’s look at the pros and cons of the remaining three options.

Leave 401(k) Assets in Your Former Employer’s Plan

Roll over 401(k) Assets into a New Employer’s Plan

Roll over Your Old 401(k) Into an IRA Rollover

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Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.