Money Mondays: How Exactly are Financial Advisors Paid? And By Who?

Hi friends!

So, I’ve mentioned in the past that you should find a financial advisor that you trust to help you plan for retirement and invest your money.  I’ve had people say to me, “Margo, how come the person who sold me insurance is offering to do a retirement projection for free, but other advisors are charging money to do this?”  The answer lies in how different financial professionals are compensated.

This is where it gets a little tricky.  It’s not as easy as it would seem to figure out exactly how financial professionals are paid.  And, most people would agree that it’s kind of confusing to figure out how to find a financial advisor you trust if you can’t figure out how the advisor is paid!   Some people have told me that this prevents them from even trying to find one at all – because when you don’t know how they are paid it’s pretty hard to figure out what it will cost you.  To compound the issue, many professionals call themselves “financial advisors,” but they all aren’t created equal.  They each may have varying expertise and very different “end games” when it comes to their relationship with you.  I’m here to tell you:  It’s confusing, and I’ll explain it to you.  I’m also going to give you a list of questions you can ask the advisor when you are interviewing them to figure it out, too.

To simplify, we can basically put financial advisors into one of three categories:  Commission-only, Fee-only, or Fee-based.  Fee-only and Fee-based sound the same, but they are actually quite different!  Here are the details:

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Fee-only:  Fee-only advisors are only paid directly by their clients for the services they provide.  This fee is usually represented as a percentage of your account value or an hourly rate.  They do not sell any products like insurance or annuities, they don’t represent a bank or any financial institution, they don’t have proprietary funds like mutual funds to place into your investment accounts, and they don’t receive referral fees for sending you to other advisors, like an attorney or insurance rep.  In this scenario, the financial advisor only represents the best interests of their client – they aren’t there to sell a product or represent the interests of a bank or other financial institution.  Every decision they make is in the best interest of their client because they don’t have any conflicts or receive compensation from any other party or institution.  Fee-only advisors are true fiduciaries for their clients.

Commission only:  These are your insurance sales-folks and annuity sales-folks.  What’s good about them?  You need to have certain kinds of insurance: home, auto, health & life, for example.  These people have expertise, execution and only indirect cost to you out of pocket.  Some of these individuals will offer free financial planning meetings, but beware.  Their planning usually revolves around insurance products and getting you to buy one.  The reason that they offer financial projections for free is that they use the time to convince you to buy a product that they sell.

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Sometimes, in these financial planning meetings, they might encourage you to buy insurance or an annuity that may not appropriate for you because it makes them money.    I carefully vet the insurance representatives that I refer my clients to, so I know they aren’t going to inappropriately suggest a product to them, but there are unfortunately people like this out there.  I also review all insurance before my clients sign on that dotted line.  Having a neutral party who only works for you, and not a bank or an insurance company, review these sorts of things is a very smart move to make so you know it’s actually best for you.  And even though you aren’t paying the commission-only advisors directly (out of pocket) for the product they are selling you, you are paying them indirectly because of the fees you are paying upon purchase and/or the life of that product.  These products are not inexpensive, and the advisor receives payment from the company offering the product as a result of the money you spend to purchase it.

Fee-based: This is where it starts to get a little more complicated.  Fee-based advisors are a mix between fee-only and commission-only advisors. They receive a fee from you directly for managing your investments, usually a percentage of the total dollar amount of your account AND they sell products like insurance, propriety mutual funds, and/or receive referral fees for other professionals they send you to.  I know a lot of fee-based advisors who are wonderful – very smart and very ethical.  However, if the fee-based advisor isn’t as ethical, you can see where they might get into difficulty.  Are the investments they are choosing in your portfolio always the best ones for you?  Or are they choosing them because they receive a commission?  Are they selling you a product like insurance or an annuity because it makes them a commission?  Or are they recommending it to you because it’s actually the best product for you, and it’s the right choice for your goals and risk tolerance?  When it comes to fee-based advisors, you are potentially paying them both directly and indirectly for their advice and the choices they make for you/recommend to you.  Again, I know a lot of really great advisors who are fee-based, and one of the positives of this model is that they can sell you directly the products you might need to ensure you are comprehensively planning for your future.  However, it’s imperative that you find an ethical advisor if you are shopping in the fee-based arena.

If this sounds confusing, you aren’t alone.  I’ve been asked the following question by clients pretty often:  “How do I figure out which bucket my financial advisor falls into?”

So, I created the following list of questions to help figure it out:

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If your advisor is fee-only, the answers to all of these questions are NO.

If your advisor is fee-based, the answer to any ONE of the following questions will be YES: 1, 2, 3, or 7.  A YES to any one of those questions means they are not fee-only.

If your advisor is commission-only, they will always answer YES to #1.  Another hint:  They won’t be charging you an investment management fee, which is how you know they are commission-only instead of fee-based.

Finally, if the answers to #4, 5 or 6 are YES, it’s time to find a new advisor regardless of the way they are compensated.

If you are looking for potential advisors, the initial meeting should always be complimentary.  This is an intro meeting so they can figure out your needs and how they might serve you.  So, cost shouldn’t prevent you from reaching out to a potential financial advisor and “interviewing” them to see if they are right for you.

In that meeting, use the list of questions I give you here to figure out how they are paid, culminating with the final one:  “How much will this cost me, and will you quote me ahead of time, or as we go?”

There are great financial advisors out there, and armed with this information, I am confident you will find the best one for you!

Happy Advisor Shopping!!

Margo

HEADSHOTMargo is a fee-only financial advisor and mom of two.

Money Mondays: 3 Types of Accounts You Should Open Now to Save for Retirement

Happy Monday, Friends!

Today, I’d like to talk about retirement.  Every time I think about having this conversation with my clients, I think about this one young man I spoke with not too long ago.  We were talking about managing his debt, and he said, “When the bills come in the mail, I swerve them.”

“Swerve them?” I asked, clearly feeling older and older by the second since I wasn’t up to date on the lingo.  “Yeah, I swerve them.  You know, I don’t open them and just put them in the trash.”  We laughed and laughed and laughed.  (And then of course we talked about how avoiding you debt doesn’t make it go away – it actually makes worse, and then we came up with a plan.  But I digress.)

The reason I think about this young man and this conversation in particular is that a lot of people I meet also avoid thinking about/saving for retirement.  It could be for a myriad of reasons – lack of understanding or fear being two main ones.  (Example: “I don’t have time to figure this out so I’ve just been avoiding it!”)  But the point, my friends, is that “swerving” your retirement, by not saving enough & in the right way, is just as damaging in the long-term as avoiding your bills.

I’m sure you’ve all seen/heard these commercials from big banks where they tell you that people who start to save really early magically have millions in their retirement accounts. Well, it’s not that easy, but those ads did get something very important right:  The earlier you start, even with small amounts of money, the quicker it builds and the easier it is to get to your retirement goal.  It’s a little more complicated than that, though.  Because it’s not just about timing of the saving or how much you save – it’s about HOW you save it.

In that spirit, today we are going to address the 3 Accounts You Should Open and Contribute To NOW to Be Retirement-Ready Later.

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1. Pre-tax Retirement Account:  This is a 401k or 403b (Depending on the type of company you work for).  If you don’t work for a company that offers a retirement account, you should open an IRA.  Contributions to any of these three accounts are with your income BEFORE it is taxed.  This means, you get paid, you (automatically) put money in this account and you don’t get taxed on it this calendar year.  When do you get taxed?  Later when you take it out.  You should put in at least the amount that is matched by your employer if you have an employer that offers a match.  Your employer’s match is a contribution they make to YOUR retirement account that’s free money to you that you otherwise wouldn’t get.

Here’s when people make a big mistake – Some people don’t contribute enough to get the full match.  Here’s when some people make another big mistake – they ONLY contribute to this type of account and think it’s enough for retirement.  However, that’s not ideal.  Why?  Remember when I said that it’s pre-tax money, so when you take it out you get taxed?  This is important.  In retirement, if all you have is a pre-tax retirement savings account, every time you use that money, you pay income taxes on it.  That’s why you also want to have the next two kinds of accounts.

2. Post-tax Retirement Account:  This is called a Roth account.  It comes in many forms – Roth 401k, Roth 403b, Roth IRA. The important thing to know about this account that it is a retirement savings account that grows tax-free, but you are taxed before you put the money in.  So, if you are in a high tax-bracket, it’s not an ideal time to make a contribution to a Roth account.  However, if you are in a moderate to low tax-bracket, you should be contributing to this account.  When you take the money out once you are in retirement, you are able to remove it tax-free.  (This is because you already paid taxes on it when you made your contribution!)  You did hear that right  – You pay taxes on it, put it in the retirement account, it grows tax free, and then you take it out tax free.  So, when you are in retirement and you need to access cash, you can access this cash without paying taxes on it.  This is one way to help mitigate taxes in retirement.  If you can, try to put a chunk of money into your Roth automatically every month just like you do for your Pre-tax Retirement Account.

3. Taxable Account:  This is a regular non-retirement savings account, but unlike your savings account at your bank, this is a brokerage account that allows you to invest the money you deposit.  You can usually set this up at your bank or at another place like Charles Schwab, TD Ameritrade, or Fidelity.  Every month, you should be saving what you can into this account, and depending on your age and timeframe for need of the money, investing it appropriately.  There are lots of professionals out there that can help you with this at a very affordable rate.  Similar to the Roth, you can access this money in retirement without paying income taxes on it.  The only drawback to this account?  It is subject to capital gains taxes every year based on trading in the account.  So, if you sell a bunch of highly appreciated stock in the account one year and realize that gain, you’ll need to pay taxes on it that year.

However, that’s great news, because it means you made cash!!

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Do you see a theme here?  You WILL pay taxes – Uncle Sam will get his chunk of flesh from you whether it’s now or later.  For the post-tax retirement account and taxable account, you are paying taxes now but not later.  For the pre-tax retirement account you are paying taxes later but not now.  So, it’s a game of tax brackets and hedging your bets. You want to have access to various types of accounts in retirement so you can minimize the amount of taxes you will need to pay in retirement and keep yourself in the lowest tax bracket possible in retirement.

I know what you are thinking: “But, Margo, I live paycheck to paycheck.  I can’t save for retirement!” Let’s unpack that a bit together.

Everyone can look at their spending habits and identify the difference between things that are “need-to-have,” “want-to-have,” and “nice-to-have.”  Need-to-haves are things you can’t live without.  Want-to-have’s are things that you want but aren’t too extravagant – like a cup of expensive coffee every now and then.  Nice-to-have’s are like motorcycles and $500 purses.  You should not be spending money on Nice-to-have’s until you already are saving a chunk every month into the three accounts I mention herein.  You shouldn’t deprive yourself of the Want-to-have’s, within reason, but I can guarantee you can look through your spending habits and eliminate a few small things and use that money, no matter how much it is, to save for retirement.  Whatever you can put in each account is great – AND don’t forget, I want you to be putting in at least the match of your employer, if they offer one, if you have a 401k or 403b.

When I am at cocktail parties, I am often asked, “So, Margo, how much does the average person need to save to be ready for retirement?”  I always say the same thing: It’s impossible for me to tell you how much you need to save for retirement because I have no idea what it costs to be you.   The point of retiring is to have a chance to enjoy your life.  So how can I tell you how much you need in order to enjoy your life if I don’t know what a month in your life looks like and/or what it costs?  There is no “average person” when it comes to spending.  Do you spend the same way as your next door neighbor?  Do you have a boat?  Do you want to travel?  Do you have an expensive hobby?  Do you want to sell everything and move to an island?  Would I want my financial advisor to assume I am the same as the “average person” in my geographic area/age group and then base my savings off of those assumptions?  The answer to that is NO.

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So, go see a financial advisor to figure out how much you need to save.  If you can’t make that happen, in the very least, save based on the capability of your budget until you can see a financial advisor.

Follow us and Tune in next Monday for the follow up to this discussion: How are financial advisors paid?  And how do you find one you can trust within your budget?

me and kidsMargo is a married mom of 2 and financial adviser in the Annapolis area.

Money Mondays: Work + School + Kids = WHHHAAAAT?

Hi friends!!

We recently had a follower request this topic, so it moved right up to the top of my list.  She, very astutely, pointed out that thinking about taking this on sparks lots of fears and worries.  How will I manage to do this?  Is it possible?  When will I find the time?  How do I find a program that’s right for me, my budget, and my schedule?  Am I taking on too much?  How do I even start?  It’s easy to become immobilized by these questions.

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I’m here to tell you it’s possible, walk you through the steps as I see them, and try to (hopefully) take away some of the fear associated with it.

I recently was talking with one of my mentors, a woman I met in a local women’s giving circle here in Annapolis, MD.  She said, “When I was younger, and I had little kids, I went back and got my PhD, so I completely empathize with what you are going through right now.”  I stopped her right there and said, “When you were younger, it was even harder, so, knowing you succeeded makes me feel like I shouldn’t be complaining and I can make this happen.”

Back in the day, there were not as many local universities with programs for working people or moms.  Back in the day, there were no “online programs” let alone online programs that allow you to set your own study/class schedule at your leisure.  That smart and successful woman had drive 45 minutes each way, 3 days a week, to sit in a classroom for 3 hours and then, find time to do her homework in between taking care of her children all day.

I know another woman who did this exact same thing, too: My amazing mother.  My mom managed to complete her masters in this exact same fashion when I was 5 and my sister was 9, after she had recently become divorced, was working full time, and had full custody of us kids.  I’m here to tell you: that isn’t my life – it’s easier now because there aren’t nearly as many obstacles.

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(This is how I envision these two bada$$ ladies I mention herein.)

So, what is my life like while I am in the middle of my CFP (Certified Financial Planner) courses and studying for my exam at the end of the year?  First, let me clarify.  Yes, I work full time.  Yes, I make time for my children and husband.  And yes, I sleep.  (I love sleep.  So if you know me, you know that I will not sacrifice sleep for, well, anything.  Except my kids, of course).

The day is something like this: I wake up around 5:15 am and get the kids ready for school/daycare and leave the house by 6:40 am (My husband leaves for work at 5 am, so I have morning duty!). Everyone is off to where they need to be by 8 am, and I am in the office by 8:15.  Most days, I leave the office around 5 pm, get home, eat dinner, spend time with the kids (and help with homework), do bath and bedtime, and that’s when school starts.

Save for the occasional evening when I have a client meeting, a board meeting, or a nonprofit event to attend, this is generally how it goes. After the kids are in bed, I settle into my home office in my PJ’s, open my computer, and attend my class.  I spend between 1-2 hours, 4-5 nights a week doing this.  I’m in bed by 10 to 11 pm.  On the weekends, I do extra studying, work on my software business, and catch up on client admin items, but I try to keep this to 5 hours maximum so I don’t miss out on fun time with the kids.

So, you ask, how do you even get started exploring going back to school?  Here are my suggestions:

Figure out what the end goal is and work backwards:  Take some time to figure out who you are, what you want to be, and what your strengths are.  I tell my kids a new variation of that old phrase: “You can be anything you want to be.”  My new variation is: “You can be anything you want to be if you find something you love that you are good at and work really, really hard to be successful.”

Almost no one keeps doing something they aren’t good at and/or don’t enjoy.  It’s easy to work hard at something when you like it and you’re rocking and rolling!  Additional education for yourself is no exception.

Find someone who is doing the type of work you want to do, and then get in touch with them and ask to interview them to figure out what degrees and certifications they have.  Ask them what their life is really like – on an average day, an exciting day, a boring day, and a challenging day.  Successful people will give you their time to help mentor you in this way, I promise.  Try to picture yourself in each of these situations and follow your gut.  From there, make a plan, starting with the next level of education required to start down this path for yourself.

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Find Your Program & Be Honest With Yourself About Time: Not all types of school are created equal.  Undergrad is different from a masters degree.  Certifications are different than masters.  PhD’s and MD’s are different, too, of course.  The amount of time you are required to dedicate to each of these varies incredibly.  Yes, finding a program is about accomplishing your hopes and dreams about what you want to be.  It’s also about being honest with yourself about how much time you can reasonably dedicate to the program.  Do your research here.  Talk to program coordinators for those programs you are interested in and decipher the amount of time required to make this happen. Make a chart to compare those educational programs which are interchangeable to get to your career goal.

For example, if you want to be a therapist, and you could either have a masters or a PhD. If you want to take care of patients, you could get an MD or be a PA. Compare the time required for each on a chart and spend some time thinking about it.  It will help you make a decision.

Find the school that fits your lifestyle – the great news here is that there are more reputable online programs available now MORE THAN EVER.  This includes undergrad programs, masters programs, certifications and more.  My online program is through one of the most respected institutions for financial certifications in the U.S.  I am allowed to log in to my courses at my leisure to do the work, with videos of the instructor doing the class available on demand, and I have a network of classmates available for me to interact with virtually when I need it.  I didn’t think I would be someone who would enjoy an online course, so if you feel this way too, I highly suggest you ask to take a sample course with a program you are exploring so you can get a feel for this.  More great news – online courses are usually more affordable than those you’ll go to a classroom for.

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(This is me when I think about all of my student loans – but not to worry!  Read on.)

Figuring Out How To Pay For It: It’s also just not about time – it’s about finances, too (Hence, part of the reason my besties tagged me to do this topic!). Most people don’t have the extra cash laying around to go back to school.  There is absolutely nothing wrong with student loans – A student loan is an investment you are making in yourself.  You are making a bet on yourself that by getting this additional education, you will have the capability to achieve more and earn more money.  From this additional money, the thought process is that you believe you will be able to pay your loans back AND MORE.  So, like I said, take some time to figure out who you are, what you want to be, and what your strengths are.  But also take the time to do research about how much more earning potential this additional schooling will afford you.

Remember those people you interviewed earlier?  Go back to them and ask them questions about earning power (general compensation information for the career of your choice) and the time-frame to get there.  Do your research.  It’s almost always worth it to take out the loans, and knowledge about these sorts of things is power.

Once you have an idea in your mind about additional earning potential, you can project future loan payments against your current budget and feel confidently that you can pay them back over time with some left over!  You may be thinking: “But, Margo, life isn’t all about making more money.  What if what I love requires more schooling but it doesn’t pay more than I making now?”  My answer to that is: “That’s perfectly fine.  Just realize, if you are taking out loans, you will need to make sacrifices in your budget/spending to pay for your loans later if your new education doesn’t afford you more in income.”

Set Small Goals and Celebrate Them:  Now that you’ve chosen your program, gotten your loans (if you need them) and started your education, keep your eye on the final prize, but also do yourself a favor and set smaller goals along the way.  Small goals are absolutely the key to my motivational success.  I finished a course?  My hubs brings home a small bottle of champagne and we toast.  I finished two courses?  I take a month off to spend lots of evenings with my babies so I can recharge.  I’m halfway through the program?  We take a weekend getaway.  The average time it takes to complete my program is 18 months.  It will likely end up taking me 2-2.5 years, and that’s okay.  I don’t have to be the quickest at this, I just have to get as much out of it as possible and cross that finish line.Image result for gif of champagne

Be Easy On Yourself:  This is not about a sprint – this is about the final goal.  Need to take a break?  Go for it.  Just make sure you have a plan about when you will dive back in.  Put it on your calendar.  Keep yourself accountable, and allow yourself to breathe.

Use a Timer:  Remember when I said I dedicate a certain amount of time on evenings and the weekend?  You can bet I use a timer.  When that timer hits, I stop.  This helps me avoid burning out.

Find a Creative Outlet:  For me, this is the blog.  Writing here helps me take a brain-break.  Brain-breaks are pretty necessary when you are trying to do a lot of intellectual things.  I do financial analysis and strategy as well as investment management all day.  I do software design/development when I’m not doing that, and then I study when the kids are asleep.  Sometimes my brain needs rest.  I have heard other people like to color.  I haven’t done it myself, but maybe I need to try it!  For me, though, my favorite creative outlet is writing.

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In life, nothing great ever happens to you without some measure of risk and hard work.  However, just because something is hard work won’t mean you won’t enjoy it.  I think part of the issue nowadays with people avoiding hard work is that they assume it won’t be enjoyable.  I find this to be a strange phenomenon because I haven’t encountered it in actual practice – ever.

The busier I am, the more I get done.  This has always been true for me.  Obviously, however, I am making some sacrifices  (Hence, why my treadmill is so lonely).  There are some people who can still work in time to exercise every day, but I am not that kind of superwoman.  However, nothing is permanent, friends, and I have plans.  When the program is over, I plan to dedicate as much time and attention to my treadmill and Christiana’s suggested fitness app as I have been to my CFP program the past 2 years.

Also, I have to believe that I am setting (what I hope to be) a good example for my kids.  Every night my son asks, “Do you have to study tonight, Mom?”  Later in life, when I tell him he needs to study, I will have shown him that I set the example of what it takes to get the most out of your education and that dedication is the way to make things happen.

Right at this moment, I just finished making some flashcards for my Investments class.  My 2 year old daughter was sitting on my lap while I was writing them, and coloring on an extra index card with a green colored-pencil.  She was certain to stop to watch me and hold the pencil in the same way I held my pen.  These moments make it all worthwhile.

If I can go back to school with a full-time job, kids, and a major need for sleep & fun, then I assure you that you can do.  All it takes is for you to be thoughtful about it and make the leap!

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Happy Studying!!!!

Your friend,

Margo

Momday Hacks: Repairing Your Credit Score

We are in a judgement free zone here.  Everyone, and I mean everyone, makes bad financial decisions as a teenager and young adult.  I walked onto my college campus at University of Miami, and on the first day got offered a credit card through Capital One.  You’d be wrong if you didn’t think that I used that card like it was free money for the first month and then was horrified when I realized I needed to pay it back with 24% interest!  (Yikes!!)  Then, as an adult?  Life happens.  Jobs come and go, (and sometimes marriages come and go) but life expenses don’t.  Sometimes this can cause our credit scores to tank.

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Why do we care about our credit score?  First of all, if you have a bad credit score, it means you will pay more to borrow money than someone with a good credit score.  If you walk into a used car lot with a bad credit score and finance the purchase of a $10,000 car, you will end up paying more for that car than if someone with a good credit score walked in the same day to buy the same car for the same amount of money.  Why?  You’ll be offered a higher interest rate for that financing and ultimately make higher payments over a period of time.  Also, nowadays, when you are interviewing for jobs, most potential employers run your credit score before deciding to hire you.  Seem unfair?  Perhaps, but it’s a common practice because they want to know if you are reliable.  Finally, if you are looking to rent a home, they’ll run your credit score too.  These are just a few examples.  Your credit score follows you everywhere, and, like an annoying little sister, it doesn’t care whether you want it there or not!

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For most people, there will be times when their credit score is less than stellar.  However – Don’t despair!  The great news about your credit score is that you can ALWAYS take steps to repair it.

What are those steps?

  1. Online Auto-Bill Pay: This is the most important one.  Set this up immediately!  Remember, online bill pay is different than automatic-debit.  Automatic debit is when you allow a creditor (like your cable company or electric company) to TAKE money from your account on a monthly basis.  (I don’t want you to do automatic debit, and I will explain why.)  Online bill pay is when you schedule to SEND money every month to a creditor from your bank account.  So, why is online bill pay better for your credit than automatic debit?  The credit bureaus are computers, and they track your reliability as a credit-worthy consumer based on the regularity with which you make payments on the exact same day every month.  When you allow automatic debits from your account, the cable company likely takes your monthly payment on different days every month based on its business schedule.  Sometimes it’s the 1st, sometimes the 2nd or sometimes the 3rd depending on the month.  The credit bureau doesn’t deem you as reliable when your payments are taken this way.  When you set up online bill pay to send your payment every month on the 1st of the month, the credit bureaus will deem you more reliable more quickly, and your credit score will improve much faster.  Bottom line: Cancel ALL of your automatic debits and instead set up online bill pay through your bank for at least the minimum payment every month on the exact same day.  Then, once a month go in and adjust the amount you will pay depending on the fluctuations of what you owe (like for your electric company).  Watch your credit score improve in the months to follow!
  2. Pay your credit cards down to less than 50% of the total limit. Here is another important one.  Credit bureaus deem you worthy of an improved score when you have all of your credit card balances down to less than 50% of the total limit.  This is indeed the magic calculation.  Of course, it’s always preferable to keep your credit card balances down to zero because they are high-interest rate debt vehicles, but realizing that’s not always possible, try to focus on keeping them down to 49% of limit or lower.  For example, if you have a credit card with a limit of $5,000, be sure to keep your balance at $2,499 or less.Image result for gifs for credit cards
  3. Pay at least the minimum you owe on all of your bills every month.  This seems like a simple one, but some people don’t realize how important it is.  Don’t avoid your bills – they won’t go away.  They’ll only get worse!  If you can’t afford the minimum payments, call the creditor and ask them for options.  Proactively addressing these issues is always seen in a more positive light, and the creditor is less likely to send you to collections when you do this (which will cause a decline in your credit score.)
  4. Monitor your credit score, pull your report once a year and dispute any fraudulent (or wrong) charges. Image result for gifs for stolen identityThere are truly free companies that allow you to do this, and you should.  I know someone who looked at their score to find that someone across the country had used their information to get a knee replacement, and never paid for the surgery.  This is a huge pain in the butt to comb through the report and make disputes, but this is an absolute necessary exercise to ensure you aren’t being punished for fraudulent activities, or in some cases, mistakes of companies who report to the bureaus.  Keep in mind, if a company who claims to provides “free” reports asks you for your credit card information to sign up, they will at some point start charging you for the service.  And, it’s very hard to cancel.  So, don’t do that.  There are also businesses that you can pay to dispute charges – but why pay someone else to do it when you can easily do it yourself?  All it takes is some time and a little bit of patience.  An example of a company to check out for this service once a year is: freecreditreport.com.
  5. Stay away from bankruptcy: Yes, sometimes it is necessary to consider this, but it should ALWAYS be a LAST RESORT.  Bankruptcy is very, very hard to recover from.  You should always consult a financial advisor and an attorney if you are considering going this route, however, remember that there are a bunch of steps you can take to climb out of a bad financial situation that don’t include bankruptcy.  It takes between 7-14 years for your credit score to bounce back from bankruptcy.  Don’t make this decision lightly.

The bottom line is that ignoring your credit score is like ignoring poor heart health.  Just because you ignore it, doesn’t mean it will go away, and ultimately it will harm you significantly if you don’t address it proactively!  It’s not as hard as you think, I promise!

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Your friend,

Margo

Margo’s Money Management: Why I Won’t Tell You ‘How Women Behave With Money’

Since we’re getting all personal here, I want to start by revealing a huge pet peeve of mine.  Let me set the stage with a few examples:

While studying for a finance exam recently, the instructor in my course said, “Women have unique challenges when it comes to saving for retirement.  However, one positive thing to note is that they take advice from financial advisors better than men!”

While driving in the car, a commercial came on for a bank.  “Women are more risk averse than men. Their investments generally are too conservative to earn the rate of investment return they need to save for retirement.”

While listening to a podcast, I came across this gem: “If you are an advisor that works with women, keep in mind that they want you to treat them differently than you might treat a man.  Speak to them instead of their husbands. Explain it in a way they understand. Don’t use too much jargon. Look them in the eye, focus on behaviors, and show empathy.”

An article recently came across my desk from a finance writer titled, “What Women Want.” Enough already! I immediately put it in the trash.

UMMMMMMM. HELLLOOOOOOOOOO.  Am I losing my mind??!?!!? When is the last time we heard commercials, read articles, or listened to instructors talk about men like this?  If men get to be individuals, with individual goals, needs and behaviors, why can’t women be unique individuals too? Dang. And who is writing this crazy offensive content?!  Boo hiss!!! 

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My managing partner asked me not too long ago if I’d be interested in writing an article to send out to clients.  I thought, “Maybe I should speak to our women clients?” However, when I sat down to write it I started to get frustrated.  I kept thinking about all of these experiences I’ve shared with you here and finally just wrote one sentence: “Women are individuals who each desire unique things from their financial advisor/investment manager based on their own situation, goals and feelings.”  I couldn’t get past this sentence so I gave up.

So, here is my PSA:  If you are working with an advisor, find one that helps you because you. are. you.  Not because you are a woman and he/she thinks she already knows what you want. Not because you “take direction well” or need to be coddled.  Ask them questions about the ways in which they are compensated (I will share some guidance on this in a later post). Figure out if they know how to incorporate your personal needs into a plan of action rather than just telling you what they think you should do (AKA, a canned plan) without getting to know you.  Find someone who respects you, regardless of your sex or whether you are the primary breadwinner in your household or not. Women have been running the show for quite some time now. (Actually, I heard recently that women control finances in 51% of households now so HELL YEA TO THAT!) It’s just that now women are starting to stand up and admit they run the show instead of allowing others to feel like they are all-powerful and the women can just “leave the money management to the men.” 

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To that point, I have one more story I’d like to share.  While at a finance conference, I sat down for the keynote session at a table near the front (Yes, I am one of those people who always sits in the front. It’s a survival habit from my elementary school days before I admitted I needed glasses).  The man sitting next to me turned to me and said, “Oh hi! You must be one of the TD girls!” Uhmmm, excuse me? “No sir, I am an advisor, like you.” Cue the mortified silence from him. And I have to say, I am glad he was mortified.  At least he showed some remorse for A) calling me a girl when I’m clearly a grown woman and B) assuming I must work for the bank as a conference hospitality rep instead of possibly being a financial advisor like him. Maybe that embarrassment is progress? Since I am trying this new thing where I assume positive intent from everyone I encounter, I have chosen to take the potential complement – he thought I looked young enough to be considered a “girl”.  However, this sheds a light on a major problem in the world of finance that still exists to this day – the fact that the majority of people think “it’s a man’s world and we are all living in it”.

Well, I hate to break it to you world, but this woman (and many advisors like me) won’t let that stand for too much longer.  And, let it be known, I treat all of my clients with respect and as individuals, whether they are man, woman, in the green, in the red, rich, older, younger or brand spanking new to starting this whole “saving” thing.

Don’t let anyone tell you what you (should) want or how you behave. 

 

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Adventures of Mommy Money: Introducing Margo!

“Mom, the teacher said that we are making lunches for homeless people.  How can people be without a home?” This was the question my 5-year old son asked me as I was rushing around the house at 6:30 am trying to get everyone to put on their clothes/shoes and get in the car.  “Well, my love,” I said, while trying to get my crazy ninja two-year old into her leggings, “some people don’t have enough money to buy or rent their own home.” I could see the look of absolute befuddlement wash over his face.  “But Mom, why can’t you just print them some money at work?”

Do you ever have that moment where you realize that you are so busy trying to manage career, wifehood, mommyhood and mayyybe a little self-care that you miss the mark on actually explaining to your child what it is that you do all day?!  Well, have no fear, I’ve had that moment for you. Multiple times, in fact. It wasn’t too long after this conversation that his teacher told me that when she asked him, “What does your mommy do during the day while you are at school,” he answered, “She donates blood and makes money.”  L. O. L.

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Me and my little loves

If this is your first foray into our blog, allow me to formally welcome you.  My name is Margo. In my career outside of the home, I am a financial advisor in a fee-only firm who primarily serves women looking to achieve a work-optional lifestyle.  But who am I really?  I’m a woman married to a hunk of a hubby I met in high school, the mother of a 5 year-old son and 2 year-old daughter, a student, a best friend to the three other ladies you will have the distinct pleasure of meeting in this blog, and a horrible chef/homemaker.  

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The good ol’ days!

How did I get to this place in my work life?  (I ask myself this quite often! Ha!) In all seriousness, I always wanted to be in finance.  When I graduated college, however, the job market was just starting to take a turn for the scary, so I jumped on the first offer for a job to make real money, which was as a fundraiser for a hospital in South Florida.  After making a few strategic career moves in the nonprofit industry, I was (thankfully) kicking ass at this career and thought perhaps I was wrong about the whole finance dream. Then, one day, I came home from work and my son, who was in preschool at the time, said to me, “Mom, look!  At school, we all were asked to draw what our dinner table looks like. Here’s mine! Isn’t it pretty? There’s me. There’s daddy. Do you like it?” Notice who was missing there? Me. It was like getting hit with Thor’s hammer. I wasn’t being true to myself or what was important to me (like being home in time for dinner), and I needed to make a change.  Shortly thereafter, I was made an offer I couldn’t refuse to join a stellar financial advisory team in my area, with a completely flexible schedule, and jumped on it with all of the enthusiasm of my 2 year old coloring on a newly painted wall.

So why this blog?  I had the distinct pleasure of meeting three amazing young women in high school who are my lifelines.  Somehow, we all managed to find totally different career life paths which make for a really awesome group text filled with varying types of expertise and knowledge base.  We joke that our “group text” is like an “Ask Us Anything” reality show, where we discuss super personal things, hilarious things, serious things, the meaning of life… Now we’ve decided to share it with you!  

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With my super awesome mom and sister

I certainly don’t pretend to have all of the answers to life, but if you need financial advice?  I’m your gal. Cooking? Nope. Dieting? I can stand with you in solidarity if you are like me and find yourself staring, adoringly, while drooling, into the front of a pizza shop while walking to a meeting.  Studying at 10 pm while your family is asleep and questioning all of your life choices and fantasizing about your bed? Without a doubt. Most importantly, though, if you need to laugh with someone who is thoroughly flawed and mostly failing  falling stumbling? forward in this thing we call life but just embracing it, then you’ve found the right place.

So… ask me anything!  It can be about finance, my handsome and hardworking hubby, kids, my messy house, why my treadmill is so lonely, or anything that strikes your fancy.  Can’t wait!!!!