It was a wild ride this past week as oil prices and treasury yields whipsawed before calming on Friday. AI-related companies fell while chip makers remained steady. All told, the week ended with the S&P 500 down slightly, but if you were watching things daily your neck might be a little sore.
Who do you need in your corner to navigate these things? Four professionals come to mind: a CPA, financial planner, estate attorney, and insurance agent. Not everyone needs each one, so how do you know when it’s time to turn to a professional?
First, a Certified Public Accountant or Enrolled Agent. An Enrolled Agent is licensed to prepare tax returns, while a CPA can provide a wider range of accounting services. If you receive a W2 for work, and don’t have anything beyond a mortgage, some charitable donations, and an investment account, you can probably do your taxes yourself. You want to bring in a professional if you have rental property, work as a 1099 contractor, or are self-employed. I usually suggest people try it themselves on tax software like TurboTax, then go to a professional if they can’t figure it out.
Once you turn 18, you need, at a minimum, a Power of Attorney and Advanced Medical Directive. A will becomes important once you are married or have assets that would need to be retitled, like real estate or investments. Or, if you don’t like the way the state law will distribute your property. If you have children, a will is a must-do, to appoint a guardian and establish a trust to hold their assets until they are old enough to manage them. We prefer clients use an attorney that specializes in trusts and estates. If your situation is simple, or money is tight, an online service like Trust & Will can work. Just make sure you actually sign the documents and have them notarized and update your beneficiaries to reflect your wishes.
An independent home and auto insurance agent is also worthwhile. First, they can shop multiple carriers for you and compare prices. Second, you can call them to discuss whether or not you should file a claim, without it being reported to the insurance company. Third, they can provide advice on what level of coverage you need and what risks you have.
I am biased in that I believe everyone needs a financial planner. I’m differentiating here between someone who provides comprehensive advice and someone who only sells investments. Our financial lives are incredibly complex: insurance, taxes, investments for retirement, college, or other goals, mortgages, and more. Should you save pre-tax or post-tax? What’s the best way to save for my children? Am I saving enough to retire? Can I be more tax-efficient? An advisor who holds the CERTIFIED FINANCIAL PLANNER™ designation and provides comprehensive financial planning can help answer these questions. They can help you take your finances to the next level: comparing job offers, choosing benefits at work, aligning your investments to your goals, increasing tax efficiency, reviewing your home and auto insurance, helping your money work harder for you.
Your action item this week is to check out your current financial advisor at finra.org. Use the Broker Check feature to see if they have suspensions, fines, or terminations. Those are giant red flags.
If you have a question you want answered, email us at info@covingtonalsina.com. Be sure to check out our Facebook page or website to see our upcoming educational events.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.