With financial planners among the most important potential referral partners for reverse mortgages, this episode of The RMD podcast features a conversation between RMD Editor-in-Chief Chris Clow and Robert klein, a registered investment advisor in Newport Beach, Calif., and founder of Retirement Income Center where he specializes in a multidisciplinary approach to retirement planning.

During the conversation, Clow and Klein discuss the state of education of borrowers and professionals on reverse mortgage products, the reluctance of many financial planners to discuss reverse mortgages with clients, and advice to clients. reverse mortgage originators on how to approach financial planners to serve as referral partners.

Here’s a brief rundown of the interview you can find in the episode, edited slightly for brevity and clarity:

Chris Clow: What do you think about the attitude of other financial planners regarding reverse mortgages, especially when it comes to barriers they think exist from brokers and apart from those who generally have a negative attitude about them?

Robert Klein: For me, this is nothing new. It’s comparable and analogous to financial advisers, many of them, and their attitudes towards fixed income annuities. In many cases, this is a lack of education, and that’s the bottom line, whether it’s fixed income annuities or reverse mortgages. […] You have little time in the day, and people like to focus on certain things. However, that said, a lot of the things we focus on are client-centric, and so as clients come into your office, and they’re talking about them more and more now, it’s up to the financial advisors to put their minds to it. up to date [reverse mortgages] and broaden their horizons.

The RMD podcast interviews reverse mortgage business leaders, professionals, government officials and thought leaders to provide auditors with the pulse of the reverse mortgage industry and all the business and regulatory realities that affect it . Hosted by Chris Clow and produced by Alcynna Lloyd.

Decide which is right for you: “The kind of advice clients need will help them decide who to go to. Some clients who are fairly confident in their goals based on their self-assessment may simply need advice on how to invest in different avenues; in such a case, they can seek help from a distributor, ”says Harshad Chetanwala, co-founder of MyWeathGrowth. Likewise, many clients want to have a proper plan in place and want to organize their finances in such a way that all aspects such as income, expenses, current assets, risk profile, financial goals, planning Insurance and debt management are taken care of. They would do well to consult a Registered Investment Advisor (RIA) who can be an individual or a company.

If you are looking for a financial advisor, the first thing you should check is whether the person or entity is registered with the market regulator Securities and Exchange Board of India (Sebi). Everything else is just a supplement.

“Professionals who have certifications such as Certified Financial Planner (CFP) or Qualified Personal Finance Professional (QPFP) have completed rigorous training programs and adhere to continuing education requirements,” says Sadique Neelgund, founder of Network FP. these qualifications as well.

Currently, there are approximately 1,300 Sebi-RIAs in India. The number includes corporate RIAs and mutual fund distributors. Some large companies are hybrid in nature, that is, they fulfill both roles. Some distributors may also offer free financial advice.

“An individual RIA cannot be both an RIA and a mutual fund distributor. A corporate RIA has the option of being both an RIA and MF distributor (some may use the option, some may not). Sebi regulation is silent on insurance products, including insurance investment products, ”says Avinash Luthria, Consulting Financial Planner and Sebi-RIA at Fiduciaries. Thus, an individual RIA can also be a distributor of insurance products.

“RIAs charge a fee directly to customers, while distributors are paid through product manufacturers, but it’s still the customer’s money,” says Neelgund.

Understand the fee structure: Free financial advice can get expensive. If someone offers you free financial advice, they will receive income from a source that you may not be aware of. It is therefore important to understand the fee structure of a financial planner.

“Since financial planning is a paid effort, where the planner charges a fee to the client to work on their plan, clients should know the fees and the fee structure in advance,” says Chetanwala.

Of the 1,300 RIAs, approximately 500 provide financial planning services. Of these, around 350 are disguised distributors and will charge commissions, while around 150 are said to be paid financial planners. Of these, most charge a percentage of assets under advice (AUA) fee, while the rest charge a fixed fee. The percentage of AUA charged can vary from 0.25% to 1.5%, but most often it is 0.75% to 1%.

“Some planners may charge a fixed fee each year, with the fee decreasing from the second year as the effort on the plan decreases. From the second year, the plan is already in execution mode and the planners will focus more on monitoring and optimizing the plan with periodic reviews, ”explains Chetanwala.

The first year fees would be in the order of ??15,000 to ??30,000 but may increase depending on the qualifications and experience of a financial planner. Those who work with high net worth individuals may also charge more. Planners who work with fewer clients and spend more time on a single client would charge higher fees.

“In evaluating the fees, I think investors should really know how much they are paying directly or through commissions and what they are getting for it. A good financial advisor adds so much more value than simply offering better returns, ”says Neelgund.

Get to know: Meet with at least two to three financial advisors before you focus on one. “Think of working with an advisor as a long-term relationship. During these first “get to know” meetings, customers should ask questions about their product and service offerings, their mode of remuneration, their clientele, the category of customers they primarily serve, the experience. and the qualifications of the sector, ”explains Neelgund.

“The client may like to interact with a few existing clients of a financial planner to get a feel for how the planner worked on their plan and helped them,” says Chetanwala.

Before registering for the services of an RIA, it is essential that an appropriate agreement be drawn up and signed. An individual RIA must tell you in writing that it will not provide any distribution service. As the Sebi circular does not specify the insurance, please note in writing that your advisor would not provide advisory services for any product.

“In addition, from April 1, 2021, corporate RIAs can no longer charge fees for investment advice and distribute new FCP units to the same client. They can do it for different clients, ”Luthria adds.

Think of your financial advisor as your family doctor. A strong relationship with him bodes well for your financial health.

While most people understand the importance of saving and investing for the future, some may not have the time or the flair to follow a long-term plan.

A financial planner guides an investor through their wealth management journey and helps them manage their finances. There are cases where the use of the services of a professional has been very helpful.

To get on the right track for wealth creation – For those who are ready to take control of their present and future financial situation, hiring a financial planner could be helpful. A good financial planner will first understand their current situation, future goals, and emotional biases about wealth, and then develop a comprehensive personalized plan.

Need for clarity in a portfolio – Most start investing on an ad hoc basis, trying to replicate the success of others or based on suggestions. Experts say everyone’s risk appetite and investment outlook are different. A financial planner can help assess a crowded, unmanaged, or underperforming portfolio in the context of its risk profile, while also suggesting the right path.

During a major life-changing event – Major life-changing events affect a person’s finances, such as getting married, having a baby, or buying a new home. Experts say you need to plan and align your finances with the event as well as the impact it could have on yourself. In such a situation, a financial advisor can offer sound advice and help navigate the event with a correct and long-term approach.

During windfall gains – This could include earnings from an insurance payment, inheritance, sale of assets, an IPO, or unexpected lottery winnings, etc. Commonly seen, most people start spending too much money or are overwhelmed by the situation, and end up making bad personal and financial decisions. . A financial advisor can guide a person on various legal, financial and tax implications surrounding different types of such gains with the right investment plan to help grow their wealth.

As retirement approaches – The money management approach shifts from creating wealth to preserving capital and generating income as retirement approaches. Meanwhile, a portfolio should have low-risk assets that can generate a stable source of income, which might also require a full reassessment by a financial planner to ensure the corpus lasts longer than the investor and n is not affected by inflation and longevity risk.

To optimize your tax liability – A change in tax regime, an increase in income, or to make the most of various tax breaks could be another opportunity to hire a professional. One might be aware of the main deductions, but a financial expert can help maximize the benefits available to a taxpayer under their tax system and also find opportunities to save tax.

Melissa Mullan, Investment Advisor Representative and Certified Retirement Income® Professional at Harford Financial Group, has received the Certified Financial Planner ™ certification.

The Certified Financial Planner ™ certification is the gold standard in financial planning. It is awarded to professionals who meet rigorous standards of education, training and ethics. Beneficiaries are committed to serving the best interests of their clients to prepare them for a more secure future.

Mullan, originally from Harford County, began his career with Harford Financial Group over 20 years ago. She specializes in creating, managing and protecting client assets and recommending strategies aligned with her clients’ goals. In addition, Mullan develops retirement plans for his clients and focuses on planning retirement income, including the coordination of social security benefits, retirement benefits and investment income.

She started with the business after graduating from high school and was the first recipient of a scholarship offered by Harford Financial Group and the Harford County Chamber of Commerce. Mullan received a bachelor’s degree in finance and accounting, summa cum laude, from Notre Dame University in Maryland. She has held a number of positions at Harford Financial Group including in administration, compliance, insurance and as a registered senior manager.

“What a great honor for Melissa Mullan to receive the Certified Financial Planner ™ certification. My colleagues and I are so proud of everything Melissa has accomplished, and this certification tops the list. It has been an integral part of Harford Financial Group for many years, ”said Adam Freeland, CFP (R), Chairman of Harford Financial Group. “Receiving the Certified Financial Planner ™ certification is a strong testament to Melissa’s in-depth knowledge in the field and the role she plays in helping our clients live their best lives. ”

Harford Financial Group advisers specializes in retirement income planning in Harford, Cecil and Baltimore counties. Cambridge Investment Research Inc. is the brokerage of the Company. A relationship-driven company with fully registered, licensed and professionally trained staff, Harford Financial Group is focused on building long-term, trusting relationships that span a lifetime. Services include assisting clients with current and future savings, investment allocation, retirement income, retirement income planning, social security and estate planning. For more information, visit HarfordFinancialGroup.com.

To note: Securities offered through registered representatives of Cambridge Investment Research, Inc., a broker / dealer, FINRA / SIPC member. Advisory services provided by Cambridge Investment Research Advisors, Inc., a registered investment adviser. Harford Financial Group and Cambridge are not affiliated.

Personal Finance Insider writes about products, strategies, and tips to help you make informed decisions with your money. We may receive a small commission from our partners, such as American Express, but our reports and recommendations are always independent and objective.

The adage “It takes money to make money” is no longer valid. No matter your income level, if you can afford to put aside even a little money, you can become an investor. We spoke with Richard Hall, Financial Planner and Wealth Advisor at Pitzl Financial, to get advice for new investors.

Save before investing

Hall’s first suggestion is to create an emergency fund before you start investing. “We generally like our clients to save three to six months” on their living expenses, he said.

If that seems like a lot to keep in a savings account that barely earns interest, you can put some of your emergency reserves in an investment account once you’ve gotten into the habit of saving. Where you want to store your nest egg will depend on your risk tolerance; although investment accounts tend to grow over time, you have some exposure to market downturns.

Focus on saving a little each month

“If your cash expenses are covered,” Hall said, “it’s good to start a regular investing habit.” Even $ 25 per month – an amount most people won’t miss – is a great place to start. “It’s going to add up over time, and it creates a good long-term habit for you,” he said.

When many of us (including me) think about investing, we think of accounts with minimum opening balances of several thousand dollars. This makes it difficult for people without a lot of disposable income to start.

However, with the rise of ETFs (exchange traded funds), you can find many low-cost investment accounts with no minimum balance. For example, a quick search found funds with no minimum investment at Fidelity, Vanguard, and Schwab, and there are undoubtedly additional options.

“Typically, you can set up quite easily for small amounts,” Hall said. He stressed that consistency was more critical than amount. “It’s better to make a good habit than to do something once and forget about it,” he said.

Keep it simple

When you start to invest, Hall suggests keeping your strategy simple.

“You don’t have to do anything too complicated to enter the market,” he said. Instead, “try to be as diverse as possible with as few holdings as possible.”

Hall suggests investing in three different funds first. For example, you can choose a US equity fund, an international equity fund, and a bond fund. Hall suggests a 60/40 ratio between stocks and bonds.

An even simpler approach is to buy a fund that already holds a mix of stocks and bonds. Many investment firms offer balanced funds preloaded with a 60/40 mix. This type of fund has advantages for first-time investors:

• You just have to find the money to invest in one fund. This is especially useful if you only have a small amount to invest each month. It’s easier to put $ 10 in one fund than $ 3 each in three.
• You can invest without any problem. If your life is already too busy, a balanced fund takes very little of your crowded free space.
• The fund manager will balance your investments, so you don’t have to.

Hands-free rebalancing can be the most important benefit of investing in a balanced fund. Balancing involves transferring money between accounts to preserve your asset mix. The process involves transferring money from an outperforming fund to an underperforming fund.

Withdrawing money from a growing account to add money to a shrinking account can seem counterintuitive – so you might be reluctant to do so. But, said Hall, “proper rebalancing has an additive effect on returns.”

“An individual investor falls into mental traps,” he said. “Rebalancing forces people to ignore the emotional behaviors they would fall into and take a more disciplined approach to investing.” Or you can choose a balanced fund and let the fund manager do it for you.

Don’t rely on get rich quick schemes (cough, cryptocurrency, cough)

We all love stories of regular schmos who become millionaires through GameStop day trading, but speculation is a risky and unreliable path to building wealth.

Asked about investing in cryptocurrency, Hall said, “Things have value when people think they have value. I don’t see it as a great place to grow wealth over time. . When you see 50% of the up and down fluctuations, it’s not really a good investment. “

He considers the future of crypto to be too uncertain to make it a good option for building wealth. “If you’re going to put in $ 25, take the $ 25 you were going to use at the casino and put it in crypto instead,” he said. You should probably apply this advice to memes stocks or other high-risk investments.

“We are training to look for the home run,” Hall said. “We see people becoming millionaires overnight.” But he noted that most people with $ 1 million or more in retirement have gotten there by saving regularly and keeping it simple, not chasing the latest hot investment.

When to seek investment assistance

You can easily open an investment account with a low-cost brokerage house if you are starting out small – no professional assistance is required. However, if your motivation for investing is a large amount of money, such as an inheritance, it’s a good idea to seek help making the best investment choices.

“Trying to rebalance to $ 1,000 isn’t that productive,” Hall said. “Half a percent on $ 1,000 is not as noticeable as half a percent on $ 100,000.”

He noted that if you have $ 100,000 or more to invest, your choices may also have tax implications. For example, if you inherit money from an IRA, you have 10 years to withdraw distributions from the account. The timing of the withdrawal will depend on the type of account. If it is a Roth IRA, which has after-tax income, you will do better if you wait until the last year to empty the account because you get 10 years of tax-free growth and don’t have to pay any taxes. tax on money when you take it out.

“People should go and see a [certified financial planner] when it gets uncomfortable or when they have questions, ”Hall said.

Hall’s final advice for the first-time investor: “Keep it simple. Try to make it repetitive. Stick with it. And: “It’s market time, not market timing. “