Financial planning gives you a sense of control over life

This week on the Retire With More Show we had a very special guest, our in-house expert when it comes to developing and maintaining strong and personal client relationships, Sally Brandon. Sally Brandon is the VP of Client Services at Rebalance. She has spoken to thousands and thousands of clients about retirement and how to invest. Over time, you begin to hear certain themes again and again. On this week’s program, Sally shared with our listeners and us a few anecdotes, stories and big lessons for retirement investors.

portfolio hygiene

One concept that keeps coming up is “portfolio hygiene.” Every year it’s really important that clients take a look at their portfolios and make sure that the way the money is being invested is still appropriate. As life goes on, changes occur. If you have any life changes, you have to take them into consideration when you take a look at how your portfolio is being managed. For example, your beneficiaries. If someone who is named as a beneficiary dies you certainly have to make that correction, but what about in a divorce?

“We had a client recently who had been divorced for several years and then got remarried. When we got linked to his account, I was able to look inside and see who his beneficiaries were. I wanted to make sure that the way he had originally set up the account was still appropriate and, sure enough, he had his first wife as still the primary beneficiary. We quickly made that change and listed his current wife as the new primary beneficiary on the account.” – Sally Brandon

It’s important to make sure that your beneficiaries are up to date, but it’s also critical to look at your overall asset allocations.

“A client of ours was the sole beneficiary of an elderly mother. We were managing her retirement account in a pretty growth-oriented portfolio, but there was room to take on a little bit more equity exposure. She has an elderly mother and our client was soon going to be inheriting her funds. When she took a look at how her mother’s assets were being invested, they were all in bonds. We needed to take that into consideration and factor in the money that she’s going to be inheriting into her overall allocation. It made us stop and think about how we should invest her retirement plan.” – Sally Brandon

Sally, or someone on her client services team, makes a point to get on the phone with every client and to go through this process of “portfolio hygiene.” It’s all about making sure that on a regular basis we learn about people’s life changes.

test drive your advisor

If you are going to have somebody manage your money, you want to make sure that you’ve made the right decision, but how do you know which financial advisor to use? Sally recommends that just as you would test drive a car, you test drive the advisor.

“Ron and his wife named Tammy decided to ‘test-drive’ Rebalance against his wife’s accounts over at Ameriprise. He chose to give us one of his wife’s accounts that was being managed in the same manner as his retirement account. It’s important to compare apples to apples. So what they did is give us her retirement account to manage for a year and his retirement account was kept over at Ameriprise. We kept the stock/bond allocation the same. When we had our annual ‘check-up’ he looked at the returns and he was really amazed by the shortfall in his account and it was mainly because of the management fees that were being stripped out of his account. At that point he got very disenchanted with Ameriprise and wanted that money for himself, so he took his other three accounts and moved them over to Rebalance to manage as well.” – Sally Brandon

Breaking up is hard to do with a financial advisor. We hear this all of the time. In a lot of ways, as a good financial advisor we’re in the business of peace of mind. People don’t always understand where their income is really going to come from. They think that the money is going to materialize miraculously.

Let’s take a look at Sarah in New York, whose husband passed away. She was worried, as most people are when circumstances change, about not having enough. She needed to understand. So she went through extensive analysis and she gave Rebalance half of her money and the rest she put at Morgan Stanley.

“She went to Morgan Stanley and gave them half her money, and she was actually feeling very comfortable. They were very well allocated, low-cost, they were charging double the fee we were charging, but in this case Sarah was happy to pay for it because they were right down the street from her and she liked being able to come in and sit down in their offices. But then Morgan Stanley made a critical mistake. They began to try to extract more fees from her account by trying to sell her the very products she knew were not in her best interest but that of the broker’s best interest. As soon as that happened, the alarm bells went off and she moved all of her money over to Rebalance.” – Sally Brandon

Sarah understood how the people she was working with were being compensated and she understood the difference in the incentives. At the end of the day, we want clients to retire with more. We want to put our clients into a diversified portfolio that is appropriate for them, that is low cost and that can give their money the best chance possible to be able to give you more.

Make sure you tune in live to the Retire With More show next week with me and John Rothmann, Saturday at 9 a.m. on KKSF Talk 910.

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