Smart Money: Financial planner may not be needed


DEAR BRUCE >> I have a question concerning a recent letter from a woman signed Lydia. She is 68 and has approximately $700,000 in retirement funds. She questioned the need for a financial planner. Your response was that with the amount of money she had, a financial planner charging in the 2 percent range wouldn't be a bad idea.

I have a similar situation as Lydia has, although I am still working (61 years old) and contributing to a company 401(k). Looking at Lydia's situation, if she has to pay a financial planner and then possibly some expense ratios, she could be paying out up to 3 percent of her savings no matter what her investments do. I am getting more nervous and conservative as I get closer to closing out my working career, and am wondering if it would be wise to skip the financial planner and invest in a divergent group of index funds?

— Chuck

DEAR CHUCK >> Since you have some time to go before you decide to retire, why not do this: Do the best you can in terms of picking financial vehicles and hypothetically invest your money in the way that you asked about. That is, to do it yourself and save the 3 percent. I would do the same thing hypothetically with the 3 percent that you might expect to pay to a financial planner. Then track the investments over a period of a year or so, making whatever adjustments you feel are necessary, and see what happens.

It may not be a perfect plan. You're just playing with numbers, but it should be a worthwhile experiment. Remember, it's not what the gross is; it's what you get to keep after all expenses.

DEAR BRUCE >> How do you shelter money besides buying a life insurance policy for your children?

— D.R.

DEAR D.R. >> What are you trying to shelter your money from, a diminishing principal? That may be impossible, unless you are willing to take a very small return on your investment.

I would be much more comfortable in the stock market, investing in strong American companies that have been around for a long period of time. Even those investments may go down, but as some go down, others will not. Bear in mind, the stronger the shelter, the lower the return. I think you can do well establishing growth over a period of years and you will be very comfortable.

DEAR BRUCE >> I have a few friends I would like to remember in my will, but I would like the majority of my money to go to several animal organizations. At the present time, I have left specific amounts to the friends and the rest in percentages to the organizations. Is there a better way to do this? The amount at this point, after the sale of my home and contents, would be over $2 million.

— R.A.

DEAR R.A. >> Sounds to me like what you set up will work — specific friends left specific amounts and the balance to be distributed among the animal organizations at whatever percentages you choose. That having all been said, I would contact the organizations that will receive the largest amounts and tell them that you would like them to provide legal advice from their attorneys, or from attorneys they choose at their expense. They will be delighted to do so.

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