Diversity Woman Magazine

WIN 2019

Leadership and Executive Development for women of all races, cultures and backgrounds

Issue link: https://diversitywoman.epubxp.com/i/1070708

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DW Life > d i v e r s i t y w o m a n . c o m W i n t e r 2 0 1 9 D I V E R S I T Y W O M A N 43 advisor at Merrill Lynch in Chicago. Even better? e funds are portable from one employer to another, and they roll over annually, allowing you to grow your account over time. Maximum con- tribution limits for 2018 were $3,450 for individuals and $6,900 for families. The stock option. ese investments offered by employers give you the right to buy a specific number of shares of your company's stock during a time and at a price that your employer sets. Let's look at a hypothetical example on a call option from Company X. e stock is currently trading at $10 a share. Owning the call option gives you the right, but not the obligation, to purchase 100 shares of Company X at $10 a share anytime in the next three months. If the stock rises to $20 a share within that time period, and the employee decides to sell the options, that's a profit of $10 a share times 100 shares for a total of $1,000. Don't go it alone Even if you are comfortable with finan- cial matters and are eager to try your hand at investing, you may want to con- sider hiring a financial planner or what is known as a "robo-advisor." ROBO-ADVISORS At any stage in your career, you can ben- efit from the smartest technology avail- able to help you invest for retirement. Robo-advisors use computer algorithms and advanced software to provide low- cost, automated, financial planning ser- vices. e largest robo-advisors include the Vanguard Group, Charles Schwab, and Betterment. Schwab's program lets investors get started with $5,000, solicit help from professionals 24/7, and pay no advisory fees and no commissions. Most robo-advisors offer the following services: • Asset allocation of your investments • Automated rebalancing of your portfolio • Tax-loss harvesting—selling a security that has experienced a loss to offset taxes on gains and income "Robo-advisors are programmed to optimize your investments based on quantifiable research to maximize your expected returns," says Westlin. FINANCIAL PLANNER A financial planner is a real person you meet with (or talk to) who studies your financial situation and goals and offers personalized advice. Before hiring a financial planner, interview several people. Here are five questions to ask: 1. Are you a fiduciary? e answer should be "yes." A fiduciary is required to act in your best interests by putting your needs before the company's guidelines. 2. How much are your services? Typi- cally, you will pay a percentage of assets under management. e typical fee is 1 percent of assets under management per year. e fee is often higher for smaller balances (starting at $5,000) and decreases as your balance grows. 3. What services do you provide? Advisors offer investment management, income tax preparation, and estate plan- ning and customized plans involving inheritance management. 4. What is your strategy for working with me? You have to believe in what the planner is doing to stay the course. Find an advisor who has worked with clients with a similar financial makeup as yours, so that you are confident the advisor can meet your goals for the long term. 5. Who is your custodian? Ideally, your financial advisor has hired an indepen- dent custodian to hold your assets, rather than acting as your custodian, which happened in the multibillion- dollar Bernie Madoff Ponzi scheme. is is an additional security check for you and your funds. Next, make sure you are comfortable with the person you are considering and the firm she or he works for. A 2017 study by GuideVine—a service that connects people to financial advi- sors—revealed that only 49 percent of Americans think advisors are trustwor- thy. "Financial advisors have a fiduciary duty to clients, meaning they are legally obligated to put your interests first," says Tuohy. Adds Sara Rajo-Miller, an investment advisor with Miracle Mile Advisors in Los Angeles: "Choosing an advisor is not about who looks perfect on paper, but rather someone who will tailor their approach based on your goals and needs." Before investing a single cent, check out an advisor's credentials. Step 1: Ask which agency oversees the advisor's credentials. e answer should be FINRA or SEC. FINRA stands for Financial Industry Regulatory Authority. SEC means Securi- ties and Exchange Commission. • FINRA advisors hold a securities li- cense, or perhaps several. You can use the BrokerCheck feature on FINRA's site to get a snapshot of the advisor's employment history and any com- plaints. • SEC advisors are "an individual or a firm that is in the business of giving advice about securities," according to SEC.gov. You can conduct an Invest- ment Advisor Search to review any disciplinary actions. Step 2: Ask which designations the advisor holds. ere are myriad designations that an advisor could hold, including CFP (certi- fied financial planner), CFA (certified financial analyst), and CPA (certified public account). FINRA has a page called Professional Designations to help you identify what the acronyms mean, along with the education required to obtain the credentials. Winning financially requires educat- ing yourself, choosing a select team of experts, and taking more risks. When you are armed with the right informa- tion, your retirement acumen and your nest egg will grow. DW Tanisha A. Sykes is a personal finance, small-business, and careers writer and editor. Follow her @tanishastips.

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