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Hurricane Harvey Financial Recovery

Hurricane Harvey may throw some peoples’ finances into chaos.

This is a natural disaster that may affect peoples’ finances in abnormal ways. Here are several important items that may help you or others you know get through this difficult time. Click on the links for more details.

Information for Now

  1. If you are forced to seek medical or dental attention and the provider imposes a penalty because you are out of the network that penalty should be waived if you are affected by the storm disaster.Communicate with your medical provider and your insurer concerning your status.
  2. If you have prescriptions that are due for renewal, however, a new insurance company approval is required, that requirement should be delayed for 90 days. Communicate with your insurer to clarify your status.
  3. If you are an employer and you have commercial vehicles that are participating in the storm relief effort, commercial insurance should extend to cover those vehicles during their relief activity.

Information for After the Storm

  1. If you are displaced because of the storm and your employer is still operational, contact them to let them know your status if you cannot make it into work.
  2. If you are forced to leave your home for an extended period, let your property insurer know and ask them to waive the occupancy requirement because of the disaster.
  3. If you experience a financial hardship and cannot make payments that are due, contact your creditor and let them know you will be delayed. If your area is part of that which is considered a natural disaster, delays should not affect your credit rating. It is important that you communicate with your creditors.
  4. If you have insurance renewals that change or increase and the change is attributed to your status as a storm victim that change is inappropriate. Contact your insurer to clarify the reason for any changes to your policy.
  5. If you have insurance premiums due and are unable to make payments because of a hardship from the current disaster, insurers have been encouraged to allow extra time to pay. It is important to communicate with your insurer and let them know your status.

The key to making it through this difficult time is communication. 

There are a lot of people that are eager to help. However, be aware that there are also unscrupulous people that may attempt to take advantage of your situation. If you have an issue that is related to insurance coverage, call your agent or insurance company. If you cannot get the answer you need you can turn to the Texas Department of Insurance.

Posted by: Van Richards

Van is the founder of Advice4Retirement and Advice4LifeInsurance you can contact him at van@advice4retirement.com Follow on Twitter @VanRichards or Facebook at https://www.facebook.com/Advice4Retirement/ and https://www.facebook.com/advice4lifeinsurance/

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Set Retirement Plan Expectations

Expectation is the conflict between frustration and reality. The first step to creating a low stress company retirement plan is a common understanding of everyone’s expectations. This includes all the entities involved in the retirement plan process. From the employees’ perspective, they see only the processes listed below in blue. However, the employer must look at a retirement plan from a very different perspective. The process in orange is a typical list of the people involved in the management of a retirement plan.

customer-service

Knowledge of a customer’s needs is where satisfying expectations begins. Knowing the process necessary for a low stress company retirement plan is critical to fulfilling expectations. This is an outline of the operation of a company retirement plan.

  • Develop a retirement plan strategy
  • Design a plan to fit the business
  • Create a method of choosing and monitoring investments
  • Have a plan that is competitive within the company’s industry.
  • Manage the vendors that interact with the retirement plan.
  • Stay compliant with fiduciary standards
  • Provide education to employees that satisfies fiduciary requirements.
  • Manage employee communication.

Developing a strategy that will accomplish this process and be reasonably flexible is important. Businesses change, employee demographics changes, and regulations change so the operation cycle of a retirement plan must be able to change. The result is that customer expectations change too. The next step to fulling customer expectations is developing a retirement plan strategy.

To see the next step, check back for the next post in this series, The Company Retirement Planning Process or visit www.advice4retirement.com

Posted by: Van Richards

Van is the founder of Advice4Retirement and Advice4LifeInsurance you can contact him at van@advice4retirement.com Follow on twitter @VanRichards or Facebook at https://www.facebook.com/Advice4Retirement/ and https://www.facebook.com/advice4lifeinsurance/

 

Good Financial Advice

When was the last time that you asked for a second opinion on your finances?  Money is one of those subjects that is hard to bring up in conversations.  If you talk about money with friends it may open your life more than you want or more than your friends, want to know.  The hesitation to discuss money also brings up the problem of trust. Just where does a non-financial person go for financial advice that can be trusted?  Here is the short answer:

Employee benefits education at work

CPA’s and attorneys

Fee-based financial planners

Stockbrokers

Investment product providers

Life insurance companies

Life insurance agents

Credit union

Banks

Robo-advisers

The internet

What are the pros and cons of the various sources of information? Here is some brief insight into the different sources of financial advice.  This is not meant to be the end-all of financial information sources, but rather enough information to point you in the right direction.

Employee benefit education is a major source for many people, and its reliability is getting a big boost.  In April of 2017, new laws go into effect mandating that all employer retirement plan information be in the best interest of the employee (Department of Labor, 2016).  That does not mean that all employee benefit information will be equally informative.  It also does not mean that employers are entirely responsible for employees’ financial lives.  It does mean that the financial advice concerning the retirement plan should be dependable.  How you relate that information to other aspects of your finances is up to you.

Stockbrokers have changed over the past fifty years.  Stockbrokers used to be just what their name implied, someone that bought and sold stock.  They did not offer much unbiased advice because they usually worked for an investment banker that was organizing the sale of a company’s stock.  As time has progressed, stockbrokers have become less sales-oriented and more concerned about if they are offering financial products that are in the best interest of their clients.

Investment product providers are mutual funds purchase directly from the provider or a unit investment trust sometimes shortened to UIT’s.  There are some providers that offer good advice, but remember that they still do not have a high responsibility to sell the products that are best for you.  They have certain regulations that they have to follow. For example, they are not supposed to say things that are blatant lies.  Moreover, they are not supposed to sell their products to people that they find are financially unqualified.  However, your overall best interest is not their legal duty.  To some degree, it is still buyer beware.

Life insurance companies have some similarities.  Like the investment product providers, they are not supposed to stretch the truth.  However, the average person is far from qualified to understand some of their products, making the need for an experienced agent more important.

Life insurance agents are separate from the life insurance companies in this information because there are many life insurance agents that are independent.  The autonomy of an independent agent does give their financial advice less likelihood of being biased. However most financial advice from life insurance agents will be compartmentalized to deal only with the financial aspects related to their products.

Credit unions remain a good source for financial products and information.  They sell credit union and life insurance products.   Nevertheless, just like any product provider, it is up to the customer to be sure that they are buying a product that they understand and can afford.

For a long time, banks were perceived as the gold standard of safety.  Recently that image has fallen because one big bank let its branches get out of control and cost its customers millions of dollars.  It gives the impression to the average person that they cannot trust banks any longer. Time will tell how that circumstance gets resolved and if their image will improve.

Fee-based financial planners are perceived as one of the most unbiased parties when dealing with money.  They do not sell products so their primary incentive is client fees.

CPA’s and attorneys are listed together.  However, it has been my experience that many more CPA’s deals with financial issues than attorney’s.  If you are looking for financial advice, a CPA or attorney will be very straight forward in telling you if they will or will not be able to help you. Some of these professionals have expanded their practice to include fee-based financial advice.  Because of their level of fiduciary duty, I would not have any reservations in stating that if a CPA or attorney provides financial advice as part of their service, it is dependable.

Robo-advisors have become a new option available for financial advice, and some are trustworthy sources of financial information.  The creators of robo-advisor services have taken the modern theories that are used to manage investments and put them into a computer program.  Plug in the parameters of your financial situation and the program will produce what is considered to be an appropriate investment allocation.  As the economy changes or personal financial circumstances change the program can alert customers of changes automatically or prompt customers to manually make changes.  Do robo-advisors work?  The reliability of robo-advisors is as good as the creator, person, or team that is managing the program.  Just as in the quality of investment advice that you obtain from real people depends upon the individual you are entrusting.  According to a study done by pollster Gallup, only 5% of U.S. investors use robo-advisors and an astounding 80% state that “they are not likely at all to use a robo-advisor” (Gallup, Inc.,2016).

flashing-red-lightIf I could post a big flashing red warning light on the page, this would be the place to put it.  The internet is an option that most people will turn to for financial advice however we should all be wary of internet financial advice because of the prevalence of scams.  It takes no financial experience, education or certification to start a website.  That is reason enough to be cautious. You may have found this article by surfing the internet for financial advice.  How do you know you can trust it or me?  The fact is you do not.  Ask yourself, does the source sound rational and can you research the advice?

When judging the quality or usefulness of any financial advice there is a reliable standard.  If a circumstance sounds too good to be true, it probably is.  People get caught up in scams because they find an answer to a problem or concern that they have and the solution they find seems to fit just right.  We all have some degrees of trust in us.  We could not live daily without some trust.  We believe a total stranger when we ask them the time of day.  Trust gets a little more away from personal control when we ask for information that will impact part of our life.  The education system teaches students to trust one another in projects.  Everyone’s grade in a group project depends on each other.  We trust colleagues at work when we share responsibilities.  However, even in these examples, you can see there is room for lapses in confidence.  As we broaden the circle of trust to encompass other aspects of our lives such as finance, reasons to mistrust widens.  There are people in our world that are putting their personal interest ahead of your best interest.  The cold hard fact is that there are people in our world that set out to deceive others.  How can you be sure that you are not getting advice for your money from a con-artist?

In her book, The Confidence Game, Maria Konnikova tells the fascinating story of Dr. Joseph Cyr, a surgeon in the Royal Canadian Navy (Konnikova, 2016).  Dr. Cyr was outstanding, he did surgery in the toughest conditions at sea, with little or no help.  The only problem was the Dr. Cyr was not a doctor at all.  He was Ferdinand Waldo Demar, a young man that had not even graduated from high school.  Konnikova’s captivating book looks at the reason why people fall for things that are not real.  She describes the people that commit these charades like this, “Their genius lies in figuring out what, precisely, it is we want, and how they can present themselves as the perfect vehicle for delivering on that desire” (Konnikova, 2016).  The thing we can learn from Konnikova’s insight is that when we are looking to find financial advice, be careful that the solution has not been created to prey on our needs.  If it is too good to be true, it probably is not true at all.

How do you make sure that you are getting sound financial advice?  Over the years I have worked for large firms and even though the firms had billions and billions of dollars under management clients did not rely as much upon the credibility of the institution as much as they did with the person that was in front of them.  Investment firms know this and try desperately to tie their employees to their company.  For the average everyday person or the CEO of the multi-billion-dollar corporation, knowing if you can trust the financial advice of your advisor boils down to work experience, life experiences, references, education, and last but not least common sense.

As people begin their careers, education is paramount.  As the years go by the value of classroom teaching is replaced with the work experiences encountered. Do not take me wrong, education is valuable, especially financial education.  My point is that life experiences have a significant impact on a person’s abilities.  If you are presented with financial recommendations, don’t be shy about asking for references of the advisor’s work.  Don’t be put off if there are not a lot of Yelp, Google or Angie’s List reviews. How some financial advisors interact online is regulated either by the government or their self-regulatory organizations making online research more difficult. If the circumstance warrants, ask for a referral.  Understand this too.  If you are asking for advice on a $35 per month life insurance policy, you probably are not going to get the phone numbers of the advisor’s top ten clients.  Samples of the advisor’s work can also serve as a good standard for trust.  I have mentioned it a several times, and it is worth saying again, the common sense factor is crucial.  If the service or results of services sound too good to be true they probably are not real.  Follow these guidelines, and it will help you in finding good financial advice.

References

Department of Labor. (2016). Conflict of interest rule—retirement investment advice (Volume 81, Number 68). Retrieved from National Archives and Records Administration website: http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28806

Gallup, Inc. (2016). Robo-advice still a novelty for U.S. investors. Retrieved from Gallup Poll website: http://www.gallup.com/poll/193997/robo-advice-novelty-investors.aspx

Konnikova, M. (2016). The confidence game: why we fall for it … every time. New York, NY: Penguin Random House.

 

Van Richards is the owner of Advice4LifeInsurance.com and Advice4Retirement.com he can be contacted at van@advice4lifeinsurance.com or on twitter @VanRichards

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