THE DOWNLOAD MONEY MATTERS
essentially life insurance salespeople. There are also financial advisers
who are tax professionals. The gold standard for a tax professional is an enrolled agent — a federally licensed specialist in taxation who can represent you before the IRS. Certified public accountants
(CPAs) are also frequently qualified to prepare taxes, although their abilities can vary greatly depending on their experience.
FIDUCIARY ADVANTAGE It’s important to find a financial adviser who is a fiduciary, which means they’re legally and ethically bound to act in your best interest. In theory, they cannot make suggestions that come at the expense of your goals and needs. For example, a financial adviser
under fiduciary duty can’t suggest that you buy certain life insurance products if they aren’t a good fit for you. Those bound by fiduciary duty may even go one step further and disclose any potential conflicts of interest. Unfortunately, in practice, there
isn’t a whole lot of oversight. There’s no governing body to ensure that a fiduciary acts in your best interest. The Financial Industry Regulatory
Authority (FINRA) regulates stockbrokers, but it doesn’t tend to go after members. Likewise, the Securities and Exchange Commission won’t prosecute someone who hasn’t acted in a fiduciary capacity.
COMPENSATION The best indicator of whether a financial professional is looking out for your best interests is their compensation model. In almost all cases, it’s best to steer
clear of commission-only financial advisers because their incentive is to sell you products, not necessarily give you optimal advice. Many CFPs charge based on an
AUM model. The more assets you have, the more the adviser gets paid.
AUM models are problematic
for several reasons, one of which is that it incentivizes the adviser to keep as much of your money under management as possible. That means that adviser may recommend you take lower withdrawals than you really could. Those fees are levied year in
and year out, and they add up. Consider this: A 1% management fee on a $1 million portfolio means $10,000 of your money is going to fees every year. The AUM model can also create
conflicts of interest, even if the adviser is supposedly acting as a fiduciary. A professional working under
this model has an incentive to keep your assets invested, as it results in a bigger paycheck for them. Consequently, they may steer
you away from certain actions that could benefit you, like paying off your mortgage or taking out larger chunks of money, even if your portfolio could withstand it. Shane Sideris, a CFA and cofounder of Nectarine, a flat fee- only financial adviser firm, points out that someone close to retirement will need an adviser to do retirement planning — including estate planning, Roth conversions, and help in maximizing Social Security. Since AUM is explicitly a fee for
investment management, not all financial advisers operating under this model will do adequate across- the-board retirement planning for their clients. The National Association
of Personal Financial Advisors (NAPFA) says that the fee-only model is an objective compensation model because it can minimize conflicts and increases the chance a financial adviser acts like a fiduciary. “The fee-only model is super
transparent because you know exactly what you’re paying for,” Sideris says.
HSA NEST EGG A Fidelity retirement study found that many people with health savings accounts (HSAs) through their employers aren’t using them to full potential. While HSAs can help pay for out-of-pocket medical expenses, they can also be a stellar retirement tool, as you can invest your pretax contributions and any growth earned is tax-free, too. Log into your account and navigate to investment options. You’ll likely see options similar to those offered by your 401(k).
GEN TOOLBELT Gen Z’s new nickname may be the
toolbelt generation. Payroll data from ADP found that falling college enrollment and rising vocational enrollment may signal that those in their 20s are gravitating to blue-collar careers. Between 2019 and 2024, bachelor’s degree students fell by 3.6%, while vocational enrollment rose by 4.6%. Careers in welding, plumbing, and electricity now bring in six figures relatively quickly. And these jobs are becoming highly skilled, high-wage careers that students can embark on without fear that AI will replace them in their lifetimes.
TOLL SCAM If you’ve recently received an alarming
text message alerting you to a toll violation that must be paid immediately, it’s a scam. Cybersecurity firm Trend Micro says there’s been a 900% increase in the toll scam texts, which typically demand a few bucks and threaten license suspension or revocation. If you get a text, delete it, and don’t engage. Engaging lets scammers know your number has a live person behind it for future scams.
STEADY HAND If you’re a long-time investor — and you should be — there’s no need to monitor your stock portfolio’s performance every day. It can be downright damaging to your performance. Market fluctuations can stress you out and even cause you to make choices you’ll regret. Ideally, you should only check your accounts periodically. Speak with a financial adviser if you need help weathering a down market. The bottom line? Volatility is part of investing.
JUNE 2025 | NEWSMAX MAXLIFE 75
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