The most common financial planning mistakes we see

We’ve crafted hundreds of financial plans over the years.

Here are some of the most overlooked opportunities we see during our financial planning meetings.

Not fully understanding different accounts/their roles

• Employee benefits – Your employer retirement plan is likely one of the best benefits you have access to during your working years. We often see people not fully understanding their plan or not fully utilizing the plan(s). This can also be said about Roth 401(k) options, Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).

• Tax implications – Your employer 401(k) is a tax-deferred account and is one of a few savings buckets you can utilize for big life goals like buying a second home or retiring. Would it make sense to funnel money into the taxable and/or tax-free buckets? From there, additional tax-planning may revolve around things like tax loss harvesting in the taxable bucket or making Qualified Charitable Contributions (QCDs) from the tax-deferred (IRA) bucket, when appropriate.

Not having a cohesive investment strategy

This is a big one. It’s why investment management is such a big part of our work.

• Asset allocation – Most often, we find people utilizing an approach that is too aggressive given their stage of life. Occasionally we’ll run into a family that is too conservative. Remember “Goldilocks and the Three Bears?” We’re looking to craft portfolios that aren’t too “hot” or too “cold”, but just right!

• Poor advice – You’d be amazed how often we run into poor investments because “their neighbor told them it was a good pick” or they’re chasing past performance!

• Ignoring fees – There are many investments (and advisors) that come with hidden fees. These fees can eat away at returns, and they can be very hard to find!

Some of the fees we look out for include: 12b-1 fees, front-end load, back-end load, annuity fees, etc. We push clients to ask outside advisors: “How do you get paid?” and “What are all of my fees?”

• Ask the question – When all else fails, it’s always a good idea to ask, “Does this account and its investments fit my long-term goals?”

Not fully understanding when (and how) to retire

• By far, the most common question we get – “Do I have enough to retire?” It’s understandable and there are a lot of factors to consider. Even those with large amounts of savings are asking this question – they may not have a good handle on how much their household is actually spending.

• Transitioning from saving to spending – We save, save, save, for so many years. People often struggle with the idea of flipping that switch from saving to spending (and how to do so tax efficiently).

Getting the family on the same page

• How do I balance retirement savings with helping my children? – Many people struggle with how to balance their own retirement savings/spending with sharing their wealth with children for things like college, cars, weddings, homes, etc.

• Only one family member knows about the finances – Oftentimes one person in the family handles the money, and that’s okay. But it’s important for multiple family members to be educated and aware of the financial situation, accounts, and planning information. This ensures your legacy wishes are adhered to and that there are no (burdensome) surprises for the survivors after your passing.

Of course, every person and family are different. These are simply some of the more commonly overlooked opportunities we see.

If you work with us, we may have talked about one (or multiple) of these items.

If you haven’t worked with us and you think you may be falling into one of these missed opportunities, reach out to us!