The Most Important Question To Ask Your Financial Advisor

"Whether you already have a financial advisor or are now looking to hire one, you want someone who has your best financial interest at heart. That means that when she is helping you direct your money and advising you on financial goals, she’s not just selling you products that she will be making money on, while you shell out more than need be." This article by Laura Shin may help you understand the complexities of how the financial industry works:

http://www.forbes.com/sites/laurashin/2014/12/18/the-most-important-question-to-ask-your-financial-advisor/

It is the most thorough and understandable explanation I’ve read and should be read by everyone who buys investment or advice from a financial salesperson/adviser/planner.

Is Your Financial Professional Truly A Financial Advisor?

I want to share with you the perspective of Lon Jefferies, a Certified Financial Planner™ (CFP) in SLC. He makes the point that anyone can call themselves a financial advisor, but most are salespeople earning commissions. If they stand to gain (be paid a commission) when you buy the products they recommend, how objective can they be? read Mr. Jefferies advice at: http://utahfinancialadvisor.blogspot.com/2012/12/is-your-financial-professional-truly.html

Benefits of middle age

The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation is the title of a research study that reports we hit our peak financial decision making ability in middle age. According to the four economists/authors: "We conclude that financial mistakes follow a U-shaped pattern, with the cost-minimizing performance occurring around age 53." 

Further info: "Many consumers make poor financial choices and older adults are particularly vulnerable to such errors. About half of the population between ages 80 and 89 either has dementia or a medical diagnosis of 'cognitive impairment without dementia.' We study lifecycle patterns in financial mistakes using a proprietary database that measures ten different types of credit behavior. Financial mistakes include suboptimal use of credit card balance transfer offers, misestimation of the value of one's house, and excess interest rate and fee payments."  

Implications? 

Young adults: listen to your parents' advice. 

Oldsters: get help with your finances from your kids or a trusted advisor.  

Middle agers: enjoy your wisdom but watch out for your parents (and keep learning as the financial world evolves and becomes more complex). 

If you haven't already initiated the conversation with your parents about financial management in old age, maybe this info can help.  (Although the focus of the study is on needed public policy changes to help consumers avoid poor decisions, it has application in the realm of family finance.)

Citation: Agarwal, Sumit, Driscoll, John C., Gabaix, Xavier and Laibson, David I., The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation (October 19, 2009). Available at SSRN: http://ssrn.com/abstract=973790

Dementia and Money Problems

The Vanishing Mind: Money Woes Can Be Early Clue to Alzheimer's
By GINA KOLATA

"New research shows that one of the first signs of impending dementia is an inability to understand money and credit, contracts and agreements."

This NY Times article, although geared to financial planners, has a clear message for family members-- the need to plan for possible mental deterioration due to aging. The message is clear: we need to watch out for signs of dementia with our parents and grandparents and have a plan in place to address the problem. For those of us without children-- who will watch out for our needs as we age?
http://www.nytimes.com/2010/10/31/health/healthspecial/31finances.html?pagewanted=1&_r=1&emc=eta1