Are you a CFP?
Just about anyone can hang out a shingle and call themselves a financial planner. In fact, interpreting the meaning of the various designations out there can be pretty time consuming. In order to be able to distinguish those who are competent from those who are not, the National Associationof Objective Financial Advisors (NAOFA) recommends that you work with a CFP. A Certified Financial Planner must meet education, examination, experience and ethics requirements. A CFP will be competent to address your financial planning issues from a comprehensive viewpoint.
Go to www.objectivefinancialadvisors.com to learn more.
The National Alliance of Objective Financial Advisors (NAOFA) has identified 15 questions for making sure your money is in safe hands. The first question is:
Do you sell insurance or other financial products?
The answer should be “NO”. Get financial advice from those who sell only advice. If an advisor sells insurance, annuities, and securities, guess what that advisor will recommend to you?
Most people who call themselves financial advisors actually sell insurance and other financial products that pay them commissions. Accepting commissions from insurance companies and other financial institutions REQUIRES BY LAW that these people act in the best interests of their employer, NOT in your best interest.
To avoid the pitfalls of bad financial advice, only trust the advice of an Objective Financial Advisor.
Check our blog often to learn about the other 14 questions, or get them all at once by filling out the information below.
Long-Term Care insurance is a health-qualifying type of insurance. You must be in reasonably good health in order to obtain coverage. If your health is not good enough to qualify for coverage, no amount of premium you are willing to pay will change the fact that you’re ineligible. As with all types of insurance, many times those who want coverage the most are those who can’t qualify for it.
If you decide to apply for coverage, you will go through a process called underwriting. Underwriting is defined as “a process of examining, accepting, or rejecting insurance risks, and then classifying those accepted in order to charge the proper amount of premium.”
The LTC insurance underwriting process consists of answering questions about your health, and may also include a physical exam and/or request for medical information from your doctor.
If you currently have certain health conditions, you will automatically be ineligible to apply for LTC insurance. Some of these conditions are ones that you would expect: Parkinson’s Disease, Alzheimer’s Disease, and Multiple Strokes. Others, such as Schizophrenia may not be as obvious.
In addition to the conditions mentioned above, here are some other disqualifying conditions:
•AIDS
•Renal Failure
•Congestive Heart Failure
•Cirrhosis of the liver
•Diabetes with Complications
•Mental Retardation
•Severe Emphysema
•Transient Ischemic Attack
In addition to these conditions, you must not have needed any of the following during the preceding 12 months:
•Assistance with activities of daily living (bathing, eating, dressing)
•Home Health Care Services
•Care in a nursing home or assisted living facility
•A walker, wheelchair, medical appliance, kidney dialysis, manufactured source of oxygen
But even if you don’t have any of the disqualifying conditions, it doesn’t mean that you will automatically qualify for coverage. Underwriting is performed on an individual basis, and there may be other conditions, or combinations of conditions, that cause an application to be declined. For example, if you have high blood pressure that is controlled with medications, but you’re significantly over weight, your application will probably be denied.
As with most things in life, the first step is the hardest. How you enter this terrain will depend on you and the nature of your relationship with your parents.
You may not get far in your first converstation, but don’t worry. It’s a lot to digest, particularly if your parents haven’t given their future much thought. Be patient. Find what works for you. If one approach doesn’t work, try another. As your parent’s health, finances, and lifestyle change, so will their needs and views. Also, laws, financial programs and local options will change. So revisit these conversations regularly.
To get started, here are a few ways to break the ice:
- Be open: If you have an open and direct relationship, don’t beat around the bush. Just come out and tell them that you’d like to talk about these issues and ask if they would mind talking about them. Everyone thinks about these things, Everyone worries at 2 AM what the future holds.
- Be Reflective: Some time when you’re together, ask them about their past, their childhood, and their parents. Learn more about them. Then move onto the future. What do they want most? How do they perceive the future? What worries them?
- Discuss Someone Else’s Situation: Chances are that you or your parents know someone who is already dealing with some aspect of aging or long-term care. Talking about what’s good or bad about their situation can be a useful launching point.
- Ask for Advice: This is a great way to get the discussion rolling. Tell them that you just entered into a relationship with a financial advisor and that you’re starting a retirement account or preparing a will. Then ask them for advice. Follow that by asking how they planned ahead and if they feel fully prepared for the time they may need long-term care.
- Grab an Opening: If for example, your mother is talking about Aunt Kathy, who’s in an assisted living facility, and rolls her eyes and says “Don’t you ever put me in one of those places,” ask her what she means. What would your mother want in the same circumstances? If you miss the chance, bring it up another time. “Hey Mom, remember when we talked about Aunt Kathy and you said “Don’t ever….etc.”
- Write: If you find the whole thing too daunting, write a letter or email outlining your concerns and what you would like to discuss. This can be particularly helpful if you live far away and only have a weekend to have these talks. You can pave the way and get them to start thinking about it before you get together.
- Get Help: Maybe you have a sibling who is more at ease talking with your parents. Maybe your parents are more comfortable talking to someone else in the family about finances or health. Don’t be offended. You don’t care how a plan for long-term care is developed, just that it gets done.
The e-booklet, “5 Steps to Understanding Long-Term Care” is a good basic primer about the issue of long-term care, and may be a good tool to open up a discussion with your parents. Order your free copy below.
Bernard Madoff has lesser company when it comes to misconduct by people in the financial business. Finra, the supervisory body for brokers and investment advisers, publishes a monthly list of enforcement actions. It’s dismaying reading, full of forged signatures, misappropriated funds and recommendations of investments unsuitable to the client’s age and needs. Not all of these people are crooks; many are simply incompetent. Few of them are likely to return to the legitimate investment business.
To avoid working with one of the next names to show up on the list, here are three simple ways to research financial planners before you establish a formal relationship:
1) Start with a simple Google search. If the planner in question has wronged clients in the past, you’ll likely find local news articles or client chatter on social-networking sites to alert you to the misdeeds.
2) Look for any disciplinary action (usually indicating an ethics complaint) taken against any certified financial planner by the CFP Board, which controls the CFP credential.
3) Get your hands on the Form ADV, the disclosure document required by the Securities and Exchange Commission that reveals any lawsuits, fines, suspensions and other sanctions involving an investment adviser. Lawsuits are common and often prove groundless, but you should make sure that all the other boxes are checked “no.”
Any planner or adviser should willingly give you a copy of all of the documents he or she files with Finra, the SEC, state regulators, insurance supervisors and anyone else.
If any of this initial research raises any red flags, you might want to bail out and find an adviser who has a clean rap sheet.
The National Alliance of Objective Financial Advisors (NAOFA) pre-screens America’s top advisors for you.
Membership in NAOFA is limited to a very few elite advisors. As part of the application process, advisors must go through a background check and a very stringent due diligence process.
For more information on NAOFA, and a FREE guide to finding an advisor you can trust, go to www.objectivefinancialadvisors.com
Why Long-Term Care is a Women’s Issue
(The following was written by my wife, Eileen Hamm and is Chapter 5 of my book “How to Plan for Long-Term Care.”)
Having a written long-term care plan is important for every family in America, but particularly for women. Almost always, the female takes ultimate responsibility for the day-to-day care of a family member who is ill or disabled. This is not sexist. This is not whining. It’s a fact. In our years of working with financial professionals to assist families with LTC Planning, I have personally listened to the stories of women whose lives have been totally altered due to the long-term care needs of a loved one. Similar stories involving men are also becoming more common. But the majority of informal caregivers in our country — almost 72% of the estimated 7 million providers of care — are female.
When I talk with couples about planning for long-term care, they often exchange glances and say, “Oh, we’ll take care of one another when the time comes.” That pledge of mutual aid between spouses is touching, and without a doubt, sincere. But it normally comes from people who have yet to observe someone in their circle of family and friends move from independence to a need for care. Those who have observed others struggling with a long-term care need are typically driven to develop a definite plan for long-term care—and that plan rarely includes the option of relying on family.
My paternal grandmother, Nana, is a good example of how long-term care affects women. After my grandfather passed away, my father made sure Nana was safe and that she received the attention she needed. During the many years she was healthy, he took the place of his father by being “on call” to help with day-to-day living. He joined her during doctor visits, took her shopping, and called her every day. But when Nana’s health declined and she needed assistance with personal care, my father’s involvement lessened and my mother took over the major responsibilities of Nana’s care. It was my mother, Nana’s daughter-in-law, who handled the intimate tasks of helping her in and out of bed, bathing, and dressing her. This is a very typical pattern. As the level of required care grows more personal and intimate, the male caregivers in the family begin to feel uncomfortable, and the women take over the primary role of caregiver. Women tend to be more comfortable and skilled in this role, especially if they’ve also had children. But providing care comes at a heavy price: with the accompanying emotional and physical stress of being a caregiver, a woman has a 63% higher risk of dying earlier than a woman of the same age who does not become a caregiver.
Women often sacrifice their social network and sense of well being to care for a loved one. It seems that every time I talk with my mother, who is now in her late 70s, she tells me about a sister or a friend “having an awful time” taking care of a spouse. These women tell her about the pure physical exhaustion they experience from caring for an adult on a daily basis. They suffer from the depression that comes from shouldering the responsibility alone, and they feel guilty for not being able to “do more.”
But the prospect of becoming a caregiver should not be the only reason for women to ask their financial professional about LTC Planning for their family—it’s also vital that they plan for their own care. Women make up the largest percentage of residents in all types of long-term care facilities, with the majority being widowed or divorced. Because we usually marry men at least a few years older than ourselves, and we live about seven years longer than men, by age 85, only 13% of women are still married.
By contrast, men make up the majority of people being taken care of at home. Normally, a wife or daughter helps her husband and parents through to the end. But her resources are limited when she needs long-term care. Unable to rely on informal, unpaid care from relatives at home, older women are usually forced to rely on more formal and costly solutions, such as a nursing home.
For example, although both my grandfathers lived to a ripe old age, neither of them spent time in a nursing home or other type of care facility. As both grandfathers became weaker and more debilitated due to old age and illness, my grandmothers once again found themselves in a mothering role, this time responsible for their husbands’ daily care at home. By contrast, both my grandmothers spent their last years in care facilities, progressing from senior apartments to assisted living communities, and finally to a nursing home. This is the typical trend: a husband can generally count on receiving good care in his own home, provided by his spouse. If his wife can’t provide the care personally, she will use their assets to hire and supervise full- or part-time caregivers
Could I be a caregiver for my husband? Sure I could. Do I want to? No. Does this mean I care less for my spouse? That I’m a selfish person? No. It means I care enough to plan. To make sure my family and I have choices if someone we love requires long-term care.
Choices for women were limited in earlier generations. Thankfully, we now have access to the knowledge and resources needed to actively participate in planning ahead for our family’s well being. We will always be “caretakers,” but our role today includes careful advanced planning for the potential long-term care of our loved ones and ourselves. If we don’t proactively plan ahead, the comfortable and healthy retirement we envision may be greatly altered, and even cut short by the consequences of providing or receiving long-term care.
Chapter 7 of my book, “How to Plan for Long-Term Care”, describes a process that has been proven to be the most effective for developing a plan for long-term care.
(c) Copyright –Allen Hamm. All Rights Reserved Worldwide.
The number of people needing long-term care is growing fast, and will continue to escalate over the next three decades. Three major trends that gain momentum as each year passes will have a phenomenal impact on health care in general, and long-term care in particular.
1. You will likely live a long life. “The Aging of America is driven by the largest generation in history, the baby boomers. The sheer numbers- 76 million Americans born between 1946 and 1964- have had a significant impact on modern society on every social and economic level. Individuals in this generation began to turn 60 in 2006. The implications are profound because the odds of needing true long-term care begin to significantly increase in the years beyond age 60.
2. Living a long life will probably result in the need for long-term care prior to dying. Our current population is not only large in numbers, but also has a large percentage of “health conscious” people. A good diet and exercise has a positive effect on longevity. But our bodies and minds will still eventually wear out, only at a much slower pace. Breakthoughs in medical science may contribute to making a life to age 100 a common occurrence. Some experts predict that life expectancy could be pushed to 120 years, and possibly beyond. Ironically, many health conscious people will need care for the last two decades or more of their lives.
3. It is unlikelyyour family will be able to provide your care. Care for adults in on the verge of replacing child care as the number one dependent care issue. Older people will soon outnumber younger people for the first time in history. In the past, when a family member needed long-term care, other family members stepped in to fill the role of caregiver. It was usually women, including wives and daughters, who became the primary caregivers for immediate and extended family members. But the changing family structure is having a profound effect on our ability to assist one another. With more women entering the workforce and careers geographically separating most families, paid caregivers will soon provide the bulk of long-term care.
Free e-booklet “5 Steps to Understanding Long-Term Care”
An article by Elizabeth Ody in Kiplinger Magazine offers excellent advice for finding a trustworthy and competent financial advisor. I think we would all be wise to follow her guidance below:
1. Align your interests by working with a fee-only adviser, meaning one who does not accept commissions. All advisers have some conflicts of interest, but fee-only advisers have the fewest. (Note that “fee-based” advisers are different — they receive a blend of commissions and other fees.)
2. Learn the alphabet soup. A Certified Financial Planner (CFP) is a generalist who should be able to help you with your whole financial picture. The Chartered Financial Analyst (CFA) designation indicates particular expertise in investing. A Certified Public Accountant (CPA) is a tax whiz. And a Chartered Financial Consultant (ChFC) has extensive training in insurance and estate planning.
3. Be picky. Get to know several candidates before settling on one. Personal chemistry matters, and there’s no point spending your money on advice from someone with whom you don’t feel at ease. Most advisers will give you a complimentary introductory session — in order to go over your needs, their process and what you can expect their services to cost — before you make a formal arrangement. Take advantage of these sessions. A good adviser should spend at least an hour learning about your full financial picture — including, for example, your goals, income needs, tax status and health, as well as the quality of your insurance coverage — before recommending any specific investments. It’s a red flag if he or she gives you a breathy spiel about some hot investment within the first five minutes of meeting you.
4. Ask the tough questions. You want to get a complete picture of an adviser’s background, specific expertise, fees and investment philosophy. Feel free to ask for references to other clients. Before you sign a formal agreement, make sure you and your adviser understand exactly what services he or she will be providing and how long you expect your relationship to last. And stipulate whether you can get a full or partial refund if your relationship ends early.
5. Avoid another Madoff. If you are looking for someone to manage your investments for you, invest with an adviser who uses a third-party custodian. Convicted swindler Bernard Madoff held client funds in his own custody, which is how he was able to drain clients’ savings and fudge their account statements. If your adviser uses an independent custodian, such as Charles Schwab or Scottrade, those institutions will take possession of your money and your account statements will come from their offices (rather than from your adviser’s).
6. Do a background check with regulators. An adviser’s will tell you if he or she has any closeted skeletons. If your adviser is also registered as a broker, you should check him or her out at www.finra.org/brokercheck. Finally, you can contact your state securities regulator and ask any professional organizations to which your adviser belongs (such as the CFP Board or the American Institute of CPAs) if he or she has a disciplinary history.
Performing due diligence on a prospective financial advisor can be time consuming. The National Alliance of Objective Financial Advisors (NAOFA) was established to match wealthy people with America’s top advisors who have been pre-screened by the Alliance. Learn more by going to www.objectivefinancialadvisors.com
The National Alliance of Objective Financial Advisors (NAOFA) has identified 15 “Commandments” to making sure your money is in safe hands. The first commandment is:
Get financial advice from those who sell only advice. If an advisor sells insurance, annuities, and securities, guess what that advisor will recommend to you?
Most People who call themselves financial advisors actually sell insurance and other financial products that pay them commissions. Accepting commissions from insurance companies and other financial institutions REQUIRES BY LAW that these people act in the best interests of their employer, NOT in your best interest.
To avoid the pitfalls of bad financial advice, only trust the advice of an Objective Financial Advisor.
Check our blog often to learn about the other 14 Commandments, or you can request our free report:
How to Choose a Financial Professional
When selecting a financial professional, there are 2 main considerations:
1. The services provided by the financial professional
2. How the financial professional is compensated
Many financial professsionals create a comprehensive financial plan based on an analysis of your situation in regards to all areas of financial planning. Generally though, the financial professional will specialize in only 1 or 2 of those areas and for the remaining areas, they will refer you to the appropriate specialist. It’s recommended that you avoid financial professionals who attempt to do it all: sell insurance and financial products, manage your assets, and recommend estate planning strategies.
Compensation to financial professionals can be based on an hourly rate, a management fee, a commission earned, or by some combination of these 3 models. We advise working with a fee-only advisor- one who does not earn any commission or referral fees from other professionals. Fee only advisors will provide you with objective advice with only your needs in mind.
Need help finding an advisor? The National Alliance of Objective Financial Advisors (NAOFA) was established to match the wealthy with America’s top advisors who have been pre-screened by the Alliance. Learn more by going to www.objectivefinancialadvisors.com
