In 2007, I actually sought a financial advisor, developed an asset allocation model, and started to track my finances more closely than ever. All good moves, but after reallocating some of my investments, I made my third mistake:
3. Underutilizing Financial and Tax Advisors
I mentioned that I developed an asset allocation model with my new advisor (after lots of meetings and questionnaires, mind you). Nowhere did I say I actually read it.
I skimmed the hefty report, then tossed it aside. It’s hard to explain this incredibly lax behavior on my part. I called my advisor and asked her to summarize, then acted on what she said, yet the report remained shut. I am reading it this week, because after admitting my behavior here I am sufficiently humiliated. Shame on me.
But not reading the report led to even more bad behavior.
Because I hadn’t read it, I didn’t keep in touch with her the way I should have. As the market began acting up, I wondered whether I should reallocate my investments, but never reached out to ask. She told me my investments were long-term so I shouldn’t spook at the first sign of decline, but I still should have asked. She might call me if she sees trouble ahead, but there’s no guarantee. It’s my money, and I need to manage it, actively.
From this comes a goal. In 2008, I am going to check in with her on a monthly basis, even if it’s just an e-mail. It’s going onto my calendar so I can’t possibly forget.
Another mistake: Although I did my own taxes last year, I have a long-standing relationship with a tax accountant and planner, and as questions flitted across my mind this year, I didn’t call to ask them.
I’ve a sneaking suspicion that if someone examined my tax situation, they’d find I could actually donate even more to charity while optimizing my deductions. Last year I just gave as much as I felt I could, but I need to have both my advisor and tax accountant address this with me for 2008.
I’ve started a running list of questions for my tax and financial advisors which I keep on my desktop so I can jot them down as they arise. By March, I’ll schedule a meeting to address all the queries I’ve gathered to date.
If nothing else, I plan to learn from my mistakes.
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How actively do you plan to manage it? I find that too much activity is usually not a good thing. Follow the advice of Ron Popeil, “Set it and forget it.”
Better to read it late than never.
I think we find it hard to call friends for advice in their area of expertise, because it is like asking for a freebie. However, I try to keep it mutual. When I have given free advice to friends, I have no problem asking them for advice.
How did you choose / find your financial and tax advisors? Recommendations seem to be the way to go but I don’t personally know anyone in my situation.
As an engineer and mathematician by training, I’ve always felt obligated to do my own taxes… but with starting at least two businesses (one flip, two rentals last year photography) I’m thinking it may be time to get some help. At least for the first year or two. I ask because I see that you do your own taxes, so you can understand needing “real” advice and not wanting to pay someone just to fill out a spreadsheet that I can do myself.
I’ve been to your usual “tax places”... but they all seem like morons and I end up helping them more than vice versa. Any thoughts?