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Socrates was right: You don’t know what you don’t know

Recently, I was having a cup of coffee with a friend and business owner. We were talking about business, and she said, “Do you think people really understand what you do or why they need a financial advisor?”

Her question brought clarity to one of the things I had been pondering recently…do people really understand what a financial advisor can do for them?

If more people understood the value of a good financial advisor, I believe more could have had a better outcome during and after the 2008 financial crisis.

We started our own financial services company in 2016. It came from a dream that was rooted in concerns we had in 2009 when we were looking around and seeing that so many had a lack of access to good advice. When it comes to finance, often, people just don’t know what they don’t know.

Do you know?

Here’s a short quiz…see what you know…

  • Do you know if you can or should contribute to a Roth IRA?
  • Do you know the difference between an FSA and an HSA account and the value of an HSA in planning for your future? There is tremendous value in utilizing an HSA account.
  • Do you know why you should consider putting your assets in a trust and what happens when you pass away if you don’t?
  • Do you know what an internal expense is on a mutual fund or exchange traded fund and how it can impact the growth of your investments?
  • Do you know about the spread on an exchange traded fund and the importance of the size of the spread and the size of the fund itself in best execution? If not, you should, because it directly affects your performance.
  • Do you know if you should put more money in your traditional 401k or more in your Roth 401k?
  • Do you understand how you might lose money in an intermediate or long-term bond fund in a rising rate environment? And, do you know if you own either of these two types of bond funds in your 401k?
  • How about duration? Do you know how important the duration of a bond or a bond fund is when rates are rising in determining the volatility of your bond or possible loss of value?
  • Do you have any idea what percentage you own in stocks vs. bonds in your retirement account or 401k? Do you know why?
  • How about healthcare costs? Any idea how much it is estimated you might spend in retirement on these costs? This is one of the critical planning focuses of a financial planner along with taxes, and it should be.

As financial planners and investment managers, we understand how critical knowledge of each and every one of these questions is in navigating to a financially sustainable future, and these are just a sampling of things you should know.

If you don’t know the answers to these questions, you ought to be doing yourself a favor and get a partner–a financial advisor who can help.

If you have hired a landscaper to save you time on the weekends, think about hiring a financial advisor to not only help you grow your nest egg but also to save you money near term and long term. Don’t be left without access to good advice. Choose your advisor wisely. Choose an advisor who will educate you along the way so that you understand more tomorrow than you do today about your financial situation and how you can steer toward a financially sustainable future.

Important Note: The views expressed in this post are as of the date of the posting and are subject to change based on market and other conditions. This post contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and should not be taken to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Lenity Financial, Inc. unless a client service agreement is in place.

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