More than 2,500 financial planners will gather in Denver beginning Saturday for the Financial Planning Association’s annual conference.
As part of the four-day event, the City of Denver and the Financial Planning Association of Colorado are partnering to offer a one-day financial planning event for the community. More than 165 financial professionals from across the country have volunteered to meet one-on-one with attendees to answer their financial questions.
In addition, there will be classroom-style workshops addressing a variety of financial topics. Volunteers have agreed to offer advice on a “no strings attached” basis and will not give out business cards or sell financial products or services.
Denver Financial Planning Day
Date: Saturday, 10 a.m. to 2 p.m.
Site: Colorado Convention Center, Korbel Ballroom, 700 14th St., Denver
To get the ball rolling, The Denver Post asked our Facebook followers what financial questions they would like to ask, and four members of the Financial Planning Association of Colorado agreed to share their insights.
What is the best thing to do with a 401(k) from a previous job?
A: Before moving your 401(k) from a previous employer, you should consider this:
• Will your former employer’s 401(k) plan help meet your strategic goals for retirement? Will the investments available enable you to design a portfolio that gives you the best opportunity to achieve your targeted rate of return, given your tolerance for risk, and at an expense that is comparable to what is available to you from other providers?
• Have the funds available to you performed at acceptable levels over holding periods of one, three, five and 10 years vs. their peer group? Are there options available that give you access to multiple funds in the same asset class if not?
• How does the cost compare to other alternatives available to you, such as an IRA? Don’t overlook the plan fees of a 401(k). Many small to midsize company plans force employees to pay for plan fees and administrative expenses. That with the internal expense and trading costs of a fund can raise the overall cost to you to the detriment of your long-term targeted rate of return.
• Diversification still matters. Does your former employer’s plan give you access to noncorrelated asset classes, such as commodities, emerging markets and high yield bonds that help you to minimize your short-term and long-term risk, reducing volatility, enabling you to “stay” in the market for the long term in order to achieve your targeted rate of return?
• Last but not least, if you choose to liquidate the portfolio/401(k), you will be subject to income taxes, and if you do so prior to age 59 1/2, you may be subject to an additional 10 percent penalty. If your former plan does not meet the above criteria, it may be time to move it. Be sure to speak with a certified financial planner practitioner to ensure the plan is suitable for you.
Robert L. Holland Jr. is a certified financial planner practitioner and a registered representative of INVEST Financial Corp with First Financial Strategies LLC in Denver.
To consolidate or not? I’m thinking about getting one payment for my cars and credit cards.
A: Debt consolidation can offer relief from high payments, high interest rates and stress, at least in the short term. It’s important to take the time to determine whether consolidation is appropriate, and if so, what type of consolidation. In these tight credit markets, many lenders will not provide a consumer with an unsecured consolidation loan. Instead, lenders are looking for real estate or other forms of collateral to secure a loan. Converting unsecured debt into secured debt may not always be the best choice. Some people may find themselves slipping back into old spending habits after getting instant relief from a debt consolidation loan and end up with more debt than when they started. There are three additional questions to ask when considering loan consolidation:
• Are my interest rates being reduced?
• Am I lowering my monthly payment?
• How many years will I be paying on this debt?
Once you have answers to these questions, weigh the benefits against the consequences. It’s important to keep in mind that most car and credit card loans are short-term debts designed to be paid in full over three to five years. If you restructure the debt to be paid over 10 to 30 years, your payment will drop but the amount of interest you pay over time will increase significantly. There’s a reason we don’t see too many 30-year-old cars on the road these days. An alternative for you to consider may be a debt management plan through a local nonprofit credit counseling agency. A debt management plan offers significant relief from your debt load and stress with minimal impact to your credit standing.
Chad Gentry is executive director of Community Credit Counseling Services in Lakewood.
We inherited money, and I don’t know what to do with it. We are pretty old – 57 and 60 – so where are the safe places for money right now? Or should we go for the not-so-safe places?
A: This is an ongoing question, especially for those in the baby-boom generation. When should I start being more conservative with my investments? The answer depends on how many resources you have for the future compared to what your income needs will be with inflation and taxes. Inheritance or any windfall needs to be included as part of the strategy to build and preserve resources. Once this couple updates their financial plan – which includes determining how much risk they are willing to take for future opportunities; what other resources they have such as pensions, Social Security, 401(k) plans and other investments; and when they are planning to retire – then we can address how to properly allocate the investments for the inheritance. They should also consider their longevity. Age 60 is not old, especially if you will live until age 90 or longer. This would require 30 years of potential cost of living increases to consider. There may be decades of lost growth opportunity if the mind-set is “we are pretty old, we might need to invest in a safe place.” They may discover they have enough time to layer for conservative needs in the short term and also allocate for longer-term goals. This could include some growth investments designed to hedge against future tax and inflation. Layering investments for different time frames, allocating in different assets for diversification and adjusting the portfolio by rebalancing on a regular basis may take some of the fear out of where to invest right now. It is important to have a good solid strategy not only for their lifetime but also to consider proper estate planning. The benefit of a financial plan is that all of these areas including risk, longevity, taxes, retirement income needs and estate planning should be considered before they invest.
Patricia Kummer is president of Kummer Financial Strategies in Highlands Ranch.
I’m worried about graduating and not finding a job. What about my student loans? What would be the best suggestions? I know I should start paying them off now, but it’s hard being a single parent.
A: Begin now to take control of your cash flow by setting up a spending plan. Use your checkbook register and list your expenses for the last six to 12 months. Divide your expenses between “requirements” (basic necessities), “needs” (what you need to get by) and “wants” (what you would like to have but could live without). Pay yourself first by trying to set aside a small amount each month in a savings or money market account, and begin to build an emergency cash reserve. Then when you begin your job hunt, you will know what you can accept in order to provide for yourself and your child. Don’t be discouraged by the employment picture often painted in the media. Colorado is in a better position than much of the rest of the country, and although economic growth is likely to be anemic for some time, that just means we may have to work harder. Those who look for opportunities are likely to find them. In the meantime, upon graduation, you may qualify for a loan consolidation, deferral or forbearance. Consolidation of loans may allow you to lower payments and the interest rate you are charged. Forbearance allows you to stop making payments for a period of time (while interest continues to accrue). Deferment allows you to avoid payments for a specified period of time due to hardship or unemployment. You can obtain information on these options from your lender. Here are some good sources of general information on student loans:
• nolo.com/legal-encyclopedia /student-loan
• studentaid.ed.gov
• studentloanborrowerassistance.org
• projectonstudentdebt.org
Ray Benton is an investment advisor with Lincoln Financial Advisors.
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