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Newsletter
2009 5th Edition (Other Editions)
Protecting Your Nest Egg is Equally, if Not More Important than Growing It !
As financial planners, we are required to take exams, acquire licenses, and perform continuing education, with the primary objective of helping our clients :
- Protect wealth
- Save wealth
- Grow wealth
However, the harsh reality is that majority of our clients focus mostly on the growth component, and often overlooks the protection component. This can be very dangerous and damaging because this could cause severe financial hardship…or ruin to their lives.
When meeting with our clients, we found that unexpected events such as the following were usually overlooked.
- A car accident and major lawsuit
- A critical illness
- The need for long-term care
- A major disability
- One spouse passes
- Both spouses pass together
- An unexpected coma
- Probate costs and administration
On the other hand, when we ask them to provide us with in-depth details about their current investments, they can usually answer this question rather effectively (why they chose their advisor, what investments they own, their asset allocation, etc.).
Why is that so ?
We think the answer is very simple… most clients do not like to purchase, discuss, or be sold any forms of insurance. Most people view insurance as "throwing money down the drain". The perception and belief is usually that it will never happen to me! And because statistically speaking they might be correct, sometimes financial planners prefer to steer away from wealth protection and focus on the "fun stuff"…growing wealth… investments.
So what we've attempted to list below are some topics that we strongly feel must be discussed when creating a sound comprehensive plan for our clients :
Lawsuit Protection :
- How much will you be protected if you are sued from an accident that occurs in your car ? In
- your home ?
- What are the deductibles on your car ? Your home insurance ?
- Do you have receipts, pictures, or a video of your home contents in the event of something such as a fire ?
Disability Insurance :
- Do you have long-term disability ?
- How long is your waiting (or elimination) period ?
- What percentage of your salary does it pay for ?
- How long does it pay for ?
- What is the definition of disability ?
- Does this disability insurance cover your salary and commissions ?
Medical Insurance :
- Does your medical insurance carry a maximum benefit limit ?
- What is your deductible or co-pay ?
- What are the differences between in-network and out-of-network ?
Wills and Trusts :
- What is the difference between a Will and a Trust ?
- Which should you have ?
- If you have one, is it outdated ?
- What are Durable Powers of Attorney ? Do you have them ?
- What is the difference between a Revocable or Irrevocable Trust ?
- Who should be your Guardians ? Who should be your Trustees ?
- Is your Trust properly funded ?
Life Insurance :
- Do you know exactly what type of life insurance you own now ?
- What are the different types of life insurance, and what kind should you have ?
- How much total coverage should you have ? And your spouse ?
Although a large part of our job as financial planners is helping our clients save and grow wealth, it cannot begin and end there. Protecting our clients from unexpected events that could cause financial ruin can be just as important, if not more important, than growing wealth.
The harsh reality is that you can spend a lifetime doing a great job and accumulate wealth, or achieve what you believe to be a superior rate of return. However, should there be an unexpected event that was not planned for in advance, you can lose a lifetime of hard-earned wealth… and potentially cause a lifetime of financial pain.