Many well-intentioned New Year’s resolutions fall flat, but the start of 2016 does bring opportunities to prioritize and organize our lives. One area to get in order, according to Anne Gibson, a financial advisor in Ellsworth, is personal finance. Especially for baby boomers who have recently retired or who need to make the most of what remains of their working years, she said, there’s no time like the present to tune up your strategy.
As certified financial advisors at Gibson Financial Solutions, Gibson, 61, and her business partner and nephew, Paul Pangburn, 32, counsel clients of all ages and on all rungs of the financial-planning ladder, from those who need guidance establishing a basic household budget to those with complex investment portfolios.
“We see a real mix of people, all year long, right across the board,” Gibson said. “Anyone can benefit from having someone take an objective look at their financial circumstances.”
Here are several of Gibson’s tips for starting the new year right:
Get ready for tax time
— Establish a labeled paper or computer folder to collect tax-related papers as they come in.
“It’s amazing how well this simple tool works,” Gibson said. “Otherwise, April 15 will roll around and you’ll be wondering where your documents are.”
Make a checklist of the documents you’re expecting, and file as soon as possible after you have received them all.
— Consider changing your withholding amounts to be closer to the taxes you expect to owe for the coming year.
— Consult an accountant if you think you might be eligible to itemize deductions this year, especially if you had high medical expenses in 2015.
Fine tune your investments
— Review your investments to make sure they are aligned with your retirement objectives and life changes, including cash-on-hand needs and risk tolerance. Assess whether your portfolio needs rebalancing or if under-performing assets should be removed.
— Revisit your overall financial situation by recording your assets and liabilities as well as your expected income and expenses for the coming year. This will help you decide whether you will need to use any of your savings or investments to make ends meet.
— Be wary of investment scams. Always research any unsolicited proposals or work with a professional.
Update your estate plan
— Review your estate documents, including your will, your medical and financial power of attorney designations and your advance directive for end-of-life care. If you do not have any of these documents, see an estate planning attorney.
— Review your beneficiary designations on your retirement accounts, life insurance policies and other assets to make sure they are in line with your estate plans.
— Review all insurance policies — life, health, long-term care, home, automobile — for appropriate coverage.
Experts make a distinction between fee-only advisors such as Gibson, who charge an hourly rate for consultations and/or take a fixed percentage of the value of the portfolios they manage, and broker-dealers, whose payment comes entirely or in part from commissions from the financial products they sell.
Both types of professionals can do an excellent job of guiding consumers, according to Judy Shaw, a regulator with the Maine Office of Securities. But fee-only advisors, who are often self-employed, are legally obligated to prioritize the fiduciary, or financial, well-being of their clients. Broker-dealers, who typically work for familiar national companies such as Edward Jones or Wells Fargo, are guided by a broader standard of “suitability” in helping clients select investments appropriate to their stage of life and financial situation.
“It’s a key difference,” Shaw said. “Consumers assume that everyone is always working in their best interest, but it’s just not the case.” Fee-only advisors and broker-dealers are closely regulated, she added, and information about complaints or criminal actions is public.
When in doubt, Shaw said, consumers should call her office at 877-624-8551 or visit investors.maine.gov with questions or for information about a specific advisor or company. The website includes links to many consumer resources including the brochure “ A Consumer Guide to Selecting a Financial Professional.”
