- 4-Minute Article
- Sep 20, 2019
5 Decisions You Might Not Think to Discuss With a Financial Professional – But Should
Manage the impact of life events, so they don’t disrupt your long-term goals.
Created in Collaboration with Kiplinger.
- What financial decisions should you consider discussing with a financial advisor?
- What are some potential impacts of offering family members financial help?
- What are some financial considerations for unmarried partners?
Many people rely on financial advisors for guidance with life events, such as planning a comfortable retirement and funding a child’s education. But when it comes to other types of personal decisions or events, they may not always think to seek an advisor’s help.
Life and finances are closely linked, however, which makes your advisor a valuable resource to review many kinds of decisions you may be weighing. With a big-picture view of your investments and long-term goals in mind, he or she may suggest ways to manage the financial impact of your choices.
Here are five situations you may want to discuss with your financial advisor, as well as your other legal and tax advisors – either before or soon after they occur.
Around 40% of Americans provide financial support to adult children and other family members, even when doing so could jeopardize their own finances.1 Depending on the situation, such assistance could have meaningful consequences on your financial plan.
Your advisor could help you:
- Calculate the level of financial assistance you can afford to offer now and over time
- Identify which accounts to withdraw money from, so you can avoid unnecessary tax consequences and minimize the hit to future earnings
- Offer advice to your family members to help get their finances on track
About 32 million people move each year, according to the U.S. Census Bureau. And most moves tend to be short distances: 26 million move within the same state while 20 million move within the same county. Of those who choose to go farther, 4.8 million relocate to a different state and 2.6 million head to a different region.2
If you’re considering moving, it’s important to talk with your advisor about how changing your housing or location might affect your financial situation. If you’re relocating somewhere with a higher cost of living, for example, your advisor can help you plan a new budget strategy and identify the best cash flow to cover new expenses.
By working together with your financial, tax, and legal advisors, you’ll also be able to address:
- Potential tax consequences of a move
- Best funding sources for home sale expenses, as well as relocation and moving costs
- How to invest any proceeds you may make from the sale of a home
A higher proportion of adults today live with an unmarried partner versus a spouse, with estimates of unmarried cohabitating adults reaching 18 million.3 When it comes to managing finances within a long-term partnership, however, unmarried partners generally don’t have all the built-in economic and legal protections that married couples share.
That’s why it makes sense to discuss these issues with your financial advisor. He or she can help you find the best approach for you by considering matters such as:
- Determining whether to combine financial accounts or keep them separate
- Clarifying whether a partner has access to important employment benefits such as healthcare and retirement
- Planning for wealth protection and transfer if one partner becomes ill, incapacitated, or passes away
Nearly 50% of advisors offer charitable planning services.4 So, if philanthropy is a part of your financial plan, ask about strategic recommendations to help you accomplish your philanthropic goals.
There is a wide variety of options when it comes to financial giving strategies, including charitable donations, donor-advised funds, and trusts, so be sure to discuss taxes and other considerations with your financial, tax, and legal advisors to make the most of your gift or donation.
If you’re thinking of joining the 7.4 million Americans with second homes,5 bring your advisor into the conversation. As with any large purchase, buying real estate typically calls for large cash down payments and long-term debt, both of which may significantly affect your finances. And because the second-home market differs in several ways from the primary residential market, it requires a deeper understanding of real estate investment rules and the tax treatment of these types of properties.
Along with being able to refer you to a trusted network of professionals with expertise in this area, your advisor may help you navigate the pros and cons involved in buying a second home. For example:
- Evaluating the potential impact of such a purchase on existing financial goals
- Identifying the most appropriate sources of funds to tap for a down payment and other upfront costs
- Mapping out long-term expenses and how they’ll be paid now and, in the future
Ultimately, the outcomes of financial events like these are up to you. But your advisor can play a significant role in helping you manage the impact of big financial decisions, so they don’t disrupt your long-term security. Learn more about building a strong relationship with your financial advisor to optimize the work you can do together.