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Top Five Things to Review Before Changing Jobs

Top Five Things to Review Before Changing Jobs

 

The days of working for a company for 40 plus years, being handed a gold watch for your tenure, and collecting a pension for the remainder of your life is long gone. It is more likely that today’s workers will hold ten to fifteen jobs, spending less than five years at each employer according to a recent report from the Bureau of Labor Statistics. In addition to the stress and anxiety associated with finding a new job, there are important financial aspects that should be reviewed with each change. 

  • Do you have a financial plan in place? It would make sense that you should have a financial plan in place, especially if you are looking to make a job change. Using the plan, you could easily determine how the employment change will ultimately affect your financial situation-whether positive or negative. Although you may not be changing jobs for financial reasons, it would be a good idea to know going in what the effects will be. 
  • How are you protecting yourself, and your family, from death or disability? You need to evaluate how you are covered for life and disability insurance. Often times we see younger employees, even older ones, only having group coverage through their employer. Many times this coverage is not portable and cannot come with you when you separate from service. It is a good idea to research if your new employer has these coverages available for you. Whether they make it available or not, it may make sense for you to explore obtaining your own individual coverage that is yours to have regardless of your employer. This is especially worthwhile if you plan on having the number of employers mentioned in the report above. 
  • What are you going to do with your retirement monies at your previous employer? It would not make too much sense to have ten to fifteen different retirement accounts when you finally look to retire. You may create a job just to keep track of where all your assets are, how they are invested and how they are performing. Upon leaving an employer, you usually have the ability to maintain the account where it is, unless you do not satisfy certain minimums and they force you to move it or roll it over. Typically you would want to roll these assets over and that can be done by rolling them into your new employer’s retirement plan, if the plan provisions allow, or into your own IRA. There are several things to consider when trying to determine which method to use when rolling over your assets. We will review this particular topic in a future post, as this is a topic of its own. 
  • Are you contributing to your 401(k) and changing jobs mid-year? It is important to note that there is a maximum, for 2019 it is $19,000 for those under 50 years of age and $25,000 for those over, that you can contribute to your 401(k) on an annual basis. You will want to make sure that you do not violate these thresholds if you contribute to both the old and new employers’ retirement plan. This amount is not a maximum per employer, but actually a maximum on the amount you can defer annually from your earnings. Putting too much in over the course of the year will give you extra work to unwind what was done and remove the excess amount. 
  • Are you in the process of looking for a new home and would need a mortgage to purchase it? Looking for a new home is a great experience and also a stressful one. Buying a new home ranks up there with looking for a new job, so you may not want to try doing both of these at the same time. In addition to saving yourself stress, you may not want to do both of these at the same time due to your need of a mortgage. It will be important that the mortgage company see stability in your work history and they certainly will want to make sure you are with your employer for a specific period of time. The time period they are looking for will be dependent upon the type of loan you would be looking to secure. It would be wise to consult with a mortgage consultant prior to making any job changes while in the home buying process. You certainly will want to make sure you are with your employer when you are about to close because the mortgage company will call them around the closing to verify you are still employed. You will not want to risk your home purchase over a job change, so it is important that you research this in advance. 

Changing jobs brings a certain level of stress with it and there are certainly ways to mitigate it. Ideally you would want to have a financial plan in place, in advance of any change, and this will put you ahead of your fellow job changers. The advisor who helped you develop the plan will be in the unique position to walk you through these top five things you should review, as well as others not mentioned here. Having the right advisor on your side, that is a good fit, will alleviate much stress and make the transition go much smoother.

We have helped many clients through this process and would welcome the opportunity to help you or someone you know. Please feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know has plans of changing jobs in the foreseeable future or they simply want to put a plan in place. We look forward to helping you, and them, make this a smooth transition.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Are Your Adult Children Still On Your Payroll?

Are Your Children Still On Your Payroll

There has been a tremendous spike in financial support given by families to their adult children in the last twenty years. This can come in the form of a place to live, paying expenses like cell phone bills and care insurance and even paying off debt. We all want the best for our children, but at the same time this may present a tremendous burden to the parents if they do not have enough income or assets to continue this level of support.

The days of children leaving the home and being responsible for their own personal and financial wellbeing seems to have gone the way of the rotary phone. According to the U.S Census Bureau, 34.1 percent of people aged 18-34 lived under their parents roof in 2015. This is up from 26% in 2005. An astounding 25% of young people living in their parents’ home do not work or go to school. These are staggering statistics and yet another contributing factor to people working longer. The financial dependence of their children are draining resources that otherwise would have been available for their own retirement.

It is important for our kids to be prepared to take on the world and be financially prepared for it. Financial education is a key to their success and the earlier you begin the better. I remember when my kids were young we wanted to teach them about money. One of the best tools we used to help educate the kids was a piggy bank, but not your ordinary piggy bank. The bank we provided to our kids had three slots, instead of one. There were slots for savings, spending, and charity and when they would receive money they would portion out the funds to each of these areas. It created a great opportunity to discuss the concepts of needs, wants and helping others. Educational ideas like this will stay with a child for a long time. We find that many financial habits of adults come from what they learned as children and how they observed their parents with money.

The help provided to adult children come at a price, far more than the dollars you spend on their behalf, and have the potential to put them in a bad financial position for much of their adult life. What happens when you are no longer here? How will they be able to support themselves? Take a look at your household bills and see what type of support you are currently lending to your child. Sit down and provide them with a list of the current expenses you are paying and develop a game plan to shift those expenses from you to them. In addition, this will offer an opportunity to work to educate them about the importance of long term financial stability and independence for themselves. You will see that this is a gift that will help them immensely in their life going forward.

Helping your children become and remain financially independent will not only be a gift to them, but you as well. It will put you in a better position for retirement, remove worry and stress from your life and most likely help your marriage, if you are married. We find that usually when a child is being support by their parents one spouse is typically in favor, and the other not, of helping them out financially leading to stress in the relationship.   I think financial independence is summed up best by this proverb, “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.”. Provide your child with support, and you help them now. Teach your child how to handle money, and you help them for a lifetime.

We would welcome the opportunity to help you get your children on the road to financial independence. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Managing a Windfall

Managing A Windfall

 

Managing a windfall can be a blessing and a curse. It may be a blessing from the standpoint that you have received significant assets that will help you and your family. Receiving the windfall may be a curse in regards to the time and effort you will have to put into managing it.

We are currently in the midst of one of the greatest shifts in wealth from the Baby Boomers to the next generation. There will be an estimated $30 trillion in assets transferred between these generations, according to Accenture. Although that number is huge, the reality is that 70% of intergenerational wealth transfers will fail by the time they reach the second generation, according to a report presented by The Williams Group. Work will need to be done by the current generation in order to raise their level of success in maintaining the family wealth.

In addition to the generational wealth transfer we are currently experiencing, you could also be the recipient of a windfall through a business that takes off or even winning the lottery (I would not count on the lottery as a viable strategy). All in all, no matter how you receive your windfall many of the steps you should take are the same.

The first item on your to-do list should be hiring an advisor that can assemble a team for you and walk you through the steps and the process to manage this windfall. The type of money we are discussing in the framework of this article requires a number of key people including legal, tax, risk management and investment professionals-just to name a few. It is important that one of the advisors you work with take the lead, organize the team and keep everyone on the same page as you work to manage the new found wealth. The last thing you want to do is to collect the windfall and then lose it through poor management.

Once you have your advisory team in place and your designated quarterback, it is important to work with them and devise a plan. Do not rush this part as it is one of the most important steps you will ever take. The plan will be a roadmap to ensure you are receiving, spending, protecting, and handling your money in the best way possible. Building this plan and sticking with it over time will give you the best possible outcome for assuring these monies stay with you and your family for generations to come. Making a few wrong moves, simply deviating from the plan, could add you to the statistics mentioned above.

This windfall, in most cases, is more money that you have ever had or managed on your own. There is tremendous responsibility in making sure that it lasts. Working with an advisor and the proper team will certainly add to your success. Life is not static, markets are not either, and it is critical to revisit your plan on an annual basis. Each area of your financial life will want to be reviewed and discussed with your primary advisor. Adjustments may be needed along the way and that is normal. You should not equate adjustments with failure but simply a recalibration to ensure your windfall continues.

In addition to having the right advisory team, it is also important to educate the next generation along the way to help solidify your success. Ideally you want the next generation to have a full understanding of your wealth and your values. We often see that the next generation does not have the same principles when it comes to their family money as the previous generation did. This is often due to the fact that they have been sheltered and not brought into the “inner” circle. The next generation needs to see, understand, become acquainted with and learn how to work with the family advisors in order to raise the level of success for the next generation and those that will come after.

The success of handling a windfall and having it last for many generations lies in the families ability to align themselves with the proper advisor and team while educating the next generation on what this money means and how it will be best kept and used to help generations to come meet their financial goals. There is a tremendous responsibility when receiving a windfall and it may be a blessing to those that have received it. Go slowly, develop a plan, follow the plan, and educate the generations to follow in order to avoid the windfall being a curse and causing you to become a negative statistic.

We would be happy to speak with you or someone you know regarding a potential windfall. You cannot start planning early enough and why not now. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

"Free" is not Free

FreeIsNotFree

We at Mitlin Financial always communicate the importance of having a financial plan. As I have said in the past, people spend more time, energy and money on planning their family vacations than they do their financial lives. It is important to make sure you have a guide, a roadmap, for how you are going to be able to successfully retire and reach the financial goals you have in the future. We rely on tools to guide us all the time, such as Waze for the car, and it is important to have this tool to guide your financial life; a financial plan.

Recently we met with a prospective client who found us from our robust online presence. Once contacted by this family, which we will refer to as the Doe’s, we introduced the firm’s process and began to walk them through it. On the initial call we scheduled our “Is There A Fit” meeting with both Mr. and Mrs. Doe. It is key to have both spouses involved in the planning process, so it is a must that both attend our initial meeting.

The initial meeting was a huge success, the couple clearly had financial planning concerns that needed to be addressed and a financial plan would be paramount to their success. Following our meeting we forwarded the couple a proposal which outlined the areas we would cover in the plan and the detail they should expect to see in their personal financial plan. In addition, we quoted our fee for the plan.

When we contacted the couple, as we had scheduled during the initial meeting, to see if they felt we would be a good fit for them and confirm whether or not they were a good fit for us, things became interesting. As a firm, we felt this family would be an ideal client for us. They were in need of a financial plan to help organize and outline their financial life as they approach retirement and also needed assistance in managing their assets. I must say their assets were everywhere and invested in many different ways without a unified direction. In speaking with the prospective clients we learned that they too felt we were a good fit for their family and would provide the services and attention they need to work towards their goals.

The couple had a few questions about the financial plan and the fee. They felt that the fee was too high. When speaking with them to learn more about their questions, I came to learn that they had decided to choose to work with another firm. The reason they provided us was because the firm they were going to move forward with was not charging them for the financial plan.

Have you heard this before? Do you think a financial plan has no cost? I can tell you from personal experience that a good financial plan can take anywhere from five to thirty hours to produce, depending on its complexity. The pitfall with a free plan is typically it is simply used as a “sales” technique to get your assets under management. The financial plan is used as loss leader in order to have you move your accounts to the firm. Unfortunately, in many instances this may have consequences that you may be unaware of and it particularly problematic if you are not working with a fiduciary advisor like Mitlin Financial, Inc.

When offered a “free” financial plan by a non-fiduciary advisor you will typically see several outcomes that may come as a result. This is not to say that this is the case in 100% of the circumstances, but it does happen often. Many times the “free” plan is one you could probably do in five minutes using an online calculator and get the same result, not providing you much guidance. We have also seen outcomes that produce plans that are two hundred plus pages that are designed to confuse you and presented in a way you would never be able to follow or implement. One additional result we have seen with the “free” plan is the broker, or non-fiduciary advisor, using investment vehicles that will pay them handsomely in order to compensate them for the lost upfront revenue for the “free” plan. The “advisor” in this case is looking at the financial plan as a loss leader. Essentially they are using the plan as a tool to get you to transfer their assets to you and once that is done they will look to have you invest in high commissionable products. This will allow the “advisor” to recoup the money for the time spent on putting your plan together. This may involve you buying products that may require you to hold on to them for several years before you can get out of them without a penalty and/or purchasing products that may be in the “advisors” best interest and not your own. They have put several hours into this plan and need to be compensated somehow, did you really think they were doing this for free?

It is very important that you do your due diligence in advance, especially when working with a non-fiduciary advisor. This scenario can ultimately cost you way more than if you actually paid for the plan. We have not even spoken about the follow through and implementation of the plan, which many times will fall to the wayside once they are investing the assets and this is the most important part. We feel it would make more sense to work with a fiduciary advisor and pay for the plan on its own. This will allow you to implement the plan and incur those costs separately. More importantly, because you are working with a fiduciary advisor they will be required to work in your best interest and disclose any potential conflicts of interest.

Working with a fiduciary advisor in this instance is paramount. As a fiduciary, these advisors must disclose any costs and make investments that are in your best interest and not theirs. We have seen fiduciary advisors offer the financial planning component for “free”, but typically these are cases where the client is having them manage in excess of a certain dollar amount; typically over one million dollars or some higher threshold. When you think about, in this case the plan is not free either but is being done as part of the services for your family because of the size of your account and the benefit it produces.

There is no free lunch or financial plan and it is important when hiring an advisor that you understand all the costs. There is an unwillingness, especially among the non-fiduciary advisors, to have a discussion about the costs of doing business with a financial services firm. As a firm, this is something we disclose at our first meeting. Unfortunately, the Doe’s have most likely fallen into a trap that will end up costing them far more in the long run than if they move forward and worked with us. Chances are that they will learn this at some point down the road and either we or some other fiduciary advisor will have to charge them even more to fix and unwind the mistakes that were made.

We would welcome the opportunity to speak with you about your own experiences with financial plans and help you, your family and friends in any way that we can. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Five Biggest Mistakes of New Business Owners

Mistakes of New Business Owners

 

A new business is typically an endeavor that comes with many challenges. Businesses are usually started by people, entrepreneurs, who have come across a great idea or provide an excellent service. This venture entails many working parts and has many risks/rewards. According to the Small Business Association (SBA) Office of Advocacy’s 2018 Frequently Asked Questions, eighty percent of small business will survive the first year and about half will survive beyond five years. Only about one third of businesses will survive to celebrate their ten year mark.

Taking a mathematical look at this, these numbers are quite discouraging and one must think why this is the case. In our view, there are five key things that have a tendency to get overlooked by new business owners. Those new business owners that focus on these five areas will have a higher level of long term success for their companies.

  • Not having a plan comes in at number one and is the largest contributor to company failure. Would you ever think about driving cross country to a specific destination without a roadmap or Waze by your side? I think it would be extremely difficult to hop in the car and start driving West (we are located on the East coast) without any tools to guide your trip. Essentially, starting a business without a plan is the same thing. As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.”
  • Having a great advisory team in place is paramount to the success of your business. Your advisory team should include a CPA, attorney, banker, insurance advisor and financial advisor. This would be the bare minimum I would start with on your team. As the business grows in size and success there will be a need to add additional professionals to the team. This core group will be sufficient to ensure you get off to the right start, have people in place to turn to for advice and rely on those that have been successful helping people and companies like yours.
  • You will want to have goals and metrics to benchmark your success against. These metrics may be very different from one company to the next and will change over time as well. The key is to have a direction in place to keep you on track while running the day-to-day of the business. You will want to make sure that you have SMART goals (Specific Measurable Attainable Relevant Time-Based). Using the SMART process will allow you to then break the goals down into bite size pieces to track your progress and success.
  • Being impatient in a new business can be deadly and comes in as one of our biggest mistakes. New business owners have a tendency to think and want things to happen much more quickly than they do, everything takes time. Our optimism and vision will typically allow us to envision the business moving forward far more quickly than it will in reality, and that is fine. Optimism is typically a common trait found embedded in the entrepreneur. This is a new business and it will take time and effort to get the word out there about your product or service. A new business owner will need to be patient and have the ability to wait for their success to arrive.
  • Keeping a cash safety net is key to the success of any business. There are always events that can take place while owning a business and they typically cost money. You will want to make sure that you have a sufficient emergency fund for these instances. Many new business owners find themselves with their back against the wall if a financial event takes place and they do not have a sufficient cash reserve. This may cause the owner to get a loan, borrow money from friends and family, utilize credit cards or even give away significant equity in their growing business for an insignificant amount of capital. Making sure that you have a cash reserve will be paramount to your success.

Beginning a new business is a rewarding experience and can be a life changing event. It is imperative to make sure that you are doing everything in your power to ensure your success. We have included what we believe are the top five mistakes of new business owners and this is by no means and exhaustive list. Having a handle on these items will put you in a position to be far more successful than if you had not addressed them. We encourage you to contact us if you are considering beginning a new business or are already in business, but have questions about where you may be overlooking important concerns. We would be more than happy to have a discussion to see if we can be of assistance and help you towards being one of the businesses that passes the ten year mark!

Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

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