How To Find A Financial Advisor in South Bend

So the stock market has rebounded from its low point in March, 2009. As we are wrapping up the 3rd Quarter of this year, I have been reflecting on a few thoughts.

Although we have seen some market recovery, for many of us, 2009 has been more challenging than 2008.

* As I talk with people, I am sensing more uncertainty over the future of the economy and

their plans for retirement.

* Unemployment continues to stay at a high level. Some regions are higher than others

nationally. The Michiana area, with its long ties to the RV and automotive industry, has

experienced higher unemployment than other areas.

* Most recently, according to today’s South Bend Tribune we learned that the Braking

Division of Robert Bosch Corp. will be sold to Akebono Braking Industry of Tokyo, Japan. This

puts more strain on our area’s economy and could result in additional job losses.

* Many of those I have talked with are continuing to look for ways to pinch pennies, cut

corners and make their money last.

The one thing which hasn’t changed is that people still need to live their lives in dignity when they finally retire. And with people living longer than they used to, that takes Savings & Planning. Costs of living will continue to rise as well.

If you are living in the South Bend, IN area, how do you find someone who can help you develop the right strategy for you to reach your goals in these trying times? There are several qualities you should look for when shopping for an advisor, no matter where you live.

* Is he/she a Good Listener? Can you share your dreams & goals with them?

Do they make you feel important? Do they ask you questions such as “What is
important about your savings to you?” and “What would you like your retirement to be
like?” If all they do is tell you about the latest stock tip, or if they do all the talking, it
may be time to look elsewhere.

* Do they have a reasonable amount of experience?

Advisors can sometimes fall into 2 groups. You may not want an advisor that the ink on
their license has not yet dried. Most of us if asked would prefer an experienced advisor,
although you may want to find out if they are accepting new clients, or is there a
minimum amount to invest. There is a great website, http://www.financialadvisormatch.com/.
You can plug in the area you live in and it can give unbiased information on advisors in
that area. Also you can look up an advisor by name.

Another great website to learn information is http://www.linkedin.com/ which is a
professional networking site. This can give you great information about your
Advisor, much like an on-line resume.

* Does he/she have the “heart of a teacher”?

This is a comment often made by financial talk radio show host, Dave Ramsey.

Dave has grown in popularity because people are getting back to basics and
want common sense advice. Most people want investing concepts made simple.
Can your advisor help make this ‘fun’ to learn? Or do they talk in technical jargon?

* Does he/she talk about WHY Investing is so important for all of us?

Can they look at your budget with you and help you determine what type of income
you’ll need at retirement? By helping you know how much income you need (after
Social Security and any other sources of income), you should have a much better idea
for how much you need to be saving - AND put together a plan to do it!

* Will they offer to review your 401(k) and other statements for FREE?

Some advisors are “fee” based and charge by the session or by the hour for advice.
Others work on commission and are only paid when investments are made. For most of
us, this is the fairest method. There will always be times you have a question, and
advice should be free. Depending on how much you invest, you may also qualify for
volume discounts, also known as “breakpoints”.

* Is your advisor independent, or do they work with a larger firm?

This is really a matter of personal preference and there are pros & cons to each. Also
there are great advisors with either side. Many people prefer an established name brand
firm, while others enjoy the personal attention they may get from an independent.
In some ways, you could compare working with an advisor to eating at a restaurant.
There are large national chains, and also individually owned local restaurants which
have found their own niche.

There was a great article earlier this month (Sept 14, 2009)
“Schwab Says Independent Advisers Attract Brokerage Firm Assets”
http://www.bloomberg.com/apps/news?pid=20603037&sid=aYTCv4DGu76Y
by Alexis Leondis of Bloomberg.com. The article shows the results of a survey done by
Charles Schwab about where clients are holding their assets. Ms. Leondis states,
“Almost 90% of the independent Registered Investment Advisors said that they gained
assets in the last 6 months and 45% of the assets came from so-called full-service
brokerage firms.”

Whether he/she works independently, or with a larger firm, your advisor can’t prevent
market declines. However, working with someone you are comfortable with should at
least help you to feel better about the future of your retirement.
Best wishes in your search!

Dean Voelker is an Independent Registered Investment Advisor in South Bend. He has
been licensed in Indiana and Michigan since 2003. You can follow Dean on Twitter, and also find his profile at Linked In and Financial Advisor Match. Dean also hosts a weekly Podcast program

on Blog Talk Radio, "Improving Your Financial Health". 　
　
　
　

Single Bonds or Mutual Funds?

What's the best way to buy municipal bonds? Should I buy single bonds or mutual funds?

Like most decisions, there are pros & cons with both methods. You should talk with you advisor about which method is right for you - possibly a mix of both.

One of the advantages of owning a single bond is that you have a fixed rate of return - you know exactly what you are getting. For example, on a $100,000 muni bond paying a 5% coupon, you will get $5000 per year in interest income. Because you don't have to pay federal taxes and you may not need to pay state taxes, that may be similar to getting 7% or more, depending on your tax bracket.

Interest from a single bond is usually paid ever; 6 months, so you would get $2500 with each installment. You may also ask your advisor to structure your bonds in such a way that you are able to receive income every month.

Another advantage it that while your advisor does get paid, his or her commission is built into the price of the bond when you buy it. This is a common question I am asked.

Think of buying soup at your local grocery store. The grocer buys soup in large bulk quantities, with all brand names & flavors. Because they buy so much soup at once, they can buy at a wholesale price. When a customer buys soup, they pay a retail price and may only buy 1 can, or a few cans at a time.

Bonds work the same way. If you buy a bond worth $10000, you will get $10000 when it comes due. Along the way, you have gotten a great tax free rate of return every 6 months. If you are fortunate enough to be working with a great advisor, you may have even been able to buy the bond at a discount, so that when it does come due, you even had a small gain. (Woo-Hoo!)
Its great when everyone wins!

One more thing about a single bond - You know exactly which project you are supporting.
(Example - St. Joseph Regional Medical Center Bond)

A big disadvantage is that a single bond is not diversified. This is where mutual funds are better. Going back to the "soup" example, a mutual fund allows you to carry all the "flavors" in one investment, which is managed by professionals at a mutual fund family.

Most bond mutual funds also pay interest monthly, because they own hundreds of bonds. This can be helpful if you are counting on monthly income from your investments, and a huge advantage over CDs.

Also, it is much easier to invest a smaller amount. For those who don't have the 5000 or 10000 minimums required by many single bonds, you can establish a mutual fund for as little as 1000.
Once you have a fund, you can add to it or even withdraw money easily.

Sales charges on bond funds purchased through your advisor may be as high as 4.25%, although you may qualify for volume discounts, also known as "breakpoints" if you are able to invest large amounts of money.

For more information on municipal bonds or other investing, please contact me at www.deanvoelker.com