image_pdfCreate PDFimage_printPrint

5 Things To Do Differently in the New Year

by Eve Kaplan, CFP®

In the spirit of New Year’s Resolutions, here are 5 easy steps toward a more solid financial future:

1. Consolidate where you invest. Do you have multiple brokerage accounts, IRAs at different institutions, etc? Every month you receive numerous statements. It feels like you’re “diversified” but you merely have your holdings scattered across so many positions/locations that you can’t see the forest for the trees.

2. Consolidate your holdings (once you’re consolidated where you invest). It’s very common to have multiple holdings of the same (or very similar) asset class. How do you know if your holdings overlap and/or are redundant? List all your mutual funds and identify the asset class by reviewing the “benchmark” used to measure performance (ask your advisor or consult the mutual fund company if you’re not sure). If you have many mutual funds using the same benchmark, you may have significant overlap problems.

3. Consolidate your advice. I sometimes meet people who tell me they like to give 1/3 of their investments to advisor #1, another 1/3 to advisor #2 and another 1/3 to advisor #3 “to compare advice.” Typically one advisor is handling “bonds,” another works with passive index/Exchange Traded Funds investments and another has a combination of bonds/actively managed mutual funds/individual stocks. This creates an “apples” versus “oranges” comparison that insures “the left hand doesn’t know what the right hand is doing.”

4. Know how your professionals get paid. This is a “biggy” because so many people fail to ask “what does it cost” and “how do you get paid?” Do you know what your broker earns by putting you into A, B or C shares? (Do you know there are no-load alternatives that don’t charge “up front” (A shares), “surrender” (B shares) or “on-going” (C shares) fees?). Do you know why you were advised to buy an annuity? Is it truly in your best interest? (or just a very attractive product  since it can generate up to 8% commissions)? Sure – my clients need products sometimes, too, but Fee-Only advisors like me don’t earn or split commissions when I recommend them. Accordingly, my clients know they’re investing in something that truly is in their best interest.

5. Know what your professional advisors can (and can’t) do. Your financial life consists of a number of moving parts. If you don’t work with an objective financial planner, the only person coordinating these moving parts is…you. There are many examples of trusts that were unfunded because communication broke down amongst attorneys, brokers/insurance agents and clients. Brokers may manage your investment or insurance life, but they aren’t charged with seeing the “big picture.” Only a financial planner can do that – preferably a Fee-Only planner who offers objective advice because he or she isn’t compensated by commissions.

There probably are a good 25 things everyone should do to get a better financial life – but these 5 recommendations are a good starting point.

Copyright © 2010 by Eve Kaplan

Eve Kaplan is a Fee-Only (no commissions) Certified Financial Planner. She works with a number of physicians in her practice. Kaplan Financial Advisors, LLC is a Registered Investment Advisor in NJ and NY. Her website is She can be reached  at 908-898-0549.