5 Things Your Broker Should Have Told You

Be Prepared for Retirement—5 Things Your Broker Should Have Told You

You’ve made it to retirement.  You’ve worked all your life to build your life savings, so what do you do now?  Many of us have had decades of experience in our respective fields of expertise, but how much experience do we have being retired?  For those just starting their retirement journey, fear and insecurities are present in your mind because you are unsure of a few things:  Have I saved enough?  Will my money last my whole life?  How will the uncertainty of the stock market affect my financial future?  What if taxes, inflation, or healthcare costs eat away at my nest egg?  These are some of the major concerns in retirees’ minds as they face an uncertain retirement landscape.

Perhaps you have worked with a stockbroker for some time.  Throughout the 90s you may have had some exceptional returns.  If you were disciplined enough not to sell your holdings from 2000-2002 or 2008-2009, you may have hit new highs in your retirement accounts after the markets bounced back in the years following those downturns.  But now you’re ready to start living off your savings.  Where do you start?  You may feel that your current broker hasn’t put a strategy in place for you to effectively start drawing down on these accounts efficiently.  Perhaps there is a better suited advisor who specializes in the distribution of your assets, not just in how to grow and accumulate your savings.  Most stockbrokers are focused on getting you the best return.  But when you approach retirement, you need an advisor who’s going to take a holistic approach to your entire retirement picture.  You’re no longer in the accumulation phase (growth with the desire for high returns), but now you’re approaching the distribution phase (preservation of capital and the need for your assets to last through your entire life).  So, what are some things a holistic advisor might tell you that you may not have heard from your broker?


1. Know Your Risk Tolerance

First things first: You need to do a thorough risk analysis and make sure you are not taking more risk than what is worth the potential reward.  Would you be okay losing 30-40% of your life savings?  Many retirees don’t realize that could be a reality if we suffered another downturn like 2008-2009. We wouldn’t let our family ride in a car that wasn’t crash-tested, so shouldn’t we crash test our portfolio that contains our life savings? Also, at age 70 ½, we’re all required to draw down from any tax-deferred retirement accounts.  If we’re forced to draw down at a low point in the market (like the beginning of this year—the lowest start to a market year in all of history), then we are forced to take a significant loss.  It is best you sit with an advisor who takes all these possibilities into consideration in order so that you conserve and preserve as much of your hard earned savings as possible.  Not all risk is bad, but we want to make sure you are not taking on more than you realize.  Many of our clients are surprised at how much risk they are accepting without full recognition of how it could negatively impact their retirement future.

2. Have a Plan for Distribution

Many of us have saved in 401ks or other company retirement plans and IRAs.  If you have saved that way, you probably know that in those accounts is money you have not paid taxes on yet.  So the question is, how do we best draw down on those assets in the most tax efficient way possible?  The answer is to have a detailed, planned distribution strategy in place.  Oftentimes, you will need a descriptive plan showing exactly how you should draw down on these accounts year by year.  Without a specific plan, you may overpay in taxes or fail to preserve your wealth.  It’s important you work with an advisor who is a distribution specialist; they can help you maximize your retirement income in the most tax efficient way possible.  There are many strategies you can utilize that help you navigate through the required minimum distributions you will have at age 70 ½.

3. Utilize Social Security Strategies

Social Security is an integral part of your retirement income.  When I was a broker with a large firm, we oftentimes didn’t even consider Social Security when meeting with clients!  Can you imagine a financial advisor not even factoring a source of lifetime income into your retirement plan?  That large firm doesn’t mention it because it didn’t benefit them, but it certainly benefits you (which makes it important)!  There are many options available for how you can claim your Social Security benefits.  Make sure your advisor goes into depth on what the best option is for your personal situation.  There are many factors which affect when to claim and there are also some new changes which go into effect in 2016.  Make it a point to meet with a fiduciary advisor as soon as possible who can steer you in the direction of maximizing your Social Security benefits.

4. Do a Tax Analysis

No one wants to pay more to Uncle Sam than they should!  Make sure your advisor not only shows you how to draw down on your assets in retirement, but also shows you the most tax efficient way to do so.  Many people who come to meet with us show us their tax returns and we are surprised at how little their current broker advised them on ways to minimize their tax burden.  Many people are relying on their CPAs to help them. Even though these professionals know how to decrease your tax payment on the current year’s tax return, they sometimes fail to strategically plan for the long term elimination or reduction of your tax burden.  We meet people all the time who say their CPA never told them how much their required minimum distributions would be!  How can you or your broker plan to minimize your tax burden if they are not advising you in this area?

5. Check on Your Fees

This is one thing most brokers do not even know themselves!  Do you know what fees you are currently paying?  If not, then you may be paying more than you should.  If your broker did tell you what their fees were, it’s possible that they are even higher than what they disclosed!  Why?  Because if your broker is like most brokers, they might utilize mutual funds.  The mutual fund industry is under scrutiny because they are not required to fully disclose all transaction costs (at least not yet).  Most brokers fail to consider these hidden costs because they are not disclosed in the prospectus.  Every time a mutual fund manager sells or purchases a security, there is a transaction cost which gets transferred to YOU, the owner of shares in the mutual fund company.  And this cost is not required to be disclosed to you with full transparency!  Make sure you sit with a fiduciary advisor who is required to disclose all fees and who doesn’t utilize mutual funds.  It is only then that you can truly know what your cost of ownership for your investment portfolio is.  We would be glad to do a fee analysis on your current portfolio so you know exactly what you are really paying!

Questions, comments, concerns? Feel free to contact me!
Rich Feola

732 364 5462


At Family Focus Financial Group, Rich develops unique retirement strategies for his clients and recognizes that there is no one-size-fits-all approach. Rich is committed to developing both a custom strategy and close relationship with each client. He believes maintaining a relationship with our clients will ensure their strategy is always on course to reach their goals. Rich Feola maintains an insurance practice and the fiduciary standard of Investment Advisor Representation, a series 65 licensed registration, with Global Financial Private Capital, an SEC Registered Investment Advisory Firm.


*Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor. Global Financial Private Capital and Family Focus Financial Group are not affiliated companies. Not intended for specific legal or tax advice. Any views expressed are for information purposes only and should not be construed in any way as an offer, an endorsement, or an inducement to invest or purchase insurance products.