Other Retirement Facts:

What exactly is unreasonable to expect or ask of your advisor? It’s good to know where the line between realistic expectations and unrealistic requests is when working with an advisor. On today’s show, we will cover 4 unreasonable requests that are asked throughout the industry and discuss how we can better manage our expectations and therefore our financial future.

“I want returns but no risk.” 

In today’s market, this might seem like a possible request to ask of an advisor. Unfortunately, just because the market has been generous on returns for the past few years doesn’t mean that risk is not involved. We can get too comfortable with risk when the market is doing well. It’s important to manage expectations. You have to take risk on to get return, but it’s a matter of managing that risk and its impact on your returns. An advisor can help you with that management! By understanding your risk tolerance, we can position risk in a manageable way.

“Can you reduce your fees?” 

While it might not hurt to ask an advisor if they can reduce your fees, it’s probably not reasonable. A lot of advisors are on a sliding scale when it comes to their fees. You get what you pay for in value, time, and management. If someone is offering lower fees think about the overall value you are getting with their services. Are they offering a robust plan that includes tax planning and estate planning or are they involved minimally?

“How do I get out of paying taxes on my IRA or 401(k)?” 

Legally, you cannot get out of paying these taxes. Did you know IRA stands for Individual Retirement Arrangements? This means you have an arrangement with the IRS where you get a deferral upfront. However, as you reach your required minimum distribution age you owe the IRS those taxes. Roth conversions have been particularly popular in the past few years, paying taxes now rather than later. You’ll owe taxes on your IRAs and 401(k)s, we can’t control that, but we can help you manage these taxes efficiently.

“Can you just do it for me?”

It may sound reasonable to ask your advisor, the professional, to do your plan for you. While to a degree the advisor can manage your plan, you have to be involved in the customization of your plan. Your advisor will need to know what you want or need for the long term. Without your input, they cannot create a plan that meets your expectations. Advisors can do the heavy lifting, but you have to be involved. At the end of the day, your advisor will show you your best options and you’ll have to make the final choice to initiate those options.

Listen to the entire episode or skip ahead using the timestamps below. 

[0:41] – We’re into mid-November

[1:31] – I want big returns, but no risk

[5:56] – Can you reduce your fees for me?

[8:40] – How do I get out of paying taxes on my IRA or 401(k)?

[11:13] – Can you just do it for me?

A Quotable Moment:

“You’re going to get out of the process, what you put into it. ”

-Phil Putney