NEW YEAR’S RESOLVED

As we approach the new year I wanted to share a few simple steps to help get you on track to a profitable retirement.

1. KNOW WHAT YOU OWN

Step 1 is to take an inventory of what you own. Step 2 is to assess these investments. Ask yourself the following questions: Why did I originally buy this? Would I buy this again if I were investing today? Is the investment performing up to my original expectations? How am I monitoring my investments? As our economic markets continue to expand, new products and services are becoming available to investors having a tremendous impact not only on your retirement planning but your retirement income as well. Your advisor should help you answer these important questions, assess your portfolio and present potential alternatives to you on a regular basis.

2. UNDERSTANDING THE FEES THAT YOU PAY

All investments have certain costs attached to them including upfront sales charges, backend sales charges, management fees and commissions. Some expenses are clear and understandable while others are buried in detail. While many investors do not understand the negative impact high expenses can have on a portfolio there are two costs I would like you to keep in mind: What does it initially cost me? and, What are the ongoing costs to me? Your advisor should be able to provide you with a detailed explanation and understanding of the various expenses incurred and all initial and ongoing costs. It has always been amazing to me the number of people that do not know the total fees they pay and the total return of their portfolio. You should be meeting with your advisor at least annually to discuss all of these items. At that time your advisor should be able to provide you with your real rate of return (ROR). This is your portfolio return after all fees and expenses are subtracted.

3. CONFIDENCE IN THE FIRM THAT YOU WORK WITH

As the financial planning industry changes rapidly you need to make sure that the firm you have chosen to work with provides a wide array of services. Many traditional and nontraditional firms are now offering investment advice and financial planning. At the same time, financial planning for the Baby Boomer generation is becoming more complicated and increasingly difficult with regard to longevity, inflation and more importantly market conditions. Your research should include an analysis of the firm’s reputation and strength in the marketplace. The advisor and firm you choose to work with must have the experience and knowledge to help you assess all of your retirement needs, create, amend or validate your current retirement plan, design a plan for income in retirement and provide ongoing monitoring and communication to you.

Let’s Review

1. Know what you own. Every investment has its place.

2. Identify your real ROR and your total portfolio expenses and ask yourself whether you are getting what you are paying for.
   And finally,

3. Management Matters – Does the firm you have chosen to work with have a comprehensive approach to financial planning. Is it a full service firm that offers a full range of products and services?

There are always other factors that apply such as taxes, estate planning and current market conditions. But I believe that using these three simple steps can help you get on the right track to retirement. Tune in next month as we cover the three major risks that all Baby Boomers will face.

Kevin C. Krul is First Vice President and Financial Advisor with Hefren-Tillotson. He may be reached at 412-258-1101 or kkrul@hefren.com. The Wexford office of Hefren-Tillotson is located at 4001 Stonewood Drive.