Podcast Episode - Ask KT & Suze Anything: How Do I Choose a Financial Planner?

On this edition of Ask KT and Suze Anything, Suze answers questions about investing for a recent college graduate, buying a new car, helping out parents, plus a “Can I Afford It?” quizzy and so much more!

Listen to Podcast Episode:

Podcast Transcript:

Suze: March what, KT?

KT: March 28th, 2024.

Suze: Welcome everybody to the Women and Money podcast as well as

KT: Everyone smart enough to listen.

Suze: What is today's KT?

KT: Ask Suze Anything podcast.

Suze: You are on it today!

KT: Yes, ma'am.

Suze: So this is where all of you have a chance to write in a question, send it to ask Suze S-u-z-e Podcast at gmail.com and if KT chooses it, we will answer it on this podcast and you never know when I will answer you personally, which I have done

KT: A lot lately. She's lately, you're spending a lot of time writing back and forth to much needed um listeners.

Suze: The people, KT, that I tend to really write back, their spouses died. They just got a divorce, their kids are sick. Some trouble happened that really, they're sad.

KT: Trauma.

Suze: They've been traumatized somehow. And so I try to help them as much as I can. All right, girfriend.

KT: Ok. Here's a good one. Christine. Hi, KT and Suze. I love listening to your podcast and I'm learning so much. I feel confident at this point in my own money choices. But I don't know how to advise my daughter. She is 20 years old, graduating in May with a bachelor's degree as she begins her career. Where should she invest her money when her goals are to buy a house and someday start a family? Now, listen to this, Christine said my advice to start a Roth IRA isn't very good advice, Suze. Thank you for any help you can provide. Where did she get that from?

Suze: I don't know. So here Christine is what you need to understand. I hear you asking me about your daughter who is 20 years old graduating in May has lots of time to make mistakes and figure out what to do with her own money.

Suze: You did not write me and ask me about yourself, what you're doing with your money, how you should be investing. And the reason that I say that is if you think advising your daughter to start a Roth IRA isn't very good advice, then I'm concerned about the advice that you're giving yourself. And the reason is that's fabulous advice. Remember with the Roth IRA, any money you put in, you can take out at any time without taxes or penalties, regardless of age or how long it's been in there and given that you can only put in X amount of money every single year, the more you get into a Roth IRA, the better off you are in the long run, just have her keep it in a money market account. Use it as an emergency fund. If she needs it. Once she has more and more money, you can go from there. But it concerns me that if you think that isn't good advice, what advice are you giving yourself?

KT: It was good advice. Christine. All right, Cheryl asks if a person comes into $150,000 where should it be placed in order for it to grow for retirement?

Suze: I love that you picked this one.

KT: Yes, this is an open question.

Suze: Dangerous because KT has learned this, Cheryl and everybody else listening to me right now,

Suze: let's say it wasn't me that you're writing into, let's say you just came in to $150,000 and you walk in to some financial advisor's office that maybe a friend told you about or however you got there, you walk in

Suze: and the person says to you, what can I do for you? And you say I have $150,000. How should I invest it obviously to grow for retirement or whatever the reason may be?

Suze: And they tell you immediately. Oh, great. You have $150,000. You should buy this. You should buy that. You should do an annuity, you should do this, you should do that all things that probably will make that advisor a lot of money in commission.

Suze: You are setting yourself up to really possibly be taken advantage of. That's never a question that you ask

Suze: without also saying. All right, I've just come into money. I have $150,000. You needed to tell me, Cheryl number one. How old are you? Do you have any debt? Are you healthy? Do you own a home? Do you have a mortgage on that home? What is the interest rate on that mortgage?

Suze: Is your job secure? Do you have a will? Do you have a trust? Do you need a new car? Do you have any car loan debt without really telling me at least 20 or 30 things about you? So I could say to you. Oh, you're in your sixties right now and you still have $150,000 mortgage on your home that you're gonna keep forever

Suze: Since you just came into this money, let's possibly pay off the mortgage on that home. Oh, you have $30,000 of credit card debt? Oh, let's pay off the credit card debt. Oh, you need a new car, whatever it may be

Suze: but never just ask anybody what should I do with $150,000. Next question, KT.

KT: Ok, Dear Suze and KT. I am aware of your thoughts about buying and leasing new cars and Suze I you're not a fan with that said, do you have any advice for anyone who would prefer a new car? I have a long commute to work and would feel more comfortable in a newer car. I'm currently driving a 13 year old Subaru Outback. That's a good car. And maintenance costs are high. Many thanks.

Suze: So, here's what I would tell you. If you can afford a new car, you can write a check for it. Or even if you finance it, you can finance it over the max a three year period of time. I don't have a problem with you buying a brand new car, a Subaru, right? Our car as you know, is 12 years old. And eventually we too will have to buy a car and I will, with KT, we will buy a brand new car, right? Because we just will, why not?

KT: Because we can.

Suze: And we can and we will write a check for it. And so that's how it will be. So if you can do that as well, girlfriend, I don't have a problem with that on any level. Also, KT, I understand that when you have a long commute to work, especially if you're a woman, it can be really insecure like you don't know if you buy a new car for yourself, but one that's used. Is it good? Was it an accident? What kind of research did you do on it before you actually bought it? So if the goal of money is to make you feel secure and you can afford it and you feel more secure in a brand new car, then you're using what the goal of money is for.

KT: Hi, Suze. I have a quick question. How do I pick a financial planner? With your help, I think I've done pretty good with my finances and my retirement planning, but I feel like I still need somebody face to face, to look over my numbers and give me confirmation. But how do I pick somebody local that I can trust?

KT: I sort of feel like I might know more from listening to you than anybody I just randomly pick here in my hometown. Do you have any suggestions for what makes a good financial planner? And how can I know I can trust them? Thanks for your help.

Suze: The very first thing you would do is never pick a financial planner randomly.

Suze: The second thing you would do is never go to a dinner or some event that you've been invited to and then use that financial planner. Third. You want a financial planner or advisor who has been in the business at least 10 15 or 20 years, not somebody who has just done this for the past year, 2 3 4 or five. And why is that? You want an advisor who has been in up markets, down markets, sideway markets, recessions, depressions, all of it, high interest rates, low interest rates and they've seen it all. They need to have done this for a long period of time.

Suze:  Next, you want a financial planner that works in my opinion, for a major brokerage firm. So that if you go and you see this financial planner, you then all of a sudden invest with them and something goes wrong. You have a major brokerage firm that you can come back at to possibly get your money back from. If you just have an independent financial advisor, they work for themselves. Maybe they deposit the money for you in a major firm, but they aren't backed by that firm. It's just where your money happens to be deposited.

Suze: If all of a sudden, they're not as honest as you think they are. You have nobody to come back to one day. Maybe you went to their firm, it's a little firm on some street and you go there to talk to them and it's closed. Now, where do you go with a major brokerage firm that has offices all throughout the United States, you know, that can never happen to you. Next. You never make the check that you're depositing with this financial advisor out to the financial advisor. You always make it out to the brokerage firm, period. Never forget I told you that.

Suze: And you find a good financial advisor usually from a recommendation from people who know about their money and are using them when you go to see that financial advisor and this is important for all of you, which is why I'm going on a little bit longer about this. They immediately tell you how they charge immediately. You should be looking at their office. Is their office a mess? Is there paperwork everywhere? Are they not organized? If they're not organized, they're not gonna be organized with your money either. Just so you know that. So you want to see that. It is absolutely a neat office. 

Suze: If you are married, you should have a financial advisor that will only see you if your spouse is with you as well. If they're willing just to see you and not both of you, I won't be using them because what you do with your money also, your spouse has to be in agreement with you and at least needs to be part of the planning system there. And when you go to see them,  they should be asking you a million questions like I did just a little bit ago about everything they need to know about you. That's a good way to start. You know, I think it was in chapter six, I could be wrong or step six in the Nine Steps to Financial Freedom book that I wrote that I give you an entire list of questions that a financial advisor should ask you and how to find a really good financial advisor. You could always go to the library and take that out and finally you might want to, if all you want is somebody to check everything that you have and make sure that it's in order you might want to look for a certified financial planner. The initials are CFP. 

Suze: I personally have been one since 1986 I believe. And it's a course that you have to take. That's over two years, an extensive course with extensive exams that they educate you in taxes, estate planning insurance, everything that you would want a financial advisor to know about. So if you just don't want a stock picker or something like that, look for a certified financial planner, that's probably what you need.

Suze: Remember also advisors either work on commission or they are fee based. I would only use a fee based financial advisor and I would never let that fee be more than one per cent. All right, KT.

KT: Next question is from Jenny. Dear KT and Suze. If I am over 59.5 and I have semi-retired by going to a part time job.

KT: I don't plan to start social security until 70. Is it ok to withdraw 10,000 this year from my traditional IRA and make the $8000 contribution to my Roth IRA.

Suze: So if I get this right, Jenny, right, you want to take $10,000 out of your traditional IRA, you want to withdraw it. So you pay taxes on it, then you want to take $8000 of that $10,000 and contribute it to your Roth IRA.

Suze: You would be far better off to tell you the truth if you have the money to do that, why don't you just convert $10,000 from your traditional IRA to your Roth IRA?

Suze: That way you get all $10,000 in your Roth IRA. That's what I would be doing if I were. You forget this thing about withdrawing it, paying taxes on 10,000 and only putting $8000 in your Roth. That makes no sense, just convert it. And if you don't have the money to pay the taxes on the $10,000 conversion. And that's why you were doing it the other way. I wouldn't be doing it at all. All right.

KT: Next question from Linda and Linda, I have to say I picked this one because her subject "was to renovate or close my eyes." I love that. And I have to tell you you're not alone. My own sister's going through the same big dilemma.

KT: So I hope you can help me with an argument I'm having with my inner self. I am planning to renovate the two bathrooms in our home, which we have lived in for 30 years. The bathrooms have not been touched for more than updating a few faucets while functional. They are hopelessly outdated.

KT: Then she said, Suze, I've been pushing my husband to think about selling and downsizing, but I seriously doubt that will happen unless it's absolutely necessary or maybe never, we can afford the renovation. I'm hoping to spend about 30 to 35,000 total.

KT: Remember the word? Hope.

Suze: I was just gonna say, are you kidding me? If you're hoping this is what happened to Lynn, KT's...sister, she was hoping to spend, I think it was $28,000 or something

KT: All like her quotes came in double

Suze: And she still has 70 some odd 1000. Da da da I, KT and I have built five homes. We have renovated at least two. Right. KT as well. We don't have them anymore. That was during our working years. Right. And never ever have. We had...

KT: Even close to

Suze: budget a project coming in on budget and on time. Oh my God. Are you kidding?

KT: Think about doing my sister just wants to do one little bathroom, but this is two bathrooms. Probably the only two in her house. Think about not coming in on time.

Suze: How do you do two bathrooms for $35,000?

KT: Wait, let me, let me finish. We don't know where she lives. Maybe it's possible.

KT: So she said I'm not sure I would get the added value back if we did sell our home would probably sell for about 250,000 and Susie, it is paid off. So do I give myself nice bathrooms I can enjoy for a few years at least? Or is it a waste of money?

KT: Now, what's your answer to that?

Suze: So she has a home that's worth 285,000. So she's going to spend almost 14% of the value of her home to renovate two bathrooms. But here's what really caught me about this email. Do you know?

Suze: Pushing. She has been pushing her husband to downsize and possibly move and sell. So the only reason my dear Linda that you are staying is your husband is not on board with what you want to do. Number one. So personally, I think the true renovation here is you need to renovate how your husband is thinking about this, that you already said that this house is not terribly senior friendly that you are in your mid sixties girlfriend. I'm telling you the bodies honestly change. I hate that. I'm saying this but they do right, KT?

KT: It's harder for us whether you want them to or not.

Suze: They do and the time to downsize the time to really renovate your financial future is now and that if it's not senior friendly, then anything can happen at any time. You can break your leg, you can need a hip replacement, you can be anything can happen. So now is when you take that money and you sell and what do you do with it? You move to some place that is brand new stairs, no stairs, elevator, whatever it may be somebody else doing the maintenance. I don't know what it is. But where you have two brand new bathrooms, a brand new kitchen

KT: with a bench

Suze: with everything that you need. It's true with the bench.

KT: Wait, let me tell them a story. So, Suze and I both watched our mothers decline and end up in wheelchairs and then end up bedridden until they passed. And we looked at each other when we were building this, you know, dream home on an island. God forbid, I mean, we're on an island very isolated.

KT: We looked at each other and Suze said, KT, one entrance of this home is not going to have any stairs or any little ramps or anything. Just an easy roll in and out. And she used the word roll in and out in the event that we had to succumb to a wheelchair

Suze: and every bathroom shower does not have a curb

KT: And big doors

Suze: So you can roll into the shower and there is a chair in it and a handle and everything that you would want as you get older. Now, here's what's interesting.

Suze: Guess who needed all of that?

Suze: Me, me,

KT: She did.

Suze: Right. And so we had to use that for quite a while and, you know, even to this day, seriously, maybe I'm getting more personal than you want to know when I take a shower. I take it sitting down, I take it with a handheld and that's how I do it right. Because I don't want to fall. I don't want to slip. I'm still not totally stable. I don't mind saying little wobbly, wobbly at times. So it's, I need that.

KT: You know, what else, Linda? When you do move into something brand new or relatively newer than where you are. It's fun. It's fun because you're, you're at a point where you almost feel like it's a honeymoon all over again. You and your husband can, you know, get rid of the old and have some new things around you.

Suze: And also with an older home, I'm just gonna say that water heater, refrigerator, new this, new that. So you can do it if you want to girlfriend. But as far as I go, I don't think so. Convince your husband, let him hear this. Come on hubby, let's do some mine renovation and go with your wife. I think you'll find out that both of us were right. All right, KT.

KT: Ok. So this is from Lisa. I like this one a lot. It says yay for the trust and, and she's so right. Hi, Suze, because of you, we put my mother's home in a trust. Thank you, Suze. As her passing has been smoother than it would have been if we didn't do that. Now, the decision is if we should keep the house as a rental, my brother will get half of the cost base to the home. So I would need to buy him out because he isn't interested in renting it. My question is, should I keep the house or put the inheritance into the stock market or become a landlord?

KT: The house would cost me about 200,000 that I would need to give to my brother. I'm 65. I would like to pay off my house. But the other side of me is thinking a small cash flow from a rental would be good if I did cash it out. I think I should put it into a higher interest rate investment like a CD.

KT: So she goes on and on and she said both homes are in Loveland, Colorado as this area has seen steady growth.

Suze: So the home she lives in and the home that she inherited this one's easy.

KT: I know what I would say. Don't be a landlord.

Suze: Don't be a landlord, Lisa, here's the scoop. You want to increase your cash flow girlfriend. I'll tell you how you increase your cash flow, take the money and pay off your mortgage, whatever your mortgage payment is. Well, absolutely. Once it's paid off, decrease your expenses and therefore increase your cash flow, it also will make it so that you are absolutely secure and you own your home outright, you have it at a 3.99% interest rate while that isn't that high.

Suze: I'm telling you I would not be investing in another property. You never know. I don't know if you've ever been a landlord or not. We both have and I'm telling you things. Think about if you had been a landlord and just a few years ago during the pandemic where your tenants didn't have to pay you. I mean, are you kidding me? No, you're not gonna do this, take the money and pay off your mortgage, the rest of it, whatever else is left. If you wanna put into the markets, if you wanna put into high yield CDs, whatever it may be, go for it. But no, I would not be buying it outright. All right. KT

Suze: You know, it's quizzy time. Now, now our quizzy time this time I'm going to maybe start doing as quizzys. Can I

KT: I love that. I get to choose approved and denied. I get to be the approved and denied?

Suze: Maybe you get a a real buzzer. So anyway,

KT: I love this one.

Suze: This one is from Lee. Everybody you're playing along.

KT: Let's all play together.

Suze: So write this down. Alright. Hi KT and Suze.

Suze: I would like your approval to buy my parents a car. They currently live with my oldest sister and her husband and three small kids. My other sister and her family are moving in soon to, for instability in our home country. All right. So everybody, Lee's parents are living with his older sister and her husband and three small kids and now another sister and her family are moving in as well. So we're going to have one household.

KT: Six adults and how many kids?

Suze: I don't know. At least three, probably...

KT: How many bathrooms?

Suze: I don't know. But a lot. Right. They have been working to save up to be able to move out.

Suze: My dad at a grocery store and my mom at a schoolhouse, it will take them a long time to be able to save enough to move out and to buy their own car. I will provide quick facts to keep it brief. All right, we all have this situation. We have six adults, approximately five kids in one house.

Suze: Mom and dad are working, making very little money at a grocery store and a school and a school teacher. And now here are the facts. All right. I'm 28 years old and single. I have a fully funded emergency fund. I hope that means Lee, that you have 8 to 12 months of expenses. All right.

Suze: Last year I maxed out my Roth IRA and 401k and plan to do so again for 2024. At 28 he has 155,000 in total. In those accounts,  I have a savings account outside of the emergency fund of $32,000. And I just got a $25,000 raise and I'm now making $185,000 and will receive a $10,000 bonus next month, 5000 after taxes.

Suze: I would use my bonus to buy a good used car and finish paying it off monthly. What do you think?

KT: Approved.

Suze: You thought about it that quickly.

KT: At 28 years old, wait, 28 years old using a bonus. A bonus is usually unexpected income. It's called a bonus. You didn't expect you were gonna get it for a good used car. He said he would...

Suze: One second KT think, think, think everybody think. Did you approve or deny them?

Suze: He is gonna receive a $10,000 bonus, but 5000 after taxes, that's what it will probably be. And he's gonna use his money to buy a good use car 5000 and finance it and finish paying it off monthly. He didn't tell us for how long. Can he do that or not? Just approved or denied?

KT: Approved.

Suze: You would approve that?

KT: I would absolutely approve him. Listen to me 28 years old.

Suze: Allright I hear you now, right here's Lee, what I would tell you. You're approved, if you want to do that. You have the money. Would I finance it? No, I would take whatever you have outside your emergency fund as well as your bonus after taxes and just buy it outright. You don't need to finance anything. However, if you are going to do this for them, you also have to be willing to pay for the insurance, the maintenance, the gasoline and where are they going to keep it? Number one, number two,

Suze: I would rather see you given the situation that they're in I would rather see you rent them a studio apartment just for them more important even than a car may be that they have a place to live without five kids and six adults at this point in their life. So I just ask you to think about that if you were going to be paying for monthly expenses for the car and everything.

Suze: Is it possible that you could also afford? And I want to tell you, Lee, at this point in your life, you're still single. You're 28 years of age, you're making 100 and $85,000 a year. You have a $10,000 bonus. You're doing everything.

Suze: I would either do two things maybe buy a place and have them move in with you or rent them a studio apartment that you pay for so that they can live that life alone and go visit everybody and then give them time to do what? Save money. So if you want, you could probably do both. But I'm giving you Lee a double approved, right? Because you, you can, you just can. And the truth of the matter is there's no greater thing that you will ever do with your money never in your entire life than doing these two things for your parents fabulously. So, especially at 28. 0 my God. That's exactly what I would do if I were Lee

Suze: Anyway, until Sunday. There's only one thing that we want you to remember when it comes to your money and what is it Love of my life?

KT: It's people first then, then money...

Suze: Then things. Now you stay safe and stay unstoppable.