Life-changing Financial Events that Call for Registered Investment Advisors
Some financial events are so significant they just call for Registered Investment Advisors. Because these events frequently cause big changes in your financial situation, resources and goals, you should meet with a Registered Investment Advisor. Doing so allows you to work through the important financial implications, and help you avoid common mistakes.
Have any of these life-changing financial events happened to you?
An IPO Event or Sudden Wealth through Company Stock or Options
Have you founded a company that has gone public (or is about to)? If so, you need to put a plan in place for what you will do with the new wealth. There is, or will be, a maze of new distractions and temptations to navigate. Additionally, sudden wealth can transform your life. Having a trusted investment advisor on your side is essential.
Your Earnings Skyrocket
Of course, big success in a job or with your own business is cause for celebration. However, it also means it is time to do some careful planning. Have you identified how much of your new earnings should be saved and invested for the future?
Selling Your Business
After selling your business, what lifestyle level will you be looking to maintain? How much income do you need or want after selling your business? Will you want a fixed income or a variable amount that you can access on-demand? A fee-based, Registered Investment Advisor will seek input from your CPA, and then model several approaches to building an investment portfolio to accommodate your specific wants and needs.
You Received a Large Inheritance
Significant wealth will be transferred to children in the coming years. If you receive a large inheritance, especially all at once, there are tax payments and other concerns to think about. Because an RIA is ethically and legally obligated to put your interests first, you’ll want to get advice from a fee-based, Registered Investment Advisor.
You Won the Lottery
Lottery winners don’t have a good record of financial stability in the years after winning the lottery. Too many end up in the same (or worse) situation than before they won the lottery. In fact, about 70% of lottery winners will lose their cash within a few years, according to the National Endowment for Financial Education. The moment you come into significant cash, hands come out from everywhere, asking for some of it. If you have been fortunate to win the lottery, you should meet with a fee-based, Registered Investment Advisor, to create a plan for protecting and growing this sudden windfall.
A Spouse Has Died
Knowing what to do with life insurance payouts and becoming the sole owner of various assets, including investment portfolios can be daunting. These are situations where fiduciary relationships are critical. Knowing that the person who is giving you financial advice is speaking to your best interests, and yours alone, can bring tremendous comfort during difficult times. Often, the best advice is to hit the pause button. As you go through the loss of a spouse or close family member, you’re probably not thinking clearly. You need time to figure out how that money should be used.
Dividing investment accounts and other assets can be unpleasant business. Do you keep the house, or sell it? Do you split up retirement accounts? How do you split up investment accounts? How do you invest going forward with (likely) 50% of the capital you had prior to the divorce? You need to advice from a Registered Investment Advisor.
You are Nearing Retirement
If you haven’t already, you need to think about how you want your post-career life to be. Your investment portfolio may need some additional diversification to protect the nest egg you have built. This too, calls for Registered Investment Advisors.
What Should an Investment Advisor Do For You?
If any of these life-changing events have already happened to you, or you think they could soon, visit with a Registered Investment Advisor. To learn more about what an Investment Advisor should do for you, click here to download our free eBook “3 Things an Investment Advisor Should Do for You”.
Anatoliy Cherevach is a Chartered Financial Analyst and a Portfolio Manager with Kunath Karren Rinne & Atkin, LLC, with over 19 years of portfolio management and security analysis experience. Prior to joining KKRA, he was a Portfolio Manager and Research Analyst with Cohen & Steers. Anatoliy holds an MBA in finance from Pacific Lutheran University. He is an active member of the CFA Institute and CFA Society Seattle.