American Capital Planning Blog

ACP Blog, created by Bonnie Ashby Sewell, CFP®, CDFA™, AIF®

The Price of Free Advice

Boy Leaning photo 300x200Joanna made plans to celebrate.  At 10:06 am on February 22nd, 2007, her divorce was finally final!  A bit too early to enjoy an adult beverage, she headed straight for the outlets.  Retail therapy was in store and she looked forward to some healing!  Have any friends who’ve done this?  The people who love Joanna want her to be happy, healthy and healed.  But they also want her to be able to pay the bills she racked up in her celebration.  Joanna’s first stop should have been to her trusted advisor.  Instead, fast forward 7 years when Joanna comes into my office.  She is now in her mid-50’s, has had a few health issues and is still earning about $65,000, not that much more than in 2007.  What has changed, she explains is there isn’t much left in her accounts and she thinks she might have to sell her home so she can send her last son to an expensive college like the first three sons enjoyed.  She pushes all her paperwork across the table.

I can see she hired an ‘advisor’ from a well-known big firm and she’s taken the time to list her expenses on a sheet I sent over before our meeting.  While looking over tax returns, her spending, and her account statements, it’s clear she’s underwater every month by $5,000.  I ask her what plan she’s been working off of until now and she says she was expecting her investments to do better and her money to last longer.  She says at least her ‘advisor’ never charged her for his time.  We lock eyes as she bears a sheepish grin acknowledging the ‘oops!’ hanging in the air.  Back in 2007, Joanna walked away from her 23 year marriage with $960,000 in cash, a paid for home she thinks is worth $975k now, and a $5k/monthly support check that ended last month.

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