GAINESVILLE, Fla., March 12, 2019 (GLOBE NEWSWIRE) — Navigating your investments during tax season can be tricky. Many people feel pressured to make financial decisions about 401(k) contributions and other funds based on potential tax breaks, without understanding the long-term ramifications of their decisions, or knowing the right questions to ask that should be directed to a financial adviser, and not necessarily your accountant. James Di Virgilio, CIMA®, CFP® and co-founder of Chacon Diaz & Di Virgilio, says choosing a financial adviser can be tricky if you are not familiar with the right qualifications.
“Most people are under the impression that financial advisers must do what’s best for the client, but this is not the case, as the pool of fiduciary financial advisers is actually quite small, comprising less than 15 percent of all advisers,” says Di Virgilio. He is one of the country’s leading fiduciary investors and financial planners who has earned both the CIMA® and the CFP®, two of the most respected designations in his field that only 1 percent of advisers have in combination. “You have to really do your homework before selecting a financial adviser; you must be skeptical of the ones working at banking institutions as they do not have to put your best interests first, which can create conflicts of interest.”
As a fiduciary, Di Virgilio says he holds a position of trust and has a legal obligation to do what’s best for his clients at all times. He stresses that using certain financial advisers from banking institutions can put the investor at a disadvantage since they can be motivated to sell and persuade individuals into certain investments that further their own bottom line, and not necessarily the investor’s. Other common missteps include interviewing only one financial adviser before making a decision, paying commissions of any kind, paying mutual fund investment sales charge fees of any kind, paying annual financial planning fees, buying variable annuities and whole or permanent life insurance.
“Almost anyone can become a financial adviser since a college education is not required,” says Di Virgilio who is also an adjunct professor at Warrington College of Business at the University of Florida. “In fact, someone can call themselves a financial adviser without having any specialized education, training or expertise.”
Di Virgilio says to choose a financial adviser who can prove he or she is a fulltime fiduciary and financial expert based on relevant education, experience and certifications. Examine the acronyms in their title and look for these key credentials: Fiduciary, CFP®, and CFA® or CIMA®. Many investors believe being a fiduciary is the most important financial adviser characteristic.
For tax season, Di Virgilio offers two other points of financial advice to consider when selecting investments. Generally speaking, he says, those who are single and making more than $40,000 annual gross income (AGI), or married making $80,000 AGI, should choose to invest in the Traditional 401(k), as it will produce more wealth in the long run. Otherwise choose a Roth 401(k). The more money you make, the more dramatic the difference you will see between the Traditional and Roth 401(k). If you are retired, spend from the correct retirement accounts. How you are taxed on your retirement income will make a significant difference during your lifetime. Additionally, Di Virgilio advises against viewing the home you live in as an investment strategy. In general terms, renting and investing actually saves more money than owning a home. If you must buy a home, remember that the less house you buy, the more money you have to invest in assets that produce a better long-term return. If you are retired, downsizing is an excellent way to increase your liquid portfolio value, thus increasing the amount you can safely withdraw each year. For more information and tips, visit www.cddwealth.com.
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