By John A. LeMieux, CFP, CIMA, CDFA
AntonLeMieux Financial Group
As an amputee or the family member of an amputee, you may have unique needs when it comes to finances. So when you’re choosing a financial advisor, it’s essential to find a qualified professional whose expertise and business style match your needs. You want to establish a relationship with someone who makes you feel comfortable, but always remember that you are hiring a financial advisor to work for you. So don’t be shy about asking questions that will help you determine if they’re the right fit for you and your family.
When you’re interviewing potential candidates, here are some questions you can ask to help you find an advisor who meets your needs.
Are you a Certified Financial Planner?
Is the financial advisor just an investment advisor, or does he or she also offer financial planning advice? These may sound like the same thing, but they’re not. Find out if the advisor holds the Certified Financial Planner (CFP) professional designation, or another credential that demonstrates a commitment to the profession. There are many designations, including Chartered Financial Analyst and Personal Financial Specialist, but the CFP is considered the gold standard for financial planners.
Depending on your family’s particular needs, you may want to look for a CFP advisor who has proven experience in a particular area. For amputees and their families, it may be helpful to find a person who has some expertise with health insurance, although health insurance plans vary from one issuer to another. (Other reliable sources of information for insurance coverage may include your employer’s human resources officer or the billing specialist at your prosthetist’s office.) Some CFPs are especially proficient in taxes; others are well versed in real estate, retirement, estate planning, and other aspects of finance. Find a CFP whose strengths align with your particular needs.
What services do you offer?
Financial planners structure their practices in various ways. Some focus primarily on investing, whereas others offer a full range of advice to help you with your overall financial picture. Beyond evaluating your immediate financial needs, an advisor who provides a broader range of services may be able to assist you with saving for college, starting up (or sustaining) a business, and planning for retirement. A more diversified practice can also help you take advantage of programs that hold particular interest for people with limb difference, such as ABLE accounts and health savings accounts. And some advisors offer financial planning advice for a flat fee or hourly rate, independent of investment management services.
Are you independent of financial product sponsors?
Product sponsors include stock brokerage firms (discount and full service), insurance companies, and banks. If the financial advisor is employed by or affiliated with a specific company, they may not be free to recommend a wide range of products and services from a variety of providers.
Do you operate as a fiduciary?
An advisor who operates as a fiduciary makes every decision and suggestion with the client’s best interests in mind. Advisors who work in a non-fiduciary capacity may utilize the “suitability” standard, under which an investment or planning recommendation must be suitable for the client but does not need to be the best available.
Who else will be working with me?
Many financial planners have others in the office to assist them, so you may want to ask to meet anyone else who will be assigned to your family’s portfolio. It’s also worth finding out whether the advisor has a network of outside professionals (such as attorneys, insurance agents, and tax specialists) that he or she can refer you to if needed to assist you with planning specific to disability issues.
How will I pay for your services?
Financial planners often charge asset-based fees, in which the compensation depends on the value of the holdings they are managing. Others are paid by commission, an hourly rate, a combination of both, or by salary. Be sure to have the advisor explain how he or she is compensated, and how this payment principle affects the advisor’s incentives. You can also ask whether the advisor has a fee schedule in place that lists all of the services provided and the cost for each.
Can I have it in writing?
You should always have the advisor provide you with a written agreement that details the services they will be providing. As part of the agreement, the advisor should clearly indicate how he or she will be paid. Keep this document in your files for future reference.
Finding the right financial advisor for you and your family is critical. The trust that comes from a good relationship with a qualified financial advisor may allow for peace of mind. Knowing you have someone in your corner for financial issues is an important step to enjoying all that life has to offer. As amputees, we know that life is precious and that a high quality of life requires planning, forethought, strong support, and collaboration.
The author, an above-knee amputee, is co-founder and principal of Anton LeMieux Financial Group in Falmouth, Maine. He is a Certified Financial Planner (CFP), Certified Investment Management Analyst (CIMA), and Certified Divorce Financial Analyst (CDFA). This material has been provided for general informational purposes only and does not constitute either tax or legal advice.
Read more about John LeMieux’s limb-loss journey in Life Is Greater Than Limb.
ABLE TO SAVE
For many amputees, it’s absolutely essential to partner with a financial advisor who knows the ins and outs of ABLE accounts. Established by Congress in 2014 via the Achieving a Better Life Experience Act, ABLE accounts use the tax code to help people with disabilities work toward long-range financial security. They function much as 529 college savings funds do. Deposits are completely tax-deductible, and withdrawals are tax-free as well as long as you spend the money for a qualified purpose such as education, transportation, assistive technology, home modifications, or healthcare.
Perhaps most important, money deposited in ABLE accounts doesn’t impact your eligibility for means-tested benefit programs that provide support for health care, housing, food, and other basic needs.
The only catch is that ABLE accounts aren’t available to every person with a disability. Under current law, you must have acquired your disability at age 26 or younger to be eligible. However, a pending bill called the ABLE Age Adjustment Act would raise the age of onset to 46, enlarging the pool of potential ABLE savers by millions of people.
Each state administers its own ABLE savings program, and more than half of them accept out-of-state account holders. So if your own state’s ABLE program doesn’t meet all of your needs, you can shop in other states to see if there’s a better fit available.
How can you find the ABLE account that works best for you? The ABLE National Resource Center has a “select-a-state” tool that lets you compare varying state programs on a wide range of factors. Check your own state’s program first, then use the tool to search for other ABLE programs whose features may be more compatible with your preferences.
Here are some important ABLE program features to consider:
All states offer four basic investment options with varying degrees of risk and growth potential. However, some states give you a broader range of investment profiles to choose from. For example, the ABLE programs in Massachusetts (which does accept out-of-state applicants) and Florida (which doesn’t) offer eight portfolio options.
STATE INCOME TAX DEDUCTIONS
In addition to deducting ABLE account contributions from your federal income taxes, you can claim a deduction on your state income taxes in some states. In most cases this provision is only available to in-state residents. Some states permit this deduction not only for the account owner, but also for friends and relatives who contribute to your account. There may be a cap on the amount of the deduction you can take. Depending on where you live, state income-tax deductions can have a big impact on the value of your ABLE account, so be sure to consider this question before you open an account.
There’s great variability here, both in the types of fees that are imposed and the amount of each charge. You may have to pay a monthly, quarterly, or annual maintenance fee (typically in the range of $40 to $75 per year). Some states allow you to roll over your savings to another ABLE account free of charge; others require you to pay for the privilege.
CHECKS AND DEBIT CARDS
Nearly every ABLE program includes debit-card and check-writing privileges, making it easy and convenient to access the funds whenever you need to. The terms and conditions vary from state to state, however. Some programs require an up-front charge to activate this feature, others have a small monthly maintenance fee, and still others include this benefit for free. In certain states you’ll incur a per-transaction fee each time you use the debit card or write a check; these tend to be small, but they can add up if you have a lot of recurring expenses.
CONTRIBUTION MINIMUM AND MAXIMUM
Most states require you to make a minimum annual contribution to your ABLE account, usually in the neighborhood of $25. By federal statute, the maximum annual contribution to an ABLE account is $15,000. However, the ABLE to Work provision enables working adults with disabilities to contribute another $12,000 or so, raising the ceiling to about $27,000 a year for those who qualify.