On more basic financial matters, average answers showed more promise.  Eighty-eight percent of the respondents knew the definition of diversification, 79 percent knew asset allocation, and 57 percent knew dollar-cost averageing.  And nearly 80 percent of survey takers strongly agreed with the importance of understanding their own financial situation – ranking 7 or higher on a scale of 1 to 10.

In conjunction with the study, Northwestern created a brief 14 question online quiz that you can take at http://www.financialmattersquiz.com and test your own knowledge.  It’s a little heavy on insurance related topics (which makes sense because Northwestern Mutual is an insurance company), but it’s pretty good.

“We know from this study that most Americans want to be financially self-sufficient, and are focused on preserving their lifestyles and protecting against uncertainty,” explains Dave Simbro, Northwesters Mutual vice president – life products.  “This desire makes improving our nation’s financial literacy especially relevant, and we believe the first step is an honest assessment of one’s personal finance proficiency.”

In another study done by Metlife, 53% of more-affluent Americans (investable assets of at least $200,000) believe the help of a professional financial advisor is required when planning for retirement.

It’s interesting that 69% of the American population can’t pass a financial products & concepts quiz, yet only about half of the population feels they need the help of a financial professional. 

If knowledge of financial products and concepts is not your area of expertise (and that’s OK if it’s not), call us today for a no-cost, no-obligation appointment.  We’ll review your current financial situation with you and help you see if you might benefit from the help of a professional advisor.

While going to get a burger and shake may not seem like a big deal, the stakes get much higher as children grow older and parents start making financial gifts, or giving financial assistance to them.

In personal financial planning, reducing a person’s estate is often a concern.  Many people who are in a position to do so, will make financial gifts to their children for estate planning purposes.  This is usually done when someone is trying to reduce their taxable estate, or just to let their kids enjoy some of their inheritance early.  Additionally, parents will often give financial assistance to children when there is a need.  While there is nothing wrong with giving money to your children, you need to be very careful in how you do this so that nobody screams, “That’s not fair!”

Equal gifts, but not equal needs

Every family that has adult children knows what it’s like to have at least one child who has a greater financial need than the others.  Parents are often naturally inclined to want to help this child out a little more than the others.  This is where it can get a little sticky.  If a parent gives money to one child and not to the others, they take a chance of driving a wedge into the family.  While you may think you are doing that child a favor, (and you are) your other children may not feel the same way about it when they find out.  I have seen several situations like this where siblings who were better off financially felt left out, cheated, and maybe even less loved, because their parents didn’t give gifts equally.  I’ve seen this drive a wedge between siblings, and between parents and children.

Leaving more to one child

I’ve also seen situations where parents left more of their estate to one child when they passed away.  Again, this was a case where the parent felt that this particular child had a greater financial need and would benefit more from the larger inheritance.  While this may have been true, the child who inherited less was left to feel left out and somehow less loved.  Even though this is done with good intentions, it can really tear a family apart.  The more well-off child resented the sibling that was left with a bigger inheritance, and at this point the two have not spoken to each other in about 10 years.

Is there a better way?

Only you can decide the best way to handle these situations.  But I have seen some different things that people have done to try and make .  In one situation, a child was having some financial difficulties and the parent wanted to help them out.  They made an agreement that any money the parent gave them now would be deducted from their final inheritance when the parent passed away.  I thought that this was a fair way to help the child out now, but still be fair to the other children in the family.  I have seen other families require the child to pay back the money over time, but with little or no interest.  This method helps the child out now and allows them pay the money back when they get back on their feet.

There are a lot of ways to deal with these situations that allow you to help out a child in need.  While it’s easy to think, “My other kids don’t need this money”, you may not be doing them a favor in the long run.  You may in fact be setting them up for family contention down the road if you don’t give equally to all of your children.  Even if they don’t need the money as badly, if another child gets more, there could easily be feelings of resentment and bitterness towards the other child, and towards you.  No one wants to be remembered that way.

This year’s National Consumer Survey on Personal Finance by the CFP Board of Standards suggests the nation’s advisors have a big void to fill when it comes to the way the public is preparing for retirement.

The survey of 1,742 consumers found that 51% of respondents listed building a retirement fund as one of their most important financial concerns. Forty percent cited managing retirement income.

Yet 64% of respondents said they did not have a financial plan, and only 17% said they have a financial plan that they update regularly.

“These results tell us that Americans of every type of background and income level think carefully about their assets and how to improve their financial state,” said Eleanor Blayney, consumer advocate for the CFP Board. “We also see that many lack an understanding that everyone can benefit from having a financial plan, regardless of one’s wealth or social status.”

Among the reasons cited for not having a financial plan were the expense of hiring an advisor, the feeling by some that their financial situation wasn’t complicated enough to merit professional involvement and confusion over the qualifications of financial intermediaries. Forty percent said they were not aware of any credentials for financial professionals.