11 Smart Financial Moves You Have to Make

11 Smart Financial Moves You Have to MakeAccording to a BankRate.com survey, 61% of Americans couldn’t handle a sudden $500 bill. Too many of us are living paycheck-to-paycheck and not worrying about retirement.

Planning your finances isn’t something you can put off for another day. The sooner you create a strong financial plan, the more money you’ll enjoy in retirement.

1. Understand your financial situation – It’s imperative that you understand your assets and liabilities at all times. Many people are worth less than they think because they’ve never looked at it on paper.

2. Create a budget – A budget is an excellent way to build discipline into your finances. By portioning your income into categories, you prevent yourself from overspending.

3. Set financial goals Figure out the type retirement you want. Use that to figure out type of life you have to live now to make it a reality. A person who wants to travel will have different financial needs than someone who wants to live simply.

4. Come to terms with your significant other – Partners who haven’t aligned their financial goals often make mistakes. One wants to save, the other wants to spend. Make sure you agree on a plan so there’s no deviation.

5. Work down your debt – Debt directly works against any of your investments. If one account is gaining 7%, but you’re paying a debt at 3%, technically your net worth is only increasing by 4%. The sooner you get rid of the debt, the faster your money will grow.

6. Prepare for the end – It’s a tough subject, but end-of-life planning is essential. Don’t leave your loved ones with a financial burden or family in-fighting. Have honest conversation about how to handle things after your passing and draft a will with a lawyer.

7. Hire a CPA – If your financial situation is complex, hire a professional accountant who can reduce your tax liability as much as possible. Take advantage of all deductions, tax-free accounts and loopholes.

8. Diversify your investment portfolio – Every day, people lose everything because they
keep their money in one place. Keep some cash in a savings account that you can access immediately. Then spread your investments into a mix of stocks and bonds in different funds. Never keep all your money invested with your employer; if they go under, you lose your savings and your income.

9. Examine your credit report – Your credit report is a history of your financial transactions and your willingness to meet your obligations. Make sure this report is accurate. Look for errors, accounts that should be removed, and accounts that don’t belong.

10. Change your financial passwords – Online security is a serious matter these days. Thieves can access your accounts if you create poor passwords. Make sure you aren’t using the same password for every account. Change them regularly.

11. Use a trust to cut taxes – A trust allows you to pass assets to a beneficiary without incurring a tax burden. For example, you could use a trust to pass your estate down to your children upon your death, but still permit your wife to use and profit from that estate.

Always remember: a plan is no good unless you follow through. Ensure that your plan is right for your situation and see it to the end.

Robert Albretsen

Accredited Pension Administrator

RAlbretsen@srfm.com

11 Smart Financial Moves You Have to Make

 

Auto Insurance: Why You Need a Specialty Policy for Your Collector Car

Exotic Car Insurance Why Do Exotic Autos Need Specialized InsuranceCollector cars aren’t used like typical vehicles. They’re often driven less and cared for better. They don’t commute to work, but they spend weekends parked at car shows. You need a collector car auto insurance policy that meets those specific needs.

Many collectors in the United States make the mistake of insuring their collector vehicles through big-name insurance companies. This costs them more and fails to provide adequate coverage. Specialty insurance policies provide significant advantages for collector cars.

Your collector car isn’t like the standard models

When you sign up for traditional insurance, you select a few options from basic categories like make, model, and condition. But that doesn’t tell the whole story of a collector car.

Collector vehicles (and exotic cars) are tricky to value. They may have a list of improvements, modifications and custom parts. A specialty insurer has to ask about what’s been modified, how much has been invested, the parts that are used, etc. Keep detailed information and receipts so your insurer can put together the right policy for you.

Specialty coverage is usually less expensive

You don’t drive your collector vehicle every day. It probably sits in the garage for weeks at a time, only taken out for the occasional drive or car show. So you shouldn’t pay typical insurance rates.

Insurance for collector cars is often far cheaper than standard commuter insurance. For example, the price of a policy for a 60s Mustang (which includes physical damage, comprehensive and collision) may only cost a couple hundred dollars.

Furthermore, bulk pricing is available for collectors with large collections including instant coverage when you buy a new vehicle.

Designed for low mileage use

Most specialty collector insurance carriers will not restrict how many miles you can drive your car each year but they aren’t looking to insure classic cars that are driven daily. Average mileage for these cars is between 2000-3000 miles per year – including car shows and events. If you do drive your car daily, high net worth carriers such as Chubb will insure your vehicle but the cost will be reflective of the use.

Collector car insurance uses the Agreed Value

Automobile insurance comes in three varieties:

  • Actual Cash Value: This is the depreciated book value that you would find in a source like Kelly Blue Book. Older cars with more miles and in poorer conditions are worth less. This is how a majority of cars are insured.
  • Stated Value: This is for collectibles. The insurer allows you state the value of the car that’s greater than the depreciated value. But the car still can depreciate, so you might get less than you expect in a claim.
  • Agreed Value: This type of insurance lets you state the vehicle’s value and guarantees you’ll get the full value of your policy in a claim. There’s no depreciation.

Collector cars are hard to price. They don’t have a clear market value. They also often appreciate in value. This means you always want to buy a policy that’s written with an Agreed Value so you’re paid accordingly should something happen. Coverage is also in effect for the full 12 months of the year, so there is no need to call and suspend coverage during the Winter months.

Don’t limit yourself to traditional insurance policies. Speak with us about insuring your collector or exotic car.

Mary McGrath
Personal Lines Manager
mmcgrath@srfm.com

Mary McGrath Personal Lines Account Executive mailto:mmcgrath@srfm.com

“Ban the Box” Law Prohibits Inquiries of Criminal History

“Ban the Box” Law Prohibits Inquiries of Criminal HistoryOn June 1st, Connecticut Governor Malloy signed House Bill 5237, An Act Concerning Fair Chance Employment. This new law is referred to as the “Ban the Box” bill.

Effective January 1st, 2017, Connecticut employers will be prohibited from asking about criminal history (including prior arrests, convictions and charges) on job applications. Connecticut is now the 19th state to adopt this type of legislation.

The law applies to any employer with one or more employees, including the state (and any political subdivisions of the state). However, it does not apply to job applications of independent contractors.

The Equal Employment Opportunity Commission collected data that shows that 92% of employers perform criminal background checks on job candidates, and that a criminal record reduces the likelihood of a job offer (and even just a callback) by more than 50%.

The EEOC asserts that the criminal history box on an application allows employers to instate blanket policies to disregard any applicant with a criminal history. Further, they claim these practices disproportionally affect minority applicants, which violates the 1964 Civil Rights Act.

The new law is designed to enhance the protections of people with criminal or legally-troubled pasts. Throughout the United States, more than 100 million people (about a third of the population) have criminal records.

There are two exceptions to this new law. An employer may ask about an applicant’s criminal history on a form if they are otherwise required to by state or federal law. They may also ask about criminal history if any kind of security, fidelity or money bond is required for the position.

Similar “Ban the Box” laws in other states typically prevent the employer from inquiring about criminal information until a certain point in the hiring process. However, Connecticut’s law only prohibits a criminal history inquiry on the initial application. Employers may ask questions about an applicant’s history at any point forward, including during the interview. The interviewer may also run a background check on an applicant and ask any questions they like, even regarding expunged and erased convictions.

The law establishes a “Fair Chance Task Force” that will study employment opportunities available to individuals with criminal histories and may recommend further statutory restrictions.

The law is a victory for anyone whose past has been marred with any type of convictions or arrests. It allows them to display their credentials to prospective employers before being forced to reveal their criminal past.

Employers should take a few steps to ensure compliance with the “Ban the Box” law: 1) Remove any language regarding criminal histories from job applications and advertisements. 2) Provide training to employees who conduct hiring to teach them when it is acceptable to make inquiries into criminal histories of applicants. 3) Audit the hiring process to ensure the compliance and timing of inquiries into criminal histories.

Shannon Hudspeth
Human Resource Director
shudspeth@srfm.com

“Ban the Box” Law Prohibits Inquiries of Criminal History

Fundamentals of Retirement Planning

Fundamentals of Retirement PlanningIt would seem that high net worth individuals would need to worry and plan less for retirement than those with fewer assets.  However, properly planning for retirement is not specific to an income group and individuals at all levels face the same challenge, which is having enough income to meet their needs and desires and maintain their lifestyle for an undetermined number of years in the future. 

Only twenty-two percent of Americans are very confident about having enough money for a comfortable retirement and those with higher assets can jeopardize their legacies and futures if they don’t have realistic and disciplined retirement plans that focus on their individual objectives while factoring in risks and fluctuating market conditions.  

As you plan for retirement, here are four key things to keep in mind:

  • What Are Your Goals?  Always start with this question when thinking about your retirement planning and try to identify your primary goal.  Do you want to travel the world or just live the rest of your life comfortably?  Do you want to leave a legacy for your grandchildren?  Would you like to transfer wealth to a charity?  Do you want to stay in your current home or downsize? Your financial plan needs to match your primary goal and timeline.
  • Chose Advisors Wisely – Ensure you’re working with a trustworthy and reputable advisor that discloses all fees and obligations up front and in writing.  Also, make sure that they specialize in your particular area of need.  For example, if you are a high net worth individual, work with an advisor who is experienced and well-versed in retirement planning for the wealthy and can help you identify the right asset-allocation plan to ensure your retirement goals and lifestyle are met.
  • Beware of Leverage – It doesn’t matter if you made millions of dollars and squirreled it away for retirement if it wasn’t saved and invested strategically.  For example, did you maximize every tax opportunity?  Remember – it’s not what you made, it’s what you kept.
  • The Portfolio Mix – While you may be wealthy when it comes to shares in your company’s stock, make sure you’re not overexposed in any particular area.  Some liken it to betting on every horse – work with your advisor to put money in different buckets (i.e. – traditional 401K plans, Roth IRAs, etc.) to make sure your portfolio is diversified and your assets are protected over the long term.

Make sure your advisor helps you to think through any retirement surprises you may not be thinking of, such as medical costs, social security, taxes and the risk posed by inflation.  With the right plan, you can take the worry out of retirement and focus instead on enjoying your time doing whatever you love.  At Sinclair Risk and Financial Management, we can sit down and discuss how your employer sponsored retirement plan can best meet the retirement goals of both the owners and their employees. Give us a call at (203)265-0966 today.

Robert Albretsen

RAlbretsen@srfm.com

Accredited Pension Administrator

Fundamentals of Retirement Planning

Planning for Construction Risk

Planning for Construction RiskThe construction industry is flourishing, with outlooks like the Wells Fargo 2016 Construction Industry Forecast’s Optimism Quotient predicting that local construction, profits, equipment purchases and rentals and overall future growth will be strong this year.  Add to this that warmer weather means the busy construction season is here and it’s a great time to be in the industry, whether you’re an independent contractor or you own a large building construction firm.

However, as you take on more work, you also need to make sure that your risk exposure and insurance coverage is keeping up.  For example, you may hire more workers or rent more equipment to keep pace with your workload, which opens you up to more potential issues, like safety and liability. What if a new worker is injured using construction equipment, the materials you purchased for a huge job are stolen or a homeowner sues you because they feel there was design error in a job you performed for them?

Make sure you are protected against potential pitfalls with these three tips:

1)     Appropriately Assign Risk - Quite simply, think through anything that could go wrong in a project, plan for it and assign the risk to the person who would be most capable of handling and controlling it.  For example, a contractor can best control the safety of the workers on a job site while the homeowner would probably be the best choice for any project design risks since they’re most likely working with the architect and designers.  By spelling out risk responsibility in the contract before the project even begins, everyone is clear in advance about who is responsible for what risk.

2)     Make Sure You’re Covered - Once you know what your role and area of responsibility is, work with a trusted risk and financial management firm that has expertise in the construction industry and will take the time to sit down, understand your unique challenges and customize a program for you.  From Errors and Omissions coverage to Workers’ Compensation to OSHA concerns, ensure you’re aware of and protected from any of the risks associated with your projects.

3)     C.Y.A. – Cover your assets by making sure you closely examine all contracts for consistency and that you also have an experienced and knowledgeable attorney review all contracts.  Also – don’t rely on a cursory review of a certificate of insurance to prove that the parties you’re working with on a project are compliant with insurance requirements.  Beyond requiring a certificate of insurance proving proper insurance coverage in the contract, consider requiring that the full policies be included to provide evidence of adequate coverage.

With the right planning, risk management and insurance coverage, you can enjoy the benefits of the construction boom without the headaches.  At Sinclair Risk & Financial Management, we take the time to understand your company and individual situation and work with you to help you minimize your risks.  Give us a call today!

Jonathan Belek
Risk Management Consultant
jbelek@srfm.com