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As a financial professional, I strive to maintain an excellent relationship with all of my clients. I have no problem in discussing most issues with them and accepting what they tell me at face value. However, and it is a big however, there are certain things which I never accept at face value.
The only two things which I accept verbally from a client is their salary and how much vacation that they are entitled too. When it comes to other benefits, particularly disability insurance and the matching of employee contributions to a retirement plan, I always ask that I receive a copy of the benefits booklet.
In the case of disability insurance, I have found that too often people hear that they are covered for 60 percent of compensation but fail to realize that bonuses may not count or that the maximum amount of the benefit is capped at a certain number.
Most people do understand that a company will match 50 cents on the dollar up to a certain amount but are uncertain on the timing. If you were to contribute the maximum amount to your 401(k) plan in January, you might that the company based their match only on the January salary and not on the annual salary. Since you would no longer be making contributions that year, you may lose out on the remaining match.
Show me the deed! I have had cases where people assured me that the property is jointly held, when in fact it has not been. This makes a difference in estate planning because property held Joint, with Rights of Survivorship will by-pass probate court and property that is titled as Tenants In Common will not. If we are doing some planning, let us all begin with the proper facts.
Insurance policies, annuities, IRAs and retirement plans all have provisions where you name the person who will receive the money when you die. Your will does not cover these instruments. I have had instances where people have told me that so and so was the beneficiary, only to learn upon examining the document that someone else was. Now, I ask to see in writing, who the beneficiary is.
Wills, Health Care Proxies and Power of Attorney Documents
I have learned that some people are so ashamed at not having these basic documents that they will actually tell me "yes, we have them", rather than say no. For planning purposes, I simply require that these documents be presented. If clients do not have them, or if they are not current, then I urge the client to update them.
Not one client has felt offended that I require documentation before I accept any of the above at face value. It is all part of professional due diligence!
- disability insurance