Retirement Planning
This type of IRA allows qualified withdrawals to be tax-free in retirement.
What is a Roth IRA
The process of spreading investments across asset classes to reduce risk
What is diversification?
This document specifies who receives assets from retirement accounts upon death
What is a beneficiary designation
This is the first stage of an effective financial planning engagement
What is gathering client information?
A fiduciary is required to act in whose best interest?
Who is the client?
This factor typically has the biggest impact on how aggressively a client can invest for retirement.
What is time horizon
This type of risk cannot be eliminated through diversification.
What is market risk (systematic risk)?
This type of account generally provides a tax deduction today and taxable withdrawals in retirement.
What is a Traditional IRA?
When a client fears losses more than they value gains, they are exhibiting this behavioral bias.
What is loss aversion?
his fund should generally be established before pursuing aggressive investing strategies.
What is an emergency fund?
A retiree taking withdrawals from investments is particularly exposed to this risk
What is sequence-of-returns risk
An investor owns 50% of their portfolio in a single stock. This is an example of this type of risk
What is concentration risk?
Clients with highly appreciated investments often seek to minimize this type of tax when selling.
What is capital gains tax
A client wants to move entirely to cash after a market decline because they think the downturn will continue. This bias may be influencing them.
What is recency bias?
This insurance is designed to replace income if a client becomes unable to work.
What is disability insurance?
Using the Rule of 72, money earning 9% annually would approximately double in this many years.
What is 8 years?
This investment practice involves selling assets that have grown above target allocation and buying assets that have fallen below target allocation.
What is rebalancing
RMD stands for this phrase.
What is Required Minimum Distribution?
This type of question often begins with "What," "Why," or "How" and encourages clients to share more information.
What is an open-ended question?
A young family with significant debt and income replacement needs is most likely to need this type of life insurance.
What is term life insurance?
A client's retirement portfolio falls 20% during their first year of retirement. This planning challenge may permanently affect portfolio longevity.
What is sequence risk (or sequence-of-returns risk)?
A portfolio consisting of large-cap stocks, international stocks, bonds, and REITs primarily demonstrates this investment principle.
What is diversification?
Even if a will says otherwise, this document generally controls who inherits a 401(k) account.
What is the beneficiary designation?
During discovery, identifying a client's goals, concerns, and motivations is often called uncovering this.
What are client priorities (or goals)?
A client has $25,000 in credit card debt at 22% interest and $50,000 in cash. Before investing heavily, an advisor would most likely recommend addressing this financial issue first.
What is paying down high-interest debt?