The high price of ignoring financial advice | Business

People hire financial advisers with the very obvious goal of getting advice on how to handle their money. So why do investors often cut advisers out of consequential decisions?

Some advisers say their threshold for wanting to know about a client’s out-of-budget expenditure is around $2,000. But sometimes clients skip picking up the phone and instead make financial decisions on their own, even when it is a big one.

It can happen even with the best clients, who otherwise seem to be listening to advice.

That is what Malik Lee, a certified financial planner in Kennesaw, Ga., found when one of his clients cashed out a retirement account after he stopped working, thinking it was no big deal.

But a move like that can result in a huge tax bill, and there is often nothing a financial adviser can do after the fact.

Another retirement decision that can be tempting to make on your own is when to take Social Security. If you are already employing a financial adviser, however, this is one area of expertise you should tap in to. The adviser has specialized training and also will likely have access to professional programs that will run the numbers for you.

The age at which you claim your benefit can have huge financial impact on your retirement, because the later you take it, the larger your benefit, said Edward Vargo, a financial adviser based in Ohio.

Waiting until 70 can add as much as $6,000 a year in benefits, Vargo said.

Setting priorities

Sometimes clients do not talk to their financial advisers about important decisions because they know they are wrong and yet they intend to go ahead anyway.

Therese Nicklas, a financial adviser in the Boston area, has had some tense meetings with clients who were not only keeping things from her — but also from each other.

What can start as a move with good intentions can…

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