Nine Things I Learned from our Financial Adviser

In line with our 2012 Wealth Management New Year’s resolution, we met with a financial planner last January. Yes, I know this post is almost half a year delayed. I wanted to make sure that I have closed all our assignments before I share my learnings.

So who is Efren Cruz? Efren is the national best selling author of “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement and Estate Planning”. He is a contributor for the Philippine Daily Inquirer, and MoneySense Magazine. Experience-wise, he is backed with more than 25 years, working for insurance and mutual fund companies as well as for banks. Now, he is the chairman & CEO of the Personal Finance Advisers Philippines Corp.

So why did we meet with a financial adviser? I want to think that Franco and I spend our money wisely but in terms of knowing of how to strategically manage and grow our hard earned cash, we needed help. A lot of people, mostly insurance agents, call themselves financial advisers. However, since they are representing certain products, I wanted to delay meeting them until we have a game plan.

So what happens when you consult an independent financial planner? The first meeting is mostly information gathering for Efren. He wanted to know how are we at managing our finances. It is good that I already prepared a statement of assets and liabilities and a summary of our expenses. These were not required but were very helpful in getting the ball rolling.  Efren wanted to know what our financial goals are. Honestly, we knew what were our goals but how much and when, we only learned during our meeting. Because I prepared a two page list of questions, the first meeting was actually spent doing Q&As. On the second meeting, Efren presented to us a report. The report has 4 key areas: cash management, debt management, risk management and wealth management. If you would like to know the cost of the consultation, I can send the information to you thru a personal message. Please leave a comment or send a message thru the contact page if you would like to know. Let me tell you, it is not as expensive as you think. It is a small amount to pay for information that will help you for a lifetime.

What we learned:
1) Since we are full time employees, it would be wise to let the expert fund managers grow our money. Efren stressed that we do not need the additional and unnecessary stress. Prior that meeting, I was somewhat curious about stocks. Efren made me realize how stressful the stock market is. By getting pooled funds like mutual funds, UITF’s and VUL’s, I am letting the fund managers, the experts,  handle the buying, selling, monitoring, and stress of the stock market for me.

2) It is best to get insurance with pure protection and investments separately. Variable Unit Linked insurance policies offer both insurance and investments but for a higher administrative cost.

3) Not everyone needs and is fit to go into business. Reading Colayco’s Pera Mo, Palaguin Mo, left me feeling pressured to have a business. Work is stressful enough. I don’t have time to comment on my favorite blogs. I wish I have more time with my family. What in the world will I do if my one and only lotto franchise employee goes on AWOL?

4) To know if an investment vehicle is right for you, you have to determine your financial goals first.

5) Emergency fund should be equal to at least 3 months of one’s monthly expenses for employees. This was a major wake up call for us. All this time, we thought the EF should be at least 6 months the monthly salary. Three months is good. More months would be better but one should consider that by over protecting, we are limiting our potential for growth.

6) It is possible to retire at 50 but you have to start planning ASAP. I thought early retirement is an option only for people who are already rich in the first place.

7) There is value in staying with one company until retirement age.It was only during the meeting with Efren that I realized that retirement pay can be quite significant provided that our salaries continue to increase. Say one’s salary is 30K and he gets 5% increase every year. If he stays with his company for 30 years, he could get as much as Php3.9 million. Not bad at all, right?

8) It is okay to die broke. Here, Efren is quoting Stephen Pollan who said in his book, “Die Broke” that it is okay to zero out your money upon death. After we retire, we should enjoy our savings and not worry about assets that we will leave behind for our children. Dying broke is living rich. We learned how to stand on our feet without being too dependent on our parents. My hope is for our children to learn the same.

9) There is such a thing as estate tax! When we die, whatever we leave behind, are not given to our dependents in full. The government deducts their “share” for being a partner in growing our estate.  Grrrr!!!!!! There is a group in BIR that focuses on reviewing obituaries.

You may contact Efren Cruz via email at efren@personalfinance.ph or thru his mobile number 0917-505-0709. It is been months since our last official meeting but up until last month, he is helping me review proposals at no extra charge. I highly recommend him!

PS. I am sucker for autographs. When Franco and I were still planning our wedding, I told my friends that I want to collect autographs from celebrities. We only got one though. Thanks, Kaan, for getting Inday Garutay to congratulate us!

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