Starting in 2010, investors who own traditional IRAs will be able to do a Roth IRA conversion regardless of their income level or tax filing status. Additionally, investors who convert in 2010 have the option to delay their tax payment for a year and spread their payment over the 2011 and 2012 tax years. Please consult with your tax professional to determine if a conversion makes sense for you.

In 2010, there is a home buyers tax credit available. One is the $8,000 “first time” home buyer credit and the other is the $6,500 “move-up/repeat” home buyer credit. April 30, 2010 is deadline for these tax credits. Please consult with your tax professional for details and to determine if you would qualify.

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1. Get Your Emergency Savings Account Ramped Up. Ensure you have 6 months of living expenses saved up in a liquid savings instrument (e.g. checking account, CD, or interest-bearing savings account).

2. Focus on Debt Reduction. Reduce your highest interest debt as much as possible. Start with your highest interest-bearing liability, usually that’s your credit cards.

3. Do a Top Down Re-evaluation of Your Investment Portfolio. Consider each individual holding (e.g. stocks, bonds, mutual funds) and reduce your exposure among the more exotic, alternative riskier investments.

Just like your grandmother used to say, “It’s important to have savings, don’t take on too much debt, and be careful of what you invest in!”

The Faster Times quoted Anthony Diaz, CFA, financial advisor and vice president of investments at IFC Advisory for his insight and expertise on financial planning in the upcoming year. Feel free to check out How to Get What You Want in 2010 and let us know what you think!

1. Get Multiple Referrals:
A good place to start is with a close circle of friends – people who have the same social economic background that you do. Ask them if their advisor is doing a good job and if they are comfortable with them. But don’t stop there….Ask your lawyer or attorney, someone who prepares your taxes, a CPA, etc., because when you get a referral from another trusted financial professional, they are putting their reputation on the line. They’re not going to refer you to somebody unless they are 110% sure about them. There are also a lot of websites that you can go to for referrals. One website that we have seen and liked, is WiserAdvisor, which is a new service that offers a list of advisors that fall into what you’re looking for. You have to make that first contact and do the initial screening, but this site will give you some ideas.

2. Do Your Due Diligence:
You’ve got to make sure that the person you’re talking to is qualified! Anyone can throw up a designation, but it doesn’t mean that they are necessarily good. It’s very much like interviewing someone; you have to look at your potential advisor’s resume and testimonials. Not just if they have a designation, rather what have they done in the last 5 or 10 years, where have they worked and what have their previous clients said. I recommend contacting the state regulator to see if that advisor has had any complaints, or if the advisor has been sanctioned or disciplined to make sure they have a clean background. You can also get a lot of the information about an advisor from the biographical section of their website. If you want a more chronicled representation of the advisor’s background, you can get that from their ADV form (only registered and expert advisors have to file an ADV form with the FCC).

3. Check For Compatibility:
You need to be a match with your financial advisor. Look into their investing style, portfolio management style, and advisory style to see if it is compatible with yours. Some advisors are a little more aggressive than others, some take a shorter term or longer term approach, different methods of operation and again all this information will be forth coming from their website. Get familiar with what their investment approach is, what their investment philosophy is and trust your gut.

4. Ask About Compensation:
Decide what works best for you – a fee based or commission based advisor, or a hybrid of both.

5. Inquire What Services Are Involved:
Another thing to consider and inquire about are the services offered, as not all advisors do everything. Some do estate planning, some don’t, some do insurance, some don’t, some take a more holistic approach toward their clients’ needs, and others don’t. Ask yourself, do I need someone who is going to be everything to me, cover all my bases, or do I just need someone who is going to take care of my insurance or put me in mutual funds? Also consider what kind of financial planning services you need and consider those advisors who provide those services.

If you have any questions about selecting a financial advisor/fund manager, please contact us, we’re here to support you!