COVERITLIVE.COM

11:43

Please submit your questions to Sun personal finance writer Eileen Ambrose. Live chat starts at noon. Main topic: How to find a trustworthy financial adviser? Please feel free to submit questions on other topics as well.

11:59

Good afternoon. Welcome to the chat with Sun personal finance writer Eileen Ambrose. She will be answering questions about finding a trustworthy financial adviser in the aftermath of the Bernard Madoff scandal. She is also happy to answer questions on other topics. 30 minutes. Let's begin.

12:09

Sorry, we're having some technical difficulties here.

12:09

Let's start now with a question from Carolyn.

12:10

Carolyn wrote in with this question: I will be losing my job come this October and will be receiving a substantial severance package.I would like to know how I should save and invest this money so that it will hold me over until I find other employment.

12:11

Eileen: You didn’t mention the size of the severance, or how long you expect to be out of work. My initial thoughts are that you have been given a sizable heads up on your job loss, which means you have time to cut down on your spending, and determine what are fixed expenses- mortgage or rent, food, utilities. Then you can figure out how long your money can last. Since this is money you will be drawing down on immediately, you don’t want it in the stock market. It should be in safe, liquid accounts. You can put in a money market fund or FDIC-insured money market account at the bank. Consider putting it in certificates of deposit that have different maturities. You also didn’t mention if your severance package came with health insurance. If not, you might be eligible for a subsidy that will pay as much as 65 percent of your COBRA premiums for nine months. The full subsidy is available to those with adjusted gross income under $125,000 if single or $250,000 if married and filing a joint tax return. The subsidy starts to phase out thereafter and disappears once income exceeds $145,000 for singles and $290,000 for joint filers.

12:13

A question from Maryann: The only method I've known for finding a good financial adviser is through personal recommendations. How do you go about finding one if you don't have those connections?

12:17

From Eileen: You can try contacting the Financial Planner Association, which has a referral service for certified financial planners. You can check their Web site. Also, there's a group called NAPFA, which is an association for fee-only planners. You might also try the Garrett Network, which also gives referrals to planners in your area based on your zip code. The Garrent planners charge by the hour.

12:18

Liz has a question about investment amounts:
You've mentioned in your column that it's important not to invest all of your money with one adviser. But how much is too much?

12:20

And, while we wait for her answer to Liz's question, she has an added response to Maryann's financial planner question:
Eileen: by the way, once you get names from these groups for advisers in your area, you still need to do the basic things like interviewing them to make sure you get along with each other and delving into their background. But the planning groups have standards for their members to meet.

12:22

And, here's a question from sobocrab:
Is there a website the posts information on financial advisors who have been in trouble for unethical or illegal dealings?

12:25

In reply to Liz, Eileen has this response:
Financial experts I spoke with mentioned that if someone had $10 million in assets, but only gave Madoff 10 percent, the damage from the fraud would be bad, but not devastating to one's retirement. I think you need to approach it that way. How much would you comfortably feel giving a person control of? 50 percent? One-third? For many of us, the bulk of our money is in a 401(k), so it's likely protected against a Madoff-type fraud.

12:27

Eileen: Your best resource if you're in Maryland is to try the state's securities division. The number is 410-576-7048. While the state regulates investment advisers with less than $25 million under assets, it overlaps with other regulators. The division can tell you over the phone of problems or send you a report.

12:28

Ann Plogman: is it advisable at this time to invest the proceeds from the sale of our house in another residence?

12:29

sobocrab, here's an aditional response from Eileen:
I should have added, the Maryland securities division also collects information on financial planners, so again it's broader than some other regulators' sites.

12:30

Eileen: I lean toward thinking that a house should be something you live in, rather than invest in. But if you were buying a house for the first time, or haven't owned one for the last three years, now is a good time to take advantage of the $8,000 first-time homebuyer credit.

12:31

Here's a follow-up from Carolyn:
Hi, Eileen, this is Carolyn. You answered my first question about investing money received from severance. To answer your questions - I don't know the exact amount I will be receiving, it will include unused vacation pay and all that. I know it will be in the six-figure range. The company will provide health coverage through COBRA, which they will pay the premium at 100% for the first six months.

12:32

Eileen: Sounds like a good package. But if you are going to be living on this the next year, liquid and safe accounts will be best. Do you have any idea how long it will take you to find another job?

Page 1 Next >