If you’re one of the millions of Americans who are still paying your bills the same way your parents did, with stamps and envelopes, it may be time to join the 21st century and simplify your life.

By setting up your accounts online and automating your bill payment schedule, you will save several hours a year that you would otherwise spend buying stamps, writing checks and licking envelopes.

How much time does it take to pay your utilities, cable provider, credit card, mortgage and car loan (just to name a few) each month? If you estimate one hour a month, that’s 12 hours per year you dedicate to paying your bills. And that number is probably low. You may be one of the few who enjoy this monthly ritual; if you are, continue to do what makes you happy. But if you’d like to get this time back, I’d strongly urge you to consider enrolling your accounts in automatic bill payment. Auto-pay is an option that will charge either your credit card or bank account, on the date the bill is due or an alternate preferred date within your billing cycle, so that you, the payee, won’t have to do anything. Each month you will still receive a statement to review, either as an email or a hard copy (most accounts will let you decide), but there will be no action required on your end. The one thing you have to keep an eye on is your card’s expiration date – when you get a new card, just make sure to update the payment information for your enrolled accounts.

The majority of utility companies and service providers will allow you to set up automatic bill payment using a credit card or a debit card. I recommend using a credit card because on average, credit cards reward the account owner with 2% of the purchase price in cash back or points. Meaning, if you spend $200 per month on your cable and internet bill, and pay with your credit card, you’ll earn $4 in rewards every month. This may seem like a negligible amount, but consider if you spend $6,000 a year ($500/month) on your utility bills; that would equate to $120 in tax free rewards that you are missing out on, while instead opting to pay for the inconvenience of stockpiling stamps or spend the time logging into each of your individual accounts and paying manually.

We all know that time is our most precious commodity – you can’t buy more of it, and it’s finite. If you set up your accounts to auto-pay with your favorite rewards credit card, not only will you get some of your precious time back, you’ll get paid for it too!

Disclaimer

You may have read about the controversy over the Department of Labor’s (DOL) fiduciary rule that was released back in April.

Originally introduced by the Obama administration with the goal of issuing new protections for investors by addressing conflicts of interest residing within the retirement advice marketplace, the final rule broadens the definition of a fiduciary to include any advisor who offers counsel on 401(k) plans, IRAs, rollovers or distributions. Sounds complicated, huh?

While the extensive rule spans more than 1,000 pages and contains countless regulatory standards, the key takeaway for investors is actually quite straightforward: is your financial advisor a fiduciary, or not?

In the simplest terms, acting as a fiduciary means always acting in the best interest of your client. The new rule requires all financial advisors providing advice on any retirement account to act as fiduciaries to deter conflicts of interest in the advice they offer. The rule is also intended to reduce consumer ambiguity when searching for an appropriate partner to manage their financial future.

So, what does that mean to you, exactly?

The benefit of the fiduciary rule for consumers is that all advisors will be required to disclose information which they may not have previously.  In many instances, these additional disclosure requirements will add much needed transparency to the client-advisor relationship. In light of the new requirements of the fiduciary rule, we’ve provided a few questions to ask when vetting a potential or current financial advisor.

Does your firm offer any proprietary investments or products?

As mentioned above, one of the key functions of the fiduciary rule is to discourage self-dealing, conflict-of-interest fees. In the past, financial planners working for brokerage firms with their own mutual funds were able to push more profitable, proprietary products over others, prioritizing their earnings over their client’s interests.

Once the rule is fully implemented in January 2018, advisors will be required to clearly and prominently disclose any conflicts of interest, such as hidden fees or backdoor payments, for any retirement plan recommendation they make.

To avoid headaches in the meantime, we suggest that investors ask potential advisors if they offer any proprietary products or investments during the evaluation process. This will help clarify whether the investment services being offered are truly in your best interest.

How are you compensated?

In addition to understanding a firm’s product and investment offering, it’s also important to understand how they are compensated. Does the firm charge a flat fee for financial planning and investment advice? Or, do they work off commissions? What is the frequency in which they are compensated?

Unfortunately, some investors, especially wealthy investors, may have been treated unfairly by their advisors in the past—being steered toward products that didn’t support their goals and finding out about misleading or hidden fees after transactions have taken place, and only if they reviewed their statements very closely.

Under the fiduciary rule, brokers will be required to disclose fees at the very beginning of a partnership, making it easier for investors to understand the cost of the product or services they will receive.

How does your service fee compare to your competitors?

Just like any other purchase decision, make sure you compare a potential firm’s fees to the fees of similar firms. For example, we’ve seen instances where clients have been charged a fee 3 times that of another client in a similar situation, for the same level of service.

The new rule has a focus on price parity which discourages advisors from charging premium pricing for non-premium services. Once an advisor discloses how they are compensated, make sure to ask what services are included to ensure that the fee measures up to the service provided.

Recap

Waldron Private Wealth has always operated as a fiduciary, and we pride ourselves on our commitment to providing independent, conflict-free investment advice to our clients. We have no proprietary products to sell and provide our clients with a fee structure that’s easy to understand. The Department of Labor made headlines by taking a proactive approach to creating cost and service transparency for the consumer, but the industry has a long way to go.  Make sure the partner you choose is always on your side. A sense of trust, honesty and the complete absence of a conflict of interest should always be part of the offering.

Disclaimer