Thirteen Things I learned as a Financial Consultant

By: Velinda Peyton

“Living well is the best revenge”



I spent thirteen years working as a financial consultant and learned what I felt were invaluable lessons about money issues that I wanted to pass on to my children, family and clients. The great majority of people will work most of their life, some in jobs they don’t really like, and make the sacrifices necessary to earn a decent living. I think everyone will agree that finances become an important and powerful part of your life. According to the American Psychological Association, money is one of the leading causes of stress for Americans. Without proper planning, financial problems can destroy lives, marriages, and in extreme cases, take a life. Money is definitely a necessary evil. But with proper financial planning, you can make this part of your life manageable and profitable.

However, in working with hundreds of clients over the years, I realized that no matter how beneficial the recommendations I made for them may have been, they did not always take my advice. Some of them did nothing, some partially acted on my recommendations, and others just plain made bad financial decisions. Not taking the time to plan financially has nothing to do with not realizing the need, or not having enough money. It has nothing to do with intelligence, education or resources. Taking care of your financial life (or life in general) has everything to do with responsibility, common sense, dealing with reality, and love and concern for the people in your life that are meaningful to you.

Clients I met with who resisted this love and responsibility used senseless excuses in dealing with this ever so important part of life. Forget all the closing tactics financial advisors learn in this business, what these resistant clients needed was a gentle but firm dose of cold hard reality. I would look right at the resistant client and ask them, “What would your wife (a stay at home mom with small children) and children do if you died in a car accident tomorrow without any life insurance?” I wanted to jolt them out of the denial they were hiding in. I had one man reply that his wife would just get married again right away and she would be fine. And he said that right in front of her! That is not love.

The recommendations I made for my clients would give them peace of mind for a lifetime or help them plan for a lifetime. Some clients would argue with me that I just wanted to sell them products for my own benefit. But the truth was that I made a one-time commission; and they had a life-plan that would protect them and their families for a lifetime, help them build for their life, and keep them from experiencing the financial stress too many irresponsible people opted to endure because of bad decision making.

So with this, I share thirteen important insights I learned as a financial consultant.



Totally oblivious of the stock market in my early adult life, I wasted potential growth by saving in conservative accounts. I saved seventy thousand as a down payment on my first house with these accounts…but not because they earned much. I accrued this amount of money because I was a good saver. After I became a financial consultant and learned about the great potential of growth investing in the stock market offered, I realized how much potential growth I had lost.

Unless there is a very short-term or liquid need, I would never again put all my hard-earned money into a conservative account. These conservative accounts long term keep us from earning the growth we could if, at least partially, invested in the stock market. Age and how much money you have has nothing to do with proper planning and taking advantage of what the stock market offers. With the potential and long term track record the stock market has for growth, taking the ultra-conservative approach is simply a decision to lose money that could have been made. Being too conservative is just another expression of fear and naivety about investing.

Another thing to consider that bears mentioning about the stock market is investing in index funds. Index funds mirror the “indexes”. This means that index fund investments will return near the same rate of return as the indexes. Couple this with the fact that they have fewer fees than regular mutual fund accounts, allows for greater potential growth. I personally found that index funds gave me great returns and diversified my investments among the different asset class index funds.

However, be sure to solicit the advice of a professional in recommending investments based on your risk tolerance and investment needs.


Shortly after I started working as a financial consultant, I learned that investing in capital asset ventures that realize capital gains have many benefits over interest bearing accounts. Capital assets such as securities and real estate realize capital gains when sold. The growth or gain in these investments is appreciation and taxes are paid only on the gain. This allows the growth to compound upon growth without being taxed every year such as an interest bearing account. Even though it is widely known that capital gain taxes greatly benefit the wealthy, they also have historically been lower than the average/median income tax bracket that the great majority of Americans fall into. Yes, you may pay income taxes annually on the dividends, but the dividends are usually a small amount. Also important about capital gains is that they pass on to heirs at death of the owner income tax free because of the stepped up cost basis, as opposed to paying taxes on interest bearing accounts which are taxed as ordinary income. For example, if you bought real estate at $100k that appreciated to $500k, it would pass on to your heir’s tax free at your death. Take the same scenario of an annuity, for example, and the difference would be taxed as ordinary income. This is a big difference that capital gains offer, and especially when it comes to estate planning. This does not apply to qualified retirement plans.


Saving (or investing) is easy…just do it! Save for anything…just get in the habit of saving. Your life is not only about paying the bills. However, people in general are not interested in saving.  They view it as money they could be spending, as frivolous spending is an obsession with too many peopleRemember these savings investments are for you, your life and dreams. At the very least, make sure you have an emergency fund…for the emergencies that will happen. Also, many people don’t have enough in qualified retirement accounts to adequately support them in retirement; therefore, additional savings for retirement in non-qualified investments are important. The important thing is to make saving a habit and that habit should be at least ten percent of your net income.


“I met with a couple who called me to inquire about life insurance. Actually it was the wife who called me after two deaths occurred with members of her church and the reality of life insurance came to light. She was a stay at home mom and nervous about what would happen to her family if her husband died.

When I arrived, the wife was not home yet so I spent time talking with her husband. He was proud to show me his expensive and elaborate computer system. He was a computer repairman and obsessed with computers. His system was expensive and far beyond what most families owned. As sophisticated as this system was, he told me he was saving for a new one.

When his wife arrived she expressed her concern about not having insurance coverage on her husband. After acquiring the necessary information about their financial situation, I recommended a term policy on her husband which was affordable on their budget. He drove a motorcycle sixty miles to work every day, so was more at risk than most people in this respect. However, he did not want to spend money on insurance so opted not to take out the coverage. His excuse was the same as most people…he didn’t have enough money. But he had enough money to buy a new computer system he didn’t need! As I have said many times, people have money for what’s important to them. This man was not thinking about his family’s welfare.

I would never think about not covering myself, my husband and my family with life insurance. Everyone will die someday. You need to make sure your family is not left with the financial burden of your irresponsibility. I cannot imagine choosing to marry, raise a family, buy a house, build an estate, or take on any financial responsibility without this important coverage. Even a single person needs to make sure this last arrangement is covered. Start when you are young and healthy and make sure you are not underinsured.


One of my clients called me because she wanted to go over her financial options in light of a recent personal financial change in her life. Her husband had recently had a heart attack and was now disabled at home for a long duration. Already challenged health wise, the husband’s prognosis for returning to work was not good. Of course his income was suddenly cut off and her income was not enough to support their lifestyle or pay their bills. She was so upset about her current situation that she fell apart emotionally during the appointment. She wasn’t crying, even though I’m sure she felt like it. She was yelling at me because there was nothing I (my company) could do to help her. He had no disability coverage through his employment, and they didn’t plan ahead for this disaster by covering him with personal disability insurance. They also had no emergency fund thus finding themselves in a very difficult situation.

I can only imagine the financial devastation a family would endure when the only income earner is disabled and cannot work for an undetermined amount of time without any disability income coverage. Medical bills are accruing, personal bills that can’t be paid, physical care needed for the disabled, and the lives of this family stressed and disrupted. All this and no income! Your ability to earn an income is the financial stability of your family’s lifestyle. To not insure the golden goose with disability coverage (or life insurance) is just plain stupid.


Every now and then I would have a client or potential client set an appointment with me because they wanted to talk about retirement. However, what they would reveal at the appointment was that they wanted to ask if my company, a fraternal insurance company, would be able to help them financially in retirement because they had no retirement savings! My company didn’t help in that way. What an awful situation to be in because of irresponsibility in not saving for retirement.

Investing for retirement is another just do it! After disability protection, not investing for retirement was the second biggest excuse I got from younger clients. They had debt, children, little income and no time. What they really had were excuses. In every household, there is frivolous spending. Anyone can afford to readjust their budget and invest at least fifty dollars a month for retirement…which is fifty dollars a month for you. It always amazed me that more clients didn’t do this early. This is one part of financial planning that is self-initiated and it’s for your future, unlike paying bills.

Many of my clients waited until they were in their fifties and then scrambled to build a nest egg for retirement. By starting early, the investment amount needed is smaller and allows the client to get into the habit of setting money aside for retirement…or any other form of financial accumulation. Starting early also allows the advantage of compounding to build.


Even though an income earner would have to be oxygen deprived not to take advantage of a matching qualified retirement plan (which I highly recommend you do), there are other alternatives to the remainder of retirement plans available. Some qualified plans with a company offer limitations of investment options that may not be the best options in the market. If the investment plans offered by your company perform at modest gains or the advisor doesn’t recommend appropriate investments for your needs, your overall accumulation may be nominal. For all these reasons, careful planning and knowledge of all the ramifications of qualified plans should be done before starting one. Deciding on the right plan for retirement accumulation will make the difference in the overall growth of the funds.

Of course, the advantage of qualified retirement plans is the tax deduction; however, qualified retirement plans are not the only option in saving for retirement. In some cases, perhaps not the best option unless you are in a high tax bracket and need the tax break. Traditional IRA’s and qualified retirement plans are a tax deduction when deposited, but are fully taxable when used in retirement. These retirement plans have too many restrictions as to the amount that can be deposited and too many government (IRS) controls. Distributions from qualified retirement accounts have to be started at the latest by age seventy two and one half and have to be used in a certain number of years, whether you need the additional money or not.

Many traditional IRA’s are started by people who are in the fifteen percent tax bracket and don’t really need a big tax break. They become fully taxable at retirement, which may be a time when most retirees need to limit any excess expense and count on their retirement income…not pay it out in taxes.   SEP IRA’s, for example, have a mandatory withholding by the IRS or twenty percent when you take a distribution. That twenty percent is held by the IRS for perhaps a whole year when it could be earning interest or growth if that twenty percent was not mandatory to be withheld. If a retiree doesn’t pay twenty percent in taxes in retirement, it again is wasted sitting with the IRS while it could be earning growth or interest. And receiving back money from your tax return that is already yours has an adverse benefit compared to having that money invested instead of with the IRS.   There are many qualified retirement plans and many people take advantage of these plans because they are offered through employment. However, how many people in a low tax bracket really need a tax deduction just to have fully taxable income in retirement when financial needs may be tight.

Investing in a qualified plan needs to involve careful consideration, planning and evaluation before starting one. I mention this because I worked with clients who had to take mandatory distributions from IRA’s when they didn’t need the money. Also for wealthy people with large estates who have qualified plans, they now have the combination of income and estate taxes that need to be paid if they die with unused qualified accounts. Income taxes and estate taxes together could eat up most of the money in the IRA.

So what is the alternative? Firstly, retirement, or at least supplemental retirement savings don’t need to always be in a qualified plan. In a non-qualified plan there will not be a deduction on your income taxes, but the taxes paid in retirement will either be capital gain on the growth or interest depending on what type of account the money is invested in. Non-qualified investments, such as mutual funds or stocks, can be allocated for retirement in a non-retirement (non-qualified) account. If you don’t need the tax deduction or contribution to a qualified plan would not help your bottom line taxable income, consider a non-qualified account as an alternative

However, the real answer to retirement savings is Roth IRA’s. Roth IRA’s are too good to be true. If you don’t have a Roth and your income is not prohibitive to starting one, start one now. The only disadvantage is that there is a limit to the amount that can be invested. The advantage of a Roth’s is that they are never taxable…not the amount invested or the growth…none of it. So if you have a Roth that has quadrupled by the time you are ready to retire, it is all tax free money! You can also have both a qualified plan and a Roth. You can also have a spousal IRA for spouses that are not employed. There is not enough I can say about how great Roth IRA’s are, and a one of a kind unique investment product, so take advantage of them.


Reducing taxes should always be a part of financial planning. What a total waste of your hard-earned income to pay out unnecessary money in taxes. With approximately one quarter of all the money you earn payable for income taxes, that realization alone should strike revenge within all of us to take as many avenues possible to reduce this burden. Planning will accomplish tax savings. The best way for most families to start is to simply buy a home as early as possible. Buying a home will allow big tax savings and opens up all the other deductions you are allowed on a 1040 tax form. Another way to reduce tax liability is to start a qualified retirement plan as soon as possible. Both the purchase of a home and a retirement plan benefit you in more ways than just tax savings.


I always loved dealing with this excuse! I would tell them up front that debt is no reason not to take care of financial responsibilities such as life insurance and retirement. The reality is when current debt is paid off there will be more debt to replace it. And since the great majority of debt Americans have is for material things they don’t need, they can’t rationally use debt as an excuse not to start investing or taking care of other financial planning.

In America, people are debt crazy and obsessed with spending! They love it! Why else would they choose to give so much money to debtors through all the interest they pay on debt accounts, or all the material things they buy that they don’t need? This kind of spending is the single biggest waste of money other than throwing it away. And most people throw this money away because they have too many credit cards maxed out with high interest rates. The interest rates credit companies charge should be better regulated because some of them charge insanely high rates. Stop the obsessive spending and get rid of the credit cards or they both will financially destroy you. Talk about the quickest road to bankruptcy!


Estate taxes are usually paid by wealthy people and paid at the death of the estate owner. However, many of us accumulate an estate that will be subject to estate taxes. You work hard all your working life building your estate; however, you need to work just as hard to protect it. You will pay dearly for this hard work if proper planning is not done. With estate taxes being subject to as much as forty percent (2015) of an estate over a certain amount, it just doesn’t make sense not to protect for the possibility of having to pay these extraordinarily high taxes. Why would anyone want to leave money to the government though excess estate taxes when proper planning will make a difference and reduce this tax liability The government didn’t help you earn that money so why would you want to give it to them? For very large estates worth many millions, the client better take the time to plan for this one.

I had clients tell me they didn’t want to spend any more money to salvage their estate, or the kids would just get what was left after the government took their share because they didn’t want to do any estate planning. What kind of thinking is this? You would rather have your money go to the IRS than your children? What would your children think about that kind of attitude?



I’m going to get personal here. After watching both my parents die living for years in convalescent homes, I’m taking a personal vendetta here to make sure that people understand how important it is to cover themselves with long term care insurance coverage. I’ve heard the excuses that you don’t get any better care when you have LTC coverage than when you don’t…which is not true. Worse is to have someone tell you to spend down your assets so you can qualify for Medical. If a person has no one other than themselves, and they don’t care about leaving their estate to an heir, and they don’t care about the kind of treatment they receive, then one could spend down the assets to qualify for Medical. I doubt if too many people want that to happen. Anyone approaching retirement, and hopefully long before then, should highly consider LTC insurance. What this insurance does is pay partial expenses in a care facility should the need arise they would have to go into one. With the possibility that one-third of retired people over the age of sixty five will spend some time in a long term care facility, it makes good sense to cover yourself with this insurance. LTC insurance premiums are based on health and age, so don’t wait too long.


When my son was only five years old, he insatiably talked about becoming a Veterinarian. It dawned on me that I’d better start saving now for college so his dreams could be realized.

Even though you can work longer until talking retirement to pay for college, or mortgage your home (as one of my clients did), or live a lesser lifestyle to put your children through college, saving for this expense is a much better alternative. I can’t think of a better investment or a bigger return on your money than to invest in your children’s life by giving them a college education. This is one expense that comes back one hundred fold in a lifetime of career satisfaction, good income, and a great lifestyle for your children. Also a college education is something they can always turn around into another career simply because they possess a four year degree…since employers focus on that. Start saving for this one when they are born.


When I was a young adult first living on my own in an apartment, I watched on the news in disbelief as an entire large apartment complex in Tustin, CA was completely lost in a fire. Most of the residents interviewed realized they had lost everything they owned, and they admitted they had no renter’s insurance coverage. The next day I was the proud and relieved owner of a renter’s policy. Since then I have made sure I am always covered by insurances that protect my life.

Other Insurance

I can’t imagine going through life without medical insurance. If you own a home you need homeowners insurance. If you drive an automobile, you have to have auto insurance. Surely you have taken care of these life necessities! Even renters insurance is important if you are a renter. You never know when you will have to use these coverages for the emergencies that arise unexpectedly, and the chances of using at least one of the above for an unexpected event is very likely.

Will or Trust

Make sure you have a will or a trust. A trust is usually necessary for estates that would be subject to probate. Probate is a lengthy process that will cost much more than the price of a trust. With a trust, distribution of assets at death will flow without the need for probate. A trust will also define special needs, such as care of disable family member or who the guardian would be for minor children. The main reason to take care of having a will or trust is to make sure your wishes for distribution of your assets are spelled out. Heirs will fight needlessly over money and property at death, so having all that taken care of in a will or trust will eliminate most of that nonsense.

Lastly, make sure all your beneficiary designations are up to date. A newly re-married person likely does not want to leave an ex-spouse as a beneficiary. Also, when children are born, they may need to be added as contingent beneficiaries. Too often people forget to update beneficiary designations and assets are left to the wrong person.

For more in-depth financial information, you can purchase my new book: “What Real Financial Freedom Is, How to Stop Living and Struggling Without Enough Money”, available at Amazon as an e-book for $1.99.   You can access the link here.