Nancy Kropko has seen too many stories of self-employed individuals who have incredible passion for their work but fail to make the same commitment to their own future.
“Being self-employed doesn’t mean that you have an eight- or nine-hour job every day and then you go home and have leisure time,” says Kropko, a financial professional at AXA Advisors, LLC.
“You dedicate your life to your business and you put everything else on the back burner to help that business grow and succeed. But when you don’t make the time to plan for your own future, you put both you and your family at great risk.”
Time is often cited as a reason for not making these critical plans. Business is booming, customers have urgent needs and there just isn’t any time to think about the next phase of your life. But those safeguards you put in place to protect your business and its customers against the unexpected are just as important for your own well-being.
“Self-employed people need to call somebody, and sooner is always better than later,” Kropko says. “It’s just not worth the risk to wait.”
Smart Business spoke with Kropko about how to help secure your own future when you’re self-employed and seemingly short on time.
Where is a good place to start your financial planning effort?
Most self-employed people, especially if they have a business, believe that their business will be their retirement. That’s usually the furthest thing from the truth. You don’t save any money, you don’t open any retirement accounts and you believe that you’ll be able to sell your business for a dollar figure commensurate with all the work you put into it. But that’s often not the case, and you’re left with far less than you need to retire. The first step to avoiding that fate is making a phone call to schedule an appointment with a financial professional. Once you meet with the professional, you’ll come away with a list of items and/or information you’ll need to collect for the next meeting when you can start making formal plans. Now you have a timeline to keep you on task.
For those who do have investments, it is often ineffective to manage them on your own. A professional can help maximize your earning potential by finding ways to potentially reduce your taxes through tax-advantaged investments. They can provide references to professional tax and legal advisors. Some people don’t think of these things on their own, especially if they’re self-employed and focused on running their business.
Another common risk when you’re self-employed is failing to buy disability income insurance. Business is good, and it’s easy to feel invincible. But you’re relying on the good times to continue so you have that income to support your business and your family. If something happens where you can’t work anymore, you might be able to get Social Security disability, but it might not pay out for two years, if it pays out at all. A financial professional can help you put protections in place to help mitigate this scenario and other unexpected events that could occur.
How do you find the right professional to meet your needs?
A good place to start is with referrals. Ask other self-employed individuals who they have worked with to do financial planning. Choosing someone who is a certified financial planner (CFP) can be a good way to go, but it doesn’t need to be mandatory. There are many financial professionals who are not CFPs, but do the right thing by their clients. It’s more important that you find somebody you can trust and that takes time. Interview a couple of professionals and get an idea of how they work. It has to be your plans, your goals and your objectives, not those of the professional. If you find a professional who has helped another person align his or her goals and objectives and developed a trusting relationship, that’s worth its weight in gold.
Insights Wealth Management is brought to you by AXA Advisors, LLC
Nancy A. Kropko offers through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC, offers investment advisory products and services through AXA Advisors, LLC, an investment advisor registered with the SEC, and offers annuity and insurance products through AXA Network, AXA Network, LLC does business in California as AXA Network Insurance Agency of California, LLC and, in Utah, as AXA Network Insurance Agency of Utah, LLC. AXA Advisors and AXA Network are affiliated companies and do not provide tax or legal advice. GE 109460 (11/15)(Exp 11/17)
