In a very interesting article penned by Emily Fredrix of the AP titled, Parents Offer Refuge to Older Adults, Fredrix talks about a new phenomenon of adults moving back in with their parents. "Taking shelter with parents isn't uncommon for young people in their 20s, especially when the job market is poor. But now the slumping economy and the credit crunch are forcing some children to do so later in life - even in middle age. "

Many financial planners that I know are of the belief that parents shouldn't jeopardize their financial independence in order to help out their adult children. They are of the belief that if the children are in their 40s or 50s, they should wipe their hands clean of providing support.

My question is, what is family for? Should parents be sailing on a cruise to some exotic island when their responsible son just lost his job and is in a financially tough spot? Dying and getting buried with lots of money doesn't really help. Isn't the point of having money, aside for trying to provide a comfortable lifestyle, to try and help out those less fortunate? Wouldn't a struggling daughter fit that bill?

If parents are themselves stretched financially, they don't have to actually shell out money for the child. Rather, they can provide a roof and help that way, allowing the child to save hundreds of dollars a month.

I have worked with parents in similar situations. I have found that for both parents and the children who have moved back in, they find that their relationship has grown much stronger as a result.

Neither parents nor children view moving back home as a desirable outcome, but if left with no choice, would you actually refuse to support your child?

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/24/08.

Should parents let their kids live on the street? originally appeared on BloggingStocks on Mon, 24 Mar 2008 14:08:00 EST. Please see our terms for use of feeds.

Though August's market volatility is now a distant memory for some investors, it could be a spur to seek out assistance from financial planners. How can financial planners advise clients to deal with volatility, both from a psychological and portfolio standpoint? What does volatility actually indicate about underlying economic fundamentals (apart from fear and uncertainty)?

In my view, financial planners need to be honest about what they know and what they don't know. And they should advise their clients to prepare themselves for volatility through a combination of balancing their life - the psychological part -- and portfolio contingency planning - the portfolio perspective.

From a psychological perspective, I don't know if financial planners have a role - beyond recommending psychologists who specialize in helping people deal with psychological pressures related to money. But one thing financial planners can do is to be honest about the limitations of their knowledge:

Continue reading How financial planners can help investors deal with market volatility

How financial planners can help investors deal with market volatility originally appeared on BloggingStocks on Mon, 08 Oct 2007 16:00:00 EST. Please see our terms for use of feeds.

An article in today's Wall Street Journal discussed the emerging trend of financial planners catering to younger, less affluent folks. People need help navigating a much more complex financial world than their parents faced: 401(k)s, student loan debt, benefits, insurance, etc. I think it's great that there is help available for people, but I wonder how helpful it really is.

The problem is the costs: Most fee-only financial planners charge $100-$250 per hour, which is a huge amount when you're talking about someone making around the median income with little in the way of assets. And that's just for the financial advice. If you turn over your portfolio for them to manage, you'll hand over another 1-1.5% of that money each year, in addition to the expense ratios on the mutual funds they choose.

The problem is that financial planner services scale well: Someone with a net worth of $1,000,000 might not need that much more in the way of help than someone with $10,000, depending on the individual circumstances. So a financial planner might make sense for a high net worth person, but is probably just not a good investment for someone with less money.

I also think that most people could manage their own finances very competently with some basic research. Here are a few books that I think younger, less affluent people should read before they consider hiring a professional. If after reading these, you still think you need help, go for it:

To learn about budgeting: America's Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams.

To learn about investing/financial planning: The Wall Street Journal Guide to Planning Your Financial Future.

In most cases, I think you'll be able to get a lot of the benefit of hiring a financial planner from those books for a whole lot less money.

Financial planners cater to younger, less rich -- Is that good? originally appeared on BloggingStocks on Wed, 23 May 2007 19:40:00 EST. Please see our terms for use of feeds.