I happen to be a member of Costco and receive their monthly publication called Costo Connection which contains a variety of articles, one of which is a Q&A with Suze Orman. Readers submit questions to Suze Orman and she selects a few to answer in her column. Both the questions and answers tend to be brief.
In her recent column, one of the readers posed a question about whether or not he should consolidate various retirement plans into one account. Suze’s reply included a recommendation that he should consolidate, including taking steps to convert his Traditional IRA into a Roth IRA. The person who asked the question did not provide any additional details about his overall financial situation such as the value in each of his accounts, his age, income level, marital status, whether or not he has children, tax bracket, etc. Again, the question was brief. While Suze’s advice to convert from the Traditional to Roth IRA may have been appropriate for that person’s situation, but she couldn’t really know without having more details about his overall financial picture. For example, if that Traditional IRA were of significant value such as several hundred thousand, the investor could be facing a HUGE tax burden on that conversion. Further, if he were under age 59 ½, and elected to have taxes withheld in the transaction, he would also be penalized on the amount of funds that were withheld for taxes and therefore not subsequently deposited to the Roth IRA.
The intention here is not to criticize Suze Orman. She does sometimes provide some good advice. But it is important to understand that the advice provided in these types of columns is blanket advice. It may not be appropriate for all people who read it, since it is provided without knowing each person’s individual and unique financial condition.
This applies to other types of blanket financial advice too, as there are many financial gurus out there providing advice in such Q&A columns, even our own blogs/vlogs from Kramer Wealth Managers! It is easy to read something and assume one can take it at face value and follow the advice provided but keep in mind that the information is provided in generality and may not be appropriate for your unique situation.
So next time you see advice that sounds good, talk with a qualified financial advisor to review your complete financial picture. Then that advisor can let you know if that advice would be suitable for you. We at Kramer Wealth Managers take the time to get to know each client, ask the right questions, and take a comprehensive view of your current financial and tax situation and your objectives. Only then can we can be in the right position to make recommendations that fit your needs.