Protect your portfolio, says local professional

Editor’s note: This is the first in a periodic series of interviews with financial experts.
By Elna Seabrooks
Staff Writer
    HOULTON — The news is grim across America. Officially, we’re in a recession and have been for about a year. As 2008 draws to a close with a rollercoaster ride on the stock market amid mind-numbing financial turmoil, it may be time to reassess your financial situation with a view to your future. Surviving the vicissitudes of the financial world takes smart planning. And, the key is planning — not sitting back with a come what may attitude.
Houlton Pioneer Times photo/Elna Seabrooks
FINANCIAL ADVISOR —Katahdin Financial Services VP Bradley Berthiaume gives clients personal attention to suit their individual goals.
Investing for your future
    Bradley Berthiaume, vice president and financial consultant for Katahdin Financial Services says everyone’s situation is different due to retirement schedules, goals and age. The person about to retire in a few years, he says, may view a 401K plan differently than one who has only started investing in a topsy-turvy market. The older person “would want to be more conservative. If they’re younger, and they’re going to be invested for a longer time, then, they’ve got more time to wait for things to come back and to do better from there. Each individual person’s situation is going to be different so advice to each of them would be different. But for the most part we should see things rebound and do reasonably well.” Ironically, though, he says sometimes older investors can be very aggressive in their planning.
    If your employer matches your contribution to the plan, he says “you would certainly want to take advantage of any match from the company. One of the things we try to walk through with folks is their whole situation. So, if they don’t have emergency money they may want to do that before they would contribute or they may look at their debt situation. It’s looking at the whole situation, not just their 401K.”
    The precipitous dive in the stock market had some people re-allocating their assets. But, Berthiaume says, since everybody’s 401K typically has a few options, and plans differ from company to company, you may want to go over your situation with your financial consultant. He says if you have met with someone and have a road you want to go down, probably the biggest thing would be to go over it, update it and make sure you know where you’re at with your plan. That’s so that you know how you are approaching things as you go forward.
Contingencies, advance planning and reserves
    If you think you may lose your job or if you have to take a cut in pay, you will probably need cash reserves. Typically, three to six months’ expenses in reserves is a good measure if you lose your job in order to  stay current with your expenses, he says. “If you are going to use money in the next year or even a year and a half, you’re not going to want to have that money invested in risky assets,” says Berthiaume. He says he walks through each person’s situation “based on their goals of retirement income or trying to buy a house or a camp or traveling or whatever they want to do,” trying to match the plan exactly to what they want to do.
    People who have debt, he says, should list all of it on a sheet of paper with the interest rate, the payments and the balance. Then, says Berthiaume, the person can develop a plan to pay down the most expensive bills first to get a handle on the actual level of debt. “Listing all those balances makes it easier to arrive at good decisions.”
    When it comes to life insurance, it’s not as boring as you may think. In addition to having a will, Berthiaume says it’s important to consider how your spouse will pay monthly bills, replace income, or pay off large debts. Among the factors influencing the amount of insurance coverage are: number of children, your total debt and maintaining your lifestyle. He says he would walk through your whole financial situation and the strategies to reach your goals so that you can attempt to manage unforeseen situations within those goals.
You and your planner
    Berthiaume says it’s important for the consultant to work with the client and make sure any certificates of deposit (CDs) are getting the best possible rate, any investments are the best possible choices and debts are at the lowest possible interest rate — all with strategies to accomplish the client’s goals and considering their tolerance for risk. He stresses that consumers should know how their choice of a financial product works. “Don’t be afraid to go to a local banker you trust and get some advice if you are concerned about your situation.” Berthiaume says he does not charge a fee to discuss financial planning.
    Next  time – retail banker, Annette Beaton, talks frankly about your money, your credit and your financial picture.