Jacqueline Schadeck, then 14 years old, was a witness to a life-changing event in 2007.
Schadeck was raised by a single mother in Northern California. She found enough money to purchase new clothes and go out for dinner. Her mother, who had inherited $1.4million from a relative, was able to surprise Schadeck.
Schadeck said that I finally bought my first pair of matching Coach shoes and bags. I also went to the nail salon for the first time.
Her mother reached out to an acquaintance from high school who claimed to be a financial advisor. He mismanaged the money and took it. The inheritance vanished within two years.
Schadeck stated that he never did comprehensive financial planning. He instead put the majority of the money in a 529 college savings account with a high-cost mutual funds company. She said that my mom worked minimum wage and waited tables. She did not understand the investment strategy or where the money was going.
Worse, the mother was subject to early withdrawal fees as well as taxes when she pulled out funds. The 529 plan was placed in a fund class by the adviser that paid him a high upfront fee but imposed severe penalties on account holders who needed cash for a short time.
Schadeck stated that he never told Schadeck about the tax debts owed to him.
Schadeck, who is now 28 years old, experienced the thrill of a rollercoaster ride that showed her how money can be used to her advantage. Schadeck, now 28, is a certified financial planner in Atlanta.
Schadeck stated that the relationship with this adviser was short-lived and that it was heartbreaking to see everything crash after only one-and-a half years. I made a promise to myself that I would never go bankrupt again.
Schadeck's family had $6,000 when she applied for college. She was awarded a Kennesaw State University basketball scholarship that paid her tuition and a Pell Grant.
Schadeck became interested in personal finance after experiencing both wealth and poverty in her teens. Schadeck cites a pivotal moment in her life as one fateful day at college.
She typed in financial advice into a search engine one morning and began to research financial planning as a career. The top 10 most in-demand jobs for the next decade were listed to her and she selected financial advisor.
Later in the morning, another student from her Introduction to Finance course mentioned to me that the Financial Planning Association sponsored a job fair that night.
Schadeck stated that she went to three interviews that night. Schadeck said that she chose to intern at an independent small business and that her mentor is still there.
Schadeck stresses the importance of holistic planning in her own practice. Schadeck teaches clients, many of them first-generation wealth builders, about the importance to prepare a comprehensive plan that includes tax planning, estate planning, and investment management.
She said that the different parts of a plan don't always work together. All the pieces must work together, and you will need an adviser to help you put them all together.
Although she doesn't often share the details of her family's inheritance with clients she might mention a lesson she has learned that could be applicable to a particular situation. Her mother, for example, bought her first house with a portion of her inheritance. However, she didn't realize the financial consequences. Schadeck assists first-time homebuyers in calculating variables like the cost of property taxes and how mortgage interest deductions affect federal taxes.
She said that my family lost $1.4million due to poor financial advice, and lack of financial literacy. Because they were not born into wealthy families, I am able to help them with their financial planning. We sometimes have to set parameters to protect them and tell them how much their money will go. Sometimes, we have to set parameters to protect them and explain where their money will go.
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