Managing money is fun! Do you strongly disagree? You are not the only one. Americans find that task daunting, boring or frightening. Some just don’t have the time to do it. Either way, there comes the time in our life when we all need to admit that we need help. If you don’t know what you are doing with your money, you should find a financial advisor who can help you navigate through the complicated money world.
Who is a financial advisor (FA)?
Simply put, a financial advisor is a professional who can help with your finances. Anything from planning your retirement, taxes, estate, or just saving for that big old downpayment for a dream house.
Do I need one?
People are not very good with their money. Even though the overall financial health of Americans has improved in the last seven years, still 40% of them can not come up with $400 for an emergency. Yes, let that sink in. 4 out of 10 people in America will have to either sell something or borrow if such an occasion arises.
I do know that some people really struggle, working two or three jobs to provide for their families, but I also know that most of the money problems come from either not knowing what to do with it or recklessly spending it with no thinking about consequences.
If you are reading this article, it means that you have some doubts and questions about your financial life and you need help. Although it is very wise doing the research online before taking any action, googling only probably won’t fix everything. No two people and situations are alike, and you might not even find an answer to your specific question anywhere on the web. That’s when a professional should step in and asses your situation, create a tailored plan for your needs, and keep you and your money in check.
Where can you find one?
To find a good advisor, you have to do some research. It’s very important to understand the job description of a financial adviser and how to prepare yourself for a job interview. In this case, you are the boss and you are hiring!
You have a few options. Start by asking family members and friends for recommendations. You will hear first-hand experiences from people you trust, and you might learn something about that process right away. Ask them what areas of finances did they get help with.
If your inner circle of people is not helpful, surely Google is. Many websites are there to help you while searching for the right person. Usually, when you enter your zip code, you get a list of people available that are close to you. Then, you can read their bios, reviews and a brief description of what services do they provide. Visit your local bank to see who is available there.
Once you pick one or two people (or as many as you want!), you need to schedule an interview so you can get to know them.
You have every right to ask questions!
When meeting your potential financial advisor for the first time, come prepared with some basic list of questions. You should be interested in that person’s experience, education, ways of communications he/she prefers, etc.
You also have every right to UNDERSTAND what the advisor is talking about. You might be a complete novice when it comes to money, or you can be very invested in that topic, with lots of experience. Either way, a financial advisor can not look down on you. Rather he/she needs to explain the reasons why something is being suggested, using plain English when explaining investment options. At the end of the day, it’s your job to worry about your money. Believe me, YOU are the one that always will care the most! Which brings us to another question:
How is your advisor paid?
There are a few ways that people who provide investment advice make money: some charge hourly fee or a small percentage of the portfolio they manage, and some get extra payments from third parties for recommending specific products. Make sure that the person you are talking to has a fiduciary duty, which means that the person is obligated by LAW to work in your best interest, and not for their own pockets! And if FA is receiving any compensation for recommending something, it needs to be fully disclosed.
Let’s talk for a second about the price. The irony is that the people who need the advice the most are not the people who can spend any amount on it easy. It might look that this type of service is out of your reach but think twice. You will see the benefit of seeing a professional (almost) immediately, and you will be happy what your decision to take some action. Down the road, you will see that expense as the best investment in your future!
General help or specific task?
What kind of help do you need with: planning for retirement, saving for your kid’s college, down-payment for your dream house or just paying off that credit card debt? Or all of it and some more? Not all FA are experts in all areas of finances. As we stated at the beginning, the world of finances is very complex. Just look at the investment options: there are stocks, bonds, HSA, mutual funds, bitcoins, CDs, insurance products, etc. Not all people can be experts in all the mentioned investment types. Most advisors can create your general plan, but if your situation is complicated you might need to hire other people as well: tax accountant, estate lawyer, etc.
If there is no connection, feel free to walk away
It’s that simple. If for some reason you still feel uneasy in the office of your potential FA, even after that person answered all your questions, but something is missing move on. It’s not the end of the world, and I am sure you can to the same interview with other people until it feels right. Look, when you are talking with a financial advisor it’s like you are talking to a doctor! Talking about money problems puts you in a vulnerable position. You need to trust that person completely and you don’t want to be judged for your poor financial decisions.
How often do you need to see one?
It depends on your situation. Some people do it once a year, some would like to do it every quarter, especially if they have a lot of money invested and just want to check on how those investments are doing.
Keep in mind when something major happens in your life that can shake you to the core, like loss of your job, or a loved one – you need to talk to a professional. We are especially prone to make money mistakes when something big happens. It can be something good, like buying a new house or getting married. All these personal changes will impact your financial life, so you better prepare for what’s coming.
As you can see, there is no right or wrong answer here. Talk to your advisor as many times as you want and can afford as long it helps you sleep better at night.