Money Is Personal, So Is Financial Planning
Money is personal which means there is no universal way to spend, save, and invest. Our opinions today are directly influenced by how we grew up watching and listening to our parents manage money, debt, and other financial decisions. So, how does one go about hiring a financial planner?
Not everyone needs an advisor. Some enjoy control and decision making following their own path. Often, an investor’s temperament and expectations may decide their receptivity to advice. Alternatively, those who know the value of their time and recognize financial complexity may welcome a relationship. An advisor should bring ideas, organization, accountability, and knowledge into focus. Finance is all about behavior and a lot like a wool sweater. When you pull on one thread, you’re pulling on them all.
Finding the Right Advisor
Thanks to the internet and AI, investors have multiple choices at their fingertips in selecting an advisor. You can describe the traits and style of who you most want to work with, and the algorithm will present options. A more personalized approach is speaking with someone you trust about their relationship with their planner. Receiving an introduction from a friend to their advisor can be valuable to both parties. Why? Investors are looking for the best advisor fit for their needs, while advisors are looking for the best client fit in their community.
The Seven Questions That Matter Most
Speaking to several advisors to get a feel for who they are and what they believe is a great start. There are countless questions on the internet to ask a potential advisor when speaking with them. Personally, I think most of these checklists miss the mark. What you’re trying to figure out in a conversation really boils down to seven questions. This includes:
- Who is this person?
- What’s their investing philosophy?
- Are they good listeners?
- What type of questions do they ask?
- What’s their process?
- How are they compensated?
- How do they manage conflicts of interest?
Trusting Your Gut
That’s it. If my wife and I were hiring a financial planner for our family, this is what we’d ask. I believe a joint decision between spouses is best, this allows each to ask questions and get a feel for the answers. It’s these answers that reveal who’s likely best to help your family. You’ll get a feeling, who understands me/us the most today, right now, with room for this relationship to grow?
This is a subjective feeling. What does it feel like when you’re interacting with a planner and their team? Not all advisors are the same, some focus on wealth management and investment returns while others are more holistic in their approach to strategy. Who’s best for you depends on what your family is looking for. Do you know what you’re looking for?
Clarifying What Your Family Needs
If not, let me offer several suggestions. I think prioritizing cash flows, specifically where and how monies move through your bank and investment accounts, is a great start. Cashflows drive all stages of life regardless of your level of wealth. How you want to address college expenses is another theme. Knowledge of what exactly it will take to retire successfully and stay successfully retired is a worthwhile evolving conversation. So are safety net issues, estate planning, and taxes that need to be integrated and personalized around who you are.
A Relationship That Grows With You
A great planner can be a foundation and sounding board so investors and families may learn more about themselves and what they want. Not everyone wants the same thing or knows what they want. As you grow older and switch jobs, send the kids to college, become empty nesters, and travel spending time with friends and family, what you want will likely change overtime. That’s totally ok and to be expected. Life changes and so do we. Having a trusted friend to speak with that knows your story is priceless. This may allow better decisions today and ideally fewer mistakes and regret tomorrow.
