Finance

What Can a Financial Advisor Offer You?

What Can a Financial Advisor Offer You

As a Certified Financial Planner, it’s cannot be a big surprise that I encourage people to meet with a financial advisor and see if working together makes sense. I very much believe in what I do and have witnessed firsthand the difference a financial advisor can make in a person’s life. I am also aware that people who choose to DIY their finances can do just fine too. But I also believe the average person, as much as they want to have a stable and successful financial life, will not do the work long-term without a coach to keep them on track. Our financial lives are always evolving and are never “done”. Without regular reassessment of our goals and progress, we face an increased likelihood of not achieving our dreams.

To DIY or Not DIY Your Finances: That is the Question

There is nothing wrong with seeking help or doing it yourself. Just as some people choose to change their own oil, others go to a garage. Or some opt to color their own hair while others go to a salon. Neither is wrong.

However, your finances affect the well-being of your entire life, so you need to make a thoughtful decision as to what makes sense for you. You need to consider whether you have the interest, skills and desire to do it yourself. Some of you may not have the skills now but are eager to immerse yourself in the world of personal finance and investing to learn everything you can now and throughout the remainder of your life. Others want to be financially confident and make informed decisions but not necessarily learn every nuance themselves. They want to work with a coach instead.

A Coach Pushes You to See Possibilities

I love to workout. I get up very early in the morning to squeeze in my daily workout and I don’t feel quite right on those rare occasions that I have to skip one. A few years ago, I got hooked on Boot Camp. I consider myself to be in good shape, but WOW! The intensity of the workout was insane and left me exhausted and exhilarated afterwards. I realized that my intensity wasn’t as high or sustained when I worked out by myself. Without having anyone to push me to do better, to encourage me, to challenge me—I had actually stagnated.

Stagnation when it comes to workouts just leads to stiff and sore muscles. But financial stagnation can have a much higher cost. It may mean not achieving your goals when anticipated or even at all or being unaware of a heightened risk exposure or potential opportunities.

What a Financial Advisor Can Do for You

Once you know what you want for yourself financially, I recommend adding a financial coach to your team. Or if you find yourself struggling to set authentic goals, they can also help you articulate what you want your money to do for you too. When looking at long term financial goals, there are a lot of factors to consider:

All of these factors are important in developing financial goals and planning for them correctly. Too often, I met with clients approaching retirement who failed to consider several of these items. If they had hired a financial advisor years earlier, they could have used the time to save more accurately for their goals. Now we are trying to play catch-up.

Nobody Cares about Your Finances More than You Do

When I hear or read people advocating that people do-it-themselves, they often say financial advisors don’t care about your finances they way you do. And that is a good thing in my opinion. Now hear me out before you start sending me nasty emails or tweets! Nobody should care more about your finances than YOU do because they are YOUR finances and YOUR dreams/goals. Therefore, the person who should be the most vested in your finances IS YOU! It shouldn’t be me. It shouldn’t be anyone else but YOU. Now with that being said, your financial advisor should provide you with the tools and guidance to help you make informed decisions and act in your best interest, not their own.

A Financial Advisor Offers Objectivity

One of the greatest gifts I offer my clients is my neutrality. I absolutely want my clients to achieve the lives they want for themselves, and in order for me to help them do so, I need to be able to look at their situation objectively and keep my perspective when my clients cannot. As much as you need to be invested in your finances and your goals so that you will do the work needed to achieve them, it can also cause you to be blind to some of the risks and opportunities that you have.

I know this because I feel the same way about my own finances. Nobody is more invested in our finances than my husband and me. It is our life—our hopes and dreams—and we take them very seriously. I believe I do a great job putting together our investment strategy, but I also know that my own desires and fears can affect my objectivity, which is why I have another financial advisor review my plan. Even as a CFP® with 23 years experience, I don’t even completely DIY my own finances because they mean too much for me to not have a second pair of eyes see if I missed anything or to challenge me to think differently about what I can achieve.

The truth is we can be our own worst enemies when it comes to realizing our dreams and therein lies the greatest risk of DIYing your finances—your lack of objectivity. You may swear that you’re looking at your choices objectively, but the reality is sometimes we are simply too close to see the forest through the trees. Even if you choose to DIY the majority of your finances, I would still encourage you to have a professional review your plan. You may be surprised by what you missed.

How Do I Find the Right Financial Advisor for Me?

I do understand why some people are leery of financial advisors. I’ve seen the headlines too and know that some financial advisors have taken advantage of their client’s trust. This saddens me beyond belief, but I also know there are many advisors who want nothing more than to help put your money to work for you. On Wednesday, I’ll share some questions you should ask potential financial advisors and what else you should consider before hiring one.

Shannon

Photo courtesy of www.FreeDigitalPhotos.net.

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April 21, 2014  •  34 Comments  •  Finance

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  1. Monday, April 21st, 2014
    I think my wife and I will eventually meet with a financial planner, but for now I think we have a good handle on our finances. I think people are leery of financial advisers the same reason they can be leery of bloggers - they think they are simply salespeople trying to push a product.
    • Shannon Ryan
      Monday, April 21st, 2014
      Sounds like a good plan, DC. You have a good handle on your finances right now, and when you're ready, you'll have that second pair of eyes look for gaps and opportunities.
  2. Monday, April 21st, 2014
    I have never been a big fan of financial advisers. I went to see one really early on when I had only been in full time work for a small amount of time, and the advice he gave me was all very generic in nature and didn't take into account for any of the goals I told him about.

    It was pretty much at that time that I decided to do things on my own and learn through experiencing. To date it has been the best financial decision I ever made. So in that regard I guess seeing the expert was a good use of my time.
    • Shannon Ryan
      Monday, April 21st, 2014
      I'm sorry that you had such a negative experience when you meet with a financial advisor, Glen. I can see how that would have frustrated you. I definitely believe that goals come first and foremost and help us determine our investment strategy. On the plus side, like you said, it did spur you to learn about finances, although it's still unfortunate that a negative experience had to be the catalyst!
  3. Monday, April 21st, 2014
    We've never had a financial advisor, but I'm not against it. However, I would only use an advisor that we paid by the hour. Getting paid commission just creates too much of a conflict of interest IMO. I've heard far too many horror stories.
    • Shannon Ryan
      Monday, April 21st, 2014
      Yes, it's definitely important to understand how your financial advisor gets paid and that you are comfortable with the arrangement. And your advisor should very upfront with how they get paid too.
  4. Monday, April 21st, 2014
    I totally agree about financial advisors offering objectivity. It's finding the good one that is hard. Like Glen, we've had some negative experiences in this area, and it's made us a bit gun-shy.
    • Shannon Ryan
      Monday, April 21st, 2014
      It really bums me out to hear everyone's horror stories and I can understand why it makes some people a little anxious. Great ones do exist. It's a little bit like dating, you kiss a few frogs before you find Prince Charming.
  5. Monday, April 21st, 2014
    I think there are a number of financial advisors out there (I worked with many of them) that give the profession a bad reputation. It is a shame that there are those examples because for every 10 of them, there is someone like you who is not the same. I tell people that finding a financial advisor is like finding a spouse, you have to date around sometimes and not settle. It is such a personal relationship and if you don't feel comfortable, keep searching. You may have to kiss some frogs, but there are good ones out there too. And yes, if they do everything that you mention, the relationship is absolutely worth it.
    • Shannon Ryan
      Monday, April 21st, 2014
      It is a personal relationship and like you said - you do have to date around and not settle! I love what I do and I truly believe in the value we offer. It is so unfortunate that there are some financial advisors who give a profession that I love such a bad name. It's why I think it's more important than ever for financial advisors like you and me to make sure that people also see more than the horror stories.
  6. Monday, April 21st, 2014
    I have never used an advisor; however, that's because I love doing it myself! I do think there is a really important place for advisors, and hope that people make conscious choices about their finances regarding what works best for them. For those who do hire advisors, I hope they know enough to hire a fee-based CFP. With so many options out there, for people who are not educated in the subject, it can be overwhelming and easy to hire the wrong professional, which would be worse than going it alone.
    • Shannon Ryan
      Monday, April 21st, 2014
      I agree, people need to make a conscious choice as to what is in their best interest. There are lots of options and not all financial advisors are created equal. People definitely need to do their due diligence and be prepared to interview multiple advisors too.
  7. Monday, April 21st, 2014
    Good post Shannon! We've never had an advisor as I came out of the finance world and have been comfortable managing our investments. That said, another thing I'm seeing is that the time I have to manage our investments is dwindling as our business grows. I guess that's a good problem to have, but it has opened up the definite possibility in my mind of hiring an advisor as I just might simply be missing some things due to my growing lack of time...not to mention me not being perfect. ;) You bring up a great point about the objectivity and is something that is well worth having when it comes to a holistic view of your investments.
    • Shannon Ryan
      Monday, April 21st, 2014
      Time is always an issue! It is definitely a good problem to have when it means your business is growing. :) I know for many people a lack of time is another reason why they seek the help of a financial advisor. It's easy to keep putting off your finances and a financial advisor can definitely help you stay on top of them. So many people overlook the objectivity a financial advisor can offer. We sometimes put blinders on when it comes to our goals and need somebody to help give us perspective or challenge our way of thinking.
  8. Monday, April 21st, 2014
    Like this post Shannon! My experience with financial advisers is that the fee-only type generally care more about your finances that the fee-based or commission type. A fee-only planner charges a set rate (or percentage) based on the amount of assets the person has. Therefore, as the client's portfolio amount grows so does the fee taken by the adviser (which is how it should be). So the adviser has a vested interest in doing the right things to help their clients assets grows. An adviser working on commission would be more likely to do things with the assets to put money in their pockets. The focus of the two is simply different.
    • Shannon Ryan
      Monday, April 21st, 2014
      Yes, people definitely need to understand how their advisors get paid and make sure they are comfortable with it. The advisor should also be upfront with their fee structure too prior before you formalize the relationship. This way there is no confusion or frustration later.
  9. Monday, April 21st, 2014
    I've never really thought about using a CFP. Maybe it is something I should look into... Thanks for sharing! Previously, I never really knew who CFPs were there to work with or what their purpose truly was. What a great educational article. Thanks Shannon!
    • Shannon Ryan
      Monday, April 21st, 2014
      I'm so glad that I could help!
  10. Monday, April 21st, 2014
    I think a lot of people think that only financial advisors are only for rich people. And one of the great things about the industry is that there's really a strong movement to change that and make good financial planning available to people at all levels of wealth. The reality is that most financial planners should probably even use a financial planner. As you say, there's just a ton of value in having an objective 3rd party help you think things through.
    • Shannon Ryan
      Monday, April 21st, 2014
      Great point, Matt! I get that all the time too. People assume if you're not wealthy that a financial advisor cannot help you, but that's not the case. I agree that many financial planners can benefit with working with another financial planner. It's very hard to always objective when we it's our goals we're working towards.
  11. Monday, April 21st, 2014
    We have only met with one financial advisor prior to quitting our full-time jobs. He was solely focused on retirement and did not want to speak about current goals or anything else. We met with him on a fluke and I wish after meeting with him that we would have looked for other advisors to speak to until we had found someone we could work with. Perhaps we will pursue that again soon.
    • Shannon Ryan
      Monday, April 21st, 2014
      I'm sorry that you had such a bad experience it. It's unfortunate that he didn't want to talk about your current goals or anything else. I would definitely encourage you to sit-down with some financial advisors again and see if you can find one that is a good match to your needs. They can really be an asset when you find the right one.
  12. Monday, April 21st, 2014
    I think a financial advisor can be a great idea. I have not had great experiences with them, but I know there are many great ones out there and it is sad that the shysters give the good ones a bad reputation. Just like I don't want a doctor who is 100 pounds overweight and out back smoking, I don't want a financial adivsor who doesn't manage his or her own money well. I think having a blog like yours is a great way to get your name and brand out there. I don't need to see your balance sheet to know that you know your stuff!
    • Shannon Ryan
      Monday, April 21st, 2014
      You are so kind, Kim. I'm grateful that my passion and knowledge shines through the blog. I agree wholeheartedly - it is unfortunately that the bad ones, hurt the good financial advisors too. I guess that can happen in any profession, but it still bothers me. I know what a difference a financial advisor can make and it saddens me to know that people who could truly benefit from some guidance are afraid to seek help.
  13. Tuesday, April 22nd, 2014
    When I was a working in a small company, my boss has a financial advisor, they met every week, checking my boss financial status. For me, having a financial advisor would be very helpful, especially when you're a very busy person and you can't hardly review our financial records.
    • Shannon Ryan
      Tuesday, April 22nd, 2014
      The time factor is another big reason people choose to work with a financial advisors. Our lives get so busy and it's too easy to keep pushing important financial matters aside because life happens. :) Thanks for stopping by and commenting, Marie!
  14. Tuesday, April 22nd, 2014
    Once we pay off our debt I would like to meet with a financial adviser. Like you mentioned, I think having someone’s outside perspective would be very valuable. I could be completely overlooking something and just not realize it. We have big goals in life- retirement, paying for our future children’s college education, and hopefully leaving our convention 9-5 jobs. I will definitely utilize the skills and knowledge of a financial adviser to help us reach our dreams : )
    • Shannon Ryan
      Tuesday, April 22nd, 2014
      Yes, an outside perspective can be incredibly invaluable. I meet with people who are confident they have everything taken care of, but more often than not, we find something they overlooked or may need to look at bit differently. It's very hard to be objective when it's our goals and things we really, really want. :)
  15. Tuesday, April 22nd, 2014
    I've never met with a financial advisor before, but I am not against talking with one and seeing how they could help us :)
    • Shannon Ryan
      Tuesday, April 22nd, 2014
      Great attitude, Mackenzie! The right advisor can definitely be an asset. :)
  16. Tuesday, April 22nd, 2014
    A married couple I knew went to one, and it was really helpful because of the student loan debt and mortgage they carried - I think it helped them let go of some emotional ties, especially to the house, that were really bringing them down. We haven't been to one yet, but I can see us going to one, especially because we (okay I) worry a lot about balancing how to raise kids in SoCal. I look forward to your Wednesday post. :)
    • Shannon Ryan
      Tuesday, April 22nd, 2014
      I love hearing a happy story since it seems so many have had poor experiences! And yes, helping people regain perspective and understand how their emotions may be clouding their good judgement is a critical role a financial advisor plays. Raising kids in SoCal can be spendy, and it's great that you want to have a plan in place beforehand.
  17. Wednesday, April 23rd, 2014
    Hey there Shannon.

    I was going to read your latest post but when I saw this one, I thought I should come and read this first.

    We've been talking about investing money and since we'd be going into it with any knowledge of how investing works, I think it would be best we seek the help of a financial advisor.

    I'm glad I stopped here first. I'm off to read your latest post. I've learned more about the role of a financial advisor.

    Happy Wednesday!
    • Shannon Ryan
      Wednesday, April 23rd, 2014
      I'm glad you're ready to dip your toe in the world of investing, Corina! A financial advisor can certainly help you with investing and take a overall look at your financial health too.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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