I’m a financial advisor, so you’d expect me to say ‘Always’ is a good time to meet and talk to a financial advisor. But actually, NO. Before you’d want to meet with an advisor to discuss your financial matters, something else has to happen, and that thing depends on you. What is that thing, you might say? It is your mindset, your readiness, and willingness to make necessary financial changes to achieve your goals. That part falls on you and no financial advisor can convince you when that is right for you. Unless you have established that mindset, please don’t waste your time or your advisor’s time by initiating a meeting with them. A meeting is the next step in the planning phase, so you’ll hear ideas, but because you’re not ready, you won’t execute on them and they’ll stay either on paper or briefly within your memory and then later forgotten. The mindset of being ready to make a positive financial change for yourself or your family is the very first and most important step needed prior to looking for an advisor.
The next step, assuming you’re ready for it, is to do due diligence and understand a bit the different types of advisors, the rules that guide them and the services they provide. The term ‘Financial Advisor’ is so overused by many financial professionals that most people cannot distinguish who is who. Our suggestion, especially if you’re looking for big picture guidance on your financial life and goals, is to look for a financial planner that provides services that you’re looking for while also being transparent on the fees and who pays them. The term you’d want to be looking for is ‘fiduciary’ where the advisor has to put their client’s best interests first, but also has understandable services and fees. Be aware that most financial advisors get compensated from products that they sell and those products may not even be in your best interest. Aim for alignment of interests with your advisor. That is usually achieved when you, the client, pays directly for services in a transparent manner, and not by a third party, such as the investment product that compensates the advisor for selling it to you.
If you’ve done the above homework, there are still some instances when hiring an advisor makes most sense. They typically fall into times of major changes in your life and I’ll detail few below together with how an advisor can help.
- Just graduated college or got your first job. This is the moment where many get to enjoy their first paycheck, making their own money and that’s cool. But since you’ve never made or had that amount of money, you may not know exactly what to do with it, besides, you know, buying that ‘thing’ you’ve been thinking about for a while. Meeting with an advisor and discussing even a simple plan of your goals, budgeting, your spending and savings and how and where to save and invest is a key component to setting you up working properly towards your financial and non-financial goals. Many don’t meet an advisor at this juncture and thus wander and drift for at least 5-10 years without a financial plan, spending most of their income and just having fun. I’m ok with fun, everyone likes it, but valuable time is slipping from your hands.
- You want to buy a house. Many come up with that as a goal, but some don’t even care about that anymore. Still, that is a large financial decision and planning for it is almost mandatory. I’d suggest to meet and talk with a financial planner way before you’d want to do that so you can discuss down-payments, affordability, closing costs, your budget and more before you seriously look for that pretty house on Zillow. In addition, buying a house is a financial goal that may affect other financial goals you may have and meeting with a financial advisor is important to make sure you’re not jeopardizing those just because you’d want to have your own lawn mower.
- You want to propose to the love of your life. This is big, and an even bigger financial decision. Usually we see couples before or right after getting married. That life decision typically makes most think of ‘planning’ and financial planning is a big one at that. Should we combine finances? How to pay bills? What combined goals do we have now? What if we don’t 100% agree on some goals? These and more are valid questions that can be discussed with your advisor as a trusted, knowledgeable and unbiased third party. The same should be applied if divorce (hopefully never) comes into the equation, but we won’t discuss that now – still thinking about the wedding flowers.
- You want to make a career change. That’s also major, and it could affect your financial life. Will you be making more money, and if so, where should we put the extra $, what goals to prioritize and how? Or will you be making less, taking a pay cut to reduce prior high stress and to spend more time with the family? Where will we find money to support that and/or what life changes may need to happen? All questions to be discussed with your advisor.
- You want to save and invest but have no idea how or whom to trust. Trust is earned, not given, so that will take some time, but you can start with evaluating advisors based on the criteria mentioned above. Many people fall in this category and think such at different times in their life. They know they need to save and invest for their future, but the complexity of the topic doesn’t let them see it through or incentivize them to start. Again, seek someone that will help make things clearer to understand, keep things simple but also cover all angles. Did we mention we do that?
- You just had (or thinking of having) a baby. Major family changes always call for a review or seeking an advisor. Goals, priorities, and budgets definitely change and you’d want someone to walk you through these financial concerns while you worry about baby blankets. Did you know you can have a 529 Plan (College Investment Plan) even before you have a baby? Now you do.
- Almost always is a good time. I’ll end where I started; that seeking professional financial guidance is almost always a good idea to get clarity on your goals, as sometimes you’re not even sure what your goals are or should be. Mostly, the above ‘triggers’ make people think and maybe even seek out a financial planner or advisor, but don’t wait for those triggers to get you to think about your financial future. The truth, and you don’t need me to tell you this, is that the future will be here whether you plan for it or not. The difference is: Will you be ready for it?