Let me tell you a secret. I didn’t speak to my first financial adviser until this year. Before that I tried to do it all on my own. And I think the main reason I waited so long is fear.
I didn’t know how to find someone. I had a checkered past with money while growing up. I thought financial advisers were for rich people and far out of my reach.
Then at my company I learned about an opportunity to get a free financial plan from an adviser that works in our building. I was hesitant at first but it was also free! And being the frugal man that I am I scheduled the appointment and met with the adviser a week later.
I learned 3 things that will likely earn me between $50,000 and $100,000 by the time I retire. It was a watershed moment.
I want to enable you to take that same first step.
By the end of this post I want you to know why speaking with a financial adviser is helpful. I want to empower you to find a trustworthy advisor in minutes. I want you to know exactly where to start in your first conversation.
What A Financial Adviser Can Do For You
What exactly is a financial adviser? I remember when I first got into personal finance I thought whatever they were they were for people not like me. I also had no idea where to find one. No one I knew actually talked about their relationship with their financial adviser. Did they even exist?
Let me demystify a financial adviser for you. At its foundation, a financial adviser can answer in about 10 minutes life questions like “Can I retire on time? Am I on track?”
They are able to provide this advice because of schooling they have gotten, training and work experience. To be a financial adviser you need a bachelor’s degree and to have passed a series of financially related licensing exams.
How they do this is by asking you about what you own (e.g., house, car, retirement accounts), your expenses (e.g., rent, food) and your income. They then run financial analysis and make some projections about the future.
While it sounds like magic powers, it’s really not. Many of us just never learned these kinds of skills in school or in our homes growing up.
Other questions a financial adviser could answer in about 10 – 20 minutes include:
- “Can I afford a new house in 2 years?”
- “Am I saving enough in my kid’s college fund?”
- “Does my mother have enough money to live on?”
They can also provide more detailed analysis about the state of your overall finances. However my number one recommendation is to start with some high-level questions.
Exactly What To Ask In Your First Call
I was looking for financial advisers for my mother several months ago. I identified 5 names that I wanted to speak with. I scheduled calls with each.
I spoke to the first three people for about 5 minutes. I asked them if they had availability for new clients, explained my Mother’s situation in 30 seconds, and scheduled a future discussion.
Then the fourth adviser I called did something different. His wife was his partner. As soon as I got on the phone with him he said “Hold on one second, my wife knows a lot about Social Security, I think she can help. I’ll go get her.” Within a minute his wife was on the call to share her knowledge as well. I was impressed.
He asked me several questions about my mother’s finances and then he said “There are three things I would encourage you both to think about to extend her retirement.” He then proceeded to tell me three things I had never thought of.
I learned something important. Ask questions.
So in the next conversation I had a specific script that I used. I want to share it with you now so you can get massive value in the first discussion you have without paying a dime:
“Hi, my name is JP. I’m looking to work with a financial adviser to answer some questions about my Mother’s retirement. I would like to understand a bit about your approach. If I share some of the high-level facts can you let me know two things? First, what you think her current state is relative to retirement goals? Second, what two things would you recommend she change?”
Here is the process:
- State your goal / question (retirement planning in my case)
- Ask them for their overall impression of how you’re doing financially
- Ask them for two specific ideas of what to change
It’s a great way to get free financial advice from an expert.
1 Simple Step to Find A Financial Adviser in 10 minutes
Now that you know the value a financial adviser can provide and how to have that first conversation, let’s discuss the logistics of how to find one you can trust.
One of the top worries people have in looking for a financial adviser is finding someone they can trust. Financial advisers have a reputation of being “scammy”.
There are two types of financial advisers. One group is far more trustworthy than the other. The first group is commission based advisers. They take a portion of the investments they sell to you. Or they take a percentage of your assets each year.
The second group is called fee only advisers. They charge you a flat fee for a service (e.g., $200 for a retirement analysis). Fee only advisers are significantly better than commission based advisers. Their livelihood does not depend on selling you something.
Within the fee only adviser bucket focus on “fiduciaries”. This is a legal term and sounds intimidating but here’s what it means. A fiduciary has a legal obligation to put your interest above their own. If they don’t they can have their license revoked.
Right now, in 10 minutes you can find a fee only fiduciary adviser in your neighborhood. Take out a pen and paper. Write down one through five. In 10 minutes you will have five names and phone numbers.
The two best networks for fiduciary financial advisers are below. Click on the links and search for an adviser in your area.
Now that you have a list block out time on your calendar today or tomorrow to make the calls. This is important.
See all of us are ambitious and driven. Yet, often we fail to plan and goals slip. Remember the last time you said ‘I should really get my yearly checkup with my doctor’ and didn’t go? The reality is that we often get distracted and miss our goals.
I don’t want you to make that mistake. Take 2 minutes now and block off 30 minutes in the next 24 hours to get this done. Write down that specific time right now. Block off the time in your calendar.
You already have the language for the first call above. Pick a general topic that you want to know more about. It could be anything from seeing if you’re on track for retirement to understanding if you have too much credit card debt.
The Low Stress Approach To Preparing To Speak With Your Financial Adviser
I think for many years I never spoke to a financial adviser because I was scared. Why in the world would I actively seek out an opportunity to talk about money?
This was mostly driven by the fact that I didn’t have healthy honest conversations about money with my family growing up. And in the few times that money did come up it was either all roses or extremely stressful.
You may have similar worries. My goal is to enable you to have that first conversation. That’s the hardest part. I want to give you the 20% of the preparation activity that will drive 80% of the result.
So let’s say you bit the bullet made that first call. As discussed above you don’t need much for that call. You can simply have a topic in mind that you need to discuss.
After that first call the adviser will schedule a 30 – 45 minute initial meeting. For that meeting below are the must have documents. It’s only a handful. I want to share them with you now to focus your efforts.
- Income (salary + bonus, if you just verbally have this information that’s fine)
- Yearly expenses (an estimate will work)
- Retirement documents (401k, pension, other retirement accounts)
- Insurance policies (life, disability, car etc.)
- Current checking and savings balances
- You age, marriage status, number of dependents
That’s it! Your adviser may have a few other items but these are the critical pieces of information that you need.
Bonus! One Question That Will Earn You Thousands
When I met with my first financial adviser he gave me three tips that will earn me thousands of dollars over the next several years.
The most valuable recommendation he provided to me was to use what is called a back door ROTH IRA. I had heard of this approach before but he actually explained to me how it works. That strategy alone will earn me tens of thousands of dollars.
I asked him one question that lead to that insight. I want to share it with you so you can get a similar benefit. Here it is:
“I bet you’ve worked with a lot of clients who are similar to me in age to me and have goals like mine. What is the number one thing they could do that would have the most impact on their financial future but they hesitate to do because it’s hard? What actionable step can I take today?”
Use this same approach during your visit. This could unearth a wealth of information and will likely help you earn thousands!
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Estate planning is the process of determining where financial assets will go after someone passes. Family coordinators of care see the issues behind this process up front. They find themselves in conversations with their loved ones about plans for a vacation home after death, left over retirement assets and who gets the family jewelry.
While it sounds like a legal headache it’s worth looking into estate planning in advance. If you don’t the government could take 50% or more of your loved one’s assets. The last thing you want after your loved one worked so hard to earn their income is to turn it over to Uncle Sam when they pass.
This post will outline 2 secrets to estate planning that you can start today. These secrets will put you far ahead of the curve. You will know that your loved one has the options to plan now far in advance of needing it. Uncertainty will be replaced with clarity.
How To Begin
Speaking with loved ones about financial matters can be challenging. However speaking up is better than staying quiet, even if it’s uncomfortable. As you play a larger role in their financial life these conversations are important.
The best way to begin is to ask their advice. For example, “Mom, we have been thinking about our own financial planning now that we have kids and it’s been a bit challenging to set up a will and get things in place. How did you and Dad approach it? What did you learn?”
See if they have a financial planner or lawyer they work with already. See what steps they have taken. Do they have a will or irrevocable trust? How about beneficiaries for their retirement accounts? Have they thought about what they would like to do with their funds after they pass?
You don’t need to press them on specific topics. Just listen. The discussion will likely unfold over several meetings. Don’t be afraid to table topics that are too thorny. There will be time to discuss them later. If the situation is more immediate however be direct and loving.
Once you understand where they are with estate planning review the below secrets to take things to the next level. Many are missed by some of the highest earning families. Take the time now and it will pay significant dividends down the road.
1. Find An Expert
There are many steps your family can take to transfer assets to the next generation today. However estate planning is a field that requires significant expertise in technical fields like tax and law. It’s worth your time to find an expert to help your family through this process.
If your loved one already has a lawyer or accountant make sure they have expertise in estate law. If not, bring in an estate lawyer to partner with them.
Confirm that your loved one’s estate will have assets to transfer first. If their estate will be worth less than $25,000 to $50,000 they may qualify for a simplified process (called simplified probate) and will not need an estate lawyer.
Search here for an estate planning lawyer in your area. Also check with friends and family for recommendations on someone they have worked with in the past. This may help you find a trustworthy individual or at the very least inform you more on what you are looking for.
Similar to when you search for at home care assistance, interview two to three estate planning candidates before making a decision. Find someone who is a good technical and personality fit for your family.
2. Set Up Power of Attorney
The most challenging situation many families face when a family member gets unexpectedly sick is that no one is the individual’s power of attorney. This means that medical and financial decisions cannot be made if the loved one is incapacitated.
If you only had the time to do one thing this is it.
There are two primary types of legal power of attorney, one for financial and one for medical. Both transfer the decision making power in specific circumstances to a loved one or friend.
Read more here for a detailed step by step action plan. The basic components are:
- Review the actions you will be able to take (5 min)
- Identify the legal power of attorney (30 min)
- Review that the contract can always be reversed (15 min)
- Distribute the form to financial institutions (2 hours)
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In my first three major romantic relationships I paid for things without discussing it with my partner. I remember buying one x-girlfriend red pants from Club Monaco, taking another to Paris all expenses included, and picking up countless dinners and nights out.
This was a learned habit. Uncles and mentors took me out to lunch as I started my career in business. My father and mother took me on vacations abroad. Loved ones helped me with rent when I lost a job in 2009.
I learned a specific script. You help the people you love. You don’t ask questions. You don’t make financial plans. You just act.
This approach has its benefits but also introduces challenges. It avoids building a healthy dialogue about money. Resentments have space to build up in the silence. Then, as many caregivers have experienced, there is an intense discussion about money.
Since many families lack a honest dialogue about money I wanted to share some lessons learned. A good place to start is with these two strategies.
But what do you do if there’s an argument? How about a touchy topic where you know people will get angry?
Specific steps can relive a lot of the frustration and make for a productive conversation. This post will focus on those steps. I want to enable you to calmly and thoughtfully express your views. I want to position you to have the best possible response from your loved one. I want your relationship to remain intact.
#1 Mistake People Make
Several years ago I sat down with my x to discuss our weekend activities. We were having fun going out to delicious dinners, seeing Broadway shows and taking classes at the local Y. But the expense were adding up.
I wanted to talk about it. So one Saturday afternoon while we were both sitting on my fold out murphy bed I jumped in.
JP: “I think we’ve been spending a bit too much money going out.”
Her: “What do you mean?”
JP: “Well I noticed that we’ve spend several hundred dollars over the last few weeks.”
Her: “How much do you think we should spend?”
JP: “Well, less than we are spending now. We should probably cut back on a couple dinners a month. How much do you think?”
Her: “I don’t know. You brought this up.”
JP: “Wait, you don’t have a budget?”
Her: (silence and burning eyes of anger)
Here is rule number one. Don’t try to change someone’s underlying habits with money.
There were so many things wrong with this situation. Because I never budgeted in my romantic relationship we had zero history or trust built up of speaking about money together.
And then when I learned that she didn’t keep a budget (god forbid everyone isn’t as anal as I am) I became judgmental.
The conversation quickly devolved into an argument about our behaviors with money. It was not good.
Avoid falling into the trap of trying to influence someone’s underlying behavior with money. It’s too broad and deep for one conversation.
Strategy #1 – Focus On One Topic
One of my favorite activities each year with my mother is Savings Day! It’s awesome. We go through her budget with a goal of saving $1,000 the next year. We call phone, cable and utility companies to negotiate rates. It’s lots of fun.
But that is the only goal. We don’t talk about retirement. We don’t talk about jobs. We focus on saving money.
It works. It’s fun and keeps things light hearted.
For a family coordinator of care you may want to speak to your loved one about reimbursement for medications you picked up for example. Or you may want to talk with a sister about helping with home caregiver costs.
Pick one topic and stick with it.
Strategy #2 – Write Down Your Goal For The Conversation
Get a pen and paper and write it down. Then stand in front of a mirror and say it out loud three times. Then write it down three more times. Before you go and meet the person write it down another three times.
Here’s why. When the conversation gets tense and voices raise you want your brain to remind you of what your goal is for the conversation.
99% of the time it will remind you to stay calm and not engage in a fight. You will be able to sit calmly even when someone is getting angry at you. Why? Because you will know your goal.
If your loved one gets angry and it’s better to pick up the conversation another day you will suggest postponing. If your loved one pushes one of your buttons you’ll know not to take it personally.
Strategy #3 – Define The Worst Case Scenario
Most people avoid financial discussions all together. This allows for resentments to grow.
Take a pen and paper and define the worst case scenario in five sentences. Define the impact to your relationship, your pocketbook and your peach of mind.
Then take a moment and accept that that worst case scenario is a possibility. A highly unlikely possibility but a possibility nonetheless.
Then write down three things that you can do to mitigate the worst case scenario from happening.
In 2010 I wanted to talk to a loved one about some money I had been lent. I had avoided this conversation for five years. I thought he would get angry and yell at me.
The day finally came when I brought it up. None of my worst nightmares came true. The financial topic was never resolved fully but I didn’t lose a relationship with this person, no one yelled and my life proceeded just fine.
Define the worst case scenario. Accept it. Put in mitigating steps.
Strategy #4 – Talk
Schedule a time to chat with your loved one and have the conversation. Just do it. It will bring a freshness and honesty into your relationship.
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