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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October 22, 2015
By: JP Adams