Why hire a financial advisor?
Today I had lunch with Rodger Premeau, one of the authors of this blog. You see, originally Mike Polega and I got the idea to start a real estate blog, and in order to make it a better experience we asked Rodger to join us. Rodger and I didn’t know each other that well, so he invited me to lunch.
I have to admit, I was a little worried that he was going to try to sell me his services. Of course Rodger knows he’s in the relationship business first, and the selling business second so there was no sales pitch.
He did stun me with one thing, however. Now, personally, I have an MBA. Finance was my focus, and I enjoy that stuff. So, when it comes to financial planning it’s not the what or how that is the problem. It’s the discipline to stick with the plan that’s key, and that’s why I’ve never hired a financial advisor. Discipline is a personal thing, right?
So there I am talking to Rodger, and he tells me about his decision to get into this particular field. Turns out financial stuff was a hobby, and when he got “right-sized” out of his corporate job, he decided to make financial planning a career. I love hearing about people who find a way to make a living doing what they really want to do. Anyway, later he was talking about how found his first financial guy. What? I thought this was your hobby, why’d you hire a financial guy?
“For the discipline”, he says. He needed someone to help him get the things done he wanted to get done.
Turns out it that being a good financial advisor involves a certain amount of wheedling, cajoling, and nagging to get your clients to follow through on the plan you put together for them. Just writing out a plan doesn’t help most people; it’s helping them execute it that matters. That’s something Rodger learned that he’s carried into his own practice. Kind of like when you hire a maid to clean the house, and then find yourselves scurrying around cleaning before she arrives, so she doesn’t see the mess.
That’s a reason for hiring an advisor I’d never thought of before.
1 Comment
Because they have a life! Most financial concerns do not need to be addressed right away. If you get a bill in the mail, you have a couple weeks to pay it. Retirement can be 10, 20, even 30 years or more away; I can save money next month. I’m healthy, active, I can get insurance next year. For most people the day to day management of their financial lives is as exciting as a Kenny G concert. Also, some people feel intimidated by their finances. They know they need to save, but how much? Should I use my 401(k) or put it someplace else? What fund should I put it in? I know I need to be diversified (whatever that means) so should I use multiple funds? Multiple accounts? Multiple companies?
The biggest value an advisor brings to the financial planning relationship is knowledge. They can help you fill in the gaps in your understanding and help you figure out what is best for your situation and circumstances. The second biggest value that an advisor provides is discipline. A good advisor will meet with you every 3-6 months to make sure that you are on track, get an update on your financial and personal situation and answer any questions that you have. If you have not made progress, they will nag, educate, and reiterate the importance. (If your “advisor” is not meeting, or asking to meet, with you every six months you do not have an advisor. You have a Broker or agent.)
When I got “right sized�, the second phone call was to my financial advisor. He helped me look at my options and understand how I was going to pay my bills until I got a new job.
Ultimately, it all comes down to value. Any time you hire a professional, you need to ask yourself if you are going to receive value. Is this person going to save you time, money, or both? Are you going to have a better outcome because you hired and worked with this person? Will you have more money? Will you sleep easier? Will you be in a better financial position? If the answer to all of these questions is no, do not hire that person. If one of them is yes, hire them. If you are unsure, start slowly. A good financial advisor will understand. They will work with you to help you feel comfortable and build that trust.
Comment :: December 17, 2005 @ 112:23 pm