I’m a Financial Planner and I Don’t Think You Should Hire Me
Let me explain.
This is not about me. I’m not trying to play some kind of reverse psychology trick on you.
This is not a message of “just pick yourself up by your bootstraps and do it yourself” (more on that below).
This is not challenging the value of financial planning.
This is not challenging the value of a financial planner.
When you get down to it, the goal of financial planning is stress relief, time well spent, strong relationships, and living a life that aligns with your values.
The goal of this article is to provide you a framework to make progress in these areas.
Above all else, this is a message of empowerment.
What is True Financial Planning?
First, we need to establish what true financial planning looks like. It involves much more than just managing investments or selling insurance.
The financial services industry has historically done a terrible job with this. The emphasis has been on growth, sales, closing the deal, collecting referrals, and go, go, go!
True financial planning is:
Conversations around what you (and your partner, if applicable) really want out of life
Painting that financial picture by identifying the obstacles and developing a plan to overcome those obstacles
Helping to implement those steps (this is where investments and insurance come into play)
Proactively projecting your annual cash flow
Reviewing your tax return & implementing tax strategies for the current year
Tax strategies can vary wildly depending on your situation. Planning considerations for a small business owner are completely different from a tech employee with incentive stock options.
Understanding how to optimize your employer benefits & compensation
Celebrating the milestones
Adapting to the setbacks
…and - and - and…
Now, what is the best way for you to go about receiving true financial planning for yourself?
The Options
The DIY Conundrum
Sometimes (read when I’m procrastinating on something else), I’ll peruse Reddit’s r/personalfinance sub and a handful of Facebook groups that center around personal finance.
Any time the subject of working with a financial advisor comes up, the overwhelming majority will tell you that you can do all of this yourself:
“No one will care about your money as much as you”
“Just read JL Collins’ Simple Path to Wealth and Ramit Sethi’s I Will Teach You To Be Rich”
“Dave Ramsey says….”
Let me be clear:
I DO believe everyone needs to do financial planning
I DO NOT believe everyone needs to work with a financial planner on an ongoing basis
To see if you fall into the DIY camp, ask yourself these questions:
Does the topic excite you and give you energy?
How much value do you put on your time?
Are you willing to go in-depth into tax strategies?
Do you and your partner have the discipline to stay on track?
Are you and your partner happy with the decisions that got you to where you are?
If the answer to each of these questions is not an emphatic “YES!”, then keep reading (I realize #2 isn’t a yes/no question, but you know what I mean).
Finding Help That Is Financially Viable For You
I struggle A TON with this one. The fact of the matter is that working 1-1 with a financial planner is cost-prohibitive for many.
Some advisors have minimums related to assets under management (AUM) in order to work together. But what if you don’t already have $500,000 available to hand over? That’s kind of why you came here in the first place, to figure this out!
More commonly, an advisor’s compensation is tied to commission on a product sale. The problem with that arrangement is that any advice is to put the client on the road to that product sale. The client rarely sees, or fully understands, the underlying expense of this arrangement.
I’m not 100% innocent in this either. I have a flat minimum fee for ongoing financial planning. While I believe this arrangement puts me on the client’s side of the table the most, it’s not without its shortcomings. The best I’ve been able to do personally is to also offer shorter project-based engagements.
For those who fall into this camp, what other options are there?
Robo-Advisors
While this doesn’t encompass all of true financial planning, robo platforms such as Betterment and Wealthfront are designed to take over the investment management aspect.
These platforms will set you up with an investment portfolio and automate rebalancing, tax-loss harvesting and other investment optimization strategies.
Lower Cost Financial Solutions
The large players such as Vanguard and Fidelity offer access to financial advice for a much lower fee than most independent advisory firms. This would provide you an opportunity to talk with an actual person about your personal situation.
The primary downside is that it is simply not possible for them to truly understand all aspects of your financial picture, so the responsibility still falls on you to fill in the gaps. Also, the service tends to have investment minimums as well (i.e. Vanguard requires $50,000 in investments to utilize their personal advisor service).
There are also independent solutions such as Hey Money that focus on the advice side of the equation. From the Hey Money goal statement “You need an unbiased financial friend to listen to your story and help you determine the next right step.”
Picking Your Solution
Narrow Down By Your Specific Needs
When beginning the search for a financial planner, it can be really overwhelming. Where do you start?
Do you ask your friends and family for “their guy” (I’ll save the issues with lack of diversity in financial services for later)?
Do you just Google “financial planner near me”?
Does your work’s 401(k) provider give you somebody?
Instead, reflect on what issues you are facing. Maybe you’re gearing up for retirement and aren’t sure when to start taking Social Security. Or maybe you’re a newlywed couple and navigating how to best combine your finances and buy your first house.
Those are two wildly different issues, and it’s in your best interest to have a financial advisor that really understands the waters you’re swimming in.
For that reason, each advisor in this network has clearly stated the type of clients they would best be able to serve.
For example, I do my best work for:
Tech employees
Individuals receiving stock compensation (RSUs, ISOs, NSOs, ESPP)
Those working for a company that is going through an IPO
Those that have charitable intentions
Those that want to plan for college or are looking to buy a home
Individuals focused on living with intention over investment performance
Those that are happy to work collaboratively & remotely
Individuals that don’t mind when I show up to a meeting in a Liverpool t-shirt
For 99.9% of people that will read this, the above list would completely land flat. But like I said at the beginning, this is about you. You shouldn’t compromise or bend to what I’m looking for. That’s why I don’t think you should hire me.
Many of us are also members of the XY Planning Network. Every advisor listed there are fee-only CFP® professionals AND the network’s Find An Advisor search feature provides the ability to filter by specialty.
Connection and Comfort
Recent surveys have found that in 34 percent of cohabitating couples (married or not), one or both partners couldn’t correctly identify how much money the other makes; and that people are “more comfortable“ talking with friends about marital discord, mental health, addiction, race, sex, and politics RATHER THAN money.
Suffice to say, that the idea of talking with a perfect stranger about your money is usually not tops on your list. It can make you feel uncomfortable, ashamed, judged, and a host of other negative feelings.
For that reason, it’s vitally important that you feel 100% comfortable with your financial advisor. Be candid, ask probing & clarifying questions, don’t be reserved worrying that you’ll sound silly.
This is easier said than done because there’s only so much time you can spend and questions you can ask in order to suss out whether it’s a good fit.
Similarly, if you’re currently working with someone and find yourself being guarded or that it’s not a great fit, maybe it’s worth a revisit. Donovan Brooks has an excellent post that goes more in-depth about 8 Signs That You Need a New Financial Advisor.
I know inertia is a powerful force, but life is too short and the stakes too high to settle for “but he’s a nice enough guy”.
Conclusion
This is one area where it’s perfectly acceptable to act selfishly. So put aside your thoughts of “but he’s been nice and I don’t want to disappoint him” or “but she came recommended by my friend and it’ll be awkward if I don’t work with her”.
I know I said this article is not about me, but bear with me on this last point. We all have strengths and weaknesses. We all have varying needs, styles, and available resources. The most optimal outcome is for everyone involved to be working in a way that matches their strengths, needs, style.
The good news is there is likely someone out there that specializes in exactly what you’re dealing with. Or at least a solution that will get you further along the path than where you are now.
You are the focus and should feel empowered to make decisions that are solely in your best interest.
