Hiring an Investment Advisor: How You Can Get Their Help, Even If You’re Not Rich
4 minutes to read
September 17th, 2018
If the very idea of investing makes you break out in hives, you’re not alone.
A new study found that perceived financial well-being — feeling secure about not only the state of your current situation but how well you’ve planned for the future — holds the key to your overall well-being.
Your financial security can affect you as strongly as job satisfaction, relationship stability, and physical health combined.
When you really take the time to think about it, money is the most concrete expression of every neurosis we carry.
Every neurosis we have, we can express it around money.
Someone dealing with your finances can really be transformative — it’s like removing an anvil from your back.
First, know thyself, financially
For many of us, it all starts with understanding our own habits.
Regardless of your financial state, everyone can benefit from taking stock of what stability means for you.
But don’t be mistaken the process can be uncomfortable.
It can be hard to sit down and look at the numbers, especially if you know you’re in mounds of debt but you’re not sure how bad it is.
But think of it this way.
Yes, it’s unpleasant now, but you’re saving yourself from more unpleasantness later.
Some suggest starting by tracking your spending from the monthly cell phone bill right down to your 3 p.m. vending machine run.
This eye-opening exercise forces you to think about your spending a little bit more, which then makes you more aware of how you’re spending.
Writing down your spending gives the transaction a sense of tangibility.
This activity will help you develop a personal profit and loss statement, so you can see where your money is saved and where it goes.
Next, figure out what you want
Whether you’re a recent graduate trying to figure out how to handle student loans, a retiree looking to maximize your 401(k), or anything in between, we all want our money to work for us.
Americans need to understand that investment advising isn’t just for the wealthy, it’s important to sit back and reflect on your own individual circumstances, understanding your long-term goals.
There are some basic goals, what we call the “holy grail” of financial security. People have three big priorities in life.
- They want to be consumer debt-free. (pay off credit cards)
- They want to have an emergency reserve fund, like 6-12 months of your expenses sitting in some boring account.
- They want to maximize their retirement account.
Once you have those figured out — or a plan for how to get there — the real fun begins.
Here’s when to call in the pros
Using life events as a prompt is a great idea.
Maybe you and your spouse look at finances differently.
An investment adviser at Longhouse Wealth Management can act as a mediator.
Because money can be so emotional, bringing in someone else can help bridge the gap.
Life events like graduating from college, getting married and buying property, are all great times to start thinking about your financial future, but there is no wrong time.
Our mantra is "it’s never too early for you to use our services and to take advantage of our knowledge."
Our clients come to us for help prioritizing, at all stages.
Even if you know you should plan for the future, we can help you enact and stick to a solid plan.
With an investment plan, you’ll receive a road map for the future and someone who catches things that slip through the cracks.
Investment advisors can help clarify the process
While the average person can probably pay down credit cards, set up a Roth IRA and do some basic investing online, professionals can help streamline the nuances of investing.
It’s like WebMD or Dr. Google.
You can look up symptoms, but there’s a limit to what you can do with that information.
Finance is the same way — you can find a lot of things on your own, but you need that deep knowledge, especially to avoid common mistakes investors make.
Know what to look for
By going to finra.org you can search for any investment advisor or firm and:
- read through their business plan,
- see how much money they have under management, and
- even see what their fee structure is.
It’s great to really be able to understand your advisor’s business model before you hand over the keys to your retirement castle.
Less concretely, you also want to feel comfortable with your investment adviser.
An investment adviser is almost like a family doctor — someone who will be with you over the long haul.
Find someone with whom you can let all of your finances hang out.
After all, brutal honesty is in your best interest.
Trust the process
A good investment adviser will help you set a plan for getting and keeping your investments in shape.
Because finances are attached to fallible humans and, to an extent, volatile markets, plans often grow and change over time.
Finances do not follow a “set it and forget it” strategy.
That means adhering to the three R’s:
- Revisit the plan,
- recalibrate and
- reroute as necessary.
With each event, things change.
It’s important that your adviser remain flexible to revisiting your plan when and if your life circumstances change.
Once you tweak that plan, it could require a reroute.
Maybe you had built up emergency savings and then there was an emergency, so you needed to deplete those funds.
We would then reroute what was going to 401(k) savings or investment accounts back to the emergency funds to replenish.
Regardless of your income, you can be helped
Financial health — just like the physical or mental kind — takes time and effort.
It doesn’t happen overnight.
You don’t have to understand everything about investing at once.
Start with one thing and focus on feeling good and confident with that one thing, even if it’s paying an extra $10 a month toward your debt, or learning to say no to an impulsive purchase.
Start small, and you’ll get there.
And no matter what your past financial life looks like, recovery is possible.
When it comes to managing money, feeling a sense of power or control over your situation is crucial.
A good way to start is to stop beating yourself up over your past money mistakes.
Bad debt, impulsive spending, too many parking tickets — whatever it is, learn a lesson from it, but then let it go.