While nearly everyone could benefit from a financial advisor, not everyone is able or willing to use one at certain times. Additionally, not everyone who uses a financial advisor would use him or her at the same capacity as others. Furthermore, financial advisors are often pretty picky about who they allow into their practices as clients – at least the good ones are picky – so not everyone really benefits from the same kind of advisors. Here are some tips on when it’s a good time to contact an advisor.
Some people (I’d estimate about 20% of people) really enjoy managing their own finances holistically. Some people enjoy filing their own taxes, so they don’t hire an accountant; some people enjoy fixing their own plumbing, so they don’t hire a plumber (bad example?). There’s nothing wrong with someone who wants to manage their own finances. They may want to contact an advisor to hold phone calls just annually or semi-annually to double-check their plan, as well as to discuss new opportunities that arise; an advisor can be a valuable resource for providing clarity on new ideas and opportunities. Contacting an advisor doesn’t mean you have to give up control of your own finances.
For physicians, it might be helpful to interview advisors in residency or even as you’re just finishing medical school. It makes sense to contact an advisor specializing in working with young doctors to assess your student loans and help you manage it while in residency. In my opinion, this is where the financial planning process begins in a young doctor’s life. Some advisors might even have special deals for residents, so you should ask about that, too.
It’s important to work with an advisor who will help you work through what you want to do and not just tell you what to do without fully explaining why. Education is the key to good decisions. It’s typically the advisor’s job to bring the education, and it’s the client’s job to bring the decisions. The advisor can help with the decisions in many cases, but it’s important for the client to be fully aware of and on board with every recommendation.
If a person manages their own financial planning, and they just don’t know what to do next, it might be a good idea to reach out to a trusted advisor. Get his or her opinion on your progress. Ask for advice about what to do next. When I’m meeting with a client, I spend a decent amount of time helping that client make decisions on factors that aren’t necessarily tied to our financial planning conversation. Sometimes it’s just helping a client realize which decisions are emotionally driven and which are rationally driven. So if you have an advisor you trust and respect, consider the notion that decisions bigger than asset allocation and estate planning are oftentimes sorted out by an advisor.
For a person who has no desire to learn about insurance, estate planning, and investment management, they should interview a few advisors. Get some feedback from colleagues you admire on their thoughts about an advisor. Many people will be happy to provide information about their advisor, and some may not have an advisor – or even have had a bad experience with one. The results will vary, but come up with some questions, find a few advisors to interview, and see what feels right during the interviews. Ask about their clients – who does the advisor work with best? Ask about the strengths and weaknesses of the advisor. Also ask how the advisor charges for his or her services. No one advisor is for everybody, and the advisor will be trying to see if the prospective client is a good fit for his or her practice, too, so expect a few questions in return. This is all important information, and it could lead to one of the best professional relationships you make. There’s a lot of value involved in a professional opinion on your future.