Talk to a Financial Advisor
Once you’ve selected a financial advisor, you need to provide as much relevant information as possible. Before you meet, it’s important to prepare the right documents and any questions you may have. If you have a spouse or partner, be sure the two of you have discussed your financial goals ahead of time.
Chatzky likens the process to a doctor’s examination: “A doctor takes your blood and reads your vital signs, but still has to ask how you’re feeling to give a diagnosis.” With a financial advisor, you provide your financial “vitals,” such as assets and liabilities. If you’ve prepared a net worth statement, that’s the best place to start.
“To gauge things like your appetite for risk,” Chatzky says, “it helps for the advisor to know if, for example, you lost your parents at a young age or you’ve been through a divorce. Someone who has experienced these life events might not be so willing to take even age-appropriate risks. And that’s not something your financial advisor will know, unless you offer it.”
Below are more suggestions for getting the best guidance from your advisor.
Gather everything the advisor will need to put together a comprehensive plan for you: tax returns, insurance policies, pay stubs, and loan, mortgage, credit card, and bank statements. Be sure to include all other investment records, too, such as brokerage and retirement plan statements.
Couples should be sure to discuss their goals ahead of time, to avoid surprises in the meeting. “Often spouses are not on the same page, and don’t even know it,” Chatzky notes, “because people don’t talk about money enough.”
"Putting a dollar amount on goals can be hard," says Eleanor Blayney, author of Women’s Worth: Finding Your Financial Confidence, "but talking about values can get you started."
“Prepare by thinking about what is really important to you,” Blayney suggests. “Financial security? Time with family? Leaving a legacy?” That can lead more naturally to a discussion of how best to express those values through financial moves.
Wells Fargo Advisors has a process called Envision that uses priority cards to help make this step fun and enlightening.
Blayney notes that many women want to be liked and hesitate saying things that might put them in a bad light. For example, it can be hard to say, "I’m carrying $10,000 of credit card debt." Instead, it might be easier to talk in terms of what that debt is hindering you from accomplishing.
Also, write down your questions ahead of time, and make sure you find out how to ask any follow-up questions after the meeting. That’s what Chatzky does. “I always say, ‘I know I’m going to have additional questions: What is the best number to reach you, or do you prefer e-mail?’ ”
Once you’re comfortable with your investment and retirement plan, keep focused in order to implement it. Studies show that women may actually be better investors than men. “Women often believe they need to know everything in order to do anything,” Blayney says. “They’ll say, ‘I think I should know this better.’ But admitting what you don’t know is probably a great beginning.”
Keep a close watch to make sure your advisor is performing at the level you expect. “I always emphasize: You’re the employer,” Blayney says. “And even though your employee has the skills and expertise you need, you have to be involved enough to monitor how that person is doing.”
So always review your account statements, and question what doesn’t seem clear. You should also meet face-to-face with your advisor at least once a year, and depending on your goals and the complexity of your investment plan, perhaps more frequently.
It’s important to understand how your advisor is compensated. Here’s a quick rundown of possibilities:
- Commissions. Advisors may receive commissions when you buy insurance and investment products recommended in your plan.
- Investment management fees. Advisors may charge a fee (perhaps calculated as a percentage of the assets) for the ongoing management of your investments.
- Fees. Advisors may charge a fee for specific services, such as developing a comprehensive financial plan.
- Before meeting with your financial advisor, prepare all relevant documents, as well as questions you want to ask.
- If you’re seeing the advisor with your spouse or partner, make sure the two of you go over your goals beforehand.
- Stay involved with your finances by reviewing your account statements and making sure you understand anything that isn’t clear.