First off I just wanted to say that you should always try to manage your own finances. A financial adviser is not for everyone. I know that most 20-somethings hate dealing with managing their own money. It’s so much more exciting to plan trips or work on a side gig then it is dealing with putting money aside. But it’s worth giving it a try. If you have one income with a few investments on the side, you can easily manage your own money and file your own taxes.
With that being said, the right financial planner can really help you take care of your finances while you focus on what you love doing in life.
Who should look into hiring a financial planner?
1. Someone in a complex situation. Some 20-somethings have very complex financial situations. Whether you inherit a lot of money (lucky you-know-what!) or run a transaction heavy business, you might be better off looking into hiring someone to deal with your finances.
2. Rich people. If you win the lottery, make a sex tape with a celebrity, or have made wise investment decisions at the right time, you could technically be “rich.” If you have more money than time, then yes a financial adviser can likely help you out.
3. Those with a busy life. If you work two jobs, work crazy over-time hours, have a stressful job, or have plenty of family obligations, then a financial adviser can be you savior. (Drinking every weekend doesn’t count as a busy life)
The steps to take before hiring a financial adviser to manage your money:
Setup a free meeting with a financial planner in your area.
It’s important that you don’t pay for the first meeting with a financial planner. The first meeting should should just be a feeling out process. You see what they’re all about. You ask questions. You figure stuff out.
Don’t be afraid to schedule meetings with many different financial advisers. It’s your money and you want to make sure it’s in the right hands.
Ask the financial adviser how they make their money.
You want to know how the financial adviser earns their money. If it’s commission based I’d be very wary. You don’t want to have the person that’s supposed to help with your finances attempting to push mediocre investments on you.
You’re better off going with a fee based financial adviser in my opinion.
It’s important that this gets answered. It’s usually one of the first things I ask anyone trying to sell me something– what’s in it for you?
Everyone works for money. It’s just good to know where this money comes from.
Lucky for you guys the money for Studenomics (all of the millions) comes from advertisers.
Figure out how the financial adviser communicates.
You can’t expect them to be on Twitter, but communication should be fairly simple. When hiring anyone I require a direct (or semi-direct) office number that is available during standard office hours. I don’t expect professionals to work all day everyday. There’s nothing wrong with having a life. But if I call them on a Monday morning I should receive an answer on the same day.
Would you date someone that didn’t call you back?
Get references & call them.
Ask for references. Call them. Ask important questions. The potential financial adviser doesn’t have to be perfect but make sure they get the job done. Communication problems, high fees, and poor reputation should all be red flags.
If you have any minor issues or notice anything suspicious then you need to address them with the financial planner. If you’re just skeptical of the person- move on. There’s many financial advisers out there. Find out that’s right for you. You want to be able to enjoy life without worrying about your money.
Treat this just like you would any other major purchase (i.e. trip or car). Ask all relevant questions. And if you’re not satisfied with the information you get, there are 7 more questions you can ask your financial planner. At the end of the day it’s up to you to decide to if hiring a financial planner to take of your finances is the right decision and which financial adviser is right for your situation.
Just curious: has anyone reading this ever had to hire a financial planner? If yes- how’d it turn out?