Your Financial Future

Teaming up with a financial advisor

by Dianne Bernez

January 1, 2006

F or many people, the beginning of a new year is a good time to take stock of their overall health and to schedule check-ups with their medical practitioner. But when was the last time you really sat down and reviewed your financial well being? If you're like many busy professional women, a financial check-up is something that you keep putting off until you have more time. Or, worse yet, it's something you haven't even thought about for the last several years despite milestone events in your life such as changes to your marital status, income level and overall goals.

But there's value in conducting a yearly review of your fiscal fitness, and one of the smartest ways of doing so is to make it a point to meet with your financial advisor. You don't have an advisor? Read on and find out what you need to think about before you engage their service, and why engaging an independent financial advisor can get you on your way to sound financial health.
Atlanta Woman spoke with Valerie Brown, president of ING Advisors Network about the merits of using independent financial advisory services.

Valerie Brown, ING

What exactly is an independent advisor?

In a nutshell, an independent financial advisor owns his or her own business. He or she provides financial advice and guidance to people who are looking to better manage their wealth as it relates to retirement planning, investments, children's education, elder care and other needs. We tend to think that finance is just about moving around money, but it's really about assessing where we are in life, what our goals are, how comfortable we are with risk, and what we need to do to get to where we want to be financially.

Why should I go to an advisor?

There are a lot of complicating issues when you're trying to successfully plan for your long-term financial future. Financial experts such as independent advisors focus their whole careers building expertise about financial matters - from how to optimally diversify an investment portfolio so the effects of market fluctuations are moderated; to providing investment options that help you feel more confident that you won't outlive your income. During the latter part of the '90s, we saw what a lot of people went through with the stock market collapse. I think many of us now realize that managing finances is much more complicated than it looks. A financial advisor has had rigorous training, will take the time to understand your risk tolerance, find out what you want to achieve, and be willing to put in the hours necessary day in and day out to help you achieve your goals.

How should I think about my relationship with a financial advisor?

The most successful advisors have been in the business for years and have weathered market fluctuations of all sorts. Certainly they have gone through lots of training and can help you get to where you want to be. But getting the right relationship with your advisor is half analytics and half chemistry. Think of choosing an advisor the way you would your family doctor. Talk to your friends and family, find out who they use, and then spend the time interviewing several advisors before you make up your mind about who you want managing your hard-earned money.

What are the benefits of using an independent advisor?

Because they own their business they really understand the importance of building a long-term relationship. They usually have a very varied product shelf so they're not obligated to push any one brand at you, but it's always wise to ask and receive disclosure that describes any conflicts of interests on any products or services. All quality advisors have this type of disclosure. This helps you make certain you understand how your advisor gets paid.

Let's say I've received some recommendations from my friends or colleagues, what do I do next?

Set up interviews and shop around. You should expect to spend at least 60 to 90 minutes in initial dialogue, which includes the advisor listening to you very closely and spending the time interviewing you about your needs. Most of that initial meeting should be all about you: what your goals are, and in understanding your risk tolerance through a risk analysis profile. The advisor should not be pushing products at you. He or she should also clearly explain their cost structure and how they charge for their services.

What should I expect in costs?

As a rule of thumb, if you have over $100,000 that you'll be investing, you're probably better off with a fee-based relationship where the advisor receives a small percentage of the assets they manage for you. If you have less than $50,000 to invest, a commission-type relationship would probably work better for you.

What else do I need to know?

Once you find a good advisor, the peace of mind and amount of energy that you save in engaging their services is enormous. Like a good health check-up this is one thing you really owe yourself.

Up Close & Personal

"Money is the most intimate relationship you'll ever have," says Donna Wolff Howell, president of Carnegie Wealth Strategies. "People will sleep together and not have a clue how much money each other has."

As shocking as that may sound, Howell's point is that many people are reluctant to discuss money matters even with those who are closest to them, let alone a stranger such as a financial advisor who - gasp - is going to pore over your income statement with a magnifying glass and ask you to 'fess up about just how you plan on achieving that villa-in-Tuscany retirement you dream of having by age 44 -- especially since you haven't contributed to your company's pension plan for the last few years. And yet, sharing the details of your income, your aspirations, and what you really want to get out of the hard-earned money that you make is key to establishing a long-term, trusted relationship with an advisor who will help you achieve your wealth management goals.

"I spend a lot of time getting to know my clients, and vice versa," Howell says. It's not about pushing products at clients because, "much like a marriage, if there's no chemistry between us, they won't be willing to follow my advice, nor will they be open with me about what they're trying to achieve."

In these days of second, third and even fourth marriages, blended families, stepchildren, sideline businesses and real estate assets acquired prior to 'couple-dom,' investing the time with an impartial, independent financial expert makes a lot of sense.

"Women tend to be a little more emotional [about money] and a little more conservative than men when it comes to investments," Howell says. "That's not necessarily a bad thing. Many of us suffer from what I call 'bag lady syndrome' where we worry about how we'll take care of ourselves, financially, when we're older."

Having a financial advisor to advise and guide you can ease concerns about making financial mistakes, although Howell points out that 'mistake' is a relative term. For example, while taking out a second mortgage on a house that's almost paid off may not make sense for Susie Smith, age 62, it may be just the right approach for Jaticka Jones, age 47, who needs to fund out-of-state college tuition for her sons for the next few years.

The bottom line when looking at your financial needs and goals is to recognize that your situation is unique. Take the time to find a good advisor who will really get to know you, and who will customize a financial strategy that makes sense - for you.

Click to make comment

Email to a Friend

Email to a Friend

Your Financial Future

Teaming up with a financial advisor

by Dianne Bernez

January 1, 2006