If someone asked how you were doing financially, what would you say? You don’t need to answer because I know that very few people have everything they need for a financially stable home. I know I don’t. Just like dentists probably don’t floss every night, financial advisors don’t do everything they tell you to do either.
What they can do is get you started on the right path by alerting you to “leaks in the boat,” or turn an old sinking investment into something that is much more profitable. Remember that financial advisors are in business to make money off of making you money. If you keep that in mind, and not let them railroad you into doing something you don’t want to do, you will see that there is a lot of benefit to be found in getting financial advice from someone else.
It is important to remember that they should discuss the following (in order) with you to understand your specific needs. If they start right away on investing instead of basic needs, then you may be talking to the wrong person. (Hint: if you have all of this information put together ahead of time, then you can really put the financial advisor to work making money for you!)
Your dreams.
You have dreams that you want to save for. Is it the cabin in the woods or adopting a baby. If you are saving for something in the near future, your investments should be different than long-term investments.
Your needs.
Someone might be doing well with a savings account or 401K, but does not have a living will or enough insurance if something might happen to them. Do you have a kid going to college in the next few years and you need to save for them?
Your budget.
Financial advisors know how important a budget is. They should know that if you are living paycheck to paycheck, then you should not be socking away hundreds of dollars a month on your 401K.
Emergency Fund.
A financial advisor should discuss with you your basic needs like saving an emergency fund before advising on any other large investment. Build your money market account for emergency savings. Use RateCatcher.com to find the best money market rates.
Your investments.
A good financial advisor will explain to you the importance of diversifying your portfolio and helping you to understand how it is funded. A good financial advisor will help take your old 401K from the company you no longer work for and turn it into something much more profitable for you.
For some people going to a financial advisor is like going to the dentist. You don’t want to be lectured. You don’t want to be told that you are spending money on the wrong things. But it need not be that way. If you have someone that does that, then you are talking to the wrong person. There are several companies that will offer financial advisement for a low or no fee. I say to always try it and see.
