by Cassandra Laymon, CFP®, MBA
- When you start thinking about your finances, do you get anxious or break out in a cold sweat?
- Are you overwhelmed with all the steps you need to take put your financial house in order?
- Do your eyes glaze over when you have to build your own mutual fund portfolio in your 401(k) account at work?
- Do you have the knowledge to make these decisions, but lack the time? (You do have a full-time job, don’t you?)
If you answered yes to any of these questions, it may be time to consider hiring a financial advisor. The Bible even encourages us to seek wise investment counsel:
Listen to advice and accept discipline,
and at the end you will be counted among the wise. ~Proverbs 19:20 (NIV)
Oh, how I hate that DISCIPLINE word! It has many negative connotations of rule-following, hard work, and punishment when expectations are not met. Here’s a better definition I’ve come to appreciate: Doing what must be done even when you don’t feel like it. How disciplined are you in financial matters? Are you paying off debt, saving and investing for the future, and giving as generously as you’d like to? Do you an actual plan? If no, why not?
Often it helps to have a trusted guide to lead us along – someone with the experience to help cut through the noise and focus on what’s most important in terms of your age, risk, and wants and needs.
I think one of the best reasons to hire a financial advisor is to have an accountability partner.
Aren’t your workouts at their best in terms of effectiveness and consistency when you have a personal trainer or gym partner? It’s great to have an advisor when you’re tempted to go off plan, but want to stay the course. I often smile when I hear from clients who say, “I really want to make this purchase, but I think you’re going to talk me out of it.”
It’s also helpful to have an advisor when one spouse (often the husband) handles all the money.
Money issues can be a hot topic for most couples, and it’s helpful for an objective third party to answer questions and explain the plan so both parties understand. And if you don’t have an advisor who provides clarity for you or gets impatient with your questions, then I would encourage you to search for a new advisor.
A financial advisor will be able to help you set the right “finish line”, and determine what steps you need to take to get there. Years ago, there was a commercial that asked, “What’s your number?” Meaning: How much do you have to save to be able to meet your goals. Very few people know what their current “number” is, let alone their retirement number. A financial advisor will ask you numerous questions about your spending, saving and giving goals and appetite for risk to determine your own personal finish line. In this way, your advisor brings clarity and specific action steps to make sure there are no surprises (like a significant shortfall) when you are ready to retire.
We often talk about being a good steward of your money, but hiring a financial advisor is, in fact, good stewardship of your time. We don’t hesitate to hire a plumber or electrician or a lawyer or a CPA, because they have specialized knowledge that we don’t. Yet many people try to manage all the details of financial planning and portfolio management on their own.
I’ll be the first to admit that there is a lot of noise in the financial world. There are so many products and pricing variables that it’s hard to know the best course of action to take. An advisor should be able to help you focus on a few of the best options, and help decide what is right for you.
What’s the worst thing that could happen if you don’t work with a trusted advisor? In this case, the worst is pretty bad. If you don’t follow “the rules” that the government has set forth, you could end of paying a lot of needless taxes and penalties. Here are a couple of examples:
- If you don’t handle your 401(k) rollover correctly, you could pay income tax on 100% of the amount.
- If you fail to pay your Required Minimum Distribution any year after you turn 70½, you will are subject to a 50% penalty.
Not a pretty scenario.
What is the best thing that can happen if you do work with a financial advisor?
You could have a great partner who will guide you through all the complexities of your financial life, saving you countless hours of reading and research, and arrive at your projected finish line right on schedule.
What should I look for in a financial advisor?
First and foremost, you should look for a CERTIFIED FINANCIAL PLANNER™. My first goal after becoming an advisor was to achieve this designation. It gave me confidence that I knew the rules or tax, insurance, investing, retirement and estate planning so I would be able to give my clients accurate and current advice. As an added bonus, CFP® professionals are held to higher standard, called the Fiduciary Standard, when giving advice. Other advisors are supposed to “do no harm” (a very loose definition, if you ask me) and a CFP® is required to always to do only what is best for you. Those are very different definitions, and why I would say a CFP® should be non-negotiable. On the Beacon Wealth Consultants team we have a group of CFP®s and CPAs to ensure our clients are getting the most accurate advice.
If you are also interested in managing your money from a biblical perspective, I also recommend you work with a Certified Kingdom Advisor™. This is a rigorous course (almost as rigorous as the CFP® exam) to ensure you understand and implement biblical wisdom in your practice. We require all of our advisors to obtain this certification because this is a cornerstone of how we operate our business.
If you are convicted that you don’t want to invest in companies that oppose your faith values (abortion, pornography, and addictions to name a few) you should also inquire about Biblically Responsible Investing. If you don’t’ inquire about it, your advisor won’t know it’s important to you, even if your advisor is a Christian.
Can you see how a trusted advisor may be the key ingredient you’ve been missing for a happy ending in your financial life? If you have questions that would help you decide on getting financial help, don’t hesitate to ask us as firstname.lastname@example.org.