On this episode of the Millennial finance podcast Financially Well, I have a slightly different focus: financial planning. I specifically want to focus on the 3 best questions for Millennials to ask a financial advisor in 2022.
If you’ve ever researched “financial planning,” you’ve probably come across an article such as Nerd Wallet’s “10 Questions to Ask a Financial Advisor.” These articles are very useful, especially for anyone who has never worked with a financial advisor. For example, Nerd Wallet encourages consumers to demand that they ONLY work with a financial advisor who commits to the fiduciary standard. Author Andrea Coombes writes:
Similar articles talk about how you can find out how your advisor is compensated. Or whether they require you to move accounts under their management. Or even what their approach to investing is. I cannot emphasize enough how critical these questions are.
But, that said, these questions also reflect the minimum that you should consider when selecting a financial advisor.
Before I talk in more detail about the best (less common) questions to ask a financial advisor, I want to put this financial planning discussion into context. I regularly have money conversations with other Millennials, either as their financial advisor or through a financial wellness program. What would you guess Millennials typically need from me?
Most couples in their 30s, for example, aren’t too interested in technical Wall Street jargon. They’re not very concerned about commentary on the next potential hot stock. And they definitely don’t want me to make their financial lives more complicated, restrictive, or stressful.
Instead, they’ve come for more clarity. They’ve come for more confidence. They want to figure out how to use money to make their lives better. They want to make sure they’re avoiding financial mistakes that could limit their options in a few years. And they want to take advantage of financial opportunities that might provide them with more flexibility when they’re older.
The differences between these two scenarios may seem stark. But there are probably more financial advisors who would rather talk about their superior investment returns than your uncertainty with money.
With that in mind, how should you approach financial planning? How can you find a financial advisor who will help you to live your ideal life? Not just in old age, but also right now?
If you’re thinking about financial planning for your family in the months ahead, make sure you are prepared to ask the most fundamental questions that I mentioned previously. But I also believe that the following are the 3 best questions for Millennials to ask a financial advisor in 2022:
This question may sound like a critique of the financial advisor’s qualifications or experience. You also could view this question as related to accountability. In other words, “Will you keep hounding me until I implement your suggestions?
But the actual purpose of this question is entirely different. This question is about the psychology of money. It’s about your emotions around finances. It’s about your current financial behavior and habits. Ultimately, seemingly solid financial advice can prove unsustainable in the long run. Even with a fiduciary who has your best interests in mind.
This is most likely to be the case when the financial advisor hasn’t taken the time to understand how you feel about money. Your feelings may relate to your experiences with money as a child. Or how your parents managed money. In some cases, your feelings may reflect a fear about not having enough money in the future. In other cases, your feelings might stem from having more money than you grew up with. A good financial advisor will take the time to ask you questions about these experiences and feelings. They’ll make sure that their recommendations will work given who you are.
This is a pretty open-ended question. Purposefully so. With this question, you’re giving the financial advisor free range to share their experiences with and knowledge about Millennial finances. The leeway that you provide, though, will quickly give you a sense for how well the financial advisor understands your life. A financial advisor who defaults to stereotypes and generalities likely isn’t a good fit for you. A financial advisor who redirects the conversation to their interests and expertise should raise major red flags.
You deserve a financial planning process that resonates with you. The themes, topics, and even logistics should reflect your life. Your financial advisor should be able to speak deeply on repaying student loans, buying a house, and learning how to invest. This question is about you. If you don’t hear yourself in the answer, you probably will have a better experience elsewhere.
Let’s assume a financial advisor has given you good answers to the first two questions. They clearly care about your past experiences with money and how those impact your decisions today. They clearly specialize in working with Millennials and are prepared to provide you with the specific help that’s most important to you. There’s still another nuance to consider, though: do they understand what your actual objective is?
Counterintuitively, the objective — in most cases — isn’t the maximum amount of money. After all, money is a tool. It’s a tool to make your life better in different ways at different points of time. Your primarily objective probably isn’t to just die wealthy. That might be nice for any kids or grandkids you have. But you likely want to live your life, too. Strong investment returns aren’t the primary objective here. Instead, the objective may look like frequent visits to see family, a beach house at your favorite vacation destination, or substantial charitable giving to a cause that you support. The specific objectives look different for everyone. But, at their essence, they’re usually not about the size of a bank account. You need to make sure that your financial advisor understands that.
I hope this somewhat unique episode and my discussion today help you to feel more comfortable with the idea of financial planning. Most people don’t want to spend more time than they need thinking about money. This is one reason why real, high-quality financial planning can almost immediately make people feel so much better about themselves and their lives. You may not be ready for financial planning today, or even next year. But when you are ready, I hope you feel empowered knowing what questions to ask a financial advisor.
Thanks for listening today. I encourage you to subscribe to this Millennial finance podcast to learn about more ideas that you can apply to your personal finances in the weeks ahead.
[Editor’s note: this article reflects the transcript (which I’ve edited for clarity) of a recent Financially Well podcast episode.]
Kevin Mahoney, CFP® is the founder & CEO of Illumint, a Washington, D.C.-based company that offers financial planning for Millennials. He specializes in navigating the new financial decisions that arise during our late 20s and 30s, such as repaying student loans, buying a house, saving for college, & learning to invest. In addition, Kevin also works as a financial wellness program provider to Millennial employees around the country, including group speaking engagements.
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