Are you a Registered Investment Advisor (RIA)?
There are lots of different roles out there: RIAs, Certified Financial Planners (CFPs), Stock Brokers and Financial Coaches. It is important to ask whether the Advisor you are working with is actually a Registered Investment Advisor. This means they are registered with the SEC (Securities and Exchange Commission) and bound by the rules of The Investment Advisers Act of 1940, one of the major pieces of legislation passed after the market collapse of 1929 and subsequent Great Depression. This binds them to a fiduciary duty, the highest standard of care legally in the US. An RIA is legally required to put client interests ahead of their own. They are also required to maintain licensing and meet examination requirements, often the Series 65 or Series 66 and Series 7.
An RIA will help you clearly understand your financial options to reduce your financial overwhelm. They will help you take a step back, understand your priorities and goals, and then help you manage your expectations and investments to get there. An RIA is like a financial doctor - they can diagnose the problem and help you with financial wellness too. They can also be a central resource to connect you to other experts as needed, including financial planners, lawyers, tax accountants, insurance agents and more.
Unlike other STEM fields where we have seen more women enter the industry, today, only 15% of RIAs are women. This plays a big role too in why women feel less comfortable going to an RIA.
How much money do I need to meet with a Financial Advisor?
Every Advisor has different asset minimums. Most should look at you for your long-term relationship potential, but they also want to be efficient with their time. Visit their website and look for what their asset minimum is.
But a GOOD advisor should look at you for your relationship potential, and not just see you as a single transaction for right now. If you have $5,000-$10,000, that's a great place to start, but even if you don't, it doesn't hurt to meet with someone. They will look at your income potential and savings potential.
An Advisor can help give you second opinions, review your 401K allocations (even if they aren't managing it). A phone call is free - you can always call and ask these questions. A good Advisor will always have a free, first consultation - it's a win-win for both of you. They want to make sure you are a good fit for them, and you should make sure they are a good fit for you.
How much do you charge?
The industry standard is based on a percentage of the assets managed. You will hear it quoted as "Fee Only." It typically starts as 1% of assets under management, and then likely goes down from there depending on how much you are giving them to manage.
A asset-based management fee aligns the Advisor's interests with yours - they are incented to grow your assets. They aren't compensated for selling you products, like stock brokers, whether you need them or not.
An RIA is LEGALLY required to explain how they will be compensated to you, so definitely ask this question.
How does a Financial Planner differ from an Advisor?
Many people aren't ready to invest yet. A financial planner can help you get there. They can take a look at where you are today, and map the path to getting to the point where you have savings to invest. They charge more by the hour than as an asset-based fee, since you aren't investing assets yet. They can help you answer one-off questions, tackle specific financial issues, and help you when you aren't necessarily ready for a total package.
A good RIA will likely have Certified Financial Planners either on staff as part of their team, or be able to make recommendations and refer you to one.
What does a first consultation meeting like?
A first meeting should be 30-60 minutes. The RIA should mostly listen - to get a feel for your background, your current financial situation, and what your WHY is, both now and into the future. You will want to come with your numbers: your balance sheet - savings, retirement fund balances, assets and debts, as well as your credit score.
A GOOD advisor will be able to guide you through that discussion, and then help you put specificity to your goals. You may want to retire someday - an Advisor will help you frame exactly what it looks like: where do you want to retire? how old do you want to be? what will your lifestyle be like?
The more specific you can be, the better you can plan and prepare. But they should really try and get to know you, where you are coming from and what you want to achieve; and you should get a feel for them too. Are they someone you feel comfortable with? Do they seem trustworthy?
What should my financial priorities be?
It really is a balance of everything - you can't just ignore one and hope it resolves itself. Debt will not go away, your child will need to be educated someday. An Advisor will help you set your goals, rank your priorities, and help you recognize that time is on your side. You can't start saving and investing too early.
When it comes to investing, time is on your side. You can never start too early. - Brittan Leiser, AdvisHERClick to Tweet
An Advisor will work to find solutions to help you start saving for your goals, while you are also paying off student loans, your mortgage, etc. You need to take advantage of the benefit of compound interest to reach your goals. You can't put off investing until all your debt balances are gone - or you will run out of time.
The benefit of a Financial Advisor is they are fully informed as to what all your options are, across all your balance sheet issues, and can help you balance them to reach your long-term goals and priorities. They provide the tools and resources to empower you and help you get there.
What are some long-term savings options most people don't think about?
It depends on your personal balance sheet and goals. But one many people don't think about is Treasury Bills. The average savings account interest rate is 0.2%, but you can earn over 2% on Treasury Bill - it's liquid, safe, backed by the government. That's what the banks are doing with your savings deposits.
But this all comes after you have other plans in place first - you want to focus on maximizing your retirement, starting with your employer options. Make sure you have an emergency fund savings in place, and then different types of retirement options beyond that. You have so many options - and most people aren't aware of what most of them are.
Investing comes down to stocks, bonds and cash - and how you diversify among those. Then, you want to think about how taxes come into play. So you start to think about how to diversify for tax advantages. As an example, you can invest in municipal bonds - debt issued by your town to repair roads or build schools - and you earn interest, but it is often not taxed at a state level.
It comes down to what works for you, given your personal situation, your risk tolerance, and your goals
What is your risk tolerance?
A good Financial Advisor will help you understand your risk tolerance. They will role play with you - how much are your comfortable losing in different market scenarios. What may be risky to you, may not be risky to them - so you want to work to make sure you are on the same page when it comes to your personal risk appetite.
What else to know about working with a Financial Advisor?
Most people don't realize the breadth of services available to you via a Financial Advisor. We try to serve as the financial hub, or financial doctor, for all your personal finance needs.
We are also constantly reading, learning, networking in the industry to stay on top of what's going on in the world, the market, the economy. We try to stay on top of it and a step ahead to plan for our clients, so they don't have to.
What books would you recommend for people to be better clients?
I'm a big fan of books that empower people to be more involved in managing their finances, and don't read like a text book. Many of these help you better understand complex financial jargon in a way anyone can understand, or simple tips anyone can implement in their everyday lives, even if you are short on time.
Thank you so much to Brittan from AdvisHER for answering your questions, and empowering all of us to get out there and meet with a Financial Advisor. Now that you know the questions to ask a Financial Advisor BEFORE hiring one, do you feel more confident, informed and prepared to do it? Take the lead - ask around for references, research options online, call and schedule a FREE introductory meeting with the 2-3 you feel might be the best fit.
Brittan and I definitely share a major passion - to empower women to be more involved and informed in their finances. If you're reading this, bring it up at your next girls' night out. Ask your friends who they use as a Financial Advisor. You don't have to tell them how much you make or how big your balance sheet is to have a conversation and support one another in making good financial decisions.
Brittan Leiser is a Financial Advisor with One Seven, a Registered Investment Advisor in Beachwood, Ohio. Brittan created AdvisHER after recognizing that in the male dominated financial industry, women often felt ignored or overwhelmed when it came to having a conversation about their own personal finances.
A graduate of the University of Notre Dame’s Mendoza College of Business, Brittan is passionate about helping clients understand their financial options in order to achieve their true potential. Brittan enjoys cultivating strong relationships, solving complex problems, and feels most rewarded when she is able to help others prepare for and live their most meaningful lives. When Brittan isn’t in the office, she enjoys running, exploring new parts of the world with her husband, baking chocolate chip cookies, cheering on all Cleveland sports teams, and teaching her one year old son the words to the Notre Dame fight song.
Do you have more questions before you meet with or hire a financial advisor? What else would you like to know? Leave a comment below, send me a DM on Instagram or shoot me an email anytime with your family finance questions. The more you ask, the better Family Finance Mom can be for everyone!
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