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What to Expect When Working with a Financial Professional

What to Expect When Working with a Financial Professional

November 09, 2016

Have you ever been to a networking event? Maybe it was a chamber of commerce, a rotary club or an alumni gathering. Did you feel like you were drowning in a sea of financial professionals? Advisors, Representatives, Brokers, Agents, Planners, Investments, Insurance, Taxes, Equities, Securities. What does it all mean? How do you know who to work with?


Building a relationship with a financial professional may be stressful or intimidating, especially if you do not know what to expect from the process or experience. Here are a few things to ask yourself and think about as you begin working with someone:


  1. What kind of person do you need?


One of the first questions when deciding to establish a alliance with a financial professional is, what kind of person do I need to work with?


Most families will work with a variety of different financial professionals, but when it comes to the primary person you seek out for financial advice, what should you expect from them? What should they provide you?


Ideally, your primary financial relationship should have a process in place that covers everything in your financial life and examines how all of the pieces work together. If someone only spends time with you discussing the mix of stocks and bonds in your portfolio, you don't have a comprehensive financial relationship, you have a portfolio manager. If your primary financial relationship has only spoken to you about one or two types of insurance policies, you don't have a comprehensive financial relationship, you have an insurance agent.


Maybe we need a new title for the type of relationship that is comprehensive. When someone asks me what I do professionally, I struggle to answer with "financial advisor". With the comprehensive process we deliver to our clients, I don't think "advisor" does it justice. Your primary "person" should review all of the moving parts of your financial life with you – protection, cash flow, investments – and how those pieces work together.


  • Protection: Your advisor should review all of your asset protection. That doesn't mean they should just discuss what type, if any, life insurance you have. It means looking at your home, auto, umbrella coverage, wills and legal documents, buy/sell agreements, group benefits you elect at work. Your relationship should be there to help you understand what you have in place relative to what you would need to be fully protected. The financial advisor will educate you and implement these strategies, even if they are not the person to handle that transaction.


  • Cash Flow/Savings: Your advisor should review your cash flow and savings. The rate at which you save can be so much more impactful than the rate of return you chase in the market. Has your advisor helped you create a system in place to save more money or have they simply asked you to just contribute to your account they manage for you? Have they helped you understand a balance between eliminating short term debt and building up assets on your balance sheet?

Most clients usually focus or obsess on one only to neglect the other, when both are needed for as part of a balanced financial plan.


To think of it another way, have you ever had to do physical therapy? Maybe there was something wrong with a hip or shoulder. Did your physical therapist take you through exercises only for your injured hip or did they make sure to address the other hip as well to make sure there was BALANCE? It’s the same in your finances.


  • Communication: It is important to know what your advisor will expect from you. Assuming you have established a valuable relationship, your advisor will expect you to be completely honest with them. Your advisor is not there to judge you; they are there to help you. Communication is key for this to happen. Maybe there is a recommendation your advisor made that you can't seem to understand how it fits in your overall goals. Make sure you ask them to elaborate on the recommendation. If you feel like you've "fallen off the wagon" lately and you just can't seem to save a dollar, let them know. Maybe there is a tweak to your advisor's cash flow system that can help you get out of ruts or avoid them in the first place.


  • Expectations/Maintenance: After you build a foundation with your advisor and begin implementing your financial strategies, it is important to maintain communication? People often ask how often they should meet with their advisor. The answer to that is you should meet at the frequency in which you feel comfortable. For most of my clients, it’s AT LEAST 1-2 times per year. Beyond the 1-2 times per year, you should reach out to your advisor and let them know when you've had a significant life change or have one coming soon. Examples of this might be getting engaged or married, expecting a child, buying a home, a promotion or change professionally, a serious medical event, a death in the family, or divorce. Those life changes can have a big impact on your financial life, so communicating with your advisor during those times is crucial to maintaining financial health through them.


  1. With today's technology, do I even need a person?


My answer to that question would be yes. Today's online platforms and robo-advisors are great and low cost solutions for investment management, but can they help you with the emotions of financial decisions. Have you ever heard a statistic that the stock market has averaged around 8 percent while the average investor has averaged around 2 percent? That's because we as human beings are EMOTIONAL. We need a coach to hold us accountable and to coach us through the times where we're making decisions with EMOTION and not logic.


While it may be overwhelming working with a financial advisor initially, it can and should be a positive experience that positions you better for the long run. It’s important to remember who to work with, the type of planning the do, and have clear communication and expectations for the relationship. By doing those things, you will have more confidence in your financial plan and in yourself. 


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