Conquering the Fears of Hiring a Financial Advisor: Your Path to Financial Empowerment
In my years as a financial planner, I've gained invaluable insights and helped numerous clients improve their financial futures. It's been incredibly rewarding to bring clarity to the often chaotic world of personal finances. However, I've realized that I could have made an even greater impact if not for the misconceptions people often harbor about working with financial advisors.
I encourage you as the reader to take a moment to reflect on your thought patterns around money and potentially working with a financial advisor. Are you perhaps magnifying certain issues or catastrophizing other scenarios in your mind? Our negative thought loops often conjure up difficulties that don't truly reflect the facts.
Understandably, clients rarely voice their true objections or fears upfront. I've typically uncovered these concerns in one of two ways: either after an individual became a client and shared their apprehensions, or during the initial meeting process when a prospective client's language or body language revealed hidden concerns. Below, I've listed the top thoughts and fears I've encountered about working with a financial advisor, along with facts that should negate these concerns holding substantial weight:
Thought: I can’t trust someone else with my finances.
Translation - I feel uncomfortable sharing personal financial data.
Fact: This can be thought of in two parts - a trust concern and a privacy concern. First, let’s address the trust portion. Many financial advisors operate as fiduciaries; as do I. A fiduciary is a person legally obligated to act in your best interest. This means putting your needs as a client above theirs as an advisor. In other words, given the choice between recommending a product with more commission over another with less commission (but is more appropriate), a fiduciary must recommend the option that fits your situation best regardless of its benefit to their pockets.
Second, the prospective client may be worried about their privacy. A great deal of people have heard about and understand attorney-client privileges. These privileges protect confidential information learned by the attorney during client representation. This exists within personal finance as well. Financial advisors are bound by strict confidentiality rules and must maintain robust data protection tools to safeguard sensitive client information.
2. Thought: I do not want a professional to know what I have.
Translation - I do not want to be criticized/judged for past financial decisions or my current financial situation.
Fact: As noted above, I act as a fiduciary. I am not here to chastise or make you feel less than for making the decisions you’ve previously made. Nor am I here to laugh at you because you do not understand the jargon or complexities that exist within finances. Rather, I am here to meet you where you are and guide you toward your financial goal(s). It is my goal to develop a relationship with you so that I may provide you with information and an objective viewpoint free from harsh criticism.
3. Thought: I have had a bad experience with an advisor in the past or multiple.
Translation - I worry I’m going to be taken advantage of or not get the results I’m after, again.
Fact: Everyone in the financial services industry does not operate in a fiduciary capacity. Not all individuals within finance are advisors and not all advisors are the same. Just as one bad meal doesn’t make eating a bad decision, a poor experience with an advisor shouldn’t deter you from seeking valuable financial guidance.
Similarly, we all know of a stoplight that takes forever to change to green. This shouldn’t make you despise all stoplights - that one in particular is the issue. Stoplights are there to protect you and coordinate an organized flow of traffic. Like a stoplight, an advisor who truly has your best interest in mind will aspire to protect you from making unsound decisions. The best thing you can do when speaking to this concern is to address it head-on. Discuss with the prospective advisor(s) his/her/their fees, any potential conflicts of interest, and the expectations you have regarding this partnership in the making.
4. Thought: I cannot afford a financial advisor or I do not have enough money to seek guidance.
Translation - I do not believe meeting with you will be worth either of our time.
Fact: Granted, the purpose of any job is to make money, but making a positive impact is equally as important. Discuss with an advisor what costs you may incur to engage further. Here at TRUSTLOVE, we do not charge you to meet with us. We can quickly assess your financial situation and either discuss further steps or point you toward relevant resources for your circumstances.
5. Thought: I handle my finances and do not need professional guidance.
Translation - I believe that I can manage my money just as well as a professional or insert one of the previous thoughts from above.
Fact: This can be true. Someone with a financial background could potentially do the job just as well as a licensed professional. Ironically, most of the individuals who’ve said this to me don’t have a finance background. Licensed professionals have broader expertise and access to more sophisticated tools than the average investor. I’ve spent countless hours and thousands of dollars on preliminary education, state/national exams, and continuing education. This is the case for other advisors as well. Why not leverage the resources, time, and knowledge a professional possesses so that you can achieve your financial goal?
This list isn't exhaustive but highlights the most prevalent concerns. Ultimately, the decision to work with an advisor is yours. We have only as much influence as you allow. When considering an advisor, approach discussions with an open mind and honesty, while expecting the same in return. If you're contemplating working with an advisor or are simply curious, please reach out. We'd be delighted to help you discover your limitless financial future.
