If the title of this post triggers you on some level (probably because you are a financial advisor… or you know one that you really like and trust), stick with me for a moment.
To be clear, I’m not a financial advisor or financial planner. I don’t sell financial products, and I don’t give specific financial advice.
I’m an educator, coach and mentor that specializes in supporting entrepreneurs to keep and grow their money, and many of my clients ALSO work with a financial advisor, which can be great.
What’s a huge red flag to me is when someone says something to the effect of, “I don’t need to understand what’s going on with my money because some else handles that for me.”
If you’re not an expert in a particular area, it makes sense to seek out an expert that can support you in that area, right? So if you don’t think that you’re great at managing and investing your money, it’s smart to get support.
But here’s the distinction I want you to get…
There’s a difference between delegating and abdicating responsibility.
When people are disconnected from their money and don’t really understand what’s going on, more often than not, their portfolio is leaking money without them realizing it, and they’re taking unnecessary risks with their financial future, even if they have a great financial planner.
One of my amazing VIP clients actually had a financial advisor that she liked and trusted that stole all of her money(over $400,000 at the time), and she’s not the only person I know who has been in this situation.
Bottom line, I don’t trust someone just because they call themselves a financial advisor or a financial planner.
I’ve also met people who call themselves financial advisors or financial planners who work for insurance companies and are limited in what financial products they can offer. So they might recommend products that are not the best fit for their clients because that’s all they’re licensed to sell.
And even in the case of well-educated, high-integrity, certified financial advisors, many Big Box Advisors are using outdated investment strategies from the 70’s that work to an extent, but leave their clients’ portfolios with invisible, costly, and totally avoidable money leaks, while subjecting them to unnecessary price volatility and risk.
If you want to implement one of those strategies for yourself, you can do it with one ticker symbol in an online brokerage account like TD Ameritrade or E-Trade and save yourself the 1-2% in fees, which can make a really big difference over time.
For example, if you have a million dollars portfolio growing at 11% over 20 years, just 1% in fees will cost you over $1.6 million in growth.
All that said, I do believe that there are plenty of trustworthy financial advisors, and that it can be totally worth it to pay for their support. I actually have several financial advisors that I work with in various capacities.
So I’m not knocking financial advisors, but I AM a stand for independent financial education.
I’d love for you to work with your advisor to implement a strategy that you understand and delegate aspects of it to your advisor, like researching funds that meet your criteria and presenting them to you, instead of saying “You handle it. I don’t want to look at it.”
Financial expert Dave Ramsey says that the right financial advisor has the heart of a teacher, not the heart of a salesperson.
When you meet with this person, do you feel like you learned something? Do you feel empowered to make better financial decisions? Or did you feel pressured or belittled? If it’s the latter, I encourage you to walk away.
And if you already have a financial advisor that you like and trust, that’s great. I still encourage you to make a lifelong practice of increasing your independent financial education.
Penelope Jane Smith is the premier financial freedom coach for women entrepreneurs and the go-to expert for some of the biggest names in the conscious business industry. More about Penelope.
Great advice! I have had both the good and the bad advisors. I love Penelope’s balanced approach to finances.
Great advice for any area of our life that we delegate. Need to know enough to ensure that whatever is happening is in alignment with our goals and values.
The importance of reading and collect information to make the decisions that best benefits you 🙂