Why Americans are Afraid to Talk to a Financial Advisor

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In a recent study, a majority of Americans are scared to speak with a financial advisor. Almost three quarters, 71%, have reported that they are afraid to talk about their personal finances with these experts. While the survey itself should not be taken with complete accuracy, the figure does suggest a level of discomfort people have when talking about their finances.

But why are people afraid to talk to financial advisors? When we are ill, we often look to doctors to help alleviate the problem. If we are involved in any legal drama, we often consult lawyers. Why should this be any different?

The answer to this is simple. Money is a complicated topic. Whether you are financially stable or financially struggling, the mere idea of opening up to a stranger about your financial status can be quite intimidating. Even if you know the person, money, in itself, is a very personal subject. Regardless of how personal money is, this should not deter you from seeking professional advice from a financial advisor. A financial advisor’s job is to merely guide their clients with various strategies for investing and savings. Typically, they provide their clients and customers with financial products and services so that they can create optimal financial plans and investments for their client’s futures.

Below, you will find five of the biggest misconceptions people have about financial advisors. I wanted to make sure that I am able to clarify any of those fallacies so that you can make the most appropriate decision in further bettering your financial future.

1. This is a stranger! How can I trust a stranger with my money?

One of the most common misconceptions people have is that you are involving a stranger into something that is incredibly personal. While this person is a stranger, you need to keep in mind that the individual is also a trained expert and licensed professional. To learn more about the individual, take a look at their website. Do your homework. Spend some time learning about the financial advisor’s firm, their business practice, and overall success. Look to see they have the appropriate licensing and overall experience. In addition, look to see if that specific financial advisor has a personal or professional site. This will give you a stronger window of learning more about the person you are working with.

2. I Have Made Poor Financial Decisions

Another misconception we often hear is that people are too embarrassed to discuss certain financial slip-ups they had in the past. While knowing a person’s financial history is important, it should not be the sole factor of refusing professional help. The best way to move on from this is to learn from your mistakes. Financial advisors are trained and certified to view your financial profile holistically and to educate and guide you in the best possible way. Take those embarrassing mistakes and learn from them. See what you and your advisor can do to leverage those flaws to optimize them in the best possible way.

3. Financial Advisors are for the 1%

Oftentimes, people are intimidated solely from their annual salary. Keep in mind that financial advisors aren’t just for the rich. Do not feel intimidated to approach a professional of how to optimize and leverage your assets. Just because you are accumulating a certain amount now does not mean you can’t make more through strategic investments. If, however, the cost is prohibiting you from seeking help, try looking at lower packages. In addition, looking for a financial advisor is an overall investment. You are better off investing in an expert than making costly mistakes by yourself.

4. Finances are Personal Issues

This is probably the most common issue people have when avoiding a financial advisor. Money, as stated before, is a very complicated entity. It is incredibly personal and oftentimes uncomfortable to talk about. So why talk to a complete stranger when you can’t even talk to your family about it? The reason why is that these are experts in their field. They have seen success and have seen failure and know best way to optimize your finances during this journey. Do not be fooled that you can just avoid talking about the subject. Knowing where your finances are going will be a huge attribute in growing your future. Talk about it. Internalize it. Be aware of it.

5. I Have Savings. What Can They Do For Me?

As much as it is important to save, it is also important for you to diversify your profile. The more engaged you are with your money, the stronger you are at making decisions for you future. Look at new ventures. I cannot promise you they will always work out, but they will give you a better insight in how to play with your money. In addition, savings is very different from investing. A financial advisor wants to grow your money. They are looking for greater strides in your future. Sometimes you need to take that risk if you want something bigger than yourself.

Terminology You Should Know When Meeting With Your Financial Advisor

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When you are working with a financial advisor you will often hear buzz words that they will throw at you when you are planning your financial future. This type of confusing jargon should not intimidate you. Rather these words are just a part of the industry. Below you will find ten terms you should know to better prepare your understanding for your financial future.

401K

This is a retirement savings plan that is sponsored by an employer. It allows the employee to save and invest a piece of their paycheck into an account before taxes are taken out. Taxes are not paid until the money and the amount is withdrawn from the account.

529 Plan

For families wishing to save for their children’s college funds, look into a 529 plan, which is sponsored by states, state agencies, and educational institutions that are authorized by Section 529 of the Internal Revenue Code. A 529 plan is a tax-advantage savings plan designed to encourage saving for future college cost.

Annual Report

An annual report is a comprehensive report on a company or individual’s financial activities throughout the preceding year. Annual reports tend to give information on the financial performances, assets and liabilities, profits and losses, expenses, revenue, and much more.

Commission

A commission is the money that a broker or advisor charges to a client for their advice and services.

Dividend

Dividend is the money paid to a class of a company’s shareholders. A company pays this amount quarterly to its investors.

Earning Reports

This is something that can be found in the annual or quarterly report. Earning reports are the public company’s report cards that state the overall income of the company’s earnings, expenses, and net income.

Fiduciary

A fiduciary is a trustee who is legally appointed to hold assets for someone. This person is able to manage the assets for the other person’s benefit.

Margin

A margin is when a client uses the broker’s credit to buy a security. The amount the client pays is the margin.

Net Worth

The net worth is the total assets minus the total outside liabilities of an individual or a company. This is used to talk about the value of the company or individual’s personal finance.

Portfolio

This is the overall work and investment your money is going into. This provides a variety of financial assets such as stocks, bonds, and cash equivalents.

Before You Invest

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Any time you are planning on investing in a stock or financial plan, you are devoting more than just your money. There, you are dedicating your time, resources, efforts, and funding to achieve a greater goal. In essence, it is more than just a piece of paper. It is a representation of you becoming a part owner of a new entity. When investing in a company, it is imperative that you do your due diligence before making any type of serious commitment. Any spur of the moment actions could lead you into a very unfavorable situation. Below, I have outlined a variety of helpful tips that can help ease you into making the right decision. Remember, investing is a gamble and a risk. So to do your homework is really the only option when making your decision.

So what is the homework?

Especially when I bring up the word homework, many people immediately think of long hours reading and analyzing data. One thing is sure, they are not wrong. When I talk about homework, I am talking about the history and financial statuses of the company you are planning on invest in. Having a strong holistic view of the company and its background will lead you in becoming more confident about your decision. Imagine that you didn’t do your homework and that you decided to invest because of a friendly tip. While beneficial at times, this is an incredibly risky move. Going into a company and making any type of financial commitment is basically a gamble. At one end you can hit the mother load and reach your financial goals. At the other end you can be facing a financial crisis and losing more than just your investment. Because of this risk, because of this gamble, I highly recommend that you do your due diligence and analyze the overall situation before making the leap.

Start off by researching the Chief Executive Officer. The Chief Executive Officer (CEO) is the most senior corporate administrator or executive in charge of managing the overall organizations. When you research him, make sure that this is a person who can represent the company in the best way possible. Validate their vision, goals, and leadership and decide whether or not it aligns with your future goals. In most cases, any concerns or worries about a CEO can completely compromise an entire company and cost them millions. To make sure that the company has the right leadership as you the following questions:

  • What is the CEO’s vision and goals for the company?
  • What direction is the CEO leading for the company?
  • Do I believe in the same values and principles that the CEO is pushing for in the company?
  • Does the CEO of the company have the right credentials and experience to put the company in the right direction?
  • Where does the CEO see the company in the next year (five years, ten years)?

After analyzing the company’s leadership, start examining the company’s business model. A business model or business plan is an abstract representation of the entire organization. This breaks down the overall strategy the company will use to maximize its profits in its industry and field. In this business model, the company should have a strong sense of its goals on a timely fashion. If they do not have these steps outlined, note that in your head and ask for later. Having a steps and goals in a timeline manner will help you assess where you can begin seeing return. Similar to the CEO section, you also need to begin asking some hard-hitting questions about the company.

  • What is the company’s goal? Where does it see itself in one year (five years, ten years)?
  • What were the financial trends in the company?
  • How is the overall work culture? Is there a lot of turnover?
  • What are company’s steps in moving forward in the future?
  • Highlight and question any unwelcoming trends such as low revenue / sales or high cost and expenses

Having this holistic view and history of the company will put you in the right place to make a decision.

The next thing you need to assess are the financial aspects of the company, this being the: profit margins, revenue, and cost. Analyzing these important numbers will solidify your decision in whether or not you should invest in the company. These valuations provide an overview of what you could potentially be seeing in the next coming years. One tip when analyzing data is to not be fooled by only one-year growth. This could have sporadically happened because a variety of factors. When you analyze these numbers, make sure you have the overall breakdown of the past five years. This will allow you to gage all positive or negative trends that you could potentially see later on in your investment.

Now if you are still uncertain about making your decision, talk to a financial advisor or your accountant. These are professionals who can provide you the best advise for your financial situation. Furthermore, they will be able to break down all of the necessary information and financial jargon that you may have trouble with during the initial meeting when you were first asked to invest.

So there you have it. Before you invest, do your homework. This ounce of effort will separate those who make money from those who lose money.

The Reasons and Steps for a Strong Retirement Plan

Retirement piggy bank

Before we begin discussing why you need to have a retirement plan, you first need to comprehend why you need to take ownership of your retirement plan. One thing is certain; we cannot rely on others to provide a long-term solvency for our futures. At the end of the day it is your future. The first obligation is to you.

Why do we need a retirement plan?

This may seem like a trivial question, but you would be surprised to learn how people are very cavalier about this situation, especially when you are young. For some people, they live in the present-day where the only responsibilities they have are going on around them. Having this type of mentality, while liberating, can be incredibly damaging to you and your future. The truth is that the older we get, the more responsibilities life will pile up on us. With this never-ending rollercoaster, the stability of your golden years needs to be certain. That is why it is vital that you have strategically mapped out an overall retirement plan in which you can build up every single year.

So how do I save? Do I just put a dollar in the penny jar and call it a day? As simple as this sounds, the overall concept is correct. First and foremost, start off with a goal in mind. Ask yourself a series of questions of what you are looking for when you retire. Do you want to travel all across Europe? Do you want to stay in and take care of the grandkids? Or do you want to just read all day and enjoy the rest of your years? Having answers to these specific questions will motivate you to keep saving. If you have a goal in mind, it will usually force you in a habit to save at a timely manner.

Once you have that goal in mind, start saving. The best advice is to simply start off small. If possible try and increase that amount. The sooner you start saving, especially in large quantities, the more time your money has to grow. Make this a priority. Devise a strategic plan and be consistent with it.

In addition to staying consistent with your work, analyze the cost and expenses for your dream retirement you. This goes hand-in-hand with keeping a goal in mind. While everyone may have a different view of how they want to spend their retirement, the one thing they can agree on is that retirement is expensive. They are not wrong. Experts estimate that you will need at least 70 to 90% of your preretirement income to maintain your standard of living when you stop working. Being aware of the exorbitant amount of these expense will help you frame how much you have to save per month and how long you will be saving.

To help aid you with this cost, try and contribute to your employer’s retirement saving plan. For most companies, your employer will offer a variety of retirement saving plans such as a 401K. Make sure you sign up for these plans. While they cannot fully compensate everything for your golden years, it will provide a strong cushion later on down the line.

Last thing you need to be aware of is to not touch your retirement savings. As much as consistency can be a problem for some people, leaving your retirement alone is its own entity. If you withdraw from your retirement savings, you will be losing more than what you have invested such as tax benefits and withdrawal penalties. Regardless of the situation, leave your retirement plan alone. It is easy to fix a situation. But it is not easy to fix your future.

Scott Storick, From Player to Financial Professional: The Five Life Lessons Learned From Basketball

 

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Not many people can say that they made a career from basketball. I know what you are thinking, “Did this guy play in the NBA?” The answer to that question is no. While I did play in high school and collegiately at UNC, Charlotte, I never made it to the big leagues. But my passion for the sport helped jumped started my career in finance through a simple pick-up game with some partners from the Guardian. During that game, my resume and jump shot were not the reasons why they decided to bring me on board. My financial background of course helped me ease in conversationally, but it was the traits that I brought on the court that highlighted my overall work ethics. There are so many dynamics from the game of basketball. It is important that you correspond to those leadership qualities and translate them to your everyday life.

Be a team player. Learn the fundamentals and work with those around you

Like a child, you need to know how to crawl before you walk. Similar to basketball and any other professional field, you know to understand the basics and fundamentals of the game. Knowing how to pass, dribble, run, and shoot is what will establish you as a player. Similarly show the basic knowledge of your professional field and quick adaptability to change is what employers love to see. Show them that you are malleable; you are able to learn, grow, and develop in any aspect of the game.

Self-Confidence, Be bigger than yourself

Never hide the fact that it is your intention to be the best. In every game we want to win. It is our priority to perform at the highest level. Having this type of self-assurance in how you approach the game or overarching decisions will be a true definer in your overall mental thinking. Remember, it is more than being physically stronger. Mental strength and self-confidence can go a long way in pushing yourself forward in your career whether it is on the court or at the office.

Strategies, Anticipate the Play

The greatest players have been extraordinary not simply from their tricks and their points, but from their vision and awareness of the game. Initiating a plan of action, especially in the heat of the game, is what separates a player from a leader. Having this keen type of intelligence gives you an advantage in seeing and analyzing an entire situation at creating success once understood. This is by no means an easy task. Not many people can anticipate the play before it actually happens. You want to always have your eyes and ears open so that if it is your point guard feeding you the ball or a senior partner handing you a contract, you know how to best approach the situation.

Leadership, take control when need be

There will come a time where you need to veer away from the flock and become the one that leads the herd. When this day comes, own it and embrace it. Begin by establishing bold visions and goals for you and your team to work towards. Having these short-term and long-term goals will push you and those around you to strive for something bigger. Furthermore, work in a purposeful and strategic way. Aim not simply for what is ask from you but what you can constantly improve on. This is what a leader does. A leader motivates, inspires and creates. No matter where you go, embracing this responsibility in your professional field will change you for the better. Just remember, at the end of the day, think bigger picture.

Perseverance, never give up, always go for the win

No matter what the situation is, always find a way to take control. It may be difficult at times when things are not going your way, but believing in yourself and pushing that ‘never give up’ mentality is what you need to do to take control of the game. This perseverance separates the winners from the workers. It separates living and dying. You need to want it more than you want to breathe. Coaches, teammates, supervisors, and coworkers will see this in you. It will create that chain reaction that will eventually lead you to victory.

 

 

Look Out For More

Look out for more articles regarding financial advice and savings. I’ll be sure to have more rich content posted soon.