When Do-It-Yourself Isn't Good Enough
My husband, Neil, and I have always considered ourselves sophisticated, do-it-yourself investors. We exhaustively research investments, then match our moderately high tolerance for risk with our long-term goals of funding our kids' college education and saving for retirement. We thought financial advice was for investing neophytes; what could we learn that we couldn't find out for ourselves?
Well, that thinking only got us as far as the end of the bull market. With our portfolio down more than 30% last year and this year's negative returns mirroring the market, I began to question our ability to meet our financial goals. I'm not alone. Last year, the National Association of Personal Financial Advisors reported a 35% increase in the number of people seeking advisers, and this year they're on track to see the same.
ENDLESS OPTIONS. I decided that my husband and I needed a financial checkup. While we had recently bought a home, drafted wills, and increased our life and disability insurance, we had no real plan as we blindly socked away money for the future. We have several separate and pooled accounts, both taxable and nontaxable, but we're hazy as to the overall allocation of our assets. Should we shift some of our longtime growth funds into recently higher-earning value funds? Are there any tax-saving strategies we need to consider? Should I invest aftertax dollars in an individual retirement account? Will we have enough money to retire in 15 years, maintain our lifestyle, and travel? These were just some of the questions I thought about.
Neil didn't think we needed advice. In his mind, as long as we were saving the maximum in our retirement plans, and then some, we'd be fine. But my financial anxieties got the best of him, and he agreed to see an adviser. I immediately got to work trying to find someone before he changed his mind.
The options seemed endless--certified financial planners, personal financial specialists, chartered financial consultants and analysts, registered investment advisers, money managers, and money coaches. I asked everyone I knew for a recommendation of someone they knew who provided investment and financial advice. I ended up with four names and called them.
TRUST. Rather than focus on a person's professional title, I looked for someone who could address our specific questions. While most of my concerns are fairly universal, we also needed to address the complications of how to handle income from the sale of a family business. Over the phone, I asked about the advisers' backgrounds, how long they had been in business, how they were compensated, what services they provided, what kind of clients they served, how often we would meet, and whether there was a minimum account fee or investment, among other things.
I particularly liked one candidate, but wanted his opinion of our portfolio without investing the minimum $300,000 he normally requires of a client. I asked if he would consider a one-time financial checkup with the possibility of managing some money in the future. After some negotiation, he agreed to review our asset allocation and make recommendations for a $750 consulting fee.
I'm busy getting our financial files in order for our mid-May meeting. I know my husband and I have different goals and expectations. I want someone I can return to for ongoing advice and perhaps future money-management services. He's looking for a one-time analysis. "Women choose a financial adviser for a long-term relationship with someone they can trust. They see the adviser as playing a significant role in making the investing decisions," says Bridget Macaskill, chairman and CEO of Oppenheimer Funds. "Men see themselves as in control of investment decisions, so building a trusting relationship is less important." That's certainly the case in my family. But I figure it's one step at a time.
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By Toddi Gutner