Coming up, we didn’t really have full discussions about money. It was clear when we didn’t have much– when food was tight or when one of us needed to step up more than the others– but we didn’t have family strategy sessions about how to save or make money. We didn’t learn the basics. We just knew what struggle was, and that making enough to get by meant that everyone in the family hustled. Our ticket out of that, though, wasn’t a good job or a lottery ticket, it was education.
We dig into the golden ticket of education in a number of other sections of Thicker Grits, but here, let’s talk about money. We do a lot of talking about the functionality and strategy of finances here at Thicker Grits, but part of doing that is understanding who all of the players are and the roles they play. We have a lot of respect for coaches here, but today we’re going to rap about financial advisors.
What is a financial advisor?
A good financial advisor is a coach with fiduciary responsibility whose primary role is to teach you how to navigate financial decision-making, help you to identify blind spots, and assist with the resolution of complex circumstances. With this assistance, the coach will be able to facilitate your progress towards your goal, hasten your results, deepen your learning, and help to prioritize any competing goals.
Often, people misunderstand the financial advisor’s role and relinquish all control to a stranger with credentials to invest money in ways beyond understanding. But black-box investing is exactly what gets so many people in trouble. First, a good financial advisor should not take 100% responsibility for decisions along the journey but should guide decision making with information and teaching. At the end, you should be the decision-maker and fully understand every decision and investment made with your money.
Fiduciary Check work
See blind spots Make decisions
Teach the way Steer learning
Assist with complexity
Facilitate and expedite progress
Prioritize competing goals
When am I ready for one?
But when is the best time to engage a financial advisor in your journey? Honestly, you can engage a financial advisor at any point along the journey, particularly if you are feeling lost or stuck. But there are some key things you can do to make sure you maximize the return for your invested time and energy.
Before anything, set your mattress money aside. This is equivalent to 1-2 months of rent or mortgage and can be as much as 1-2 months of living expenses.
Next, set your Everest. Do you want to be debt free, retire early, invest in a real estate portfolio, prepare for your children or prepare for an educational milestone? Is there something else you’d like to do? Write all of your goals out– big picture and any smaller ones that you’d like to hit along the way. It’s okay if they compete.
Get it in order. Get your data and get an idea of where you are. Develop a current budget to get a snapshot of spending. Pull a copy of your credit report to know all of your numbers and to get a complete idea of everything that you owe. You can get one free copy of your credit report from your bank every year. Before you go to a financial advisor, print out your most recent statements from all of your accounts so that you can understand what your numbers are. If your income is not stable, here is where you identify that and, if it’s within your bandwidth, pick up whatver side hustles you may need to help stabilize you.
Have an idea of any spaces you want to work on with your advisor. Identify your learning goals. Do you want to learn about investing or real estate, for example? Identify any habits you’d like to build or break. And then, think about how often you want to meet with your financial advisor, and be open to having them suggest a schedule.
Build an emergency fund. This fund should be easily accessible and liquid savings (no investments– cash or CD at a local bank or credit union) that amount to six to nine months of household expenses.
Once you’ve set these things up, you will be ready to meet with your financial advisor and tackle your goals.
What’s your Everest? What are you hoping to accomplish?