Shopping For a Financial Advisor

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I have been ready to invest in our retirement but my husband, Dave, and I wanted sound guidance on how to do so. Since Dave and I used Dave Ramsey’s book Total Money Makeover to pay off my student loans, save up a 6-month emergency fund, and get on track to have a 20% down payment on a home by next June, we figured it would be wise to continue using his advice as we move to the investment stage. I went to his site a couple months ago and signed up to be contacted by one of his Endorsed Local Providers (ELP). I was pleased to be contacted the next day by a financial advisor who was willing to meet up with Dave and me to discuss investing.

Meeting Advisor #1

We met the guy at a little café where he gave us a folder of information, showed us the different funds we could choose from, and then asked “Do you know what you want to go with?” My response (in my head): “Um….NO?! I have no idea what anything that just came out of your mouth even meant.”

I know Ramsey’s criteria to become an ELP is a rigorous process since he wants his listeners to be in the right hands. I think this guy just didn’t line up with what we were hoping for. I was hoping for someone who desires to know our plans, our goals, and our lives so they could best direct us with what they believe is the best option based on our situation. I want someone who will give me unbiased advice like a parent would give to their child. I’m sure that comes across as a bit needy, but this is a lot of money being invested over my lifetime and I want some solid wisdom before I hand over any check.

Try again

Two months went by and after praying and asking friends and family if they knew of any good advisors, my sister-in-law directed us to her financial advisor at Edward Jones. Her previous financial advisor had retired from the company and she found this woman to take over her account. She is located 3 hours away where my sister-in-law lives, so I took a shot in the dark and emailed her asking if she would be available to meet on a Saturday since we’d be in town.

She called me up within a half hour and was more than willing to meet with us. She emailed me a form to fill out before our meeting that covered where every dollar of our money was currently sitting along with what our short term and long term goals were. There were boxes of options to check off which was helpful since I wouldn’t have thought of some things on my own. I already liked how this was going. Now on to our meeting…

Meeting Advisor #2

I thought we would walk into this meeting, discuss investing options, pick one, and be out in an hour. On the contrary, we spent most of our two hours talking about ourselves. She wanted to know about our family, our hobbies, our get-out-of-debt-fast story, and more details about the goals we checked off in the pre-meeting form. 

She then gave us a background on her own life. She had a full time career that provided free financial counseling so she took up the offer and met with an advisor. She admired this advisor’s role in clients’ lives and soon left her company to start her own career with Edward Jones.

She explained to us that of course she makes money through her clients but she loves educating others and has a great passion to help people gain financial freedom and control their money instead of letting money control them. She knows many of her clients well and has attended birthday parties, graduations, and funerals. She also has a limit of clients she’ll take because she doesn’t want to be stretched too thin like those who take on 500-1000 clients. This was all music to my ears.

Homework

We did not choose our investing option at that meeting. Instead, she sent us home with more homework. We received 3 forms to fill out and send back to her- one covered our monthly budget so she could compare it to our goals and determine how much we could invest and where. I originally thought we could put X amount into a Roth IRA, but she decided we should probably do a little less than that for now since we want to have the down payment for a home by June and keep some savings in case we decide to try for a baby soon. That’s less money in her pocket, but she wanted to do what was best for our goals.

The second form was a questionnaire to determine how aggressive we wanted to invest based on our answers. The third form listed goals and we were to check off those we were pursuing, the priority they had, and where we stood with reaching them. She also asked Dave to send her his 401k information (not through Edward Jones) so she could advise us on that as well. We plan to meet with her soon and hear her input on how we should invest.

I thought choosing a good financial advisor would be as easy as signing up to hear from one, but I was proved wrong through my two very different encounters. Overall, I am very grateful we met this woman and feel that I’ll learn a lot from her!

Do you have a financial advisor? How did you decide on one (or decide not to go with one)?

 

This has been a guest post from Jessica. She is a Registered Dietitian and shares practical, useful tips on food, fitness, and finance. Be sure to subscribe to her blog, Budget For Health.

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Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

10 Comments

  1. Sounds like you found a good one. There is a new Rule (2111) that advisers have to follow. It focuses on suitability and accountability. Without understanding EVERYTHING about your life, how could the first adviser make a suitable recommendation?
    A Blinkin recently posted..The Most Ridiculous Ways People Found My Website

  2. I don’t have a financial adviser but if I did I would want one similar to the second one in your story. She sounds amazing! When it comes to your life savings, there should be no pressure to make a decision and it’s great that you found an advisor who is keeping your best interests in mind.
    Shannon-ReadyForZero recently posted..Two and a Half Budgeting Mistakes I’ll Never Make Again

    • We found her by asking friends and family to make recommendations so consider that option if you decide you want one. I didn’t want to keep putting off investing but I really felt like we could find a better advisor than the first. One. I’m glad we waited!
      Jessica @ Budget for Health recently posted..How Much Protein Do You Need?

  3. Best of luck to you. If you’re like me, I was confident and happy when finding a financial advisor early on, but like a lot of people, I dropped him after a few years of self-educating and the bombshell of realizing how much money I’m paying him to do, really, nothing.

    If you are planning a mostly buy-and-hold approach, why pay someone to do that? Plus at EJ, you’ll probably be paying hefty front-loads and high expenses and fees for their funds. Or, worse, you’re in a wrap account and paying a % of assets.

    This is YOUR money. I’m surprised that anyone writing about finance for the average saver would go with a brokerage like EJ. Educate yourself and ask lots of questions. Check out Bogleheads.org for some great information.

    Just my 2 cents and fair warning. I almost guarantee you will be looking for a way out in a few years. There are some good advisors out there, but don’t let her personality suck you in. She is a saleswoman, nothing more.

    • Tim- Thanks for being honest and sharing your experience. I know a bare minimum about investing but not much more, so I appreciate any wisdom I can get. If there’s a company you recommend please offer those tips as well. I’ll check out the site you recommended- thanks again!
      Jessica @ Budget for Health recently posted..5 healthy foods that get too much attention

  4. Our #1 requirement is having a certified financial planner who is also a CPA. You want one who can see both sides of the story – investments as well as tax implications. We would not have a financial planner who makes money when he or she sells a stock or investment.

  5. I actually got licensed as a financial planner just because I wanted to have advice I could trust! *grin*

    Generally, I like to know how an adviser is compensated. That’s an important part of generating trust in my opinon!
    Alex recently posted..Four Fresh Spinach Recipes


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