You Me & We – The search for good advice

My husband and I both love and dread home renovations.   We have lived through multiple renovations.. literally lived in the house through them.   I even have a picture of our daughter when she was just 9 months old crawling around on a subfloor with power tools (not plugged in) nearby.   The dust, the noise, the disruption.  And we can handle all that just fine.   What we dread is picking the finishings.  He doesn’t like the colours I like, I don’t like the patterns or textures he likes.  Disappointment after disappointment when the other doesn’t like what we like and had been envisioning.  We dread going here, there and everywhere in search of the ever-elusive thing we both can both agree on. But let me tell you, what we both agree on is always far better than any of the options either of us individually had thought we liked along way. When we finally agree, we both love the end result.  And it is why when the time comes, we embrace the next project.

For a couple’s financial management, finding the right advisor can be just as challenging.  What works for one of you, may not work for the other.   And if it doesn’t work for one of you, it certainly shouldn’t be made to work for both of you.  And yet, the research points to this happening in the vast majority of households.  The advisor that he uses and likes, is the household advisor.  And she doesn’t like it or chooses to ignore it.  And in the long term, this simply doesn’t work.

The good news is that by and large, wanting to make sure the spouse is well taken care of is a leading concern high net worth individuals have.   What that typically means to people is that their spouse having enough income to maintain their lifestyle, cover expenses like health costs, for their lifetime without concern about running out of money.  But is “having enough money” the only element to making sure a spouse is going to be ok?   Making sure a spouse will be ok financially should also include making sure the spouse has the right professional advice they need to guide them along the way.  And yet, 80% of widows will change advisors in the first year after their husband passes away.   Even if they have enough money, by and large widows are left scrambling to find the person or people to help them navigate their financial decisions going forward, decisions they may be unprepared to make.  It means the couples’ advisor wasn’t her advisor. And changing advisors so soon after losing a spouse means they didn’t like, relate or trust their partner’s advisor.  And that is a problem.  It’s likely a contributing factor to why UBS’s Own Your Worth Survey found that:

  • Over half of widows and divorcees discover financial surprises
  • About 60% of widows and divorces wish they had been more involved in long-term financial decisions
  • 74% don’t consider themselves to be knowledgeable about investing
  • 98% encouraged other women to take a more active role in finances

That one of you is happy with the household advisor is not sufficient. If one of you isn’t confident, doesn’t feel comfortable with the advisor, and doesn’t feel it can be improved, one of you is at a significant disadvantage and potentially set up for future uncertainty.  Like when it comes to renovations in my household, if you can set out to put the effort into finding an advisor that suits both of your individual needs and you together as a household, you are more likely to each be engaged in at least the high level financial picture. You can both be working towards the financial goals each of you and both of you have.  Taking an active role doesn’t necessarily have to mean taking it over or becoming an expert in all areas of personal finance.  Rather, it can simply mean being aware and involved.

Getting good advice is important.   Research has found benefits such as advised households build more wealth and are more confident in their finances.   While some people have the skill, knowledge and ability to do it themselves, most people don’t.

If making sure your spouse will be ok is important and currently the “household” advisor is really just one person’s advisor, it may be time to make some changes.   Perhaps it simply means both of you need to attend the meetings and in time, the current advisor can truly become the household advisor.  Or maybe it means investing some time in looking for a new advisor that suits you both individually and together. Regardless, Bank on Yourself – Why Ever Woman Should Plan Financially to be Single includes a chapter dedicated to everything you need to know about working with an advisor including interview questions.   Here are a few high-level points to get you started:

First of all, it starts with that professional’s technical ability, knowledge and ethics. Absolutely we must get this right.  Look for things like:

  • Tenure – how long have they been working in that profession, and how long at their firm? There is no right answer, but new may mean not as experienced or potentially as knowledgeable, too long may mean not up to date on the latest.   So, for instance, a long tenured financial advisor may focus on investments only just like when they were a stockbroker, but not be up to date on financial planning, tax efficiency of income or estate planning.   Tenure can mean commitment and that they have long standing clients – good signs.  Just make sure the services they provide and the breadth of knowledge they and their team have is suitable for you and your situation.
  • Institution – are they with a reputable firm? This provides both compliance and oversight of your accounts, as well as the security of where your money is being held.  Very important.
  • Regulatory Record – is it clean? Do they have any reprimands?   Complaints? If so, discuss it with them.
  • Credentials – not just the courses they have, and there are all sorts of different courses and accreditations. Ask why they chose to take those courses and pursue those designations.   Why can give you great insight into how that person thinks and their motivation.
  • Publications – are they thought leaders in their field? Do they take the time to educate their clients, the public, other professionals?   It demonstrates their area of knowledge and the types of clients they help.

Once an advisor has checked the boxes, meaning that they have the skill, knowledge, ability and ethics, we need to make sure that person or that person and their team are the right fit for you.  Not every advisor is the right fit for every client and not every client is the right fit for every advisor.   And for your client-advisor relationship to work, that fit really needs to be right.  We call it a meeting of the minds.  Are you comfortable with that person and their team?  Do they communicate with you in a way that suits you? Do you feel comfortable sharing and opening up with that advisor?   Has that professional demonstrated that they have listened and understood what matters to you and are they on your side working to make it happen?   Now, this meeting of the minds can be really hard to find.  In fact, Investor Economics found that 87% of women struggled to find an advisor with whom they could connect.  And in focus groups I have been a part of, this has held true.   So ask questions – ask the professional you are interviewing questions like “tell me about the type of clients you work best with”.   Do they give you answers that are data points, or do they talk about personalities, the types of common circumstances they have helped clients through?   While finding the right fit can be difficult, especially finding the right fit for both of you, it is possible.  Take the time to make sure your spouse has the right professional advice they may need to guide them along the way. It is an important part of making sure they will be okay.

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