Thinking about hiring a financial planner? It could be a great move to make — especially if you’re at a point where you have cash left over at the end of the month and aren’t sure of the best way to leverage that to grow wealth and achieve your goals.
In the past, advisers might have just been for people who were already wealthy. But today, newer and more flexible business models mean more firms don’t require asset minimums (and might only offer comprehensive financial planning services rather than only investment management).
Still, hiring a professional to act as your personal CFO usually isn’t cheap. It’s an investment in yourself and your future, so you need to understand how to get the best return possible from that relationship.
Here are five ways you can make the most of having a financial pro on your side, and understand how to best use a financial planner so they can maximize the value they provide to you.
1. Be open, honest, and coachable
This should go without saying, but a financial planner cannot help you if you don’t share openly with them. That means disclosing all the details of your financial life — and I know that can be really difficult to do.
But remember, your planner isn’t here to judge you (or shouldn’t be; this is why it’s really important to do a gut check to make sure you actually like and trust your planner before hiring them).
Your planner should create a safe place for you to lay everything out on the table. Together, you need to understand where things stand now in order to make the best comprehensive plan for moving forward and getting to where you want to go with your financial life.
In addition to sharing the numbers, share your thoughts, goals, fears, and worries, too.
Personal finance is personal; money is much more emotional than purely analytical. How you feel about your finances will impact your behavior and your actions, so sharing openly with your planner will help them design a strategy you will implement.
There are probably a lot of routes and options that will eventually get you to where you want to go. The best one is the one you’ll actually stick with over time.
Finally, you also want to be coachable. That means being:
- Open to feedback (and also open to change, based on that feedback)
- Willing to take action once you have a strategy in hand
- Ready to ask questions
- Interested in learning
The best financial planner in the world won’t do you a bit of good if you’re not willing to change or consider new things in the process of reaching your goals.
2. Accept the accountability your planner can provide
Knowing what to do is one thing — and your financial planner can certainly tell you the right things to do with your money to make the most of it and build wealth over time.
But how many times have you started a diet or exercise program because you knew that’s what you needed to do to gain muscle or lose weight… only to find you fell off the wagon less than two weeks into your new routine?
Knowledge typically isn’t enough when it comes to behavior change, updating habits, and making progress toward long-term goals that could take months or years to achieve.
To best use a financial planner, definitely take advantage of the knowledge, advice, and wisdom they can give you… but make sure you lean on them for the accountability piece, too.
Your planner should assign you action items or tasks to take after each meeting in order to move forward.
These could be really tangible, like “increase your contribution to your ESPP plan,” or “transfer that extra cash from your checking account to a short-term savings goal or a long-term investment account.”
Or they could be really intangible, like “talk with your partner about your priorities and be ready to share at our next meeting,” and “think through what you would like to do next: buy a house or start a business.”
In either case, your planner should also follow up with the accountability to make sure you get this done. Just like a personal trainer holds you accountable to getting in the gym and doing the reps, a planner can send reminders, check in with you between meetings, and make sure things don’t slip through the cracks as you make progress with your plan.
3. Listen, especially when they advise against something
Most people are focused on what a planner will tell them to do to reach their goals. But one of the most valuable things you can get from a relationship with a financial planner is listening to them when they tell you not to do something.
When you get panicky and want to sell out of your positions in your investment account that you set up for long-term wealth building? Listen when you adviser says, “let’s sit tight and stick to the strategy we designed before you felt emotional about this.”
When you feel pressured to buy a home because your local market is hot? Listen when you adviser says, “I understand you don’t want to miss out, but the plan we built has you buying a home in 5 years. Let’s keep working on building up the down payment you need to buy the house you want.”
Your adviser can help you stay focused, disciplined, and consistent with the actions you need to take — and avoid — on your way to building wealth.
4. Ask for referrals to other professionals who can go to bat for you
You probably worked really hard to find a financial planner you trust, like, and enjoy working with — and repeating this process for every professional you need on your team sounds a little overwhelming, doesn’t it?
Thankfully, you can just ask your adviser for referrals and recommendations.
And if they’re a fee-only financial planner working as your fiduciary, they don’t get commissions or kickbacks from other businesses, so you can know they’re not being financially compensated for a recommendation.
Most planners have a professional network because they know that’s a huge value-add to provide to their clients.
So when you need an estate plan, ask your financial pro for a referral to an estate planning attorney they know and trust. Need help with a complex tax situation? Ask your planner to recommend a CPA that will do great work for you.
And if you have a legitimate need to buy something like term life insurance, ask them to direct you to an insurance broker who won’t oversell you on a policy that’s too big (and too expensive) for your needs.
5. Uncover your blind spots
What we know typically falls into two categories:
- The stuff we know we know
- The stuff we know we don’t know
These two areas are pretty easy to manage. When we know things, we can use that knowledge to our advantage. If we know that we do not know other things, we can choose to learn or ask questions to get the answers we need from experts who do have a particular domain knowledge.
Where we can get into trouble, however, is with a third category of knowledge:
The stuff we don’t know we don’t know.
In other words, we can get into trouble with our blind spots. When we don’t know we don’t know something, we don’t have the questions to ask. We don’t know we need to learn.
The blind spots aren’t the problem. It’s not asking someone to check them for you that will cause issues. This is where your financial planner can come in.
They can provide an objective, outside perspective on your finances and your financial plan to look for those things you didn’t even know to check or ask about.
Together, they can work with you to eliminate blind spots and shore up your defenses against the unknown.
Eric Roberge, CFP, is the founder of Beyond Your Hammock. He helps professionals in their 30s do more with their money.