This weekend on Forbes.com, I’m adding to my series on what financial advisors actually do. So this week I’m reposting one of my favorites on this topic. Next week, I’ll post the addition.
This weekend I took a trip down memory lane — actually two lanes! I attended my 20th year high school reunion and revisited my college for an alumni cross-country race. Both reunions reminded me just how much has happened the last 20 years and how old I’m getting. (Note to self: running a 5k is nowhere near as easy as it used to be.)
I loved catching up with people that knew the younger version of me. It was also a bit surreal to try to condense 20 years of experience into a hundred, three- to five- minute conversations. The question I had to answer the most was, “so what do you do?”
This question was much easier to answer when I could just say “I’m a tax attorney.” While many people likely have no idea what a tax attorney actually does on a daily basis, they know what taxes are, and they know what attorneys do.
Now when I say “I’m a financial planner,” I often get a confused look, a courtesy nod and the occasional “oh that’s interesting.” The conversation then usually switches to Ben and his career. (Another note to self: being a librarian is way more interesting than either being a tax attorney or financial planner.)
I’ve spent a lot of time wrestling with this question because I have to explain it quite a bit to friends, acquaintances and people interested in my services. So I thought it would be fun to share the explanation with you, just in case you’re curious.
What DO I actually do?
The short version is that I help people put the jigsaw puzzle of their life together. I help them make the best decisions about their money so they can create the life they want now and in the future.
I love the jigsaw puzzle analogy because it’s so relatable. Almost all of us have struggled to reconcile the beautiful picture on the puzzle box top with the hundreds of scattered pieces inside. Most people come to me with many, many pieces. I help them complete the picture with a combination of technical analysis (that is, figuring out how their cash flow, taxes, insurance, investing and estate planning all fit together) and qualitative analysis (dealing with individual money mindsets, exploring emotional baggage with money and dealing with any behavioral blocks).
I try to understand the people I’m serving so I can help them fill in the gaps. Most of my clients are young professionals, finally making good money, getting married, starting a family and building lives with a lot of competing desires and needs. It’s a stressful time, so I went to alleviate some of that anxiety and help them deal with the tension between what they want and need now with what they will want and need in the future.
It’s actually very similar to what I did as a tax attorney. Putting together a puzzle where all of these complex rules come together to benefit a client’s specific situation. However, now as a planner it’s much more proactive rather than the reactive.
What I don’t do
I also add some of what I don’t do to help complete the explanation.
I’m not a magician. I can’t magically make all of your money issues disappear the minute you hire me. The real work and progress comes in the planning process. We have to work together to achieve your goals.
I don’t want to sell you products. Financial professionals used to almost always get paid for selling products — like annuities, life insurance, stocks, bonds, etc. Some advisors still do business this way, but I don’t. I’m selling you my services and my advice. Everything I do for you has to serve your best interest, not mine.
I’m not trying to collect your assets. Have you seen The Wizard of Lies or The Wolf of Wall Street? Fantastic movies. They’re even based on real people. But they are not based on the way I do business. I’m not just collecting assets, taking your money and then using it for luxe vacations or ruckus parties where little people are thrown at big targets. We work together to help you align your money with what you want out of life.
Unfortunately, we’re not all the same
I understand why people get confused about what I do. A prospective client said to me just last week “I’ve met three different advisors and you’re all so very different.” It’s not unusual to meet different people who call themselves advisors yet do many different things.
The financial planning industry has only been around since the late 1960s, and it’s been through several incarnations since its birth. It started out all about products (e.g., insurance, stocks, tax services), then morphed into one that controlled information on concepts like Modern Portfolio Theory and then become more focused on software and algorithms.
We are now in a place where the focus is shifting towards giving valuable, ongoing advice. But there’s still no agreed upon theory or principle on what financial planning actually is.
Until there’s some uniformity and distinct guidelines of what those of us in the industry do, you will have to make some effort to find an advisor that fits your particular needs. That will entail knowing what you’re looking for and asking the appropriate questions to make sure that advisor has to serve in your best interest.
I hope this alleviates some of the confusion and satisfies your curiosity. Feel free to contact me at the links below with any additional questions.