$20,000—loss. You might have to sit there, trying to smile, while you watch your $100,000 turn into $80,000 or less. Can you handle that? Can you sleep at night, knowing you're that much poorer today than you were a few weeks ago? If you can't handle that feeling, don't take the higher risk, period. And if your advisor doesn't explain the real effect of risk the way I just did, pick up your money and run the other way.
4. The advisor should listen.
In any meeting between you and your financial advisor, the most important person in the room is you. That means what you say is most important. If your advisor talks constantly, or interrupts when you're talking, that's a warning sign. You want someone who really cares about you. Someone who listens, really listens, taking notes when you tell him what's important to you in your life, what your hopes and dreams are, what you're afraid of, what you want and what you don't want.
Do not stand for the condescending advisor who says, “There, there little lady. Don't bother your pretty little head with this financial stuff. I'll take care of everything and you go have lunch with your girlfriends.” If you hear something like that, pick up your money and run the other way.
5. The advisor must help you quantify your dreams.
Your perfect picture, the life you dream about, has a price. Right now you might not know what that price is. But before you leave your advisor's office, you should not only know how much your dreams will cost, but also where the money will come from and how. The advisor must have patience and be willing to work with your time horizon, not his. If he's suggesting even a slightly higher risk and you're not ready for it, don't take it. Remember, you're the most important person in the room.
6. The advisor must be willing to spend time with you.
Very few financial advisors get paid by the hour. They get paid for doing transactions or for managing money. If they can complete a transaction in one minute and get paid exactly the same as if they had to spend an hour, guess which they'd rather do. Despite that, they owe you as much time as you need to fully understand what you're investing in, how much it costs, how much risk you're taking and anything else you want to know, even if they have to explain it again and again until you get it. Don't forget that you're in a process of evolution, a slow transition, not revolution. It takes time to learn, understand and make informed decisions. If your advisor seems to be in too much of a hurry and is not willing to spend the time you need, pick up your money and run the other way.
7. The advisor must be someone you trust.
You can go to someone who is highly recommended by people you respect. He can show you impressive, audited performance numbers. You can do all the due diligence and get all the information you need. But in the end, once you've gotten everything straight in your head, you should make the decision based on how it feels in your gut. That means your advisor has to feel right to you. Your advisor has to be someone you can trust. That's the personal chemistry factor we talked about when selecting a therapist. It's just as important in the financial arena.
Should you choose a woman to be your financial advisor? Good question. While it's true that we women understand each other in ways men never will, that doesn't mean a woman will necessarily be a better financial advisor for you than a man would. The key factors are not gender-based. They are the seven items listed above, and men are just as capable of meeting those criteria as women are. At the same time however, I've found in my practice that I can explain things to women using language I know they understand. Sometimes a woman will say to me, “My husband was telling me about that for years, but I never quite got what he was saying. Now I see it.”
Some Final Things to Think About
That about covers what I have to say. If you thought this book would have a
4. The advisor should listen.
In any meeting between you and your financial advisor, the most important person in the room is you. That means what you say is most important. If your advisor talks constantly, or interrupts when you're talking, that's a warning sign. You want someone who really cares about you. Someone who listens, really listens, taking notes when you tell him what's important to you in your life, what your hopes and dreams are, what you're afraid of, what you want and what you don't want.
Do not stand for the condescending advisor who says, “There, there little lady. Don't bother your pretty little head with this financial stuff. I'll take care of everything and you go have lunch with your girlfriends.” If you hear something like that, pick up your money and run the other way.
5. The advisor must help you quantify your dreams.
Your perfect picture, the life you dream about, has a price. Right now you might not know what that price is. But before you leave your advisor's office, you should not only know how much your dreams will cost, but also where the money will come from and how. The advisor must have patience and be willing to work with your time horizon, not his. If he's suggesting even a slightly higher risk and you're not ready for it, don't take it. Remember, you're the most important person in the room.
6. The advisor must be willing to spend time with you.
Very few financial advisors get paid by the hour. They get paid for doing transactions or for managing money. If they can complete a transaction in one minute and get paid exactly the same as if they had to spend an hour, guess which they'd rather do. Despite that, they owe you as much time as you need to fully understand what you're investing in, how much it costs, how much risk you're taking and anything else you want to know, even if they have to explain it again and again until you get it. Don't forget that you're in a process of evolution, a slow transition, not revolution. It takes time to learn, understand and make informed decisions. If your advisor seems to be in too much of a hurry and is not willing to spend the time you need, pick up your money and run the other way.
7. The advisor must be someone you trust.
You can go to someone who is highly recommended by people you respect. He can show you impressive, audited performance numbers. You can do all the due diligence and get all the information you need. But in the end, once you've gotten everything straight in your head, you should make the decision based on how it feels in your gut. That means your advisor has to feel right to you. Your advisor has to be someone you can trust. That's the personal chemistry factor we talked about when selecting a therapist. It's just as important in the financial arena.
Should you choose a woman to be your financial advisor? Good question. While it's true that we women understand each other in ways men never will, that doesn't mean a woman will necessarily be a better financial advisor for you than a man would. The key factors are not gender-based. They are the seven items listed above, and men are just as capable of meeting those criteria as women are. At the same time however, I've found in my practice that I can explain things to women using language I know they understand. Sometimes a woman will say to me, “My husband was telling me about that for years, but I never quite got what he was saying. Now I see it.”
Some Final Things to Think About
That about covers what I have to say. If you thought this book would have a
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