Choosing a Financial Advisor - The most important Question to Ask
Financial Advisor? Or just an investment manager.
There are about 315,000 financial advisors in the US. Of those, about 70% do not do any actual financial planning and instead are solely investment managers. Meaning if you have money they will only give you advice on how to invest it but don't provide any comprehensive financial planning. This is why we believe in Investing with Purpose. Everyone has a purpose that drives their investment decisions. This is one of the things that make Phillip James unique. We are one of the minorities in the financial planning world who focus on the financial plan. How can we invest your money without understanding your situation, your circumstances, and your needs? Think about when you go to the doctor. They won't prescribe any medicine until they perform a checkup to figure out what treatment is best. We are the same; we want to know all about your financial situation so we can determine the best investments for you. We look at your attitude about risk, your need for liquidity, your need for income, your life expectancy, job status, your assets, your debts, and most importantly your goals for yourself and your family.
Already have, looking for, or don’t need a financial advisor.
If you are reading this, odds are you either have a financial advisor or you want one. People that do it themselves these days are in the minority. There are two types of people who do-it-themselves. The first group is usually young and have a very small amount of money to invest. They generally think they can’t afford to hire a financial advisor. This is not true as we only have an account minimum of $5,000. The second group are people who just don't want to pay for a financial advisor. They'd rather save the money. This is understandable and as long as you have the time and knowledge to get it done that’s fine. I just want to make sure it actually gets done whether you are doing it or a financial advisor is helping you. So the question is, "If you are going to hire a financial advisor, how do you know who is best for you?"
There are many different questions to ask, in fact we have a financial advisor checklist that you can use when looking for an advisor. Check this out so you know what to ask when you are meeting with different advisors.
One of the most important Questions to ask. Does your Financial Planner’s Age Matter?
If you are 25 years old, odds are your financial advisor will be older then you. When you are 25 odds are your doctor, lawyer, accountant, and even your plumber is going to be older then you too. But if you are in your 40s, 50s, or 60s, is your advisor still going to be older than you? Do you want your advisor to be older than you? Well let’s think about it – when you are age 60 do you want a doctor whose 70? That means when you are 70 your doctor will be 80 and probably retired, maybe even dead, and you'll have to look for a new doctor in your 70s. Don't you want a doctor who has known you and your medical situation for the last 20 years? The same thing goes with a financial advisor. You don't want your financial advisor to retire before you do! If your financial advisor retires (or dies!) your advisor is not going to be there when you need them. And you are going to need them much more in retirement than when you are in your 20’s or 30’s. Just think about it.
Here are some stats:
5% of the Financial Advisors in the US are younger than age 30 (Accenture) (sadly I’m no longer included in this having just turned 31 this January).
60% - 80% are age 55-65 years of age. The implications of this on you and your financial plan is tremendous especially when you consider most advisors are operating as a solo practice.
Financial advising is a continuous process. It’s not a onetime thing but a process you have to revisit as your life changes. Therefore, the advisor you hire is someone that needs to be along with you on the journey. At Phillip James you have two professionals on your team at all times who understand your plan, your goals, and your needs, just in case something were to ever happen. We saw problems with the old way of financial planning and beleive this is the only way to set up a successful practice.
We have one financial planning philosophy and one investment philosophy. There will come a time when we'll have other advisors on our team. Regardless of whether you are working with Phillip or James or another advisor you will have the same experience because Phillip James is a company built with a base of knowledge that does not change from person to person.
Even though we are relatively young advisors (both under 35) we will be around 30+ years from now. Even more important is having a company, like Phillip James, behind you that has consistent values and methodologies because it provides continuity and protects our clients.
Take comfort in knowing we will be here while you grow your assets, when you need estate planning, when you retire, when you need long-term care, and when you or your spouse pass away.