What in the world is a "financial advisor" and what do you people do all day?

You save your money. You try to keep your expenses below your income and your debt manageable. You think about the future and try to set some money aside. Things get a little murky here as you begin to ask yourself some questions.

Should I be investing this money?

What does it even mean to ‘invest’ my money?

Do I just buy a few stocks and hope for the best?

Do I use a mutual fund?

What, exactly, is an ‘annuity’?

Things seem even more intimidating when you start to think of specifics. If you’re not retired, you’ll probably want to do just that someday. If you are retired, you might think about living on a nest egg or why is healthcare getting so expensive? What about college for you kids or grand-kids? The list goes on and on.

What happens if I pass away?

What about taxes?

Isn’t investing risky?

What happens if I lose a bunch of money?

Issues like these are exactly where good advice can come in handy. Enter the Financial Advisor. Your Financial Advisor should be well versed in all of these questions. They can educate you on options, help you invest in a responsible way, and give you guidance as to what other kinds of counsel to seek. Different Financial Advisors have different areas of strength, but the kinds of questions represented above should serve as a minimum.

In short, Financial Advisors should be a resource to you. It should be their privilege to serve you and walk with you through the questions you have. Sadly, too many advisors see clients as sources of income instead of human beings. They like easy solutions which can be scaled in order to maximize revenue. Making a living isn’t bad, it just shouldn’t be at your expense.

Here are five things you should expect from your Financial Advisor:

Regular proactive contact: If the most you’ve heard from your advisor over the past 18 months are a few mass emails, it may be time to ask what your Advisor does all day. The industry standard is at least one substantive discussion every 12 months, but that is a minimum.

Discussions about cash reserves, account titling, beneficiaries, etc.: Your Advisor should bring up a whole host of topics which are not directly about trades, investments, or the stock market. For instance, every investor should have a cash reserve. Even though the advisor won't (and shouldn't) get paid to hold cash, they should still bring up the subject. Asking you about any changes to your beneficiaries or reviewing how your assets are titled isn't flashy and won’t generate a commission, but they are part and parcel of the work of an Advisor.

An active financial plan: I say ‘active’ because some Advisors use financial planning mainly as a way to bring in outside accounts and not much more. Furthermore, true financial planning is an on-going process. The plan itself should inform investing decisions, but should also be regularly updated and reviewed. At Core Planning, we talk about “the next best action” as the heart of good financial planning.

Transparency: You should know how your advisor gets paid, and how much you are paying. Too many people have been talked into investments which didn’t make sense for them but made a great deal of sense for the Advisor. The way an Advisor is paid can be convoluted. Make no mistake, though, they are getting paid somehow. And an Advisor should make a good faith effort to make their compensation clear.

Expertise, not condescension: Advisors, along with their firms, bear a responsibility to continually learn, refine their understanding, and expand their knowledge base. But being knowledgeable in investing is no excuse to talk down to people. Rather, your Advisor should be trying to pass along what they know.