Millennial retirement is a long way away. Recently, I had the privilege of working with high school students a few weekends ago and although they are considered Generation Z, they are extremely interested in being successful. This is a similar outlook to that of Millennials, despite Generation Z’s interest in eating Tide Pods.
Unfortunately, depending on who you talk to in our society, you are going to get a different answer on what the “best” way to achieve your goals will be. Some advisors will recommend mutual funds while others will focus on insurance. Still, there are a vast amount of choices when it comes to investing to reach your goals, and it would be impossible to mention them all here.
So, the question is, who is right, and who is wrong?
Well, it depends; some advisors are going to drive their clients into certain products based on answers to the following:
When do you plan on retiring?
How do you feel about risk?
You should buy insurance because…
Mutual funds are diversified….
Based on your risk tolerance you should buy…
These are just a few examples of what to be cognizant of while interviewing with potential professionals who can help you manage your money. Like any industry, you will experience those at the top of their field and others who are in their career for the wrong reasons. It’s important to be aware of what you’ll be asked so that you can better prepare for these interviews
A smart idea before investing any money is to interview anywhere from two to five potential advisors before making a decision. I like to tell prospects this because building your wealth is a relationship, not a transaction. You need to choose someone you can clearly communicate with and know you can trust to ultimately help you do the best you can with your money.
During the interview process, you will find an array of different styles that advisors use in their practices. A few questions I would suggest asking during the interview process include the following:
How did you get into the business?
Why do you enjoy being an advisor?
What products do you offer? Are they client specific?
Do you charge commissions or fees?
How often do you meet with your clients?
Can you explain your investment philosophy?
Now, I am not trying to throw any of my counterparts to the dogs, but being an advisor is a sales position. There is nothing wrong with being in sales, but during the interview process, it’s important to be aware that the person in front of you is “selling” to persuade you that he or she is the best person for the job.
Why is this important?
During the process, perhaps a comprehensive financial plan or risk analysis will lead an advisor to make suggestions based on certain areas that are important in making a smart financial decision.
Please be aware that if you have a plan or risk assessment completed for you, and it points to a certain product such as life insurance, a mutual fund, or a particular product, then this is a time where you need to think about what has been presented to you.
Ask a friend, parent, or one of the other advisors you are interviewing what their thoughts may be on what someone else is suggesting to you.
Why? Remember advisors are in sales, and in sales, there are all different types of people. Make sure that someone is being the F word, which in the world of finance is a
The best example I can provide is the following:
Life Insurance. Who needs it? Who doesn’t need it? Without going into the intricacies, there are two types of insurance, Whole Life and Term Insurance. However, what sets apart the best advisors from the mediocre is showing you the difference between investing your money into insurance versus placing your money into a different investment such as Stocks, Mutual Funds, or ETF’s.
Insurance is a great product and helps protect you in case something catastrophic occurs. However, like going skydiving, watching sports, or eating your veggies, Insurance is not the best product for everyone.
To learn more about insurance, read “What is Your Life Worth”
To wrap things up, here is a summary of what you learned:
- Make sure to interview at least 2-5 different advisors before making a decision.
- Remember that the potential advisors you are interviewing are in a sales job.
- If your discussion leads to them suggesting a specific product, ask how they came up with that decision, and why it is the best investment for you.
- Ask questions.
- Take your time before deciding on who is the best fit to manage your assets.