- Younger individuals tend to overlook seeking professional financial advice
- Professional fee-only advisers can actually add more value to a young professional than they may realize
- Financial planning is not just for people who need to prepare for retirement.
Call it youth. We don’t think we need help with much. And according to a few articles I’ve come across recently, young people on the whole generally don’t perceive a need for professional financial advice.
Although age is just a number, let’s assume for purposes of seeking financial advice that being ‘young’ ranges from the early 20’s to mid-40’s. And as someone who would be considered a young client, I completely understand the hesitation. The interaction that many have up until they accumulate some wealth is typically a lack of service since you are not a big account, or being sold a product like home owners insurance. We may even have friends or acquaintances starting careers in the financial world who we can’t imagine paying for advice from.
But, just over the last week I found myself working with several younger clients on issues that covered a wide spectrum of financial planning areas. In speaking to more mature clients about whether they would have benefited from advice earlier in life, the response is always a resounding “Yes!”
I would imagine a few of the ways they would have benefited from engaging an advisor when starting out are as follows:
- Having a professional guide who knows you well enough to help navigate problem areas you may not have anticipated.
- Learning how to set realistic goals along with manageable steps to achieve them.
- Being held accountable for “slips” so you may think twice about charging a major purchase on your credit card or cutting back on your savings plan if someone else will know about it.
If you have a spouse or significant other an advisor can help:
- Facilitate conversations about finances. We all know the impact of money on relationships. An advisor can not make decisions for you, but they can create a dialogue between people with different personalities towards and histories with money.
- Develop a mutually agreeable course. Often one person in a couple has a dominant financial personality. An advisor can be the independent voice that helps the two of you negotiate differences in your personalities to formulate and clarify the course.
- Provide reassurance. Should a anything happen to either of you, you know someone familiar with your goals will be there to support the other spouse.
And since young people are just about always in the beginning stages of their financial life cycle: How about the value and satisfaction of starting out on the right path instead of stumbling along? In the long run, starting your finances on the right foot early can easily overcome the benefits of waiting until the day you earn a little more.
As a profession, advisors may not have the best track record of pursuing younger clients. But, the so-called ‘account size’ mentality is quickly becoming a thing of the past. There are many ways to engage a financial advisor today, whether it is on an hourly retainer, per project basis, or a ‘coaching’ relationship. One of the realizations advisory firms today are coming to is that individuals have different needs for the type and quantity of advice.
Financial planning is not just for people who need to prepare for retirement. Young adults have their own challenges, which can include saving to buy a first home (as well as questions on the amount and process of that purchase), tax planning, insurance needs, setting up a college fund for a new baby, and more. Finding an advisor to work with even before life gets “complicated enough” is well worth the effort to get started on the right path and move efficiently toward realizing your goals.
The preceding blog was originally published by the Financial Planning Association®(FPA®). To view the original blog please visit the FPA Web site.