Finance Tips,Webinars

Taking Financial Control: Do You Need a Financial Advisor?

When it comes to financial planning, the enormity of the task can feel overwhelming. But when worrying about the big-picture, people often forget about the small, regular steps they can take to move forward financially. The trick is to find spots where they can take those steps, and take larger control of their finances. That’s where you might need a financial advisor.

We jumped into an honest discussion about financial fears and strategies with Renee Cohen, a financial advisor in the WMN / WRK network. (Watch our full webinar with Renee here).

So often, people assume that financial advisors are only necessary for the traditionally wealthy. But that’s not true: It’s important that everyone – even if they’re not wealthy – have someone in their corner who can help them with financial planning.

Cohen said that she realized how lost-in-the-wind everyone seemed to be when it came to financial education, when she noticed that she and her closest girlfriends so rarely talked about money. What they were doing with it, how they were planning for the future, which investment accounts to choose: None of these topics seemed to come up. The culture of silence surrounding money can often exacerbate all the confusion we already feel about finance.

“We don’t really have these organic conversations,” Cohen said. “We’re not taught this in school. We’re kind of left on our own when we go into the workforce. … How many times do you open up your statement and it still feels like a foreign language?”

So where to start? According to Cohen, finding a financial advisor can (and should) be a process. You don’t want to work with just anyone. Try “interviewing” a few different options for advisors – how their fees are structured and what kinds of clients they typically work with are good questions to ask during the search process.

It’s also crucial that you break down what you’re expecting out of a relationship with a financial advisor – help with investments? An overall financial plan? Assistance with how you’ll start a business? Once you figure out your expectations, you’re more likely to find someone that works well for you.

“What a lot of people are seeking in today’s world is advice, and that’s someone who can help brainstorm ideas, have foresight for you, have strategies that work comprehensively for you,” Cohen said. “You may be saving for a home or a new car or planning to start a family, or start a business. How do all those pieces work in concert with each other relative to your goals? I think it’s the advice piece that’s been lost.”

A financial advisor can be helpful for those who have some big goals, including starting a business. You may have a great idea for a business – but do you know the numbers associated with making it work?

Cohen herself has worked with clients answering these same questions, and she helps them figure out where they are financially, how much money is necessary to start a business in their particular industry (service- or product-based businesses differ in necessary cash, for example), and what a realistic time frame is to get everything off the ground. She also helps clients figure out how they can move their money around to work for their goals: For example, if they’re self-funding a business, they might have to sacrifice the large amount they’ve been investing into their 401(k) account or IRA.

And even for those who aren’t starting their own business and are just struggling with everyday financial questions, people like Cohen can be helpful.

According to Cohen, everyone has three different buckets they can put their money into: The first is on-hand cash. The second is tax-deductible accounts, like a 401(k) (if you’re working in corporate) or a traditional IRA. And the third is tax-free dollars – accounts like a Roth IRA, for instance.

And if the names of all those accounts sound like alphabet soup, it might be time to start the search for a financial advisor. Having someone in your corner who can guide you, develop a financial plan, and hold you accountable when it comes to your financial practices can pay huge dividends.

Those advisors can help you with the bigger steps. And they can help instill in you an appreciation for the small steps – like saving a little each month, or diligently making your credit card payments. Working with a financial advisor can be a scary step, but it can also revamp your entire mindset around money.

“It’s kind of like, all of a sudden you’re not going to go from eating cheeseburgers and pizza every day to just eating kale,” Cohen said. “At some point, you’re going to say, ‘I don’t want to do this anymore. It’s the same in the financial world. Financial wellness is an ongoing thing, and you’ve got to take the right steps.”

Renee Cohen is a financial advisor at Northwestern Mutual, who helps people demystify the financial process. See her full WMN / WRK profile here.