Congratulations, recent 2019 graduates. You now embark on an exciting new chapter of your life. You are eager to start a career and work toward achieving all your goals.
But where do you begin? How do you make the best out of your first paycheck, and others to come, to finance for your ambitions and dreams in life?
Answer: Get a financial advisor.
Just like when you want to get in better shape, you go to a trainer. When you don’t know what to do with your finances, you go to a financial advisor, a person who guides you through all financial decisions, big and small, now and in the future.
It is never too soon to start drawing up your financial blueprint, but the task can be intimidating. How many people have the will to analyze their spending, sort through regulations, and compare investment opportunities for the best options? You are young and life is long. You can easily postpone budgeting for your life.
But sooner or later, there comes the time when you face huge expenses you can’t cover with your monthly paycheck. Where do you find the money when, after a few years out of school, you start thinking about settling down, getting married or buying your first house, while student loans still weighing on your shoulders? Get a firm grip on your financial future as soon as you can with the help of a financial advisor.
Your finance is very personal and may not be something you want to discuss with just anyone. You should build a long-term relationship with an advisor you feel comfortable with, so that you are both on the same page with your financial history and needs.
To begin with, you can ask your parents if the advisors they have are good choices. If you don’t want to work with your parents’ advisors, you can consider someone in the same office, an associate on staff, for example. If you work with an advisor who knows your parents, he or she understand your family relationships better, and can coordinate financial planning when it makes sense.
Find out what services the advisors provide, and how they get paid. Advisors may have different titles — planner, advisor and consultant (just to name a few), but not everyone provides the same level of service. Some advisors get paid based on the products they sell you.
Some advisors have their own business with a few employees, while others may have no support staff. It is important to understand the dynamics of your advisor’s team, and what your back-up plan is, should an emergency arise. What do you do, for instance, if you lose your job? Do you have a sufficient rainy-day fund set aside to tide you over?
One of the new trends in the financial services industry is getting online advisors or robo-advisors. This is a low-cost option, but their services may be limited and lacking in the personal touch.
Robo-advisors don’t get to really know you and your views on money. Sometimes, they only provide tools for investing. They are not able to work with you on big life decisions, like whether to buy a home or when to have a child.
More importantly, talking to an advisor in person helps reduce anxiety. It is difficult to take emotions out of your investing decisions. When it comes to investing, having a plan and sticking with it reaps more success than making changes based on short-term fluctuations. When the stock market goes down, staying calm and disciplined is hard. This is when face-to-face advisors come to be useful.
When you are in this very beginning of your financial journey, finding a good advisor is the most important decision you can make. Do it sooner rather than later. Make sure to do your research so that you can find an advisor who understands your needs and aspirations, someone you are comfortable with for the long haul, and someone who is right for you.