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"Money, Honey" Series, Pt. 2: How, Why, And What Kind of Financial Advising is Right for You

10/10/2018

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Welcome to installment #2 of my Money Diaries-inspired series! 

If this is the first post you're reading  from the series, head back to Pt. 1 and get your baseline established—not a "must" to understand the below but if you're interesting even obliquely in financial advice then you'll probably find Pt. 1 (LOANS, DEBT,  AND SAVINGS) even more helpful!

As background, this insight isn’t coming from me—I'm merely passing on the brilliance of Manisha Thakor, a Harvard MBA, CFA, and CFP® who’s nationally recognized for her expertise on financial wellbeing.
 
Manisha's the VP of Financial Education at the Seattle-based wealth management firm, Brighton Jones. (Little ~fun fact~: most wealth management firms have a minimum net worth value of $1,000,000 before they'll work with you. Cute!!)
 
This one won’t be as lengthy as the first post, but still hits on some critical points if you ever want to be someone who has enough money to warrant financial advising. If you're craving more in the meantime, go ahead and order the book. I promise, it's a worthwhile investment (coming from the girl who exclusively buys Calvin Klein underwear because they're on-brand...I know, but trust me).
 
Getting a financial adviser is wise, if you don’t yet have one. But be careful—if you feel a little icky about them, she explained, it’s with good reason, because financial advisers don’t have a universal standard like doctors and lawyers.
 
I’ve only received informal personal finance advice from my friends Ali and Evans who own a wealth management firm and practice personal finance education in his free time, respectively, but now that I have this information I’ll probably move forward with finding an official adviser.

Side note: we were talking about  investments and wealth management along this same vein, and she off-handedly made a comment about  how  "if you have less than $250,000 in assets, you should work with Ellevest," and I swear you could hear a penny drop in the room. Someone in the back was like, "What if I have no money?" Hilarious.
 
The questions you should ask your financial adviser, in order of importance:

  1. Do you operate under the Fiduciary Standard or the Suitability Standard? A licensed Fiduciary has a legal obligation to act in your best interest, while someone following the “Suitability Standard” only has to do what’s ‘suitable’ for you; i.e., an extremely vague guideline. HOT TIP: If your adviser only wants to talk investing, they’re likely Suitability and only in it for the returns. In short, work with a fiduciary adviser.
  2. How much should I be saving right now? What’s the priority of paying off my debt?HOT TIP: We talked about this in Pt. 1, but try to have at least $2,000 in savings for emergencies only, then begin contributing to your 401(k) up to the company match, then start working toward 3-6 months of your living expenses. My personal opinion/take is to hit that 6-month mark then take anything in excess of that and start investing it in stocks and ETFs. Interested in investing but don't know where to start? You've come to the right place, my green grasshopper.
  3. Help me with my renter’s insurance, car insurance, and health insurance (if applicable). I never knew financial advisers crept into this realm, but they can advise you on these (extremely expensive) purchases, too.
  4. Let’s talk about my taxes. Apparently financial advisers can help you with figuring out what to deduct. Since taxes genuinely infuriate and confuse me, I don’t know enough to expound much further, but they did pass handy little push cards with the following list of ‘things you can deduct this year’:
    • Yourself
    • Your retirement fund
    • Your student loans
    • Your higher education
    • Your relationship (if married)
    • Your charitable donations

​Alright, folks, thanks for playing. Tomorrow we'll talk about everyone's favorite thing to stress about as young adults: renting vs. buying.
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    Full-time Brand marketer at Southwest Airlines, part-time Yoga Sculpt teacher, occasional Waffle House Model and reformed materialist.

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