People meet with me on a daily basis about money. It is the primary reason I have employment: People need to know what to do with their money. They want to know how to make it work for them, how to save it, how to invest it, even how to spend it. The funny thing is, the meetings are never really about money. Emotional finance is a crucial aspect to my relationships with my clients. When I say “emotional finance,” I don’t mean panic selling or getting overly excited about a great day for the S&P 500. I mean that our emotions and our relationships are often the drivers of our financial decisions.
When you meet with your advisor, I highly suggest you go beyond the numbers and delve deeper into what you truly want in your life and how you can use money as a tool to get there. It’s true that money alone can’t buy happiness, but if you’re smart with your money, you can use it to get on the right path to what makes you happy.
Here are five circumstances you should bring to your advisor that aren’t just about money:
1. Changing or Quitting a Job
It’s becoming increasingly rare to have just one career and almost unheard of to stay at the same company for an entire career. When you’re thinking about a shift, the time to let your advisor know isn’t when you’re rolling your 401(k) over — it’s when you’re still in the designing phase of the career leap.
We aren’t just here to tell you “no,” or to crunch numbers to help you figure out your budget (although we can do that, too!). Most advisors have contacts in various areas and may have a client or connection in the field you’re hoping to move into. We can help you connect, or help you consider varying aspects of the career move. Ask your advisor if she knows anyone in the company you’re checking out, or in the area you’d like to work in. Chances are, she does.
We can also work with you to develop a game plan that will allow you to move from your current position to your dream role with confidence so that you can handle whatever lifestyle shifts occur. The question doesn’t have to be whether you can make a big change, but rather how you can make the change. We’re here to help brainstorm ways to help make it all work — from modeling planning scenarios to seeing what lifestyle changes are needed to reviewing health insurance and benefit options.
2. Taking the Next Step in a Relationship
Thinking of a joint account in the near future? Did you recently get engaged, or are you thinking about moving in together? Most financial planners have helped clients work through the exciting and sometimes hectic events that come with moving forward together in a relationship. We are there to help you consider the big picture, but also all of the little things that come with big events.
We can be a sounding board for concerns you may have and help you to assess what’s a realistic concern that should be addressed and what is less likely to become an issue. We can also meet with you as a couple to go through a planning process and help you to get on the same page and tackle some of the tough questions in a productive way. While we’re not couples’ therapists, financial planners can play an important role in the harmony of your relationship by helping to stop arguments over money before they even begin.
3. Buying a Home
Beyond the obvious questions about how much you can afford to pay for a mortgage and down payment, there are many other aspects to home ownership that can impact your life. I have the privilege of getting to know my clients well and gaining a lot of insight as to how they move through their lives. Discussing your options with your financial advisor or financial planner before you put down a deposit can save you some heartache in the future.
A financial planner will ask you about your intentions for the property and whether that fits into your profile. Risk isn’t just for the stock market — there are varying risks in real estate that should be considered. Are you dreaming of owning an investment property? Your planner might talk with you about whether you’re comfortable taking on the role of landlord. Got a mortgage pre-approval in place and are stretching for that super nice condo? Your advisor can run the numbers on how an increase in common charges might make going out to dinner a lot harder than it used to be. It’s not just about what you can afford. It’s about what you’re willing to take on, or sacrifice, in order to be a homeowner.
4. Starting a Business
Itching to get out of the suit and into an apron to start your own food truck? Want to hang a shingle out for your own law practice? Being an entrepreneur can be an exciting, rewarding adventure. It can also be a difficult path to walk. If you’re considering starting your own company or just moving to a consulting gig, it’s about so much more than just the money.
Your advisor has likely seen you go through some ups and downs in the market and knows how you handle your financial situation. Becoming your own boss (and writing paychecks for others) means you’ll need to get a good grip on the financials of your business. You advisor or planner can be a great resource for financial education and can help you think of things you might prefer to ignore — like health insurance and whether you should have a SEP IRA or a solo 401(k).
5. Family Matters
I’ve seen family businesses and investment partnerships that were hugely successful, and others that were hugely disastrous. More than a few times, I’ve had meetings center on the opening statement: “So my [insert name of family member here] wants me to invest in their [insert business venture here], and I’m not sure what to do.” During that statement, I’ve also seen a spouse mouthing the words “HELP ME” a few times.
When family members want you to invest in their latest and greatest plans, it’s hard to say no. When family needs to borrow money, it’s hard to say no. Your financial advisor or planner can help you to make an informed decision about the investment and whether or not it’s truly a good idea. Sometimes it’s a smart investment. Other times, an objective person can see that it’s simply not a good bet for various reasons.
I recently had a client toying with an investment in a family venture to own property together. She had plenty of assets to make the investment, and it worked with her financial plan. We ran the numbers and it had very little impact on her portfolio and wouldn’t pose a tax issue. After listening to her describe the investment with a great deal of concern in her voice, I asked her: “If I told you you didn’t have the money to do this, would you feel upset or relieved?”
Her answer: “Relieved.”
Sometimes it’s not about money — it’s about saving yourself from the stress or emotional turmoil that can stem from an otherwise acceptable investment.
As a financial planner and an attorney, I’ve worked with many clients to sort through major life decisions. It would be easy to say that the math behind the decision was always the centerpiece, but in truth it’s usually just the tip of the iceberg.
Emily Boothroyd is a member of the DailyWorth Connect program. Read more about the program here.