Do We Need a Financial Advisor?

We met on a gray afternoon in December; we went to her. She picked that particular Clyde’s, she said, because it’s her favorite place to go and meet people. She said “people,” but I’m guessing she really meant “clients.” We—Nate and I—are prospective clients.

We were referred to her by a trusted friend. For months, we emailed back and forth, Nate and I debating whether we needed her or not. Finally, we decided to meet face to face, to try each other on for size. The entirety of lunch was spent dispensing with small talk. Then, as coffee was served she pulled out a thick black binder. It’s time to get down to business, she said. She, Ellen, is a financial advisor.

The experience was not unlike going into a single public bathroom only to forget to lock the door and have it flung open whilst dispensing of bodily fluids. Everyone does it, and everyone knows it’s happening; yet it’s still pretty embarrassing. Nor is it very far from leaving the house in a poor fashion choice only to discover the fluorescent lights under which you’re standing leave little to the imagination. Everyone knows what’s under there; we just don’t like our’s being closely examined by people we don’t know well. In a public place, no less.

But there we were, drinking coffee at Clyde’s with Ellen. Nate and I looked at each other and took a deep breath. No going back. We sheepishly pushed our latest bank statements, paycheck stubs and other financials across the table. And there, in a broad wooden booth, she studied our pay stubs and quizzed us about 401(k)s and insurance. She asked us about our various checking and savings accounts while filling out paperwork.

Then the real questions started.

“What are your goals?”

“When do you want to be able to retire?”

“Do you want to buy a house? When?”

“Would you like to pay for your future childrens’ college education?”

“How much debt do you have?”

“What’s your timeframe for paying it all off?”

And on and on. The questioning lasted through two cups of coffee. She logged each answer in a notebook. Nate and I took turns talking. Most of the time we were on the same page; sometimes we surprised each other.

We talked about housing prices in our area and whether our goal of buying a house in 10 years was feasible. We chatted about retirement and the difference between working for money and working for fun. She asked, we answered, and she wrote. This part of the meeting, she said, was for her to get an idea of how we want to live the rest of our lives, so she can help make it financially possible.

“So, swing for the fence,” said Ellen. “Don’t hold back.”

And so it went. Nate and I talked about owning a home and being able to send future children to decent universities debt-free. We talked about traveling and being comfortable in retirement. We talked about the financial possibility of my someday being a full-time freelance writer (surprise, Nate!). We even talked about how, and when, Nate and I would be able to help support family overseas.

Through it all Ellen switched between prodding us for more information and doling out semi-approving nods. She was hard to read; stoic, even. I imagined this had something to do with maintaining that client-advisor relationship barrier. She may know more about Nate and I now than our own parents, but this is not a dinner date and we are not friends. This is business; it isn’t personal.

At one point, we switched gears so Ellen could go over our monthly budget with us. This was the less-fun part of the meeting. Ellen took meticulous notes while Nate and I divulged our monthly spending habits. Everything was fair game: bills, rent, groceries, eating out, clothes, student loans, etc. For a business meeting, things started to get intensely personal. Only this time, Ellen crunched numbers while we talked.

I can tell you right now it was intimidating. But then, what else would planning your entire financial future in one afternoon be? Intimidating. Nate and I exchanged increasingly weary glances as we grappled, simultaneously, with uncertainty and the desire to plan.

Call it millennial jitters or recession-era PTSD. After watching many in our group of friends subsist on credit cards, reward points and associated stresses, Nate and I had resolved to do things differently. We were gonna be weird, full stop. Yes, we’d also had our fair share of wayward spending habits and unhealthy relationships with online bank accounts. Those days were over.

We launched our journey into financial responsibility about a week after he popped the question. First, we signed up for financial guru Dave Ramsey’s nine-week course titled Financial Peace University. The setting: a church. The goal: Finding our path to financial redemption by way of living debt-free. Ramsey’s own version of the straight and narrow.

That was more than a year ago. Meeting with Ellen was the next step in our financial journey. By the time the waiter came around for our third coffee refill, Ellen was ready to make her pitch.

For an up-front fee of $1,500, we could secure her services for one year. The up-front fee, she said, may seem unusual, but it was better than paying an advisor on commission. A commission-based pay arrangement meant an advisor would be more concerned about his or her well-being than ours. In short: we’d pay her $1,500 now, but she wouldn’t be making money off us for the next twelve months. Nate nodded. It made sense.

Her services included advising, yes, but also quarterly meetings, and most important: availability. We could call her anytime of day with questions. She could be available at a moment’s notice. That’s great, we said. That’s good to know, if a little daunting.

Then she dispensed her first piece of wisdom. For now, we were to focus only on paying off the rest of our debt. There was no reason it couldn’t be done in two years.

Nate and I nodded. The upside: We were relieved to know she didn’t want us to be in debt anymore than we did. The downside: She hadn’t told us anything yet we didn’t already know. Is it worth it, at this point in our lives, to pay $1,500 for a glorified accountability partner? Maybe. Some friends have told us some variation of “yes, the earlier you start, the better.” Others have said it doesn’t make sense to hire a financial advisor until we actually accumulate an amount of wealth that’s advisable.

We are still talking it over, but regardless of what Nate and I decide, this much I know: After three-and-a-half hours at Clyde’s, we’re right back where we started. Unsure of the future, but desperate to plan for one.


A.C. Elliott lives in Washington, DC.


19 Comments / Post A Comment

pizza (#599)

Personally, I would just self-educate and then invest that $1500 rather than spending it on an advisor. There’s plenty of great books and blogs out there that can give you more than enough information.

gl (#5,458)

@pizza I suppose that this is a measure of accountability that some people want/need. It can be hard to be intrinsically motivated to save/pay debt when the mere act of thinking about figuring out a plan causes you to break out in a cold sweat.* I totally see the appeal of paying someone to do that thinking for you so you don’t have to.

…that said $1,500? NO WAY.

*talking about myself here, not the author.

tussock (#1,296)

@pizza My partner and I decided against hiring a financial adviser for pretty much that exact reason. As the author says, she wasn’t telling us anything we didn’t know already. Instead we spent the money on an attorney (drawing up wills/powers of attorney/health care proxies),and we’re hiring an accountant to do our taxes and give general advice.

garysixpack (#4,263)

Having that discussion in a public restaurant, where you might be overheard by the people eating at the next table? I don’t buy it.

Mae (#1,769)

@garysixpack I’m puzzled by this, too. Doesn’t she have an office?

Allison (#4,509)

@Mae I can see the more relaxed atmosphere being helpful to clients, but that seems like an awful lot to spill in public.

sea ermine (#122)

@garysixpack Eh, I’ve spilled these kinds of personal details in a restaurant (like while talking with my boyfriend or close friends). I don’t mind people knowing this stuff and as long as I’m not shouting my SSN and birthdate into the crowd I don’t mind strangers hearing about my finances/income/personal life plans.

garysixpack (#4,263)

@sea ermine
In my mind, there’s a difference between you making the decision to be indiscreet and your financial adviser deciding for you.

WayDownSouth (#3,431)

@garysixpack yes, I agree. You’d expect a financial advisor to at least have a rent-an-office arrangement. Meeting in a restaurant or coffee shop sounds very down-market.

I’m also a bit surprised about the price. Although I do understand the poster’s willingness to pay someone for guidance (similar to paying a personal trainer for exercises that you could learn yourself), $1,500 for unlimited advice for a year sounds awfully inexpensive. I hope that this financial advisor knows what she’s doing and this couple aren’t her first clients.

sea ermine (#122)

@garysixpack I assumed that if they were uncomfortable with the location they would have suggested another venue (like the advisors office).

Caitlin with a C (#3,578)

I don’t think it’s about some magic threshold of wealth. I think that if you really want a second (human) eye on your finances on a regular basis and a person to call with financial questions, and you don’t have accountants for parents or something, getting a financial advisor can be a good idea.

To me this falls under “now that we have some income, we can pay people to do a few things for us where our money is worth less to us than the time/effort/confidence in our own abilities it takes to do the task”. For me, that’s a) financial advising and b) house cleaning. I am sure I have the ability to put in the time and effort as @pizza mentions above, but no matter how much I expend, I have a hard time feeling confident that I am making the right financial choices unless they sort of match up with what an expert thinks makes sense. So I spend money on that (ONLY because it also falls within my ability to spend money). House cleaning: we don’t have time and hate some specific cleaning chores (I’m looking at you, bathtub/grout) enough that we decided to pay someone to clean our place twice a month. It makes sense, because we have some money and don’t want to clean (but should), and someone wants our money and will clean for it.

On getting a financial advisor: do think about how long you want to have one (your whole life? Your 30s?) and how much that may cost. Take that into consideration when you make your decision, because $1500 every year is different from $1500 this year.

On advisors: I do think fee-based is better than commission-based. Just a personal opinion.

Sloane (#675)

$1,500 for some accountability just seems a little pricey. If you need accountability for the money, maybe find a friend or family member who you trust…

I met with two financial planners (CFP) a couple of years ago. They met with me a couple of times, and I walked away with some really good advice on saving, a personalized budget, some options for how to invest my retirement account, and a disability policy, which I hadn’t really thought about until they told me about it. They got the commission from the disability policy, which costs me $61/month (and does give me peace of mind). They tried to sell me a life insurance policy, but that’s not a priority for me.

honey cowl (#1,510)

Does anyone else feel really weird about the first two paragraphs of this essay, or am I totally cray?

@honey cowl

I *think* the author was going for a suggestive/misleading, “is this illicit” kind of misdirection to pique interest. But since the title is “Do we need a financial advisor?” it fell a little flat.

honey cowl (#1,510)

@emmycantbemeeko Yes. Maybe I’m too ~*~sensitive~*~ but because the advisor was a woman and there were scare quotes around “clients,” it seemed to be a metaphor for “this is a lady of the niiiiight!” which was awkward. She’s a financial advisor, there’s nothing illicit about that.

Beaks (#3,488)

We wound up hiring a financial adviser when we had an unexpected windfall that we wanted to be able to invest/ allocate in a sensible, diversified way without doing hours and hours of research ourselves. We were also about to get married so for us it was a good way to prepare for the transition to managing finances as a couple.

I knew I wanted to hire a fee-only planner that had a fiduciary duty to us- Helaine Olen had a good post a while ago about the difference between a fiduciary duty and the “suitability standard” that’s worth hunting down if you’re looking at hiring an adviser (or if someone at your bank is offering “free” financial advice).

For us it was worth the money- our plan was in the same ball-park price wise as the O.P.’s, and it helped us have a really through conversation about our financial goals and gave us a framework for managing our finances.

DarlingMagpie (#1,695)

If the priority right now is paying off debt, I’d do that and save the $1,500 for a financial advisor when you have actual money to manage.

shawn (#5,699)

A run-of-the-mill investment adviser will charge 1-2% on assets under management annually, and actively manage your investments (admittedly not the same thing as a financial adviser, but many serve both functions). A fee-based adviser will normally charge on a quarterly basis. (what commissions would Ellen earn? She’s not a broker.) With that in mind, $1500 sounds high for financial advice, and I can’t imagine how many questions you would have that this person would be uniquely qualified to answer. Would her advice save you more than $125 monthly? How? If she can’t demonstrate that, maybe a negotiation is in order.

LKeyes (#5,703)

It may be hard to see what you are going to receive in exchange for $1500 annually. I have similar feelings about gym memberships and personal training. It’s hard to understand why personal training costs $100/hour, but people pay that amount, get committed to working out, and the results are positive. You could also watch videos online or buy a fitness band instead.

Just curious, what would you be willing to pay for financial advice? You may just need a second opinion from this financial advisor, so you could negotiate a flat fee for a point in time financial plan.

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