Who Is Doing Your Financial Planning?

The psychological impact of an advisor carrying the planning burden for their own family can be very real and can change relationships.

By Karen Caplan Altfest

You spend your entire career planning for your clients’ retirement, but who is doing the planning for you? Most likely your answer is one of the choices below.

  1. I am.
  2. My spouse is.
  3. My friend is.
  4. A professional advisor is.

In many professions, there are admonitions about being the sole expert in your own life. For example, attorneys have a saying that “A man who is his own attorney has a fool for a client,” while doctors typically shy away from treating their loved ones.

I believe the thinking has to do with objectivity, distancing and maintaining a proper perspective; for many people, it is wise to separate normal emotions about one’s own life and family from the work they do. Because there are few reports on how many RIAs seek professional financial help, I recently undertook a survey and queried colleagues on their own plans for the future — primarily in terms of finances — and how they arrived at them.

My questions included:

  1. I determine my own financial needs and create my own plans. Yes or no.
  2. I think about asking other professionals for their advice but have not done so yet. Yes or no.
  3. When I am close to or at retirement, I will seek help from a financial advisor. Yes or no.
  4. I have turned over my finances to another professional. Yes or no.
  5. If you do not use an advisor now, what is the reason?

The responses I received, while not statistically significant because they came from a small sample, begin to clarify what many advisors believe, and do or don’t do themselves. Mainly, younger advisors (under 40) do not feel they have the resources to hire an advisor, although they do think about it. In many cases, they feel they have enough knowledge to meet their own needs at the present time.

Some advisors said as they get close to retirement, they will engage another professional. But not until then. As one advisor said, “I am confident in my abilities to do this myself.”

A more mature advisor thought differently about seeking help: “The more I learn about this field, the more I see the shortcomings of my own past planning. I see a need to treat my personal planning with the same care that we provide clients. I think I am guilty of putting important items [on] the back burner, but I have been reconsidering my priorities.”

Pros and cons of seeking help

There are many ways to come to a decision about seeking help in your own field. Maybe none without weighing the pros and cons.

In my mind, the pros of hiring another financial planning professional include:

  1. Sharing your concerns.
  2. Having a double-check on your ideas.
  3. Possibly earning peace of mind.
  4. Gaining freedom from pleasing friends and relatives.
  5. The ability to show clients that you believe in our profession.

Cons include:

  1. Feeling a possible blow to one’s ego.
  2. Concerns about exposure of your personal information.
  3. Wrestling with feelings of inadequacy.

For those in my sample who said they seek help at all, it is primarily in specialty areas, such as estate, tax or insurance planning.

Why seek help?

There may be good reasons for an advisor to seek help. As one advisor wrote, “I will likely … hire a financial advisor someday, not for their technical expertise, but for their ability to create [a] healthy mindset/mutual accountability around money for my wife and [me.]”

The psychological impact of carrying the financial planning burden for one’s own family can be very real, can change a relationship and can lead to second thoughts or recriminations, none a desirable outcome.

We at Altfest have several clients who themselves are financial planners, hedge fund managers and related financial professionals. More than one has said to us, “I do this in my job, but I can’t do it for my mother-in-law (substitute “wife,” “children” or “family.”)” Actually, I have seen situations where emotional chaos, or worries about mistakes, lead to inaction, and nothing has been done in a relative’s account in decades.

I understand. I’m always very flattered when someone in our industry chooses our firm for their own financial needs. They meet so many financial professionals, know the industry and have chosen us to check on their financial arrangements, discuss sensitive issues or to supervise their investment accounts.

Even financial reporters who interview many financial professionals have cast their lot with our firm; they are welcome clients, too.

New insight can yield a great gain

Recently, I questioned a colleague and friend about her own financial experiences. She is comfortable in her financial acumen, and is an independent thinker. She does not have an advisor. However, she mentioned that she could have learned to save sooner and would have liked to have known more about money earlier. This leads to my theory: If you learn one significant new way to save, borrow, lend or invest, then meeting with an advisor could prove very worthwhile.

Remember, if you do not choose an ongoing relationship with a financial advisor, it is at least helpful to have someone you respect to contact when such a need arises. If seeing a professional helps your family relationships or lets you sleep well at night, that can be a great bonus! This financially astute colleague finally took steps to see an attorney to create a will so her wishes for her estate would be firmly in place.

If you are thinking of working with another financial advisor but worry that doing so could tarnish your professional reputation, know that your advisor should retain privacy for your meetings and information, just as you do for your clients.

How to know if you need an advisor

If you have a thorny issue and have not dealt with it, think about how that is affecting you and your family. Think about how discussing it with an experienced professional can lend clarity. If you procrastinate about your own finances or if your children don’t take advice from you but you sense they would from an objective provider, perhaps to assert their independence, it can be time to act. Feel free to ask the advisor you select how he or she would handle your issues — it might be reassuring.

As for myself, about 12 years ago when my husband and I were thinking of buying a larger, more expensive apartment, we engaged a senior planner at our firm to do a financial plan that included the costs associated with buying the apartment, moving, renovating and furnishing it. If the planner had told us that was not a reachable goal for us, we would have tabled it and we let him know that in advance.

Fortunately, his conclusion was that we could buy the apartment we wanted if we decided to go that route. We took his advice with new confidence and have been happy in our home for more than a decade.

And now? We still call on experts at our firm with a variety of areas of financial expertise and, even while arriving at our own decisions, we take what they tell us very seriously. We probably are not our staff’s favorite clients — we ask tough questions — but we are eager to hear other points of view.

My final suggestion to you is that because you already know most of what the professional advisor is telling you and frequently apply it to your own clients’ situations, take a step back, relax and hear what they have to say. You are not there to argue or show who is more knowledgeable, but to get objective advice.

Perhaps the financial planning community should come up with a slogan that underscores the benefits of engaging another advisor and learn to free themselves to make the most of a peer’s advice with the least amount of worry.

Karen Caplan Altfest, Ph.D., CFP®, is a principal advisor at Altfest Personal Wealth Management. She helps many of the firm’s clients with a variety of investment and financial planning issues and specializes in helping women clients and widows. Karen’s Financially Savvy Woman programs, including the Women’s Financial $pa, TM are popular with clients. Her focus is to educate and empower women.

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