Vol. 14 - Tips for Choosing the Right Financial Advisor
In this episode, we are addressing what to look for and expect when deciding to work with a financial planner. We cover:
Fiduciary and what that means.
Delegating vs Abdigating money management responsibility
Know about the company/firm they work for
Getting to know the individual you will be working with by asking questions
If your goal is to achieve FIRE, make sure they understand FIRE and know how to help you reach your goals
Get the Mindful Millionaire Book
Learn more about Leisa from Episode 39
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TRANSCRIPT:
Naseema McElroy (00:01): Hey Nurses on Fire, we are back with Leisa Peterson, the author of the Mindful Millionaire and our Certified Financial Planner. We, wanted to talk today about what it looks like to work with a financial planner and like what should you be looking for? What characteristics should a financial planner that you choose to work with have? Okay, Leisa. So if somebody is coming to work with you and of course everybody has their own specific niche and you know, people that they serve, what, what should, what are some baseline questions that people should be asking before they work with a financial planner, financial advisor, anyone who they're looking to help them with. Money management.
Leisa Peterson (00:47): Yeah, great question. So I know the most common thing that's going to come up is around fiduciary and like is this person, I mean it's a big word, it's like, it's a horrible word because it doesn't like we can't fake it, but the idea is is that, is this person that you're considering hiring, going to put your interests before their own? I mean, that's pretty much what it's all about. And so you want to make sure that they have a fiduciary standard, that they are either applying in their business because they're a certified financial planner, which we take an oath to do that in our business. Or some people just operate that way and they will tell you about it and they'll probably have material about why they're taking that stance and how they back that up, that they're not going to be making choices that could help them create commissions, more income and not help you at the same time. So, you know, I think it's important to ask that question to know what you're getting into even before you go. You probably don't want to meet with somebody who's not taking that standard. Don't even waste your time.
Naseema McElroy (01:55): And it's funny because you think that that would be common nature. I mean, especially for our nursing community, I mean like we all have our own little standards that we operate under nursing and that's like the first thing, right? Even doctors like first do no harm. Like that's what we're here. We're here to serve, we're here to help. It's not about our best interests. And so like to think that you would have to even ask that and to look for that in the first place. It's kind of startling to think a little bit, but I know that there are fiduciaries, you can be a fiduciary in one area and not a fiduciary in another area. Can you explain how that works?
Leisa Peterson (02:34): Yeah, I mean there's a lot of different scenarios and I don't think we could cover all of them, but the one that was coming up to my mind, even as you were talking is like there are a lot of companies that have positioned themselves as if they're financial advisors, but they're really more oriented to insurance products. So when you buy an annuity, for example, the commission that the person gets that for selling that to you can be pretty big amount of money. And so it's tough to sell an annuity product without in the back of your mind as a producer, knowing that there's a big payout and, and that's where it gets like very blurry is yes, it might help you. And yes, an annuity might be a great option, but because the risks are so high that you might be sold something that somebody is going to make a lot of money.
Leisa Peterson (03:30): You have to just, you have to apply more care and diligence in your research and get multiple opinions to know that the fiduciary is actually applying. Does that make sense? Yes. I think that a lot of people think that by getting a financial planner or a financial advisor that all their money woes will be solved. Like overnight. Like they can just hand them this like build out worksheet and all of a sudden this magic is going to happen where you know everything will be taken care of. Is that realistic expectation? No. And if it's okay with you, I'm going to, can I read a little bit from my book? So here's my book. This is an advanced copy cause it's not out quite yet. But what I said and I, this is a big deal to me, like as a woman investor and also someone who has gotten trained in the business, I still feel like it's really easy for us to not handle this as well as we would like.
Leisa Peterson (04:31): So this is what I say and my book talks about chakras, so just go with this. But I use the chakras to kind of explain some of these challenges that we're dealing with in the external world with money. And I said one way to think about the throat chakra and better managing your money is that this stage is about knowing the difference between delegating money management responsibility and abdicating it. And so when you delegate aspects of money management to others, you're still the person overseeing it, which means you're in charge of making sure your investment and financial advisors are following your direction, right? That's the big one where we're like, but I don't know enough to have a direction. It's like, well then don't give them your money. Like that's how you know. And I'm, the book is written about teaching you some of these things to look at and ask.
Leisa Peterson (05:24): So it's not like we're just picking it up and saying you're on your own. But far too many people have left themselves in vulnerable or vulnerable to the behavior of unsavory financial advisors because instead of delegating, they're abdicating their responsibilities for the care and growth of their money. This is exactly what happened with Bernie Madoff several years ago where people were, you know, on mass, billions of dollars, right? Going into an advisory firm where it a Ponzi scheme, meaning as long as money kept coming in and he could pay out money, cause there were people, there were people coming in with money, he could pay that same money out, but he was not actually investing the money. They were spending the money. And because people didn't ask questions like why am I getting a 20% return in? And that's what your statements would look like rather than what everybody else is seeing, which is like an 8% return.
Leisa Peterson (06:24): Like how are you doing that will, it was fake. That's how they were doing that. So that's a perfect example of like abdication where if some basic questions have been asked by his investors and questioning the assumptions, like they were really good at saying everything's awesome. Look at how good of an investment return you're getting. You know, obviously that didn't work out so well. People lost millions of dollars, like families being wiped out because all of their money was with, you know, one advisor that, and that will continue. Like we'd love to say this isn't going to continue, but there are people out there that literally they could be running a legitimate business and then something like this happens and all of a sudden they're like already sort of shady, but they just, you know, turn in this other direction and things that you're doing with them may not be legit.
Leisa Peterson (07:19): You just have to be very careful. Yeah. And of course we don't want anyone in general to fall prey. So people like this. So what are some things, some basic knowledge or some basic talking points that people should have or have an understanding of before they even work with a financial advisor or financial planner? So the way that I sort of think about it, and I'll just take you through the way I would approach it is there's the firm that they work for. Like I want to know about the company. Like does that company have a good rating? Do when you go on and you research that company, are you seeing good things? Do you like what you see? Some of these, uh, financial advising firms are, they say they're going to be doing a lot of financial planning with you, but it's kind of like glorified, fancy number reporting that isn't really like realistic.
Leisa Peterson (08:16): I hate to say it and I saw it like you put in one number and you're controlling all the assumptions and yet the world isn't like that. So you want an accompany if it's going to be more pragmatic, they're not just about telling you all the things you want to hear, but they're also telling you the things that you might not want to hear. They're honest with you. So what's the company look like? And then what does the individual look like that you're going to be working with? So I know you had some questions that came in from your community and I love this idea of like, and it's catching them off guard. Like what are the last three books that you read, you know, what do you do in your spare time? What have you done for yourself financially? Like, are you an investor?
Leisa Peterson (08:57): How long have you been an investor? What kind of returns have you seen in your own portfolio? You know, tell me about the strategies you use for yourself and why would I, I don't want that for myself. Is that what you're going to recommend? Because that's what, you know, like, ask those sort of curve ball questions that are off the path. Because if somebody is going to BSU, which unfortunately a lot of people do, you're going to sniff it out by asking these questions that you're actually really familiar with. Because if somebody says, you know, they're reading these books that are like all about cutthroat competition and you're somebody who's like love peace and you know, um, compassion like right there you're going to be like, I don't want to work with somebody who's reading those books. So you don't have to know a ton of stuff about financial advising. You just know that you know who you like to hang out with.
Naseema McElroy (09:51): Exactly. And another important question and I saw come through too was what did you, how did you respond to 2000 and 2008 like how did you handle the last couple of recessions? Were you even working then and what did you do? How did you advise your clients through that? Or even how did you get through that? Like I think those are like questions that you know are priceless and will really show you, you know, somebody else's values. So a really good question from my community, I was proud of them for that. So another thing is of course we are nurses on fire and you know, our goal is to aspire towards or achieve financial independence. And so how do we talk to a financial advisor? How do we make sure that we're working with a financial advisor that is looking out for what our interests are, which can include and should include the possibility to retire way before the traditional retirement age?
Leisa Peterson (10:52): Yes. So this is great. We were talking about it offline there. First of all, this fire movement, like financially independent, retire early, uh, not all of the financial advisors out there are going to even understand what you're talking about. This is a more millennial, newer concept. And if they aren't paying attention to podcasts and things they might not know. And so if your goal is to do this, to achieve this, you would definitely want to ask them like, are you familiar with it? You know, how could you help me get to a fire state? Like what would you do? Or how can you encourage and hold me accountable and how can we use the tools that you have behind the scenes to help me achieve these goals in a much faster way than traditionally your models are going to show. So the idea is do you know what it is?
Leisa Peterson (11:41): Asking them that and then if they say yes, it's like, well here, you know, can I tell you what my goals are? Like I've got 10 years and I've got an idea of how I'm going to make that happen. But it's still, there's still these pieces I'm not sure I can do, you know, how are you going to help me make sure that I am on track? Like what, how do we partner together to bring this into reality and then just shut up like just silent and let them do whatever they're going to do. But if they don't give you a good response that makes you really comfortable, you probably, well they are in the writeup.
Naseema McElroy (12:17): Exactly. Exactly. And so the goal of this podcast and the goal of my platform is to really empower people to make smarter financial decisions and not to totally abdicate those decisions. And so I hope that when you're seeking out a financial advisor that you are looking for someone that is going to support you along the journey and not carry you along. You know, like you have to look at this person as a partner and not someone who is going to totally do all the work and you're just released from knowing anything about your money and then all of a sudden the money is just going to just fall into place. That's not how it happens. And so by understanding that it gives you power because you have all the control, you have control over your money, but it's also scary because you have control over your money. But money does not have to be hard if you really understand it. It's pretty straightforward. It's pretty easy but, but you have to get intentional about it. So thank you so much Leisa for sharing your expertise and like you are a certified financial advisor and as a certified financial planner, talk share a little bit about the people who you typically work with before we close out the end of the episode and how people also can purchase your Mindful Millionaire book.
Leisa Peterson (13:43): Oh thanks. So the book is available for preorder Amazon, indie bound, Barnes and noble, like in the local bookstores. A lot of them can get an access to the copy. It comes out July 14th, 2020 and I typically am focused on creating communities workshops that help people look inside of themselves. And while I've got the background with the finance and those questions come up, a lot of times what I've learned is that the reason that we're not living as fully and freely as we want to be living is because of these money stories kind of trapped inside of us that go back to trauma that many of us experienced when we were growing up. And it's showing up not just with our money but in our relationships and other places in our life. And so the workshops that I teach and the coaching I do, it's kind of like life coaching that helps people really get to the core of those changes.
Leisa Peterson (14:43): So sometimes people are pivoting, you know, like a divorce, a huge job change. They're like, okay, I've got that come to Jesus moment and now I'm going to decide that right to do. And so I'm helping people through those big, big kind of disruptions that they know are opportunities. And they just need some help finding them. And if there is an interruption, this is the biggest interruption. I know a lot of people have seen, especially on a global scale. So I know that you're serving so many people, but thank you so much, Leisa. So Leisapeterson.com and yeah, wealth clinic.com mindful millionaire book dog. You're going to find me. Awesome. Thanks again, Leisa. Thank you. Okay.
Hey there I’m Naseema
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