Taking Charge of Your Financial Future

08/10/2016 08:09 pm ET

The other night, as I was watching the movie “Suffragette” on HBO, I was struck by how far women have come financially in the last 100 years.

In the early 20th century, a woman’s lack of voting rights went hand-in-hand with her lack of choice to make financial decisions — even with the money she earned. Today, most women would never consider silently handing over their paycheck to their husbands as was expected years ago.

Women now account for nearly half of the American workforce and represent the primary or sole breadwinner in 40% of households with children, according to Pew Research Center. This trend naturally lends itself to women taking more control over their property and money. In fact, in my practice, I see more and more women coming to the table to make long-term financial decisions for themselves and as equal partners with their spouses, irrespective of whether they pursue a career.

How smart these women are to be engaged in the financial planning process! After all, in addition to thinking about retirement, women are keenly focused on preparing for children to leave the nest and go to college, aging parents, outliving a spouse, taking a career break to raise a family, and even divorce. At times, planning for these competing goals can feel overwhelming, but taking charge doesn’t mean having to go at it alone. Whether you’re already involved in financial choices or still finding your voice, seeking out a relationship with a financial advisor can help create clarity and peace of mind.

Different perspectives

While both men and women are keenly focused on investment performance, I’ve found that women tend to be more engaged when discussing what their wealth means for them and their families. They want answers to questions such as, “Will I have enough to live on if my husband passes?”, “Can I retire from my high-paying job to pursue a second career?” or “Can we take our entire family on this dream vacation?” As such, finding an advisor who can give you the financial context for these big life questions, rather than simply focusing on rates of return, is critical. 

Although men and women may approach their finances a bit differently, the criteria for selecting a financial advisor and building a successful long-term relationship is very much the same.

4 Cs of selecting an advisor

With more than 300,000 people holding themselves out as financial advisors in the U.S., it is very important to keep in mind that not all are created equal when it comes to what I refer to as the 4 Cs… Credentials, Compensation, Customization and Comfort.

Credentials

Anyone can call themselves a financial advisor or wealth planner, but that doesn’t necessarily mean that they are an expert in the field. The professional you want to seek out will have a proven track record in the industry and professional credentials that take a significant amount of time and expertise to earn. These include the Certified Public Accountant (CPA), the Certified Financial Planner™ (CFP®), and the Chartered Financial Analyst® (CFA) designations. Planners with these designations have a proven level of competency within financial planning, investing and tax matters. To earn the CFP credential, for example, a planner must pass an exam that tests knowledge of insurance, investing, taxes, retirement planning, employee benefits and estate planning. Having an attorney who specializes in philanthropy and estate planning is also of utmost importance if you want to transfer assets to charity and family members. While you likely will not find one advisor who has all of the credentials listed above, working with a firm with a deep bench of expertise and resources across many disciplines is ideal. 

Compensation

Understanding how an advisor is paid is critically important. In addition to knowing the underlying cost, you should also understand how the compensation structure impacts the independence and objectivity of the advice you receive. Fee-only planners, also known as registered investment advisors (RIAs), are paid only for the advice they give. They do not earn commissions for selling financial products such as life insurance or mutual funds. RIAs have a fiduciary responsibility to act in the best interest of their clients. While this may seem like something every financial planner would do, understand that only those with a fiduciary responsibility are legally required to.

Customization

As you look toward long-term goals, you’ll want to find a professional who listens to you and develops an individual plan — rather than follows a cookie-cutter, one-size-fits-all approach.

Think about what’s important to you. Will you be happy living modestly or want to maintain a lavish lifestyle in your later years? Would you like to leave wealth to your children or enjoy it with them while you are alive? Do you have favorite charities you want to provide for now, in retirement or after you’re gone? How much legal structuring are you willing to do to cut your tax bill? Are you comfortable paying a low-interest mortgage and putting your excess cash to work in your portfolio; or do you prefer to live debt free?

The answer to these questions requires a different strategy depending on your personal circumstances, so it’s important to work with an advisor who can provide advice based on what is best for you.

Comfort

Arriving at the best financial solution that is consistent with your personal goals and emotions is arguably the most challenging aspect of the financial planning process. Doing so effectively requires a lot of thought and communication between clients and their advisors. Given that you will need to share some of your most personal feelings around financial fears, career challenges, family dynamics, health concerns and dreams for the future, finding an advisor that you click with — one who makes you feel confident and comfortable as your financial life unfolds — is of paramount importance for men and women alike.

Take charge

I’m thrilled about the great financial strides women have made in recent years. As you strive to control your financial destiny, I encourage you to seek out a financial advisor who will empower you to do so.

(Lisa Colletti, JD, CFP, works in New York as Director of Planning and Principal of Aspiriant. Los Angeles-based Aspiriant provides independent investment management, wealth planning, family office and wealth management services across the United States.)

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