If you’re a millennial, chances are you that you may already consider working with a financial advisor. In fact, one 2021 survey says that 65% of the millennial investors are likely to begin working with an advisor over the next two years. This age group, like all other age groups, has unique financial challenges and pitfalls to avoid. So if you’re a millennial, it’s a good idea to work with a financial advisor who’s attuned to your specific needs. Here are four qualities that you should look for in an advisor.
Choosing an Advisor With the Right Accreditation
While it’s always a good idea to get some personal recommendations before hiring a financial advisor, be sure that whomever you hire has the right background, education and training. This often means one with a certified financial planner (CFP) designation. A CFP could help you create a financial plan for long-term goals, including retirement, education planning and estate planning. These advisors can also have specific focuses in tax planning, insurance planning, investment planning and other financial areas.
The CFPs certification requires candidates to complete a rigorous accreditation process that includes coursework to pass the 150-question CFP examination, have at least 6,000 hours of experience working in the financial sector (or 4,000 as an apprentice) and adhere to a strict code of ethics.
You may also want to work with financial advisors who hold these common financial certifications:
- Chartered Financial Analyst (CFA): Expertise on stock analysis and money management.
- Chartered Financial Consultant (ChFC): Works with clients to create workable plans for their financial goals.
- Certified Public Accountant (CPA): Specializes primarily on tax planning for individuals and businesses.
- Chartered Mutual Fund Counselor (CMFC): Offers investment advice on mutual funds.
- Chartered Investment Counselor (CIC): Provides high-level investment advice for managing assets.
Finding an Advisor You Mesh Well With
You may not want to work with a financial advisor who seems more like a parent than an equal. Or you may be more comfortable working with one with decades of experience. You may respond well to a straight-shooter or may respond better with someone a bit more reserved.
Regardless, be sure you are working with a financial advisor with whom you have a good rapport. After all, you’re going to be talking to this person regularly and sharing with them some of your most personal information – in a word, your finances. You can’t be shy and you certainly can’t be uncomfortable when discussing important financial matters such as paying off debt, saving for retirement and adjusting your budget.
It’s also worth looking into a financial advisor’s after-hours and weekend policies. As a millennial just starting out in the workplace, you may not always have the time off to commit to an annual or bi-annual meeting with your advisor. And you shouldn’t have to. Find one with hours that meet your needs.
Making Sure Your Advisor Is a Good Listener
When working with a financial advisor, it’s key that they take into account your short- and long-term financial goals, not just what they think you should be aiming for. For example, you might be more concerned with buying your first home rather than saving for retirement. That’s OK.
While your financial advisor should definitely share with you the statistics about the power of compounding interest and starting early when retirement planning, they should also take your goals seriously. In an ideal world, you’ll find a way to incorporate both into your financial strategy.
Does Your Advisor Understand Your Unique Needs and Goals?
Millennials owe an average $38,877 in student loan debt, the third-highest balance of all the generations, while 70% say they are living paycheck-to-paycheck in 2021. Furthermore, millennial homeownership in 2020 is also 8% lower than it was for their parents or grandparents at the same age. That’s why it’s important that a financial advisor understands your financial goals, which will likely be much different than those of your parents.
It’s also helpful to work with one who specializes in paying off student loan debt because, let’s face it, this is likely something you’re dealing with. While hiring a financial advisor when you’re young may be intimidating, it’s not something you should put off for long. After all, a financial advisor can help you get on the right path for retirement, investing and, eventually, financial stability.
Although millennials, as a group, have unique financial needs and confront unique money challenges, most do not have the benefit of a financial advisor. Now is the best time to engage the services of such a person, preferably a CFP (though there are other good certifications, too). Whoever you chose should be sensitive to your particular needs and goals, including being familiar with ways to handle student debt, homeownership and budgeting.
Financial Advisor Tips
- Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- The millennial generation has its own unique financial challenges, including student debt. Use this guide to help you find the best way to pay off your debts.
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