Turning to the Experts

When you hire a financial advisor, the assistance you receive is tailor-made, says Treana M. Lankard, vice president and branch leader for Fidelity Investments.

“Every investor has a unique situation, so we take into account the big picture,” Lankard says. “We look to understand their priorities, preferences and family dynamics to lay out the foundation of a plan that aims to effectively manage their wealth now and into the future. Once we have this framework, we can start to determine what kinds of accounts might best support and put their financial plan into action.”

The goal of a financial advisor “is to help you make your money work harder for you. In other words, we partner with clients to ensure that every dollar has a purpose,” Lankard says. “At the end of the day, financial planning is collaborative and fluid – we’ll be there to help your financial plan adjust with you through all of life’s challenges.” 

Myths, Debunked

Not all financial advisors are alike, and they are not just for the uber-rich.

The best way to separate fact from fiction is to interview financial advisors before you hire one, according to NerdWallet.com.

“Not only are there many different types of financial advisors, but advisors also make money in many different ways,” NerdWallet says. “Some advisors charge an ongoing fee based on the amount of assets they manage for you; some are paid commissions from the products they sell to you (annuities, life insurance, mutual funds, etc.) or from trades they place on your behalf; and some charge an hourly fee for the services they provide. Often, it’s a combination of these methods. Don’t be afraid to ask any advisor what they charge and compare their fees to others before moving forward. “

For more than 75 years, Fidelity Investments has worked with all types of people to help them manage their wealth, says Lankard.

“Whether you’re looking for guidance on saving for retirement or need strategies to better manage your money, financial professionals help make your goals actionable by partnering with you to put a plan into motion,” Lankard says.

Financial advisors can help with budgeting, saving, investing and portfolio management, insurance coverage and retirement and tax planning.

How to Save Smart

Financial how-to articles offer similar advice when it comes to beefing up your savings and living below your means: track your spending, cut the frills, create a budget, stay out of debt and find a side hustle.

The lifestyle blog Kindafrugal.com also presents such tips, but with a more positive spin.

“Being ‘kinda’ frugal to us means finding joy in simplicity and embracing the art of maximizing our earnings and getting the best value out of every dollar spent,” the authors write. “It’s not just about saving money; it’s about creating a life that aligns with our values and dreams.”

Jessica Jones, senior financial advisor for BOK Financial Advisors, encourages people to “get into good habits as soon as possible. I like to coach my clients to live on 90%, put 10% of what they bring home into savings, or if they have an employer-sponsored plan, put in 10%. Get in the habit of telling yourself: ‘Not every dollar I make is available to me right away.’”

Young people are saving at a higher rate than some might think. According to the Federal Reserve’s Survey of Consumer Finances, Americans under the age of 25 had an average balance of $10,200 in their bank accounts in 2016. By 2019, the last time the survey was done, the average savings balance for that age group had grown to $11,250.

Risk Tolerance 

When investing, the level of comfort you have is called risk tolerance, “and it’s essentially the amount of risk you are willing to take on your investments,” says Lankard.

“With lots of time on their side, young people may choose a high-risk, higher potential reward investment since they are able to recoup any losses over the long-term if an investment has a bad year,” Lankard says. “On the other hand, those closer to retirement may prefer investments that may be less likely to result in short-term losses.”

But sometimes just the opposite is true. Jones says she also considers the experience level of her clients when advising about risk.

“If you are inexperienced, you might not be able to tolerate the level of risk that comes with age and experience,” Jones says.

Conversely, people with more experience at investing “might have a higher risk tolerance because you have a higher level of assets,” she says. 

High Risk Investments 

When considering whether a particular investment might be risky, Jones says she considers the client as well as the stock itself.

Jones says she would not patently warn clients away from MemeStocks, Bitcoin, options, mini-bonds or complex investments. 

“Those types of alternative investments require a certain client,” Jones says. “For more experienced investors with more liquid assets, if you want to use that as an alternative to your overall position, that’s something we can look at exploring.”

With Bitcoin, “I’m not advising a client to dump their retirement into that,” she says. “We don’t have enough history on Bitcoin. It’s been extreme ups and extreme downs.”

When it comes to options, “I would not necessarily say they are high-risk,” Jones says. “They should not be used for everyday clients. I am typically only using them for very experienced clients.”

MemeStocks, which are shares of companies actively being traded, “are hot topics because they are in the news for something,” Jones says.  “The risk in that is to be careful following trends. Make sure it matches your goals. Sometimes these companies might not even last.”

Financial Freedom

The road to financial independence “looks different for every individual,” says Jones. “I don’t believe in a one-size-fits-all. There may be things that make my road different than yours.”

Lankard says that one of the best things to do to get started toward greater financial wellness is to create a plan.

“Your financial plan is a blueprint for managing your money, constructed on several key financial pillars: spending, saving for the future, managing debt, protecting what you already have and estate planning,” she says. “Understanding where you stand on each of these in the context of your long-term goals can help you remain flexible and change course should your priorities change or if life just gets in the way.”

Financial independence, Jones says, “means you are self-reliant. You have built a position for yourself where you are not dependent on the mortgage company. You have a steady stream of income, and are on your own without having to depend on government assistance, a loan company [or] a credit card, and you are not using other people’s money.”

Credit Card Debt

Having credit card debt, “isn’t necessarily horrible,” says Jones. In certain situations, in fact, it might be a better option than tapping investment accounts. 

During the early years of the COVID-19 pandemic, for example, “there were a lot of people without jobs for a long time,” Jones says.  “I have clients whose jobs were put on hold. Unless they started depleting retirement accounts, they turned to credit cards.”

Once you have recovered from a financial crisis, impulse spending, medical emergency or whatever else landed you in credit card debt and are ready to wipe out the balance, it’s a good idea to call the credit card companies and ask about payment options, Jones says.

“You can also explore balance transfer options, which offer zero-percent interest for 12 or 18 months with a one-time transfer fee,” Jones says. “That fee will be much less than the interest you are going to pay.”

To free up money to make bigger payments, “start from the basics, look at where your money is going,” Jones says. “Look for the dollars and cents that are going places that can be put on hold. Starting is as easy as being disciplined enough to re-budget.” 

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