By Nicole C. Milici
Many men believe they need a Financial Advisor to outperform the market. Many women believe their man is making the best financial decisions for them, while not considering consulting a Financial Advisor themselves.
A survey by American Express concluded that most men handle the finances in a household. I’m sorry ladies, but this is a load of … how do I say it nicely?… bull! Your finances are your personal responsibility. Don’t take a backseat in determining your financial future.
Here are five reasons a woman needs to consult a financial advisor:
- To Create a Financial Plan
Whether you are single, married, divorced, or widowed, at some point in your life you will be responsible for your finances. While the divorce rate is going down in the U.S., so is the number of people actually getting married (www.today.com). More women are staying single longer. Also, nearly 700,000 women lose their husbands each year and will be widows for an average of 14 years. (United States Census Bureau).
A financial plan will help you establish your goals and priorities for your future. Will you outlive your money? Would you like to be able to put your children through college? Do you have charitable giving goals? Might you need to take care of aging parents? How about a vacation home with a walk-in closet and an Imelda Marcos shoe rack?
- To Gain Access and Be Held Accountable
A financial advisor has access and knowledge that you don’t, obtained through years of formal education as well as the experience of working with many successful clients. They can assist you with diversifying your investment portfolio and determining your tolerance for financial risk. Women tend to be more risk averse (www.nasdaq.com), and an advisor can keep them in their comfort zone. Also, while we all tend to stray from our goals, advisors are experts at holding us accountable to those goals. A good one will keep you on track to achieve your financial goals during times of market volatility.
Pick a financial advisor who is a fiduciary. In Latin, “fiduciary” means “trust.” A fiduciary is a person who has the power and obligation to act for another under circumstances which require total trust, good faith, and honesty. Independent, registered investment advisors are held to the fiduciary standard. They are required by law to act in your best interests. Brokers are not.
- You Can Talk and They Will Listen (Except when they Interrupt!)
Financial advisors are a good sounding board for a woman’s brilliant ideas. A financial advisor can give us perspective, straight talk, and valuable advice. Female brains are more interconnected between the brain hemispheres. Male brains have more connections within each hemisphere, (University of Pennsylvania, Male and Female Brains Really Are Built Differently). This means women can zigzag between left “logic” and right “creative” more easily than men. Female brains seem to have a stronger connection between their logical and intuitive elements. “When women are asked to do particularly hard tasks, they might engage very different parts of the brain,” said Ragini Verma, an associate professor of radiology at the University of Pennsylvania and one of the authors of the report. “Men might over-engage just one part of the brain.”
- To Help You Save and Budget
Women live longer than men. Time Magazine states that, across the industrialized world, women still live five to 10 years longer than men. While everyone can put a little money aside for retirement, a financial advisor can help you build an investment portfolio that you won’t outlive.
Also, if there are surprises in your life that affect your income or need for capital (and there always are), your financial advisor can be your first call. They can help you through a crisis by planning and budgeting in advance and then by adjusting your budget as circumstances demand.
- To Give You Freedom and Flexibility
Unfortunately, even though it is 2016, there is still a Gender Pay Gap. Women often earn less compensation then men in the same position. As a result, women need every advantage they can get, and having an experienced financial advisor can help.
Having a solid financial plan gives you the freedom to focus on what’s really important in your life––your family, your faith, your health and happiness…but not whether you picked the right stocks and bonds.
Financial advisors are extremely valuable and there are differences in cost. Make sure you understand how they are compensated and check for hidden fees that might not be transparent.
Select a financial advisor who subscribes to a low-cost, passive investment philosophy and adheres to the fiduciary standard. This way, you keep more of the money you’ve earned.
At Portfolio Solutions®, we design, implement, and maintain dedicated portfolios using low-cost, passive investing methods so our clients keep more of what the global markets offer. We would rather help investors earn more by controlling their investment costs than by taking unnecessary, additional risk in their portfolios.