5 Questions You Should Ask When Hiring a Financial Advisor

Finding the right Financial Advisor for the job is so important! You need someone who is trustworthy, competent, and affordable. 

Questions To Ask Yourself

Before you interview a financial advisor, you need to ask YOURSELF a few questions: 

  • What are you looking for in a financial advisor?
  • What services do you need?
  • What are you willing to pay for them?
  • How often do you want communication (frequent in-person, occasional call, or email)?

Knowing your goals and communication style will help you to quickly determine which financial advisor is the right one for you.

Questions To Ask a Financial Advisor

  1. Are You a Fiduciary?

You want your financial advisor to say yes! Fiduciaries are financial advisors who are required to:

  • Put the client’s interests first
  • Disclose important information, including their fees
  • Reveal any conflicts of interest
  1. How Do You Get Paid?

Financial advisors can make their money in several different ways:

  • Hourly
  • A fee based on a specific service
  • A percentage of the managed assets
  • A sales commission on investment products

To avoid any conflicts of interest, look for an advisor who is “fee-only.” 

  1. What Services Do You Provide?

Different advisors may only support you in certain financial areas, such as:

  • financial plans
  • managing assets
  • investment advice
  • retirement
  • insurance
  • tax planning

Before you hire a financial advisor, know what services are offered and if there are any extra costs for additional services. 

  1. What’s Your Philosophy on Investing?

A good financial advisor should fit your needs. You want someone whose investment philosophy matches yours and uses strategies that you understand. This will help you feel more secure through the ups and downs of the market. 

  1. Who Are Your Typical Clients?

You want to work with a financial advisor who has experience working with people in your situation. 

Conclusion

A good financial advisor should expect questions like these. They understand how important the relationship is between the advisor and the client and want a good fit for both parties which is why you should interview more than one. 

Your financial advisor is an important person in your life. Take your time to consider all the candidates and choose the one who’s best for you.

If you are looking for a trusted partner to help you navigate financial decisions, we are here to help. Schedule a meeting with us today to see how we can help you with your own financial journey. 

 

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

What Is Rebalancing?

When we speak of rebalancing in the investment world, we are referring to balancing your investment allocations back to where you started. For example, if I invested $100 and I wanted to be $50 in stocks and $50 in bonds, I would invest the money and make the trades accordingly. My 50% stock allocation and 50% bond allocation changes every day because the market moves every day and prices of these assets change along with the market. Essentially, my 50/50 allocation is set only on the day that I invest.

When Should You Rebalance?

It is good practice to look at your investment portfolio once per year and rebalance back to your original targets. The idea behind this is that you are taking some of your gains in the assets that are over your target and reinvesting those gains into the assets that have declined below your target.

A study by Gobind Daryanani titled “Opportunistic Rebalancing” suggests using thresholds as a rebalancing approach. For instance, you put a 20% threshold on each holding and monitor when those holdings hit the threshold, then rebalance. This is difficult to do without rebalancing software but can be done manually if necessary.

Another thing to be mindful of is trading costs. Don’t spend all of your returns on trading costs trying to keep your target allocations in line either.

The Bottom Line

Your investment allocation changes the day after you set it and needs to be monitored. It is ok for your allocations to change, that is going to happen and that is the reason you are investing in the first place. Just be mindful and make sure you take some of the profits off the table and stick to an investment strategy that you are comfortable with.

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Why women need to be proactive about their finances after divorce

Divorce is definitely not easy, but sometimes it is necessary and it can have a huge impact on women and their finances. 

Even though women are the ones who initiate divorce 69% of the time (according to Stanford University), there are high emotions and a lot of uncertainty. How will your life change? Your kid’s lives? Your financial situation? 

The U.S. Census Bureau has some startling statistics on divorce in the United States. Approximately every 42 seconds, there is one divorce in America. You are not alone.  With women typically living longer than men, there’s more years to plan for.  Coupled with the financial toll that divorce has, it is critical to prepare as much as possible to soften the blow.

How to financially prepare for a divorce

When you’ve decided to file for divorce, it’s time to gather as much information as possible and figure out a plan.

When it comes to your new financial future, here are a few things to consider:

Take inventory of your finances

Taking time to get organized and educated is a key factor  if you’re planning to leave your marriage.

Here’s a short list of items to start with:

– pay stubs

– bills

– credit card statements

– bank statements

– mortgage statements

– investment statements

– income tax forms

– contents of your safe or safety deposit box

– any other pertinent financial documents

The more information you can give your financial planner and lawyer, the better.

Your monthly income

Perhaps you have your own income at the time of divorce and earn more than your spouse, or maybe you have a lower income than your spouse because you have been out of the workforce for years. 

Either way, you should work with your attorney and financial planner to try to calculate how much income you’ll require after your divorce. Once you have this information, then you can start planning.  There are a variety of sources that may or may not be available to support your income needs–current and/or future jobs, savings/investment accounts and spousal support.

Unfortunately, the reality is that many mothers are supposed to get alimony or child support but don’t. According to the U.S. Census Bureau, only 45.6% of custodial parents who were due child support in 2013 received full payments. This loss of income can be a significant financial blow. That’s why women must prepare for divorce financially and figure out their budget once finalized.

 

No more joint accounts

If you have a credit card or loan that is in your name and your spouse’s name, you are both responsible for it. It’s best to avoid any negative situations like your spouse running up a large balance on a joint credit card and refusing to pay. This drags down your credit. So be sure to take your name off all joint accounts. 

Have at least one credit card that is in your name only. This will help you start to establish your own financial independence. Next, get a separate checking and savings account and save enough money for a couple of months worth of living expenses.

What are your next steps?

With this new independent life, there are countless things you should consider in your financial planning.

  • will you stay at the family home
  • how will you pay for it
  • do you need to get a job

How to pay your legal fees

When it comes to divorce, most people require a lawyer. If you can’t afford one or your spouse has removed your access to funds, there are a few things you can do. 

  • Ask about a payment plan. Divorce is expensive! Many lawyers offer payment plan options. You might have to pay an initial retainer, and then you would proceed to pay in monthly installments.
  • Apply for a personal loan. If you have good credit, you can consider taking out a personal loan to cover legal costs. 
  • Ask family or friends to help. No one wants to ask friends or family for help, but they may be able to help you at this difficult time. 
  • Look for pro bono services. The American Bar Association states that lawyers should try to contribute at least 50 hours of pro bono legal services per year to help those in need. With that in mind, it wouldn’t hurt to ask the attorney if they can provide pro bono legal aid.
  • Contact the family court in your area. If none of the above options are viable, reach out to your family court. They can refer you to low-cost civil legal services agencies and other resources in your area.

Getting your financial life back in order after a divorce

Once your divorce is final, it’s time to heal your emotions and recover your finances.

As you’re adjusting to your new budget, living independently and paying off debt that you’ve accrued due to your divorce, you might have to tighten your wallet and cut some expenses. 

A nice vacation may be just what you’re looking for, but now is the time to save. Work with a financial planner to track your income and expenses, so you know what kind of budget you’re working with. 

Pay off Debt

As you’re paying off debt, don’t forget to check your credit periodically. It’s not uncommon for credit to take a hit after divorce. If yours is looking less than great, you should work on rebuilding it, as your credit score affects so many things in your financial life. 

To pay off your debt faster, it might be good to look into a side-hustle. There are a lot of options, and with so many jobs going remote, it may be a great choice to freelance. 

Save for Retirement

It’s important to not only pay off debt but also save for retirement. With life expectancy for women at 81.2 years (and growing every day with modern medicine), planning for your future is critical. A great way to save for retirement when you’re focused on getting through each day is to make it automatic. If you have a company 401(k), have them automatically deduct it from your paycheck. And if that’s not an option, set aside a fixed amount each week to save in an IRA or other retirement plan that may be appropriate for your situation (always check the rules).

 Gaining financial independence may be challenging, especially if your former spouse took care of all the finances in the relationship. However, with a plan in place and sticking to a budget, you will get to a place where you will have financial freedom and be able to grow your net worth.

Life beyond challenges

Divorce can significantly impact a woman’s financial and mental health. It may be challenging, but creating stability during this season of life is doable with enough planning and a strategic approach. 

Nothing is permanent, and this chapter is merely an obstacle. You will find a way to navigate it and will once again thrive.

You are independent and free. Set goals, live simply, and before you know it, you will be living the life you desire.

If you’re not sure where to start on your own financial journey, I encourage you to download our FREE Financial Empowerment Guide Exclusively for Women. 

If you are looking for a trusted partner to help you navigate financial decisions, we are here to help.  Schedule a meeting with us today to see how we can help you with your own financial journey. 

 

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Guide to Achieving Financial Independence for Women

Financial independence is the ability to support oneself financially without assistance. Financial independence is an important goal for people of all backgrounds, but it is crucial for women who continue to be disadvantaged in the job market.

Money management skills and financial awareness can give women more confidence to invest and save for their future. 

A Closer Look at Where Women Stand With Finances

While many strides have been made, the fight for equality in finances among women and men continues. Here are a few startling statistics:

  • Only 5.8% of S&P 500 CEOs are women.
  • 85% of women control their families’ day-to-day finances.
  • When women invest, their portfolios outperform men’s by 0.4%.
  • Women of color only make up 3% of women in C-Suite positions, compared to 66% of white men.
  • Since the onset of COVID-19, more than 2.3 million women have left the labor force, compared to 1.8 million men.

Women Face Challenges in the World of Finance

Women who seek personal empowerment should focus on financial freedom. There are several roadblocks that make it challenging for women to partake equally in the financial world as their male counterparts.

One example is the pay gap. According to statistics from the U.S. Bureau of Labor, women earned only 82.3% of that earned by men. Many women of color experience an even wider gap. 

Household responsibilities, lack of resources to financial tools, and pay discrimination are all issues that women face compared to men.

While equal rights between men and women have increased, there is still a lot of work to be done. Here are a few key challenges women continue to face:

Women continue to be paid less than men

According to the U.S. Bureau of Labor Statistics, women still make less than their male counterparts. This gap widens for women of color.

Having children often disrupts a woman’s career

Having children as a working woman tends to result in a wage cut of 4% per child. For working women of color, this number increases to 10%. 

Exposure to financial literacy is less for women

Women are less likely to choose their course of studies that lead to financing careers. Men study economics almost 2x more than women.

Typically women have a longer lifespan than men

A man’s life span is typically 8% shorter than a woman’s. This leaves most women left to manage their own finances at some point in their life, particularly when their male counterparts pass away.

Strategies to Sustain Your Wealth

Women typically know more about managing their finances than they give themselves credit for. While some financial strategies are applicable at any time, some moves make sense at certain stages of life. Becoming more financially literate is the best way to start developing a financial plan.

When creating a lifelong safety net, it’s important to set financial goals and understand short, medium, and long-term money strategies.

To build independent wealth and financial independence, it’s important to start budgeting, investing, planning and saving for retirement.

  1. Create a Budget and Evaluate Your Spending Habits

Following a budget allows you to save for financial goals while living within your means. Women are typically better at managing money, but it’s always a good idea to reevaluate where their money is going.

 A good place to start is by listing how much money is earned each month, then itemizing spending into categories of necessary and unnecessary expenses. 

PAYING OFF ANY DEBT YOU HAVE

Uncontrolled debt causes stress and prevents women from attaining financial freedom. To start, consider adding paying down debt into your monthly budget. The debt avalanche and debt snowball methods are two strategies to do so. 

The avalanche method works by paying off debts with the highest interest rate first. The snowball method works by paying off debts by prioritizing the smallest debts first.

Regardless of the strategy, it’s important to always make more than the minimum payment.

  1. Investments

Investments can be a reliable source of income, can help counteract inflation and help to ensure your savings continue to grow. Many women lack the confidence to invest successfully, however, women are just as effective in investing as men, and oftentimes their portfolios are more successful. 

Surprisingly only 26% of American women invest in the stock market, even though nearly half of women view the stock market in a positive light. 

Investing helps to give women an equal opportunity to accumulate similar wealth as men.

INVESTMENT STRATEGY TYPES

Finding an investment strategy that is right for you will depend on your risk level and your goals for short and long-term investing. 

Do you want to be an active or passive investor? Active investors are typically involved in the buying and selling of assets, while passive investing tends to mean more “sitting and waiting.”

In general, short-term investments are designed to provide results within three years, while long-term investments provide financial security many years down the road, such as stocks, bonds, and real estate.

Portfolios can be high or low risk. A high-risk portfolio has an aggressive strategy. This has the potential of high rewards but could result in several ups and downs. Low-risk portfolios will not have as strong results as high-risk but also are not as volatile.

  1. Save, Create an Emergency Fund, and Build Credit

When planning your monthly budget, setting aside a specific amount for savings is important. I recommend keeping a 3-6 month emergency fund. This emergency fund can help with an unexpected family emergency, job loss, or health crisis.

Building credit is another great way to work towards financial independence. Pay off your credit card balances every month to enhance your credit score.

  1. Plan for Retirement

According to the World Health Organization, on average, women live 6 to 8 years longer than men. However, since women often have less than men saved, it’s common for them to outlive their money. Saving for your later years will help to give you a more enjoyable retirement.

Create a Life of Financial Freedom

In our society, there are a lot of challenges and inequalities that women face when it comes to finances and economic security. However, it is still possible for women to create a life of financial freedom in spite of these challenges. If you’re not sure where to start on your own financial journey, I encourage you to reach out to me for a free no-obligation consultation. Managing your finances is an important step in taking control of your life and creating the future that you want for yourself. With diligence and perseverance, you can help make your financial dreams a reality. Contact me today to get started!

Financial Journey LLC is a registered investment advisor offering advisory services in the state of Virginia and in other jurisdictions where exempted. Information provided is for educational purposes only and not, in any way, to be considered investment or tax advice.

Inflation

Inflation is the general increase in price level which corresponds to a reduction in purchasing power. Why do we care about it? We care about inflation because our dollars buy less. For example, remember when you could buy a gallon of gas for $1? Now it’s $3 a gallon. The same amount of money that would fill out tanks up will only fill up one third of a tank now!

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