Married Life Primers

Financial Advisors: The Complete Guide For Married Couples

You and your partner don’t have millions of dollars laying around so why do you—planners of a wedding or newly married couple—need a financial advisor? Simple: Because now’s the time to start saving.

A good financial advisor or planner can offer guidance no matter how puny your bank account. A pro can help you create a budget, assess cash flow and map out a plan for your future financial life together. And while that may not sound as fun as booking a helicopter ride for your honeymoon, these are things that will have a much more significant long-term impact on your lives than a 60-minute aerial tour of waterfalls and volcanoes.

What Is a Financial Advisor?

JJ Burns, a Certified Financial Planner board ambassador in Long Island, NY, puts it this way: “A great CFP becomes a facilitator in a marriage—he or she can help make sure each person is heard.” A planner will prompt you to set goals, whether it’s buying a home or paying off your student debt, and lay out a roadmap to achieve them.

You’re probably wondering: How much is this gonna cost? As with so many things, it depends on what you need and how hands-on you want to be.

How to Find a Financial Advisor

You killed it when it came to finding the right wedding band—but the criteria for getting set up with the right financial advisor is, understandably, a little different. Andy Byron, CFP and principal at HC Financial Advisors in Lafayette, CA, says it can be a challenge to find a financial advisor who doesn’t have asset minimums (i.e., it’s hard to find someone who will work with you if your net worth basically amounts to all the cash you got, or plan to get, as wedding gifts).

The first thing to do: Get referrals. Ask around to see if any of your peers have advisors they’re working with who they recommend. Or, if your parents have a financial advisor, see if they can help you—or at least point you in the right direction.

Check the NAPFA websites, which have directories of fee-only financial advisers, and confirm that the person is a CFP (certified financial planner) or CFA (chartered financial analyst). The reason you’ll want to avoid no-fee CFPs is simple: If they aren’t being paid by you, then they’re probably earning a commission from insurance companies and mutual-fund firms whenever they sell their products (including bankers), which is a definite conflict of interest.

This is where the concept of a fiduciary (aka an advisor who must legally act in your best interest at all times) comes into play. Under federal law, investment advisers are regulated by the Securities and Exchange Commission (or appropriate state authorities), and they’re required to provide services to their clients under what’s known as a “fiduciary standard.” They are, at least in theory, as unbiased as it gets.

What to Ask Potential Financial Advisors

A man puts $100 bills into a jar for savings
Photo by @nina_p_v / Twenty20

Byron suggests “interviewing” someone you’d like to work with by asking if they have clients who are similar to you (in terms of age and assets). Do not hold back on any questions about fees or anything else. “You’re looking for blatant transparency,” says Byron, “and if you don’t find it, move on.” You don’t have to love this person, but you should at least be able to get along with them, according to Kelly Lannan, Director of Young Investors at Fidelity. You may only see them once or twice a year, but they’re going to be an important part of your life.

Some questions:

  1. How long have you been a financial planner?
  2. How were you trained and what are your qualifications (licenses, credentials)?
  3. What is your investment philosophy or approach? (Do you lean risky or conservative?)
  4. What services do you offer?
  5. Will I be working directly with you or someone else?
  6. Do you make money through fees or commissions or a combination of both?
  7. Who else benefits from your recommendations? (What companies?)
  8. What will this cost me annually? Estimate if need be.
  9. Have you ever been in any legal trouble with your financial advice business?
  10. Can you summarize our contract in writing?

What to Expect When You Meet a Financial Advisor

One way to know you’re in good hands, says CFP Burns, is if the planner asks you to provide information in advance of your first meeting. They may send you a cash-flow budget worksheet, which you can complete and send to them ahead of time; that will lay the groundwork for a productive and efficient face-to-face, when the time comes.

Some things the questionnaire may ask: your monthly spending on food (both at home and out), clothing, cleaning, your rent or mortgage, real estate taxes, utilities, personal care, doctor’s visits, car payments, gas, vacations and charity donations. You may even want to keep a daily spending diary for a few weeks, to check for any expenses you might initially have missed.

Be ready to discuss all your assets, which will probably include your checking and savings accounts, 401(k) plans, real estate, and any debt, whether student loans, a mortgage, or credit card. You’ll also go over how much money you make, as well as your expenses. If you’re already using a personal finance app or “robo-advisor” (automated, custom advice-generating online tool), you’ll be a step ahead, since this info will all be readily available to you.

You’ll probably come away from your first meeting with a brief to-do list. Burns says his clients typically leave with the directive to follow-up with any additional information (such as tax returns), and to start the steps for setting up three key elements to financial stability:

  • A will or other plan to determine where the couple’s assets would go if someone dies or becomes disabled
  • Appropriate insurance
  • Some sort of savings plan

How Much Does a Financial Advisor Cost?

If you’ve gone with a fee-only financial planner, the rates will be very clear (since there’s no commission involved). There are generally four ways fee-only financial advisors charge clients:

  • Hourly (a few hundred an hour)
  • As a retainer (varies widely and depending on your assets)
  • As a percentage of assets (often 1%)
  • As a flat fee (starting at around $1,500 for a plan)

Burns usually starts new clients with an hour-long consultation, which can range from $300 to $500 an hour. If all of this sounds overwhelming — the investment of time and money — you can experiment first with personal finance apps, which tackle bill payment, budgeting, investing.

The Biggest Mistake People Make

The number-one piece of advice to newly married couples: don’t wait. Even if you think you can’t afford to save right now, or if you don’t know the difference between a mutual fund and a hedge fund, there’s one thing you probably do have going for you—and that’s time. “Compounding is the biggest gift you have going for you,” says Andy Byron, CFP and principal at HC Financial Advisors, since the laws of compound interest basically mean that the most important dollars you invest are the early dollars.

 

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