Financial adviser Eric Walters always has tissues on hand when meeting with one client in the midst of a divorce, especially because they talk about her marriage, family and fears.
“I find my role as a planner often involves counseling clients around sensitive topics, dealing with fluctuations in wealth, and how to enjoy their wealth,” he said.
Walters, the president and founder of SilverCrest Wealth Planning in Greenwood Village, Colo., has worked with widows to create a conservative long-term financial plan so they’re no longer afraid to spend their money. He’s also shared books or resources with entrepreneurs after they’ve sold their businesses because they’re not sure what to do with their time.
Financial planners play many roles for their clients, only one of which is managing money. These advisers talk out clients’ hopes and dreams, resolve familial conflicts, offer career advice and in some cases, see the first signs of cognitive decline. One of their most important roles is listener.
“As an adviser, we have to be really, really good listeners,” said Melissa Sotudeh, wealth adviser and chief compliance officer at Halpern Financial. “Of course it has to do with money, but you have to be able to understand and explain that this is the pathway there.”
There are many types of financial adviser, as well as terms to explain them. Some focus just on the investments, while others go to school or are certified in financial planning. If they become a registered investment adviser or are a Certified Financial Planner, they must be fiduciaries, which means they must act in a client’s best interests when managing their money. (Comparatively, some advisers, or broker-dealers, are only held to a suitability standard, where their advice must be aligned with clients’ situations and needs but not necessarily be the most cost-effective choice for the investor). There are a handful of titles and credentials an adviser may go by.
See: Stay away from these 3 types of financial advisers (and that’s coming from an industry insider)
Financial planners are usually taking goals, taxes, retirement and lifestyle decisions into consideration, and they’re balancing emotional reactions with logical approaches to money management.
Money advice may be the reason clients first go to a planner, but they’re getting other services as well. Here are a few:
Therapist or counselor
Financial decision-making tends to stem from goals. “When people come in, we talk about the hard number stuff, but then we also talk about the soft interpersonal stuff that impacts the numbers,” said Lora Hoff, a wealth management at Investment Planners, Inc. in Dallas. That means talking about passions and dreams for retirement, and how to have the money to fund those wishes. It also means acting as a third-party mediator when couples are having trouble understanding each other or how to share their finances. “There’s always more to the story,” she said. “We’re not afraid to touch on it and then really have a meaningful conversation about how best to balance it.”
Advisers also remind clients why they chose to invest the way they did when market volatility strikes, as it did in December. Investors often turn to their advisers asking what they should do, or if they’ll still get to retire in a few years. Sotudeh said her firm was proactive in discussing the volatility with clients, but still took the opportunity to discuss their plans and investment strategies. “When I bring that up again, and I say ‘well then this all plays out,’ they relax,” she said. “That really makes a big difference.”
Career coach
Clients sometimes use their financial planners as a sounding board when starting a business or making career changes. Charles Adi, founder of Blueprint 360 in Houston, said clients will talk to him about the consequences of going back to school or starting a new business. He doesn’t tell them they can or can’t go through with these decisions, but he does ask questions like “how would you feel if you had to start over in a few years?” and “what are you really looking for out of this opportunity?”
“What I do most often than not is listen,” he said. “They talk themselves through it.” He also offers resources, including information on grants they can apply for, or tell them how to talk to bankers about loans.
Some aspiring entrepreneurs just want to know it’s OK to start a business, Hoff said. “Sometimes they need someone to bounce this stuff off of to get permission,” she said.
Also see: 8 mistakes to avoid when choosing a financial or tax adviser
Medical assistant
Rose Price, partner and adviser at VLP Financial Advisors in Vienna, Va., has driven her client to an eye doctor appointment and toured retirement homes with her, too. “My concern was making sure she was safe,” Price said. The client, who she had worked with for about nine years, was going through a difficult time, having to move from her home of 40 years and with no family nearby. “It was tough. She was scared.”
The industry is opening up avenues to help the elderly manage their money, especially when they may no longer be capable to do so on their own. The Financial Industry Regulatory Authority, a self-regulating organization for broker-dealers, announced new rules in 2018 to avoid financial exploitation of seniors, including adding a trusted contact person to accounts and holding disbursements until they can be verified.
Advisers may have their clients discuss their wishes for such an unfortunate event, no matter their age or health. John Scherer, owner of Trinity Financial Planning in Middleton, Wis., said he’s fortunately never had to tell clients their cognitive abilities seemed to be declining, nor share that news with family, but he said he is ready if ever it happens. His firm began using the Alliance of Comprehensive Planners’ “cognitive decline form” two years ago, which addresses various steps he would take if an issue arose. “If something comes up, rather than trying to figure it out, we can say ‘here’s what we talked about,’” he said.
But no matter how much an adviser wants to help, there will be times clients should go elsewhere, said Michael Kay, president of Financial Life Focus in Livingston, N.J. Advisers aren’t medical professionals or attorneys, and have to be careful not to cross the line or provide faulty advice.
“It’s just kind of knowing what the boundaries are,” he said. For example, families with children who have special needs may work out the financials with an adviser, but also need an estate planner to discuss legal documents to keep their children safe after they’ve passed. When there are problems outside of their expertise, advisers will usually introduce their clients to a network of professionals, including lawyers and accountants. Of course, they may follow up with clients afterward, as Kay does.
“These are our clients,” he said. “They’re like our family.”