Setting Expectations
You're responsible for the success of your own personal finances, but you don't have to do everything yourself. You're managing a team of people, including yourself, to make sure you meet your goals. How all these teammates work together is an important part of your success.
Your Role and Your Team's Roles
Your role is to make sure that your best interests are the top priority and that you express your needs, goals, and questions at every step along the way. Your advisors will make suggestions and recommendations. They rely on you to give them all the information they need and to be realistic and truthful about your circumstances. They also rely on you to make all final decisions, unless you have given them this power, as is sometimes the case if a money manager is managing an investment account and has discretionary authority to pick investments within certain guidelines.
Even if you've given your investment advisor discretionary authority to make investments, your account statement should come independently from an investment company that holds the account, not the advisor. Deposit checks should be written to the investment company, not the advisor.
Advisors Working Together
Insist that your advisors work well together. If they aren't communicating or if they feel protective of their turf, you can't be sure your needs are being met. You may feel some conflict if your financial planner is recommending a different policy than your insurance agent is suggesting, or if more than one advisor provides a particular service. If this is the case, understand that you will probably get the most unbiased advice from the advisor whose compensation isn't influenced by whose recommendations you implement. For example, if your financial planner and your insurance agent are both recommending a different type of life insurance but the agent is the only one paid on commission, you should consider her bias.
Remember that your advisory team includes you, and relies partly on your web research, your reading, and any classes you might take. Your advisors should respect your questions and should not make you feel as though you're being dictated to.
When Is an Advisor Crucial?
In your 40s and 50s, you need at least a financial planner to review your personal financial plan with you and the steps you are taking to manage your money toward reaching your goals. Bypassing a planner is a little like skipping regular medical checkups and tests. As an amateur, you aren't capable of tending to all the important details concerning your plan. A good advisor will save you at least the equivalent of his fee by maximizing your resources, saving you time, and preventing costly mistakes.
