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HerMoney Podcast Episode 253: How To Find And Choose A Financial Planner 

Kathryn Tuggle  |  February 17, 2021

Do you need professional financial guidance? Here’s the ultimate rundown on how to know when it’s time, and how to find the right financial planner. 

In today’s episode of the HerMoney podcast, we’re going to answer the two questions that Jean gets asked most often: When do I need a financial advisor, and how do I find a financial planner? Because even though we can be fully empowered to successfully manage our own finances and investments every day, sometimes we all need a little help from the experts. 

In terms of when we need an advisor — what does that look like? Do we need one once we start earning “real” money? Do we need one when we get married? What about when we hit our 40s and retirement comes into view more clearly? And when it comes to how to choose that advisor (who we’ll want to work with for years to come!) what should you look for? How do you know if they truly have your best interest at heart? And where do you even start the search? 

To help walk us through finding a financial planner is Pam Krueger, founder and CEO of Wealthramp, an SEC-registered referral service that connects consumers with vetted and qualified fee-only financial advisors. You may best know Pam from her investor-education television series on PBS, Money Track, and she’s also the author of The MoneyTrack Method: A Real Person’s Guide to Successful Investing

Listen in as Pam and Jean talk candidly about the big financial issues on people’s minds these days, for 2021 and beyond. Pam also explains what she means by common words of advice she gives to her listeners — the importance of “thinking like an investor.” 

Pam also  breaks down the different types of advisors and what they do, and explains what it means to hire a “fiduciary” when you’re looking for an advisor — and what it means to find that all-important personality fit. 

“What I’m looking to do is understand how this advisor is helping his or her typical clients, and I want this advisor to hear my story and really listen with empathy, and if you’re not getting that, then move on. It’s not the right advisor,” she says. 

Pam reveals the top considerations when choosing an advisor, and breaks down her top three best pieces of advice for all our listeners who may be ready to pick up the phone (or do some Googling) to find an advisor who is right for them. 

Lastly, in Mailbag, Jean advises a woman who recently came into a sizable inheritance but has no other savings, and directs a Chicago-based listener on where to find an advisor. We also hear from a listener with several questions on whole life insurance, retirement catch-up contributions and rolling over an IRA vs. starting a new one. In Thrive, how to stop money fights in their tracks.

 

Sponsored by Fidelity Investments. Join us for Moms & Money, a candid conversation with moms about this past year and beyond. We’ll talk about the unique financial realities moms face and how you can create a roadmap for your family’s financial future. Visit Fidelity.com/Women today.

Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. Posts may contain references and links to products from our partners. Learn more about how we make money.

Transcript

Pam Krueger: (00:01)
What I’m looking to do is understand how this advisor is helping his or her typical clients. And I want this advisor to hear my story and really listen with empathy. And if you’re not getting that, then move on. It’s not the right advisor.

Jean Chatzky: (00:21)
HerMoney is supported by Fidelity Investments. We all have our own financial needs and goals. Investment advice from Fidelity can help you reach yours. Plus they have tools like financial checkups and more to help you make smarter well-informed decisions every day. Visit Fidelity.com to learn more.

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Jean Chatzky: (00:42)
Hey everyone, I’m Jean Chatzky. Thank you so much for joining me today on HerMoney. I’m excited about today’s episode. I have been for a while because we are going to answer the two questions that I get asked most often, whenever I go out to give a speech, or whenever we are checking our mailbag. And they are, when do I need a financial advisor? And how do I find a financial advisor? Because even though we can be fully empowered to successfully manage our own money, our own investments every day, sometimes we need a little help from the experts. I have a financial planner. I love. I credit him with many of my smart moves over the years. But when, truly, do you need to bring a financial advisor into your life? Do we need one when we start earning quote unquote real money? Do we need one when we get married or get divorced? Do we need one when we hit our forties and retirement comes into view more clearly? Or do we need one, and this was it for me, when we realize we don’t have enough time in our own lives to devote the time that we need to be devoting to our finances. And when it comes to choosing that person who hopefully you’ll want to work with for years to come, what do you look for? How do you know if they truly have your best interest at heart? And where do you start that search. To help walk us through all of this we’ve got Pam Krueger. She is CEO of Wealthramp. They are an SEC registered referral service that connects consumers with vetted and qualified fee-only advisors. You may know Pam from her investor-education television series on PBS. It was called Money Track. She is also the author of “The Money Track Method: A Real Person’s Guide to Successful Investing.” And she’s an old friend of mine. So I am so happy to have her here today. Hey, Pam. Welcome.

Pam Krueger: (02:56)
Thanks Jean. It’s great to be here. Fresh new year. Yay.

Jean Chatzky: (03:01)
Yay. I know that you and I had the same experience for such a long time, that you were a journalist on television for many outlets, including MarketWatch and Forbes and PBS. And you, like me, got asked that question over and over and over again. Can you find someone to help me?

Pam Krueger: (03:26)
Jean, it was always a matter of introducing people, especially with the advent of internet tools that are nearly free, or they are free. All this plethora of all these great ways people can help manage their own money. So on our show, like you, we always wanted to empower women, especially, to use these tools, how to use these tools, build a budget, build wealth, manage money, and of course become an investor. Now through that process, and through those years, we had plenty of people who would ask me, just like they would ask you. But Pam, especially after the last financial crisis of 0-8 and 0-9, I don’t want to use a robo. I know the tools are available and they’re really cool digital tools, but we need help. We want to sit down. We want to collaborate with an expert who will understand our unique situation, my family situation. And you can’t quite get that sometimes by, you know, just sort of clicking buttons and trying to guess. So as much as I always wanted people to use the tools and not rely on a financial advisor, it kind of came back around and bit me in the butt because I had so many people saying to me, you know, Pam, you’re not answering my question. How do I find an advisor when I want an advisor? And the reason I didn’t want to give them referrals at that time, and I did feel I was kicking them to the curb a little bit with giving them answers that were not specific. But my fear Jean was, I can’t give a referral to people I don’t know very well because everybody’s situation requires a different type of advisor expertise. And even though we don’t think of advisors as being different from each other, we think of them as painting them all with one big advisor. You’re an advisor. sort of a paintbrush. And the reality is they are as different as we are.

Jean Chatzky: (05:35)
Let’s take a quick pause and come back to the initial question. I mean, there are so many big issues out there for people right now when it comes to their finances in 2021. How do you know if you need somebody to help you or if you’re just a little confused about an issue and you can do this work yourself? Where do you fall on the answer to that question? Is there a certain amount of money that you need? Is there an age that you hit? I mean, I teed up all of these questions at the start of the show. Is it marriage? Is it divorce? Is it some sort of life event? How do you know if you need a real person?

Pam Krueger: (06:15)
So by talking to people week in, week out and doing this for years, just like you, what I find is that it falls into two categories. You know, people who are beyond the free tools like we talked about, and they realize that they either need help or they really want help. The need help category are the people who say, there’s a lot at stake. I don’t want to make a mistake. I’ve got money that I’ve saved and worked my tail off to have in my 401k. And now I’m about to retire or, you know, I have stock options. I don’t know what to do with them. I don’t know how to avoid paying all these unnecessary taxes I might need to pay. Things like that sort of constitute a need. So they feel they need to have, it’s not a want to have. And then you have a different category. You have someone who is like my niece, who is in her early thirties and she doesn’t quote unquote need an advisor. Right? But she feels she wants an advisor because she wants to set forth a map in front of her that will lay out the steps that she needs to take to be able to buy a house, save for a down payment, have enough emergency savings, be able to, you know, figure out how to sock away enough for retirement. So she wants to proactively get on top of it. So you’ve got the people who feel they need an advisor for something right now, red hot, lot’s at stake. And then you’ve got the people who say, no, no, I really want to pay for advice cause I want to get it right. I want to build wealth. Those are sort of the two categories.

Jean Chatzky: (07:55)
That makes a lot of sense. I’m thinking back on my own history. I mean my ex-husband and I, the first time we consulted a financial advisor was to figure out how much we could afford to spend on a house. And we didn’t have an ongoing relationship with this advisor after. You know, we paid for the advice, we got the advice and then we went forward. And then it was some years before I consulted an advisor again. And that was okay. It doesn’t have to be, I am hiring you and I’m going to pay you every quarter for the next decade.

Pam Krueger: (08:30)
That’s right. You don’t have to marry the advisor. But on the other hand, the best financial plans are the financial plans that change as your life changes. And they change with you. Because a financial plan can’t be like a snapshot. It has to be a video. Because if financial plan has to move and change as your is dynamic. So as you get married, as you have children, as things come up in life. You may have a child with special needs, or you may have to take care of an aging parent in a way financially that you never planned on. So life happens. And when it happens, that financial plan needs to change and adjust. Because you can imagine, if you went back to the financial plan that you just mentioned, Jean, and you revisited it 10 years later and you tried to follow it, it would almost be like following a GPS that was stored in your GPS memory that you go back to that’s taking you to Dallas, Texas when you really wanted to go to New York. It’s good, really good, to have the check-in like you did. I love that. I think that as long as people understand that a financial plan does need to change. So you may not need the advisor for the ongoing part of it, but don’t rely on a ten-year old financial plan.

Jean Chatzky: (09:54)
Totally agree. Totally agree. And I want to actually come back to that and what it means to having an ongoing relationship with an advisor, and how much that relationship costs. But I’m getting ahead of myself. Before we do that, let’s talk about choosing an advisor, finding an advisor. And talk to me a little bit about your company. So you were a broadcaster, right? People know you from television. They’ve seen you for years on Money Track and you switched gears. Tell me about this company that you started. And let me just explain to everybody that HerMoney has decided to have a partnership with Wealthramp to help the women in our community find financial advisors. What is it? And why did you go in this direction?

Pam Krueger: (10:43)
So really it was our viewers who created this company, created Wealthramp. My show was a non-profit. And because of all those voices that I kept hearing saying, Pam, you’re not answering my question. I really need a referral for an advisor. The only way I could do this and do it right, would be to stop and put a pause on the TV series every week. Just stop and focus in on this problem to solve. Because this happened after the last financial crisis. And I just had way too many viewers that were asking me. So I will looked out into the marketplace, Jean. And I said, what’s out there. Who’s out there that’s helping people connect with an advisor. And I saw some good non-profit associations that you and I both know that our lists of professional advisors with various credentials. Not very helpful though, when it comes to finding the right advisor for you. It doesn’t lead you to the choices or options that narrow down based on what you need. So it kind of leaves people feeling like, well, that doesn’t solve my problem. And then you have services that are out there that are really working for the advisor and they want to help bring business to the advisor. And what I had to do was I somehow had to kind of thread the needle and say, okay, I love advisors that are curated, that are going to be vetted, that I’m going to vet, and be very particular about who could possibly be referred, because our audiences are depending on us to give them the names, the actual names and referrals for advisors who are going to fit their situation and have been vetted personally. So essentially I had to stop what I was doing. And it took me four years to curate the network of advisors that I felt would have the competence and the expertise, have the credentials we need, have the experience we need and have reasonable fees and be vetted.

Jean Chatzky: (12:38)
I think there’s a lot that we can learn from the experience that you’ve gone through, whether we want to use a referral service or just want to find a financial advisor on our own. So how do you vet a financial advisor? They have so many different criteria. They have so many different credentials. There are so many different kinds of advisors out there. How do you figure out the landscape?

Pam Krueger: (13:04)
That’s what made this, you know, both a challenge and made it really actually, you know, kind of fun and intriguing. Cause I’ve known about advisers because I’ve been in the wealth management space since I was 24 years old. So I had a good understanding to start off with. Now, when we talk about vetting an advisor, we start with independent registered investment advisors held to the fiduciary standard by the SEC.

Jean Chatzky: (13:29)
What that mean?

Pam Krueger: (13:29)
What that means is that these are advisors who are independent and they do not rely on sales, on commissions, if you will, for getting paid to sell insurance products or whatever it might be. Their real income comes from consumers who pay them directly an advice fee. So they are really in the business of offering advice, qualified advice, versus a sales rep.

Jean Chatzky: (14:00)
I thought that a fiduciary had actually something to do with putting the interest of the client above your own interest.

Pam Krueger: (14:10)
It’s actually a legal definition that the SEC requires of advisors who were registered with either the state or SEC. And it requires that these advisors are absolutely held to what’s called the fiduciary standard, which means they have to act legally. They must act in your best interest. They cannot put their own interests, in other words, they can’t put, ooh, I’m going to make a nice big fat commission if I recommend to Jean a particular type of investment versus another investment that might not pay me that commission. They’re not allowed to put their own self-interests ahead of your interests. That’s what the meaning and the spirit of fiduciary really means. And so when it comes to money, of course, we want to have advisors who are holding themselves and are held to the fiduciary best practices. Let’s put it that way.

Jean Chatzky: (15:10)
So what else do you look for?

Pam Krueger: (15:13)
When you’re looking for an advisor, a lot of people don’t realize that there are background records that the regulators have where the advisors have to file every single year. And there’s a narrative that’s on the SECs website. If you search for investment advisor, search on the SECs website, and then you just pop in their name or the name of the firm, and you’re going to get a big, long, boring, dry narrative. It’s not what’s on their website. And it’s what they file with the regulators that describes their fees. It describes their practices. It describes all the different ways that they can be compensated. It describes relationships that they have with other funds or other managers or other insurance. It has everything in there that people really ought to read, but people are intimidated to go and read it and understand and interpret what’s in there. So that’s level one. That’s not even true vetting yet. That’s just pre-screening. And what you’re looking for, by the way, what we’re looking for here is we want to avoid the advisors that we can see have a track record of complaints. And that’s all on record. And the second thing to avoid is when you can’t find the advisor in the regulator’s database, you’ve got to run. Don’t walk. Run. Huge red flag. They must be findable on the regulator’s database or you cannot work with them because that means they’re not keeping up with the filings.

Jean Chatzky: (16:50)
Once you’ve cleared these initial hurdles, then what’s level two.

Pam Krueger: (16:56)
So level two becomes, now imagine that you’ve taken a big yellow highlighter and you’ve read, tip to tail, that entire narrative in the SEC records or in their records. And you are yellow highlighting and flagging questions you might have. You’re looking for ambiguities. You’re looking for gray areas. You’re looking for things that you might want to question. And that’s when the next level happens, where you have an interview with the advisor and you’re looking to learn about the advisor’s firm. You want to know the backstory. How did this firm come together? Who is the team? What’s the expertise and deep bench of expertise within the team? If you’re not a CPA yourself, is there a CPA within the firm? Does that matter to me, all these details about what brought the firm together, the history, who they are. And then really after that Jean, it’s a drill down of interviews after that, to uncover a lot of details about the client experience.

Jean Chatzky: (18:00)
One of the things that I think is very, very frustrating about the industry is that advisors get paid in different ways. And so figuring out how much the relationship is actually going to cost you can sometimes be difficult to parse. How do you get to the bottom line?

Pam Krueger: (18:18)
I really insist that we streamline it. I don’t have time and you don’t have time to listen to a big, long convoluted story about their fees. What I want to know is, please tell me every single way you’re compensated and I’d like that in writing. And then please tell me how your clients pay you. What are your fees based on? Can I pay you by the hour? Can I pay you by the project? Can I pay you on a yearly retainer? Or if I do want you to actually manage my investments and make decisions for me, can I and should I be paying you a fee based on the assets under management. But guess what? Here’s the good news. If you pull all those different ways you can pay an advisor together, spoiler alert, end of the movie is, they all come out to be pretty much the same. Because at the end of the day, Jean, advisors are just like anybody else. They charge based on complexity and time into your case. And how much of my team’s time did I have to spend on your case this year?

Jean Chatzky: (19:23)
So what’s the ballpark that you think people typically should be paying an advisor?

Pam Krueger: (19:29)
The advisors are going to kill me for saying this.

Jean Chatzky: (19:31)
I want to know. I want to know.

Pam Krueger: (19:33)
I know they’re going to kill me. But the truth is is that, you know, I’m not here for the advisors. I’m here for you. I’m here for the consumer. I don’t want anybody paying over 1%. I really don’t.

Jean Chatzky: (19:45)
1% of your assets.

Pam Krueger: (19:46)
1% of the value. So if it’s a $500,000 investment account, let’s say that you have a medium amount of complexity. Let’s say that you have a second marriage. And so you own some rental properties and you want someone to be evaluating the cash flows from those properties. And you have a fair amount of work. I can see paying up to 1% if it’s complex, but I want to see it under 1% of the assets. So that would be, you know, about $5,000 a year that you’re paying for that advice. Now, as your assets go up and you get over $1,000,000 million, if your complexity hasn’t gone up, then your fees will not certainly go up proportionally. So in other words, if you have a $2 million account, then you’re not going to pay, you know, necessarily $20,000 a year in fees. You’re probably going to be somewhere close to a one half of 1% at that point, if your situation isn’t complex. So I want everybody to be thinking about how much time and how much complexity is involved in their financial planning and everything should be revolving right around 1%. But yeah, I’d like to see it less than 1%.

Jean Chatzky: (20:57)
Absolutely. And I like when there is an official sliding scale so that you can see that as you gain in assets, you pay less in fees. That’s the way that my advisor works. And I think it’s very transparent. And I think it’s very clean. I want to talk about fit with a financial advisor because I think that’s really important. But before we get there, let me remind everyone that HerMoney is proudly sponsored by Fidelity Investments. Whether you are looking for a turnkey way to save and invest, or you need to tap the support of an experienced pro for a more complicated financial picture, just like Pam is talking about, Fidelity can help you meet your goals. In addition to investment advice, Fidelity also has online tools like financial checkups that can help you make smarter more well-informed decisions every single day. So visit Fidelity.com/HerMoney to learn more.

Jean Chatzky: (21:56)
I am talking with Pam Krueger. She is founder and CEO of Wealthramp, an SEC registered referral service that connects consumers with vetted and qualified fee-only advisors. Let’s talk about fit. How do you know if it’s a good fit with an advisor? And so when somebody goes through the wealth ramp process, if they do it, for example, on HerMoney, they’ll fill out a questionnaire and you and your team will serve up a few potential advisors that fit their criteria, basically. And then it’s up to the customer. It’s up to the consumer to reach out to the advisor. Nobody calls, which I felt was really important and was one of the reasons that I was willing to go there with you. Because I think it’s nice that we get to take control of the process and we get to reach out and then have these interviews with these advisors. What are we looking for in terms of comfort level and fit, and the squishier stuff that’s hard to describe?

Pam Krueger: (23:04)
Right. Well, you know, the one question that I really like people asking an advisor that kind of helps to get there with the fit is to know who are your typical clients. Because if the typical client of the advisor and the firm fit with your circumstances, then that’s a good starting point that there could be a good fit. Because then you can drill down and say, and what are you doing for those typical clients year in, year out. What are you actually doing for them? So I feel like what we were asking in these questions is all about helping you identify and get very clear-minded about what your priorities are. In other words, why do you think you want an advisor? What makes you feel like you need or want advice at this point in your life? And then we kind of go through those questions that narrow it down so that we’re weeding out the advisors who are, first of all, they’re curated, obviously, it’s a curated network of 250 advisors that are on the platform. And I’m very proud of all of these advisors in a multitude of ways for a lot of different reasons. So I’m really comfortable. Now, once someone has figured out what, you know, her priorities are, and they’re saying, okay, this is the kind of advisor I need because the only advisors I’m going to recommend to you, and I won’t ever recommend more than three Jean. They’ll always be three or under. You’re going to find what you want within this three. You know, they’re going to be three different advisors, but they’re all going to fit your priorities. So let’s say that you do have a family member who has special needs. You need an advisor who has had experienced boots on the ground with special needs, trusts, and special needs planning, depending upon, you know, how high functioning that family member may be, that dependent may be. Again, we talked a little bit about stock options. Let’s say that you are working for a fast-growing startup, and a lot of your compensation comes in the form of restricted stock options. Very confusing, but very impactful. So if that is your priority, to understand how those options work and how you can best exercise and take advantage and time them, then you need to be absolutely aligned or matched with the advisor who comes to you with that specific expertise, not an advisor who specializes in retirement strategies. But I would say that probably 75% of the people who are coming to Wealthramp, more than 75, are concerned mostly with retirement. They want to make sure that they’re going to be accurate in their cashflow projections, in their financial planning, in their investment strategies to generate income later in retirement. And so, depending upon where you are location-wise, some people care about location. They really want that advisor to be within a reasonable, drivable distance. While other consumers are like nah. I’m really used to zoom now. I’m hooked on zoom. I don’t need the advisor to be right in my backyard.

Jean Chatzky: (26:24)
What if I want to work with a woman? I mean, I’ve had some listeners who are surprised that my advisor is not a woman and I’ve gone through and explained before how I found this advisor for my mother. And he did such a good job for my mother, that I moved all of my stuff over to him as well. And he’s not a woman, but I think he gets me. And that’s the important thing. But if I want to work with a woman, you know, there are not enough female financial advisors. So is it possible to find one?

Pam Krueger: (26:53)
On Wealthramp, as you know, we have close to one in three, which is much higher than the industry average. There are more women entering into the financial advisor field now than there have been in the past. But no, there’s no question about it. If the industry has about under 20% are female and Wealthramp has 30%, then we’re doing better. But that is a question that we ask on the questionnaire. I want to know, do you have a preference. 90% plus people coming through Wealthramp do not have a preference. But then there are the 10% who say they do have a preference. And guess what? It’s always female. So when they do say they have a gender preference, you know what? I can go back in history and I can count with one hand the number of times I’ve ever seen someone come in and say they have a gender preference and it needs to be a male. It’s always female, right? They always want a female. But I’ll tell you something interesting about your advisor and the advisors that are on Wealthramp, who are male, who are not female. There are female traits and characteristics that our advisors who are male embody. You know why Jean? I don’t want the advisor who’s going to be, you know, the mansplainer holding up the charts and graphs, talking down to you, you know, and explaining, now this is what you don’t know. That’s not the advisor that you’re going to meet on Wealthramp. So some of these female characteristics that we’re looking for can be found in men.

Jean Chatzky: (28:36)
I think the number one is empathy, at the top of the list. Empathy and the ability to be a good listener. You know that listening gene, if you don’t have it, I don’t want to talk to you. All right, we’re going to wrap this up, Pam. The three best pieces of advice for any woman listening today, who thinks that she is ready to find an advisor without sending her to Wealthramp, what should she do?

Pam Krueger: (29:02)
So someone who’s looking to become more confident and make more confident decisions. First of all, thank goodness there are so many great educational resources that are free. There are so many tools and so many different ways to start to feel more confident by feeling more knowledgeable. And don’t expect that you’re going to be able to take that on. If financial literacy hasn’t been a big part of your upbringing, like most of us, don’t feel intimidated by it. Just start to get empowered by, I mean, your website has it all. It’s just easy to digest. It’s easy to understand. It’s fun. It’s visual. And you’re just acquiring knowledge as you go. Number two, I would say that when someone is looking for an advisor, please remember, if you don’t remember anything else, is consider how the advisor’s getting paid and that they really are following fiduciary best practices and they can put all that in writing. That’s really a key if you’re looking for advice right there. And then number three, when you do talk to the advisor, that’s a really good time to say to yourself, what I’m looking to do is understand how this advisor is helping his or her typical clients. And I want this advisor to hear my story and really listen with empathy. And if you’re not getting that, then move on. It’s not the right advisor.

Jean Chatzky: (30:38)
Fantastic. Thank you so much for doing this today.

Pam Krueger: (30:40)
Thanks for having me.

Jean Chatzky: (30:42)
Of course. And we will be right back with Kathryn and your mailbag.

Jean Chatzky: (30:52)
Kathryn Tuggle from HerMoney.com and our producer is with me at this point. Hi Kathryn.

Kathryn Tuggle: (30:59)
Hey there, Jean. That was a great show.

Jean Chatzky: (31:01)
Thank you. You know, I think it was an important show for us actually. I mean, it is a question that we get asked, that I get asked personally, all the time. And I know, you know, as you go through letters from our mailbag, you are dealing with this constantly, too. It’s very, very difficult to know where to find good help. I mean, that’s one of the reasons that I’m so proud that this show is sponsored by Fidelity because we know that Fidelity adheres to the SEC standard that requires that brokers put the best interest of the customer first. That’s really important. But sometimes people want to find an independent advisor to work with as well. And that’s why we partnered with Wealthramp. And so if people go to HerMoney.com, they’ll find the questionnaire that they can fill out to get Pam’s vetted recommendations for an advisor. And you heard her. I mean, she’s a tough cookie.

Kathryn Tuggle: (32:06)
Yeah, she really is. But you know, I think that you have to be. I think when you’ve been in the industry for as long as she has, as long as you have, you have seen people get taken advantage of. And people who stick with someone who’s not the right fit, just because it’s the advisor that their husband picked out. So, you know, I do think that we are living in a new era where we do have choice and women are empowered to make these decisions like never before.

Jean Chatzky: (32:30)
No question. And I noticed that you picked questions for our mailbag today that are very much along these lines. So let’s go ahead and answer a few of them.

Kathryn Tuggle: (32:41)
Absolutely. Our first question comes to us from Vera. She says, hi Jean and Kathryn. I don’t know how common or strange the situation is in general, but here I am. My family and I live in LA. I work freelance in the arts, directing and working with singers at universities and private studios. Like with many freelance peoples, there are good years and not so good years. My husband earns very little, despite all his true talents, which means I provide. And if I can’t cover it all, my mother used to help out. We have no savings and no investments. And we live in a rental. I’m 64 years old and we have three children between 25 and 31 years old and all of them are independent now and doing well, which means at least our bad example of money management gave them the incentive to not repeat the pattern. My mother passed away in May of 2020 and left me around $300,000. Never before in my life have I dealt with so much money. I’m wondering three things. One, is there a crash course about investing to better understand how to deal with this windfall? Two, what would be the most intelligent approach to deal with this money? Three, how do I find a trustworthy financial advisor who doesn’t just pull me over the table? I’ve been debating buying a duplex, hopefully generating income with one part of the property. But I’m concerned that the current timing might be wrong. And I don’t know if we have sufficient monthly income to even keep paying the mortgage on the property. My fear is that we lose it all as my husband is no friend of taking any responsibility. It feels a bit like I’m between a rock and a hard place. Yet, I also feel that there’s a good way out and a way forward. I just can’t see it yet. Could you perhaps give me some advice or tell me where to go? Many thanks in advance.

Jean Chatzky: (34:26)
Well, first Vera, I am really, really sorry about your mom, about your loss. I know that that is incredibly hard to deal with at any point in your life. So I hope that you are holding up okay. You are at a very, very interesting point in your life, not just because of this inheritance, which you’re right, presents an opportunity. But also because you’re 64 years old. And so, you didn’t mention social security, but you are at the age where you should really be thinking hard about when is the right time in your life, both for you and for your husband, to start taking social security. Both of those things are going to play into the planning that you need to do for the rest of your life, in order to make the most of this money, whether that entails buying a duplex or whether it entails investing that money in order to produce income in some other way. And I don’t want to see you blow it. And so I think this is a great time for you to sit down with a fee-only financial advisor and try to make a plan. And you can absolutely use the questionnaire at hermoney.com to help put you in the right hands. But you can also talk to people in your own world if you have friends who have advisors with whom they are happy, about finding someone that is a good fit. I don’t know that this is somebody that you need to manage the money for you. You may be able to put it to work and then continue to do this on your own. But you may decide it’s a relationship that you want to continue. And both of those things are options for you. Financial advisors have become so, as you’ve heard me say before, democratic in that they are willing to sit down for a few hours, get paid a little bit of money and give you some advice that you can then proceed with following. As far as your other questions, a crash course in investing. I was thinking of sending you to read one of Jason Zweig’s books. Jason Zweig, I think, explains investing in plain English like few other people do. But I just checked my email and I noted that his latest column got dumped in my email over the past few minutes from the Wall Street Journal and I think that actually just starting to read his column in the Wall Street Journal on a regular basis – he writes every Saturday under the heading of The Intelligent Investor – would be bite-sized education. And I think that’s a very, very good place to start.

Kathryn Tuggle: (37:18)
Love that advice, Jean. Thank you so much.

Jean Chatzky: (37:20)
Sure.

Kathryn Tuggle: (37:21)
Our next question comes to us from Paulette. She writes, hello Jean. I’m a faithful reader and listener, and I need a recommendation. I’ve been hoping to find a financial advisor who can also help me do my taxes. Does such a professional exist? If not, what types of professionals should I seek? I’m a senior living in Chicago and I’d love to get recommendations on where to find someone in my area. Thank you so much for all you do.

Jean Chatzky: (37:46)
So Paulette, there are financial advisors who come out of all sorts of industries. Some come from the world of investing. Some come from the world of insurance. And some do come out of the world of tax. I would take a look at the website of the AICPA. That’s the American Institute of Certified Public Accountants. They have a zip code locator. And you may be able to use that to point you in the right direction. Pam’s questionnaire can also point you in the right direction. But let me just also mention that I know some financial advisors who happen to be accountants, and yet they don’t do taxes. What may work just as well is having a financial advisor who talks to your tax preparer or your accountant once or twice a year. So that they’re on the same page. They’ve shared documents back and forth they make sure that you are heading in the right direction. That’s how I have it set up in my life. I actually found my accountant through a recommendation from my financial advisor. He happens to be my financial advisor’s accountant. And I think that just having clear communication between your professionals rather than having one professional that wears all the different hats may be the better way to go.

Kathryn Tuggle: (39:16)
Love that advice, Jean. Thank you so much. Our last question comes to us from Tammy in Texas. She writes, I love the podcast and website. I’m 39 and I’ve always been smart with money, but not smart enough. I have nowhere near the amount of retirement I need stacked away. I was laid off in 2016, so I’ve returned to school to finish my BS. I rolled over my work 401k into a traditional IRA that now has about $27,000. It’s grown every year, but slowly. I have my money a hundred percent in mutual funds, 52% stock, 48% bonds. I’m starting a new job making more money than ever before in my life thanks to that college education. And I want to be aggressive and catch up and get my money working for me. I need to add that my partner is well compensated and handles all finances so my money can be dedicated to whatever I feel necessary. My financial planner suggested leaving my traditional IRA as is. He also suggested I open a Roth IRA with a more aggressive fund. I have an outside financial planner telling me to take the tax hit now since the amount is relatively low, and roll over my traditional IRA into a Roth IRA and max out my contributions. Lastly, the outside financial planner is also pushing whole life cash value insurance as a supplement, but I’m not fond of this idea. Please help me. Should I get whole life to supplement? And how do I catch up? Should I roll over or start a new IRA? Should I take a class to become more knowledgeable about my finances? And if so, where do I find it? Thank you so much.

Jean Chatzky: (40:51)
Boy, a lot of people are asking for a class in investing and we should look into whether we can recommend any specific investing classes. Although again, on that note, I do think Jason’s Zweig is a very, very good place to start. As far as all of these decisions. First of all, you said that you just started a new job. I would, before I look to adding a Roth IRA or continuing to put money into your traditional IRA, I would check out what sort of benefits come with this new job. The first line item on your list should be contributing to any investment that is giving you matching dollars. So if you’ve got a 401k with this new job that you can contribute to, even if it doesn’t match, the fact that you can make contributions through paycheck deductions may very well be the better decision. That’s where I would look first. I’d also look to see if this new job comes with a health savings account as a choice for your health insurance. Because if you put money into an HSA, a health savings account each year, and then you pay for healthcare out of cashflow, that can become a supplemental retirement account. Again, that money can go in often through paycheck deductions. Often there’s an incentive for making those contributions, which puts it very, very high on the list, above an outside IRA or Roth IRA. It sounds like you’ve got two different financial advisors, one inside maybe, and one outside. And I not loving the advice from the outside financial advisor about whole life cash value life insurance because it doesn’t sound to me as if you need it for life insurance reasons. I think we look to life insurance when we have people who are depending on us, who would be at a loss without our income. It doesn’t sound like that’s you. I mean, you don’t mention children in your letter. You also mentioned the fact that your partner is well compensated. So it doesn’t sound like your partner needs your income or would be at a loss without your income. We look to life insurance when we’ve exhausted the other possibilities as an investment. When we’ve exhausted the possibilities to put money in a 401k, to put money in an IRA. You do all of those things and you’re in a fairly high tax bracket, then you start looking at life insurance as a supplemental investment. But it doesn’t sound to me like you’re there quite yet. As far as rolling your traditional IRA into a Roth, if you’ve got cash outside of the IRA that you can use to pay the taxes and you believe that you’re going to be in a higher tax bracket going forward than you are today, which sounds like it’s the case thanks to that college degree, then rolling over is probably a good idea. But far as the rest of this advice, I’d look inside that company before I look outside.

Kathryn Tuggle: (44:37)
Yeah. Looking in your company is always the best place to start for retirement savings and life insurance and pretty much everything.

Jean Chatzky: (44:44)
Exactly. And Tammy, you know, I don’t know if I’m missing something here. I don’t know if you have no 401k option. And if that’s the case, we can certainly revisit this question. Just give us a shout and let us know that we were missing some information and we’ll take it from there.

Kathryn Tuggle: (45:01)
Fantastic. Thanks Jean.

Jean Chatzky: (45:03)
Thank you, Kathryn. Lastly, let’s talk about money fights today in Thrive. If we’re honest, we don’t need research to tell us what we already know deep in our bones – that we don’t always agree with our partners on money matters. Often fights with a spouse about spending or saving, they can drive us right to the edge, sometimes even over it. And when you add our normal potential for fights to the stress that we’ve all got around the pandemic, you’ve got a recipe for discord. But it doesn’t have to be that way. You can stop these fights before they get started. At HerMoney.com, we talked to several experts who successfully help couples navigate financial issues together. They offered eight of the best ways to stop these money fights in their tracks. Here are just a few of my favorites. Number one, get these things on paper. If you tend to disagree on where money should go outside of typical household expenses and monthly bills, make list of your money priorities, like kids or parents or an emergency fund, for where each partner feels that money should be placed right now. Number two, track your spending and do it together. Being aware of what you’re spending is key to meeting your financial goals in general, but it’s especially key when you’re tracking with someone else. It just helps to find a good way to ensure that both of you continue to be on top of what you’re spending, so that you can continue to be on the same page about your shared goals. And number three, look for help from a pro. If you’re unable to resolve these issues on your own, think about seeking assistance from a third party, like an accredited financial therapist or a counselor. A pro can help show couples how to consider their partner’s money stories, their experiences, their thoughts, their ideas about their finances, no matter how different they are. It truly is a great way to get to know each other and to reveal some areas that could use some extra work and some extra love.

Jean Chatzky: (47:21)
Thank you so much for joining me today on HerMoney. Thanks to Pam Krueger for opening the door into the world of financial planning and helping us find somebody who can help us, if that’s what we’re looking for right now. If you like what you hear, I hope you’ll subscribe to our show at Apple podcasts. Leave us a review. We love hearing what you think. We also want to thank our sponsor, Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us. And we’ll talk soon.


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