Do We Need a Financial Advisor?
by A.C. Elliott
We met on a gray afternoon in December; we went to her. She picked that particular Clyde’s, she said, because it’s her favorite place to go and meet people. She said “people,” but I’m guessing she really meant “clients.” We — Nate and I — are prospective clients.
We were referred to her by a trusted friend. For months, we emailed back and forth, Nate and I debating whether we needed her or not. Finally, we decided to meet face to face, to try each other on for size. The entirety of lunch was spent dispensing with small talk. Then, as coffee was served she pulled out a thick black binder. It’s time to get down to business, she said. She, Ellen, is a financial advisor.
The experience was not unlike going into a single public bathroom only to forget to lock the door and have it flung open whilst dispensing of bodily fluids. Everyone does it, and everyone knows it’s happening; yet it’s still pretty embarrassing. Nor is it very far from leaving the house in a poor fashion choice only to discover the fluorescent lights under which you’re standing leave little to the imagination. Everyone knows what’s under there; we just don’t like our’s being closely examined by people we don’t know well. In a public place, no less.
But there we were, drinking coffee at Clyde’s with Ellen. Nate and I looked at each other and took a deep breath. No going back. We sheepishly pushed our latest bank statements, paycheck stubs and other financials across the table. And there, in a broad wooden booth, she studied our pay stubs and quizzed us about 401(k)s and insurance. She asked us about our various checking and savings accounts while filling out paperwork.
Then the real questions started.
“What are your goals?”
“When do you want to be able to retire?”
“Do you want to buy a house? When?”
“Would you like to pay for your future childrens’ college education?”
“How much debt do you have?”
“What’s your timeframe for paying it all off?”
And on and on. The questioning lasted through two cups of coffee. She logged each answer in a notebook. Nate and I took turns talking. Most of the time we were on the same page; sometimes we surprised each other.
We talked about housing prices in our area and whether our goal of buying a house in 10 years was feasible. We chatted about retirement and the difference between working for money and working for fun. She asked, we answered, and she wrote. This part of the meeting, she said, was for her to get an idea of how we want to live the rest of our lives, so she can help make it financially possible.
“So, swing for the fence,” said Ellen. “Don’t hold back.”
And so it went. Nate and I talked about owning a home and being able to send future children to decent universities debt-free. We talked about traveling and being comfortable in retirement. We talked about the financial possibility of my someday being a full-time freelance writer (surprise, Nate!). We even talked about how, and when, Nate and I would be able to help support family overseas.
Through it all Ellen switched between prodding us for more information and doling out semi-approving nods. She was hard to read; stoic, even. I imagined this had something to do with maintaining that client-advisor relationship barrier. She may know more about Nate and I now than our own parents, but this is not a dinner date and we are not friends. This is business; it isn’t personal.
At one point, we switched gears so Ellen could go over our monthly budget with us. This was the less-fun part of the meeting. Ellen took meticulous notes while Nate and I divulged our monthly spending habits. Everything was fair game: bills, rent, groceries, eating out, clothes, student loans, etc. For a business meeting, things started to get intensely personal. Only this time, Ellen crunched numbers while we talked.
I can tell you right now it was intimidating. But then, what else would planning your entire financial future in one afternoon be? Intimidating. Nate and I exchanged increasingly weary glances as we grappled, simultaneously, with uncertainty and the desire to plan.
Call it millennial jitters or recession-era PTSD. After watching many in our group of friends subsist on credit cards, reward points and associated stresses, Nate and I had resolved to do things differently. We were gonna be weird, full stop. Yes, we’d also had our fair share of wayward spending habits and unhealthy relationships with online bank accounts. Those days were over.
We launched our journey into financial responsibility about a week after he popped the question. First, we signed up for financial guru Dave Ramsey’s nine-week course titled Financial Peace University. The setting: a church. The goal: Finding our path to financial redemption by way of living debt-free. Ramsey’s own version of the straight and narrow.
That was more than a year ago. Meeting with Ellen was the next step in our financial journey. By the time the waiter came around for our third coffee refill, Ellen was ready to make her pitch.
For an up-front fee of $1,500, we could secure her services for one year. The up-front fee, she said, may seem unusual, but it was better than paying an advisor on commission. A commission-based pay arrangement meant an advisor would be more concerned about his or her well-being than ours. In short: we’d pay her $1,500 now, but she wouldn’t be making money off us for the next twelve months. Nate nodded. It made sense.
Her services included advising, yes, but also quarterly meetings, and most important: availability. We could call her anytime of day with questions. She could be available at a moment’s notice. That’s great, we said. That’s good to know, if a little daunting.
Then she dispensed her first piece of wisdom. For now, we were to focus only on paying off the rest of our debt. There was no reason it couldn’t be done in two years.
Nate and I nodded. The upside: We were relieved to know she didn’t want us to be in debt anymore than we did. The downside: She hadn’t told us anything yet we didn’t already know. Is it worth it, at this point in our lives, to pay $1,500 for a glorified accountability partner? Maybe. Some friends have told us some variation of “yes, the earlier you start, the better.” Others have said it doesn’t make sense to hire a financial advisor until we actually accumulate an amount of wealth that’s advisable.
We are still talking it over, but regardless of what Nate and I decide, this much I know: After three-and-a-half hours at Clyde’s, we’re right back where we started. Unsure of the future, but desperate to plan for one.
A.C. Elliott lives in Washington, DC.