If you’re a millennial, chances are, you don’t have a financial advisor. In fact, one survey found that just 11% of millennials regularly meet with a financial advisor, while 31% use either a robo-advisor or another investing app. But millennials have unique financial challenges, and there are financial pitfalls that millennials need to avoid. That’s why it’s good for millennials to not only find a financial advisor, but a financial advisor who’s attuned to their specific needs. Here’s what millennials should look for in an advisor.
The Right Accreditation
While it’s always a good idea to get some personal recommendations before hiring a financial advisor, be sure that whomever you hire has the right background, education and training. This often means one with a Certified Financial Planner (CFP) designation. CFPs earn this certification by completing a rigorous accreditation process, including exams, educational courses, and the required experience.
More specifically, financial advisors seeking out the CFP accreditation are required to have a bachelor’s degree from an accredited college or university plus complete the required CFP coursework, pass the 150-question CFP examination, have at least 6,000 hours of experience working in the financial sector, (or 4,000 as an apprentice) and adhere to a strict code of ethics. Hiring a CFP to manage your funds can help ensure you’re working with an advisor who truly has your best interests at heart.
There are other good certifications, as well. Among them are chartered financial analyst, chartered investment counselor, certified investment management analyst, certified public accountant and personal financial specialist.
Someone You Mesh With
You may not want to work with a financial advisor who seems more like a parent than an equal. Or you may be more comfortable working with one with decades of experience. You may respond well to a straight-shooter or may respond better with someone a bit more reserved.
Regardless, be sure you are working with a financial advisor with whom you have a good rapport. After all, you’re going to be talking to this person regularly and sharing with them some of your most personal information – in a word, your finances. You can’t be shy and you certainly can’t be uncomfortable when discussing important financial matters such as paying off debt, saving for retirement and adjusting your budget.
It’s also worth looking into a financial advisor’s after-hours and weekend policies. As a millennial just starting out in the workplace, you may not always have the time off to commit to an annual or bi-annual meeting with your advisor. And you shouldn’t have to. Find one with hours that meet your needs.
A Good Listener
When working with a financial advisor, it’s key that they take into account your short- and long-term financial goals, not just what they think you should be aiming for. For example, you might be more concerned with buying your first home rather than saving for retirement. That’s OK.
While your financial advisor should definitely share with you the statistics about the power of compounding interest and starting early when retirement planning, they should also take your goals seriously. In an ideal world, you’ll find a way to incorporate both into your financial strategy.
Understands Unique Needs and Goals
Millennials owe an average of $34,504 in student loan debt, the third-highest balance of all the generations, while 62% say they are living paycheck-to-paycheck. Millennial homeownership is also 8% lower than it was for their parents or grandparents at the same age. That’s why it’s important that a financial advisor understands your financial goals, which will likely be much different than those of your parents.
It’s also helpful to work with one who specialized in paying off student loan debt because, let’s face it, this is likely something you’re dealing with. While hiring a financial advisor when you’re young may be intimidating, it’s not something you should put off for long. After all, a financial advisor can help you get on the right path for retirement, investing and, eventually, financial stability.
The Bottom Line
Although millennials, as a group, have unique financial needs and confront unique money challenges, most do not have the benefit of a financial advisor. Now is the best time to engage the services of such a person, preferably a CFP (though there are other good certifications, too). Whoever you chose should be sensitive to your particular needs and goals, including being familiar with ways to handle student debt, homeownership and budgeting.
Tips for Millennials
- Consider talking to a financial advisor who understands your particular needs. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
- The millennial generation has its own unique financial challenges, including student debt. Use this guide to help you find the best way to pay off your debts.
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