Talking About Women and Money with a Financial Planner

Certified Financial Planner™ professionals help clients align their finances with life goals. I prefer fee-based planners that have earned a CFPⓇ certification, and recommend you consider them if you’re selecting an advisor to help you with your financial plans.

If you’re like me, you probably wonder about the lessons these financial gurus have learned from years of serving clients. Is there secret perspective that they have gained from those experiences? What patterns and pitfalls do they see in their clients?

I had the opportunity to interview Mark Newfield, a Richmond-based financial advisor who started his financial planning career after a successful first career in consulting. Mark and his team shared their perspective on personal finance with me, reflecting decades of collective experience. Here’s a summary of our conversation.

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The question you should always ask a planner. I started our discussion with the basics, “Why did you get involved in financial planning?” In Mark’s view, this is the first question any prospective client should ask before engaging a planner. He noted that very few people ever ask him this, and his team always proactively shares why they are in this business.

Mark and Angela Lessor, Director of Investment Operations, both cited the personal satisfaction they get from helping others. During Mark’s first career as a consultant, he was always the person eager to talk about money and often shared personal financial advice and perspective. When he decided it was time to move on from consulting, but wasn’t ready to quit working, he, “...put two and two together,” and shifted into a second career focused on helping people with their money. Mark proudly shared, “I have a stack of notes on my bookcase from clients saying thank you for our efforts.”

Angela shared a similar sentiment. She noted that it is incredibly satisfying to help people, many of whom come in disorganized or overwhelmed with their financial situation. Developing a plan that clients can follow, helping them get their financial footing, and partnering with clients to see that their goals are achievable are some of her favorite things about the role.

This passion for helping others is a common thread among quality CFPⓇ professionals. I follow several CFPⓇ gurus on Twitter, and can feel their excitement in empowering and enabling clients to succeed. When you are working with a planner, I believe you should feel the same from them. If they talk only about beating the market, making money, and growing wealth (but with no reflection on their passion for your success, or appreciation for your goals), that’s a red flag to me.

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In general, what differences do you see between men and women in how they manage their money? While every individual is different, Mark and Angela noted that they have observed general trends across genders. In general, they observe women making many of the financial decisions in the daily running of the household. Mark noted, “It seems like people are finally starting to become aware of that, but that hasn’t changed in decades.”

Women tend to prefer more advice and consultation, and men generally like to see the numbers. Women often want to deeply understand where their money is going and what they’re about to invest in. Like many planners, Mark and Angela engage their clients in an initial assessment, which can identify where partners (same-sex or heterosexual) differ; these distinctions may or may not be gender-based, and every couple tends to differ in a few personal finance areas.

Taking a fact-based approach enables CFPⓇ professionals to help partners navigate tricky financial decisions. While the general observations Mark and Angela shared line up with much of the gender-based research on money and investing, I recommend looking for a planner that has a defined process to engage with you. This may include an assessment, detailed questionnaires about your spending and income, and a clear long-term plan to support you. This illustrates their commitment to your overall financial health and their desire to build a plan suited for you, versus a one-size-fits-all approach.

Many people struggle to talk openly about money. Why do you think that is and what advice do you have to start a money-related discussion with a friend or family member? I was curious to understand how a professional team that constantly discusses money can help us improve our comfort with the topic.

Mark and Angela shared that getting the emotion out on the table is a good first step. For example, if you’re struggling with credit card debt, you could say to your partner: “I’m worried about debt, and I think we ought to have a conversation about it. How do you feel?”

They acknowledged that most clients know intuitively whether they are in good financial shape (or not) and most aren’t as “disciplined” as they believe they need to be. This discomfort or shame can hinder communications. Mark shared, “We see people with high incomes, say an average of $300,000 annually, and yet the number of people who come in and feel wealthy are few.”

Further, Mark mentioned the relief that many clients feel when they start to discuss money openly and candidly. I can relate to this personally; when I had massive credit card debt I felt incredibly ashamed. Once I started addressing it openly with my partner, it was like a massive weight had been lifted off my shoulders.

I found these observations from Mark and Angela illuminating on several fronts. We often compare ourselves to others, assuming they are making smarter decisions with money, know something financially we don’t, or don’t have debt. The reality is, we all make money mistakes (I’ve shared several of mine), and many in the United States struggle with financial literacy. If we are brave enough to be vulnerable and share our concerns and emotions about money with others, we can engage in a more authentic dialogue.

Further, there is a perception that more money immediately equates to fewer money-related stresses. I’ll always have more empathy for those at the lowest ends of the income spectrum, even those with means struggle to consistently make the “right” decisions with their money. Removing the assumptions that some of us have, that money can solve all problems, can give those that earn more the opportunity to engage in financial improvement.

What are the top three "money mistakes" you see women make? I was very interested to see what patterns had emerged across their client base, since we all have room to improve with how we manage our money.

Budget - no one has one. Mark and Angela noted that they rarely see clients that have set up a budget, and many women spend first and try to save the reminder. They noted that this approach is often a “complete failure, except in the most disciplined people.”

They have found that they help women get serious about their budget once they illustrate the net available cash flow after required expenses (like mortgage payments and utilities). Usually, this cash flow is two or three times the amount their clients think they can save.

Ladies, this first one is good news - it means that most of us have an opportunity to save a lot more than we do today, simply by starting to track our expenses and save first, then spend (which I call “Scarcity Budgeting,” and use diligently.)

Having too many financial accounts. I wasn’t expecting this insight, but it makes a lot of sense. Mark regularly counsels clients to consolidate accounts, because “...the more stuff you have, the harder it is to manage.” He notes that many clients don’t even know their rates of return on their investments, because they have so many accounts and can’t easily keep on top of their money.

If your employer has a 401(k) or other retirement program, you are likely tied to that financial provider. Beyond that, you may have one other brokerage accounts for other investment purposes. I believe more than two financial institutions gets difficult for the average person to manage on a regular basis. If you have not done a financial inventory, it may be a wise first step to identify where your accounts are, and how you can consolidate and simplify your financial life.

If you’re partnered - be open and transparent about money. Mark and Angela noted that many women in significant relationships struggle to be open with their finances. This is related to the question above, as talking about money when you’re struggling with certain aspects of your financial life can be truly challenging.

However, surprises and secrets can be damaging and hurtful to a relationship. Both Mark and Angela advised an open discussion, and acknowledged that working with a CFPⓇ certificant can help partners be more open about money. Mark shared, “More often than not, we do counseling on our clients spending habits. We’ve had to help with where they want to live and other significant topics in a relationship.”

I agree that a professional can help guide these conversations, and believe partners should work towards becoming financially intimate.

What additional financial advice do you have for women? Before we closed our discussion, I wanted to understand what our financial experts would recommend to women looking to grow their wealth.

Mark jumped on this question, and shared; “You’re never going to figure out what you need until you figure out what you want. Financial independence - whatever that means for each client - is a set of behaviors. How do you want to live? Answer that first.”

I couldn’t agree more! We all have unique goals for the life we want to live; these goals may include travel, passion projects, ambitions for our family, career objectives. Getting crystal clear on those objectives will help us direct our money to serve (and not detract from) those objectives.

I hope you enjoyed this perspective from Mark Newfield and Angela Lessor! I’m always intrigued to learn from those that are lucky enough to help others with their money, day in and day out. Are there any tidbits from this discussion that surprised you? What other questions might you have for a CFPⓇ expert? Or, if you are a CFPⓇ professional, what would you add to this dialogue?

xoxo, Ms. Financier

Financial Planners: How to pick the right one for you

If you've decided to work with a financial planner, selecting the right person (or team) for you will take some effort. Remember, financial experts come in many forms. Source recommendations from family and friends. If they’ve had a great, long-term advisor you should add that expert to your list. Other professionals in your network, like attorneys, insurance agents, and physicians can also be a good source for recommendations. But don’t forget to explore the CFP® Board’s directory of Certified Financial Planners (CFPs). These individuals have achieved a specific certification that includes hands-on client work, educational requirements, and standards of ethics.

Once you have developed a list of 3 - 6 planners you’re interested in, I suggest you consider three elements to narrow down your possibilities.

Credentials - what expertise do they have? I clearly prefer Certified Financial Planners, but your potential planner may also have other certifications or designations. Some to keep an eye out for include CPA (Certified Public Accountant, or an expert in the tax code) and CFA (Chartered Financial Analyst, or the equivalent of a master’s degree in finance.) Explore where they have studied, what continuing education they pursue, and whether they teach seminars or classes - this will help you understand their expertise.

Increasingly, you’ll find planners that have social media accounts. I follow several CFPs that provide fabulous advice and insight, and the CFP Board also shares advice from those that have achieved certification. By scanning social media profiles, you can get a sense of a planner's personality, interests, and whether they might be a good fit for you.

Incentives - how do they make money? If you’re hiring a professional, they need compensation for their services. Generally, there are three models of payment: Fee-only means they charge for their advice, often hourly or in set packages; Assets under management means they charge a percentage of the fees that they invest and manage on your behalf (this is typical of investment/wealth managers, and not something I recommend for most); Commissions means they get paid by banks and financial services firms for selling certain financial products (like annuities) to you.

Your financial planner’s incentives should be in line with your incentives, which is why I never, ever work with commission-based advisors. My strong preference is for a fee-only advisor with an hourly rate. If they provide great advice, you’ll recommend them to others and use them again - which will make them more money. Thus, your incentives are aligned.

Fiduciary - is your financial planner a fiduciary? You may be thinking, “What the heck is a fiduciary?” In short, it means that advisors must both disclose conflicts of interest and consistently put their client’s interests first. This is not legally required, even though many assume it is. The suitability standard is required by law, which only asks advisors to consider whether investments are suitable. In my opinion, suitability is a very subjective standard.

You will not be surprised that I think a fiduciary is non-negotiable. Ask your advisor, and don’t take their word for it. Get it in writing and ask for documentation. If you hire CFP, their certification ensures they are acting as a fiduciary.

In addition to those questions, plan to “interview” at least 3 planners in a more detailed discussion to find the right fit for you. Money magazine provided a set of 10 questions to ask. I particularly love the last two: “Why did you become a financial planner,” and “What five important financial or investment books have you read?”

Some of you have asked me what I do; I largely self-manage my money, with a check-in every now and then with a fee-only advisor. However, several years ago, that fee-only advisor did a huge comprehensive review of my finances which was very helpful and illuminated a few blind spots for me. I’m happy to recommend the group I use - they work all across the United States via video/teleconferences with clients and do a very thorough job. (I do not receive any referral fees for recommending clients to them.)

What else would you recommend to those considering a financial planner? Do you have any other questions I can help with? Good luck finding the right advisor - it takes time, but can be very well worth it.

xoxo, Ms. Financier

What’s a Financial Planner? Answers to Three Common Questions

Personal finance can feel overwhelming. An insightful article in The Atlantic explored financial literacy and reported, “While Americans are not expected to manage their own legal cases or medical conditions, they are expected to manage their own finances.” I’m curious - who do you trust for financial advice? Are they knowledgeable, experienced, and on strong financial footing themselves?

The wealthy often teach positive and valuable money habits to their children. But what about those of us that didn’t grow up rich? What about women that grew up in families where it was taboo, rude, or stressful to discuss money? How can we ensure we’re making the right steps with our money?

One option is educating yourself and managing your own money. There are fabulous financial education resources available; between books, podcasts, and personal finance forums, we can become very money-savvy. But sometimes, we want an expert that can specifically examine our unique situation, and answer questions about our goals and challenges. This can be a role for a financial planner.

What can a financial planner do for me? Fair question - because of the lack of regulation around titles and designations, services can vary. Broadly, planners work with you to build a financial plan that supports your goals. A financial planner can analyze your current situation, help you set financial targets, recommend changes to meet your objectives, provide advice, and measure your progress. A quality plan will evaluate and include your entire financial landscape, including sources of income, expenses, debts, investment accounts and holdings, life insurance, and more - comparing your current state to your goals.

One portion of financial planning is investment planning; examining your specific investments, recommending how much of your portfolio should be in certain mutual funds or ETFs. But financial planning is wider than your investment strategy. If you’re just looking for investment advice - great, but a planner offers wider support. Fee-only financial planners change an hourly rate, and often offer an initial consultation for free.

Where can I find a financial planner? I suggest starting in two places. First, ask family and friends for referrals. Ask if they’ve had a productive, positive experience that has improved their financial situation over the long term. Second, explore the CFP Board’s directory of Certified Financial Planners. These individuals have received a certification that includes completing practical and theoretical financial education, passing a rigorous examination, gaining years of hands-on experience, and upholding a high standard of ethics. Importantly, they put the client’s financial interests ahead of their own. (Importantly, this is not true of all “financial planners” or “financial advisors.”)

A good financial planner can be hard to find. Many are salespeople “veiled” as planners, others are only able to offer a limited set of financial products due to the firm they work for, and others may trade in relationships - versus quality financial advice. I’ll be clear - my bias is always towards fee-only financial planners that have attained a CFP certification. Be prepared to have introductory meetings with at least three before you select one that is right for you.

What other financial advice is out there? Accountants that are CPAs are very specifically educated about the U.S. tax code. Some CPAs achieve the Personal Financial Specialist credential (PFS); these accountants are well versed in aspects of financial planning including estate planning, investing and retirement planning. While financial planners are generally well versed on taxation, they are not required to be tax experts. So, many women choose to work with both a CPA and a financial planner, to ensure their financial plans are tax-efficient. CPAs have various fee structures but typically charge an hourly rate.

Wealth managers are also available and come in many forms. In general, wealth managers work in firms that provide financial planning, tax advice, and they will actually manage your investments on your behalf. Wealth managers typically charge by taking a percentage of “assets under management,” or how much money they are managing on your behalf.

One percent is a typical rate for wealth management services; if your wealth manager oversees your $1.2M portfolio, you’d owe them $12,000 annually. This is on top of investment fees (typically expense ratios, sometimes commissions) associated with the investments themselves. I used a $1M+ example because many wealth managers have a large investment minimum. As you can likely guess from my prior posts, I do not believe most of us require a wealth manager. A 1% fee sounds small but will eat away at wealth over the long term.

In the next post, we’ll explore how to pick the perfect planner (if you’ve decided you need one!) I’d love to hear your comments on this topic. It took me years to figure out the right balance of money professionals and everyone’s need (and desire) for advice differs.

xoxo, Ms. Financier