One of the first places to seek transparency with investing is in the kind of relationship your advisor or broker has with you. There are two distinct standards of care that divide our industry:
- Suitability, which means your broker can sell you anything that they think is a reasonable fit for your situation, and
- Fiduciary, which indicates a relationship where your interests are placed above those of the advisor.
For a brief, entertaining look at the difference, watch this video: Butchers vs. Dietitians.
A recent editorial in the St. Louis Post-Dispatch discusses the topic, and highlights the conflicts of interest present not only for the advisors, but also for the politicians debating calls to impose the fiduciary standard on traditional brokers. To quote this editorial, “It would put some financial services advisers out of business. That’s OK. In fact, it’s good. The ones it puts out of business should go away and the ones that remain should be those who want to put their clients’ needs and desires above their own.”
At Hill Investment Group we believe all financial advisors should be held to a fiduciary standard and think the proposed changes are good news for investors.
The Wall Street Journal’s recent article, “A Guide to Not Retiring,” provides a detailed look at how to approach retirement. Much like my piece on the same topic, “Planning for the Life You Want,” the recommendation is to proactively build a retirement plan—one that keeps you mentally engaged and active after retiring from your traditional work.
I did the same for myself as I neared the end of my 24-year career at Anheuser-Busch. I encourage you to read my article and complete the follow-up exercise. I trust that you’ll find it valuable.
We are lucky to have had the opportunity to work closely with psychotherapist, financial therapist, and wealth counselor, Marilyn Wechter, for nearly 7 years on issues related to our clients’ families and their wealth. She has quickly become one of the most valuable resources in our network of outside advisors. We are constantly in awe of her ability to turn the discomfort of challenging situations into a healthy and welcome dialogue. Marilyn proposes that open conversations among parents and children about money are essential to fostering the appropriate relationship with future inheritance.
Keep in mind these key points when approaching family conversations about money:
-In money conversations, disagreement is not the problem. Rather, disengagement is the problem. This means that there are no taboo subjects.
-Approaching issues with soft knees is essential. Just like buildings that sway in response to wind and earthquakes, we become far less brittle when we approach issues without rigidity.
Marilyn offers these questions as a template to get started:
- What is your personal history with money?
- What were the messages that you got about it: From your mother? From your father? From your grandparents? From your culture?
- Did you witness conflict in your family of origin over financial issues?
- Was money ever spoken about?
- What role does money play in your life now?
- Can you spend without conflict, or shame, or guilt?
- Do you use money to address some other feeling or need?
- Do you use money to control or exert power over others: your children or your partners or your friends?
- Are you fearful about having enough?
- How does money create joy or anxiety for you?