A few weeks ago I attended a seminar on the principles of mentoring. As the session went on, it became clear to me that many of the same principles of a mentor/mentee relationship apply to the financial planner/client relationship. They are both about how a more experienced and knowledgeable party can guide the other to find its own way. It’s not about finding someone who can do all the work for you. Instead, a good mentor points you to the areas you can improve to reach your goals, just as a good financial planner can help you detect what plagues your financial health, design a plan to steer you away from bad habits and to move closer to your objectives, and keep you on track. It’s all about the mentee or the client- what you want to achieve, and how you get there.

So how can you tell if you’ve got the right financial planner? Other than the professional background, expertise, and certification, I believe a good financial planner should also possess the following list of qualities like a good mentor does.

  • She listens. One of the most common critiques of mentees toward mentor is that the mentor cares more about sharing what she knows than focusing on the needs of the mentees. This attitude shows itself in the lack of listening and the tendency to “lecture.” Imagine a financial adviser who spent most of the time discussing the market returns without learning the name of the child you are investing the money for!  A good financial planner spends a lot of time listening and knowing you before he/she can provide the best advice given your situation.
  • She asks questions. To go one step further, a good planner “actively” listens and drives the conversation, demonstrated through asking follow-up questions. It shows that she is genuinely interested in your thoughts, beliefs, and circumstances, and seeks to understand you fully before issuing cookie cutter advice that is not tailored to your needs.
  • She sees the big picture. One of the major benefits of having a mentor is that she can objectively see and illustrate where you are. While we may have a general idea of what financial situation we are in and what we would like to accomplish, we are often tangled by trivial things like how much we should spend on buying coffee, instead of having a comprehensive view of our income, expenditures, how to save and invest to meet our life goals, and managing the risk of loss of income. A good financial planner creates a plan to lay out the road map for you, so you have a clear understanding of how every day decisions impact the ultimate goals.
  • She gives actionable advice. In addition to putting every day financial decisions into perspective at the high level, a good planner also shows you the steps you can take to improve your situation and behavior. Everyone can tell you that you should save more, but a good financial planner will not only advise you how much you should save and how to begin, but also how you can invest more wisely and how to adjust your behavior based on your personal situation.
  • She reviews your progress. Last but not the least, a good planner keeps you accountable. Most of the time, our biggest enemy is ourselves. We say we will do certain things but we never make it happen. This is where a financial planner functions like your personal trainer. We know we need exercise, and we have all the resources at our disposal online, but many of us would still opt for hiring a trainer to keep us on track and motivated. A good financial planner would do the same for your financial well being as a personal trainer for your health.

However, mentor/mentee relationship is a two way street. As a client, what can we do to ensure that we benefit the most from this relationship? Here’re my two takeaways:

  • Be prepared. Before your meeting, make notes of your questions and areas of improvement. Make sure that your questions and needs are addressed. The more you are able to articulate what your needs are, the more likely that the financial planner can guide you toward the right direction, and avoid derailing the conversation to topics that may not be of the foremost importance at the moment.
  • Be open. A fruitful relationship requires a high degree of openness. Personal finance, like politics, is generally an untouchable topic in a casual social setting.  Many people have trouble talking about how they manage money with anyone, even their spouses. This points to the level of trust a financial planner needs to establish before the relationship can flourish. The more you feel comfortable revealing your family situations, emotions, preferences, and beliefs about your finances, the better your planner can give you advice that works with your unique situation.  So find someone that you can continue to build that trust with, and be ready to reveal your thoughts.

What are your experiences working with a financial planner or adviser? Share with me.

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