Updated on 11.24.08

Desperately Seeking Advice

Trent Hamm

Pondering Bob's advice by Digital Sextant on Flickr!Quite often, when people write to me asking for specific financial advice, I respond to them encouraging them either to seek a lawyer or a financial advisor, but I also make a point to tell them to lay all of their cards on the table for this advisor.

Some readers have expressed surprise at this response. Either they seem shocked that I wouldn’t simply give them an answer to their question, or they seem almost insulted that I would somehow imply that they weren’t being forthright about their situation.

There are multiple things at work here.

First, most personal finance solutions aren’t as simple and one dimensional as one might think at first. There are many, many factors that are in play when one tries to determine the best move for their situation: age, health, psychology, current financial state, current employment state, goals, future plans, ongoing relationships – even things as mundane as the amount of free time one has.

As a result, many situations simply don’t have a simple off-the-cuff answer. It’s quite likely that, in a short telling of your story, you’re leaving out some key information, intentionally or otherwise.

Second, I’m not an expert. While I’ve read a ton about personal finance and have actively applied that to my own life (which is what I write about here), I have very little experience taking that same knowledge and applying it to other situations. I think there’s value in sharing my own experiences – and I do believe that others can take home lessons from those experiences – but, frankly, I’m not trained in the nuances of evaluating the experiences of others. All I can share is my experience and the lessons that have come from that.

So, what’s the solution if you do need an answer to a financial question?

First of all, it is reasonable to write your situation in detail. It’s similar to the reason that people journal – quite often, simply recounting and describing your own experience and situation can open up your own mind to revealing the correct answer.

I honestly believe that this is the biggest reason people write to me. They simply need to write it all out, and once they’ve done that, they want to share it all with someone – but not with someone they know personally.

Don’t overlook things, either. No matter what the situation, you should include all the basics – your current financial situation, your health, your goals for the future, even the amount of time you have to seek new solutions. Every significant factor in your life is important for solving financial problems.

Often, just this process alone – writing everything out – will reveal the answers you need. I know that quite often I find the answers I’m seeking while writing a post for The Simple Dollar. I’ll start an article about my own situation, turn the pieces over and over in my mind, do some additional research, and by the end of the article, it’s clear to me where I should be going with things.

What if the answer isn’t obvious? Your best first step is to talk to someone you personally trust, but it must be someone that you’re willing to lay out all of the facts to or else talking will get you nowhere. You must be willing to open the books to this person in order to really tap their wisdom.

In many situations, this can be the best approach, as the person you trust likely has some insights into your personality that no advisor could bring to the table.

Of course, there are many situations where this isn’t appropriate, either. Such personal advice mostly works best when figuring out general plans, not specific investment choices. Once you get down to the specifics of financial choices or legal options, you should turn to a financial advisor or a lawyer. Here are a few tips for finding a good one.

First, you should always retain the final decision in any situation. You are hiring these people for their expertise to help you make the right decision, not to hand them the responsibility. That responsibility still rests with you and it always should. Never give full autonomy to an advisor to make choices for you. Instead, if they give you an explanation you don’t understand, ask them to explain it better. You’re paying them to provide you with their expertise, not provide you with more confusion.

Second, if you’re seeking a financial advisor, look for a fee-only advisor. A fee-based or commission-based advisor both have other interests that they bring to the table – namely, they want you to invest in whatever investment they can earn a big commission on, and that’s often not the best investment for you. Instead, seek out advisors that operate based only on fees – they may be a bit more costly up front, but you can be sure that they’re not trying to sell you a product. For your fee, what you get is their best advice, unhindered by the need to shill for a product.

Third, hit up your personal network for recommendations for both lawyers and financial advisors. This goes both for positive and negative (stay away from…) recommendations. You’ll often be surprised at the responses you get from friends and relatives you trust when you ask them for suggestions on lawyers and financial advisors – they may offer strong (and accurate) recommendations that you didn’t expect.

Finally, do not hide key information during this process. I know quite well that it’s tempting – usually out of personal pride – to hide key painful pieces of information when asking for advice. Don’t. Provide all of the painful information up front, and be an open book for additional questions. Don’t. Hide. Anything.

In the end, make sure the advice passes your smell test. Do your own investigation into the advice you get and make sure that it does make sense, no matter what the source. Multiple sources for your information are always good.

Good luck!

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  1. Noah says:

    As someone who is studying law and worked in firms, Trent’s advice is spot on. Never, ever hide things from your attorney. If you don’t trust them, find a different lawyer and tell -them- everything. Clients lying to lawyers makes the whole process take longer (which you don’t want financially), and sometimes makes the whole process impossible (which you don’t want at all). DO NOT LIE OR HOLD THINGS BACK FROM YOUR LAWYER!

  2. Thanks, Trent, for recognizing psychology as an important part of personal finance: I’m always amazed how many people make it only about numbers and not about how people interact with the real-world behaviors that make up their relationship to money.

    Naturally, I don’t think anyone should have to spend all their time dispensing advice, but I can understand people’s frustration. In the rural town in Oregon where I was raised, we didn’t have a financial planner (I think there might have been a CPA at best) and even if there was, few could have afforded their services. I think we need to make an effort as a country to raise the general level of financial education so that people don’t need that kind of professional service, or at least need it less regularly.

    The web helps some there. Personal finance blogs, sites that help you manage and organize and get advice like Thrive, and a variety of calculators and education aids are a good start. It is tremendously hard to give personalized financial advice (it has taken us a long time to get good at it), but technology allows people access to their spending in a really interesting way and I think that we, as a society, can do more to use these tools to improve our own finances.

    Because even if someplace like Thrive gives good advice, we still have to seek it out and follow that advice. Inaction is really the key here – kudos again to Trent for making a plan to follow.

  3. George says:

    > In the end, make sure the advice passes your
    > smell test.

    There are some people who have a terrible “sense of smell” and tend to believe what they WANT to believe, rather than remembering that there are no free lunches when it comes to finances.

    Do you have any advice for that crowd?

  4. RCE says:

    >>>Second, if you’re seeking a financial advisor, look for a fee-only advisor….<<<

    I disagree with your assessment of fee-only vs. fee-based. You seem to indicate that the fee-only model is devoid of conflicts of interest, when in fact this is just not true. Many times a combination of fees and commissions are actually best for the client, and sometimes only commissions are best for the client.

  5. Excellent suggestions. It’s a shame you have to endure readers who want a quick and nice solution to a problem which has probably taken a protracted length of time to fester.

    Noah certainly underscores your warning to be truthful. It is good to be validated by someone in the profession.

    Trent, you are gifted in providing use beneficial information without casting yourself as an “expert.” In all the time I’ve been reading your posts, you have been consistent in maintaining the posture of a blogger offering personal experiences that might help others. You are upfront about your shortcomings, you stand firm on your premises, and you always offer the reader freedom to their own choices. You do a great job, buddy.

  6. My perspective on this issue is very simple. That is : “No one cares about your money but you. Only you know how hard it is to earn a dollar, and even harder to save a dollar – that’s why self-interest is the best interest. The funny thing about money is that everyone can give advice about your money, but they are not nearly so casual with their own money.”
    I stated the same thing in my book “Invest Now” and I wrote a post on this too. If you are interested, here is the link: No One Cares About Your Money – http://adawnjournal.com/2008/04/15/no-one-cares-about-your-money/
    A Dawn Journal

  7. My perspective on this issue is very simple. That is : “No one cares about your money but you. Only you know how hard it is to earn a dollar, and even harder to save a dollar – that’s why self-interest is the best interest.”
    A Dawn Journal

  8. Chris says:

    I enjoyed this post very much. I used to be a financial advisor and it was like pulling teeth trying to get the entire story out on the table. It was especially difficult when spouses were unwilling to be honest with each other–to the point you could taste the stress in the room. What I think is important to remember is that you WON’T get ANYWHERE if you aren’t honest with yourself or the person that you finally choose as your confidant(be it your financial advisor, a lawyer…or Trent =). Secondly, make sure you talk with your confidant on a regular basis, even if you have to schedule time. It will help you stick to your plan.

  9. Hi Trent,

    Indeed, I think you are correct in not offering specific advice on a given finance issue a reader is facing. If the reader has read your content in detail they should be able to gleam some guidance from a topic that is associated with their issue (debt, investments, how to save money, etc.).

    I’m also not a fan of giving out finance advice, but I do like to give other type of advice freely (how to save money, living a practical life, etc.)

    Thanks for the great blog!

    http://www.scordo.com/blog/blog – a practical living blog


  10. Ryan McLean says:

    I understand why you can’t give specific advice. Because you are not a qulaified financial advisor. If you give people financial advice and they follow it and it doesn’t work that makes you liable to be sued…and you don’t want that. This was a great post and made me think a lot

  11. My perspective on this issue is very simple. That is : “No one cares about your money but you. Only you know how hard it is to earn a dollar, and even harder to save a dollar – that’s why self-interest is the best interest. The funny thing about money is that everyone can give advice about your money, but they are not nearly so casual with their own money.”
    I stated the same thing in my book “Invest Now” and I wrote a post on this too.

  12. Maggie says:

    I think Trent gets asked these questions because people want quick, easy answers which do not require them to do any thinking nor need any kind of effort on their part. “Oh I have problem. Oh I am a victim of wicked credit card companies / banks / fill in the blank. Woe is me.” Some people need to take responsibity for themselves and their own lives – possibly for the first time ever.

  13. Saver Queen says:

    Great advice Trent. Especially about being honest, and finding someone you can trust – not a financial advisor who is really a salesperson in disguise. My advice is to invest time into learning – getting third, fourth opinions, reading up on the subject, and putting in the time to research it thoroughly, actually forcing yourself to actually learn – even if the subject is difficult for you and doesn’t come easily or naturally. Furthermore, don’t be afraid to go against the grain. If you’re hearing advice from other people but it doesn’t make sense to you, don’t feel pressured to go with the herd. It’s often people who do things differently who have the most success.

  14. Too true. Since I started blogging I’ve had a number of people just ask me very specific questions … and they expect simple answers too. Usually in response to their one question, I have about 10 I’d like to ask back before I answer.

    Even then, then answer also involves saying “but you should definitely seek professional advice”.

  15. Great article, Trent. I’m a financial planner and I agree with you that reading about and applying personal finance techniques to your own situation is very different from advising other people on their situation.

    One of the most difficult parts of my job is getting ALL the information I need from clients, but it is extremely important because I CANNOT give good advice without all the information. Sometimes a few small facts can make a big difference in the advice.

    Keep up the good work, Trent!

  16. Ethan says:

    I was also a financial planner for a short time, and I think the most important part of finding one is making sure they are someone you trust, and be aware than a fee is usually an ANNUAL fee, say $300 or more.

    I worked as a fee only planner and got out when I realized that the job was really a marketing job. We now go to an Edward Jones planner who helped us set up an extremely diversified index-based system that we just sit back and contribute to. No buying/selling to rack up the fees. We’re still pretty young so we still have the advantage of time.

    Also, don’t hesitate to take the advice you’re given and run it by other planners/advisers or people you know who have financial knowledge.

  17. Trent,

    You should mention where folks can go to find a fee-only advisor. At the risk of this looking completely self-serving (I am a fee-only advisor and a member of the first 2 organizations), here are 3 places one can look for a fee-only advisor:

    1. http://www.napfa.com – The National Association of Personal Financial Advisors
    2. http://www.cambridgeadvisors.com – The Alliance of Cambridge Advisors
    3. http://www.garrettplanningnetwork.com

  18. Kevin says:

    As a CPA I agree on the methods you suggest on finding an advisor – whether it be financial, lawyer, etc. Most of our new clients are referrals from existing clients and I think that method works great. From our perspective it provides feedback that we are doing a good job and gives us even more incentive to keep doing so – since doing a poor job just once may lead to multiple clients leaving.

  19. kaleidors says:

    Why all the hostility for those asking for advice? Trent never mentioned the readers were asking for quick easy solutions–only that their questions are better answered by a lawyer/financial planner, with an additional admonition for honesty.
    Seeking more information (like asking advice) is one of the early stages for solving a problem. Sometimes, like Trent said, just writing it out is enough to process what is going on. Sometimes you know what you need to do, but not how. Sometimes you’re completely baffled–but you got to start somewhere.
    I don’t know… I just imagine ya’ll lost for hours in a hardware store looking for flanged solid wall anchors because asking someone would be the quick, easy solution.

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