What Women Need to Know When Working With a Financial Advisor | 5 Tips

What Women Need to Know When Working With a Financial Advisor | 5 Tips

 

I want to acknowledge that all women are wonderfully unique individuals and therefore these tips will not be applicable to all of us equally and may be very helpful to some men and nonbinary individuals. This is written in an effort to support women, not to exclude, generalize, or stereotype any group. 

 

I was recently reminded of a troubling statistic: Two-thirds of women do not trust their advisors. Having worked in the financial services industry for nearly two decades, this is unfortunately not surprising to me. But it is troubling, largely because it’s so preventable.

Whether you have a long-standing relationship with an advisor, are just starting to consider working with a financial planner, or are considering making a change, there are some simple tips all women should be aware of to improve this relationship and strengthen their financial futures.

 

Tip #1 – Work with an Advisor You Like

You may think this is obvious or that this shouldn’t matter. Unfortunately, it isn’t obvious to many people, and I would argue that it may be the most important factor. If you don’t like someone, you are unlikely to trust them; and if you don’t trust them, you are unlikely to take their advice, even when it’s advice you should be taking. You’re also more likely to cut your meetings short or avoid them altogether. Chatting with my clients is one of my favorite parts of my job, and it’s also when I usually find out about the important changes in their life that they might not even realize impact their financial plan. It’s an advisor’s job to identify the financial impacts of your life changes, and your advisor can’t help if they are not aware of the changes. The better your relationship with your advisor, the more likely you will keep them updated—and the more likely they can help you make smart financial decisions.

Take some time to consider what’s most important to you when building a trusting relationship, and don’t be afraid to ask an advisor about their personality traits or communication style. You may need someone who is approachable and compassionate, or it may be more important to you that they are straightforward and detailed. I’ve worked with enough advisors to know we come in every shape and size you can imagine, so don’t settle for someone who isn’t a good fit.

This chart can be an extremely helpful tool for identifying your preferred communication style(s). Once you’ve identified your preferred style, you should be able to easily tell whether your advisor is communicating effectively according to your personality. If they aren’t, send them the chart! Strong communication skills are essential in financial planning, so they should be able to adapt to fit your preferences.

Aside from communication style, it may be important to you that you work with an advisor who shares certain values that you hold dear. I recently met with some new clients who I could tell were not completely at ease even though I thought we had hit it off. They were squirming in their seats when they finally got up the courage to ask me about my political leanings. When they learned that we felt the same way, they were visibly relieved. It was important enough to them that I don’t think they could have had a trusting relationship without this information. If you feel this strongly about anything, ask about it when interviewing advisors.

If you find you are having a hard time getting to know your advisor, ask to go to lunch. Once you get away from the office and their financial charts, it will likely be easier to build a connection. You may even get a free lunch out of it!

 

Tip #2 – Tell Them What You Want

Studies have shown that women tend to be more goal-oriented than men. I have found it to be true that women are more likely to focus on goals like maintaining a certain lifestyle in retirement, sending children to college, or making sure the family is protected in the event of an emergency, while others may focus more on measuring investment performance.

At Merriman, we believe all investing and financial planning should be goal-oriented (hence our tagline: Invest Wisely, Live Fully), but many advisors still set goals that focus on earning a certain percentage each year. This can be especially difficult if your partner focuses on this type of measurement as well. Women (or any goal-oriented investor) can sometimes feel outnumbered or unsure of how to direct the conversation back to the bigger picture. You made 5%, but what does this mean for your financial plan? Can you still retire next year? The issue is not that you don’t understand performance or lack interest in market movements, whether or not this is true. The issue is that the conversation needs to be refocused on the things that matter to you. All of the truly excellent financial planners I have worked with have known this and do their best to help clients identify their goals, create a plan for obtaining them, and then track their progress. If you’re not experiencing this, it’s either time to look for a new advisor or to speak up and tell them what you want. Also, note that speaking up is more easily done when you work with an advisor you like (see tip #1).

 

Tip #3 – Know the Difference Between Risk Aware & Risk Averse

Countless studies have shown that women are not necessarily as risk averse as they were once thought to be. As a group, we just tend to be more risk aware than men are. Why does this matter? First of all, I think it’s important to be risk aware. If you aren’t aware of the risk, you can’t possibly make informed decisions. But by not understanding the difference, women sometimes incorrectly identify as conservative investors and then invest inappropriately for their goals and risk tolerance. Since most advisors are well-practiced in helping people identify their risk tolerance, this is an important conversation to have with your advisor. During these conversations, risk-aware people can sometimes focus on temporary monetary loss and lose sight of the other type of risk: not meeting goals. If you complete a simple risk-tolerance questionnaire (there are many versions available online), women may be more likely to answer questions conservatively simply because they are focusing on the potential downside. Here is an example of a common question:

The chart below shows the greatest 1-year loss and the highest 1-year gain on 3 different hypothetical investments of $10,000. Given the potential gain or loss in any 1 year, I would invest my money in …

Source: Vanguard           

A risk-aware, goal-oriented person is much more likely to select A because the question is not in terms they relate to. It focuses on the loss (and gain) in a 1-year period without providing any information about the performance over the period of time aligned with their goal or the probability of the investment helping them to achieve their goal. A risk-averse person is going to want to avoid risk no matter the situation. A risk-aware person needs to know that while the B portfolio might have lost $1,020 in a 1-year period, historically it has earned an average of 6% per year, is diversified and generally recovers from losses within 1–3 years, statistically has an 86% probability of outperforming portfolio A in a 10-year period, and is more likely to help them reach their specific goal.

A risk-aware person needs to be able to weigh the pros and cons so when presented with limited information, they are more likely to opt for the conservative choice. Know this about yourself and ask for more information before making a decision based on limiting risk.

 

Tip #4 – Ask Questions

Studies have shown that women tend to be more realistic about their own skill level. It’s not necessarily that we lack confidence—more that we lack overconfidence. I think that’s a good thing; however, it means women lacking financial expertise are more likely to feel self-conscious about asking a question that could be perceived as foolish. This can be particularly hard if there is a third party present (such as a spouse) who has a greater understanding, likes to use the lingo, and/or tends to monopolize the conversation. If necessary, don’t be shy about asking for a one-on-one meeting with your advisor so you have a chance to ask all the questions you want without someone interrupting you or changing the subject.

I would always prefer that someone ask questions rather than misunderstand, and it can be difficult to gauge a client’s level of understanding if they don’t ask questions. I have many highly-educated clients who have never had any interest in investing or financial planning, so it just isn’t their strong suit. There is nothing to be embarrassed about. I promise that an experienced advisor has heard any basic question you might ask a thousand times before. If an advisor is unhelpful or condescending when you ask a question, you should not be working with that person. There are plenty of advisors out there who are eager to share what they know with you. Sometimes the hard part can be getting us to stop talking once you’ve asked! And of course, being comfortable enough to ask questions is always easier if you like the person you are working with (see tip #1).

 

Tip #5 – Go to the Meetings

I haven’t seen any studies on whether or not women attend fewer meetings. However, if two-thirds of women don’t trust their advisors, I have to believe they aren’t eager to sit in a room with someone they don’t trust for an hour. I sometimes hear that one spouse “just isn’t interested in finances” so they don’t attend meetings. It’s perfectly fine to not be interested. My spouse isn’t! One thing I always find fascinating about working with couples is seeing all the different ways we decide to divide and conquer household tasks. Those lines are often logically drawn based on who has the most interest or the most time. However, even if you completely trust your spouse to handle the finances and you don’t have any interest, it’s important that you are part of the big picture conversations. You may not have any opinion on whether you invest in mutual fund XYZ, but you may have goals that aren’t even on your spouse’s radar or strong opinions about whether your entire portfolio is invested conservatively or aggressively. I find that when one spouse “just isn’t interested in finances,” it means that they attended meetings with other advisors in the past where the conversation wasn’t properly framed to address their goals, or they felt uncomfortable asking questions.

In addition to making sure your financial plan properly addresses your goals and takes your comfort level into account, it’s also important to build a relationship with your advisor so that if you do have questions, if you separate from your spouse, or if they pass away, you have someone you trust to turn to for help.

 

You may notice that all five of these tips are easier to follow when you follow tip #1—work with an advisor you like. There are many different considerations when hiring an advisor: Are they a fiduciary? Do they practice comprehensive planning? How are they compensated? What is their investment philosophy? They may check off all your other boxes, but if you don’t like them, you are unlikely to get all you need out of the relationship. If you’re looking for an advisor you’re compatible with, consider perusing our advisor bios.

 

 

Disclosure: The material is presented solely for information purposes and has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be relied upon as such.

Incorporating Environmental and Social Values into Your Merriman Portfolio

Incorporating Environmental and Social Values into Your Merriman Portfolio

 

Investors like you are, by definition, actively planning for your financial future. At Merriman, we understand that you also want to make sure the world is bright for future generations.

To help align your investments with your values, we offer our Values-Based Investing portfolios. These portfolios are built in a manner consistent with our overall investment philosophy and designed to deliver similar after-fee, after-tax returns while offering you the ability to have an impact through your investment choices. One of these values-based options is our Sustainability portfolio. The UCLA Sustainability Committee defines sustainability as “the physical development and institutional operating practices that meet the needs of present users without compromising the ability of future generations to meet their own needs, particularly with regard to use and waste of natural resources.”

Our Sustainability portfolio focuses on including and overweighting companies that score high on sustainability measures. By choosing this portfolio, clients have the ability to shift money away from companies that have negative environmental impacts and into companies that rank better than their peers.

For the equity allocation in our Sustainability portfolio, we have selected funds managed by Dimensional Fund Advisors. When it comes to determining environmental impact, Dimensional’s approach to sustainability investing stands out. While many asset managers offer binary screening to exclude certain securities, Dimensional tilts toward companies that rank high on its sustainability framework while reducing the weight of companies with negative scores. This approach ensures a company doing better than its peers is rewarded even if it lags behind other companies in different sectors. This process is important because while a software company won’t have a very large environmental impact, investing in an energy company that has better environmental business practices than its peers can end up being more impactful on reducing carbon emissions in the future.

Incorporating sustainability considerations is a complex task. The sustainability funds we have selected use a Sustainability Scoring Framework on an industry level. The table on the right shows how the sustainability scores are determined, taking into account both the greenhouse gas emissions the company reports as well as potential future emissions from their fossil fuel reserves. This process penalizes companies that enable others to emit more or will themselves emit more in the future.

Dimensional also screens out companies with particularly negative practices around factory farming, cluster munitions, tobacco, and child labor.

Equities aren’t the only asset class where our portfolio includes sustainability considerations. Real estate has a high environmental impact and is an asset class where we are able to successfully incorporate sustainability considerations with minimal impact on investment returns.

Per the UN Enviroment Programme (UNEP), “The construction and operations of buildings account for 40% of global energy use, 30% of energy-related GHG emissions, approximately 12% of water use, nearly 40% of waste, and employs 10% of the workforce.”

As shown in the graph below using data from the Intergovernmental Panel on Climate Change, buildings have the lowest cost to reduce emissions. A great example of this comes from the iconic New York Empire State Building, which in 2010 underwent a retrofit. Windows were rebuilt, HVAC was replaced, and reflective insulation was installed. These changes resulted in the building having an annual energy reduction of 38% which translates to a cost saving of $4.4 million per year. This type of cost saving is also beneficial to the investment as profits from these endeavors are passed through to the investors.

Source: VERT Asset Management

We are partnering with some of the most informed individuals in the field of sustainable real estate investing by using the groundbreaking Global Sustainable Real Estate Fund from VERT Asset Management. This fund targets companies that meet a threefold criteria of environment, social, and governance factors. These include both positive and negative screening and tilts. The fund overweights REITs with energy, GHG, and water reductions and also screens out prisons, businesses, or companies with environmental fines. The Venn diagram below shows how VERT incorporates a multi-dimensional scoring methodology. VERT focuses on companies that exhibit “Comprehensive Excellence,” those that fall in the middle of the Venn diagram. After this, VERT targets “Focused Excellence” REITs which fall into two of the Venn diagram categories. In this way, VERT builds a portfolio targeting the best of the best first.

Source: VERT Asset Management

 

 

There is more than one way to invest in line with your values. Whether by using sustainable funds like those from Dimensional and VERT, or one of our other investment offerings, Merriman is by your side. We want to make sure your investments not only fulfill your financial goals but also allow you to live fully, knowing that you are making a difference for future generations.

 

Reason #4 Why Clients Hire Merriman: We Provide Validation

Reason #4 Why Clients Hire Merriman: We Provide Validation

 

Our work at Merriman is all about empowering our clients to live their lives fully. Having a financial plan in place and professional investment management provides peace of mind that allows people to focus on what they love to do most.

We conducted a survey to see why our clients chose Merriman and why they’ve continued to work with us throughout the years. We compiled their top ten reasons why—in their own words—and decided to showcase their responses in a ten-part blog series. This is part four, out of ten.

Reason #4: “Merriman provides what I’m looking for: validation.”

In the grand scheme of wealth management and investment policy, you may already have a sense of what you’d like to build and which direction you want to go. There may be certain investments you’d like to make or strategies that match your lifestyle. Even if you are someone who has an innate sense of financial strategy, teaming up with an advisor gives you a certain confidence that you’re on the right track and making the best decisions.

It can be extremely helpful to partner up with an advisor and have him or her validate your thoughts. In addition to our expertise, we offer clients that validation. Lowell Parker, a Merriman Wealth Advisor and Certified Financial Planner who focuses on retirement income and goal-based planning for pre-retirees, says this kind of partnering up with clients is his favorite part of the job. He said, “The ability to partner with my clients to help them achieve their financial goals and provide peace of mind along the way is why I love what I do.”

Whether you’re someone who has an idea of which way to go or you’re someone who is open to suggestions, an advisor offers opinions and strategies to match who you are, what your values are, and the life you’re living. They may even bring up additional items or suggest supplemental insight that you might not have considered before. 

At Merriman, we owe allegiance to our clients and their financial future which is why we custom craft your plan. Our advisors are here to help you every step of the way. Together, we help create a smoother investment journey and make your financial road easier and more secure.

To learn more about our unique approach at Merriman and how we can help you unlock financial freedom, call us at 206-285-8877. You can also contact us here to schedule a discovery meeting. We’re looking forward to hearing from you! 

Check out the previous installment in the series.

Reason #3 Why Clients Hire Merriman: We Help You Get Your Time Back

Reason #3 Why Clients Hire Merriman: We Help You Get Your Time Back

At Merriman Wealth Management, there’s nothing we love more than taking on the burden of financial planning so our clients can get back to spending their time and energy doing the things they love.

Over the past few years, we’ve been asking our clients—to hear it in their own words—about the value they gain from working with us. We’ve compiled the top ten reasons why clients hire us and we will be showcasing these responses in this ten-part blog installment. Here is part three, out of ten.

Reason #3: “Merriman saves me time.”  

At Merriman, we work to help you invest wisely, live fully, and keep time on your side.

If you could adequately choose investments, decide on a savings plan, and develop a strategy for your family, would you be able to make these hard decisions without ever second guessing yourself? How much research would it take to feel confident you are making the right choice? The amount of research you’d need to do in order to make a single financial decision could eat into the time you spend with your family or traveling the world.

Living fully means living your life, and working alongside a financial advisor means you don’t need to spend hours understanding financial markets or researching saving strategies. This frees you up for more living!

Markets shift. Times change. And Wealth Advisors and Certified Financial Planners give you the information you need so you can feel confident in your financial decisions. We also hold you accountable, which in the long run saves you time and increases your chances of reaching your financial goals, more so than if you were working toward these goals on your own. We all need accountability. Even financial advisors need advisors!

Merriman Wealth Advisors do more than simply invest your money. Even when life gets busy and you don’t feel like you have the time, we keep you on track with your financial goals.

To learn more about how we can help you unlock financial freedom or to schedule a discovery meeting, contact us via our website or call 206-285-8877.

Check out the previous installment in the series. 

Reason #2 Why Clients Hire Merriman: We Cut Through The Noise

Reason #2 Why Clients Hire Merriman: We Cut Through The Noise

At Merriman Wealth Management, there’s nothing we love more than taking on the burden of financial planning so our clients can get back to spending their time and energy doing the things they love.

Over the past few years, we’ve been asking our clients—to hear it in their own words—about the value they gain from working with us. We’ve compiled the top ten reasons why clients hire us and we will be showcasing these responses in this ten-part blog installment. Here is part two, out of ten. 

Reason #2: “They’ve helped me cut through the noise.”

Financial planning comes with a myriad of components and sometimes we all need a fresh perspective to help make sense of what looks just like chaos to us.

When people don’t know where to start because there is simply too much analyze, we call this “analysis paralysis.”

Oftentimes, it’s not getting started at all that is the biggest hindrance to financial progress.

At Merriman, we take what seems to be chaos to you and make a tangible financial plan. An outsider’s perspective—like that of a Merriman advisor—can be crucial in not only getting you started on your financial journey, but also knowing which way to go first. Merriman Wealth Advisors help you discover your financial goals and work towards them. 

In thinking about analyzing decisions, Eric Jonson, Merriman Wealth Advisor and Certified Financial Planner, likes to think of it in the context of a pachinko machine. “When the ball is launched to the very top of the machine, that very first bounce can make a huge difference in where the ball ends up.”

An additional perspective is just like that first bounce. It can set you up for success and cut through the noise of the chaos. Sometimes, that third-party perspective is all that’s missing in getting started—and going in the right direction.

Our wealth advisors go beyond just the investment choices. We’re with you every step of the way.

To learn more about how we can help you unlock financial freedom or to schedule a discovery meeting, contact us via our website or call 206-285-8877.

Check out the previous installment in the series. 

Reason #1 Why Clients Hire Merriman: We help you weigh your options

Reason #1 Why Clients Hire Merriman: We help you weigh your options

 

At Merriman Wealth Management, there’s nothing we love more than taking on the burden of financial planning so our clients can get back to spending their time and energy doing the things they love.

Over the past few years, we’ve been asking our clients—to hear it in their own words—about the value they gain from working with us. We’ve compiled the top ten reasons why clients hire us and we will be showcasing these responses in this ten-part blog installment. Here is part one, out of ten.

Reason #1: “Merriman helps you weigh your options.”

Today, almost everyone has an iPhone in their pocket and a search engine, like Google, at the ready. Google is great for things like looking up baking recipes and movie trivia, but when it comes to personalized financial advice, Google isn’t great.

Our Merriman financial advisors take your life, specifics, and goals one step further. We’re experts in taxes, estate planning, and insurance, so we know how to evaluate all aspects of your financial situation. We apply smarter financial planning strategies with insight and intelligence so you can achieve your goals and protect the wealth you’ve worked hard to accumulate.

The Merriman financial planning approach is pro-active and collaborative. “Our process is much more focused on getting to know our clients,” Tyler Bartlett, Merriman advisor, says. “Money is an important tool, but it’s only a tool that helps you achieve what’s important to you.”

Google won’t be able to formulate a financial strategy for you. At Merriman, we can.

Are you ready to team up and unlock your financial freedom? To learn more about how we can help or to schedule a discovery meeting, contact us HERE or call 206-285-8877. We look forward to hearing from you!