Starting at the end, I would like to conclude that financial advice reflects, above all, a conscious and sustained decision to pay attention to personal finances. In other words, the willingness to obtain financial advice implies recognition and a commitment to do things better and to give the importance that management of personal finances deserves. In this sense, I like to think that a person seeks financial advice when they have convinced themselves that they want to improve their finances and need expert and reliable help to achieve it, which is not very different from making a change to a healthy diet, starting a physical exercise plan, or initiating the practice of meditation.
Clearly, a financial advisory relation, or in this sense any of the examples I have used, could start with an assessment of the current state and a definition of the objectives to be achieved. That would be ideal. However, that doesn’t mean we should rule out the possibility of starting with something more specific, for example: I’d like to know if I’m saving enough for retirement, or I think I’m paying a lot in interest, or I’m worried about losing my income if I have a disability. Any need, no matter how specific, can serve as a first step in a financial advisory relationship.
Obviously, everything in our lives is somehow interrelated and our personal finances are no exception. What you earn relates to what you spend and what you spend with what you save, what you save with what you invest, and what you spend and invest with what you finance, and so on. That is why, although the conversation may begin in something very specific, it is common to quickly seek to frame it within a broader context to find a more suitable and lasting solution.
Whether it’s trying to make a broad assessment or sorting concerns from major to minor and tackling them one at a time, the importance of understanding the context and agreeing on the big goals goes a long way toward narrowing down the range of possibilities and ensuring alignment between the recommended solutions.
Finally, the work of financial advice, to be optimal, requires recurrence. Needs change, the market changes, and the products available change. While it is good to review the financial situation from time to time, it is better to review it periodically, say on a yearly basis, lest something that was done years ago needs to be reviewed and modified.
Recurrence requires a commitment on the part of the client and the advisor to continue working together so that information continues to flow, and financial conditions remain at an optimal level. That’s why we said that, although it doesn’t matter where financial advice has started, it’s a good idea to make it a conscious and sustained decision over time.