By Nicholas W. Stuller
This investors’ lack of understanding of both advisors and money were sadly not exclusive to her, but the reason she shared her story was to help others avoid some of the mistakes she made.
“When I think of financial advisors, I think of someone that is not neutral and does not have my best interests at heart. I think there is an ulterior motive to sell a product from their company or some other company,” Julie Miller stated. “Twenty years ago, I had an advisor, referred by a friend who thought they were good. It turned out they just wanted to sell us insurance products.” Julie’s feeling and experience is unfortunately not unique nor new.
During our phone conversation, Julie explained to me that, although she was a business major in college, she recalls only one class thirty years ago that discussed investing. In retrospect, she wishes that classes in investing and personal finance were more prevalent, as she is not clear if she is prepared for her financial future. Julie has always contributed the maximum to her 401k, as her company has a great match, but is unclear on how much she’ll need for retirement. Or, for that matter, should she start thinking about long term care insurance? What other questions should she be asking herself? These are very important inquiries, especially since she is separated and preparing for divorce.
Julie has not made that many securities investments outside her 401k, but apparently has good instincts. When Tesla was trading at about twenty-eight or thirty dollars per share, her sense was that this company could be the next Ford and she urged her husband to buy the stock. He reluctantly did, and within five years, the stock was at 185 dollars per share. However, without telling Julie, he put a sell stop on some of the shares, and as the stock had some erratic price movements, some of the stock was sold. As of this writing, the stock is just over three hundred dollars per share. Julie confided that she is not exactly sure how sell-stop orders work and wonders if her husband does either. They also purchased some Alibaba stock, which has performed well for them.
Julie has learned some valuable lessons through her experiences. First, she believes couples should be much more transparent with each other when it comes to money and their perceptions about money. She wishes she found a financial advisor they could have trusted in the past to help them better understand their money differences. She now sees the value of an advisor, but wishes she hired one years ago. Another realization is to not fully depend on a spouse and assume their level of financial understanding. For example, Julie’s husband was in the banking industry, but he had knowledge gaps as well, which was a surprise to her. Additionally, she wishes she kept her pre-marital assets in her name only. Her attorneys believe she will be fine, but if she hadn’t transferred things to joint name, it would have been easier.
As our conversation came to a close, Julie was very surprised to learn that there were many female advisors around the country that offered financial planning to divorcees as a niche client base. She was also excited to learn that many of these advisors just did financial plans and nothing else, which gave her some comfort, given she will be going through some significant changes in the near future.
This story first appeared in my book THE TRUTH SHALL SET YOUR WALLET FREE: Secrets to Finding the Perfect Financial Advisor, published in 2018 by Post Hill Press.
Nicholas W. Stuller is the Founder and CEO of MyPerfectFinancialAdvisor the premier matchmaker between investors and advisors using personalized data, proprietary algorithms, and deep industry experience.