Who Was Your First Financial Advisor? Take a Guess!

The financial services industry is having a conversation. At the center of this conversation are women: women in financial service provider roles and women as investing clients.

Depending on which metrics you are tracking, it is reported that only one in four financial advisors are women. Specifically, the Certified Financial Planner Board reports only 23.17% of CERTIFIED FINANCIAL PLANNER™ (CFP®) designation holders are female as of May 2018. With the industry being dominated by men, the client base reflects a similar imbalance. Women as investors are not marketed to and have the potential to feel ignored. As investors, women may not feel understood by their financial advisor and may be disengaged from the process, leading to a failed plan down the road.

This does not make sense, as our very first financial advisors were often women. Mom. She taught us so much more about money than just to buy on sale or save for a special purpose. The schooling process happened organically, without a classroom structure, as we went about our daily lives.

Many life lessons taught by mom can translate to multiple applications. “Be patient” and “if it sounds too good to be true…” are both messages that not only help us in specific scenarios but work great when broadly applied. Below are some lessons she taught that, as it turns out, lend themselves towards very successful investment strategies and prove she is one of the smartest financial advisors in the room!

• “Do your homework.” When selecting a financial advisor or investment vehicle, do some research. Understand other options available and how they compare. Do not rush into something because of a pushy salesman or convincing promise. Find people who have used that particular provider or product before. Ask if they were given the chance to do it differently would they? Or would they do the same thing again?
• “Listen to your inner voice.” You need to get to know yourself with the intent to understand how you may tolerate a variety of scenarios in your portfolio. You need to be comfortable with your risk exposure to the ups and downs in the markets before you get on the roller coaster. Factor in both good times and bad, and be real with yourself about how you would handle various outcomes. Then buckle up.
• “Be patient.” Probably the hardest thing for many of us in all applications of life! With investing, there is no skill more powerful taught by mom than to be patient and ride out a storm. We often feel compelled when something isn’t going as planned to get our hands in there and change things up. While the road we take may not go as planned, if your long-term goals are still achievable, staying on course is likely the right approach to get you there.
• “If it sounds too good to be true….” Always, always listen to this advice from mom when you are talking about investments. Be wary of guarantees, promises, and great deals. They often all come with fine print or price tags that are not worth the tradeoff. Be sure to evaluate whether the “great deal” is really a bargain or if you will end up getting what you paid for – cheap imitations.
• “Plan for a rainy day.” An emergency fund is a fundamental component of a successful financial plan. While we cannot predict what life will throw at us, we can safely assume things will not always go according to plan and we will have bumps in the road. Having cash set aside to get you through an unexpected rough patch or expense will help keep your long-term goals on track.
• “If all your friends jumped off a bridge…” There have been many documented bubbles or hyped up “next big things” in investing that lead to unsustainable prices that eventually crash. Just because everyone is talking about it or claiming to have profited from it does not mean you should throw yourself onto the bandwagon.
• “Don’t put all your eggs in one basket.” Diversify. Mom was right. Strategically spread out your assets into a variety of unrelated investment categories to meet various objectives. If one of those baskets gets chewed up by a bear market, your other unrelated investments may have done better than expected and kept you from losing it all.

What they say is true: moms really do know best. When you are thinking about and making investing decisions, take her advice. Mom’s words of wisdom and insightful values create guiding principles to follow throughout life, but also financially.

As an investor, following common sense lessons as taught by mom may serve you far better than an oversold, overpriced, confusing financial instrument. Women make for savvy advisors and savvy investors. This industry is finally on its way to acknowledging this and building a new approach around women in investing.