You likely seek financial advice from lots of different sources. And some of those sources will certainly have good intentions, but they’ll often give bad financial advice. Let’s look at some examples and explore the reasons why we have to be very careful from whom we’re taking this important guidance.
Click the timestamps below to help you navigate through the many topics we discussed.
On This Episode:
The coronavirus pandemic has forced a lot of people to take a closer look at their finances, and we often reach out to a lot of different sources to get advice on ways to proceed.
Even if you’re working with a financial advisor, you’ll still have with other people to find out what they think and what planning strategies they’re using. So who are the most the people we listen to most often? The list will vary for each of us but the four most common people sources of info are family, friends, our CPA, and financial experts we watch or read.
- Family – People often turn to a family member for investment advice, especially if they perceive that family member to be financially successful. But just because someone has more money than you do (or at least you think they do), that doesn’t necessarily mean that they know what they’re talking about when it comes to the financial world. Or even if they do, they don’t necessarily understand the details of your situation. But most people have a hard time admitting that they don’t know the answer to a question when asked by a loved one, so they’ll often end up trying to make themselves sound like an expert when they really aren’t.
- Friends – Let’s be honest, people like to brag to their friends about stuff. So when your golfing buddy has a hot stock tip, or a co-worker on your shift knows a great mutual fund that you should check out, just remember that they probably don’t have much more expertise than you do. Also remember that people like to talk primarily about their successes and they often forget about their failures.
- CPAs – It’s not that CPAs don’t know what they’re talking about, but it’s important for you to understand what your CPA’s job really is. His job is to give you tax advice. Most CPAs are hesitant to agree with the advice that your financial advisor gives you, because that puts them in the position of giving investment advice, which most CPAs aren’t licensed to do. So if you ask your CPA for investment advice, he’s likely to try to avoid answering the question, which often comes across to you as if he’s saying “No you shouldn’t do that.”
- Financial Experts in the Media – Ok, maybe the media doesn’t always fall into the category of having “good intentions” but if people think these so-called experts have good intentions, then that’s a problem. Keep in mind that any financial shows you see on TV have a primary mission of getting good ratings and selling advertising, NOT giving you financial advice. And anything you read online is likely written with an agenda. So, as always, consider the source.
One piece of financial advice that many clients ask us about is how much should I have saved at my age? Well, Fidelity found that the average amount in a retirement account is $215,000.
Here’s how it breaks down by generation:
Gen Z – $5,400
Millenials – $44,000
Generation X – $175,000
Baby Boomers – $357,000
Silent Generation – $403,000
The average Baby Boomer or retiree-age clients we work with have saved an average $1.3-1.8 million. Some more aggressive savers have four or five times that amount, but don’t worry if you aren’t on track. A lot of ground can be made up in your 40s and 50s but there’s has to be a plan to reach those goals. Working with a financial advisor can insure you are saving correctly but also that you’ll have enough money in retirement to enjoy the lifestyle that you want to live.
Remember that you can always contact Jeremy to set up a meeting to start taking those steps to improve your finances.
Check it out at the top of the page and use the timestamps to help you navigate through the many topics we discussed.
1:33 – How are we handling quarantine?
3:12 – Looking back on your life, what would you tell yourself 20 years ago that you know now?
5:22 – If you could go back to any age, what would it be?
6:39 – Quote of the week on the quickest way to double your money.
8:36 – Let’s take some listener questions. Mailbag question #1: I retired two years ago with more than million in my IRA, which I thought would be more than enough to give me the lifestyle I want. I’ll probably be fine but I get nervous every time I withdraw from my account because I don’t want to worry about running out. Am I worrying too much?
13:09 – Let’s talk about finance some more and talk about bad advice.
14:17 – Many people get their financial advice from their family. Sharon shares her experience.
17:13 – Why that advice from family might not be good for you.
18:02 – What about advice from friends?
20:48 – Getting financial advice from CPAs
23:26 – Listening to financial experts in the media.
25:02 – Money leads to a lot of arguments in marriage.
25:58 – Stats on the average amount saved by age group.
31:07 – Here’s how much Jeremy’s CRNA clients usually have saved.
31:36 – Here’s what to do if you need to improve your retirement savings.
32:05 – Final words of wisdom from Jeremy.
“A lot of times what we find is that you perceive someone to have more money than you and you listen to them, but it’s not the right outcome for you.”
-Jeremy Stanley, CFP®
