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55% of Gen Zers Turn to Family for Financial Advice. This Might Be a Better Idea

Motley Fool - Sat Nov 18, 2023

Financial advisor meets with a client in their home.

Image source: Getty Images

When you're relatively new to adulthood, it can be difficult to navigate certain financial choices. What assets should you invest money in? How large of an emergency fund do you need? And what's the best home for your retirement savings -- an IRA, a 401(k) plan, or both?

It's therefore not so surprising to learn that 55% of Gen Zers have turned to family for financial advice, according to a recent Bank of America report. But while your family members may be pretty knowledgeable about financial matters, there's an even more optimal solution worth pursuing if you could use financial advice.

It pays to work with an advisor

You might assume that you're too young to work with a financial advisor, or that you don't earn enough to warrant hiring one. In reality, this is false.

It doesn't matter what your age is or what your paycheck looks like. Enlisting the help of a financial advisor can help you work toward your financial goals and make the most of your money while you're earning it. And while your family members may be generous with the advice they're willing to give you, they're also not necessarily experts like a financial advisor is.

Also, it may be hard for your family members to give unbiased advice since they care about you and only want what's best for you. As such, emotions might guide the answers they give you. A financial advisor can look at things more objectively, while using their knowledge to put you on a solid path.

How to find the right financial advisor

If you're ready to enlist the help of a financial advisor, it's important to find the right one. And that's one area where you can turn to family members and ask for some help.

If a family member of yours has a trusted advisor who's able to take you on, you get the peace of mind of having that person already vetted. You could of course also ask friends to recommend an advisor. But if you're all fairly young, you might all be in the same boat of needing to find one.

You can use NAPFA's Find An Advisor page as a starting point if you have no idea how to find a financial advisor. It will point you to some professionals in your area.

But if you're going about the search process on your own without a recommendation, then it's important to ask key questions to make sure you're signing up with the right advisor. Those questions should include:

  1. What initial recommendations do you have for me based on our first meeting?
  2. How often do you meet with and communicate with clients?
  3. What is your fee structure?
  4. Are you a fiduciary?

That last one is important, because a fiduciary is obligated to put their clients' needs ahead of their own at all times. This means that if your advisor has two investments to recommend, they have to go with the one that's better for you -- even if it means getting paid a lower commission.

It's OK to turn to family members for financial advice on occasion. But if you feel that you generally need help working toward goals and managing your money, then your best bet may be to find a financial advisor to work with. And if you ask the right questions, you're more likely to find someone who truly meets your needs.

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