Planning for our financial future can be challenging. Professional financial advisors can help navigate the ins and outs of setting up a successful financial plan, but unfortunately this sort of advice is not readily available for middle-class families.
There are numerous reasons as to why the middle class aren’t getting the help they need. As a result, there is no silver bullet that will easily change the situation. Some of the responsibility rests on financial managers themselves, but individuals also need to accept some of the responsibility.
Financial planners have always focused on higher-income families as their core customer base. The majority of financial advisors, 80% in fact, view their primary customers are being families with incomes in excess of $250,000 a year. Unfortunately, that’s almost five times the median household income in the U.S.
Not only do financial advisors view their services as being geared mostly towards upper-income households, so do individuals. A lot of middle-class families never attempt to seek out financial advice because they are wrongly under the impression that they do not have enough money to even begin financial planning.
What can we, as individuals, do to obtain better financial advice?
For one, individuals need to become better educated. When visiting a financial advisor, it is much easier to get answers to questions if you know the questions before the visit. This takes homework. Financial advisors can help you down the road, but they need our help.
When you walk into a financial advisor’s office, you should already have a list of questions that you want answered. This takes research and some homework. Simply walking into a financial advisor’s office with a blank sheet of paper and expecting to walk out with a solid plan will never turn out well.
Self-education falls on the shoulders individuals. Helping clients reach their goals is the responsibility of the financial advisor. Both sides need to work together.
The most important thing that individuals can do is to make financial planning a top priority, not an afterthought. This means accepting that advice is not free.
The irony is that middle-class families are having a hard enough time paying their bills, so the thought of spending some of their money on financial planning is not always very attractive. Personal incomes are falling, so it is easy to understand why people are unwilling to spend money on financial advice.
The reality is that the consequence of not spending money on financial planning could be much more costly than the advice itself. Making financial planning your top priority is a vital step in moving towards financial freedom.
Most importantly, individuals need to be honest with themselves, and with their advisors. Before you go to meet a financial advisor, you need to have an accurate description of your current financial situation and your spending habits.
Read More: Five things rich people do that you don’t