Read Time: 4 minutes
Welcome to the 54th edition of the Tech Financial Planning (TFP) newsletter.
When should you hire a financial planner?
This was the title of a recent Ben Carlson blog.
It’s a question I get asked a fair amount, especially since we work with a predominantly younger group of clients (at least compared to the wealth management industry at large).
Ben lists 7 of the biggest (but certainly not only) reasons you should hire a financial advisor.
I really liked his list so I decided to put a spin on it with 5 reasons people have hired us (and again, certainly not the only reasons).
Here they are.
You Have A Big Event
There’s typically two types of big event - life events and financial events
You are getting married, or starting a family, or perhaps you’ve had a family for a while but finally want to get things in order.
As your life and family progresses, there comes a lot of additional planning - education, trips, insurance, estate plans, and a whole lot more.
The other side of this is people who’ve had big financial events.
Your start up is blowing up and you are trying to figure out what to do with your stock options, or your company is about to go IPO (or just did), or you received an inheritance or your company is going through a tender offer.
When these big events happen, a lot of of people want someone to walk alongside them so they make good decisions and avoid big mistakes
Your financial situation is getting more complex
You’ve gotten big promotions in recent years and you are making more than you ever thought possible.
Or through diligent saving and investing, you have a sizeable portfolio and the stakes are higher.
Or perhaps you have been at your company for a long time and built up a big, concentrated position in your company stock.
A lot of this is good complexity, but complexity nonetheless.
People hire financial planners when these circumstances get more complex than they want to deal with.
You don’t have the time or the inclination.
Your life is full.
You have 1-2 kids (or planning on it) and probably a dog.
Your job is busy - chalked full of (probably too many) meetings.
After work you’re trying to catch up with friends, get a workout in, or take kids to practice and Chick Fil A.
At the end of the day, you have the option to throw on a show and relax, or do your finances.
If you’d rather watch the show (and that’s most people!), then it might make sense for you to hire an advisor.
I also like two of Ben’s reasons.
One - “You can also let someone else stress about your money so you don’t have to.”
Two - “This stuff can be hard if you don’t know what you’re doing or have other stuff going on in your life that requires your full attention” (see above, or whatever your stuff in life is).
You’ve Made A Big Mistake
Unfortunately, this is one I’ve seen a lot - particularly around stock options and company stock.
You exercised a bunch of options in your private company stock and got stuck with a massive tax bill.
Or you held onto a lot of stock in 2020 and 2021, only to see the value get crushed in 2022.
Or you realized that being more proactive with your stock options could have helped a ton, and now that you’re at a new company, you want to get it right.
Sometimes people realize they need help after a couple big mistakes.
You’re faced with a big financial decision
You just got a great job offer, but you aren’t sure whether you should take it or not, and there’s so much to consider?
Negotiating equity (and equity you might be leaving behind)
If you are leaving equity behind, what do you need to do to maximize it?
Do you need to exercise stock options? If so, what does that look like from a cash and tax perspective?
Are you timing your exit properly? You don’t want to leave too early and miss out on a key bonus or equity vest
If you are evaluating moving from a public company to a private company (or vice versa), how should you think about known (but potentially less upside) equity vs the exciting potential of a private company (but not certain)
How do the benefits compare? Health insurance, 401k, ESPP, and so much more
Or you are thinking about taking some extended time off, but you have so many questions.
How will you pay for this?
Will you still be ok long term?
Is this even a wise decision?
People hire a financial planner to help them work through big decisions like these and make sure they make the wise decision, in line with their goals
Putting it all together
Unfortunately, there’s not one moment where fireworks go off and it’s magically “time” to hire an advisor.
Nor is there a specific income or net worth number that signals its time.
Which candidly can make it tough!
One observation: most people reach out to an advisor too late rather than too early.
I can’t tell you how many times I’ve met with people where I wish they had reached out a year earlier, or even a couple of months!
It’s a lot harder to fix the damage from big mistakes versus doing proactive planning
Or to borrow from Ben Franklin: “An ounce of prevention is worth a pound of cure.”
Small changes over a long period of time lead to big results
Are you a tech professional with equity compensation and you’d like help making big decisions and avoiding big mistakes? Reach out and schedule a free consultation.