After a shocking survey was released from the National Association of Personal Financial Advisors (NAPFA) about Millennials and Finances, it has become apparent just how desperately millennials need guidance in areas of budgeting, retirement planning and investment strategy. In an interview with iHeartMedia, expert and lead educator for NAPFA Genesis, Stephen Fletcher, CFP®, MBA, contemplates the financial roadblocks hindering his peers, and expresses the impact that the right financial advisor can have on your finances and your peace of mind. Read the hot points below or listen to the full interview here: iHeartMedia Stephen Fletcher Interview.mp3
What are some of the common roadblocks to getting started with a financial plan?Definitely timing is a big one. People do want to try to time the market and they think that there might be a better time to jump in, really what we tell our clients is, "Listen the time is now, because you don't know where the markets are going to go. You don't know what impact the election is going to have on financial markets. So, don't wait, get moving with a plan." I like to tell clients, "The first thing—where you have to start—is know where you're headed. Know your long-term financial goals. Even if long-term for you is just in the next 5 to 10 years instead of for the rest of your life. Know where you're trying to get and put it down in writing and hold yourself accountable. That way you can start to build a plan. You can build a savings target, you can build a budget, even start putting that money to work in the financial markets.
And the next thing that I like to tell people is, "Just take the next step." It's trepidation and waiting and trying to time things properly—that’s where a lot of people get into trouble. And there can definitely be some short-term pain, you get invested in the stock market at the wrong time and it goes down. But if you're not invested for the next year, two years, if you're invested for the long term, it's a little bit difficult from the outset, but you're still going to be able to make it where you're trying to go because of the way that the stock market recovers. Because of those long-term returns that you see. And so, waiting and trying to time it ends up significantly worse than even if you have a little bit of short-term pain. Just go ahead and get moving right now.
Looking at the recent survey conducted by the National Association of Personal Financial Advisors, half of millennials described their relationship with money as stressful. So what's your advice? Just get that plan going and get started?
Yeah, I think what's really important here is that knowledge is power. And a lot of times if you're just trying to do a quick Google search and see, "Hey, this is my situation, what's some good advice?" You're going to get all of the general rules that don't really help you get where you're trying to go. And so that's where we at NAPFA, the National Association of Personal Financial Advisors really feel like we add a lot of value when we can sit down with somebody. Financial planning is not just dollars and cents, it's life planning as well. What drives you? What moves you? What is it you're trying to accomplish? Let's use money to help you get there. And so it's the ability to be able to be really personalized and give you that knowledge that you need, in order to reach your goals. And that knowledge as you become more and more knowledgeable, removes the stress. You feel more confident in taking the next step because somebody else has sat down with you, thought through it, showed you, "Hey, this are potentially some roadblocks, but ultimately this is what the outcome could be." And that knowledge, that confidence helps belay that stress and that worry that a lot of millennials are feeling.
What should we be looking for when it comes to a financial planner?
All NAPFA members are fee only planners and we are held to a fiduciary standard, like you mentioned. Fiduciary means that we have to put the interest of the client above our own. That means we're not going to try to sell you something that's not right for your situation. We are sitting down with you and coming up with the right plan for you and there's as little conflicts of interest involved in that as possible. So NAPFA, the National Association of Personal Financial Advisors, has their website napfa.org which is a great resource just to learn some more about financial planning, and to also find an advisor that is there in your local area. You can search that by zip code or if there's a specific topic, if you're a millennial that has a lot of student loan debt and you want to plan specifically around your student loans, you can search for advisors by topic as well. And you can find the right person to help you with your situation so that you get that knowledge, so that you get confident in your long-term financial plan and ultimately you get where you're trying to go.
For a 20-30 year-old who is just beginning to look into financial planning, what should be their ideal approach to get that plan in place today?
That's where I say, just start with that next step. If right now you're experiencing some trepidation, you don't really know what to do, that next step is first go to napfa.org, from there just reach out to somebody. See if it's the right fit, but don't let that stress, don't let that worry keep you from taking the next step. Because that next step is going to lead to the one after that and you're breaking down what can be a very daunting topic, into little bite-sized achievable pieces. And ultimately that's how you're going to get where you're trying to go.