Nearly half of Americans don’t know who to trust for financial advice. Here are wise ways to get over that and other fears
Most of us can use some financial advice now and then, whether it’s help getting out of debt or advice on planning for retirement. Yet fear keeps many Americans from seeking the help they need, experts say.
It’s the “same kind of fear that people have when they think about going to the doctor or the dentist,” says Mike Sullivan, chief education and operating officer with Take Charge America, a credit counseling organization in Phoenix. “They assume that there is going to be some level of unpleasantness.”
While some fears might be justified, your financial situation won’t improve until you take action. Here are some of the top fears financial experts see and solutions for moving past them.
Fear 1: What the financial professional will think. Many people stop short of getting help because they don’t want to share their financial missteps with a financial professional who they assume is very wise about money, says Maggie Baker, a psychologist and author of the book, “Crazy About Money: How Emotions Confuse Our Money Choices and What To Do About It.” They’re afraid they will be judged and scolded for bad financial behavior.
Solution: One way to overcome this fear is to ask a potential adviser how many clients they’ve seen in their career. If it’s a high number, chances are your situation won’t be the worst one they’ve seen. Financial professionals “see people who are out of control with their finances all the time,” says Baker. As bad as you might think your situation is, it’s probably par for the course.
Fear 2: What friends and family will think. Like many Americans, Tiffany Bradshaw, a marketing strategist in Los Angeles, experienced financial difficulties during the recession. Though Bradshaw wanted to seek financial advice on handling the cash crunch, she didn’t want colleagues, friends and family to think badly of her because of her struggles.
Solution: If you don’t want others to know, simply don’t tell them. However, sharing your challenges with someone you trust could ease your fears by showing you that you’re not the only one who has insecurities about money, Baker says. You also can take creative steps to keep your private life private. For example, Bradshaw met with a financial professional located about 30 minutes away, just far enough that it was “outside of my social circle,” she says.
Fear 3: Your hidden financial truth. Some people know they’re having a tough time but they have no idea how dire their financial situation is. While ignorance may be bliss, you can’t stay in the dark about your financial problems when you seek financial advice. The financial professional “is going to say, ‘Where are the numbers?’ and numbers don’t lie,” says Baker.
Solution: Open those bank and credit card statements and add up your assets and liabilities. The truth may sting, but “the best motivator is pain,” says Sullivan. “You finally get desperate enough to call for help.”
Fear 4: Change. Many people know their budget isn’t working, but they don’t really want to get rid of cable or make the sacrifices that a financial professional might ask them to make. “A lot of times people go through the counseling and we say, ‘Here’s your new budget,’ and they say, ‘I don’t know if I can do that,’ ” Sullivan says.
Solution: Focus on your desired outcome. Imagine taking an early retirement or paying no interest charges or having no calls from collection agencies.
After people make the changes they need to make they realize it was worth that little bit of suffering because they feel so relieved.
|— Mike Sullivan|
Take Charge America
“After people make the changes they need to make they realize it was worth that little bit of suffering because they feel so relieved,” says Sullivan.
Fear 5: You can’t afford it. Forty percent of Americans think good financial advice costs more than they can afford, according to a 2013 Financial Advice Survey by TIAA-CREF. Those experiencing financial difficulties can be particularly hesitant to seek help because they think it will put them further in a financial hole.
Solution: Credit counseling is free when you go through a nonprofit organization accredited by the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Other types of financial advice may come at a cost, so shop around to see if your assumptions about price are correct.
Fear 6: Getting ripped off. Stories of greed and corruption such as the Bernie Madoff scandal have unfortunately given the entire financial services industry a black eye.
“A lot of people think that anybody in this business is probably out to get them,” says Sullivan. Indeed, the TIAA-CREF survey found that 48 percent of Americans said it’s hard to know what sources of financial advice to trust.
Solution: Do your research. Ask potential financial advisers if they have a fiduciary duty to their clients, “meaning are they obligated to put the client’s needs ahead of their own,” suggests Elizabeth Buffardi, a financial planner based in Oak Brook, Illinois. If you’re concerned about financial advisers pushing certain products, consider a fee-only planner, like Buffardi, who doesn’t receive commissions based on financial products you buy. Before you give anyone money, do a Web search and check with the Better Business Bureau to find out if there are complaints and if the company is reputable.
Once you get over your fear and meet with someone, don’t be afraid to walk away if the relationship doesn’t feel right.
“Trust your instincts,” says Baker. “Even if you’re feeling vulnerable, you know whether you like somebody or not.”
See related: Financial experts reveal their worst money advice, Money experts give advice to their younger selves