Plenty of entrepreneurs start businesses in their 30s, 20s, or even teens, with little or no practical experience in managing a business—or its finances.
As a business owner, of course, you can always hire an expert to manage your company’s finances. But what about your own?
This is where a lot of Millennials and Gen Z find themselves: lacking the financial advice and support they need to build sustainable, financially healthy lives. Even if they’re making major financial decisions for their businesses on a regular basis, too often, they’re not giving their own finances nearly the same amount of attention.
Financial advisor Simon Brady, CFP and founder of Anglia Advisors, created his financial advising practice specifically to work with this demographic.
Like any good entrepreneur, he saw a need and filled it. In his case, the need was for objective, expert financial planning and advice geared toward the younger generations. “Many traditional advisors focus on older clients with established wealth and asset portfolios, running on transactional compensation models of commissions and product or insurance sales,” Brady says. “Guidance on other issues that do not earn a significant commission is of no interest, leaving many in the Millennial and Generation Z demographic lacking in knowledge and financial literacy. This can lead to poor and possibly catastrophic financial decisions.”
Here, Brady offers his top tips for Millennials and Gen Z who are working to establish and maintain financial health throughout their lives.
Trust, but verify. Before you commit to an advisor, learn how they’re compensated.
This is critical because there are essentially no rules about what a wealth advisor, financial planner, financial advisor, money coach, etc. can call themselves—even if they don’t have verifiable qualifications. What’s more, there are multiple ways they can get paid.
Unfortunately, it is perfectly legitimate for transaction-based sales people to call themselves advisors while putting their own interests ahead of their clients’. This is akin to someone masquerading as a dedicated doctor while disregarding your health in favor of kickbacks from pharmaceutical companies. You would never accept services from a physician who doesn’t have your best interests in mind, and you shouldn’t with financial advisors either.
The alternative to this model is the same one that Anglia Advisors is built on: fee-only, fiduciary advisors who are paid on project-based per-hour fees or fixed retainers. “100% of their compensation comes from the client, and so 100% of their obligation is to the client—and no one else,” says Brady.
Consult With Experts
Even though we live in the information age, when you can pull valuable financial tips and investing strategies from websites, you will always find more financial success if you consult with an expert. The better your expert understands you, your goals and your financial situation, the better they will be able to help you cultivate financial success. As with anyone in search of expert assistance, Millennials and Gen Z entrepreneurs should go into financial consultations with the goal of finding someone with whom they can work long-term.
As mentioned earlier, finding a fiduciary who is paid on a fee-only basis is a good place to start. Beginning with a strong foundation of trust—where the expert is committed to serving his or her customers—makes it much easier to build a long-term relationship with your financial advisor. This is important because working regularly with an advisor who has a thorough knowledge of your existing finances, short-term goals and long-term goals—and who is invested in helping you meet them—is far more valuable than a one-off planning session.
Start Saving Now
Although the best time to start saving was yesterday, it’s never too late.
“As a younger person, you have the most powerful financial tool of all at your disposal: time,” Brady says. “The human mind has difficulty getting itself around the concept of compounding, but real-life examples abound. The earlier you start, the easier you make things for yourself.”
Entrepreneurs work hard to ensure that their businesses are as financially sound as possible—but often, personal finances can get left behind. Don’t make this mistake yourself. Treat your own finances like a business, and you’ll be on your way to a much more sustainable future, both for yourself and your company.