There’s a common myth that financial advisors only work with people who are later in their careers and have amassed significant financial assets. Kris West and Bryan Kulp, Financial Advisors with Addison Avenue Investment Services, challenge that idea. Based on decades of experience working with technology professionals, they say that the best time to start consulting with a financial advisor is right now—at whatever stage you are at in your career.
Consultations earlier in your career can be some of the most crucial and impactful conversations of your financial life. Here are several top reasons why and lessons you can learn from sitting down for a consultation with a knowledgeable financial advisor.
Build a solid foundation of money knowledge
Addison Avenue Financial Advisor Kristopher West says the number one issue he sees with people at the beginning of their careers and beyond is they lack a solid foundation of knowledge and behaviors involving money.
“We all take a lot of our money cues from our parents,” West explained. “If we had some good examples and training, that's going to set us on a decent path. If we've had some less-than-stellar financial examples growing up, that's what will carry forward. Once we start earning more money, it will only amplify our good or bad behaviors.”
West’s colleague Bryan Kulp agrees, and he notes that this can be especially true for people relocating to the U.S. from other countries. Money habits and beliefs ingrained in childhood could interfere with getting the most from the opportunities of a tech career.
“I've had people that relocated to the U.S. who just consistently sell their stock. They wipe everything out because, based on the culture they grew up in, they feel they need to get a house free and clear. Obviously, hindsight is 20-20, but if you sold all your company shares at $40 or $50 and now, they're at $430, you’ve missed out on a lot of wealth-building potential. They didn’t necessarily need to take that pathway to get a home,” said Kulp.
Be SMART about your goals
West and Kulp say that some of the most important things they do in initial conversations are to provide basic financial education and help people identify their financial goals.
“When you're starting out, you might have grandiose goals and five different priorities. I’ll start out by asking what do we need to do before that?” said Kulp. He uses his experience advising clients in the tech industry to help guide them toward thinking strategically about their goals.
“I encourage people to be honest with themselves. Be honest with their goals,” he said. “The whole SMART goal thing. Do you think you can accomplish that goal? Is it measurable? Do you make enough money to achieve it? Is the math going to work? What rate of return do we need to make to reach the goal?”
A SMART goal is one that’s based on a proven set of traits:
- Specific: The goal is clearly defined.
- Measurable: Has criteria for measuring and tracking progress.
- Achievable: Is realistic and attainable.
- Relevant: Is worthwhile and aligns with other relevant goals.
- Time-bound: Has a deadline.
A financial advisor can also be a great sounding board to help you talk through your dreams and goals and get a clearer view of how to achieve them. Kris West recounted how one ambitious young client came to him with the goal of hitting an extremely high net worth on a very aggressive timeline.
“We took a step back, and I had him tell me more about this aggressive goal. As we dug into it and uncovered the layers, it turns out he wanted to have the ability to impact the world in a significant way,” said West. West’s questions revealed that client estimated he’d need that much to start a company that could work on big spaceflight-related challenges the way that SpaceX and Blue Origin do.
“We ran through the numbers, and found he’d have to get something like a 67% rate of return without taxation over that timeframe … I'm not saying it's impossible, but it's pretty unlikely.” Further discussion identified a blind spot the client didn’t realize he had. His audacious goal to start a world-changing company arose from observing that was how people like Elon Musk and Jeff Bezos approach big challenges. He never considered that the more direct and achievable path to his personal goal would be to join one of the companies filled with other smart people already working on solving the world’s toughest problems. Which is what he did.
Set your financial GPS
Once you’ve determined your goals, Bryan Kulp says the next step is to lock what he calls your financial GPS on to that destination. “By understanding what your goals are, you can actually relax and make a good game plan that you can track and monitor and work towards,” he said.
The earlier you set this GPS, the better. That way you have more time to take advantage of the incredible snowball effect of compounding.
“A wise man learns from his mistakes, but a genius learns from others’ mistakes. Our goal is to make sure that the people who work with us become geniuses,” said West.
Unfortunately, for many, their first lesson in compound interest is how quickly a credit card balance grows as it charges interest on the accumulated interest in addition to the borrowed principal. However, when compounding is turned around and applied to investments, the ability to earn gains on previous gains becomes a wealth-building tool that only gets more powerful over time.
“A wise man learns from his mistakes, but a genius learns from others’ mistakes. Our goal is to make sure that the people who work with us become geniuses.”
– Kristopher West, Addison Avenue Financial Advisor
Understand your benefits
Technology companies offer their employees some of the most competitive and rewarding benefits around. One of the first things West and Kulp do with new clients is help them go through their company benefits and understand how to get the most out of them. They find that a surprising number of the people they talk to are not taking full advantage of their benefits.
“Benefits are complex these days,” said Bryan Kulp. He often receives requests to help analyze complicated benefit packages that include things like stock incentives requiring multi-step planning. “I’ll sit down with them for half an hour and tell them what I recommend based on their goals. Some of my best clients today are folks that just wanted to understand their benefits.”
Make mid-career adjustments
If you set financial goals and your GPS earlier in your career, periodic discussions with your financial advisor will help you track your progress, assess your priorities and make the adjustments you need to stay on target.
Bryan Kulp notes financial conversations become more difficult the longer someone waits to get started. “It's the same initial conversation. It's just delayed. If somebody's never started the race and they want to start the race 10 years or 15 years later, they still have to start at the beginning. It's just harder when you start later because you've got habits that are entrenched. … Now, we need to either prioritize goals or eliminate goals. Because you can't support everything if it's getting too late.”
“If somebody's never started the race and they want to start the race 10 years or 15 years later, they still have to start at the beginning.”
– Bryan Kulp, Addison Avenue Financial Advisor
A big mistake West and Kulp see at this stage is people dipping into their supplementary retirement investments to pay for their kids’ college. When they do that, they can end up needing to work longer before they can retire.
“You can borrow for college. You can’t borrow for retirement,” West pointed out. An experienced financial advisor can help you identify strategies for paying for large expenses that don’t set you back on your retirement path.
“I think a lot of people think that an advisor is just going to cost them money. A skilled professional can help enhance your life and put you in a better place with more stability and control,” he concluded.
Wherever you are in your career, professional insights from a financial advisor can help accelerate your financial journey. First Tech Federal Credit Union members can schedule a no-cost consultation with an Addison Avenue Financial Advisor here.
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, marketed as Addison Avenue Investment Services and are not insured by any credit union insurance, the NCUA or any other government agency, are not deposits or obligations of the credit union are not guaranteed by the credit union, and are subject to risks, including the possible loss of principal. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. First Tech Federal Credit Union and the Addison Avenue Investment Services are separately owned and operated and not independently registered as broker-dealers or investment advisers.
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