YOYO finances

Resources are limited. That’s the basic truth that Atlantic writer Theodore Ross addressed in a recent article about why it’s hard for parents to calm down when it comes to raising their kids. He says, “Anxiety around childrearing originates from “America’s YOYO (You’re On Your Own) parenting world.” Continuing, he says, “It may take a village—but only if we're talking about one with barbed wire fencing encircling the huts, crappy afterschool care, astronomical college costs, and no one to mind the goats in the afternoon.”

Borrowing from Ross, I think most parents feel they are living in a YOYO financial world as well. I know I do. At one point, childcare for our family cost more than our mortgage. Retirement benefits are leaner than they once were, and college costs—well, Ross is right about prices in the stratosphere. No wonder most of us fall short of meeting our financial goals; the money runs out long before our needs, wants, and desires are met. 

Wouldn’t it be nice to find someone who could nimbly navigate our money lives and fashion a workable plan? 

Finding a financial adviser is one of the most common questions I’ve received in my 10-plus years covering the money beat. There’s no shortage of advisors, but finding one that you can trust, one that understands your particular situation, and wants to work with possible limited means can be challenging.

So where to begin? Here are some thoughts:

Do you need an adviser? There are some items on everyone’s to-do list that can be accomplished without the help of an advisor, especially these days when it seems like there’s an app or calculator for most every financial task. 

For example, we can all:

  • Check our free credit reports each year at freecreditreport.com to look for any mistakes or fraud on our credit record
  • Add up the amount of credit card debt and other consumer debt we have 
  • Sign up for whatever workplace retirement fund is available, making sure to save enough money each month to take advantage of any corporate matching funds
  • Track our mindless spending using an online personal financial management tool like Mint.com. Most banks have such a tool too. 

Tackling that list is not always easy. Like a personal trainer or a diet coach, a financial planner can squelch the inertia that keeps many of us from accomplishing our goals. For busy families with plenty else they want to spend their time doing, working with an adviser can free up precious minutes, or provide a sounding board to prioritize goals and alleviate “what-if” worries.

Pinpoint your main purpose. Once you’ve decided to get help, you need to figure out whether you want to work with a financial adviser on a long-term or per-project basis. Do you want a comprehensive financial plan that leaves no question unanswered? Someone who will manage your investments for life? Or, do you want the answer to a single question: like how much to save for college per child or whether you have the right mix of investments in your retirement plan? 

Figure out compensation. All financial advisers get paid. No one can give out loads of free advice and also make a living. But it can be confusing to figure out how a financial planner gets paid. Some are paid a fee based on a particular project. Others charge a small percentage: for example, –1% of assets under management on the amount of money you’ve given them to invest is fairly standard. Yet others are paid a commission earned for selling a certain type of investment or insurance. And of course there are those who are paid a mish-mash of those compensation types. There are pros and cons to each method, but the bottom line is that a good adviser will be explicit about how they are paid. 

Determine their designations. CFP, CFA, CLU, CDFA.  There are scads of professional designations that can accompany an adviser’s name based on education, training, and experience. Many professionals consider the CFP, or certified financial planner, to be the gold standard. Whatever the designation, find out if the adviser is a fiduciary 100 percent of the time, which means they put their clients’ interest first, no matter what. FINRA.org has a handy list of designations on view.  

Ask a lot of questions. Don’t worry about making the adviser feel uncomfortable or seeming to be distrusting. In the post-Bernie Madoff era, advisers should expect potential clients to be inquisitive and be prepared to show investors proof of education, fees, and a decade’s worth of disciplinary history if prompted.


Kara McGuire is a personal finance writer and a St. Paul mother of three. Send comments, questions and story ideas to 
kmcguire@mnparent.com.