Which would you rather hear from your financial advisor?
This? "Retire at 45? Sure! Let's make it happen!"
Or this? "There are two ways to realistically achieve your financial goal: Increase your annual savings 25% (cutting your spending, downsizing, or other means), or add five to 10 years to your time frame."
The "no-problemo" approach is certainly easier on the ears and ego. But five, 10, or 20 years from now who are you going to thank -- the advisor who spared your feelings or the one who spoke plainly about what it would take to set your finances straight?
Tough love is so hard to find
Fudging the truth is fine when discussing your best friend's new hairdo, nephew's orchestral debut, or delicious pot roast your in-laws served. But in matters of money, you should seek nothing but the whole truth from any financial professional you hire. That is, if you can get it.
Brutal honesty can be bad for business. What paid professional money advisor wants to tell a potential client that their finances are a disaster and their dreams are way out of whack with reality? So instead they opt to pussyfoot around the problem, try to "solve" it with inappropriate recommendations that only enrich them, or discuss the reality in such couched terms that the customer fails to get the message. (Is your advisor lame? Here are five ways to tell.)
Sheryl Garrett, financial planner and founder of the Garrett Financial Network, has no problem telling it like it is. Whether she's calling out her industry's shortcomings (Garrett has testified on the Hill about predatory lending regulation, financial literacy, and Social Security reform) or addressing an individual's most sensitive money concerns, you can count on her candidness (tempered by her Midwestern manners, of course). Her outspokenness gets results and has landed her a spot on Investment Advisor magazine's "Top 25 Most Influential People in Financial Planning" for four straight years.
Who better, then, to provide a reality check for the rest of us?
Listen up, America: These are harsh truths you need to hear
In 2006, our resident retirement expert, Robert Brokamp, sat down with Garrett to talk about the biggest money mistakes that people make. Her advice still rings true and is perhaps even more relevant in today's economy. Here are excerpts from the conversation.
1. You'd be better off spending your money than investing it with me
"The most significant asset most of us have is our ability to earn an income. The conventional financial services mentality focuses on protecting that income with life insurance and disability insurance. But what about investing to further your earning potential? Why about investing in job coaching or career training? This is a conversation that should come out of the financial planning process.
"A woman in her mid-50s approached me at a book signing and said, 'I have got about $55,000 and make just $13,000 a year. What should I do with it to help me to be able to retire in a few years?' So I found out more about what she is doing right now, and come to find out she is working in social services, really in a part-time capacity, and she'd love to do more. I said, 'What would you really like to do in life?' She said, 'I have always wanted to be a nurse.' So we ran the numbers and came to the conclusion that the best investment she could make with that $55,000 would be to spend it on a nursing degree -- to invest it in her career and her earning potential and her love and passion. Now the woman has a higher income and a new career she can enjoy well into traditional retirement age."
(Are you in a similar predicament? Find out what options you have in "Oops, I Forgot to Save for Retirement.")
2. It's either your kids' dreams or yours. Sorry kiddos
"The majority of baby boomers don't have their own financial situation in good enough shape to be paying for kids' college. Yet so many parents pledge to their children, "Hey, if you make the grades and get in, mom and I will take care of paying for college.' And there is nothing like breaking a promise to your child to break your heart. But, for the sake of the rest of your financial household, you need to make sure to take care of yourself first.
"There is no such thing as financial aid in retirement. I encourage parents to strongly consider having Junior take out loans (and if you need to take out loans ... to cover the tuition, that's fine, too). And there is nothing at all wrong with junior college or a state university. In most professions, what matters is having a degree -- not where it's from."
(Don't feel guilty about putting your needs first. "Should You Save for College or Retirement?" points out how everyone's better off if you take care of No. 1 first.)
3. You are going to die. Deal with it
"Getting a will done is probably one of the easiest things to procrastinate on because we would like to think we won't need it for a long, long, long time. Plus the concept of estate planning feels negative.
"Well, quit being ignorant. You are not invincible. When death occurs, it is a very, very traumatic thing on the surviving family. Don't make it worse by not taking care of your financial affairs ahead of time.
"Estate planning is a gift that you give to your loved ones. So give your spouse and family members the gift of taking care of things like life insurance, wills, beneficiary information in advance. Take the financial and emotional burden off your family and your survivors. If you don't, you are going to put them through living hell at some point in the future."
(Are you prepared to die (paperwork-prepared, that is)? See "How Not to Be a Burden to Your Family" to give your loved ones the gift of peace of mind.)
Ready to listen? Get straight talk from a Garrett pro
Just as refreshing as Garrett's straight-talk advice is her approach to financial planning. She started the Garrett Planning Network in 2000 to offer an alternative to the conflict-riddled, commission-based field of financial advice. The Garrett model of pay-as-you-go, as-needed financial planning advice gives customers the option of seeing a financial planning pro once, periodically, or on an ongoing basis.
We've lined up a limited-time special offer for Motley Fools: a complimentary "Get Acquainted" meeting (over the phone or in person) and a 10% discount for new clients. Find an advisor in your area and look for The Motley Fool icon.
Want more scoop on what your advisor won't tell you? You'll find three more scary things right here.
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Dayana Yochim sent her parents to Garrett Financial Network nearly a decade ago to get their important papers in order. No, they didn't write her out of the will for making the suggestion. They thanked her. The Fool's disclosure policy does not mince words.