Similar Value Systems: This advisor will be advising you on what the best course of action to take is on your finances. This is not something to take lightly. They will be your good friend giving you the advice you need to hear. However, through my work, I’ve found that people have different ideas of what is most important to them and how they would like to use money to achieve those means. It’s important to make sure that your advisor has a good understanding of what is important to you.
As part of our series about what one should look for when hiring a financial planner or adviser, I had the pleasure of interviewing Stephanie Hammell. Stephanie Hammell is a Wealth Advisor through LPL Financial, the largest independent broker-dealer in the nation (as reported by Financial Planning Magazine, June 1996–2018 based on total revenue). She specializes in financial planning and investment management for individuals as well as corporations, and has been cited in the Wall Street Journal, U.S. New and World Report, and Yahoo! Finance on those topics. Stephanie has worked with organizations on educating and incorporating value systems within investor portfolios and management strategies. She was invited to a Forum in 2019 at the United Nations Headquarters in New York to collaborate with the UN on the Sustainable Development Goals (SDGs) and is attending to further progress on sustainable and impact investing and incorporate it with investor values.
Thank you so much for doing this with us! Our readers would love to ‘get to know you’ a bit more. Can you tell us a story about what brought you to this specific career path?
At a young age, I came to the realization that money is a resource and an integral part in all of our lives. I saw my parents struggle with making bad choices regarding their money. This was very stressful for them due to the big impact it had on our future. I became a strong believer that by managing that resource well, we could 1) keep it safe and secure 2) make more of it and 3) influence others with it. When we gain control of how to best use our money effectively, we are then also able to better the world through it. We can support positive impact organizations while reaping tax and other financial benefits, and we can choose to invest in companies that have sustainable practices in mind. The power is in our hands as investors on how we want to change the world with our money while growing it for ourselves. I love the empowerment that comes with that.
Can you share a story about the most humorous mistake you made when you were first starting in the industry? Can you tell us what lesson or take away you learned from that?
When I first started, I made the mistake of assuming that the expenses that clients told me they spent were actually what they were spending. You say you’re spending $3,000 a month? More like $10,000! What I’ve found is that people tend to underestimate the amount they spend on not only living expenses, but also on discretionary items and services, travel, maintenance and other unplanned, irregular expenses.
This taught me that many of the habits we form with spending are unconscious. It’s like using your phone and spending your time, and not knowing how much time you spend on each app. Accounting for it all is difficult because it’s such an automatic process for us. Thankfully we now incorporate software that breaks down client expenses into categories so we can compare what the client feels they are spending to what that number really is.
Are you working on any exciting new projects now? How do you think that will help people?
I am actually working with our investment partners to increase the sustainability of portfolios through ESG investing. ESG (environmental, social and governance) refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business, along with financials. Investing in companies that have a positive societal impact not only gives the investor the power to make a difference through their investments, but it also leads to widespread change by financially supporting companies that impact the world for the better. Values are the centerfold of who we are; they define us. Your life is personal to you, so your financial decisions should be as well. I’m very excited to continue my work at the United Nations Headquarters in New York to further progress the inclusion of investor values through sustainable and impactful investing.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Is there a takeaway or lesson that others can learn from that?
Early on in my career, I would take on cases advising people of all paths and situations. Then I started to segment my client base and was able to recognize where my greatest strengths in expertise were. This allowed me to provide the best service to a select group of people with specific financial challenges that I knew in and out, specifically when it came to tax reduction strategies for business owners, protection of capital as well as impact investing. Business grew because others knew what my focus was on and my time opened up because I stopped entertaining topics outside of my immediate expertise. This made my process more efficient and I found that I better met the specific needs of those individuals.
In anything in life, it’s good to have a basic understanding of several things; however, to truly excel and be the best in an area, it needs to be focused on.
What three pieces of advice would you give to your colleagues in the finance field to thrive and avoid burnout? Can you give a story or example?
1) Practice what you preach. If you tell someone they should do something- then do it yourself. When you invest in what you recommend, you have a sense of relief knowing that you have your own skin in the game, and you are confident in your choices. You are more aware of how those investments operate and what their current state is. This saves time and gives you confidence, avoiding stress and burnout.
2) Be Balanced. Not only does balance matter when allocating assets to minimize risk, but also in managing professional and professional aspects of your life. The purpose of building wealth is to create security and allow for the ability to accomplish your dreams. I find that this often involves loved ones and personal aspirations. Given that your professional life is actually used to improve your personal life, it only makes sense that you spend sufficient time and focus on your personal life. When you are with friends and family- be present. Not only will those moments be more significant to you, but you will come back to work feeling refreshed and ready to bring that practice you preach to other’s lives.
3) Time-block. I started taking time-blocking seriously. I would find myself spending all my time on servicing current clients, and there always seemed to be more work to do. I would end up feeling that I could never get around to business building activities. Once I started to intentionally block out 20% of my time out for business building activities, I began to make headway. Chipping away small chunks of this at first seemed insignificant, but like the saying goes- Rome was not built in one day. Given the success of this tactic, I then did this for several other activities, including answering emails, responding to calls, and having specified times set for meetings to name a few. Planning this way I thought at first would limit me given the stricter schedule, but I’ve found that it’s made my time in each of those areas more productive.
Ok. Thank you for all of that. Let’s now move to the core focus of our interview. As an “finance insider”, you know much more about the finance industry than most consumers. If your loved one wanted to hire a financial advisor (not you :-)), which 5 things would you advise them to find out about before committing? Can you give an example or story for each?
1) Similar Value Systems: This advisor will be advising you on what the best course of action to take is on your finances. This is not something to take lightly. They will be your good friend giving you the advice you need to hear. However, through my work, I’ve found that people have different ideas of what is most important to them and how they would like to use money to achieve those means. It’s important to make sure that your advisor has a good understanding of what is important to you.
2) Fees: I know that fees are a common one that might be mentioned, but it’s one of the most crucial parts of choosing a good financial planner. There is commission costs vs. fee-based products and services, and it is important you clarify with your financial planner in the beginning of the conversation what you can expect from each investment. Although insurance tends to be commission based across the board, you have options for other investments like your mutual funds and ETFs. Commissionable up-front charge products are generally intended to be bought and held for an extended period of time, and if not, it can be an abuse of costs to you. In the case that you will be trading more frequently, fee-based planning, where your fee gets deducted from your account annually, may be a better option as lower cost with more flexibility. Fee-based (which includes offerings of commissionable products) and fee-only advising can also be a more ethical approach to pay for your service.
3) Focus: It’s important to ask your advisor what financial aspects they focus on. There are many different parts to a financial picture, including but not limited to investment management, estate planning, tax planning, retirement planning and college education planning. An advisor could focus on one of these areas or may offer comprehensive services. It’s important to be clear what you are getting when you sign up and whether or not you need to bring on multiple advisors with specializations or go with a comprehensive one.
4) Knowledge: It’s important that you make sure you hire an advisor who knows what they are consulting on. Someone could be licensed but not stay up to date on new tax and financial laws that come into play. It’s like going to a doctor. Some doctors are great and you would rave to all your friends about them, and then some you leave having a negative experience without much help and advice on how to get better. You should ask your advisor prior to working with them how many years of experience they have, what education requirements they have met (and continue to meet) and what higher education and degrees of specialization they have. One designation to look for is the Certified Financial Planner® (CFP®) designation. These professionals have met rigorous standards and have more extensive training and education than most financial planners. The CFP® mark is recognized as the highest standard of excellence in the financial planning industry. Less than 20 percent of financial advisors hold this title, which will give you greater confidence that they know their stuff. CFP® professionals have knowledge within the areas of financial plan development, tax planning, employee benefits and retirement planning, estate planning, investment management, insurance, professional conduct and fiduciary responsibility. With certifications like this, advisors are required to continue to stay up to date in education, and therefore are constantly up to date on what’s best for you.
5) Clean Background History: You can go to BrokerCheck on the FINRA (Financial Industry Regulatory Authority) website which will give you information regarding if the advisor has any prior complaints from clients on file. You are trusting this person with your nest egg so you want to make sure that they have good morals while managing that money. The oldest saying in the book is trust actions not words. Your potential advisor may say wonderful things, but looking at their past conduct will show you how they actually practice and what they value. If you are seeing complaints on their record, it’s a serious sign to walk out the door and look elsewhere.
I think most people think that financial advisors are for very wealthy people. This is likely not actually true. Can you explain who would most benefit from hiring a financial advisor and why? Can you give an example?
The people who would most benefit from an advisor are those that need a plan to best save for retirement, and once in retirement, how to best withdraw income from those assets to maximize the time those assets will last. For example, at our firm, we focus on helping clients in their retirement years diversify their assets into segments with different risk levels so that if a downturn in the market were to occur, they would be unaffected financially. Knowing which assets should be more exposed for further growth and which should provide stable income now is where an advisor can be helpful.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
In a circle, there are many parts that make the whole. The same goes with those who have helped me achieve success. It’s difficult to choose just one because there have been several people who have helped me get to where I am now. I’m grateful for every single one of them because they each contributed a piece of wisdom on my journey that helped me get to the next step.
In the beginning of my journey, I worked for an advisor who inspired and motivated me to become an advisor myself in the first place. He played a major role there. Without his part, I would not be here in this profession today. Then I had other colleagues that I would bounce work ideas off of who shared their wisdom of what worked for them. I implemented what they told me and took another step in the right direction. My clients have helped me achieve success because through working with them, I was able to see where my strengths were, as well as areas of planning that I could improve to better assist them. And then of course my family and significant other, who when I struggled through hard times on the job and was at my weakest, pushed me to keep going and remember my goal. Each of these people played a monumental role in getting me to where I am, and I couldn’t have done it without each of their contributions.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I would inspire a movement that would show people how much the value of their dollar can positively change, not only their lives, but also the lives of others. Using that dollar and building upon it for their own security, while also using that dollar to fight for causes that improve our society’s well-being can make a large positive footprint. We can make a movement by investing in social good and environmental focused companies through topics like gender diversity, climate consciousness, water conservation, prevention of animal abuse, and improvement of healthcare — many of which can also provide a tax deduction, and all of which can make you money. I call that a twin-win!
How can our readers follow you on social media?
Thank you for all of these great insights!