Financial Advisors - The Primer Part 2
If you've ever changed jobs, you probably remember getting a thick packet of information filled with jargon and IRS legalise imforming you of your options regarding your former employers 401(k) plan. Just for fun, there are plenty of dire warnings about tax consequences, and the inability to change your decision later.
The ballooning cost of a college education with the ballooning student loan debt that accompanies it have many parents worrying about how their children will be able to pay for college.
Home prices have grown so high that saving 20% for a down payment is a pipe dream for most Americans. Add in the fact that more people than ever are starting their own business and the need for financial advice doesn't look so lean any more.
Where do you turn for help with these and other complex financial issues? A financial advisor or financial planner, of course.
A Little History
In the 1990s with more Americans than ever investing in the stock markets via their 401(k)s there emerges a greater awareness of money and wealth. Although the middle class has always strived for wealth, the path has always been being promoted up through the ranks, or starting your own business. Now, a new awareness emerges of an age old concept. Money itself can make money. By saving and investing, one can grow to wealth without the traditional paths.
People start noticing that they have more money than they ever considered in their 401(k) accounts. As companies change to cash value retirement accounts, employees start to recognize how large of chunk of money the formerly black box of a monthly pension represents. The last pieces of the puzzle to fall into place are the rise of the Internet and the Microsoft secretaries.
The release of Windows and the subsequent story that even the Microsoft secretaries were now millionaires thanks to their stock options whetted the appetite of America for not just investing, but for quick (or reasonably quick) wealth. Investing in stocks once meant a sizable commission and a minimum 100 share commitment, not to mention a potentially intimidating appointment with a blue suit wearing stock broker. However, with online trading companies offering $20 trades and no minimums it became possible to buy 8 shares of AOL stock or whatever struck your fancy with that extra $800 that was burning a hole in your savings account.
Pretty soon, no one needed a stock broker. Still professionals who knew the complexities of finance were still necessary. And so, the financial advisor is born. Soon, all kinds of people are calling themselves financial advisor.