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The Advicer

I live in Minnesota and will soon have $1 million — in cash. I need a financial adviser, but the locals I spoke to left me feeling they couldn’t handle me. What’s my move?

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Experts recommend looking for a fee-only financial planner.

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Question: I am in northern Minnesota and will soon have close to a million dollars in cash. I am not 100% sure the best way to invest this. I have spoken to a few financial advisers in the area, but they leave me worried this is over their head. I need help in finding a path for my future. 

Answer: You’re correct to continue your search as it’s important that you feel comfortable with the person who might help you develop and reach your financial goals over the long term. (Looking for a financial adviser too? This free tool can match you to a fiduciary adviser who might meet your needs.)

The good news is that you don’t need a local adviser these days, says certified financial planner Bruce Primeau at Summit Wealth Advocates. Instead, he adds, you can meet virtually. You’ll just want to find a trustworthy, competent adviser with experience in your kind of situation. “My recommendation is to work with an adviser who is a fiduciary for you and can put together a comprehensive financial game plan prior to investing any of those dollars,” Primeau says.

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“My first thought is be careful,” says Relational Money financial therapist Nate Astle. “Unfortunately, there will likely be quite a few people who will be on you when they hear that amount of money.”

To that end, experts recommend looking for a fee-only financial planner because they’re paid directly by the client and they don’t receive commissions for recommending financial products. Furthermore, you may want to seek out a fee-only certified financial planner, as they have extensive experience, have thousands of hours of work-related experience and operate as a fiduciary, which means they’ll put your best interests ahead of their own.

Interview at least three advisers before making a selection too; most will give you a complimentary session and some advice for free. MarketWatch Picks has put together this list of questions you can ask an adviser during the interview process. Note too, that you may also need “someone that has a tax background given that taxes seem to touch everything,” says Primeau.

To start your search, you may want to consult the National Association of Personal Financial Advisors (NAPFA), Fee Only Network, the CFP Board or use this free tool that can match you to a fiduciary adviser who might meet your needs.

What should an adviser do for you?

To begin, a financial adviser should determine your current situation including income, assets and liabilities. “You also need to develop a plan for the money. Is it for retirement, funding education, a new home, the freedom to quit your job? You should also address your investment risk tolerance. Are you typically aggressive or conservative? Based on all of those questions, an adviser will come up with a personal plan to diversify your $1 million dollars,” says Brad Wright, a certified financial planner at Launch Financial Planning. 

You mention that you’ll soon have $1 million dollars, but you don’t say whether it’s an inheritance or a payout from something like a business. “Is it going to be taxed? You need a financial plan before any discussion or recommendations can be made on investing your money,” says certified financial planner John Eaton at Avior Wealth Management.

Depending on whether you need the money to live on or if you’re planning to buy a home or send kids to college will determine how the money should be invested.  Furthermore, in your comprehensive plan, you’ll want to be sure the purpose of the funds is discussed as well as whether or not you have an emergency fund established and what the amount of cash you want to hold in that account. “This is the first step we recommend all new clients consider,” says Primeau.

It’s also important to consider any other assets you have besides the $1 million in cash, like a 401(k) or Roth IRA. “The plan should be a critical starting point as all factors should be considered prior to investing any cash. Plus, you’ll want to work with an adviser that is a CFP as well as someone that has a tax background given that taxes seem to touch everything,” says Primeau.

The most important thing you can do is take action. “One certain thing is that inflation is eroding your future buying power during the time you take no action,” says certified financial planner Andrea Clark at The Table Financial Planning. And as LVM Capital Management certified financial planner Jordan Rummel adds: “Coming into a pile of cash, while fortunate, can be burdensome, so it’s okay to go slow.” 

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