Planning a Wedding that Doesn’t Destroy Your Financial Future

Dear Pete,

I am a loyal reader to your column and podcast. I find myself thinking a lot about the topics you discuss, but failing to act because I feel wary of trusting a financial adviser with my hard earned money.

I am 28 years old and have just over $20,000 in savings. I want to invest some of this money but am also getting ready to plan a wedding. I have heard that the average American wedding costs about $36,000. That is crazy to me! My parents are unable to help with wedding costs and my fiance and I have no desire to spend anything close to an “average” wedding.

  1. I was wondering if you have any tips on planning a wedding on a budget?
  1. Do you have any tips on the best way to develop trust with a financial adviser or recommended research when trying to find an adviser to make me feel more comfortable?

I don’t want my fear to lead me to miss out on planning for a successful future and retirement!

Thanks!

S.C.

$72,000,000,000.00

That’s right, $72 billion. In 2016, it is estimated that the wedding industry generated a nearly identical amount of revenue as Target ($72 vs $73b). That’s a bunch of money. People love their weddings and aren’t afraid to spend absurd amounts of money on them. And, I’ve seen the same statistics you have. $36,000 for a ring, wedding, and honeymoon seems, um… silly, if I’m being honest. So, dear reader, if you’re someone who plans on having the “wedding of his/her dreams” and that means sparing no expense, be prepared to look for a gift receipt so you can exchange this post for one that suits you better.

The most common cause of wedding budget bloat can be tied back to one factor: your guest list. That’s right. All those friends and family you want to (or are forced to, in some cases) invite to celebrate your big day cost you money. More people means you need a bigger venue for the wedding and the reception. The guests will probably want some food at the reception, and you may or may not want to provide them with drinks. And cake! We can’t forget the cake. You’ll need more cake, too. And, you’re going to need to send all of these guests invites, by the way. If they RSVP and show up to celebrate with you, you’ll want to send them a thank you card. (That’s two rounds of postage, remember.) I’m sure you see where this is going. A bigger guest list means more expense and consideration for nearly every category in your wedding planner. So, without further delay…

1. Smaller is Cheaper – Create your guest list. Then, trim it by 10%. Then, trim it by another 10%. Keep going until you’re still comfortable and can’t reasonably trim any further. Each reduction in your guest list will pay off by keeping money in your pocket.

2. DIY Solutions – Consider making or borrowing as many things as you can. Invitations and thank yous? No problem. Centerpieces for tables at the reception? You’ll come up with something to make Martha Stewart nod with approval. Don’t be afraid to get creative and truly make parts of your wedding your own.

3. Flower Down – Flowers are unbelievably expensive. Sure, they’re beautiful, but their expected lifespan rivals that of a carnival goldfish. You’re not taking either of them home and expecting years of enjoyment and memories. If having a bunch of pretty flowers is important to you, maybe you could consider getting married at a local park or botanical garden where they’re naturally included in the venue?  

4. Food and Drink – If you’re looking to save money, avoid serving a full meal. Consider appetizers and dessert. Or, maybe even just dessert. Additionally, if you’re going to have a bar, limit what you’re going to pay for. Beer? Wine? Maybe everyone gets one drink on you and your new spouse? Serious damage can be done at an open bar, both to reputations and wedding budgets.

At the end of the day, S.C., it won’t matter if you have a big or small wedding. An expensive or inexpensive wedding. You’re going to be married. As long as that happens, the rest of it is just details.

Now, with possibly the oddest (and most clumsy) transition in my blogging career, here are my thoughts on developing trust with financial advisors. Trust comes for most people through developing a relationship with another person. A relationship with a financial advisor (or a number of other professionals) doesn’t typically lend itself to a long development period, so sometimes you feel rushed into making a decision on if you want to be in a relationship with that person. What can you do to try and enter into that first meeting with more information than just the advisor’s name?

First things first, develop a list of potential advisors you’d like to meet. Ask friends and family who they work with. Ask them why they like them and if they think they might be a good fit for you. Go search for advisor candidates on XYPlanningNetwork.com and NAPFA. Learn about each advisor and what type of client they typically like to work with. Check out their website. Read their blogs. Find their social media and watch it for a while. Does the message they communicate resonate with you? Do they have a vibe and does it make you comfortable? Watch them from the outside for a while, then pare down your list to people you want to reach out to.

Once you schedule a meeting, be prepared to answer questions about why you’re there and what you’re looking to achieve with the advisor’s help. However, be prepared to ask questions, too. Once you start getting answers from the advisor that gives you more insight to them and their practice, you’ll be able to better discern if they’re a good fit for you.

“What questions should I ask?”

Don’t worry, I’ve got you covered. Here is a short list of 5 questions you should ask a potential advisor. Print it out. Take it with you. Make notes on it. Keep a file for each advisor you meet with so you can review it later.

  • Have you helped other clients in situations similar to mine? If the advisor has helped clients similar to you, ask them about the decision-making process they went through to get a feel for how your relationship may proceed.
  • How do you get paid? The most common ways are: Fee-based (you’re typically charged a percentage of
    your assets), Flat-Fee (you’re charged a fee each quarter for being a client regardless of your assets), Commission (the advisor is paid based on the products they sell you), Hybrid (the advisor will collect fees and be paid a commission). There should be no stammering or double-talk. It’s a straightforward question.
  • How much access do I have to you? How many times will you meet with the advisor each year? Will you meet with them personally, or with one of their staff? How promptly should you expect your phone calls and emails be returned?
  • What does “fiduciary” mean to you and are you one? Fiduciary is a fancy word for an advisor that is bound to look out for your best interests, first and foremost, regardless of any compensation they may earn with their advice. If the advisor isn’t a fiduciary, please know they are not legally bound to look out for your best interest.
  • How am I to evaluate your effectiveness? You’ll need an objective way to help you decide if your advisor is earning their compensation. Ask them how they think they should be held accountable and how those things will make a difference to you. This might be the most important question on this list.

Again, these questions will just get you started. Feel free to follow any line of questions further based on the advisor’s responses. If at the end of the meeting you feel that the answers provided were good, but you just didn’t think the communication was what you were looking for, either schedule another meeting with the advisor to give them another chance, or move on. Even if the advisor is technically competent, if they can’t effectively communicate with you, the relationship won’t ever reach its full potential leaving you frustrated.

I would also suggest you meet with a minimum of 3 financial advisors before you make a final decision.  Most people don’t marry the first person they date. Likewise, it’s good to have an idea of what types of advisors are available to you and fit best with your personality, goals, and objectives.

Once you’ve picked “the one”, contact them to let them know you’d like to proceed in becoming a client and ask what the next steps are.

S.C., good luck in both planning your wedding and finding a financial advisor. I am confident things will work out well for you in both situations.

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