The following blog is a response to our previous posting in our Issues and Answers series, Mistrust and Responsibility, One Generation’s Perfect Storm.

I think every generation has its own trust, or rather distrust, issues.  Speaking as a baby boomer, our version was “Never trust anyone over 30 or anyone wearing a suit!”  Needless to say, it never occurred to us to talk to a financial planner, which was probably a good thing, since in those days there were only a handful of such professionals.

Women in their 30s and 40s today do indeed face a different dilemma.  Not only were they raised to be suspicious of anything that isn’t sealed and date-stamped, but they now face an exceedingly more complicated world than existed for those of us who remember Woodstock.  (It’s hard to believe now, but there were half a million people there, but not one cell phone.  Our mothers had no way to reach us, which is how Woodstock happened in the first place…)

But then along come Madoff and other financial scoundrels, and the differences between Gen X-ers and Baby boomers become trivial compared with our shared conviction that the financial advisory world is a dangerous place, heavy on testosterone, and light on ethics and empathy.

The answer, however, is not Do-It-Yourself financial management.  Women may have the information needed, but not the time, experience, or judgment to make smart financial decisions for themselves and their families.   We do indeed need financial experts, just as we need doctors and attorneys.

The solution wears two hats.  As women, we need to understand how to find advisors whom we can trust.  As advisors, we need to make ourselves more accountable and responsive to women.

Let’s start with what women can do.  First, we can realize that there is middle ground between D-I-Y personal finance and handing complete control over to an expert.  Call it management by delegation – a concept that any Gen X-er can understand and approve of.  It involves doing your homework – checking references, background history, credentials – of a prospective financial planner. Yes, this takes time, but so does choosing a child-care provider or a car with an acceptable safety history.

It also involves staying engaged with the advisor.  It’s not a matter of staying on top of everything the advisor knows or does, but conducting periodic gut-checks as to whether the advisor seems to be working for you (and not the other way around).  It involves having the confidence to fire an advisor because you are not being heard, or not being educated to the degree you would like.

From the advisory side, change is also necessary.  Manisha Thakor – a well-known and well-respected personal finance author and advisor to women  –suggested three prerequisites on our blog for advisors seeking to help women with their finances:

• Be completely transparent about fees.  Women are price-conscious, and have to know upfront and center what it will cost them for the advice.  Delaying or omitting this information is a big mistake, no matter how beneficial are the services.
• Jettison the jargon.  Women need simple, relevant-to-my-life explanations of financial strategies and decisions.
• Listen to the feelings, and not just the facts, of a woman’s financial circumstances.

Another advisor suggested to me, at a recent retreat, that financial planners can gain consumers’ trust by doing trustworthy things.  To Gen X women I would say:  make your prospective advisor earn your trust.  It’s not a blank check you have to write up front, but something that can be pledged in small increments.

Unfortunately – at least to Gen X-ers – planners don’t come in tamper-proof plastic packaging, nor are they subject to money-back, safety recalls when their advice proves defective.  It’s always going entail some risk when you share confidential information with an advisor or take his or her advice.  One of the many goals of Directions is to identify ways that women consumers and their advisors can pare that risk down to an acceptable level, making not seeking advice far more risky and time-consuming than finding the right advisor.

Click here to read the stories of some of the advisors we work with at Directions.