In March, we discussed six milestones that require a financial advisor. But is a financial advisor worth it? You’re smart, so you could get online and learn about finance for yourself. What will a financial advisor actually do for you?
Define Your Goals
The starting point for all financial decisions is also one of the most overlooked. Many people simply jump into finance with the idea that they need to make a lot of money. After years of trying to grow their wealth, they get hung up on questions of purpose. What is this all for? When do I have enough? Is this what I really want in life?
A good financial advisor will start by helping you define your goals. They will take the time to get to know you, your values, and your priorities. Once your goals are clearly laid out, then you can strategize what financial moves are necessary to achieve them. Without a proper target to aim for, you won’t know which direction to shoot.
Calculate Your Savings Needs
An experienced financial advisor can help you calculate how much you need to be saving. This goes way beyond the readily accessible online retirement calculators you may be familiar with. Life is neither simple nor predictable. Financial advisors will look at many different possible scenarios as they relate to your life and your investments to come up with a target savings rate. A modern financial advisor will have access to highly sophisticated technology that can model different possible outcomes and help them in their analysis.
Maintain Proper Asset Allocation
Target date funds are becoming very popular among workers because they adjust your asset allocation as you age. If a fund can automatically maintain the perfect asset allocation, then why would someone need a financial advisor?
Target date funds use a generic asset allocation that adjusts automatically, no matter what is happening in the current economy. Are you generic? Or would you rather have an asset allocation designed specifically for you with your time horizon and risk tolerance in mind?
Financial advisors craft an asset allocation based on your unique needs. As your needs and circumstances change, they are able to make adjustments that are appropriate for you. They also look at the big picture of what is happening in the local and global economy while making decisions, something that target date funds can’t do.
Create An Accumulation Plan
Once your financial advisor has established your goals and your proper asset allocation, they will help you come up with a plan to grow your nest egg. This goes far beyond just asset allocation and includes taxes, timing, savings rates, and insurance to protect your ability to earn an income. All of your financial decisions will become much easier once you have a well thought out, comprehensive plan in place.
Create A Spending Plan
Your financial life isn’t over once you’ve saved enough for retirement. Now you have to spend it. A financial advisor will help you develop a plan to spend your money wisely in retirement. They can show you how to live comfortably while still providing for your heirs and minimizing taxes. You don’t want to be the person that runs out of money halfway through retirement. You need a plan so you can finish your life without regrets.
Walk You Through Market Volatility
You may find this surprising, but one of the greatest benefits an advisor provides is not technical, but behavioral. When the ups and downs of the markets have you ready to bail, a good advisor will talk you through it. They will help you get past the emotions of the moment and stick with your plan.
How many people are glad that they listened to their advisor and didn’t flee the stock market back in 2009? After two years of negative returns, that’s what most people wanted to do. Many did and lost everything. But it was those that had a trusted advisor to talk them through the emotion that hung on. Now they are grinning, having ridden the roller coaster of the market back up to record highs.
Manage Timelines
As I said before, life isn’t simple. You won’t just have one financial goal to work toward. You will have a myriad of goals with competing timelines all vying for your limited resources. A financial advisor will help you sort through your goals, manage your timelines and come up with a solution for prioritizing both spending and saving. And they will also keep an eye on things as they progress to make sure nothing slips through the cracks.
Would You Like To Work With An Advisor?
As you can see, there are a lot of great benefits of working with a financial advisor. From the technical aspects to behavior management, a professional advisor is a wise choice for those who want to make the most of their finances. If you think you would like to give working with an advisor a try, contact us today. We can sit down for a complimentary consultation to discuss how we can use our knowledge and expertise to maximize your finances.
