What value can a financial planner offer?
When I’m talking to others about my work as a financial advisor, they sometimes ask, “Why would someone want a financial advisor? Aren’t they only for people who have a lot of money?”
No minimums needed
Some advisors and investment managers have minimum assets they are willing to work with, meaning, you must have a certain amount of investable assets in order for them to consider working with you, sometimes $1,000,000 or more. I don’t have minimums for working with people. I believe in helping those who come my way if I can. If they came to me, there must be a reason, so I want to do what I can to help.
Michael Kitces, who runs a popular website (link opens in new tab) centered around advisor education and information, recently published a set of values that a good financial advisor can provide. I wholeheartedly agree! In addition to investment management and advice, some of the things my clients tell me they value the most are helping them to organize their finances and offer a level of accountability to accomplishing their financial goals.
6 Core Areas of Value a Good Financial Advisor Can Offer
Here’s a graphic that Michael (link opens in new tab) uses to illustrate some of the areas of value which financial advisors can address. Here are the 6 areas:
Organization: Helping clients get their finances in order. This can mean consolidating old employer’s 401k funds, streamlining banking relationships, and assembling and organizing financial paperwork. Plus, advisors can help get investments in order – making sure a client’s investments are meeting their needs and risk tolerance, and working effectively.
Accountability: Providing an accountability partner when it comes to getting things done. Most of us don’t like to show up to a meeting unprepared. Financial advisors can help to keep you accountable to what you said was important to you.
Objectivity: Financial conversations with a significant other or family member can often be fraught with old, unhelpful family behaviors or other stumbling blocks. One of the main reasons cited for divorce (link opens in new tab) is often fighting about money. A financial advisor can offer an objective third-party point of view separate from the emotion.
Proactivity: Financial advisors can help clients become proactive, so they are prepared for life events. An example is helping clients accumulate a “rainy day” fund so they have access to funds in case of an unexpected event with financial implications. According to this study (link opens in new tab), only 41% of Americans would be able to cover a $1,000 emergency.
Education: One of the aspects I love about my job is educating clients about finances. Once a client called me and said, “This might be a stupid question, but what are bonds and are they a good investment option for me?” First of all, in my opinion no question is a stupid question. AND, where are we supposed to learn things like this? Most high schools and even colleges don’t require any type of financial education 101 class in order to graduate!
Partnership: This is one of my favorite aspects of financial advising. Working with my clients can become a partnership, where we are jointly working on accomplishing goals and my clients often say they have been able to accomplish more in partnership than they would have been motivated to accomplish on their own.
As you can probably tell, I love what I do! And I love to share the knowledge I have with others.