In this article, we will discuss some common reasons why having a financial advisor might be helpful.
Financial advisors can help organize your financial life.
Financial advisors can help you get your financial life in order. For example, a person may have worked multiple jobs over the years, accumulating 401k/403b assets along the way. A financial advisor can help you get a handle on how much you have and where it’s all located. As part of a data collection meeting, a financial advisor usually asks you to provide details on your personal assets and liabilities, so this is a good time to pull out all those old statements!
Financial advisors can also work with other professionals in your life, such as accountants or CPAs, estate planning or family attorneys, and other professionals to help identify opportunities for saving money, tax efficiencies, or estate planning.
Financial advisors can help you achieve your financial goals through identifying specific things you can do to get your finances working for you, rather than you working for your finances.
One of the best aspects of a financial plan, in my opinion, is that it can act as a roadmap for what you need to do to stay on track financially towards achieving your financial goals. A financial plan can provide very specific and practical details like, “save this amount from each paycheck in your retirement account”, or “refinance your mortgage to take advantage of low interest rates”, or “pay down this credit card first by paying this amount per month”, or “yes, you have enough saved to start your kitchen upgrade but spend no more than this amount”. These are just examples and not intended to be specific recommendations to the reader, but you get the idea. A financial plan can provide very specific information about what you need to do to get on track, and stay on track, towards your specific financial goals.
A financial advisor can work with you on optimizing your investments.
A financial advisor can provide advice about investments. One of the biggest opportunities in getting your money to work for you, is compound interest. But to take advantage of this, investment returns are important. What investment returns are you getting? Having your investments professionally managed will typically cost more than doing it yourself, however, the benefits may be seen in the potential for increased returns and better oversight. For example, when’s the last time you looked at investments held in the 401k account from your old job? A financial advisor can help in providing ongoing investment recommendations based on your risk tolerance.
A financial advisor can help the interplay between emotions and finances.
The reality for that for many people, money can be tied to emotions. Money can be a means to an end, where the “end” is helping you to make your dreams for your future into your reality. As a result, people don’t always make financially smart decisions. A financial advisor can help put a bit of objective third party distance between your emotions and your finances. A financial advisor can also act as a sounding board to talk through the financial implications of a life change – whether that means buying a new home, accepting a new job, getting married, or preparing for retirement.