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When should I seek the assistance of a financial advisor?

When should I seek the assistance of a financial advisor?

October 20, 2021

When should I seek the assistance of a financial advisor?

In my opinion, engaging a financial advisor is a matter of preference.  There is no right time or age to seek the assistance of a financial advisor.  College graduates have different financial goals than married couples.  A young person might seek advice on budgeting, savings strategies, and which tax-advantage accounts to use.  Newly married couples may seek to purchasing a new home, while an older couple may want to focus on retaining their financial security well into retirement or leaving a legacy for their heirs.  Pre-retirees will want to have a comprehensive financial plan to ensure they have adequately covered all likely scenarios.  No matter what the circumstances, a financial advisor can assist with major financial decisions.

In searching for a financial advisor consider….

In searching for a financial advisor, remember not all financial professionals are the same. Stockbrokers, accountants, and insurance agents provide specialized services like buying stocks and mutual funds, tax-related assistance, and insurance product. Financial advisors, on the other, can answer the many confusing and complicated questions you may have related to investment planning, retirement planning, insurance, estate planning, college planning, and retirement planning.  As well, they can assist on major financial decisions like buying a house or business.

During the process of researching and meeting with potential financial advisors, keep your financial goals front and center. While keeping a list of goals, consider the following when choosing a financial advisor:

Credentials: Look for someone who is licensed and has gone through rigorous testing and training.  Financial advisors have several licenses such as Series 7, Series 65, Series 63, Series 66, Series 6 among other licenses.  In addition, they may hold a Certified Financial Planner (CFP) there are many other certifications financial advisor may hold along with insurance license.   

Experience: How experienced is the financial advisor? Has the financial advisor weathered economic slumps?

References: As with any major decision, ask family and friends for financial advisors they may recommend.  How often do they meet with their financial advisor? What do they like more about their financial advisor?

Why should you pay a financial advisor?

There is a lot of secondhand information floating around about financial advisors. Let’s face it most people tend to cringe at the fees.  When it comes to investing, some say, “I can do it on my own.” So, I ask:  Do you fix your own car? Perform surgery on yourself? Or fix your own teeth? By in large most people use a professional because they have more education and experience. It provides people peace of mind because they know professionals will do the job right. 

Even the professionals need help!  As we well know, doctors don’t perform their own surgery and dentists don’t pull their own teeth. In any given field experts get advice and consult others they respect. And that’s true in the world of financial planning, too.  We all have blind spots when we drive, so we are careful how we maneuver in traffic so as not to get into an accident. There are blind spots in managing your finances, too.  For those who choose the do-it-yourself approach to securing their financial future, the blind spot may come in the form of emotions while others, it might be misinformation.  Many even procrastinate when it comes to making crucial financial decisions simply because the process is too daunting. These blind spots can cause big mistakes in your financial future and the use of a professional in your corner would help.

Bird’s-eye view of your financial situation

If you want a 360-degree view of your financial situation a financial advisor can help because they are looking from the outside in.  As mentioned above, make sure the financial advisor you select has excellent credentials and experience.  Placing trust in an uncle’s cousin or an old college “buddy” you kind of knew for help with your financial decisions can prove to be yet another blind spot.  Let’s better understand what a financial advisor does.

Many individuals believe that a financial advisor’s only job is to invest money. While that is one of our responsibilities, it is not the only one.  We also work with our clients on a wide range of financial areas as described below:

  • Investment’s strategies.  Clients’ portfolios are based on personal financial goals, time horizon, willingness to accept volatility, tax situation, and investment experience.  Client completes an extensive risk profile questionnaire to determine their risk tolerance.
  • Savings strategies.  Financial advisors provided tailored savings strategy suitable to meet client’s needs base on financial goals, and time horizon.
  • College education planning.  For younger people balancing between saving for college, purchasing a home and saving for retirement is a challenge.  Financial advisors provide guidance on how to find solution to meet your goals.
  • Retirement planning. Retirement is one of the most important goals for people. Financial advisors help keep clients on track on for their retirement goals.
  • Tax planning.   (Alongside with your accountant)
  • Estate planning.  An important part of planning one of our clients’ tasks is to decide where that money would go if something bad should happen to them. As financial advisor we can work with an estate attorney to make sure assets are distributed according to your instructions.
  • Risk management planning.  Long-term care planning is but one aspect of risk management and possibly the costliest aside from health insurance. One of the biggest expenses our clients incur in retirement is long-term care. If the need of in-home medical care or if the need to stay in a rehab hospital arises while recovering from surgery, a person could burn through their retirement fund more quickly than they realize. A financial advisor can help make the best decisions in this area of planning.
  • Spending strategies.  When retiring knowing what investments will require a minimum annual withdrawal.  A primary area of our focus when clients retire is their Income stream.

This wholistic approach to financial planning gives financial advisors like me the opportunity to view our clients’ financial circumstances and address all their question.  But it all starts with you. Your financial future is in your hands. It’s time for action!