I am a Financial Advisor by profession and I make no bones about the fact that I earn my livelihood through commissions generated by helping clients invest and manage their money.
Families seek out financial advisors for a variety of reasons. Some have worked with their bankers for years and now given all the bad press aren’t satisfied with the relationship. Some have recently experienced a windfall and have a large amount of cash that is just sitting, doing nothing. Many who have never had a financial advisor before are trying to get a better grasp of their retirement. Before they reached out, they asked themselves an important question: Do I need a financial advisor?
Let’s face it. We hate spending money on things we think we can do ourselves. Maybe you feel that way about investing. Why should you pay a financial advisor when you could manage your money yourself?
There is a lot of second-hand information floating around about financial advisors. People tend to cringe at the fees, or they think they’ll be cutting a check at the first meeting. So, when it comes to investing, some people say, “I can handle it all on my own.” But let me ask you this: Do you fix your own air conditioner? Build your own computer? Fly your own plane? Yeah, me neither.
Let’s be honest—not everyone needs a comprehensive financial advisor. You don’t need a financial advisor if you love investments or work (or used to work) in the finance industry. Perhaps you just love the thrill of watching stocks rise and fall, and enjoy the research behind structuring a well-balanced portfolio, with an appropriate amount of risk. If it’s something you’re passionate about and have the time for, you might not need to bring in an outside party. If you’re running on autopilot, save systematically, have your portfolio set to auto-rebalance and your investments are relatively simple, you likely don’t need a financial advisor.
Another major reason that you don’t need an advisor is due to a previous bad experience with financial advisors. Perhaps you had a broker who led you to believe they were a fiduciary, or an advisor who didn’t communicate well and may have ignored your concerns.
That doesn’t mean you should give up. Keep exploring advisors, compensation, expertise, and methods to ensure you find someone who not only has your best interests in mind but can best serve you and your family.
You use a professional because they have more education and experience. You know they’ll do the job right. And that gives you peace of mind. The same applies to your finances. You need a pro in your corner. Many financial advisors look beyond just investments. As you speak with a professional, see if they lead purely with investments, or if they touch on taxes, estate planning, insurance, budgeting, and even life planning. You may be looking for an advisor who will take the reins, or a partner to work with, or perhaps you just want a professional to verify that what you’re doing is on track. Take time to figure out what kind of relationship you want, and make sure that your mind-set aligns with whichever advisor you choose to work with.
Think about your typical workday. You’re crazy busy from the time you wake up until you hit the pillow at night. Do you really think you can put in the hours of research it takes to choose the right mutual funds or find the right balance of those funds?
So why do you need a financial advisor?
Here are just a few reasons:
• Because they keep you on track with your investing plan.
• Because they do more than invest your money.
• Because even the pros need help.
• Because you don’t have the time.
• Because you’re an emotional creature.
A good investment advisor knows that market dips are like getting stocks on sale! They’ll strongly encourage you to leave your investments alone—and to invest some extra money while you can get the stocks at a lower price. Likewise, when a stock or new investing fad is soaring, an advisor will help you keep a balanced portfolio and not turn your retirement account into a roulette wheel in Vegas.
Professional advisors are elbow-deep in investing all day, every day. While you might spend hours looking up definitions, figuring out acronyms, and trying to decipher reports, these folks won’t. They know their stuff. They can find the answers in half the time because it’s the world they live in. They can save you countless hours that you just can’t get back—time you’d rather spend elsewhere.
If I had the time, I would much rather spend it with my family. It beats crunching thousands of numbers. Every time.
Author: Rajeev Goal
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