6 Reasons Why An Expert Advisor Can Transform Your Finances
Dan Casey
Vice President
Vice President, Financial Planner, and Portfolio Manager at Arrowroot Family Office. I manage clients’ investment portfolios and help them find solutions and optimal strategies for their financial needs. In addition to my passion for finance, I am an exercise physiologist with over a decade’s experience.
MCO
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A complete compliance management software platform that helps financial services firms unify their activities across conduct and regulatory compliance.
Personal finance is a vital skill set that all individuals and families need to intimately understand and know in order to achieve financial health or financial freedom. In order to survive as a household, a financial plan needs to be set in place, and personal finance needs to be learned; however, while it is vital to get started and to plan ahead, it is not always easy.
Having a financial advisor or financial planner in your corner can help ensure one is able to meet their financial and retirement goals on time. Financial professionals are proficient in their abilities, dedicating their craft to finance and wealth management. They know and understand the industry, the market, and how to map out one’s goals and turn them into results based on their individual needs. By working with hundreds of clients, many in similar repeated situations, financial professionals like financial advisors and financial planners are able to figure out what one needs and how to get them there while keeping individuals accountable and working towards their goals with a solid financial plan.
However, not all financial professionals are equally experienced, knowledgeable, or provide equal value. With many financial scandals happening in the past and current age, vetting the correct and best financial professional that has not only the most experience, knowledge, or value but also an individual that one can trust with their finances is a challenge. However, it is not impossible as there are quantifiable factors that one can look for when seeking a financial professional to assist them with their finances.
When seeking professional financial guidance, evaluate and vet financial advisors and planners based on the services they offer and how well they understand your financial goals. These six aspects are essential to discuss and can help one make a decision on which financial professional or wealth management firm to go with. This way, one can make the right financial decision for themselves or their family that can help them achieve their goals in the long run.
1. Understanding Money Management and Making Smart Financial Decisions
While managing one’s finances seems simple from the outside, elements of budgeting can get complicated fairly quickly. Having a professional that can craft a thorough yet simple budget can not only save a lot of time for an individual or family, but it can also help them budget in a healthy and correct way while avoiding unnecessary debt. This form of budgeting can be challenging to achieve on one’s lonesome, especially without formal education or certifications in personal finance or accounting.
As a young busy professional, creating a budget can be very time-consuming and difficult; hiring a financial planner or financial advisor can help get the job done quickly and in an efficient manner. This action can help put an individual or family in a prime position to actively achieve financial goals and financial freedom in future years.
Helping you achieve your evolving financial objectives
2. Starting a Family
Starting a family is an important milestone in an individual’s career, and while this moment is supposed to be a time of happiness and prosperity, significant planning must go into the process in order to factor in the added costs of an additional individual into the family. When one is expanding their family, one’s budget must expand proportionally to accommodate the increased living expenses of nourishment for that individual. This includes food, housing, clothes, medical expenses, entertainment, and everything else that is needed for an individual to live, survive, and be happy. A financial planner or advisor can sit down and estimate the true costs of first-time parenthood or the addition of another child into the family. They can also reorganize one’s incoming cash flow and plan for any added savings or financial goals one may have as a family.
3. Combining or Uncombining Finances with a Partner
When deciding to become serious with one’s finances, married or long-term couples often decide to combine finances. While this may be a touchy subject in a relationship, especially with varied, conflicting spending and savings habits, if done right, a financial professional can help walk a couple through which specific accounts to combine or keep separate. This will allow the financial advisor or financial planner to create a cohesive financial plan that meets both individual’s needs and simplifies finances for both parties.
In the event of a divorce or remarriage, finances may end up getting moved around, which requires careful and diligent planning in order to avoid major headaches. Alongside a difficult emotional time, both partners would have to reconsider important financial considerations such as the potential change in lifestyle and financial strategy as well as the division of investments and other assets. When remarrying, aspects to consider include: is financial security present in the relationship, are children from previous marriages added to the inheritance, and how does the marriage affect social security benefits or life insurance? Financial advisors and financial planners can help answer those questions and clear up any nuances involved in one’s finances so that both partners can start the next chapter in their lives without any hiccups.
4. Fear of Investing
Investing is also another area of complexity when it comes to personal finance. Investing in the stock market or into real estate can be one of the most powerful tools individuals have access to in order to build generational wealth; however, individuals are often paralyzed by the fear of losing money, also known as the fear of risk. This fear prevents individuals from investing in the stock market or purchasing real estate, causing families to avoid investing their finances and keep their money in savings accounts. This, unfortunately, results in missed opportunities that individuals and families can come to regret later on in life. Financial professionals such as financial advisors and financial planners can help individuals truly understand this by creating a safe investment strategy that fits in with the family’s risk appetite. While returns are never guaranteed in the stock market or real estate, through open transparency from one’s experienced financial professional, one can truly capitalize on this opportunity and not miss out on the sidelines.
5. Retirement Planning
Saving for retirement is an arduous process that requires individuals to start saving and investing at a young age. Through the magic of compound interest, money put away now can reap huge benefits in the long-term future. Automatically saving and sending money into tax-advantaged savings accounts, like a company-sponsored retirement plan such as a 401(k) or traditional/Roth IRA, is the recommended strategy by most financial professionals. These accounts have clear tax advantages that can help individuals save money in the long run while planning for a comfortable retirement.
Once an individual gets older, their ideal retirement may become clearer. This is when financial planners and advisors can help individuals and families plan for their retirement. Figuring out how much retirement would cost per year can be complicated, considering inflation and ever-rising living expenses; however, with the help of a financial professional who is experienced and adept in retirement planning, this major headache can be taken care of for an individual or family. Achieving one’s retirement goals only gets easier with the advisement of a financial advisor or financial planner, as they can help direct where to save and invest money to achieve one’s dream retirement. These professionals are experts in planning ahead and letting individuals take charge of their finances rather than simply reacting to unexpected changes.
6. Complicated Financial Situations
Debt, whether from student loans or credit cards, can feel overwhelming and insurmountable at times. This is especially true when juggling savings for retirement and other financial goals or the living expenses of an expensive area. Consulting the assistance of a financial advisor or financial planner could be beneficial as they can help teach families how to properly pay off the debt and set individuals on a debt repayment plan that does not neglect other financial goals, such as retirement.
Major financial transactions, such as buying or selling a property, can often involve various financial complexities or important decisions on how to best deploy one’s financial resources. Long before one begins hunting for properties, a financial advisor or financial planner can help determine the amount of debt an individual or family is able to take on within their financial planning strategy, how much funding can be allocated to a down payment within one’s budget, and how to stay on track with one’s financial goals with the additional purchase of a property. Financial professionals can also offer ideas and advice on reusing the equity one may have put into the property for other financial goals when the individual or family decides to sell it.
Financial advisors and financial planners can also deal with the dealings involved when receiving or giving an inheritance to a beneficiary. Not only can they work out the nuances behind the scenes of an inheritance, but they can also provide ideas and advice on how to use the money, where to put the money, and also teach how to build generational wealth for a family. An inheritance can be used in many different ways, from repaying an existing debt to putting money down for existing personal and financial goals to leaving it all for future generations; financial professionals can help individuals decide what to do with this money and put it to good use no matter what the individual or family makes.
Such complicated financial situations, and especially those that involve a lot of debt, are the specialty of most financial advisors and financial planners. Their responsibility and goal is to help individuals repay their debts in order for them to achieve financial freedom, build generational wealth, achieve a comfortable retirement, and any other financial goal. Extra assistance and evaluation of one’s finances can help individuals understand the complexities of their financial situations so that they can manage their income wisely.
FAQs
- Indeed. “Financial Advisor Salary.“
- Congressional Research Service. “The SEC’s Best Interest Proposal for Advice Given by Broker- Dealers.“
- U.S. Securities and Exchange Commission. “Regulation Best Interest.“
- Certified Financial Planner Board of Standards. “Guide to Careers in Financial Planning.”
- Financial Industry Regulatory Authority. “Investment Advisers.”
- Certified Financial Planner Board of Standards. “Why Get Certified?”
- Financial Industry Regulatory Authority. “Financial Planners.”
- AdvisoryHQ. “What Are the Average Financial Advisor Fees & Investment Fees Being Charged in 2021?”
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