Why Everyone Needs a Financial Advisor

Financial Planners Help Build Better Experiences

Sometimes, it’s hard to tell if you need professional help or can handle it yourself, whether taking care of a common cold, fixing the sink, changing the oil in your car, or doing your taxes. The same question often arises about finances.

There are two schools of thought when it comes to financial planning:

  • Everyone should have a financial advisor.
  • Everyone should act as a self-directed investor.

If only the latter were possible. Consider that we’re talking about your financial well-being. A skilled financial advisor brings experience and knowledge that most don’t have. 

It happens all the time – financial questions you consider silly or stupid, so you feel you must handle it alone and don’t seek help. This is not the best course. As often happens in life, not reaching out to a professional can delay your reaching your goals and cause you to incur more out-of-pocket expenses and lots of headaches.

Here is the thing: there are no stupid questions about your finances. Never sit on the sidelines, and fear asking a question or think you’re unqualified to go to a planner. Solid and respectable planners let you know if they can’t help you and refer a professional who can. They also let you know if you can plan your finances.

Financial Advisors Improve Money Habits

Many surveys try to determine how many people work with financial advisors and how many have a written long-term financial plan. Sadly, the numbers are discouraging.

According to reports from CNBC, 75% of Americans go it alone, without the help of a financial advisor. Another survey suggests that 60% of Americans live paycheck to paycheck, and only about 25% have a written financial plan.

Half the people without a written financial plan believe they need more money to warrant one. And that couldn’t be further from the truth.

A good financial advisor and a written financial plan encourage greater fiscal responsibility and improve money habits – in the same way that good coaches encourage discipline and performance from their players.

Even Financial Advisors Need Financial Advisors

Financial advisors will contend that everyone should know about financial planning and investing. Yet, that is different from being your advisor. Even if you are in the financial field, while you might have some of the tools needed to be a self-directed investor, there is a lot that you will need to anticipate and act on. So, even financial advisors need financial advisors in the same way that doctors need primary care physicians.

Financial Coaching

The truth is that too few people plan their finances, and they would be better off having a good advisor. Learning as much as possible about wealth management is indeed a worthy aspiration. But what needs to be followed is the assertion that everyone can go it alone. Many folks need more time, the expertise, and the inclination to fly solo on personal finance.

The more you know about your money, the better your decision-making. And your financial advisor will help you with things like:

  • The ins and outs of college funding
  • Portfolio management
  • Investing
  • Avoiding scams
  • Alternative investments
  • Understanding 401(k)s
  • Income Strategies
  • Handling debt
  • Picking mutual funds
  • Investing in private companies
  • Talking about money with your spouse and
  • How to prevent emotions from skewing financial decisions

In addition – and maybe more importantly – a good financial advisor can identify areas of concern, especially when it comes to unknowingly taking on too much risk. With help from a good advisor, you can manage your finances and achieve your goals.

Here are signs you may need a financial planner:

You recently married

To merge or not to merge finances is a huge question: emotions to contend with, forms to update, cash flow to track, debts to pay down, goals to lay out, spending habits, and needs to reorganize and prioritize.

Communication during this transition helps you navigate possible questions about taxes, investment allocation updates, selecting benefits, joint roles in household management, deciding whether to maintain separate bank accounts, and more.

You own a business

Whether you are considering starting your own business or becoming a long-term entrepreneur, you need to know how to prioritize goals, pay yourself while keeping the operation running, and the best way to manage cash flow on an income that fluctuates monthly.

Not to mention saving for retirement, obtaining health insurance, and protecting yourself and your family against a loss in income from death or disability.

You want to make a big purchase

Simple budgeting often enables you to handle large purchases. If you look to buy a first home or make another sizeable investment, understanding the overall effect on your cash flow, lifestyle, and future goals looms large

How much home can you afford? What’s your budget for home maintenance? What other goals go on the back burner? What about your future savings?

You make a career change

Job or career transitions also bring changes in income and benefits. Make sure you maximize your company benefits, leave no retirement accounts behind and ignored, plan appropriately for income fluctuations, consider future job growth or career prospects, and consider the transition’s overall influence on your lifestyle.

Your family’s growing

A baby comes with several considerations: ensuring you have an emergency fund of three to six months’ expenses, adjusting your spending for child care, groceries, and medical costs, and updating your estate plan and insurance coverage in case something happens to you, among many other needed updates.

At the End of the Day

The first step in asking for help always seems the hardest. The assistance and feedback may surprise you when you realize you must handle only some financial questions. And it makes the experience much more enjoyable.

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