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OK, not all financial advisors wear capes. But many are superheroes to their clients.
Advisors, however, do wear many hats because they play a key role in the lives of their clients as they help align their money with life goals. An advisor is someone who will help you cultivate confidence with your finances.
In addition to providing financial guidance, a large part of a financial advisor’s career is managing the client relationship. Indeed, financial professionals say they spend a great deal of their time playing the role of therapist, dealing with marital distress and serving as an emotional confidant to clients.
As a financial journalist, I have covered personal finance and the financial advisory industry for more than 25 years. I have met countless financial professionals along the way and have made connections with many advisors. The bottom line: I am bullish when it comes to financial advisors.
Let me share a personal story to explain why.
Advisors can be a first line of financial defense
About 20 years ago, my wife passed away at the age of 44 after a three-year battle with cancer. I became a single dad to my then 14-year-old son and 10-year-old daughter.
A day or so before my wife’s funeral, I received a package from my insurance company. It contained a total control account document detailing the settlement options offered to me.
A few hours later, I got a call from my insurance agent. He started to explain the options and basically was urging me to up my insurance to protect my kids since I was now a single parent.
My head was spinning, and I told the agent the timing was not right to discuss this. My financial advisor attended the funeral services, and I told him about the conversation I had with my insurance agent.
He asked for the agent’s name and phone number. After a bit of back-and-forth, I passed it along.
A few days later, I discovered my advisor called the agent and told him to leave me alone and to allow me my space to grieve and to take care of my kids.
He told me to put the insurance paperwork away and, when the time was right, we could go over my options together when I was ready. He took the time to help me, with no financial benefit for him.
To be sure, your relationship with an advisor can bring valuable insight that can go beyond money issues.
But when it comes to money and reaching your financial goals, it’s a comfortable feeling having a trusted financial professional by your side. Because let’s be honest: creating a personal financial game plan can be daunting.
There are so many investment options, all of which carry some form of risk. And, of course, there are many types of retirement plans to choose from, each with their own set of tax consequences.
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The seemingly endless number of choices can make it overwhelming for many investors.
The bottom line is that there’s an overload of investment possibilities. And, for many, planning and managing those options can be complicated. That’s why it makes sense to turn to a financial professional for guidance.
Of course, for some, do-it-yourself investing holds significant appeal. Many of these investors are perfectly capable of self-managing their own portfolios. However, other investors feel they need to hire a financial expert to create a game plan to meet their specific financial and life goals.
Basically, financial planning is the process of aligning your financial resources with your most important goals in life. Everyone needs at least a basic plan regardless of their net worth situation or their stage of life.
How to find the right advisor match
Of course, finding that financial advisor who is the right match for you comes with its own set of challenges. And since an advisor can play a key role in helping you grow and protect your wealth, it’s important to find one you trust and who will help you achieve your personal financial goals.
There are so many things to consider before choosing an advisor. The services provided by financial advisors will vary based on the type of advisor, but overall, a financial advisor will assess your current financial situation — including your assets, debt and expenses — and identify areas for improvement.
A good financial advisor will ask you about your goals and create a plan to help you reach them. That may mean discussing your budget, retirement planning, estate planning, insurance needs or tax strategies.
Financial advisors also help invest your money, either by recommending specific investments or providing complete investment management. Again, it varies from advisor to advisor.
And contrary to common belief, financial advice isn’t just for the wealthy. In fact, the right guidance early in anyone’s financial life can have the biggest impact on long-term financial success.
That’s why it’s so important to find a financial advisor you trust. Doing so comes down to engaging in some research and homework, interviewing several advisors, and asking the right questions.
When you find that right advisor, you can forge a new relationship that hopefully will last for a long period of time.
