Think financial advisors are just for the rich? Think again. In today’s complex financial environment, professional guidance is not a luxury – it is a necessity for almost everyone.
Whether you’re a middle-income professional in your 40s planning for retirement or starting to build your nest egg, a financial advisor can help you navigate the path to financial security.
Over the years, the financial advisory business gained a bad reputation, with many advisors pushing high-end products designed to make more money for themselves than for you.
However, these days, more and more consultants do not work on commissions. Instead, they charge a flat fee based on account size, so their income only increases when your account value increases. In addition, the industry has evolved to serve customers in all income brackets, not just the wealthy.
Let’s explore the reasons why working with a financial advisor will improve your life.
1. Personal strategies
A good advisor will tailor their approach to your unique situation, whether it’s your income or the level of your assets. Whether you’re a seasoned investor or just starting out, a financial advisor can help you create a strategy that fits your goals and resources.
They will take into account your current financial situation, risk tolerance and future goals to create a plan that is unique to you and will change as you change. A personalized approach ensures that you are not following a one-size-fits-all strategy, but a road map designed specifically for your financial journey.
Vanguard research found that, on average, a hypothetical investment of $500,000 over 25 years can grow to $1.7 million if you manage it yourself, but more than $3.4 million if you work with a skilled financial advisor.* That it’s double the money!
So how do you find that good mentor? However, if you have at least $100,000 in investments, check out a free service called SmartAsset. You fill out a short questionnaire and are instantly matched with up to three vetted financial advisors in your area, they are all bound by law to serve your interests.
A SmartAsset search only takes a few minutes and doesn’t cost a penny.
Not up to $100,000 yet? No problem: Read on.
*Please review carefully the methods used in Vanguard’s white paper, “Putting a value on your stock: Estimating Vanguard Advisor’s Alpha.”
More about expert matching
Back in the day, free matching services like SmartAsset didn’t exist. Either you know a good person, or you’ve swam in shark-infested waters.
There are now several services that connect you with the right advisor at no cost to you. (They make money by charging the consultant.)
These new platforms provide a questionnaire, analyze your financial needs and preferences, and give you more options so you can easily find the perfect advisor for your situation. It’s essentially like having a personal financial advisor working for you, ensuring you get an advisor who understands your unique circumstances and goals.
If you’re just starting out and have less than $100,000 to invest, check out Wealthramp. They interview and screen every consultant on their database, and they will find you the right person based on your needs. Then, simply schedule a review at a time that suits you and see if it’s right for you.
There’s nothing wrong with getting a second set of eyes and some solid advice at no cost or obligation, right?
2. Navigate through major life events
Life changes can be financially challenging, but you don’t have to face them alone. An experienced advisor can guide you through major events such as planning for retirement, marriage, divorce, buying a home, receiving an inheritance, dealing with the death of a spouse and other challenging situations.
A good advisor has seen it all before, so they can answer questions and provide expert advice when it comes to reorganizing your finances after a divorce, expanding your estate or ensuring your retirement plans stay on track.
If life helps stressful situations, having a professional who is familiar with you and your situation is a life saver.
If you have $150,000 invested, reach out to a financial advisor marketplace like Zoe Financial, another free matching service.
3. Tax optimization
Advisors can help with tax considerations, potentially saving you thousands.
As you get older and your net worth increases, income tax and estate tax planning require more attention. A skilled advisor can help you navigate the complexities of tax laws, identify opportunities to reduce your tax burden and maximize your wealth.
They can guide you through strategies such as tax deductibility, strategic giving and withdrawals for retirement accounts. Knowing the best tricks can save you thousands. If you already owe thousands of dollars in back taxes to the IRS, you can also reach out to one of our top tax help companies here.
Don’t let taxes eat away at your financial future.
4. Investment technology
Financial advisors bring years of experience and deep market knowledge to the table. They can help you diversify your investments, balance risk and reward and adjust your portfolio as market conditions change.
This expertise is especially important as you approach retirement, ensuring that your investments match your changing needs and risk tolerance. An advisor can also introduce you to investment opportunities that you may not have considered, which can increase your profits.
Money Pickle is another free service that matches you with knowledgeable, honest financial advisors.
You simply fill out a short online questionnaire, and Money Pickle searches its database to find the right advisor for your situation. After that, you schedule a free online consultation with your chosen advisor to have your questions answered and confirm that the advisor is right for you.
5. Long-term planning
As we’ve discussed, a financial advisor can help you create a comprehensive plan that addresses all aspects of your financial life – from retirement savings to estate planning.
But a good mentor will also help you stay disciplined, ignore short-term distractions and stay focused on the long term. Your goals, budget, strategies and constraints will change over time. Find a mentor who will be there to plan not only for the future but for decades to come.
And if we talk about time, in most families, only one is in charge of money. If something happens to that spouse, the family is left destitute. That’s why your team should include a trusted professional who knows your family and their needs.
6. Learn and earn
When you meet with potential advisors, one of your first questions should be whether they are a certified financial planner, or CFP.
The CFP designation is an important testament to financial planning and education. CFPs receive extensive training – completing classes, passing exams and logging at least 6,000 hours of financial planning experience before earning the CFP designation.
Once you find that expert, use it. Financial advisors shouldn’t just manage money – they should empower you with knowledge. They should explain complex financial concepts in easy-to-understand terms, helping you understand the “why” behind their recommendations.
Education goes beyond investment strategies. Includes budgeting tips, debt management strategies and retirement planning essentials. By working with an advisor, you’ll gain the confidence to make smart financial decisions independently, while still having professional guidance when you need it.
7. Dealing with debts
If debt is something you have to deal with, a financial advisor should be able to help you. But if the problem is serious, you may want to consult another free expert: a debt counselor.
For example, if you have $10,000 or more in debt, you can work with a debt service company to see what your options are. Like financial advisors, debt counselors offer a free initial consultation.
An important point
Today’s investment advisors can help make you rich, but they offer much more than that. They give confidence: confidence that you are going in the right direction, doing the right thing and on the shortest path to achieving your dreams.
If you have a minute, contact a financial advisor right now and start your journey to becoming a knowledgeable, informed investor. Check out a few of the matchmaking services mentioned above and see what they are like.
All that will cost you little time, and it could be the best decision you ever made.
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