DIY or Work with a Financial Advisor
If you are financially savvy, if you have the time to research the market, estate planning laws, investment rules, healthcare benefits and other retirement opportunities, if you are able to make decisions about your finances without being clouded by emotions, and if you have the willpower to follow a budget to reach your long-term goals on your own, you may want to attempt to handle your financial planning needs on your own.
If not, it’s wise to seek help from someone who does.
Unfortunately, we see many people learn this the hard way. Because financial planning can be intimidating, overwhelming and confusing, some people simply avoid the process altogether and put their financial planning needs off “until later,” only to reach retirement with no plan in place. Others try to follow recommendations from friends and coworkers or advice they heard on the radio or online only to realize that, while the advice may have been good for some people, it wasn’t good for them.
In the age of the Internet, there’s no problem accessing financial information, but the trick is finding the right information for your specific needs and situation.
At Align-Wealth Partners, we work with clients for many different reasons. The reasons to plan for retirement vary, and therefore, so do the reasons they want help.
Let’s take a look at a few reasons you may want to work with a financial advisor.
My Portfolio has Grown Too Complex for Me to Comfortably Manage
Our financial lives can be complex and complicated. Typically, a retiree’s income comes from a number of different sources – a pension, a 401(k) and/or an IRA. There are many unique situations that also come into play – life insurance payouts, inheritances, spousal support or the sale of a business.
If your financial situation has become complicated, it can be wise to seek help from someone who’s been through the process before.
Where is Your Income Coming from in Retirement? Do You Know?
My Portfolio has Outgrown My Advisor’s Expertise
Complications can also occur when you’re working with a financial advisor. Not all advisors are created equal or specialize in the same areas.
Often times, a financial advisor who may have been suitable when you were just starting out may not have the experience to help you with concerns as you move forward in life. Financial advice for small business owners, for example, can become complicated fast. It can also become complicated when major life events change your course of action – what should you do after a divorce, the loss of a spouse or the acceptance of a large sum of money?
Staying with a financial advisor who doesn’t typically work with clients in your situation can have harmful effects. If an advisor has your best interests at heart and can no longer help you, he or she should encourage you to seek help from someone else.
Find a local CFP professional to work with. CFP standards of professional conduct are extensive. Interview financial advisors to ensure you’re working with the best person for your situation.
I Question the Advice I’m Currently Receiving
We also hear stories from new clients that the advice they’re receiving from their current financial advisor no longer reflects their goals, situation, life stage or risk tolerance. We also hear complaints that a financial advisor doesn’t seem to be listening. This can also be dangerous.
Financial advisors should follow a strict code of ethics and rules of professional conduct. If you feel your current financial advisor is not listening to you, research your options.
My Portfolio is Not Meeting My Performance Goals
Financial plans should be reviewed on a regular basis, at the minimum, annually. If your performance goals are not being met, it may be time to make a change.
Of the 3 Common Risk Tolerances, Where Do You Fall?
I Want Someone to Do the Day-To-Day Investing
There are a million ways you can spend your time, so if you’d rather focus on things other than your finances, ask for help.
Investing and following the market – in fact, simply understanding the market – can be a full-time job in itself. And wrong decisions can have a big effect. If you don’t have the time, interest or experience to make educated investing decisions, don’t. While you may be able to make up for losses felt during your accumulation years, this can be harder to do as you get closer to retirement.
I Need Help with a Plan That Addresses My Entire Financial Picture
The same can be true if you enjoy investing and watching the market but are not familiar with estate planning, healthcare or retirement plans.
Do you need help with a sudden financial windfall, such as from an inheritance or property sale? Are you retiring and want to create a reliable income stream? Find a financial advisor who can help. Look for a financial services firm that can work with you and help you address all of your financial planning needs and concerns.
I Want Help with Tax-Efficient Investing or Developing an Estate Plan
Taxes are an important part of financial planning. Are the contributions you’re making to your retirement taxed now or later? There are benefits to both. Are you familiar with the tax laws in your area? Financial and retirement planning in Baton Rouge is different than in other areas. Remember, taxes aren’t just important on April 15!
Estate planning is also an important aspect of a comprehensive financial plan.
Discussing your death may not be the most comfortable situation, but if you don’t have a plan in place, the assets you’ve worked hard to accumulate may not go to the people you had hoped. Every state has its own rules when it comes to an estate. You shouldn’t assume that your nest egg will automatically go to a spouse or your children. And what about your debt?
Having a conversation now can help ensure your assets will be dispersed how you hoped and can help your loved ones in the long run. When you pass away without an estate plan, this can put a lot of added yet unnecessary stress on your family when they are already dealing with an emotional loss.
I’m Looking to Consolidate to One Comprehensive, High-Quality Advisor Relationship
Another way financial planning can become complicated and overwhelming is when there are several different firms handling different aspects of your financial plan.
When you work with a financial advisor who can assist with multiple needs under one roof or cooperate with your other professionals, such as an estate lawyer and an accountant, this can help simplify the process, not only for you but for your family as well. Having an advisor who understands your entire situation can also be beneficial when it comes to offering advice on other aspects of your financial life.
