This is a question many people ask when they’re approaching retirement, especially if you’re an analytical sort of person. Here’s a quick overview of the value a financial advisor can provider.
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What Is a Financial Advisor?
A financial advisor is essentially a money specialist. They will help you understand your financial needs, identify your financial goals as you move towards retirement, and put a plan in place to help you work toward and maintain the lifestyle you want. We like to think of these variables as “solving for x.”
Finance advice varies depending on the stage of life you’re in, your wealth, and the vision you have for your life as you get older. Anyone can crunch numbers and research trends on the internet, but the value of “x” is different for every person. That’s why it can help to have professional guidance.
How Do I Choose a Financial Advisor?
Good question. Not all financial advisors are equal. Some specialize in helping with a specific type of issue, such as getting out of debt. Some specialize in providing comprehensive financial advice that takes a big-picture overview of your situation and will help you build lasting wealth. Some specialize in specific industries – for example, here at Marvel Wealth Management, we’re a boutique firm that works with professionals in the aerospace and defense industries around Melbourne, Florida.
It’s important to do your research, because wealth management is a long-term strategy. Ask your co-workers, check Google reviews, and remember you can always call firms or schedule a consultation to get a sense of what they’re about, how they operate, and whether they’re the right fit for you.
It’s also critical that you choose a licensed financial advisor to ensure you get the best advice possible. And remember, you will need to get your own legal and tax advice along the way.
Do I Actually Need a Financial Advisor?
You absolutely can manage your own finances. Many people do this with considerable success. However, financial advisors can add a lot of value by filling gaps in your own knowledge. An article from Forbes, published in 2020, broke it down into five key questions:
1. If you don’t work with a financial advisor, will you really do it on your own?
Managing wealth takes serious time, effort, and skill. It’s not something you can set and forget, hoping for the best. An important follow-up question is whether you actually WANT to do it? Would you rather be training for a triathlon, spending time with your grandkids, or road-tripping down Route 66? If that’s the case, the cost-benefit analysis leans heavily towards outsourcing. Regardless of your financial situation, you absolutely can’t afford to keep pushing finance off your to-do list.
2. Is your current financial plan reliant on Googling stuff and just winging it?
Stop it. Stop it right now. Google is a wonderful invention, but it’s also full of many varied opinions, lots of different approaches, and an awful lot of bad advice. Finances aren’t linear. The market can shift at any time, which means your strategy needs to be agile. You could spend months, or years, perfecting your plan, only to find the housing market has collapsed or Saudi Arabia has flooded the oil market and sent prices tumbling. This is one of the most important ways financial advisors can add value. We have deep expertise and many years of experience helping clients successful navigate highs, lows, and market corrections, making sure your long-term goals stay on track.
3. Are your finances organized or do you have no idea where you stand?
If you’re nodding confidently, good for you. But if you’ve got a sinking feeling in your stomach right now, it’s definitely time to see a financial advisor. Knowing where you stand doesn’t just take your bank balance into consideration. It looks at things like types of investments in your portfolio, as well as current value and projected growth. It takes your assets into account and plans for things like appreciation and depreciation. Importantly, it also looks at your expected tax liability. Any of these variables can make a big difference to your bottom line, especially as you head toward retirement.
4. Are you on the cusp of making a major life decision?
Most big decisions have a financial element. For example, you might be purchasing a new home, planning a big vacation, starting a family, sending your kids to college, contemplating entering the stock market for the first time, paying off a significant debt, or punching out from work for the last time. If any of these things are on your horizon, you could benefit from getting a professional opinion to ensure you’re doing it in the smartest way possible. Financial advisors operate in this space all day, every day, which means we may have solutions you’ve never thought about.
5. Are you curious about ways you could be better managing your finances?
Financial advisors can help crunch numbers and answer the big questions you have. Should you pay off your mortgage early? How much do you need before you can retire? Should you accept a lump sum or a pension in retirement? They’ll take a holistic approach that examines each aspect of your financial standing to get a big-picture view of your strengths and weaknesses so you can act accordingly. This is critical to helping you compare and contrast alternate pathways to figure out what strategy will help you achieve your goals. Finally, a financial advisor will be able to weight up all the variables – like a stress test – to predict what your options might be if anything goes wrong. This is really valuable in making sure nothing has been overlooked so you can enjoy your future.
When Should I Get a Financial Advisor?
There’s never a bad time to seek financial advice. If you’re just starting out, a financial advisor can help you put a plan in place – you could think of it as infrastructure – which strives to maximize growth over time. If you’re planning to start a family, a financial advisor can help you figure out how much you’ll need to realize your dreams and help you work toward your targets. If you’re retiring, a financial advisor can help you figure out when this will be possible and how much you’ll need to live your best life.
There are lots of other reasons people seek financial advice: receiving an inheritance, getting married and blending finances, getting divorced and separating finances, and looking after elderly parents are common (or just wanting to make sure you don’t mess things up on your own).
Regular check-ins also mean you’ll be up-to-date with things like financial regulations, new laws, and market trends. This is important when it comes to recognizing opportunities and mitigating losses. Unless you’re passionate about doing your own research, and you check news and analysis every day, this is another area where a financial advisor can add significant value to your wealth.
What Questions Should I Ask a Financial Advisor?
As we said at the start, working with a financial advisor can be a long-term partnership, so it’s important to choose the right one. Always ask if they have experience working with clients like you, including industry, stage of life, and financial goals. Make sure you also understand the terms of the agreement, including charges/commissions, services offered, reviews, and contact. This will set the foundation for a productive and profitable relationship for many years to come.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or projects against loss.