How an Advisor Can Help: Time, Interest, and Expertise
A quality financial advisor can help with many aspects of your financial life, including how to begin building a budget, how much and where to begin stashing away money for future goals, what to do with those pesky student loans, and the list goes on.
When it comes to hiring a financial advisor there are certainly no shortage of financial issues that can be tackled and people tend to engage for one of three simple reasons.
First, they do not have the time to dedicate to properly managing their personal finances.
Much like managing your health, it takes time and effort to ensure your finances are in good shape. Time has to be invested in each aspect of your financial life on an ongoing basis to ensure things stay on track. In a world of limited resources many people hire an advisor because they simply recognize that they’d rather not spend their most valuable resource – time – doing something someone else could.
Second, they have ZERO interest in managing their personal finances.
Did you hate economics in college? Despise math in graduate school? You aren’t alone. Many people find the thought of managing their personal finances in-line with going to the dentist; not fun. If you don’t enjoy managing your personal finances it is unlikely you’ll truly dedicate the time necessary to make sure you are saving adequately, that you’re paying off your student loans in the most efficient manner, etc.
Third, they do not have the adequate expertise to manage their personal finances.
Financial planning and investments are far from rocket science and never let any advisor talk you into thinking they are. However, most people have had little (if any) formal training when it comes to the basics of personal finance and so it is not surprising that even the most basic facets of managing one’s finances oftentimes prove difficult. Who really understands what an “A.R.M.” is, let alone the risks it could pose to one’s cash flow if rates rise? Do you know the difference between whole life and term?
Now that we’ve established some of the primary reasons people hire a financial advisor let’s dive further into what exactly an advisor can do to help you.
- Guidance on All Things Personal Finance: Right off the bat you’ll want to look for a financial advisor that is a Certified Financial PlannerTM and not a salesperson peddling product. The CFP® designation ensures that an advisor has a minimum level of experience, formal training on a wide range of financial topics, and most importantly is required to act in your best interest. This ultimately benefits you when beginning to work on tackling your top financial issues whether they are budgeting basics or complex investment needs.
- Lessen the Impact of Your Emotions: We all get emotionally involved in our money and there is a major downside to this. For example, we all know to “buy low” and to “sell high” with our investments. However, when the market drops you may decide to sell because everything you invested in seems to be disappearing, and you’re afraid of incurring further losses. In the long run this will hurt you much more than simply staying put and riding out the storm. A financial advisor will be able to provide objective insight and direction to help guide you away from letting your emotions get the best of you.
- Help You Avoid Missing the Forest for the Trees: Your advisor will help keep each mini-financial decision in perspective of your greater financial plan. How you deal with your investments could have an impact on your tax return and how you deal with your budget will ultimately dictate your ability to save. A good financial advisor will help you keep each financial decision within the context of your big picture.
- Help You Avoid the BIG Mistake: This is an aspect of a financial advisor’s value that is often overlooked because it is nearly impossible to quantify. Buying too much home, being underinsured, spending more than you make, and being too aggressive with your investments. The list goes on and on and these are all simple examples of big mistakes that can derail you financially. It is an advisor’s job to help you avoid financial land mines (there are a lot of them!).
The bottom line is simple. A financial advisor can likely help if you don’t have the time, interest or knowledge to manage your personal finances. It is also important to keep in mind that advisors aren’t just for the prototypical rich retired couple. In fact, a quality financial advisor can usually have the biggest positive impact on a person’s life early on, as they set out on their life’s journey. If you lack the time, interest, or expertise it might be time to start looking for some help!
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Providing the perfect blend of powerful technology and human guidance, Lifewise is geared toward young professionals searching for a better way to make wise choices and sound financial decisions. Backed by BerganKDV Wealth Management, Lifewise is supported by a team of CPAs, CFPs and CFAs who stand ready to guide you through every financial challenge and windfall.
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