When I meet someone at a party (or more likely, at one of my kid’s soccer games) and I tell them what I do, usually the first question they ask is “What do you think of the stock market?”
While I do spend time helping clients with their investments, the vast majority of my time is spent helping clients in other ways. Below is a list of four things a good financial advisor does beyond just giving investment advice.
I help my clients really understand their finances. Most advisors have extensive experience and education on a wide variety of financial topics that clients can benefit from. A good advisor takes the time to help with everything from understanding options for your children’s college financial aid to analyzing your Social Security statement and helping you identify payout possibilities.
Understating the strategy behind any investment advice is important as well. It’s your money, you should understand how it’s being invested, and why it is appropriate for you. Even if you are someone who does not view yourself as financially savvy, you should have a basic understanding of why your money is invested the way it is, and how that might change in the future.
Keep you organized
Our office keeps digital copies of client financial documents. Everything from medical directives and insurance coverage details to wills, trusts, and other estate documents. We also help you understand the tax ramifications of major financial decisions and understand the records you need to keep (and the ones you don’t) so that you don’t end up with an unexpected tax bill at the end of the year.
Help you plan
Everyone has goals for their future. A good advisor will help you formalize those goals and create a financial plan. That plan acts as roadmap to take you from where you are today to where you want to be in the future. Using known variables such as current account balances, cash flows, and savings rates an advisor can estimate future asset values, create a withdrawal plan and recommend an investment allocation based on your individual needs. That information can be incredibly insightful and valuable when making some of life’s major decisions, including buying a home or deciding when to retire.
Financial planning also plays an important role in helping you get the most out of your money. Careful planning can help you set priorities and work steadily towards long-term goals. It may also provide protection against the unanticipated, by helping you prepare for things such as an unexpected illness or loss of income.
Give you confidence
One of the most rewarding parts of my job is improving my client’s financial confidence. Many people come to me worried about a financial matter. I help them identify what they are worried about and then suggest changes they can make in their finances to alleviate that worry. This is especially true for people at (or nearing) retirement who want to identify the best way apply the money they spent their entire lives saving.
I also act as a sounding board for my clients. They bring their big life-changing ideas to me and we work together to help them understand how that may affect their financial future. My clients have all kinds of ideas, from starting a business to buying a vacation home. These ideas cost money and it’s important to know how it might affect their overall financial picture. Once you have some confidence, those big decisions might not keep you up at night.
As you can see, a good financial advisor does a lot more than just give investment advice. We provide a holistic approach to your entire financial life, helping you and your family navigate and make informed financial decisions while pursuing your goals.