Financial advisors help you navigate complex financial matters, including when to start drawing Social Security and how to stretch your retirement savings. They also can guide you through the ups and downs of the stock market.
They can be expensive, but their expertise is worth the cost. It’s important to vet an advisor by reviewing their employment history and disciplinary record on BrokerCheck.
They can help you prioritize your goals
A good financial advisor is a trusted partner who can help you prioritize your goals and create a strategy that will get you closer to the future you envision. They can do everything from establishing savings strategies to fit your lifestyle and reducing taxes to ensuring that your assets will cover your eventual health-care expenses. They can also work with your other financial professionals to ensure that the plan addresses estate and philanthropic goals. In addition, they can create a financial strategy that takes into account the tax consequences of your choices and help you navigate changing regulations like taxable accounts, contribution limits, and investment options.
For example, if your goal is to buy a home in 2024, your financial advisor can break that down into smaller steps, like saving enough for a down payment and building up an emergency fund. They can also recommend a mortgage broker or real estate agent who can make the process easier for you. And they can help you create a debt payoff plan to tackle your student loan, credit card or mortgage debt so that you can be debt-free by the time you want to buy a home.
When selecting an advisor, it’s important to understand how they charge for their services and whether they are a fiduciary or not. A fiduciary must provide recommendations that are in the client’s best interests, whereas someone who is not may only be required to follow suitability standards.
They can help you manage your emotions
Whether it’s fear of an uncertain economy, a downturn in the market, or worries about retirement savings, financial advisors help their clients to manage emotions. They can help you find the right balance between risk and return and set financial goals that will work in the long-term. They can also help you make decisions based on fact, rather than emotion, so that you don’t end up making rash and irrational choices.
Clients can often feel vulnerable when discussing their finances with a stranger, so it is important to choose a professional who will make you feel comfortable and safe. Some factors to consider when choosing a financial advisor include their expertise, qualifications, licenses, and experience. However, it’s equally important to look at the emotional intelligence of an advisor. A good financial advisor should be able to separate their personal identity from their professional role. This helps them avoid conflicts of interest and remain focused on the client’s needs.
Choosing the right financial advisor can be difficult, but it is essential to find someone who understands your needs and will put your best interests first. Fortunately, SmartAsset has a tool to help you do just that. Sign up for a free demo of SmartAsset AMP, an all-in-one marketing service for financial advisors, today. This includes services like client lead generation and automated marketing.
They can help you stay on track
A financial advisor can help you stay on track with your financial goals. They will look at your current spending habits and previous money decisions, including whether you are saving enough each month or paying off your debt. They can also help you create a budget that will keep your expenses in check. For instance, they may suggest cutting back on eating out or eliminating unnecessary expenses like subscription services that you don’t use anymore. By improving your spending habits, you can save more and make your money go further.
A good financial advisor can also help you navigate life’s major turning points. For example, getting married or divorced, having a child, buying or selling a home, or taking care of elderly parents are all significant life events that can have financial implications. An advisor can provide guidance for each of these events and work with your other professional advisers to develop a comprehensive plan.
It is important to find a financial advisor who puts your interests first and has a fiduciary duty to you. You can do this by checking an advisor’s credentials and history on the Financial Industry Regulatory Authority (FINRA) website. In addition, interview potential professionals to see how they would approach your situation. Be sure to ask about how they are compensated and their fee structure.
They can help you make decisions
Financial advisors can help you navigate major life decisions, such as when to start saving for retirement, whether to take Social Security early or delay, and how to balance a desire for income with the need to make your money last throughout your lifetime. They can also help you figure out what to do with inherited assets or a windfall.
The first meeting with a financial planner is an opportunity for the client to discuss their current financial situation, including debts, existing investments and their tolerance for risk. The advisor may request a complete financial history, including bank statements, credit card bills, installment loan statements, pay stubs and tax returns for the past several years.
Once the advisor has a clear picture of the client’s finances, they can create a financial plan that summarizes their financial status and details long- and short-term goals. They can also review the client’s current investment portfolio and recommend changes as needed.
When selecting a financial advisor, be sure to consider the fees they charge. Some offer a flat fee for service, while others earn their income through commissions and a percentage of the funds they manage. Some even sell products and services on behalf of companies they work with. To avoid these conflicts of interest, look for a fiduciary. A fiduciary is legally required to put the client’s interests above their own.