The market is on a roller coaster this year, and the potential rewards for investing are many. Of course, so are the risks. Unless you yourself are a certified financial planner- and even if you are- it is always advisable to hire a reputable investment advisor to guide your decisions.
A trustworthy financial advisor can inform you of potential opportunities about which you may not be aware. They can also listen to your long-term goals and implement ways to achieve them. They can help you formulate a plan to mitigate risk and protect your interests in the near and far future.
Here are seven benefits of hiring a financial advisor.
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Experience
If you are not trained or schooled in finance, it may seem daunting to approach stocks and bonds, REITs, joint ventures, and other investment opportunities. A financial advisor should have the experience to explain and recommend appropriate opportunities for you.
When you hire a financial advisor, you want someone who can look at your specific goals within the context of the markets of today and tomorrow, this year and twenty years hence. You want someone who has experience under their belt guiding clients similar to you towards financial security.
That doesn’t mean the financial advisor has to be elderly, – although some clients do like the maturity that seasoned advisors can bring to the table.
Look at their educational background and the previous jobs held by any potential advisors you are considering: have they worked with financial institutions, venture capital companies, or private equity firms? Did they study economics and business at an accredited university?
Seek references for any potential financial planners. If they have a strong record of helping people like you with similar financial objectives, that experience shows they have the capability to help you.
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Cost
You may think you can save money by not hiring a financial advisor and doing it all yourself. Unfortunately, without experience or knowledge about the market, you may end up losing more money in the long run by making costly mistakes.
Some brokers may charge a percentage of your investments. Other advisors will charge you fees based on factors such as the size of your investment, their level of skill, and their reputation.
Fee-only investment advisors are suitable for people trying to manage their income for the future, provide for their families, and maintain a certain quality of life. They can help you make wise decisions without charging you exorbitant costs every time they buy or sell something on your behalf.
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Emotional Distance
One of the most important benefits of hiring a financial advisor is the emotional distance it will give you from the day-to-day stress of what is happening to your money.
With the market in its current state of instability, it is really easy to panic. As stock markets rise and fall, you may worry about your future, and make rash decisions.
Although financial planners will do as you tell them, often they can help you put instability into perspective. In fact, sometimes when the market plummets, they see opportunities instead of disaster!
By calling your advisor before investing at the slightest sign of recession, you place a buffer between yourself and self-destructive financial decisions.
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Tax Impact
Good financial planners can help you not only make money but advise on ways to save on paying high taxes on the money you make through investments. They will educate you on how to invest in order to reduce your capital gain and offer options in trusts and other vehicles that can defer or reduce tax liability.
They can help you set up ways to pass along investments to your children as well, so that they may benefit from your investments, even after you are gone.
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Retirement Planning
You may be looking forward to retirement, but worry about how to pay your bills without a monthly paycheck. Financial advisors help their clients make investments to fund how they want to live before and during their “golden years.”
They can also change your investments as your needs change. When your children are growing, you may need your dividends to go towards college savings. When your kids are out of the house and your own home is paid off, you may want to diversify your investments to fund dreams you have always had, like traveling or moving.
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Estate Goals
Another benefit that advisors bring to the table is the ability to plan for your family after your demise. They can create trusts which will help your children and their children, with reduced tax impact. They can show you how to pass your assets along so that your family will not get hit with high “death taxes.”
It can be hard to think about death. Some people like to avoid difficult conversations about what will happen to their money when they pass away. Here is another situation where an objective advisor can give dispassionate advice and perhaps see the situation with a clear perspective.
Wise planning now can benefit your family for generations to come.
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The Big Picture
The greatest benefit of hiring an investment advisor is their ability to see the big picture. It is always so hard to see beyond our own experience, especially when it comes to money.
They can calm you down about up- and downswings in the market, and give you a yearly analysis with five- to ten-year predictions. They can show you trends that may come to fruition years down the road.
They can point out where spending now will pay off later, and how long term planning may come in handy in decades to come when you sell your house, retire, and even pass away.
Your Investment Advisor: The Most Important Guidance You May Ever Receive
If you are considering hiring an investment advisor, you are making a smart choice. You can remove yourself from the day-to-day anxiety of worrying about whether you will have enough to live on for the rest of your life. You can rely on a specialist who has the experience and perspective to make your money work for you and your family for years to come.
For more information on how to find the best investment advisor for you, contact us.
It’s great that you mentioned how a financial advisor should have the experience to explain and recommend appropriate opportunities for you. I was reading up about investment guides and one of them talked about hiring an advisor. It seems there are various types, like one for investment for nonprofits for example.