Why You Should Consider Partnering With a Financial Advisor

Financial Advisor giving high five to client

Partnering with a subject matter expert and a professional in any area of your life provides an opportunity for substantial upside. Whether it’s your health, your legal matters, your education or your finances, the value you get from a true professional in return for the price you pay is often significant.

That said, I recognize that there are many examples where DIYing makes sense, and in some cases is the only possible option due to certain constraints. When it comes to personal finances and investing it has never been easier to be a DIYer, and yet, two recent studies in 2023 show that 78% (payroll.org survey) and 70% (Forbes Advisor Survey) of Americans are living paycheck to paycheck! Even if you make over $100,000 a year, there is a 50+% that you are living paycheck to paycheck according to a LendingClub report. While I’m not suggesting that every DIYer is struggling financially, I am pointing out that even with all the necessary tactical DIY tools (technology), the majority of Americans at all income levels are not meeting their financial goals and continue to carry increasing levels of risk when it comes to their financial health.

So how can a true professional financial advisor that puts your needs first help you?

1. Educate/ Demystify/ Simplify

In the ever-evolving landscape of personal finance, navigating the complexities of investments, insurance, retirement planning, tax optimization, estate planning and wealth management can be daunting. Many individuals find themselves grappling with a myriad of questions and concerns that it gets overwhelming so they get a case of analysis paralysis or put it off until another day that never comes. A financial advisor can help break down complex terms and strategies into easy to understand concepts that empower clients to make well-informed decisions that they feel confident about because they understand them.

2. Goal setting and comprehensive long-term planning

Most people have an idea of some kind of financial goal that they have, but it is usually some abstract thought like; be a millionaire, have a nice house, retire early, donate to my high school, etc. A good financial advisor can help you drill down to exactly what your life goals are, and what financial goals need to coincide with them to make them a reality. In addition, since most of us can’t achieve every single goal we have in life, an advisor can really help you prioritize your goals in order of importance based on reality.

Most of us have a similar set of financial goals broadly speaking:

Save enough to have a long, dignified and independent retirement without any real concern of running out of money.
The means to have the ability to meaningfully impact the lives of our children and loved ones. This includes the ability to do it while we are alive and our children may need it the most when they are just starting out, as well as to leave a legacy after we pass for our children/ grandchildren.
The financial resources to be able to help fund our children’s/ grandchildren’s education endeavors.
If necessary, be able to financially support the quality care for our parents as they age and may not be able to do so themselves without having to significantly sacrifice or risk completely ours or our kid’s financial future.
The awesome experience of being able to be charitable and leave a meaningful impact on your favorite charity, your church, your alma mater or an institution of your choosing.

Once the goals are drilled down on and agreed upon, an advisor can begin strategizing and putting together a long-term comprehensive financial plan to include things such as (but not limited to): Investment planning/ management, estate planning, insurance planning/ solutions, education planning/ investments, debt strategies, tax planning, business liquidation strategies, charitable giving planning, retirement planning, specific event planning (weddings…etc). As each individual goes through the planning process the plan gets more and more individualized based on your personalized goals and aspirations. An advisor can help implement these strategies, manage these strategies and/ or facilitate these strategies with other experts in their network.

3. Provide expertise and guidance

A financial advisor brings a wealth of knowledge and experience to the table that you can rely on to help guide you in your financial planning and investment decisions. Armed with information and perspective from a quality financial advisor, you can be more confident in your decision making and long-term wealth building strategy.

As the world changes more quickly than it ever has in the past, it is important to be able to keep up with new information regarding your personal finances. This could include changes to retirement accounts, Social Security, Medicare, taxes, interest rates on debt that you hold, etc. An advisor will help guide you through these changes and adjust plans accordingly to maintain your path to your goals.

4. Risk mitigation/ preparation

Many of us carry much more financial risk than we realize, and I don’t just mean in the form of being uninsured or underinsured. Although, the most recent study from LIMRA suggests that about 100 million Americans are without life insurance or inadequately insured. This doesn’t account for the millions that are underinsured or don’t have health, disability or long-term care insurance.

Outside of inadequate insurance risk, some individuals have tremendous financial risk by being too concentrated in one asset class or another, in one industry or in one company. Others carry the risk of losing purchasing power due to inflation and not being invested into the correct investment vehicles that gives them a chance to preserve and/or grow purchasing power. Many others carry significant risks by being over leveraged.

All of these risks carry the largest risk of them all… preventing you from reaching your desired financial goals.

5. Discipline and accountability

By now almost everyone is aware that panic selling out of the market during some volatility, or going all in on the “next big thing,” is more often than not the wrong answer. Even with all of the data supporting dollar-cost-averaging, indexing and going long, some of the most disciplined and intelligent people still buy high and sell low.

We also know that we should be funding our retirement accounts, staying reasonably diversified, creating our estate plans that include a will and making sure that we are properly insured just in case the thing we hope doesn’t happen…actually happens. And still, many (if not the majority) don’t stay disciplined enough and hold themselves accountable to do all of these steps regularly over any long period of time.

This is one of those areas where you can outsource your discipline, and you can make sure that you are held accountable. Unlike fitness, where you have to decide not to eat the french fries on your own because a fitness coach can’t be there 24/7, an advisor can set up a lot of automation, manage your investments for you and walk you through the rest of the steps with a cadence that is manageable. In other words, once the initial planning phase has been completed, your advisor can do most of the heavy lifting for you to ensure you actually achieve your goals and meet your obligations.

6. Time and convenience

Time is the most valuable commodity on the planet. We know this, because if you were 92 years old with a $10 million net worth you would trade it all in to be 30 yrs old again. Managing every aspect of your financial life is time consuming, and many people have limited time between a career, family and leisure. Regardless of the limits on your time, not taking your finances/ investments seriously isn’t an option. This is where an advisor can offload most of that burden for you, and significantly decrease the amount of time you have to spend in your lifetime managing your financial plan and investments.

Convenience is also a big factor when considering a partnership with an advisor. Many of the most disciplined and intelligent individuals have zero interest in managing their own finances even though they are capable. They would rather spend that time to make more money, take their family on vacations, play golf or whatever other thing that would bring them more joy. Clients also like having a central hub for all their financial affairs for its convenience. For instance, say a bank needs last year’s taxes and a copy of a mortgage statement. Your advisor most likely has that information archived and can provide it to the bank for your loan request on your behalf. A trusted advisor brings this convenience to their clients.

Whether you are busy executive with stock options, a serial entrepreneur with multiple 7 figure businesses, a high earner but not rich yet (HENRY) employee, a middle class W2 employee with a fantastic 401k plan, a Dr. in a lot of student loan debt with aspirations to own their own practice and be debt free or someone just getting started with entry-level employment, a financial advisor can help you achieve your lifetime financial goals.

While this list isn’t exhaustive of all the reasons why you should consider partnering with a financial advisor since each individual has their own unique financial picture, this list should serve as a guide to why it makes sense in many cases to enlist the services of a true professional financial advisor to partner with you on your journey to make your financial aspirations become a reality.

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