7 Reasons to Stop DIY Investing and Hire a Financial Advisor
Are you frustrated with the level of growth you experience when you attempt to invest on your own?
Do you feel left out when your friends or coworkers talk about how much money they are making in the market while the value of your portfolio barely budges?
If the answer is yes, it is probably a good time for you to take the next step in investing journey and ditch DIY investing by finally hiring a professional.
A good financial advisor can bring your portfolio to a higher level.
7 Real Reasons Why You Need to Hire a Financial Advisor
A financial advisor can help you avoid the many pitfalls of DIY investing, including:
1. Removing the Urge to Trade on Emotions
You've probably become more than a little emotional when you think about your money. And when it comes to investing, listening to these emotions more often than not can end disastrously.
It takes a particular type of person to be able to put aside feelings and make the right decision every time. A financial advisor is free of any emotional attachments and is able to choose whatever action is best for your wallet.
2. Failing to Employ a Disciplined Process
Hunches and tips rarely work out in the long run, but choosing and sticking to a proven investment strategy does.
Your financial advisor has years of investment experience to use as a guide, and will never risk your money over a gut feeling or a rumor.
3. Avoiding Rebalancing a Portfolio
Selling a well-performing asset to buy another financial instrument which is underperforming is crazy, right?
Well, not if you know what you are doing.
Most DIY investors are reluctant to make such seemingly counter-productive moves, but the pros know when it makes sense to take the risk.
4. Putting All Your Eggs in One Basket
The old adage, ”Only invest in what you know," is good advice, but if you don't have experience with several types of financial assets, your portfolio probably isn't diverse enough to offer you very much stability.
A good financial advisor will make sure that your investment strategy is well diversified to minimize down markets.
5. Selling When the Market Gets Scary
The market is down for the second week in a row, and the value of your portfolio is dropping like a stone. Are you going to have the guts to stick to with your investment system?
Most DIY investors don't and wind up not only selling their investments for a loss but missing out on the very lucrative rebound.
Financial advisors don't get scared by adverse market conditions, so, their clients are in the market to take advantage of the rebound.
6. Trying to Call Tops and Bottoms
You have heard it a thousand times, "Buy low, sell high," but attempting to call the tops and bottoms of a volatile market can cause you to lose out on a lot of profit.
A professional investor knows that being afraid to pull the trigger on a trade because the fear of getting every cent from a trade is silly as long as you can catch the majority of the trend.
7. Sleepless Nights
Investing on your own is stressful. If the market is up, you are worried whether you should ride the wave as long as possible or take your profit now. But if the market is down, it is even worse.
You are terrified your investments will never recover. Why do that to yourself? Do your due diligence, hire the best financial advisor you can, and rest easy.
The Big Takeaway
Why make investing harder than it has to be?
Take your life back and build a stronger portfolio by speaking with a financial advisor today.
Financial Advisor, Wealth Advisor, Investment Advisor: What's the Difference
Once you've decided it’s time to get some professional financial help, you may be asking yourself: “Which type of financial professional is best for me?”
From a financial advisor to an investment advisor to a wealth advisor, it’s helpful to know the differences between each category of financial experts before committing to a long-term engagement.
Understanding the Different Terms
According to the CFP Board, “consumer use of financial advisors has increased significantly in the last five years,” going up approximately 10 percent in the span of just five years.1
When advisors were surveyed about the benefits of cash flow management and budgeting, nearly 100 percent of them stated that their clients became more confident and secure about their financial futures after utilizing the service.2
However, “consumer use” does not necessarily mean every age group of consumers is jumping on the bandwagon. The Society of Actuaries found that “only 52 percent of pre-retirees and 44 percent of retirees consult a financial planner or advisor.”3
Before you make a final decision, we’ve rounded up some of the key differentiators between each group so you can sign your contract with confidence.
Term #1: Financial Advisor
The most used term, a financial advisor is someone you helps you with different aspects of your financial life. This might include planning for and transitioning to retirement, investment advice, life insurance, 401(k) plans, IRAs, budgeting and more.
Every financial advisor is different in what specific areas they specialize in and what services they provide, so if you are looking for help in one particular area, it is always best to ask.
Financial advisors can be compensated in a variety of ways - they can be fee-based, fee-only, or charge a percentage based on your total AUM (assets under management).
Term #2: Investment Advisor
An investment advisor is a professional who focuses on just that - your investments.
An investment advisor will manage your portfolio with the goal to get the highest rate of return that you can over the long run.
Before they begin designing your portfolio, investment advisors should evaluate your current financial picture, as well as determine your optimal risk tolerance, which may involve you filling out a questionnaire.
After discussing your needs and goals with your advisor, they typically will then present an investment strategy tailored according to the unique aspects of your life.
Some investment advisors actually manage your money and do the investing for you, other simple "advise" on what you should do, leaving you to implement the strategies on your own.
Term #3: Wealth Advisor
With more money comes more responsibility, and wealth advisors’ duties are catered specifically to those who have a decently-sized estate, often labeled as high-net-worth and ultra-high-net-worth individuals.
Also known as wealth managers, some of the topics wealth advisors cover include risk management and estate planning.
Keep in mind, many firms may categorize their own business under more than one of these labels (they might say they are a "financial advisor" as well as a "wealth advisor".
The Big Takeaway
Of course, the best course of action is always to contact any financial professional you are interested in working with directly and learn more about their business model and what services they provide to their clients.
Does My Financial Advisor Need to be Local?
Choosing your financial advisor is based on your needs, goals, and comfort levels, aligned with the advisor’s expertise. So, the answer to the question is no. Remember this is a joint relationship that involves your input to the advisor. An experienced financial advisor will help create investment strategies to generate sufficient wealth and retirement income.
Thanks to technology, tech-savvy consumers have an option of working with a remote or local financial advisor.
Interactions include face-to-face meetings via video conferencing, regular follow-up calls and email communications.
The First Meeting
Your first physical meeting or virtual communication is typically designed to discuss your current situation and your future goals.
The purpose is to develop a plan and build an investment portfolio based on your goals. Once the getting-to-know-you sessions (preliminaries) are completed, customary communications and annual meetings are essential.
For many clients, the lack of understanding or the uncertainty of the markets is daunting. An experienced financial advisor is going to help organize your finances for maximum benefit from now into retirement.
Planning Today for Tomorrow
Whether you choose to work with a local or remote advisor – an assessment of your personal and financial needs are critical to developing an investment plan. If you prefer traditional face to face visits, working with a local advisor is best. If you’re comfortable with mobility and have a set perception of the chosen advisor’s characteristics, expertise, and skill to achieve your financial goals - geographic distances will disappear.
Remember, you may be retiring outside of your local area. At some point, you will need to use technology to communicate with your advisor. So why wait? From the advisor’s perspective, sound business practices are rooted in establishing long-term relationships built on long or short distance trust.
Life is unpredictable, and a financial advisor can help manage the economic changes by lessening the financial challenges. The key is establishing a reliable portfolio for you with the most growth and least risk possible.
Changing Times
When you’re looking for a financial advisor, you may need to look beyond your local neighborhood. Advisors have been actively working with local and distant clients for years – regarded financial experts generally have clients scattered throughout the states, sometimes internationally.
It’s essential to select the expert capable of walking you through the hurdles to keep your dream on track no matter what life throws at you.
In some cases, the client’s location may limit the selection of local financial advisors, making it necessary to work with a remote advisor.
You may change residences or careers relocating to another city and find that working with an advisor remotely, works for your lifestyle. Look for one with the skill and knowledge to work with your situation and help guide you through the phases of earning investment returns.
The point is finding a good match for your life’s financial planning – location may be a secondary consideration. As a standard protocol, the client and the advisor establish communication methods and schedules.
Due Diligence
Before you choose a financial advisor, do your homework. Ask for references, talk with the current clients, and check out the governing financial agencies – you’re looking for disciplinary history.
All financial advisors within the U.S. operate according to the law governed by standards and regulatory guidelines. Don’t be afraid or intimidated to ask the advisor about the information you find.
The Big Takeaway
The principle value is awareness – client needs change – markets shift.
The right financial advisor will determine the amount of risk you can afford and navigate you through the events that impact your future.
Plan for the unexpected, discuss the past year’s activities and make the necessary changes as you move forward. You can’t do it alone – you need an experienced and practiced professional - local or distant.
5 Questions to Ask Before Hiring a Financial Planner
Hiring a Pittsburgh financial planner is an incredibly personal - and important - decision. This is someone who will be perusing the intimate details of your financial life, and could potentially hold your future retirement success in their hands. Most experts agree that anyone would benefit from working with a financial planner, no matter their level of income. However not all financial planners will be a good fit for you. Before you start working with a financial professional, it's a good idea to ask them these five questions:
1. Do you have experience working with others in my life situation?
Your financial planner isn't there to judge you, their job is to help you make the best of any financial situation. This could mean helping you bail out from a bankruptcy, developing a new plan now that you are divorced, or figuring out how to retire early. Finding a financial professional that has experience working with other clients similar to you, with a comparable attitude towards risk and similar needs, is a good first step.
2. What is your net worth, how did you make your money, and how is it growing?
The best option is to learn from an individual who has already proven their chops on their own money, before they decide to test out their theories on your retirement account. Far from being rude, your financial planner is likely to expect this question and probably has an answer ready to share. Hearing their strategy for growth may help you determine whether or not they would be a good fit for your long-term goals.
3. Are you willing to sign binding fiduciary and non-disclosure agreements?
A fiduciary agreement, also known as being held to a fiduciary standard, means that your financial planning professional is required to place your interests above their own -- even when it means they make less money on a trade or sale. Non-disclosure agreements are especially important for high net worth individuals, as this reinforces the standards of privacy required for anyone handling your personal and financial information.
4. How are you compensated for helping me?
Financial planners are often making money from a variety of sources: direct hourly or flat-fee payments from clients for managing financial interests and a percentage or fee for trades. It's important to know exactly how your advisor is compensated before you make a final decision (but it's important to remember that you often get what you pay for!
5. Tell me about a client's success (and a failure!)
While most professionals are interested in telling you about fantastic success stories, understanding where something went wrong is just as important to future learnings. Having a candid discussion up-front about how things can go wrong or what helps them go right is an important conversation and will also help you determine if you can trust the advisor.
Most people find working with a financial planner to shed light on many financial factors they had not considered. You may learn more about financial principles and ways to improve your family fortune – or simply get a plan in place that leaves you feeling more comfortable about your future.
Franklin Madison Advisors, Inc. (“FMA”), is a registered investment adviser firm with its registration and principal place of business in the Commonwealth of Pennsylvania. Registration of an investment adviser does not imply a certain level of skill or training. FMA is in compliance with the current notice filing requirements imposed upon registered investment advisers by those states in which FMA maintains clients.
This commentary and forecasts are limited to the dissemination of general information pertaining to Franklin Madison Advisors’ investment advisory services and general economic and market conditions and are subject to change without notice. The information contained herein is not intended to be personal, legal, investment or tax advice or a solicitation to buy or sell any security or engage in a particular investment strategy. For additional information about FMA, including fees and services, please contact FMA or refer to the Investment Adviser Public disclosures.
FMA may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by FMA with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For additional information about FMA, including fees and services, please contact FMA or refer to the Investment Adviser Public disclosures. Please read the disclosure statement carefully before you invest or send money.
Three Things to Know About Paying a Financial Advisor
Did you know that not all financial advisors get paid the same way? And while compensation does not make the financial advisor, how they're paid can influence the advice you receive and potentially the outcomes of your financial goals. What's more, if you don't understand what your own financial goals are, you may end up paying for products or services that you don't necessarily need.
Knowing where your hard-earned money goes should be your top priority when it comes to working with a financial advisor. This understanding is essential because your ability to make smarter decisions with your money rises when you know what you're paying for and how your advisor gets paid. And when you make smart money decisions, you increase the chance of achieving important long-term financial goals.
Not All Financial Advisors Get Paid the Same Way
One of the first things to know before you go out and spend on a financial advisor's services is that there are some critical differences in how their firms earn money. In general, when engaging with a financial advisor, you are likely to pay either 1) a commission, 2) an asset under management (AUM) fee, or 3) an hourly or flat-rate fee.
Commission-based Fees
When you work with a commission-based financial advisor, the commitment typically is transactional. For example, a transaction occurs when you complete a securities trade with an advisor's assistance, or they help you buy/sell assets in your investment portfolio. Specifically, you're likely to meet a commissioned-based advisor when you buy a product like an annuity or a mutual fund.
Typical fees for annuity commissions and mutual fund loads can be as high as 8% of the product sold. At an 8% fee, for every $100,000 you allocate to an annuity or mutual fund, the advisor's broker-dealer will keep $8,000 of your money and split it with your advisor.
AUM-based Fees
Size matters for advisors who operate under an asset under management (AUM) basis. Assets under management represent the dollar value of investment accounts for which a financial advisor is responsible. The industry average AUM fee hovers around 2% of investible assets but varies from one advisory firm to the next. Such firms typically have AUM minimums (many around $250,000).
This minimum comes from the fact that firm compensation is commensurate with the amount of assets managed. Typically paid quarterly and in advance, a 2% fee on a $250,000 investment comes out to around $5,000 per year and could be paid directly out of your investment account.
The fee-for-service model is the third way you may pay for a financial advisor's services. For instance, fee-for-service financial advisors typically charge for financial planning or investment management services using an hourly rate, a retainer, or a fixed fee approach. Hourly rates can average $250 and are useful for project-based work like creating a debt payoff plan. Similar to the way many legal firms charge their clients, a retainer fee is paid to an advisor's firm in advance and billed against the time you use to speak to or work with your financial advisor.
A fixed-rate fee is typically associated with a robust suite of services that include comprehensive financial planning, or flat-rate investment management services all for one price. Fixed rates usually average $3,000 per engagement, and you'll likely pay this fee directly to your financial advisor's firm.
Another distinction is a fee-based advisor, who may charge a fee for their service and yet receive a commission for selling you insurance or securities products. Fee-only advisors, on the other hand, typically sign a fiduciary oath (more on fiduciary later) and pledge not to receive commissions.
Compensation Can Influence Your Experience and Outcome
The incentives used by your financial advisor's employer may also influence your experience and overall financial results. Indeed, firms that hire financial advisors (banks, broker-dealers, insurance companies, registered investment advisors) have developed compensation structures meant to drive outcomes for their organizations.
Put simply, an organization's leaders will incentivize (pay) financial advisors to hit sales, asset, or client acquisition goals. What this means to you is that there may be a fine line between whether your financial advisor is looking out for your, their own, or their firm’s best interests.
Sales-based goals
The organizational goal of a commission-based advisor is generally to drive product and insurance sales for their firm. Commission-based advisors are typically associated with a broker-dealer or insurance company. The eat-what-you-kill culture of a commission-based environment may be enough to drive the sales goals of an advisory firm.
Even so, some business leaders have implemented quotas stipulating that an advisor must meet rising dollar or product sales targets to remain employed with their firm. Therefore, if it's the end of the quarter and your financial advisor hasn't met their quota, guess which product or service they're going to recommend to you?
Accumulating more assets is a crucial organization goal of AUM-centric advisory firms. Such companies may be associated with a bank, broker-dealer, or registered investment advisor (RIA). Because client assets tend to move from one firm to another over time, advisors have an incentive to bring in new clients to make up for lost revenue.
At the same time, the percent-relative nature of the AUM model naturally leads to higher firm revenue (and advisor pay) as assets under management rise. Indeed, a financial advisor could receive the same compensation by working with a single million-dollar client as they would with ten $100,000 clients. If an advisor's compensation rises with AUM, and their time is limited, what type of client do you think they'll want to work with most?
Client-acquisition goals
A primary goal of fee-for-service oriented companies is to increase the number of clients that come in through the firm's door. Banks, broker-dealers, and RIAs may employ a fee-for-service model. Yet, registered investment advisors are increasingly leading the way on fee-based and fee-only offerings.
However, some low-cost, fee-for-service offerings may require a financial advisor to work with a large number of clients to achieve the organization's revenue targets. What does this mean to you? Well, there are only so many hours in a day. Think about a financial advisor who has hundreds of clients that they're servicing. How much time, care, and attention do you think your financial priorities will receive when it's your turn to talk about your goals.
Suitability vs. Fiduciary Standard
Understanding the difference between suitability vs. fiduciary standards may influence your financial advisor experience. Simply put, one standard is more legally rigorous as it relates to the kind of advice a financial advisor provides.
For example, let's say that you want to add an index fund to your investment portfolio. Under the suitability standards, your financial advisor must ensure that a fund they recommend suits your needs, goals, and objectives. So far, so good, right? Not so fast. There's nothing to say that an advisor can't recommend a higher load, a-share mutual fund when a lower-cost exchange-traded fund (ETF) would do the job for you just as well.
Under fiduciary rules, however, a financial advisor is legally bound to serve your best interests. This standard is similar to those required of accountants, doctors, and lawyers. In the case of our example, an advisor must find a suitable solution for you. Still, if a lower-cost product like an ETF is in your best interest, then by fiduciary rules, your advisor is required to recommend the product that is in your best interest.
So, to whom does a suitability standard apply? This standard typically applies to commission-based advisors associated with broker-dealers and insurance companies. The fiduciary standard, on the other hand, usually refers to bank- and RIA-based advisors. What's important to note here is that an advisor can be simultaneously associated with both a broker-dealer and a bank or RIA. If a fiduciary standard is important to you, you should ask your advisor how much time they spend in a fiduciary role.
Buyer Beware: You Get What You Pay For
A final point about paying a financial advisor is ensuring you have a clear understanding of what you're trying to accomplish. There are a host of reasons (we wrote about ten of them here) why you might set out to work with a financial advisor. However, a mismatch between the kinds of services that you're looking for and the advisor you ultimately hire may lead you to subpar outcomes and a lower chance of achieving your financial goal.
For example, if your reason for seeking out an advisor is to develop a process that creates wealth, like increasing cash flows or paying down debt, then working with an AUM-based advisor may or may not be a good match. Even if you meet an advisor's asset minimums, you may end up paying for investment services that you otherwise may not need.
Alternatively, an insurance-based financial advisor may or may not be the best person to speak with if you are planning for a retirement that's still 10-20 years out. Why? You could end up purchasing an expensive insurance product that does not keep pace with your lifestyle or evolving risk tolerance or financial goals.
The point here is that each advisor brings their kind of value to the table, so be sure to clearly understand what services you need and shop around before committing to a single financial advisor.
Knowledge is Power
It's important to understand that compensation does not always make the advisor. For example, some commission-based advisors provide excellent service, seek to put their clients in the lowest cost, most suitable products, and ultimately help their clients achieve critical financial goals. In contrast, a fee-for-service advisor may deliver an inadequate financial plan because they failed to hear their client's needs, leading to poorly understood or improperly defined planning objectives.
Even so, knowing where your hard-earned money goes should be your top priority when it comes to working with a financial advisor. This understanding is vital because your ability to make smarter decisions with your money rises when you know what you're paying for and how your advisor gets paid. And when you make smart money decisions, it improves your overall financial planning and investing experience and increases your chances of achieving important long-term financial goals.
Ten Signs it's Time to Find a Financial Advisor
Having a firm grasp of your finances is a critical part of reaching your financial goals. With money being a very personal matter for each of us, knowing when you might need help can be a real struggle. Even so, changing circumstances and life events could be an early indication that you may benefit from a financial professional's assistance. Indeed, here are ten signs that now may be an opportune time to speak with a trusted financial advisor:
1. You’ve just come into a large sum of money.
Have you become suddenly wealthy or come into a small windfall? Whether by inheritance, legal settlement, bonus, or other means, a key concern after the money comes in is, "what should I do now?" Knowing what to do with a large sum of money can be a challenge for many people. Undoubtedly, friends, family, and a host of other souls may offer you well-meaning advice. But the real question is: what do you want to do with your money?
More money can bring more opportunities. When you work with a financial advisor, they can help you narrow down and prioritize what you'd like to do with your money. They can also create a plan to align your spending and investing decisions with what matters most to you now that you have more opportunities. Doing so can help preserve the longevity of your money or ensure that you're not spending in a way that you may otherwise regret.
2. You once enjoyed staying on top of the markets and your investments but would rather spend your time pursuing other interests.
Has investing lost its excitement to you? Losing interest in managing your investments can happen for many reasons. Maybe you were the type of person that got excited about tuning in to CNBC or daily reading the Wall Street Journal—even running the latest Zacks screens to find undervalued securities to add to your investment portfolio. Today, however, you would rather spend your time doing other things that interest you.
What about the financial goals set when you had initially opened that brokerage account? They may nevertheless be within reach. And did you know that a financial advisor can help manage the very account that you once managed on your own? Indeed, one job of a financial advisor is to stay on top of developments in the markets and economy and determine whether and what actions they need to take in their clients’ portfolios so that you don’t have to.
3. You’re not sure what to do about the investments you have overlooked for far too long.
Do you have three or four retirement savings account sitting with a former employer? When’s the last time you rebalanced your 401(k) or checked your brokerage account performance? If you’re not sure how to answer any of these questions, it may be a good time to check in with a financial advisor.
A financial advisor can help you make a plan to consolidate your investments, determine when and how often to rebalance your investment accounts, and show you where and why your investment performance may have deviated from the market. Simply put, a financial advisor will help your investments get back on track and help you keep an eye on its performance.
4. You’ve decided to retire and need help to manage your savings to ensure it lasts through retirement.
After planning for retirement, what’s the next most important financial decision you’ll make? Deciding on how and when to draw down your retirement savings. This decision is vital because your withdrawal choices during times of market volatility can have a significant effect on your savings’ ability to provide during your golden years.
For example, a withdrawal strategy that generally assumes calm markets can derail even the best-laid retirement plans when your investments significantly fall in value. A financial advisor can work with you to understand your liquidity needs and tailor a withdrawal strategy that produces an adequate amount of cash to weather a market downturn while keeping your money invested for the long term.
5. You have reached a meaningful life or career milestone and financial need a plan chart your next course.
Did you just get married (or divorced), buy a house, or get a promotion? It may now be an excellent time to speak with a financial advisor. The reason being is that your spending and savings patterns are likely to be affected by various crosswinds during this time of change.
More importantly, individual and family goals can shift as a result of these milestone events. A financial advisor can take the time to help you refine your priorities, create a financial plan, and provide tools that can help you align your spending and savings with your new financial priorities.
6. You’ve experienced career or personal change, and you’ve had to put off taking care of important financial decisions.
Has life come at you so fast that you’ve lost track of important financial goals? Whether you now realize that you haven’t saved enough for retirement or you have a child preparing for college, it’s never too late to save for retirement or any other consequential financial goal that you may have.
Financial advisors typically have access to sophisticated planning tools. And when applied appropriately, an advisor can create financial projections based on many model assumptions and inputs to show you with varying degrees the time and cost it may take to get your savings goals back on track.
7. Your financial goals are not as straightforward as they used to be, and you need some help realigning priorities.
Do you know what your financial priorities are? Understanding your financial priorities and objectives is essential because they are fundamental components of a solid financial plan. In fact, without clearly defining your goals, your financial plan is likely not to be as effective as it otherwise could be. So how can you clarify goals that once seemed straightforward? Talk it out.
The hallmark of a trustworthy financial advisor is in their ability to understand who you are as a person, listen to what you want from your life and help guide you toward a more specific vision of your financial intentions. What’s important to keep in mind during this process, however, is that your priorities match your values, or what’s important to you. The reason being is that if you can’t buy into the financial priorities outlined by your advisor, chances are you won't buy into your financial plan.
8. You’ve tried the one-size-fits-all books, seminars, or planning solutions and are looking for a plan custom-tailored to your unique lifestyle needs.
Have you ever met someone that taught themselves how to play the piano by ear? Or how about that neighbor that knows how to fix just about everything only by Google searching an article or watching a YouTube video? If this speaks to you, chances are you probably have your financial and investment house in order but are looking for a way to take your process to the next level.
If these scenarios do not speak to you, you’re likely inclined to want someone to help guide you along your planning and investing journey. In either case, a financial advisor can look at your unique background, experience with planning and investing, and create bespoke solutions to meet your financial needs, goals, and objectives.
9. You want a more comprehensive solution to your financial needs.
When was the last time you heard of an electrical or roofing company take on the task of single-handedly building a house? It’s not likely as specialist contractors generally tend to stay in their swim lanes of expertise. That’s where a general contractor comes in. They broadly oversee the construction of a home, from the foundation up to the roof and everything in between, calling in specialists as needed.
When it comes to your financial life, one sign that you need a financial advisor is that you’ve worked with a specialist (an insurance- or investment-oriented advisor) and now want someone to help you out across all aspects of your financial life. As with a general contractor, a fee-only financial advisor offering comprehensive financial planning and investment management services will consider your financial priorities, create a plan, call in the specialists and walk you through each step of the implementation process.
10. You want objectivity in the financial advice you receive and not sure that a commission-based advisor can deliver that outcome.
Did you know that not all financial advisors receive compensation the same way? For example, a commission-based advisor typically earns an income when they sell you an insurance or investment product. Therefore, the more products an advisor can sell, the more revenue they make. When you pay a fee-only advisor directly for service, you receive advice that is in your best interest, free of any competing considerations for selling a product or moving your investments over to their firm. When this happens, it could increase your confidence in the motivation driving the advice you receive and turns the focus toward developing a long-term relationship.
What’s more, when you pay a fixed fee, whether upfront or ongoing, it is clear how much you are paying. A fee-only advisor typically has no complicated fee structures to explain or potential “hidden” fees that may lead to confusion. Through this approach, the benefit to you may be greater trust in your advisor. At the same time, it may reframe financial planning services as another normal part of your financial life, rather than an excessive extra.
Are you ready to speak with a financial advisor?
You may have your reason for wanting to work with a financial advisor not included in this list. The reality is that individuals each have their personal reasons for seeking a financial professional’s services.
Whatever the case may be, if you’re considering your financial future and have experienced a significant change in your life, want more time for other pursuits or entirely not sure where to start, now may be time to speak with a financial advisor.