When to Work with a Financial Advisor

By Craig Lemoine, Ph.D., CFP^®, Director of Consumer Investment Research

When you think about financial planning or wealth management, you may think those services are only needed and meaningful for people who have accumulated monopoly-style buckets of money. And while financial advisors and wealth managers can add generational value to the top 0.2%, they may also be able to add meaningful and significant generational value to those of us in the remaining 99.8%.

What Do Financial Advisors Do?

Financial advisors aim to help their clients in a variety of ways, but the most integral part of what they do is financial planning. Financial planning is a process that can help you identify and inventory your current financial situation, chart goals for where you want to go and who you want to be, then develop a plan that you can follow to pursue those goals.

The process is ongoing. As you move through life, your financial advisor can help monitor your progress and adjust your plan as your goals or the economic environment changes.

Skilled financial advisors have spent years developing technical and emotional knowledge to guide their clients through the process. They can provide advice on a variety of topics, such as:

• Cash flow management
• Credit planning
• Investing
• Saving for big purchases
• Retirement planning
• Estate planning
• Wealth management
• Insurance

Financial advisors also spend years developing strong listening and communication skills to help you talk through your goals, uncover hidden risks and plot a course to work towards success.

Do I Need a Financial Advisor?

Working with a financial advisor may help you add value and direction to your financial life. They can coach you through life’s transitions – the good, the bad and the ugly.

The process of financial planning is not reserved for the elite. Qualified financial planning professionals can help you build a foundation and work with you over your lifetime. A financial planning professional can help you build a safety net and chart a course in your 20s, protect and accumulate wealth in your 30s, build a team of knowledgeable professionals for meaningful wealth accumulation and decumulation events in your 40s and 50s and set you on a course for a retirement of significance. Once in retirement financial planners aim to help you make the most out of your go-go years and transition into a different pace as you age.

Financial planning professionals help build teams to help you prepare and navigate changes through your life. It is never too late or early to find a financial advisor who can help you take a financial inventory, dig into your personal and financial goals and help set a course to make them happen.

Reasons to Work with a Financial Advisor

Generally, we seek financial advisors out during times of transition. Times when our lives are gradually changing or forced into unrest. Planning for a child’s future college, determining how much to save for retirement, what to save in for retirement or making a housing decision are gradual transitions. Where divorce, selling a business, being laid-off, inheriting money or losing a loved one are very dramatic and sudden transitions.

When we work with a qualified financial advisor, we can begin to lay the groundwork to protect ourselves from some of the more common transitions. Developing a life and disability insurance program can protect dependents and loved ones from death or disability. Having proper estate planning documents can ensure our assets pass where, when and how we want them to. Saving monthly for retirement can create meaningful assets to help boost any shortfalls. Building up a three- to six-month cash reserve can protect you from sudden job loss and unemployment.

Following and executing the financial planning process may be able to help relieve stress and protect us from some of the sudden shocks that life offers. But it can also help build assets, protection and legacy through generations. The financial planning process helps us determine how much to save each week or month to work towards our financial goals. The financial planning process helps identify our risk capacity and risk tolerance, goals and time horizons to create appropriate investment portfolios. The process can help identify when and how to claim social security, address insurance adequacy and create a strong retirement, college savings or housing platform to work towards success.

The value of a financial advisor is found in the ability to help navigate transitions in a world surrounded by change. Economic change is scary! Market downturns, political turmoil, recession fears and high inflation can feel in the moment defeating. Working with a financial advisor may help you stay on your course, rather than abandoning your goals. Financial advisors provide an experienced ear that can listen, adjust and create new pathways to pursue your personalized goals, especially when times are uncertain.