If you are a new investor, a financial advisor can help you determine the right asset allocation to fit your lifestyle. If you currently have an investment portfolio, a financial advisor can evaluate your current investments and determine if they are still suitable to meet your short- or long-term objectives. A financial advisor is your financial planning partner. Let's say you want to retire in 20 years or send your child to a private university in 10 years.
To achieve your goals, you may need a trained professional with the right licenses to help you realize these plans; this is where a financial advisor comes in. Financial advisors can be great when you are confused, emotional, or simply ignorant of various wealth management topics. Add in the fact that most people can't see far enough into the future to imagine retirement, let alone plan for it, and professional advice can be very helpful. A qualified counselor will ask you a lot of questions, some of them uncomfortable to get a full picture of where you want to lead your life.
Financial advisors help you create a plan to achieve your financial goals and will guide your progress along the way. They can help you save more, invest wisely, or reduce your debt. Properly managing your investments and making the right financial decisions requires time, skill and effort. Financial advisors can also help you navigate complex financial issues, such as taxes, estate planning, and debt repayment, or help you invest with a certain strategy, such as impact investing.
The advisor should also fully explain any recommendations to you and disclose any potential conflicts of interest, for example, you could say: “Mutual fund company XYZ pays me 30% commission and ABC only pays me 25%. A financial advisor can handle all of that research for you, reducing cognitive overload and greatly simplifying the investment process. Each financial advisory firm is required to make investments in accordance with the law and its company's investment policy when buying and selling financial assets. So-called robo-advisors offer a hybrid advisory model that combines the typical asset allocation and advisory services of a traditional advisor with a digital and automated platform.
Alternatively, a 40-year-old with a smaller net worth and a willingness to take more risks to accumulate their financial portfolio may opt for an asset allocation of 70% equity assets, 25% fixed-income assets and 5% alternative investments. To use the CFP designation of the Board of Certified Financial Planners Standards, an advisor must complete a lengthy education requirement, pass a strict test, and demonstrate work experience. Financial advisors also help you invest your money, either by recommending specific investments or by providing complete investment management. Finally, if you don't have the time or interest to manage your finances, that's another good reason to hire a financial advisor.
Online financial planning services offer investment management combined with virtual financial planning. The questionnaire will also indicate future pensions and sources of income, project retirement needs and describe any long-term financial obligations. RIAs and IARs have a duty of loyalty and are required to act in the best interest of their customers regardless of their financial or other interests they may have. A financial advisor will work with you to get a complete view of your assets, liabilities, income and expenses.
Taylor Schulte, California financial advisor and founder of Define Financial, says now is the perfect time to know for sure if your current financial plan is still right for you. If you want to manage your finances alone, you'll also need to keep abreast of popular financial products and the introduction of new products. .