Deciding whether to hire a financial advisor can be challenging.
On the one hand, a trusted advisor can help you get on track for retirement, make sure you have the appropriate amount of insurance, and manage your investments for long-term success. On the other hand, their services come at a cost. Ultimately, the benefits have to outweigh the costs, or it would simply not be worth it.
Of course, people hire financial advisors for different reasons.
Entrepreneurs may hire a financial advisor to help navigate the sale of their business while minimizing taxes and risks and ensuring a smooth and confident transition into retirement. A new physician may hire a financial advisor to help create a student loan repayment plan, potentially saving them thousands in interest while paying down medical school debt.
Top 3 Reasons People Choose to Hire a Financial Advisor
According to a recent Morningstar survey of over 300 current advisor clients, there are three common reasons to hire a financial advisor:
1. They feel more comfortable managing their money with the help of a professional
Regardless of their specific financial goals, in the end, everyone wants to know that they will be well-positioned financially. In other words, people want peace of mind. So, it’s no surprise that the reported number one reason clients work with an advisor is it makes them feel more comfortable with their money.
So what does that look like?
The right financial advisor will be able to show you what their investment philosophy is. The right financial advisor will be able to tell you what their clients experienced during 2008 or 2020. What was the client experience? What “controls” are/were in place in each account during significant swings of volatility? Any advisor worth their weight will be able to delineate the plan. If that plan involves stock picking or forecasting of any kind, Tencap suggests you run.
In our opinion, an intelligent advisor will be able to tell you what their investment methodology is, what types of funds you will own, what types of fixed income you will own, and be transparent about fees, etc.
The right advisor will be capable of helping you amass wealth during your working years, will be able to be helpful in reducing your tax bill as much as possible, and will help you prepare to spend down (draw on) your investments during retirement.
There are many services that a comprehensive financial advisor offers. As an example, Tencap completes a review of each of our clients insurance policies, looking for optimal coverage and any blind-spots. We make sure that Estate Planning work is complete and intelligently deployed. We help our clients handle filing for Social Security and help with any Medicaid needs or questions.
Lastly, as Americans approach retirement there are often many elements of “strategy” that can be utilized that often help our clients retain or build wealth. By specializing in financial planning and money management, we can often advise people of strategies that left alone, they would rarely complete themselves. That’s the benefit of working with someone that specializes in retirement planning.
2. They have a specific financial goal or need
The next reason people choose to hire a financial advisor is they have specific financial goals they want to address.
Some need a Social Security analysis to ensure they file for benefits at the optimal time and maximize their payout over their lifetime. Others want help with investment planning—designing an asset allocation and portfolio to help them stay on track for a secure retirement and will be a good fit for their age and risk tolerance.
Clients may require an advisor for strategic income tax planning, helping them find legitimate ways to lower their annual tax bill year-after-year.
No matter the goal, a good financial advisor can help their clients succeed. They develop a customized strategy based on their clients’ unique financial positions, goals, and objectives.
3. They need help managing their financial behavior
Lastly, clients reported hiring an advisor to help manage their financial behavior. They know they may be doing something wrong that keeps them from achieving their goals. A trusted advisor can help manage and change those behaviors.
Some common financial behaviors that clients struggle with include the following:
- Making emotional decisions because of fear or greed
- Overspending and not sticking to a budget
- Not following their predetermined investment plan when the market is volatile
- Taking on too much debt and spreading themselves thin
A financial advisor can help clients work on these behaviors by creating personalized strategies and providing guidance that helps them stay on track. They also provide a sounding board for big financial decisions, which can be invaluable in helping avoid costly mistakes.
Know this, very few clients hire an advisor with an awareness that this is something they need help with. In the eyes of few investors is there any sensible awareness to this vulnerability in thinking. To say that another way, this is an enormous problem for investors and very few investors are willing to see that left to their own decision making, they would make subpar or even terrible investment decisions. However, there is ample evidence that suggests that investors left without an advisor are far more inclined to break from investment philosophy during market volatility. What evidence is there to support that statement? Look at how many investors sold out of their investments during 2008 or 2020 at Vanguard Ask any advisor that has been in the business for very long. It is a problem and it impacts investors significantly!
The Value of Working with a Financial Advisor
At the end of the day, working with a financial advisor is about more than just investing and saving money. As cited, fundamental reasons for hiring a financial advisors, are:
- A sense of confidence that you are on track for the future, have a plan, and know where you are headed.
- It’s about understanding what your investment philosophy is and committing to stick with it.
- It’s about having someone in your corner who understands your financial goals and objectives, is capable and intelligent at identifying ways to amass and spend money over your lifetime and can help you make intelligent decisions during each chapter of your life.
- It’s about having an objective sounding board available when markets get scary, and you’re unsure whether you can stay on course or if you intend to get off of a moving ride.
From behavioral coaching and peace of mind to investment strategies, a qualified professional can be an invaluable asset for anyone looking to take control of their finances.
Why our clients choose to hire us at Tencap Wealth Coaching
At Tencap Wealth Coaching, we’re focused on helping you achieve all your financial goals through academically sound financial planning.
That means addressing your specific financial goals, offering tailored behavioral coaching designed to navigate challenging tendencies, and developing a financial plan that will provide peace of mind needed to keep you on track for the future.
You can expect our team to coach you on what you should and should not be doing and, perhaps most importantly, tell you why!
Consider that anyone that has hired us has had to ask themselves, “Is there value here above and beyond what I would save if I did this myself”? We are asked this often. It’s a completely fair question and we intend to show how we will add value above and beyond our fee. Plan on asking our advisors the same question!
From investment management to retirement planning and tax strategies, we are here to manage the complexities and strategies around your money. We only have to make a few high level decisions to create value above and beyond our annual fee. Know that we carry a high-degree of confidence we can showcase this for every client we take on.
This leadership and ability from our advisors and firm will allow you to relax and enjoy life while we lead out in planning, strategy and execution of your financial planning. Learn more or schedule an introductory, no-cost, meeting below.
Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.