The Value of a Financial Advisor
Managing your finances has become an essential aspect of our daily lives. With so many investment options available in the market, it can be challenging to make the right decisions for your financial future. That's where financial advisors come in. Financial advisors provide personalized financial advice to help you achieve your financial goals. In this post, we will discuss the reasons why you can benefit from hiring a financial advisor, how they can help you improve your net worth and guide you through complicated life decisions.
You Don’t Know What You Don’t Know
One of the primary reasons you should consider hiring a financial advisor is that it can arm you with a personal expert with the expertise and knowledge needed to make informed complex investment decisions.. If you need surgery, you go to a surgeon. If you need legal advice you go to a lawyer.. A financial advisor can help you navigate the financial landscape by providing you with insights and strategies to help you achieve their financial goals. They can help you understand the risks associated with various investment options and recommend the most suitable investments based on your financial situation and goals.
A Valuable Financial Advisor Has A Steady Hand During Downturns
A financial advisor can help you manage your emotions during market volatility. The stock market is inherently unpredictable, and it is not uncommon for investors to panic during market downturns, leading to make hasty decisions that can harm long-term financial goals. Financial advisors can provide a calming influence and help you make rational decisions during times of market turbulence.
Think back to March of 2020 when the COVID pandemic was just hitting. The market dropped 35% in the span of 4 weeks, the fastest 20%+ drawdown in recorded history. Those that were scared out and left the markets substantially hurt their long-term financial situation as the Fed stepped in, pumped in massive liquidity shortly thereafter and sent the market to new all-time highs just months later. We understand that it feels helpless to do nothing though. For those that wanted to change their investments, we coached them to make a small shift in their allocation to become more conservative. It made them feel like they were doing something to protect their portfolio. They still participated in the majority of the market recovery; their long-term financial goals were not compromised by short-term volatility.
Financial Advisors Can Help You Make More Money
According to a study by Vanguard, investors who worked with a financial advisor earned an additional 3% in returns, on average, compared to investors who did not use an advisor. This might not seem like a significant difference, but it can make a significant impact on your net worth over time. For instance, if you had a portfolio worth $1,000,000 that earns an additional 3% annually, it could potentially earn an extra $2,000,000 over a 20-year period.
Financial Advisors Can Provide You With A Comprehensive, Holistic Plan
Another benefit of working with a financial advisor is that they can help you develop a comprehensive financial plan. A financial plan takes into account an your income, expenses, and financial goals, and creates a roadmap to help achieve those goals. A financial advisor can help you identify areas where you can save money, and recommend investment options that align with your financial plan.
In addition to helping you manage your investments, financial advisors can also provide advice on other financial matters, such as retirement planning, tax planning, and estate planning. Retirement planning can be especially daunting, with so many unknowns to consider, such as how long you will live, how much you will need to save, and how to manage your investments in retirement. A financial advisor can help investors navigate these challenges and create a retirement plan that aligns with their goals.
Pay Less in Taxes, Creating Value
Tax planning is another area where a financial advisor can provide value. They can help you understand the tax implications of your investments and recommend strategies to minimize tax liability. Estate planning is another critical area where a financial advisor can provide guidance. They can help you create a comprehensive estate plan that ensures your assets are distributed according to your wishes.
Interested in working with an advisor? Contact our team here to learn more.