We’re in a unique era for wealth management. Today, just about anyone can open an investment account and make trades from their own laptops. Investors have a wealth of information at their fingertips and some do-it-yourself investors have earned double-digit returns by concentrating a portfolio in tech stocks. It’s no surprise that we are often asked “Why do I need a financial advisor?” But there are many benefits to working with a financial advisor – not all of which are directly related to finances.
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A Financial Advisor's Role
Financial advisors help clients address a comprehensive range of needs. They work closely with clients to build and maintain tailored investment plans that are based on the individual’s unique goals and circumstances. For example, each person has a risk tolerance that is a function of their investing time horizon, as well as their ability to emotionally withstand the market’s ups and downs. By appropriately adjusting portfolios to account for a variety of factors, including risk tolerance, a financial advisor can help clients achieve more significant risk-adjusted returns over time.
We all know that “It’s not just how much you make, but how much you keep” of your investment return. Financial advisors can recommend tax-efficient ways to approach the client’s investment model and transaction activity to maximize net returns. Financial advisors can help mitigate the risk of other losses by ensuring that you have the right amount insurance coverage for your needs and the appropriate estate planning documents in place.
There are other, less obvious, benefits to working with a financial advisor, too. Most advisors’ primary role is educating their clients. Investors don’t have to be financial experts in order to be successful, but they should understand a few basic concepts, and a good advisor will help you build that knowledge over time and throughout your relationship.
Another benefit of hiring a financial advisor is that they help clients define financial goals that align with their values. Whether a client wants to accumulate enough money to be able to sail the world in retirement, or fund a scholarship for under-privileged youth, or help pay for a grandchild’s college education, or all three, a financial advisor can help establish clear financial objectives then develop and implement a plan to achieve them.
Achieving Financial Freedom
Comprehensive advisors also act as an accountability partner to ensure clients are actively working towards their goals – and not undermining their own efforts. It’s easy to get distracted from taking the steps necessary to achieve financial freedom. An advisor will check in regularly to keep clients on track and keep tabs on any changes in a client’s goals or circumstances that would merit an adjustment to the plan.
Perhaps the most often overlooked role of an advisor is that of trusted confidante. Inevitably, each person will experience times of crisis. A relationship with a trusted advisor can be invaluable during those difficult periods. By helping avoid emotion-based decision-making, an advisor can help clients avoid the kinds of mistakes that can derail a financial plan. And, if things change irrevocably, an advisor can serve as a valuable conduit to continuity by helping a spouse, children, friends, or whoever is appointed to manage a person’s affairs to make decisions on their behalf. The knowledge that someone will carry on the financial plan – and execute a client’s wishes – when they are no longer able to do so can provide peace and comfort.
About the Author
Julie Williams is a vice president at Wealthspire Advisors and serves as a wealth advisor in the Delafield office. With more than 25 years of experience in the industry, she develops a close, personal relationship with her clients. As an advisor, she partners with her clients to clearly define their goals and utilizes proven planning strategies to meet their objectives.
Wealthspire Advisors LLC is a registered investment adviser and subsidiary company of NFP Corp.
This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. © 2022 Wealthspire Advisors
