Thanks to modern technology, there are hundreds if not thousands of tools that can help you manage your own money. You can invest in a brokerage account or open a retirement account using your mobile device, and you can even select from prepackaged portfolios of investments based on your timeline and your tolerance for risk. And yes, many of these apps and tools are cheap or free to use.
With all of this in mind, you may be wondering why you would need the help of a financial professional to retire on time.
With a world of investing tools at your fingertips, why should you hire a financial advisor anyway?
The reality is that, like it or not, technology can only take you so far. You can use an app to buy a stock or an ETF, but your smartphone won’t sit down with you to talk for hours about your dreams and goals. Your favorite investing app doesn’t have a clue about your tax situation, nor will it give you insights into government actions and laws that might impact you now and later on.
And, no matter what, an app won’t talk you off the ledge when you’re on the verge of selling investments on one of the market’s darkest days, or when you’re tempted to invest based on shaky advice from a friend.
5 Reasons to Hire a Fee-Only Financial Advisor
There are so many reasons you can benefit from the expert advice of a financial advisor, and many of them won’t become apparent until you have a true fiduciary — a fee-only financial advisor — in your corner.
Here are some of the main reasons you should work with a professional advisor whose entire career revolves around helping you succeed:
Invest with a Goal in Mind
A financial advisor can help you create a long-term financial plan with short-term goals and savings benchmarks built in. Your advisor can also assess your spending to find out if you need to make any changes, then help you set up automatic investment withdrawals that can help you work toward your goals without any added work on your part.
With a financial advisor on your side, you’ll have a specific goal to shoot for every month and every year, all of which will culminate in your eventual departure from work. Without a financial advisor, on the other hand, you could easily wind up coming up short for your retirement number and not finding out until it’s too late.
Potential for Greater Gains
Plenty of research shows that few individual investors “beat the market” over time, yet having a financial advisor on your side could help you achieve greater gains. This is according to a recent study from Vanguard, which shows that financial advisors who follow a specific framework can add around 3 percent to their client’s average returns.
Too many people focus on avoiding the cost of professional financial help without thinking about what they could receive in exchange for their investment. The reality is, a good financial advisor can pay for themselves many times over. Remember that a fee-only financial advisor’s job is to help you grow wealth in the smartest way possible, which leaves you free to focus on your own career and spend your free time on something else.
Plan for Tax Efficiency
Planning for retirement involves a lot more than investing in stocks and bonds and hoping for the best. There are many moves you can make (or not make) that could save you considerable sums of money on your tax bill now and later on, and the best steps extend far beyond simply maxing out tax-advantaged retirement accounts.
A fee-only financial advisor can help you plan for tax efficiency during the accumulation phase, but also fine tune your plan as you prepare to retire. Also, the best financial planners call in expert help from tax advisors and accountants who can find loopholes and suggest even more smart moves to save on taxes now and years from now.
Avoid Costly Mistakes
Where financial advisors are charged with giving you advice and helping steer your financial plan, they can also talk you out of financial moves that could ruin your retirement. If you’re someone who is prone to making big financial decisions on a whim, or if you already know you can be driven to act by greed or fear, then a financial advisor might be the best investment you could ever make.
A financial advisor can help you avoid selling at the bottom of buying into “hyped up” investments that don’t fit with your financial plan. Without someone to turn to, you will be left to make big, life-altering financial decisions on your own.
Know When to Call it Quits
Finally, do you know when you’ll be able to retire? Maybe you think you’re on the home stretch of your career, but you’re not entirely sure if you have the funds to last for the rest of your life.
While having a money pro on your side can be life-changing in every stage of your career, hiring an advisor toward the end can help you plot out the final few years of your working life. A financial advisor can help you find smart ways to invest more during the end of your career while also adjusting your portfolio to reduce risk and instability over time.
A financial advisor can also help you know exactly when you have reached your retirement number, or the amount of money you need in savings and investments to fund your living expenses for decades to come — and even leave a legacy if that’s your goal.
Make Sure You Hire a Fee-Only Financial Planner
If you’re on the verge of hiring a financial advisor, there’s one essential task you should put on your list right away. Make sure you’re only considering a fee-only financial planner who earns money for their advice instead of commissions on the investments they suggest.
My firm is a fee-only financial advisory firm, and there is a good reason why. My fee-only structure allows me to give you entirely unbiased financial advice that I never benefit from. This means you’ll always get honest, helpful advice for each stage of your journey to wealth. And since I do not earn commissions on products we select for your portfolio, I focus my time and energy on helping clients build wealth using the best financial products and tools available today.
Don’t just hire any financial advisor. Hire a fiduciary who is legally obligated to act in your best interests. If you believe I might be a good fit, read about me and my investing philosophy here and schedule a free phone consultation today.