5 Ways Financial Advisors Can Help You Improve Your Finances

5 Ways Financial Advisors Can Help You Improve Your Finances

stock market rate of return

stock market rate of return

Demand for financial advice has increased dramatically since the market collapsed in 2020. The 2022 Northwestern Mutual Planning & Progress Study surveyed 2,381 American adults to find that 62% believe their financial planning needs improvement.

Some 35% of Americans have sought advice from a financial adviser, and nearly one in five said they have started working with a financial adviser or plan to do so in the wake of the pandemic.

Additionally, a Natixis Investment Managers survey found that 72% of millennials in North America with investable assets of at least $100,000 consult a financial advisor. Additionally, 66% work with a traditional advisor and 46% do not trust AI-powered digital platforms.

This free quiz can connect you with up to three licensed financial advisors who serve your area, each bound to work in your best interest.

Let’s look at five ways financial advisors could help you improve your finances.

1. Financial advisors can help you navigate the new normal

The global economy appears to be at a tipping point, with fears of a prolonged recession looming amid Europe’s energy crisis, high cost of living and frequent interest rate hikes. At this point, market movements can be unpredictable and continue to show signs of decline.

These new trends have forced Americans to take a hard look at their finances. Pandemic-induced job losses, rapidly rising household and personal debt, increased investment risks and fluctuating incomes have collectively driven individuals to seek financial empowerment through reliable advice.

Interestingly, people are partnering with advisors to stabilize assets and protect them against market pressures, inflation, rising debt and other impacts of the crisis extending to physical well-being and mental. In these vulnerable times, advisors can help investors stay on track and follow the markets while keeping long-term goals in mind.

2. Financial Advisors Can Help Prevent Emotional Investment Decisions

Suffering market losses is not an easy ordeal. In trying to prevent losses, investors can often act impulsively, guided by emotional instincts to protect their wealth. With billions of dollars lost in personal money mismanagement since the start of the new decade, it may behoove investors to work with a financial adviser who could be a sounding board for critical investment decisions. .

Financial advisors who adhere to fiduciary standards may emphasize the use of behavioral finance and counseling principles to understand clients’ attitudes, values ​​and biases to help them make the best investment decisions. possible. They can help identify emotional patterns associated with your spending, debt, investments, and market transactions to stay on top of volatile situations that require a hands-on approach.

Trustees consider your sources of income, liabilities, risk tolerance, years to retirement and tax situation to determine your retirement needs, retirement plans, insurance and the process of estate planning and long-term care.

3. Financial advisors could help you meet your specific financial needs

A financial advisor is a general term for fund managers with different specializations. Depending on what part of your financial life you need help with, you may need a Wealth Manager for managing high value assets, a Licensed Life Underwriter for life insurance and estate planning, a certified public accountant for taxes or a certified financial planner for the whole. retirement planning plus all of the above.

Therefore, it is essential to be clear about your financial goals and aspirations when looking for a financial advisor. More than 70% of advisors say most clients seek retirement planning advice, according to a 2021 SmartAsset Financial Advisor Survey.

4. Financial advisors may be better equipped to handle life events than robo-advisors

Automated robo-advisors can organize your finances and recommend trades based on your investment profile entries for a small fee. These digital platforms allow new and seasoned investors to create, manage, and customize stock portfolios, retirement accounts, and monthly budgets for AI-powered insights that attempt to predict the best financial outcomes in different situations.

According to a Qualtrics survey of 300 wealth management clients who consult financial advisors, the top reason for switching advisors over the past ten years was high fees. Forbes reports that the average fee for human advisors was 1% of assets under management or $2,318 for a comprehensive financial plan, compared to between 0.25% and 0.50% for robo-advisors.

One way to understand the comparatively higher fees is that unlike a robo-advisor that won’t prevent you from making rash financial decisions, a financial advisor could help you prepare financially for life situations such as founding a family, taking out a mortgage and going through a divorce. The Qualtrics survey also found that the average client-advisor relationship lasts more than 10 years.

5. Financial advisors can regularly monitor your portfolio

Fiduciary Financial Advisors use a comprehensive financial roadmap to make time-sensitive decisions, rebalance portfolios, stop ongoing losses, and capitalize on growth opportunities.

Financial advisors can also help you monitor past financial decisions that could affect your current and future goals. Sometimes advisors can help prevent further damage, for example by creating a debt repayment plan to reduce your liabilities as soon as possible.

Advisors closely monitor portfolio movements and send regular updates on changes and current status. Plus, they hold frequent meetings to check in on goals, progress, and client questions over the phone or in person.

This free quiz can connect you with up to three licensed financial advisors who serve your area, each bound to work in your best interest.

How to get in touch with a licensed financial adviser

Knowing where to start when looking for a financial advisor can be a daunting task. Free advisor databases like the Financial Planning Association, National Association of Personal Financial Advisors (NAFPA), or XY Planning Network might be a good place to start.

These websites allow you to search for advisors based on region, referrals, specialty, and fee structure, which can simplify screening and make connections easier. It is imperative to check the credentials of each potential adviser, whose records are generally available from the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).

However, the total time spent finding the right advisor for your needs can be long. In the wake of the pandemic, fintech firms have bolstered their client-advisor matching services with client convenience, due diligence and meaningful relationships in mind. SmartAsset’s free advisor connection tool manages over 65,000 new monthly connections as of October 2022.

A short questionnaire connects you with up to three approved financial advisors who serve your area.

SmartAsset can also help you set up introductory meetings to allow you to interview your advisor correspondents regarding their background, fees, investment approach, specializations, services offered, minimum investment amount, mode of communication and the possibility of acquiring financial knowledge.

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