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Did you know that most people have a fear of working with a financial advisor? So says a recent survey conducted by the McAdams firm, in which nearly two-thirds of the 2,000 people surveyed reported some sense of fear or uncertainty around having to deal with a financial advisor or planner. Half were anxious about the amount of money they would have to pay for their services. Over a third of respondents were worried that talking with an advisor would only uncover bad news. For a significant portion, trust was a factor - feeling that they would be negatively judged for their financial history, being unsure their information was secure, or that any advice given wouldn’t be relevant to their individual situation.
Think you fit into one (or more) of these statistics? In a world where financial success and stability often seems to make your life go round, it’s easy to be at least a little hesitant to put that all into another’s hands. But do we really know what financial advisors do and the benefits working with them can have on our financial lives?
What do financial advisors do? Actually much more than you may be aware of. But to boil things down, these are a few of the most central responsibilities they have:
- They keep you accountable. You’ve tried to save up for that dream vacation. You made the resolution that this would be the year you would really start putting money steadily into your child’s college fund. Somehow, that extra money you were going to portion out of your paycheck just seems to keep disappearing making it difficult to meet your goals. Sound familiar? Having a professional financial advisor is like that personal trainer who helps get you from couch to marathon (or maybe just a 10k) in a matter of months. They help you to define goals that are specific to you and, with their experience and expertise, help you avoid the common pitfalls that may have hindered you up to this point.
- They get you backstage access. Financial advisors have access to a myriad of tools, investment accounts and strategies that aren’t available to individual investors. Heard before that you should never put all your eggs in one basket? Having an expert in the field can help you diversify your assets even further with a strategy that’s tailored to your life stage and financial goals. And when the market seems poised to take a downturn or upswing, they can anticipate how it may affect you and quickly recalibrate your valuable investments to ensure a smoother ride. Equally as important, they are building on decades of experience (if not more) to help calm nerves and keep you on course toward your long-term goals.
- They help you navigate life’s transitions. Whether it’s the loss of a job or a new career, a divorce or a new marriage, becoming a first-time parent or becoming an empty-nester, these are all major life moments that often have significant financial implications. Financial advisors can help alert you to the impacts of these events and interpret them in ways any person can understand so you can approach them confidently.
Aside from what they do, there's a number of additional benefits to working with an advisor:
- It frees up your time and resources. If you have ever tried to start investing independently, you may have become aware of the overwhelming number of options and information available out there. As we mentioned, professional financial advisors know where to look and who to talk to. Think of them like a search engine that already knows your past history and future goals and knows exactly where to look to yield only the most robust results. This efficient and thoughtful approach could help you better apply earnings toward paying off old loans or credit card balances more quickly, for example. You could direct those earning into areas where money will work for you, instead of the other way around! And now that you’re letting a financial advisor do the legwork of putting your money to work for you, you have more time to spend on a hobby that matters to you, or with your family or friends.
- It’s good for your relationship. The American Psychological Association recently confirmed something you’ve likely known for years: money is one of the biggest sources of conflict in adult relationships. Bringing some order to your finances, even if it’s just in baby steps, can act as a sort of pressure-release valve for that point of conflict in your relationship, especially when you have someone “mediating” in a neutral position. You and your partner can reach one point of common acknowledgement and devise a stronger strategy (with the help of your advisor) to gain some traction. You will be amazed at the positivity that can bring to what was often a contentious reality.
- It’s good for your personal health. Really, it is! Financial peace can not only improve your relational life but it can also improve your personal life. Another recent study showed that when people felt more secure about the current state of their finances and even how they’ve planned for their future, it had a more positive effect on their overall well-being than their physical health, relational stability, and job satisfaction combined.
But what about the cost? Cost may be a deterrent for many, but advisors are providing a valuable service that benefits your life. If you have concerns about the cost of working with an advisor, ask them questions about how they get paid before getting started. Your fees may depend on the work they do for you or your assets under management. It’s a critical aspect of the partnership you’ll want to understand before working with an advisor. You just need to decide if the benefits outweigh the cost.
It’s natural to have doubts. Managing your entire financial life can be overwhelming but know you don’t have to tackle it by yourself. Explore your options and goals and decide if working with a financial advisor is for you. Maybe take that proverbial first step in the journey to set up a meeting; that may be a great place to start. No doubt there may be some aspects of your financial life you wish were in better shape. Instead of dwelling on past mistakes, you now have the power to make educated and thoughtful change. Start with a conversation and go from there; you’ll never regret learning more.
Contents of this blog article are intended to provide you with a general understanding of the subject matter. However, it is not intended to provide legal, accounting, or other professional advice and should not be relied on as such. Information may have changed since the publication date.