You probably spend a lot of time thinking about your money, right? You want to spend it wisely, save it carefully, and invest it so it grows steadily. However, you may not know the best way to go about it. Even if you consider yourself a financial expert you may want an outside perspective on investing your money to maximize your returns.
More and more people are hiring financial advisors to help them manage their money. If you have thought about it, here is some information you should consider.
What is a Financial Advisor?
A financial advisor helps you with your finances and, in some cases, can manage all your finances for you. The term “financial advisor” includes many individuals and services, like financial planners, financial consultants, and financial managers. Financial advisors can even be a digital “Roboadvisor,” also known as a digital management service.
What do they do?
Financial advisors investigate your current financial situation, including your assets, debts, and expenses. They will help you better manage these financials by showing you ways to improve your situation and achieve your financial goals. To do this, they may have you list your goals and set up a plan for you to reach them.
Additionally, a financial advisor may help you refinance or pay off your debts or make sure you save enough money for an emergency fund and your retirement. They may also help you with tax planning so that you do not unnecessarily spend money on taxes that you could be saving. Furthermore, they can help you invest your money by recommending when and where to invest, or you could opt for them to take complete control of your investments.
What a financial advisor does depends on your goals and what you want from them. For example, while a wealth manager can provide a whole host of financial services for you, a registered investment advisor will focus solely on your investments.
When to Seek Financial Advice
To be financially successful and get your money to work for you, you need to be proactive when managing your finances. Unfortunately, many people don’t know the best way to manage their finances or have enough time to be proactive. If you are making enough income to increase your wealth, it is likely due to your dedication to your craft or career. Your time spent on that career probably means you have little time to spare. And, of course, reaching those financial goals and managing your money in the best way possible takes a lot of time, knowledge, and skill.
That’s why, of course, there are many people whose careers focus on managing other people’s finances. The biggest reason to seek a financial advisor is when you realize you are not managing your finances as well as you could be. That may be because you don’t have the time or expertise to do so.
Of course, hiring a financial advisor means that you will establish a long-term relationship with someone to care for your finances. You will need to be open to providing and discussing your financial information and listening to their advice, even if it is not what you want to hear. To be successful with your financial advisor, you will need to understand and trust that they know what they are doing better than you do.
Advantages and Disadvantages
Better money management. The most significant advantage to having a financial advisor is finding your finances better managed. Managing your finances could mean effectively paying off your debt, having better success with tax planning, borrowing money, or more success in investments. The advantage to having a financial advisor is that you should be saving/making more money (after their fees).
Time savings. Another advantage to having a financial advisor is that it frees up more of your time. You can spend more time doing what you love, relaxing, or focusing more on your career if that’s your cup of tea. Time is money, and that’s why we pay others to do services we could be doing; it frees up more of our time, so we have more autonomy. Plus, hiring a financial advisor will probably make you worry less about your finances, as you can rest assured, they are in good hands.
Unregulated. Financial planners lack regulation like many other careers in the financial world. So,while there are many trained, trustworthy financial advisors, the burden is on you to choose a legitimate one.
Fees. The second disadvantage to a financial planner is an obvious one: their fees. Financial advisors don’t work for free. If you think you are fully capable of handling your finances, you may end up saving more money if you do it yourself.
No guarantees. The last disadvantage is an uncertain one. Financial planners can claim expertise in tax planning, refinancing, or helping you meet your goals. Many further assert that they can make you a higher ROI on your investments than you currently make. That may be or may not be a valid claim. More conservative financial experts would argue that making specific investments for a significantly greater ROI is little more than pseudoscience. Of course, there are many examples of people making millions or billions on the stock market. So, this disadvantage may not be as valid as the others.
You have to ask yourself if you think you would benefit from a financial advisor. Furthermore, you may decide that you need help with some services, but not others. If you choose to go with a financial advisor, make sure that they are trustable and have a clear idea of your financial goals. 1st Source Bank has a strong group of financial advisors in our Wealth Advisory Services Department. Please feel free to contact us at 1-800-882-6935.
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