New technology has made it easier than ever for people to invest on their own, but doing so may not always be the best option when it comes to saving for important life goals. Enlisting the help of a trusted financial advisor can help minimize slip-ups and ensure that your financial plan stays on track. With this in mind, here are several of the potential benefits you could enjoy from partnering with an advisor:
1. Benefit From Their Expertise
Even if you keep an eye out for the latest financial news and your TV is constantly tuned to financial networks, it’s not easy to compete with the professionals when it comes to accessing valuable information and the training that’s required to digest and act on it. Not only do financial advisors often have resources at their disposal that retail investors do not, but they can devote the necessary time to the markets and have plenty of experience to lean on.
Many financial advisors have certifications that denote expertise in certain financial planning topics, from tax and risk management to investing and retirement planning. These certifications can involve hours of self-study, a rigorous examination, and continuing education requirements.
Speaking of the time that goes into financial planning, the forces that drive the economy and the various financial markets are constantly changing and may necessitate changes – subtle or significant – to your long-term plan. Whether you’re retired or have a full-time job, it can be difficult to stay on top of everything that could impact your finances. When working with a financial advisor, you are partnering with someone who has devoted their career to understanding and monitoring the markets.
2. Take the Emotion Out of Investing
Watching the effects of stock market volatility play out in your portfolio can trigger emotional responses – it’s hard to avoid. When the markets are struggling and your monthly financial statements show losses, it can lead to panic and the urge to sell, even if you’re an experienced and disciplined investor. Conversely, when the markets are flying high, it can be equally challenging to resist the temptation to buy more assets or increase the amount of risk in your portfolio.
The reality is that short-term market movements shouldn’t cause you to lose sight of your long-term plan, and an advisor can help you maintain that perspective. An advisor is someone you can look to for encouragement and objectivity when it feels like the markets are unpredictable. They can help ensure that your finances are properly positioned to weather volatility and that you stay on track to reach your goals 5, 10, or even 20 years down the road. Investing doesn’t have to be like riding an emotional rollercoaster – an advisor can shoulder that burden for you.
3. Focus on More Than Just Returns
Investing is about setting long-term goals and then striking the right balance between risk and return based on your individual needs and time horizon. The process involves more than simply identifying investments that have recently yielded the highest returns – assets should be diversified across different sectors and asset classes to ensure your portfolio isn’t too vulnerable to movements in the market.
An advisor can help you develop a plan that enables you to meet whatever cash and other needs you have on the horizon while aiming to keep your investments growing steadily over the long term.
4. Provide Tax Management Strategies
There’s a lot that goes into managing tax obligations, and the more assets and accounts you have, the more you may have to consider. An advisor with expertise in tax planning can simplify this process for you and help you manage your obligations in such a way that you don’t surrender more than you need to. This can be done through different strategies such as charitable planning, tax-loss harvesting, and allocating investments to tax-advantaged accounts.
Some investments and investment accounts can afford you more favorable tax treatment than others. Partnering with someone who specializes in securities and understands the nuances of their tax implications can save you money, particularly over the long run.
5. Incorporate Your Values Into Your Plan
Are you someone who’s interested in making an impact with your investment dollars? What about supporting charitable causes? An advisor can help you allocate your investments according to your interests and charitable goals so that you can do well by doing good.
If you’re concerned about climate change, for example, you can invest in assets that support clean energy businesses. If you’re passionate about equality in the workplace, you can invest in companies with high scores for diversity and inclusion. Committed to your faith? We can help you build a portfolio that aligns with your faith's values and teachings.
Further, a financial advisor can help ensure that your values-based investments fit within the context of your financial goals.
If you’re looking to start working with a financial advisor, the first step is to identify the right advisor for you. We invite you to visit our website to learn more about us and our unique approach to financial planning and personalized index portfolios. You can also schedule a free consultation here.