7 Reasons to Hire a Financial Advisor (and 3 Reasons not to)

7 Reasons to Hire a Financial Advisor (and 3 Reasons not to)

If you’re considering whether or not to hire a financial advisor, here are 7 reasons to do so, and 3 reasons hiring an advisor would not be the right move 

Reasons to work with a financial advisor:

1. You want help with the things you know you don’t know:

• Maybe it’s deciding which investments are right for your goals, or how much insurance you actually need, or how much you need to be investing per month to achieve financial independence.  Whatever it is, there are likely things you already know you need some help with and working with a professional can answer those questions 

   

2. You want help with the things you don’t know you don’t know:

• Lurking in the dark are the things you aren’t even aware you don’t know, simply because your expertise is in another area, and you don’t work in the financial industry day in and day out. Since a financial advisor does, they can inform you of strategies or risks you didn’t even know existed.  

   

3. Decision points:

• Often the most value from an advisor comes down to just a few major decision points.  Shortly after I started my career, the financial crisis of 2008 happened.  The turmoil and chaos I saw unfold taught me better than anything else the true value of an advisor.  At that point in my career, I wasn’t licensed to advise; I could only educate.  Sadly, I spoke to many clients who could not get a hold of their advisor in what was likely the most terrifying moment of their financial lives. Having a trusted advisor in those crucial moments can, in and of itself, make it worthwhile.

   

4. You want the job done right:

• When my car is having a problem, I take it to a mechanic I can trust.  They work on cars day in and day out and have seen every problem there is. I want the problem fixed, so I hire someone I know has the experience and expertise to fix it. This may be more expensive than doing it myself, but will likely save me money in the long run because the job will get done right the first time. Working with a trusted advisor provides that same assurance in regard to your money and financial plan.  

   

5. Your time is valuable: 

• Using the same example above, I take my broken car to a mechanic not only to get the job done right, but to get it done quickly.  “You could save a lot of money by doing it yourself”.  When simply looking at dollars spent, this may be true. But what it’s not considering is the amount of time I would spend to learn what I need to learn to fix the problem.  That time could have been much better used elsewhere.  People hire professionals because they don’t have the time to learn an entirely new subject on their own

6. It’s what the wealthy do: 

• Studies show about 70% of millionaires use a financial advisor, roughly twice that of the overall population.  Why?  Because their money is important, and they want to ensure they are investing properly and mitigating risk where possible.  You may or may not be wealthy already, but hiring the right advisor can help you no matter where your net worth currently sits

   

7. You simply want a professional in your corner you can count on:

• Knowing you have a valued advisor in your corner you can rely on for expert advice at any time, for any reason, is yet another good reason to hire an advisor. 

Reasons not to Work with an Advisor:

1. You expect them to have a crystal ball:

• Although advisors do have access to resources the general public may not, this doesn’t mean we can predict exactly what the market is going to do tomorrow, or next week, or next month. We can look at the fundamentals of the economy and markets and make an intelligent recommendation on how to tactically allocate a portfolio for a particular objective.  But market movements ultimately remain unknowable.  The good news is, in the long run those movements haven’t mattered, and a good advisor will remind you of that. But if you’re looking for someone to tell you when to put everything in the market, when to take it all out and put it all in again, you’ll be frustrated and disappointed, because that’s not what we do (and not what we should do)

   

2. You want maximum growth with zero risk: 

• When stocks are soaring, everyone wants to be in on it.  Of course, when stocks inevitably take a dip in the other direction, many want to be off the ride completely. In my experience with do-it-yourself investors, this very often leads to buying near or at the top, when optimism is peaking; and then selling when they can’t take the price drops anymore, which often happens at the bottom, shortly before a rebound. Advisors understand that volatility is the price that must be paid for high returns, and a valued advisor can help you keep your eye on the long-term goal when everyone else seems to be losing their cool. We are here to invest prudently for your particular goals and risk tolerance and help you through the inevitable ups and downs, we’re not here to pretend you can earn double digit returns with no risk; and any advisor who does is someone you shouldn’t trust

   

3. You want to “beat the market”:

• The “market” usually refers to the S&P 500, one index among many. A diversified portfolio tailored to your particular goals has very little to do with any one particular index, and has everything to do with helping you reach your goals.  If the S&P 500 is outperforming other indexes over a particular time frame, than a diversified portfolio’s returns may not be as high. On the other hand, if the S&P 500 is lagging behind international, or small cap, or any other numerous asset classes, than the diversified portfolio may have higher returns. Then again, for an investor looking for high yield, income, or asset protection, what the S&P 500 is doing is about as relevant to that person as the price of tea in Greenland. Focus on your goals, your financial plan, your own path, not what some index is doing. 

There you have it.  If you’re not yet working with an advisor and this article resonated with you, give us a call or schedule an appointment here Everest Wealth, and let’s see how we can help you. 

Ryan Page 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.