The Benefits of Having a Financial Advisor

By: Lou Gershman

A financial advisor plays a vital role in determining the right type and mix of investments that suit your financial needs and goals.  Their objective is to manage your investments in such a way that your existing assets can potentially generate sufficient income throughout your life – specifically in retirement.

Retirement planning and saving usually goes beyond simply allocating a portion of earned income into a company-sponsored retirement plan.  While these saving plans are usually a crucial component in your overall financial plan, most investors discover that they will need to supplement that with additional savings and investments to achieve their financial goals.

An advisor can review your financial situation at a comprehensive level in order to provide recommendations to get you from where you currently are financially to where you want to be in the future.  Additionally, an advisor helps determine how much you will need in retirement and create a plan that meets your needs. This planning increases in complexity the more variables are incorporated (work timeline, return on investment, taxes and inflation to name just a few.)

Financial advisors traditionally have a “go-to” inventory of qualified investments that they have already researched and performed significant due diligence on (risk, performance, etc.). In theory, an investor can avoid ‘reinventing the wheel’ and investing in expensive and complex planning and analysis tools by leveraging a professional who has been doing the same for many years, for many unique circumstances and has mastered not only the technology but understands today’s complicated and confusing markets. Helping you sort through the financial abundance of choices is just one reason to hire an advisor.

Another function an advisor performs is to help guide you through tough times in the market, which are both frequent and painful for most investors. An advisor can lead you towards rational decisions, tune out distracting and conflicted influences like financial news and politicians, and improve your chances of hitting the panic button at exactly the wrong time in reaction to a down market or stressful event.  Skilled financial advisors have the tenure and disposition to look beyond emotions and make decisions based on logic and objectivity.

Regardless of how simple or complicated your financial situation appears to be, an advisor can point you in the right direction, especially when it comes to dealing with tax implications that are often overlooked by the average investor.  Even everyday investing decisions can have enormous and adverse tax consequences.  An advisor can help identify ways to optimize your tax bill for the long term.

As time passes, an advisor can help rebalance your portfolio to suit your changing needs (age, marriage, retirement, and other life situations). 

Here’s the bottom line: A financial advisor works for you and can give you peace of mind when it comes to long-term investing and saving. You've spent a lifetime accumulating assets. Are you really willing to go it alone?