What Services Do Financial Advisors Offer?
Planning is bringing the future into the present.
What services do financial advisors offer?
What terms do you need to understand when interviewing financial advisors?
What questions should you ask when interviewing financial advisors?
What are some tips for getting the most out of your appointment with your financial advisor?
Knowing what services a financial advisor can offer will help you better decide if one could benefit you and what you can expect out of your appointments.
When comparing advisors, be sure to compare what services they offer to your current and potential future needs. A good financial advisor should input all accounts and not just the ones they are managing. They should ask questions about everything that pertains to your financial life, even about things they might not necessarily make revenue on such as rental properties, 401k’s, 529s, and/or deferred compensation plans. Your advisor should look at all things that will affect your total net worth.
Areas financial advisors should ask you about:
Investment goals
Any college savings goals – If you have dependents.
Retirement planning – A good advisor can help you stress test your retirement plan to ensure you will be okay for retirement.
Estate planning – They can help counsel you on creating your estate plan, and they can usually help ensure you have all the boxes checked; however, most advisors cannot draft the documents for estate plans as that usually requires an attorney.
Long-term care planning – Your advisor can help ensure you have a healthcare plan for your later years.
Tax planning - Tax efficiency is important because it affects all aspects of our lives. Financial advisors are not replacing the CPA, but they should be the bridge between your tax preparer and your finances. They should ask to see your tax returns to help identify ways to take advantage of available tax savings strategies, and they can help work with your tax professional to make sure your investment plan will minimize your annual tax liability.
Determining if you are properly insured WITHOUT selling you stuff. There are good financial advisors that do sell insurance or other products, but make sure you are not being pressured into buying their products.
Emergency reserves – They should ask you about your cash reserves to make sure you are okay if an emergency happens.
Areas financial advisors might help you with:
Debt management – Your advisor may be able to help you with debt management and help create strategies to pay down your existing debt and/or to keep you out of debt for the long term, however, any debt cycles should be broken before you can work on building your net worth. Financial advisors will be working on what you do have and not on what you owe.
Create a spending plan – Financial advisors may be able to help you create a plan to control your spending and/or help you know when it’s okay to spend.
Areas financial advisors will/should not do:
They will not or should not pitch to you about how they can beat the market. They may talk about how they feel they can make great gains in certain areas, but an advisor who talks a lot about how they are going to outperform the market can be a sign they are more focused on being an asset manager and not a financial advisor.
They are not going to help you skip steps. Financial success takes hard work and dedication. Your advisor is there to help you stay on the right path for true long-term financial success.
Note: A red flag warning is if your financial advisor’s plan is to solve all problems with the same solution, such as having an insurance policy to save for college, protect against premature death, and save for retirement.
Disclaimer: I am only learning myself, so I cannot guarantee this information is completely accurate, but my hope is that it can give you a good starting point if you are interested in finding a financial advisor as well. Be sure to do your own research and let me know if you have any additional information or corrections to add to this information.
To learn more, check out my Financial Professionals page for additional information.
