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How do I know if I need a financial advisor?

Mar 18, 2015 by Alex in  |  Flag
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Wow seems like everyone has some really good advice here. I guess i would add that if you are asking the question, when you most likely need some guidance. It's often not what we know that causes the issues, but what we didn't know or most likely something you thought you knew but somehow misunderstood. With a proper financial relationship those areas can be addresses sooner than later and smaller issues now can be corrected before they become a financial calamity later.

Comment   |  Flag   |  Mar 23, 2015

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Hi Alex,

If you need someone to assist you with financial and retirement planning and feel that for whatever reason you are not inclined to do this for yourself, then you would be a good candidate for the assistance of a financial advisor.

There are a number of questions that you may want to ask, just to give yourself a level of comfort with whomever you decide to hire. For example, 1) How long have you worked as a financial advisor? 2) Are you independent or employed with a traditional "wirehouse" brokerage firm? 3) Are you compensated by fees or commissions? 4) Do you charge to prepare a comprehensively written financial plan? 5) What credentials do you hold? 6) Do you require a minimum amount of assets under management in order to work with a particular client? 7) Explain your overall investment philosophy 8) Do you design and manage your own investment models or do you primarily rely on "outsourced" managed money services?

I'm happy to answer any additional questions that you may have. Feel free to contact me at: (240) 482-3752 | msmith@wcfingroup.com | www.wcfingroup.com

Thanks and I wish you the best!


Comment   |  Flag   |  Mar 18, 2015 from Bethesda, MD

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Alex, this is a great question. Not everybody needs a financial advisor. There are those people who are well versed on the subject and feel very comfortable taking the time to research the information.

If you're not one of these people, you may be a good candidate for using a financial advisor. Most advisors will offer a free consultation. This gives you the chance to get to know the advisor as well as the advisor to see if he/she can be of help to you.

Many people procrastinate and don't start the financial planning process until later in life. Unfortunately, as they say, time is money. The longer you wait to start the process, the less money you'll be able to make.

1 Comment   |  Flag   |  Mar 18, 2015 from Las Vegas, NV
Anthony Thomas Isola, CFP®

Well Said!

Flag |  Mar 18, 2015

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I agree with much of what others said. Here are some questions I would be asking:

1) Do I know what I own and what I owe? Do I review it at least once per year? 2) Do I know what "Risk" is for a portfolio of stocks and bonds? 3) Do I know how much risk I want to take? 4) Do I know how much risk I am currently taking (stocks/bonds)? 5) Have I weighed risk vs reward in investing? 6) Do I understand interest rates and debt? Have I paid off all my credit card debt (best investment you can ever make) 7) Do I take advantage of employer retirement plans, IRAs, or other tax advantaged vehicles? 8) Do I enjoy researching investments? 9) Do I know how well my portfolio has performed the past year, 3 years, or 5 years? 10) Do I know how much I need to retire/put kids through college? 11) Am I on the correct path to get there through saving and investing? 12) Do I see value in having someone help me with these questions? 13) Do I see value in having an expert to bounce ideas off of?

One example in my personal life for my family I can bring up. When it was time to draft a will, trust, and complete the other legal documents for my estate plan, I hired a trusted estate attorney and I paid her the same amount she would charge my clients. Am I trained, knowledgeable, help my clients in estate planning matters? Yes. Could I have downloaded a will and trust from the internet and attempted to create my own? Possibly. However, my estate planning for my family was important enough to me to hire an expert and work with her to create the estate plan that met the needs of my family. For me, the cost was well worth the value I received.

Comment   |  Flag   |  Mar 24, 2015

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We have created a free public service guide to help investors realize when and why they might require additional help from a professional. Below are just some excerpts for your review:

What are some important questions that I should ask myself to determine if I need the services of a financial advisor? • Do I have time to develop a well thought-out strategy and invest my own assets? • Is investing my own assets the highest and best use of my time? • Do I understand the constantly changing complexities of the financial markets? • Do I have the knowledge to research investments, track their performance, and make changes? • Can I stay objective and not make emotional financial decisions? • Does it make sense to manage my own assets as I get older? • Who will step in and manage my assets if I suffer a debilitating illness?

Who uses the services of financial advisors? • Based on a nationwide Paladin Registry study, 77% of those surveyed with at least $100,000 of investable assets use the services of financial advisors. • The remaining 23% develop their own financial plans, conduct their own research, and make their own investment decisions on an unassisted basis.

Who makes the investment decisions if I use the services of a financial advisor? • You can delegate work to professionals, but retain control over financial decisions. This is called a non-discretionary relationship. Advisors cannot buy or sell investments without your approval in advance. Or, you can delegate the work and the decision-making to professionals. This is called a discretionary relationship.

What is a fiduciary advisor? • They are the ideal professionals because they are RIA or IAR and they acknowledge their fiduciary status. • Fiduciary advisors are held to higher ethical standards, they have more disclosure requirements, and they are more accountable for the quality of their advice. • Most high quality professionals are fiduciary advisors.

Comment   |  Flag   |  Apr 02, 2015

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The other advisers share some great insights and ideas. I think the answer to the your question is really your question itself. I sense you need a fee-based adviser because you realize you don't fully understand the complexities and integrations of all your fragmented decisions regarding income taxes, estate planning, insurance planning , education planning, 401-k investment selections, investment risks, asset allocations and more. If your most valued asset is your family and you are concerned about their future you should find a fee-based CFP adviser to talk to and give you advice.

Remember, you don't know, what you don't know, so you should seek out professional help in those areas!

To learn more =visit www.EndowmentWM.com or if you have any other questions please call 920-785-6010 or email Rob@endowmentwm.com..

Good luck!

Comment   |  Flag   |  Mar 18, 2015 from Milwaukee, WI

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Further to Michaels comment - there are many people who are knowledgeable enough to do their own financial planning - perhaps! But I have had some very very knowledgeable clients bring in plans they did for review by "an impartial set of eyes" and I can usually point to some room for substantial improvements. One thing I learned when I got into this business is that the more you know, the more you respect that you do not know! Most people who are not financial advisors will at certain points in thier lives benefit from the experience of someone who has done this many times before. When is it important? Starting out to make sure you are on the right track. When you are buying a home or other major commitment. When you are raising a family (review insurance, balance retirement and college goals, etc.) , before sending the kids off to college, and as you approach retirement.

Be sure you learn about how advisors are compensated, and select the method you feel most comfortable with. Some work as consultants for an hourly fee, others want to manage your investmennt $ for a fee, others make money selling you investment or insurance products. Make sure you know the rules before you start playing the game!

Comment   |  Flag   |  Mar 18, 2015 from Bridgewater, NJ

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I agree with Michael that not everybody needs a financial advisor if that person is comfortable in doing the research and taking their time.

"Financial Advisor" is a general term for investment professionals and includes several different categories and expertise. The term is most often used to refer to financial planners that can help with retirement, insurance, and tax planning, etc. It can also include advisors, like mine, that only provide discretionary investment management.

It is probably worth finding one that specialized in an area that you are uncomfortable with or do not feel you understand. If in doubt, a financial planner usually covers broad areas and can help point you in the right direction.

Comment   |  Flag   |  Mar 18, 2015

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Alex, A financial advisor's job is to solve tax or investment problems, coach you toward long-term goals, and help you deal with your estate. A good financial advisor will help you set realistic expectations, though they cannot guarantee results. They’ll keep you on a financially ethical path, and help you invest in a logical, not emotional manner.

A good advisor can improve a haphazard portfolio by analyzing its risks and returns, its redundancies and unnecessary investments, and help control the fees and taxes you’re paying. A financial planner will provide independent advice that looks at your entire financial picture. They will help you with planning for your retirement, as well as planning to provide for your family. They also help in the aftermath of family problems, such as death and divorce.

So, lacking any specific information from you, it is difficult to provide a specific answer for your circumstances. Do you have investable assets, or are you just afraid of making rookie mistakes? Do you have any investment experience; do you have an investment style? Do you have any investment experience, good or bad? Do you feel comfortable investing? Or does it keep you up at night? Not everyone needs a financial advisor, but you might want to speak to one, just to find out what you know and don't know.

You can consult with a financial advisor in your area, preferably a CFP®; most financial advisors offer a free consultation. If you feel you need help, the Certified Financial planner Board also offers an outreach program and holds free Financial Clinics. Check out their website at http://www.cfp.net/public-policy/consumer-outreach

I hope this puts you on the right path.

Comment   |  Flag   |  Mar 18, 2015 from Delray Beach, FL

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That is a question that you will need an impartial source. The way I look at it is its like using a trainer at the gym. Most people know that they need to exercise but do not have the discipline to follow through or the knowledge necessary to accomplish their goals. If you fall into the category of being a self starter and enjoy teaching yourself new things, you might not need an advisor. On the other hand most people do not fall into this category. More importantly, most make their investment decisions based on emotion rather than data. Know yourself and use some of this information to help you make an informed decision.

Comment   |  Flag   |  Mar 18, 2015

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