Are Financial Advisors Worth It?

One of the most common questions people ask themselves when thinking about hiring a financial advisor for the first time is “are they really worth the money”?

The very fact that you’re giving it a thought can already be a clear sign that you could probably use expert advice, as most of us do.

Professional financial advice is especially important when considering big questions, such as investments, retirement plans, mortgages and equity, but it’s also invaluable for our everyday financial behaviour and the way we think about uncertainties in life.

Here are a few good reasons why financial advisors are beneficial to you, no matter how simple your financial situation may seem.

Stay Organized

Most people don’t know where to start when they are managing their finances.

They might have some funds in their retirement plan, some extra cash in their bank account, a home equity line and a salary. In such a situation, unless financial planning is their expertise or a hobby, the decision about where to invest or how to best save money is nothing more than a guess. Such a shot in the dark can result in an unintended error with severe results in the future.

A financial advisor will help you stay organized and give your finances a structure necessary to understand your situation better. They will start by creating a net worth statement so that you can easily grasp all your assets and liabilities at a glance.

For example, if you’re starting a business or moving your team to a new, luxury office, you could use the help of a professional in planning your budget for the move. Otherwise, you could end up spending more than you should and putting your business at risk.

Quantify Your Goals

Furthermore, together with your financial advisor, you can quantify your personal goals, as well as your business goals if you’re running one. That way it will be possible to do some serious planning on how to best achieve them.

As everyone has different spending needs, life expectations and risk capacity, no two plans will be the same.

A professional financial advisor will take all your needs and other relevant information into account. They will help you find a balance so that you can save for your retirement and your future and still live a rich and fulfilling life.

Opes Fidelio, for example, offers a service of lifelong financial planning to their clients, helping them set realistic goals, and guiding them in making important life decisions so that they can achieve their objectives.

Help With Investments

Many people are not very interested in the topic of investing. Even though they know it may be beneficial, they find researching all the available options daunting or confusing.

As a matter of fact, a study by Vanguard actually found that only one-quarter of investors are genuinely self-directed, truly enjoy investing and have a level of discipline needed to follow their long-term investment strategy through.

The other two-thirds can find professional advice on investment rather profitable – helping them invest money to make more money, and achieve their personal goals sooner.

A financial advisor will help you create your investment portfolio, by taking into account the level of risk you are comfortable with as well as your personal and business goals. With their guidance, you will escape the most common investment pitfalls that can put your investment portfolio and your financial plans at risk.

Behavioural Guidance

Your financial advisor will help you access offers on the market, fees, and taxes, but it’s not where their role ends. Their true value lies in the behavioural guidance they’re offering, with their professional expertise and objective approach to your lifestyle and spending habits.

By helping you set your life priorities and quantifying them, they will make you accountable for achieving them. Along the way, they will try to keep you focused on your long term goals, even when your short-term objectives are changing.

Irrational behaviour in people is commonplace, behavioural finance claims. When it comes to money, people make mistakes because of their lack of discipline, cognitive errors and emotional biases. A partnership with a financial advisor can help you recognize when you’re about to make such a mistake, and think twice before spending your money impulsively.

In conclusion

There are a lot of other ways a financial advisor may be beneficial to you, such as minimizing the costs of your investments or finding tax opportunities you may not even know about.

When choosing an advisor, make sure you know how they are compensated and whether they adhere to a fiduciary or a sustainability standard. These standards affect the type of advice that you’re receiving.

A fiduciary has a duty to always act in the best interest of a client, while adhering to a sustainability standard means you’ll get suitable advice, but not necessarily in your best interest.

With all these gains, one can hardly question the value they add to the lives of their clients. It’s more a matter of finding the advisor that you can trust, be open and sincere with. You may also want to check out our post on Pension Transfers.

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