Am I intimidated by finances?
This first question is intended to help you clarify your own relationship not simply to money, but to finances as a whole. Finances are much more broad than money. Included are things like your spending habits, expenses, liabilities, assets, investments, and savings strategies.
Does simply hearing the above words bring a little bit of vertigo? A little bit of nervousness? If so, then these are good indications that a financial advisor could be right for you. The world of finances is immense with lots of moving parts. It’s not weird or unnatural that getting understanding of this world often requires the help of someone who has been navigating that world for a long time—someone who’s been trained to navigate that world.
Overcoming one’s intimidation with finances is crucial to achieving their desired lifestyle. Maybe you already own your own home and have crushed a lot of your debt, but you’ve been putting off the help of a financial advisor because your salary isn’t six figures. Is a financial advisor still right for you? Absolutely. The reason? Because you may still possess the need for assistance in achieving the kind of financial life you want.
In the spirit of reaching future-oriented goals with your finances, let’s think about retirement.
Do I want a comfortable retirement?
It seems unlikely that anyone would answer this question with “no.” Still, it’s an important question to ask yourself as you try to determine whether a financial advisor is right for you. It’ll also be especially important to clarify what “comfortable” looks like for you. The best way we can describe it, is setting up your retirement in such a way that worry is greatly reduced, and your enjoyment is greatly increased.
When people begin to think through retirement and how to achieve it, the first thought is usually investing. Investing in your future is the way to secure a comfortable retirement, but the investing can look quite different for a lot of people. For some, it’ll take the more “traditional” look: arranging a portfolio full of stocks, bonds, mutual funds and/or exchange-traded funds. With this kind of approach, financial advisors stand in to help create, manage and optimize the portfolio. You decide on their level of involvement. If you’re looking to retire comfortably and lack the insight needed to optimize these kinds of investments, a financial advisor will of course be valuable to you.
Investing is much broader than participating in the stock market, however. It can, and for many often does, look like managing real estate investments efficiently. Do you own property and want to leverage it towards your retirement with no idea how? Do you want to own property for the purpose of retirement? This approach is becoming increasingly popular and clearly benefits from the help of someone trained to navigate these parts of the “financial world.”
At the end of the day, retiring comfortably is a matter of leveraging your current assets (your actual money, properties, stocks, etc.) in such a way now that you can live your ideal life later. The key word here is “leveraging.” Notice how nothing in this section requires enormous wealth.
But suppose enormous wealth (or just wealth) is in your future. Then what? Here’s question number three.
If I don’t have a lot of wealth now, will I have a lot of wealth in the future?
This question is absolutely key in figuring out whether you need a financial advisor. While you may not have a lot of wealth now, that can change very quickly with an inheritance. Inheritances sometimes come as a surprise and leave the inheritor feeling a sense of “what now?”
For example, depending on your parent or grandparent’s estate plan, your financial situation could change dramatically overnight. You could go from owning zero properties to five; your bank account could move from $5,000 to $500,000. These types of changes may feel dramatic or overly stated, but they happen for people all the time.
This illustrates the importance of a financial advisor when it comes to family planning. For those interested in setting up their family for success, proactively strategizing your finances is critical. Many inheritors, for example, are caught by surprise over their inheritance. This element of surprise just adds one more unnecessary obstacle when it comes to efficiently managing inherited assets or making sure that your family can capably manage what you’re passing on.
So, it’s incredibly important to make sure you have the resources in place to help you manage wealth even if you don’t consider yourself presently wealthy.
Wealth management is another common service of financial advisors. Having someone assist financially in the management of your wealth, investments or inheritances can be nerve-racking. It can feel exposing to let someone else in on such personal matters. You really can minimize the nerves by starting early. If you don’t feel like you “have enough” to justify having a financial advisor, that may be the perfect sign that you’re ready for one.