When Should I Consider Hiring a Financial Advisor?

Whether you're nearing retirement, moved into a higher income bracket, or your finances have become more complex for other reasons, you may have thought to yourself, "Do I need a financial advisor?" The answer depends on your specific financial situation, but the truth is most people could benefit from the independent, objective advice and professional insights that financial advisors offer. Read on to see when speaking to a financial advisor might make sense for you, or start a conversation with a member of our advisor team by calling us at 877-930-4015 or contacting us online.

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What Financial Advisors Do

The exact services a financial advisor offers can vary based on the kind of advisor they are and their business's practices, but generally, financial advisors assess their clients' current financial situation, discuss their short-, medium-, and long-term goals, and build a roadmap to help their clients reach them. The most experienced and knowledgeable advisors are able to tailor their services to each of their clients' specific needs, which may include:

  • Comprehensive Financial Planning: Financial advisors do more than pick stocks or manage portfolios. They'll analyze your debts, savings, and how much you're saving, and help you understand what kind of accounts you need and where your money is best placed for growth, and where it's best held for things like emergency funds. This ensures that your financial decisions are part of a larger, cohesive, customized strategy.
  • Financial Portfolio Management: One of the key roles of a financial advisor is to guide clients in choosing the right investments that align with their risk tolerance and financial objectives. Whether it's stocks, bonds, mutual funds, or other investment vehicles, advisors provide valuable insights and strategies to build a robust investment portfolio.
  • Retirement Planning: Planning for retirement is a complex task that financial advisors are well-equipped to handle. They assess your current financial situation, estimate your retirement needs, and devise a plan to ensure you have a sustainable income stream in your retirement years.
  • Tax Planning and Optimization: Financial advisors also play a crucial role in helping you understand the tax implications of various financial decisions. They work to optimize your tax burden, ensuring that your investments and financial plans are tax-efficient.
  • Estate Planning: Advisors assist in planning the management of your estate to ensure that your assets are distributed according to your wishes after you pass away. This includes advice on wills, trusts, and other estate planning tools.
  • Risk Management: A critical part of financial planning involves identifying potential risks to your financial health and mitigating them. Financial advisors help in assessing insurance needs, such as life, health, and disability insurance, to protect you and your family against unforeseen circumstances.

When You Should Hire a Financial Advisor

Major Life Transitions

Life is a series of transitions, and whether planned or unexpected, major life events often come with significant financial implications:

  • Starting a Career or Changing Jobs: Embarking on a new career or making a job change can significantly impact your financial landscape. A financial advisor helps you navigate 401(k) rollovers, understand employee benefits, and set up a savings and investment strategy that aligns with your new income and career trajectory with your risk tolerance and goals.
  • Marriage or Partnership: Combining finances with a spouse or partner involves more than just deciding on joint or separate bank accounts. It's about aligning financial goals, managing debts, and planning for the future together. Financial advisors can facilitate these discussions and help create a unified financial strategy.
  • Welcoming a New Family Member: The arrival of a child introduces new financial responsibilities, from immediate needs like healthcare to long-term goals like education funding. Advisors can assist in adjusting your financial plan to accommodate these additional expenses and savings goals.
  • Buying a Home: Purchasing a home is one of the largest financial commitments you'll make. A financial advisor can help assess how much house you can afford, the implications on your overall financial plan, and strategies for mortgage and down payment planning.
  • Starting or Expanding a Business: Entrepreneurial ventures bring unique financial challenges and opportunities. Financial advisors can provide insights on business planning, cash flow management, setting up a retirement plan for yourself and/or your employees, and aligning your business goals with personal financial objectives.
  • Inheritance or Windfall: Receiving a large sum of money, whether through inheritance or other means, requires careful planning to manage taxes, investments, and long-term financial impact. Advisors offer guidance on the best ways to integrate these funds into your existing financial plan.

Lack of Experience, Time, Knowledge, or Desire to Manage Your Finances Alone

Not everyone's the DIY-type. Getting into a higher income bracket offers a great opportunity to save and invest more, or redirect some of the fruits of your labor to other life goals. It's OK to get to the point where managing all that yourself feels overwhelming (or maybe you could do it all if you just had more time). Financial advisors can help evaluate your current finances and goals, offer clear advice, demystify complex financial concepts, and offer peace of mind that your finances are being put to their best use. This guidance is crucial for making informed decisions, avoiding common pitfalls, and capitalizing on opportunities that might otherwise be overlooked. Financial advisors also keep a vigilant eye on market trends, regulatory changes, and new opportunities so you don't have to.

Do you have a good sense of how much savings to invest and how much to keep in an emergency fund? Do you know if a 401(k) or IRA meets your interests more? Are you comfortable rebalancing your portfolio or knowing when to withdraw from different retirement accounts? A financial advisor can help you answer all of these questions and more. They can also help you answer these questions as an objective third party and someone who's not emotionally connected to your finances or goals.

More Complex Finances

As your assets grow and your financial situation becomes more intricate, you'll have more opportunities and the impact of any financial missteps increases. As you accumulate debts, assets, and needs like paying for your kids' education, even simply budgeting becomes more complex. You may have varied income streams, a highly diverse portfolio that might include stocks, bonds, real estate, international investments, or even business interests. Each of these comes with its own set of risks and opportunities. A financial advisor brings a deep understanding of these investment vehicles, providing guidance on portfolio diversification, risk assessment, and timely decision-making.

As your wealth increases, so does the complexity of your tax situation. Financial advisors work to optimize your tax savings with strategies like deferring tax payments to a future year where you may have lower income.

An experienced financial advisor can also help in crafting a comprehensive estate plan that safeguards your assets, ensures they are passed on according to your wishes, and minimizes the tax burden on your beneficiaries.

Nearing Retirement

As you approach retirement, your financial focus shifts from accumulation to preservation and distribution of wealth. Maybe you believe you've done a good job of managing your investments and savings to this point, but it's always a good idea to have a professional look things over to see anything you may have missed. Nearing retirement brings unique challenges and opportunities, and navigating them successfully can make the difference in enjoying a comfortable and secure retirement.

  • Transitioning from Saving to Spending: One of the most significant shifts as you near retirement is moving from a mindset of saving and growing wealth to strategically distributing it. A financial advisor helps in planning this transition, ensuring that you have a sustainable income stream that can support your lifestyle throughout retirement. This involves careful analysis of your retirement accounts, Social Security benefits, and any other income sources, as well as timing withdrawals to optimize income and minimize taxes.
  • Risk Management in Investments: As retirement approaches, the tolerance for investment risk typically decreases. A financial advisor plays a crucial role in rebalancing your investment portfolio to align with this reduced risk appetite. This often involves a shift towards more conservative investments, ensuring that your life savings are protected against market volatility, while still generating necessary growth to keep pace with inflation.
  • Comprehensive Retirement Planning: Retirement planning encompasses more than just income streams. It includes planning for healthcare costs, understanding Medicare, long-term care planning, and even estate planning. Financial advisors provide guidance on these various aspects, ensuring a holistic approach to your retirement planning.
  • Estate Planning and Legacy Considerations: As you near retirement, thoughts often turn to the legacy you wish to leave for your family or charities. Financial advisors assist in estate planning, including updating wills, setting up trusts, and planning for the efficient transfer of your assets. This ensures that your wealth is distributed according to your wishes and that your loved ones are cared for in the manner you intend.

Retirement is not just an end to a career; it's the beginning of a new (hopefully) long phase of life. A financial advisor can help ensure you can live out your golden years the way you want to.

Business Owners' Specific Needs

Entrepreneurs and business owners face unique financial challenges and opportunities. Balancing personal financial health with the demands of running a business requires a specialized approach. Here's how a financial advisor can be particularly beneficial for business owners:

  • Integrating Personal and Business Finances: Business owners often find their personal and business finances closely intertwined. Financial advisors can help in distinguishing and managing these two aspects effectively, ensuring that both personal and business financial goals are met.
  • Business Growth and Cash Flow Management: Advisors play a critical role in planning for business expansion and managing cash flow. They provide insights into investment opportunities, risk management, and strategic allocation of resources for sustainable business growth.
  • Retirement Planning for Business Owners: Retirement planning for entrepreneurs might differ from traditional employees. Financial advisors can assist in setting up retirement plans that are suitable for business owners, considering factors like business valuation and succession planning.
  • Tax Planning and Liabilities: Businesses have unique tax considerations and potential liabilities. An advisor can help navigate the complexities of business taxes, identifying strategies to minimize tax burdens while staying compliant with regulations.
  • Succession Planning: Planning for who will take over the business after you retire is crucial for your financial well-being and that of the business. Financial advisors can aid in creating a comprehensive succession plan, ensuring a smooth transition while protecting your financial interests.
  • Employee Benefits and 401(k) Plans: Designing and managing employee benefits, including 401(k) plans, is another area where financial advisors can provide significant value, helping to attract and retain talent while managing costs.

Speak to a Financial Advisor Today

You don't want anybody, yourself included, jeopardizing your financial health and life goals. Whether you are facing major life transitions, managing complex financial scenarios, approaching retirement, or simply looking to build a more secure financial future, the right guidance from an experienced financial advisor can be a great asset in helping you reach your goals. At Correct Capital, we understand that each individual's financial journey is unique. That's why we cater our services to meet you where you're at and help you get where you want to go. Call Correct Capital today at 877-930-4015 or contact us online to get started.