Just as a doctor can help you manage your physical health, a financial advisor can help you manage your financial health. This includes an in-depth analysis of your financial situation: your assets, income, expenses, savings and debts.
Based on your age and stage in life, a financial advisor should help you find the most efficient ways to pay down debt and save for the future. For example, they should help you figure out where to direct your retirement savings by teaching you the key differences between a Roth and Traditional IRA, 401k, Health Savings Account and annuities.
If you are retired, an advisor should help you develop a strategy to withdraw your retirement savings and use any fixed income sources, such as pensions, social security and rental income, to meet your needs in retirement.
Insurance
An advisor should ensure you and your assets are protected in the event of an adverse situation, such as an accident or death, and suggest changes. They will review the deductibles and liability limits in your home and auto coverage, provide guidance on how much insurance you realistically need, and set up a strategy to handle long-term care or medical expenses, should they become necessary.
Taxes
An advisor should understand your tax return and show you strategies about how to reduce your tax liability. This may include contributing to an HSA or helping you qualify for tax credits through your retirement savings.
Investments
An advisor should discuss investment management with you. This begins with how much risk you would like to take in your portfolio. After your risk tolerance is established, the advisor should develop a comprehensive plan for all of your investments to make sure everything is working together. One of the most important things an advisor helps with is to keep you on track with rebalancing your portfolio and managing your emotions during market swings.
Legacy
Finally, an advisor should help you make sure that your beneficiaries and ownerships match your estate plan. They can also help you develop strategies to provide liquidity to your heirs, give efficiently to charity and reduce taxes and fees associated with settling your estate.
It is important to remember that a financial advisor doesn’t replace your insurance agent, tax advisor or attorney. An advisor should coordinate with these people to make sure all of your financial affairs are in order. Then they can monitor your progress over time and continue to make meaningful recommendations over the life or your relationship as your situation changes.
If you aren’t receiving this type of service from your financial advisor, we would love to talk with you. We have helped hundreds of people get on track financially and would love to help you too.
Together, we can work to keep you on-track towards your financial goals.
Request a consultation with me to learn more.
Read more articles by Joshua De Bilzan