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Getting the Most from Your Financial Advisor: Ensuring Full Value for Your Investment

If you spend a little time on Mindful Money, you might get the sense that I recommend against hiring a financial advisor. And, while it is true in many cases, such as:

  1. When the planning needs are simple
  2. When it’s only an issue of managing investments
  3. When the lifetime costs would be substantial relative to the benefit

It isn’t always true.

The financial press covers the daily gyrations of economies, markets, and individual investments in a way that makes the gyrations seem important or meaningful – THEY ARE NOT.

And the financial services world comes up with plots and schemes to make personal finance appear complex – IT IS NOT.

These two issues push many people to seek expensive advice for things that are incredibly simple, and Mindful Money aims to help those people with those simple issues.

AND… there are times when a financial advisor makes a lot of sense and is absolutely worth the cost.

Just be sure – when you pay for the luxury service of financial advice – that you’re getting the full value for the price. Financial advisors can offer a wealth of expertise, helping you navigate complex financial decisions, plan for the future, and manage your investments.

This short guide aims to help you understand what to expect from a financial advisor and how to maximize the value of their services.

Understanding the Role of a Financial Advisor

Financial advisors offer a range of services designed to help you manage your finances more effectively. These can include investment advice, retirement planning, comprehensive financial planning, tax strategies and compliance, and estate planning. By understanding the full scope of what an advisor can do for you, you can ensure you’re taking full advantage of their expertise.

Investment Advice: Advisors can help you build and manage a diversified investment portfolio that aligns with your financial goals and risk tolerance. Most importantly, an advisor can help you stick with your portfolio when it is hard to do so (which is often the difference between meeting your goals or not).

Retirement Planning: They can assist you in creating a comprehensive retirement plan, ensuring you have enough saved to maintain your lifestyle in retirement. Critically, they can help you determine which assets to use and when, to maximize the longevity of your retirement income stream.

Comprehensive Financial Planning: Great financial advisors get to know your entire financial and life picture. They often know you better even than those who share your last name… making them invaluable in making those big life decisions as they come up.

Tax Strategies & Compliance: Effective tax planning can help you minimize your tax liability and keep more of your hard-earned money – by developing tax-efficient investment strategies, tax-loss harvesting, utilizing tax-advantaged accounts, and understanding the tax implications of different investment decisions.  Some advisors will also do your taxes for you, which can be a HUGE time and cost savings.

Estate Planning: Advisors can help you develop an estate plan to ensure your assets are distributed according to your wishes after you pass away, and will integrate with (and even pay for) the attorney to draft your Wills, Trusts, Powers of Attorney, and Healthcare Directives.

Setting Clear Goals and Expectations

To get the most from your financial advisor, it’s crucial to set clear goals and expectations from the outset. This includes defining and prioritizing your financial objectives, such as saving for retirement, buying a home, or funding your children’s education. By clearly understanding and articulating your goals, you can work with your advisor to tailor a financial plan that meets your needs.

Regular Reviews and Adjustments

One of the key benefits of working with a financial advisor is the opportunity for regular reviews and adjustments to your financial plan. Life changes, and so do your financial needs and goals. By meeting regularly with your advisor, you can ensure your financial plan remains aligned with your current situation and long-term objectives.

During these reviews, you should discuss any significant life changes, such as marriage, divorce, inheritance, sale of a business, the birth of a child, or a career change. These events can have a major impact on your financial situation, and your advisor can help you adjust your plan accordingly.

Asking the Right Questions

To ensure you’re getting the full value from your financial advisor, it’s important to ask the right questions. Some key questions to consider include:

  • What is your investment philosophy, and how does it align with my goals?
  • How do you get paid, and are there any potential conflicts of interest?
  • What services are included in your fee, and are there any additional costs?
  • How often will we meet, and what can I expect from these meetings?
  • Are you a fiduciary in 100% of our interactions (anything less than 100% means find someone else).

By asking these questions, you can gain a better understanding of your advisor’s approach and ensure it aligns with your needs and expectations.

The Importance of Fiduciary Duty

When choosing a financial advisor, it’s essential to work with someone who has a fiduciary duty to act in your best interests. Fiduciaries are legally obligated to put your interests ahead of their own, which can provide an extra layer of trust and confidence in their advice.

Ask your advisor if they are a fiduciary and if they adhere to the fiduciary standard. This can help ensure that the advice you receive is objective and focused on helping you achieve your financial goals.

Transparency and Communication

Transparency and open communication are critical to getting the most from your financial advisor. Make sure you understand how your advisor is compensated, including any fees or commissions. This can help you avoid potential conflicts of interest and ensure your advisor’s recommendations are in your best interest.

Additionally, maintain open lines of communication with your advisor. Share your financial goals, concerns, and any changes in your situation. This will enable your advisor to provide more tailored and effective advice.

Education and Empowerment

A great financial advisor doesn’t just manage your money; they also educate and empower you to make informed financial decisions. Look for an advisor who takes the time to explain complex financial concepts and strategies in a way that you can understand. This will help you feel more confident and in control of your financial future.

Of equal importance to most families is support in offering basic financial education to the youngest generation. Financial literacy is woeful in the United States; having someone unrelated to teach the kids is a huge added value.

Evaluating Performance

Finally, regularly evaluate the performance of your financial advisor to ensure they are meeting your expectations and helping you achieve your financial goals. This can include reviewing your investment performance, assessing the progress towards your financial objectives, and considering the overall value of the services provided.

If you find that your advisor is not meeting your needs, don’t be afraid to make a change. Finding the right advisor can make a significant difference in your financial success.

Introducing my firm: EP Wealth

EP Wealth checks all the boxes above. There is a $1,000,000 minimum for new clients and a $2,000,000 minimum for some complex services (integrated tax return completion and estate planning).

When considering financial advisors, EP Wealth stands out as a top-tier, award-winning firm. Recognized for its excellence, EP Wealth has received numerous accolades. The firm’s commitment to community is evident through initiatives like the Giving Tree, the Women’s Initiative, and the Financial Literacy Initiative.

EP Wealth’s leadership is dynamic, with a new CEO, Ryan Parker, who brings fresh energy and vision to the firm. The company boasts unparalleled employee benefits and has been consistently recognized as a “Best Place to Work” in multiple locations nationwide. Access to and communication with leadership is exceptional, fostering a collaborative and dedicated work environment.

One of the compelling reasons to choose EP Wealth is that it has already solved the challenges associated with growing into a large, successful firm. This provides clients with a secure, consistent path forward, even if unforeseen circumstances arise. EP Wealth’s impressive ranking in USA Today – the #14 firm in the country and #5 in the “Large” category – underscores its industry leadership and commitment to excellence.

Conclusion: The Benefits of Working with a Comprehensive Financial Advisor

Working with a financial advisor who offers deep financial planning, including tax strategies and estate planning, can provide significant benefits. These advisors can help you develop a holistic financial plan that addresses all aspects of your financial life, from investments to taxes to estate planning.

By ensuring your advisor is a fiduciary, maintaining open communication, and regularly evaluating their performance, you can maximize the value of their services and achieve your financial goals. With the right advisor, you can enjoy greater financial confidence and peace of mind, knowing that your financial future is in good hands.

If you are curious about hiring a financial advisor for your family, know someone who is currently looking for an advisor, or would like a second opinion on your financial advisor, don’t hesitate to reach out. I’d be happy to walk you through the pluses and minuses of going it alone vs. hiring a financial coach vs. hiring a comprehensive financial advisor.

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