Why Pay For a Financial Advisor?
Why should I pay for a Financial Advisor? Some of you may be asking yourselves that right now. Let me start off by telling you who should not pay for a Financial Advisor. If you possess some of the following traits it may not be worth hiring an Advisor:
- You are just as comfortable losing money in the market as you are making money.
- You enjoy reading/studying finance in your free time.
- You have the free time to spend managing your portfolio and you enjoy doing it.
- You are a Do-It-Yourselfer
Just because you have some of these traits does not mean you should not seek financial advice. However, I have found that if you possess some of these traits you may not be happy paying an Advisor a 1% annual fee. Advisor fees may range higher or lower than 1% depending on your asset level. Also, there may be additional fees for the funds or managers an Advisor uses. For this conversation lets focus on the fees the Advisor gets, typically 1%.
Now, lets dive into what you should not be paying an Advisor for. You should not be paying a financial Advisor solely to outperform any market index such as the SP500. If this is your main objective in hiring a Financial Advisor, odds are performance will disappoint at some point and you will become unhappy.
Now let us focus on what you should be hiring a Financial Advisor for and what they should be bringing to the table:
- Piece of mind. This is by far the most important factor in hiring a Financial Advisor. This starts by finding someone you are comfortable with. Someone who you feel has your best interest at heart.
- A Financial Plan. Having a Financial Plan ensures that throughout the ups and downs of retirement you are still on track to reach your goals. For example, the goal of a retiree may be to not run out of money.
- Smooth out the ride. As most folks grow older their tolerance for risk declines. Your Financial Advisor should tailor your portfolio to your comfort level. If you are positioned correctly you should never fear the next market decline.
- Be a resource. A good Financial Advisor knows a lot about the financial world but also has valuable resources of their own. Such as a relationship with a CPA and attorney. To provide a complete financial plan, they need to address tax and legal issues.
Keep in mind this is not a comprehensive list. This is my opinion from my experience as a Financial Advisor. We are all different and require different approaches. However, we are all human and have a similar psychology. I continue to learn something new everyday and use that to adjust my experience as a Financial Advisor.
Investment Advisory Services offered through Spyrnal Wealth Management, LLC. Insurance products and services are offered through Timothy J. Spyrnal. Snowbird Retirement does not render legal or tax advice. Be sure to consult with a qualified tax and/or legal adviser regarding the best options for your circumstances. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Insurance and Annuity product guarantees are subject to the claims-paying ability of the issuing company and are not offered by Spyrnal Wealth Management.
The foregoing content reflects the opinion of Snowbird Retirement. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.