Choosing the right financial advisor is essential. Find someone with whom you feel comfortable sharing your most intimate financial details and who can help you create a holistic plan for reaching your wealth goals.
They’ll help you make intelligent decisions
One of the most significant benefits financial advisors provide is helping their clients make intelligent decisions. For example, during market turbulence, advisors help clients keep their emotions in check and remind them that their investment strategy was created before a downturn occurred. They also help their clients make sound personal finance decisions, like setting up an emergency fund and starting a debt repayment plan.
And they can assist with estate planning, which includes getting the necessary paperwork in order and identifying people to make decisions for you when you can’t, like a healthcare proxy and an executor. To find a financial advisor who can provide you with these benefits is essential.
To start, consider finding a fiduciary who must put your best interests first and avoid conflicts of interest. SmartAsset’s free tool matches you with vetted advisors who meet these criteria, and you can interview advisor matches at no cost to decide who is the right fit for you.
They’ll help you stay on track
When people think of financial advisors, they typically picture someone who can help them invest their money. But a financial advisor’s responsibilities go way beyond that. They can help you create long-term strategies for building wealth and managing risk.
They can also help with other money goals, like financial planning, retirement planning, investing, debt management, and insurance coverage. They can even be a source of objectivity when markets get unnerving or you’re tempted to take more investment risk than is appropriate for your situation or goal.
They can remind you of your goals and the historical averages of market returns. Your financial advisor can also be a sounding board when making big money decisions with significant consequences. Just like your doctor has a nurse or your hairstylist has someone else do their own, you can benefit from a second opinion. Ask for a recommendation from trusted sources and check an advisor’s disciplinary history online before hiring them.
They’ll help you manage your risk
Financial advisors can help keep you from making ill-advised investment decisions based on your emotions during market turbulence. They can also help you develop an investment strategy that aligns with your goals, risk tolerance, and time horizon. Advisors can provide a broad range of solutions that work with your budget, from investments to insurance and banking products.
If you choose an advisor specializing in a particular area such as prop trading, they can offer expertise unique to your situation and provide tailored recommendations. You will need to do your research before you look to invest in the best prop firms and consult with your advisor to see if trading will be the right move for you. Be sure to understand how your advisor makes money and that they’re committed to acting as a fiduciary.
It would be best to ask them about their education, credentials, and experience. If they don’t have a CFP or CFA designation, they may be unable to act as your fiduciary. Also, beware of “fee-based” products like annuities that contain hidden commissions and sales fees. These commissions can cost you tens of thousands of dollars over your lifetime.