Signs You Need A Financial Advisor? Should I Change Financial Advisors?

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Now that you know what a financial advisor is (or should be 😁🙃), how do you know when you might need to work with a financial advisor?

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What if you already have a financial advisor and you’re wondering when it makes sense to fire or switch financial advisors?

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Not Everyone Needs A Financial Advisor

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Shocking to hear from a…financial advisor. 😜 But it's true! If you:

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💡 Can detach from emotions and make rational decisions.

💼 Have expertise in financial planning, tax planning, investing and other financial areas.

📊 Enjoy managing your portfolio and staying updated on the changing financial and tax landscape.

📝 Have a plan for your incapacitation or passing away.

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Then, you might not need a financial advisor. However, most people don't check all those boxes and could benefit from one. 🤔

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Weighing The Costs & Benefits💰

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Ask yourself: Do the benefits of working with a financial advisor outweigh the costs? The tricky part is that some benefits are easy to measure, while others are more intangible. 🤷‍♂️

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If not, that's okay. You’re your own financial advisor, but think about a few examples of the opportunity costs of not having one:

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🚨 Not having enough life insurance or proper liability protection. Something happens where you’re subject to a lawsuit and the settlement depletes your assets due to poor liability protection. Even worse, you pass away prematurely without the necessary amount of life insurance and leave your loved ones behind without the means to continue their lifestyles.They sell the home they can’t afford, the kids change schools or your partner now has to work multiple jobs to make ends meet.

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📉 Buying only U.S. tech stocks because they’ve done incredibly well in the last decade. Then you go to retire and need portfolio income, but U.S. tech stocks underperform a diversified investment portfolio over the next several years. Now you might be exposed to Sequence of Returns Risk [link to the guide explaining this].

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🕒 Staying in cash or waiting for "the right time" to invest, only to miss out on growth.

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Be cautious getting too caught up on just the cost and ask yourself: What's the cost of not working with a financial advisor...or of not having peace of mind, a solid tax strategy, or an appropriate investment plan? 🤷‍♀️

The cost of the peace of mind knowing you don’t have to worry about your finances. You can spend time with family, travel, and live the life you want.

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I do believe that more people could use a financial advisor than are currently using one.

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The Value Of Financial Planning

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Good financial planning is about living a better life, not just obsessing over tax plans or investment strategies. It’s about ensuring that while you’re managing your finances, you don’t miss out on the things that matter most.

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Are You Saying This? 🤔

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• "When can I retire? How will my income be replaced? Am I going to be ok?"

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• “How much can I safely withdraw from my investments in retirement?”

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• "I’m not sure if I’m missing something or even doing the right thing?"

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• "I’m very busy and want to optimize my situation, but just don’t have the time."

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• "How much do I need to save each month to be financially independent/retire at age __?"

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• "How do I carefully unwind and diversify concentrated investments with sizable gains?"

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• "How do I sell my business tax-efficiently and use the proceeds to transition into retirement?"

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• "What should I do with my vesting Restricted Stock Units (RSUs) & Incentive Stock Options (ISOs)?"

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Or maybe you're facing a big life change like:

• 💍 Getting married
• 👶 Having a baby
• 💼 Changing jobs
• 💔 Going through a divorce
• 💸 Receiving a large windfall

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Examples Of Signs You May Need A Financial Advisor

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• You have complex financial questions. This includes cmplex tax situations or uncertainty about tax-efficient strategies.
• If you're unsure about the investments in your portfolio or lack confidence in your investment decisions, an advisor can provide clarity and align your investments with your financial goals.
• Not knowing where you stand financially or if you're on track to achieve your goals.
• You need a solid financial plan and someone to hold you accountable to it.
• You received an inheritance or are selling a business, you may be looking for guidance during this significant transition.
• You’re approaching retirement and lack a comprehensive plan with a strategy to ensure financial security during your retirement years.
• You’re unsure about how to align your investments and financial plan with your life goals.
• Your finances keep you up at night. 😴
• You're going through significant events like marriage, divorce, inheritance, or starting a family that can complicate finances.
• Experiencing stress or uncertainty about financial decisions.
• If you lack the time to dedicate the appropriate amount of time to manage your finances and stay updated on personal finance changes.
• If you want a holistic approach to your finances, including investment, tax, retirement, estate planning and more.

These are just a few examples. If you're uncertain about engaging a financial advisor, consider interviewing several to explore the value they can offer. This process allows you to assess their expertise and compatibility with your financial goals. Even if you decide not to proceed, you'll gain insights into when professional guidance might be beneficial in the future.

Why People Pick Financial Advisors🧐

Everyone has their reasons. Whether it's experience, relatability, or personal fit, people choose their advisors based on different factors.

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So, maybe you’ve decided you do need a financial advisor, or perhaps you want to switch from your current financial advisor.

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What next?

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Good Questions To Ask Your Current Financial Advisor Or To Ask When Interviewing Financial Advisors

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• Are they a fiduciary 100% of the time, a fiduciary some of the time or do they work under the suitability standard? Their answer here doesn't make them a good/bad person or financial advisor, just good for you to know where they may have conflicts of interest.👀

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• ‍How are they compensated for the actions/implementation you're recommended? Does this include any commissions or bonuses for selling a financial product? 💵

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• What services do you provide? Financial Planning? Tax Planning? Estate Planning? Business Succession Planning? Investment Management? Retirement Planning? Do you offer tax preparation services? Estate plan document creation services? Can you review and shop around my health, homeowner and auto insurance coverages?

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• Do you have any disclosures, disciplinary actions, or complaints filed against you? You can go to FINRA Brokercheck and you can search the financial professionals' names to see what (if any) complaints have been filed against them and to see if they’re registered. ✔

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• ️What is your investment philosophy? Their approach should align with your risk tolerance and financial objectives.

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• How will our relationship work? Frequency of meetings, ongoing support, and communication methods.

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• What is your experience and qualifications? Areas of expertise, experience, what network of professionals do they have access to, credentials and more.

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• What happens if I decide to end our relationship? Will I be invested in any "proprietary" funds? Are there any fees associated with this?

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• Do you have a succession plan? If you retire or leave, how will my investments and financial plan be handled at that point? Will I have say in my new financial advisor?

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We will cover different ways a financial advisor can be compensated in the future. The great news is there are many options out there and many pushing for more transparency around this!

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By considering these factors, you can determine if a financial advisor is right for you and ensure you find one that meets your needs.

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Signs It's Time To Change Your Financial Advisor 🔄

• You haven't heard from them in a while or doesn't return your calls/emails.
• Excessive or unclear fees can erode your investment returns over time. Ensure you understand all costs involved and that they are justified by the services provided.
• You dread meeting with them.
• They only provide investment updates or the probability of success of your financial plan…whatever that means!
• They’re saying they “don’t answer or help with tax, estate, or legal questions”. They should be incorporating these aspects into your financial plan and not always deferring to tax or legal professionals.
• You don’t understand your investment strategy or financial plan 😕
• If you feel your concerns are dismissed, your questions go unanswered, or you're not receiving the attention you deserve.
• Financial planning should be personalized. If your advisor offers generic solutions without considering your unique circumstances, it may be time to seek more tailored advice.

These are just a few examples. If you're considering changing your financial advisor after reading this, it's prudent to interview several potential candidates to identify someone who can effectively address your specific financial needs.

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Everyday Person Thoughts

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What Caught My Eye

Steph Curry once made 105 STRAIGHT 3-pointers in five minutes. How many do you think you could make in a row?

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"One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular.” - Tony Robbins

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Ready to Take Off?

📩 Have a financial question? Visit The Financial Takeoff and our Ask a Question page.

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🚀 Want to explore working together? Schedule your Initial Collaboration meeting to see what’s possible with your financial planning. We look forward to meeting you!

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Life is short and time is precious. Thanks for taking yours to read this and I hope to be a part of your Financial Takeoff!

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Disclaimer: This is just for informational purposes and should not be used or viewed as tax, legal, or financial advice. Work with your tax professional, legal professional, and financial planner to evaluate which strategies would be the best for your situation.