Like most folks, when I meet people for the first time, a question that typically comes up is, “So, what do you do for a living?”
In my case, I’m a financial advisor and most people already have an idea of what a financial advisor does for their clients.
But most people are dead wrong, and in this post, I hope to show you why.
For example, you might think that a financial advisor…
- Sells financial products like insurance, annuities, & investments
- Helps people invest and plan for retirement
- Watches CNBC 24/7 to keep an eye on “the market”
In fact, you may think that the above list is exactly what a good financial advisor is supposed to do for their clients.
It IS true that helping people choose the right investments and plan for the future is a small piece of what a good financial advisor does for his clients.
But as you can see from the picture at the beginning of this post, it’s just that…a small piece.
Rather than go on and on about the dozens, if not hundreds of different situations a good financial advisor can help their clients with, I thought it’d be easier to make a list of the questions that a good advisor should be able to help you answer.
Here it goes…
Life Goals & Values
- Do you make enough money to support your dreams and goals in life?
- How much will you need to save for that “once-in-lifetime” vacation?
- What are you doing right now to enjoy life?
- Are you doing what you need to from a financial standpoint to accomplish your goals?
- Are you teaching your children the right money habits for their age and maturity level?
- Can you and your spouse afford to splurge a little or do you need to save more?
- Are your investments aligned with your goals?
- Is your current asset allocation right for your situation?
- How are your current investments performing compared to other investments?
- You read an article about an upcoming stock offering and are wondering if it’s a good investment?
- When’s the best time to rebalance your portfolio to maximize investment returns?
- How much are your investments costing you?
- What is a mutual fund’s “turnover rate” and why does it matter?
- Does socially responsible investing make sense for your situation?
- How can you choose investments that reflect your morals and values?
- What’s the best way to maximize the long-term impact of your giving?
- Do the organizations you support align with your values? If not, where should you give instead?
- Should you consider gifting money to family members?
- You want to help starving children in Africa, but aren’t sure of the best way to do that?
- Would it be better to donate something other than cash (i.e. stocks, bonds, etc.)?
- From a tax standpoint, what’s the best way to maximize your gift and decrease your taxes?
- Is the charity you’re supporting legitimate and are they being good stewards of your donations?
Expenses & Cash Flow Management
- Do you have enough money in your emergency savings?
- You just received an inheritance or windfall and aren’t sure what to do with it?
- What’s the best way to track and monitor your spending and expenses?
- Where should you be putting any excess cash at the end of each month?
- How much house can you afford?
- How will the birth of a child affect your spending?
- Can you afford to quit your job and start a business?
- What financial planning opportunities are available exclusively to small business owners?
- What type of retirement plan should you consider for yourself? What about your employees?
- What’s the best “exit plan” for you from a financial standpoint?
- How should you go about finding a buyer for your business?
- Will you be able to live off the proceeds of the sale of your business?
- How’s the financial health of your business compared to others in your industry?
- Are you doing everything you can to minimize your expenses and maximize your profits?
Income & Tax Planning
- Are you mitigating the effect of taxes on your wealth, while maximizing income?
- Are you overlooking any tax deductions or credits?
- Will the birth of your child affect your taxes?
- How much money should you be making, given your education, skills, and experience?
- Should you convert from a Traditional IRA to a Roth IRA to help save money on taxes?
- Which health insurance plan and other benefit options should you choose?
- What are your benefit options if you’re self-employed or a stay-at-home parent?
- Are you maximizing and/or utilizing all of the employee benefits available to you?
- Is a flexible spending account right for you (FSA)?
- What about a health savings account (HSA)?
Credit & Debt Management
- Should you refinance your mortgage?
- Which debts should you pay off first?
- What about student loans and other debt?
- Should you buy or lease your next car?
- Should you ever borrow money for an investment?
- How much should you borrow for the purchase of a home?
- What’s your credit score and why does it matter?
- What is an umbrella insurance policy and do you need one?
- Do you have enough life, auto, home/rental, and other types of insurance?
- Will your current level of insurance be adequate with a baby on the way?
- Do you need disability insurance?
- What is long-term care insurance and should you consider it?
- How much money will you need to retire?
- Should you save money in your 401(k) or is another option better?
- What’s the best way to claim Social Security in order to maximize your benefits?
- Will you outlive your savings?
- What is an annuity and should you consider one?
- Should you utilize a Traditional IRA or a Roth IRA? Or something else entirely?
- When is the earliest you can afford to retire?
- Is traditional retirement the only option or are there other options to consider?
- What’s the best way to save and invest for your children’s college?
- When’s the best time to start saving for your children’s college?
- What’s a 529 plan and do you need one?
- How much do you need to save and how should it be invested?
- What education options are best for you and your family?
- Should you go back to school to update your skills?
- Do you need life insurance(find out here)? If so, how much do you need right now? In the future?
- Do you need a will?
- Will your loved ones be taken care of if you pass away unexpectedly?
- Who should you name as a guardian for your children?
- What about a power of attorney, living will, HIPAA release, and other estate planning documents?
- Are there any other estate planning tools to consider for your situation?
- What is a trust and do you need one?
- What type(s) of trust are available to you and what are the benefits of each kind?
- Should you leave all your money to your children? A charitable organization? Both?
- What should you do when an immediate family member dies?
- You’re not sure if your current financial advisor is acting in your best interests and you want a second opinion?
- What to do if you get different advice from your attorney, accountant, and insurance agent?
- Do you need a CPA or accountant? If so, how should you go about choosing one?
- What’s a family office and is it right for your situation?
- How much is your current financial advisor charging you?
There are a lot more questions a good financial advisor can help you answer, but I’m tired of typing and you’re probably getting tired of reading so I think 87 is enough for you to get the general idea.
If it has to do with your financial life, then a good financial advisor can probably help.
The Good, The Bad, and The Ugly
I know what you’re thinking, “Wow, a good financial advisor does way more than I realized! But how do I differentiate the good advisors from the bad ones?”
While it’s true that many financial advisors push products, a good advisor will take on the role of a financial “coach” who comes alongside you to help you make wise decisions about your money that align with your goals and values.
In addition, there are a small but growing number of financial advisors that focus on a holistic approach to helping people manage their wealth. Most of these advisors don’t sell products at all and are paid on what’s known as a “fee-only” basis (watch this short video to learn about the different ways an advisor can get paid).
There are an even smaller number of advisors that wouldn’t be caught dead watching CNBC because for them, it’s a waste of time.
Instead, they base their financial planning and investment methodologies on three things…
- Timeless financial wisdom and principles
- Nobel-Prize winning research
- Modern financial science
SageOak is one of these firms.
Now the next time you ask someone what they do for a living and they say, “I’m a financial advisor,” rest assured, you probably know more about what a good advisor does than they do.
And you can feel free to move on to more small talk.
So, how ’bout them Bears?
This was part two of a two part series on reasons people don’t turn to a financial advisor for help and why it matters. You can read part one here.
If you would like to explore a possible advisory relationship and see if SageOak is the right fit for your situation, please click the button below to schedule a complimentary 15-30 minute initial phone call.