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What Should Financial Advice Look Like?

The days we’ve all endured in 2020 have been unlike any we’ve experienced in the past.

Our cheese has been moved! And millions of Americans have been financially impacted by these historical and unprecedented times. Yet, many Americans have begun to take control of their financial situation by reaching out for financial advice.

Hiring a financial planner or financial adviser to assist you is common. But, when asked what your adviser or planner does for you, what is your answer? We typically hear from folks that their adviser invests their money and does little or no actual financial planning.

And how about the wealth manager? Same thing. Typically no goals-based or comprehensive review of the person’s financial life. And this has become such a common theme that we felt compelled to share our insights. In challenging times like these, you need more from financial advice.

Most people need more today than just investment management.

A recent Barron’s article states, “Whether you’re starting a family or starting retirement, there often comes a time when so many factors are in play. There are current spending needs, future savings and legacy goals, upkeep of a vacation house—that paying a financial advisor to serve as your expert juggler-in-chief will prove to be a far better investment than any hot stock could ever be.”  And, Chris Hogan says, “There’s a lot more to creating a financial plan than just picking the right mutual funds. You need to get on a budget and stick to it. You need a strategy and action steps to grow and build your retirement accounts. And you need to stay focused and intentional in planning for the future.” Chris Hogan is a #1 best-selling author, financial expert with Dave Ramsey Solutions. Wow—do we agree with this!

So let’s face it, getting a game plan for your financial life today and your future includes many moving parts. For example, there’s debt management, budgeting, long-term care planning, insurance, retirement, education, tax minimization strategies, investments and more. But, if the only service an adviser provides is investment management, then consider what you are paying for that investment advice. (Gobankingrates.com- link below for more information on average costs)

So, how should your meeting time be spent?

We think, in a typical quarterly meeting with a financial adviser, just a few minutes should be spent on investment performance. And the majority of the time should be spent on all of the other pieces of a person’s financial life.

Vanguard estimates that certain advisory services, including portfolio rebalancing, tax-advantaged allocation and withdrawal strategies could add a few percent to a client’s annual returns. But, those numbers factor in only the potential investment aspect of the advice. So, by taking a look at your entire financial picture –insurance, wills, trust, college costs, budget—the increase in return on your money can be even greater through proper savings and planning.  And, integrating your various life choices with your money every step of the way is critical.

Good financial advice/financial planning should include the following:

  • Help you to organize your finances.
  • Project the results of your savings and investments so you can see how well-prepared you are for retirement.
  • Help you to make decisions with your money that will focus you toward reaching your financial goals as efficiently as possible.

So, here are a few simple questions to ask yourself about the adviser you hire… Do they provide the following?

  1. Holistic advice
  2. Solutions, not products
  3. Goal-oriented saving and investing

and are they…

  1. Certified Financial Planner™
  2. Fee-only
  3. Fiduciary*

*As we mention Fee-only and Fiduciary, it’s important to understand what this means to you. “Fee-only financial planners are registered investment advisers with a fiduciary responsibility to act in their clients’ best interest. They do not accept any fees or compensation based on product sales. Fee-only advisers have fewer inherent conflicts of interest, and they generally provide more comprehensive advice” according to Forbes magazine contributor, David John Marotta.



Financial Planning Association/http://www.plannersearch.org/,

Gobankingrates.com – How much does a financial advisor cost?

Barron’s-https://www.barrons.com/articles/do-you-need-a-financial-advisor-1529107203, Vanguard Advisor’s Alpha-2019 https://advisors.vanguard.com/insights/article/IWE_ResPuttingAValueOnValue,

Dave Ramsey Blog-What do financial advisors do,

Lenity Financial, Inc.-https://lenityfinancial.com/an-invitation-to-think-differently-about-financial-planning/