Financial advisors play a crucial role in retirement planning, offering behavioral coaching, personalized investment strategies, and cost-effective portfolio management.
Working with an advisor can lead to a 3% increase in net returns, potentially resulting in an extra $1.3 million in retirement funds over 30 years.
Kellen Thayer, a financial advisor with Advisor.com, said, “People often say they will start investing tomorrow, but tomorrow never arrives. A financial advisor can be the accountability partner they need to ensure they don’t put off what they know they should be doing until it’s too late.”
“It’s akin to your physical health; you will always be better off starting today than avoiding addressing it altogether,” he continued.
“When volatility rises – like in 2008, 2020, or 2022 – good advisors will be there to remind you of your goals and can help you take advantage of market pullbacks to add to your portfolio at deep discounts,” explained Thayer.
Advisors provide accountability, emotional support, and help navigate market volatility.
Thayer said, “Asset location is just as important as asset allocation. Effectively waterfalling funds into specific accounts to optimize the tax benefits of each is vitally important.”
They also prioritize low-cost, tax-efficient investment opportunities.
Establishing a good rapport with an advisor is essential, ensuring a long-term partnership focused on individual financial goals and needs.
“It usually boils down to three questions: Do I like you? Do I trust you? Do I want to do business with you?” explained Thayer.
“If you answer ‘no’ to any of these questions, then you should keep interviewing advisors until you get the perfect match,” he concluded.
When tackling investing on your own, it’s easy to miss hidden costs. A good financial advisor can implement a cost-effective portfolio to minimize these costs and maximize overall returns.
Research by Morningstar has shown that low costs are associated with better investment performance. It’s simple math: when you pay less in fund expenses, you get to keep more of the returns regardless of how the market is doing.
“It’s not what you make, it’s what you keep,” Thayer says. “Advisors help you develop a plan, stick to it, and can help you to avoid costly mistakes that may exceed any fees you pay them over the long term.”
A good financial advisor will help you look for investment opportunities that offer low costs and don’t charge hidden fees. Depending on the size of your portfolio, professionals found through Advisor.com charge clients through a flat fee or a percentage of assets under management. Both methods are presented upfront, so you know what to expect.
After working hard for years, everyone deserves a comfortable retirement. To ensure you’re building the most wealth possible for your golden years, you should consider consulting an expert who will keep your best interests in mind
when helping you plan for each stage of your financial journey.
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