Financial advice is not black and white. Between the seemingly unlimited variation of job titles and the vagueness of offered services, it can sometimes be exhausting to try to understand what a “financial advisor” can do for you. Often these advisors may simply provide investment advice without taking other parts of the whole financial picture into consideration. In our view, the comprehensive approach to financial planning is much more valuable than this stripped-down version.
Why follow this holistic method? In order to make meaningful and effective financial decisions, all information is necessary. Let’s take home buying, for example. If you were in the process of buying a home, a significant consideration would be whether that house suits you from a financial perspective – can you afford it? However, there are a wide variety of other considerations as well. What’s the neighborhood like? How far is the work commute? Are there any problems with the home that will require repair or maintenance? Is it in a favorable school district? These are crucial questions that need to be answered before making a decision.
In the same way, investment advice directly ties in with other aspects of your financial picture. By gaining a full perspective of your tax situation, a comprehensive financial planner could help you make informed decisions about your investments with tax implications in mind. If you have specific financial goals or plan to retire in the future, a financial planner could help you choose asset allocation strategies that help achieve those goals while taking into account other considerations such as estate planning or Social Security benefits.
Many comprehensive planners also work on a retainer basis, meaning they provide ongoing advice, making themselves readily available to answer any questions you may have. Because life can throw curveballs and financial situations are dynamic, we believe that ongoing advice is a vital part of having a financial planner.
Will your advisor take your entire financial situation into consideration? Will he/she look out for your interests first in a fiduciary manner? These are the questions that must be answered before moving forward with an advisor. If they cannot be answered with a resounding “yes,” then it is likely best to stay away.
Written by Elijah Essa, Financial Planning Associate