Are you suddenly on your own or forced to assume greater responsibility for your financial future? Unsure about whether you’re on the right track with your savings and investments? Finding yourself with new responsibilities, such as the care of a child or an aging parent? Facing other life events, such as marriage, divorce, the sale of a family business, or a career change? Too busy to become a financial expert but needing to make sure your assets are being managed appropriately? Or maybe you simply feel your assets could be invested or protected better than they are now.
These are only some of the many circumstances that prompt people to contact someone who can help them address their financial questions and issues. This may be especially true for women, who live longer than men on average and therefore may face an even greater challenge in making their assets last over that longer life span.
Why work with a financial professional?
• A financial professional can apply his or her skills to your specific needs. Just as important, you have someone who can answer questions about things that you may find confusing or anxiety-provoking. When the financial markets go through one of their periodic downturns, having someone you can turn to may help you make sense of it all.
• If you don’t feel confident about your knowledge of investing or specific financial products and services, having someone who monitors the financial markets every day can be helpful. After all, if you hire people to do things like cut your hair, work on your car, and tend to medical issues, it might just make sense to get some help when dealing with important financial issues.
• A financial professional may be able to help you see the big picture and make sure the various aspects of your financial life are integrated in a way that makes sense for you. That can be especially important if you own your own business or have complex tax issues.
When should you consult a professional?
You don’t have to wait until an event occurs before consulting a financial professional. A specific life event or perceived need can serve as a catalyst for seeking advice. Such events might include:
• Marriage, divorce, or the death of a spouse
• Having a baby or adopting a child
• Planning for a child’s or grandchild’s college education
• Buying or selling a family business
• Changing jobs or careers
• Planning your retirement
• Developing an estate plan
• Receiving an inheritance or financial windfall Making the most of a professional’s expertise
• You’ll need to understand how a financial professional is compensated for his or her services. Some receive a fee based on an hourly rate (usually for specific advice or a financial plan), or on a percentage of your portfolio’s assets and/or income. Some receive a commission from a third party for any products you may purchase. Still others may receive some combination of fees and commissions, while still others may simply receive a salary from their financial services employer. Don’t be reluctant to ask about fees; any reputable financial professional shouldn’t hesitate to explain how he or she is compensated.
• Don’t let yourself be pressured into making a financial decision you’re not comfortable with or don’t understand. This is your money, and you have the right to take whatever time you need. However, give yourself a deadline for your decision so you don’t get caught in “analysis paralysis.”
• If you think your financial life simply needs a checkup rather than a complete overhaul, you’ll need to clarify the areas in which you’re looking for assistance. That can help you decide what type of advice you’re looking for from your financial professional, though you should also pay attention to any additional suggestions raised during your discussions. Your plans should take into consideration your financial goals, your time horizon for achieving each one, your current financial and emotional ability to tolerate risk, and any recent changes in your circumstances.
• Don’t assume you have to be wealthy to make use of a financial professional. While some do focus on clients with assets above a certain level, others do not.
• Even if you feel you need detailed advice from several different specialists–for example, if you own your own business–consider whether you might benefit from having someone who can coordinate among them. A financial professional can sometimes be a gateway to other professionals who can help with specific aspects of your finances, such as accounting, tax and/or estate planning, insurance and investments.
• If you want comprehensive management, you may be able to give a financial professional the independent authority to make trading decisions for your portfolio without checking with you first. In that case, you’ll likely be asked to help develop and sign an investment policy statement that spells out the specifics of the firm’s decision-making authority and the guidelines to be followed when making those decisions.
If you feel that consulting an expert might be helpful, don’t postpone making that call. The sooner you get your questions answered, the sooner you’ll be able to pay more attention to the things–family, friends, career, hobbies–that an organized financial life could help you enjoy.
Provided by Ed Wettig, CFP, Wettig Capital Management which offers investment management, financial planning and retirement income strategies. Securities, insurance and investment advisory services offered through Royal Alliance Associates, Inc. Member FINRA/SIPC. Wettig Capital Management is a marketing designation.