Top 5 Benefits of Hiring a Financial Advisor

Financial advisors exist to help you make more informed and responsible financial decisions. Whether your goal is to build wealth, retire early, or manage your estate, they can provide the information and expertise you need to do so. In a world with automated “robo advisors,” understanding the benefits of hiring a personal financial advisor can help you understand how important and helpful they can be.

Today, we’re discussing the top 5 benefits of hiring a financial advisor to help you decide whether hiring a financial advisor is best for you.

What does a financial advisor do?

Financial advisors are professionals who guide you through financial decisions. Often, they help with financial planning, retirement savings, or creating an investment portfolio. Most financial advisors spend some time getting to know more about you, your goals, and your financial habits. They then use this information to research your options and advise you about which decisions make the most sense for you.

“Financial advisor” is an umbrella term that can encompass many specialties. When looking for a financial advisor, it’s helpful to understand what their specialty is and whether they’re suited to your specific financial situation. Certifications and degrees aren’t always required for financial advisors, though most need securities licenses to sell investment and financial products.

When should I hire a financial advisor?

There are several situations where you might ask for professional financial advice. Usually, these involve receiving or distributing large sums of money or working toward long-term financial goals. If you’re making a big financial decision, it’s usually best to consult with an expert. Even if you have some financial experience, an advisor can offer you a second opinion. Some common situations where people hire a financial advisor include:

  • Making retirement plans
  • Filing taxes
  • Seeking investment advice
  • Change of situation (New kids, marriage, divorce, etc.)
  • Estate planning/wealth management

Top 5 benefits of hiring a financial advisor

Financial advisors offer many benefits to those in the process of making big financial decisions. Most of these benefits involve helping you make the best decisions on your path to reaching your financial goals. Some of the most important benefits of hiring a financial advisor include:

1. Expert advice

Financial advisors are experts in their field. They have the experience needed to analyze a situation and determine the best path forward. And, in a field as volatile as the financial market, having a thorough understanding of how it operates is an invaluable resource. A financial advisor can use their expertise to help you avoid common mistakes, remove emotion from your decision-making (such as FOMO investing), and even prepare for the unexpected.

In short, financial advisors know what they’re doing. Even better, they’ve made it their career to use know what they know to help you reach your financial goals.

2. Financial one-stop-shop

Investment advisory, retirement planning, help with exchange trading, taxes, and more. The finance world has many specialties, each with its own benefits and options. Because these specialties can go hand-in-hand, choosing a financial advisor who offers expertise in several financial services can have serious benefits.

By having one advisor or firm handling all of your retirement and investment management, they can ensure that all aspects of your financial planning work together to help you meet your long-term goals. They can also make sure that you avoid unnecessary taxes and pay the ones you owe on time and in full.

3. Stress reduction

Financial planning is stressful and unpredictable. Financial advisors can remove that stress with strategy, intelligence, and education. They can offer advice on when to buy or sell, which specific investments might be most beneficial, or provide research that helps you make more informed decisions. Most importantly, they can also assess your risk tolerance level and guide your choices to stay within your comfort zone.

Financial advisors remove the pressure from you to know which decisions to make, when, and why. With the right advisor, you can feel confident in your decisions and learn how to mitigate losses.

4. Navigate the “new normal”

Ever since the Covid-19 pandemic began, investors have worried about what it might mean for the stock market. Those with experience have learned what changes to look for, what those changes might mean, and how to adapt to them. Unseasoned investors can learn from this experience. A financial advisor can help you understand what to expect and how to navigate the ever-changing financial world, much as we had to do following the Great Recession.

5. Clear goals

If we don’t know where we want to go, how can we expect to arrive there? Luck works sometimes, but having a specific plan is better. Financial planning works the same way: it’s most successful when you have clearly stated goals. It gives you an endpoint you can work towards. Financial advisors understand how important this is and can help you remove any vagueness from your financial goals.

First, they’ll help you create a clear goal. Hoping to retire? They can help you figure out what your specific plans are, such as when you want to retire, whether you hope to own a house, or whether you’d like to travel. They can use this to help determine how much money you might need to support your desired retirement lifestyle.

Then, they’ll help you build a specific plan of action to help you arrive there. Maybe you’d benefit from investing in mutual funds or ETFs; maybe you’ll need to play the stock market. Whatever the path is, they can tailor it to fit your plan and help you achieve the goals you want the way you want.