Why Life Events — Not Portfolio Size — Warrant A Financial Advisor
Do you know when you should hire a financial advisor? Many Americans feel that financial advisors are for those with a lot more income or a bigger investment portfolio than they have. But in reality, a financial advisor's services are better gauged in terms of life events rather than the size of your assets. Why? And how can they help during these life events? Here's what you need to know.
Why Do Life Events Warrant Financial Advice?
A life event is any major change that affects the majority of one's life. It is often the end of one chapter and the beginning of a new one. Some life events, such as getting married or the birth of a child, happen quickly and are easily identified. Other life events, like marital breakups or retirement, can take a long time to work through.
While life events are primarily physical changes or emotional adjustments, they also have financial consequences. Divorce, for instance, is a life event with some of the greatest financial effects. These range from reduced income to alimony or support to the division of future retirement assets. Unless you plan for the financial outcomes of such events, you may end up facing problems even during happy life changes.
How Can a Financial Advisor Help?
A financial advisor will look at your life event through several lenses that may not be possible to do on your own. What are these?
The first is an impartial analysis of your new situation. A newly married couple might have a rosy view of their relationship and may not want to discuss money. But the advisor will help them go through their individual financial life to reduce debts and increase assets. The advisor may also help them create a workable budget. And the advisor will certainly help the couple form and execute new, shared goals.
Second, a financial advisor will look at your circumstances through their experience with other clients. Marriage might be new to these newlyweds, but they're not the first couple the advisor has aided. A good advisor may know what tends to cause money arguments in couples and how to avoid these. Or they might help the couple see the need for proper insurance.
Finally, the financial advisor will look at your finances in terms of reaching your personalized goals. They don't set goals for the client but rather use their expertise to make yours happen. If your life event involves providing a home for your grandchild, for example, they will help you rewrite your financial plan to align your goals with your newfound priorities.
Where Should You Start?
Have you experienced a major life change? Do you expect to experience one in the near future? Then get started making a success of it by meeting with a financial advisor today. No matter how large or small your assets are, they will help you make the best transition possible to your new chapter in life.
