6 Key Areas A Good Financial Adviser Looks At

6 Key Areas A Good Financial Adviser Looks At

August 24, 2022
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Financial advisors are there to help you in your plans to make the most of your money. Whether you’re just dipping your toes into the world of personal finance or looking for a one-stop solution for all your monetary needs, a good financial advisor can help you pursue financial independence. A financial advisor is a professional who helps those with little or no knowledge about personal finance manage their money better. Even if you’re doing pretty well with your finances and don’t need someone to manage your money, working with a financial advisor could still be helpful as they can give you insights on different areas that you may need improvement. Here are 6 key areas that a good financial advisor looks at while advising his client:
 
Current income and savings
Any good financial advisor will always want to know about your current income and savings. Most individuals tend to place their savings into local banks or savings institutions that earn anywhere from 0-2%. The problem with that is that inflation is currently at 9%. It's true that if you don’t have the money to save, then you won’t be able to invest in anything, but where you save your money is almost as important as saving it. And yes, you must also keep track of your spending, and if you can’t do it on your own, find a way to track your expenses so you can save adequately.
 
Assessing Insurance Needs
Often, the least favorite area for a financial advisor to look at is insurance. However, a large reason for home foreclosure here in America is due to disability or sickness. Here, a good financial advisor looks at your disability coverage, your long-term care and your life insurance. They will look at all of your insurance-type products. A financial advisor wants to make sure you have as much as you need and pay as little as possible when you need it.
 
Determine your investment horizon & Accumulation of Wealth
A financial advisor can help you decide how long you’ll be investing for and how much you want to accumulate before you retire. This will help you decide which investment option is best for you. There are different types of investment options, such as stocks, bonds, and other investment instruments. Your investment horizon will decide which option is best for you. A postage stamp in the 80's was 15 cents. Now, that same postage stamp would cost you around 60 cents. This means your assets need to more than quadruple over the next 40 years just to keep up with inflation. Numerically, your current $50,000 in the bank will need to be $200,000 at least just to keep up with inflation.
 
Taxes
Who wants to pay more taxes? Yeah, not me either. Taxes are believed to be the most expensive thing in your life. Yes, even more expensive than your mortgage. It's important to get with an experienced financial advisor to make sure you're in the right vehicles and evaluate your tax liability.
Retirement (401k & Pension Plans)
If you’re working and have a 401k or pension plan, then an experienced financial advisor will help you understand the different options available to you. They can help you decide how much money you should keep in your retirement account so that when the time comes, you can retire with dignity.
 
Estate Planning Strategies
Wills and trusts established today provide an orderly distribution to your heirs. There are 3 places you can leave your money. First is your beneficiaries if they’ve been fairly good to you, charities if they’ve been bad to you, and then the government. A good financial advisor can work with your estate planning attorney regarding your strategies.
 
Bottom line
It’s important that you find a good financial advisor who you feel comfortable with. You should be able to discuss any financial matter with your financial advisor and be able to get the answers you need. Advisors can keep track of the market and give you advice on where you should be investing your money, helping you maintain a balanced portfolio on your way to pursuing your financial goals. It’s important that you understand the different areas that a valued financial advisor looks at. This way, you’ll know what to look for when hiring one.
The opinions voiced in this material is for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.