Many people find it difficult to invest on their own, particularly as they face complex financial situations and decisions. That’s when professional financial advice can help. A relationship with a professional Financial Advisor will help you strategically plan, and set up disciplines to work toward your goals and financial success. A good financial advisor will also build a relationship with you that goes beyond traditional financial planning and results in a more valuable financial life-planning approach. I like to tell my clients that I am here to help educate them on appropriate and valuable actions, and to guide them away from possible pitfalls and harmful actions & decisions.
Personalize Plan that creates Solutions
A carefully planned investment strategy is a practical way that you and your financial advisor can make sure that you maintain the direction and discipline you need to pursue your investment goals. The first step in creating an investment strategy is to work with your financial advisor to understand your current situation and decide what you want to accomplish. Together with your financial advisor, you will need to determine your investment goals, risk tolerance, and time horizon.
Most investors think of financial advisors as investment counselors whose only job is to manage their finances and help them pursue their investment goals. A good financial advisor will look beyond just a client’s investments to incorporate a holistic approach that includes tax planning retirement saving and spending advice, estate planning, and more. Most importantly yoking yourself with an Advisor that is a follower of Christ and fears God will bring wisdom that goes beyond an earthly perspective. Being on the same page spiritually with a trusted Christian advisor is crucial and an integral part in stewarding the resources that God gives us. Make sure that Christian Advisor is competent though, and well trained, experienced, and recommended by trustworthy sources.
Your financial advisor will help you identify your attitudes toward investment risk, asset allocation and diversification, trading, investment costs, and other issues that define what’s important to you as an investor. Establishing your unique investment philosophy will help guide the fundamental decisions you and your financial advisor make about your portfolio. Your advisor adds value to your investment plan by monitoring and periodically rebalancing the asset allocation of your portfolio. A skilled financial advisor also has the training and insight to help you:
• Understand your goals, your dreams, and your reasons for investing.
• Help create an investment strategy that can address your short- and long-term needs. Reviewing and adjusting your investment portfolio through your life stages.
• Help make sense and educate you on the many investment options, retirement accounts, and determine how and if they fit into your financial plan.
• Act as an effective behavioral coach to keep you focused on your objectives.
In real terms, an experienced financial advisor can offer the strategic planning,
Discipline, and monitoring that can add great value & confidence in your financial planning. Helping you stay on track to meet your goals, as markets go up and down is a key component to success. There is great value in offering objective support and guidance during periods of market volatility, when many investors are tempted to run away from their long term plan.
Do it Yourself Financial Planning?In many areas of our lives, self-reliance yields positive results. You could say our country was built on this principle. Despite online and discount brokerage pitches that make investing seem easy, successful investing may not be that easy or successful. While do-it-yourself active trading can be fun and give you a sense of control, it may not translate into profits. Many times due to our emotional nature, we make poor investment decisions motivated many times by fear or greed.
Learn winning habitsOnce we put our financial plan into action, evidence suggests positive results follow. In its Value of Financial Planning study, the Financial Planning Standards Council found those clients who had a comprehensive, integrated financial plan that included strategies for household budgeting, tax, retirement, estate planning, investing, debt and risk management felt the most comfortable about their finances and were confident in achieving their life goals. So the more confident we are in our planning efforts, the more comfortable we are, and more likely we are to stay the course and have greater financial success.
Getting the most out of your partnershipTeaming up with a financial advisor can be a smart decision. But like in any relationship, success takes commitment from both sides. What can you do to help make your partnership with your advisor a valuable one? Here are four tips.
1. Be open and honest. Any solid relationship has effective communication at its core. Your advisor will have difficulty helping you if you hold back important information or leave out key details. Be clear about your financial situation, what you want achieve and your attitudes toward risk. Don’t forget to include your spouse in the discussion early on. You might find their risk tolerance is much different than yours, and that can affect how well, or how poorly, your plan performs.
2. Keep your advisor in the loop. Your financial plan has to evolve with your circumstances. Keep your advisor updated on major life changes like marriage, divorce, birth of a child or pending retirement. Any significant event should trigger a review.
3. Have reasonable expectations. You should expect your advisor to make specific recommendations, explain those recommendations and identify the risks involved. What they can’t do is say with certainty what financial markets or interest rates will do, or how a recommendation will turn out. It helps to be realistic. Remember when a risk-free return of 6% was easy to find? Not so now. Your hopes should reflect this reality.
4. Show initiative. Taking an active role in your finances will help you get more out of your advisor relationship. Review your account statements. Read information your advisor offers on an investment you’re considering – even do a little research on your own. Don’t hesitate to ask questions about how a recommendation fits in your plan. When you meet, be prepared to bring important paperwork (e.g. tax returns, statements) and take notes. Document what you and your advisor have agreed to.
Establishing a relationship with a financial advisor you can trust is critical to achieving your goals.
The general public lacks both the confidence and the preparedness for a confident financial future. Utilizing a Financial Advisor motivates and directs an individual to overcome their financial inertia and gives them an awareness of their need to plan and act. Advisors are a Catalyst for Action, including basic steps of saving & budgeting and more complex issues of Retirement Planning and Investment education.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments(s) may be appropriate for you, consult your financial advisor prior to investing.
Jeffery Masters, President of Jeffery W. Masters & Associates 954-977-5150.