Some people may choose not to work with a financial advisor because they don’t think they need one. While it may be the case that not everyone needs to work with a financial advisor, I think there is a tremendous amount of value which can be unlocked from such a relationship when the correct client/planner match is found. I’ll provide some examples below because illustrating this relationship may be helpful in figuring out where some of that potential value may lie.
Investments
In a long bull market it may seem like you don’t need help with your investments because most major market indexes have been rising. Basic exposure to a US stock fund may be providing more growth than you even expected. It’s when the volatility picks up that people start to look deeper into their portfolios and question their asset allocation decisions. The reality is that creating an investment portfolio should involve a careful consideration of one’s investment objectives, time horizon, and risk tolerance. The portfolio should be viewed broadly to include all the holdings within one’s retirement plans, after-tax accounts, annuities and insurance policies.
Your advisor should be able to input all of your investment holdings into software which analyzes your overall exposure to stocks v. bonds, various industries and sectors, and so on. You may realize through this in-depth analysis that you are over or underexposed to certain parts of the market based on your personal needs.
Budgeting/Net Worth Analysis
I often tell people that financial planning isn’t rocket science. Perhaps the hardest part about it is having the discipline to save and invest routinely, which takes many years and much patience. Having a clear idea of where you spend your money and how your total net worth is increasing (or decreasing) is an integral part of the planning process. Every person should have a household budget and balance sheet to monitor their net worth and spending. If something isn’t working in your financial life, these worksheet should help expose where the problems are coming from.
Insurance
This is a tricky planning subject for many people. I often find those who are employed by a major corporation may think that the basic suite of insurance benefits offered by many employers is sufficient to cover their needs. However, these basic, pooled benefits don’t take into account the totality of one’s financial life. If the primary earner in the family is a self- employed spouse, there may be a much larger life insurance need than what a company offers, especially if kids are involved. If a family has a high income earner, especially one which has taken on debt (such as doctors) the disability benefit may be a crucial consideration. There are many other insurance planning topics which should be addressed to make sure you have patched up any of the many potential lurking liabilities.
Estate Planning
This is probably one of the more vulnerable areas of financial planning for individuals who are able to self-manage the bulk of their investment and insurance needs. There are many life events (marriage, children, significant assets, etc) which can necessitate a greater level of estate planning. The most basic level of planning involves reviewing beneficiary designations and establishing documents including a Will, Living Will, Health Proxy, Power of Attorney, etc. The creation of trusts may be helpful or needed as well to better control assets and potentially remove tax liability for larger estates.
Plan, Plan, Plan
Perhaps you read one of the above scenarios and thought to yourself that you might have a potential issue within your current financial plan. A good financial advisor doesn’t have to be super expensive and can save you a bundle in terms of helping you see potential liabilities and reviewing the decisions you make with your assets.
As always, feel free to call or e-mail me with any questions.
Russell Bailyn
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Vice President
Wealth Management
Premier Wealth Advisors LLC
14 E 60th St, #402
New York, NY 10022
P: 212-752-4343 *231
F: 212-752-7673
E: rbailyn@pfawealth.com
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