Do I need a financial advisor?
Even with these benefits, you may be wondering if you need a Kansas City financial advisor or one in another city. It depends on your wealth mindset.
Think of your investments and retirement portfolio as an important investment as your home. While there are plenty of DIY projects around your home, you’ve likely hired an interior designer, landscaper, painter, or a real estate agent to help you along the way. You don’t have all the time in the world for everything to be a DIY project.
So, you should approach retirement planning with the same mindset. In fact, your retirement account will likely be more valuable than your home! You may not be there yet, but you will be soon.
If you invest on your own (DIY), you may or may not gain 5% a year, which is the estimated value added to your portfolio with a financial advisor.
So, why wouldn’t you hire someone to help you manage your money? Because the money is not tangible until retirement, because it costs you a little bit of money, or it’s one of those things you’d rather set and forget?
We started with 10 reasons to hire a financial advisor. In 2024, with a high cost of living and uncertainty about the future, we've expanded on the reasons why you should hire an advisor.
Here are 17 ways financial advisors can help you:
- Provide personal advice and insights.
- Rebalance accounts and not set it and forget it.
- Navigate tax implications.
- Connect you to other financial professionals.
- Informed about market trends, complexities, and changes.
- Help you understand investment strategies.
- Guide decisions avoiding analysis paralysis.
- They save you time and prevent stress.
- They are not emotional.
- Some KC financial advisors are fiduciaries.
- Provide risk management to navigate market volatility.
- Neutral party to bounce financial ideas off.
- Keep your finances organized.
- Help you reach your financial goals.
- Consider your wealth beyond your retirement account(s).
- Maximize Social Security.
- Help you decide "when" to retire.
Choose what you'd like to learn about, and go directly to that section.
Think beyond your retirement account, and consider your overall wealth. A financial advisor can provide that broader financial perspective for your wealth today and in the future.
Let’s explore in depth some reasons why you should hire a financial advisor.
1. Provide personalized advice and insights.
We all have unique financial situations, and they're ever-changing. A financial advisor can help you adjust when needed and provide personalized insights for changing personal and professional financial decisions. Financial advisors continually look at your full financial situation and provide customized advice rather than a one-size-fits-all approach. Some scenarios that may change your financial plans include:
- Children - you may plan for college with a 529 or college savings plan or consult your advisor to answer questions about the FAFSA.
- Professional changes - Perhaps you worked in the private sector for a while and then switched to a federal job. That changes your retirement benefits dramatically, potentially adding a Thrift Savings Plan to your portfolio.
- Move - If you're considering moving to a city like Kansas City, your financial advisor can help you with taxes and cost of living. When you move, your financial advisor can answer questions about how that move may or may not change your financial situation.
- Divorce - If you get divorced, that changes your financial situation, and you may find yourself financially starting over or getting remarried.
These life decisions can change financial choices and how you manage your money. A financial advisor is always there to provide personalized insights.
When life happens, who are you going to call as a DIY investor to help weather these challenges?
2. Financial advisors rebalance accounts and don't set it and forget it.
Setting it and forgetting it, as most DIY investors do, is a big financial mistake.
A financial planner adjusts your portfolio as needed. It often pays off long-term, helping you achieve your retirement goals.
The Russell Investments study found rebalancing on a hypothetical account would potentially reduce volatility by about 1.99%.
A financial advisor can manage your short and long-term goals while balancing your portfolio.
3. Navigate tax implications
Taxes now and during retirement should be considered when setting retirement goals and determining the types of investment vehicles. With some investment vehicles, you pay taxes now, and others, you pay taxes later.
A financial advisor can help you create a sustainable income stream that considers the types of accounts you have - various investment vehicles, Social Security, pension, Thrift Savings Plan (TSP), and investment withdrawals.
They can also help you minimize tax liabilities. If you feel like you're paying too much in taxes, let's talk and get the latest tax guide.
4. Connect you to other financial professionals.
Russell Investments points out that in their first study, ten years ago, a financial advisor was a broker. Those days are long gone!
Now, financial advisors provide all sorts of wealth planning and are always ready to answer questions and connect you with other financial professionals.
Retirement planning is so much more than how much money you have invested. Comprehensive financial planning also covers your taxes and estate. We can put you in touch with accountants and estate lawyers who can help you meet your overall financial needs and life goals.
5. Informed about market trends and changes.
Let's face it: life is constantly changing. New technology, new rules, and new trends.
If you take the DIY route to managing your money, you can make investment mistakes. You don’t know what you don’t know.
You may think you know enough to invest, but then again, there are likely things you missed in your research.
How invested are you? How much time do you devote to your finances every month? It’s probably a fraction of what an advisor spends.
Financial advisors are up-to-date on legal regulations, trends, tax changes, and market shifts. It’s complex and time-consuming for an investor to acquire and interpret all this information.
Especially if you hire a financial advisor who specializes in clientele like federal employees, he can provide additional advice and information like telling a retiree to look in his or her OPM folder years before retiring to avoid delays in federal retirement benefits when the time comes to retire from the federal government or leave a federal job.
Financial advisors offer practical and personalized insight you can’t get alone. They also provide you with the knowledge you didn’t know you didn’t know.
6. Understand investment strategies.
Investment strategies can often be complex and overwhelming for novice investors. Asset allocation, diversification, rebalancing, tax optimization—these are just some of the many tactics in the investing playbook.
An advisor, with their years of training and experience, can effectively execute these strategies, tailoring them to the investor's circumstances. This expertise has the potential to generate better returns over time, which often outweighs the cost of hiring a professional advisor.
If you hire a Certified Financial Planner, their accreditation requires ongoing training and education. They take continuing education classes to understand the complexities of the financial world and inform and educate you.
7. Financial advisors guide decisions, avoiding analysis paralysis.
There are so many ways to invest your money. That’s why it’s hard for the average investor to know where to start.
With investments, it's easy to get analysis paralysis when sorting through all the research. Ever felt it? It’s frustrating!
You spend hours researching a topic – whether it’s the best financial product or the best RV to buy for retirement – yet you still can’t decide. You analyze every angle of every choice to the point of paralysis.
A financial advisor will break through your analysis paralysis and provide the pros and cons of all the financial products, funds, and investment vehicles.
They provide clarity and perspective so you can reach your goals.
If you like to delegate tasks, a financial advisor is a perfect fit for you. You can give your advisor guidance, but leave the heavy lifting to the financial expert and have peace of mind knowing your finances are in the hands of an expert!
8. Saves time and prevents stress.
If an advisor is saving you from analysis paralysis, they’re also preventing stress!
It takes time to research investment accounts, maximize investment opportunities, stay on top of trends and tax changes, and adjust to life factors. Wouldn't you rather spend that time dreaming of your retirement or spending time with your family?
Tap into the research, analysis, strategy, and insights of a trusted and experienced financial advisor.
Remember, the fees of hiring an advisor are often less than the potential gains of using an investor.
When you interview your advisor, ask them how much they’ll do for you. They can do as much or as little as you need, within reason.
9. Financial advisors are not emotional.
Have you ever looked at your investment account and wondered what happened?!?
Let’s face it – money brings out the emotion in all of us. That’s because we work so hard to earn it.
Think about how your emotions affect your daily decisions. Have you ever made a rash, emotional decision that you later regretted? Emotions sometimes drive us to make decisions that seem good in the heat of the moment or emotion but don’t make as much sense when we take a step back and re-evaluate the decision.
Of course, hindsight is 20/20.
An advisor has years of hindsight to tap into and doesn’t have the same emotional tie to the money, which allows him to make more informed and objective decisions that ultimately can net you more money.
When you choose a financial advisor, it’s your money and not their money. That slight distinction makes all the difference because it allows the advisor to base decisions that minimize loss and maximize gains in objectivity rather than emotion.
As a DIY investor, emotions can cloud financial decision-making, especially when the economy is uncertain or fluctuating.
Think of your advisor as a financial buffer against emotional biases that can cost you in the long run. You’ll get objective advice every time that can help you achieve long-term goals.
10. Some KC financial advisors are fiduciaries.
A fiduciary has a legal and ethical responsibility to you. Not all financial advisors are fiduciaries, but some are, especially fee-only advisors.
A fee-only advisor is always a fiduciary because you, the client, pays for their services. How it’s calculated varies by the advisor, but here are some scenarios of how the advisor gets paid.
The advisor chooses the best financial products based on what’s best for your investment goals, rather than a commission-only advisor who may be persuaded by commissions when suggesting a product for your money.
Hiring a fiduciary fee-only advisor ensures there’s zero emotion tied to your money.
11. Provide risk management to navigate market volatility.
Nobody wants to lose money, but it happens occasionally when investing. A financial advisor can help you make decisions to minimize losses. He can’t prevent them or guarantee they won’t happen. However, he can talk you through a market decline and keep your emotions in check.
If you were an investor in the 2000s, think back to how you felt. Investors opened their 401-K statements and experienced breathtaking drops in their retirement accounts. Emotions affected how people handled those drops unless they had an advisor they could call to “advise” them through the market volatility.
When dealing with money, you need to make rational choices that make the most sense in the long term. A financial advisor provides consistently objective and sound advice, regardless of personal, professional, or market circumstances.
A certified financial advisor can prevent impulsive decisions when the market is volatile, keep you level-headed, and help you sustain long-term investment goals.
He can also help you manage fears and unknowns in the market and help you prepare emotionally when you suspect the market may be headed downward.
The fear of loss can trigger irrational selling when the market is down and the lure of quick gains and risky buying when the market is booming.
When you have a financial advisor on your side, they can also help you adjust your investments and risk tolerance quickly when they see signs of a downturn or during economic volatility.
A financial advisor's steady guidance and emotional discipline give clients the peace of mind they need to achieve retirement goals.
12. Neutral party to bounce financial ideas off.
Have you ever thought something sounded good until you talked it over with a trusted friend, spouse, or colleague, only to realize it's not the best plan?
That’s why it helps to talk things out, sort through the data, and make decisions. Two brains are always better than one! You develop more ideas and gain different insights, perspectives, and approaches to saving.
It’s especially crucial for divorcees who are making financial decisions for themselves and their children but don’t have a companion with the same vested interest to bounce ideas off.
If you have a question about the market, investing, or financial trends – you have someone who can provide answers, so you have the confidence to make the right decision.
13. Keep your finances organized.
Organization is the most significant financial planning obstacle. If you’ve changed jobs over the years, you probably have investments in multiple accounts.
Financial advisors have access to software that can pull all your investments and create a one-stop shop to analyze their performance.
At Open Road Wealth Management, we put all your accounts in one place. With account aggregation, you can see your assets and liabilities in one place, even if they’re held with different companies. You can also see how each account performs and your overall investment portfolio.
We use a network of software and cutting-edge technology to guide your decisions.
Think of your advisor as your GPS that guides you along the open road. It uses data, like GPS uses traffic reports, to guide you on the quickest path to your destination. Your financial advisor will guide you down the right financial roads to reach your investment goals.
14. Help you reach your financial goals.
It’s great to dream up financial goals, but they’re only valuable if you execute them. When was the last time you updated your goals? Your financial advisor will check in with you periodically and help you make necessary adjustments.
We all have different goals – whether it’s retiring early, saving for your child’s college education, saving enough money to buy a house, buying an RV, or establishing an estate for future security for your children or grandchildren.
Financial advisors suggest you update your goals every few years. What are your financial goals, and are you close to achieving them?
If you made financial goals five years ago, and you still have met them – it may be time to call in an expert because life can change goals.
Think about that in the context of high inflation right now. Has that forced you to adjust your goals? You’re paying more for basics like food and utilities, and if you want to buy a house and borrow money, it will cost a lot more!
A financial advisor ensures you hit the reset button to adjust for changes in your lifestyle, job, family, and economy. And that you have a strategic, goal-driven plan that aligns with your dreams, time horizon, and financial capabilities.
With this personalized approach, your financial journey will align with your stage in life and, ultimately, your retirement goals.
15. Consider your wealth beyond your retirement account(s).
Some financial advisors also provide wealth management, like we do here at Open Road Wealth Management. We consider your wealth today and in the future, which may even mean generations from now long after you're gone. What do you want your legacy to be? Do you want to leave money to your children or grandchildren or an organization you care deeply about? A future-proof wealth management strategy considers these questions.
At Open Road Wealth, our Retirement RoadMAP helps you manage wealth before and after retirement. MAP stands for a Made-to-Action Plan. Ready for a financial advisor who considers more than just your investments? Schedule a complimentary call.
16. Maximize Social Security.
You're eligible for Social Security benefits at age 62, but that doesn't mean you should take them then because you'll get reduced benefits. You don't get full Social Security benefits until you reach the Social Security retirement age of 66 or 67, which varies depending on when you were born.
A wealth manager will help you think beyond your financial investments, and consider ALL your wealth after retirement, and when to tap into those assets so you can maximize your wealth.
17. Help you decide "when" to retire.
It's not always cut and dry "when" you should retire, especially considering the implications to your total wealth. You have to consider when you can tap into benefits, and sometimes there are age restrictions or like with Social Security, it can pay to wait to receive benefits.
While it may be trendy to retire early, every personal financial situation will be different.
For federal employees, "when" you retire can dramatically impact your FERS benefits. We have a guide to help you make that decision and calculate your federal benefits, and of course, our federal benefits expert can help guide you through that process.
You may be motivated to retire for personal reasons, and that may make financial sense for you. Perhaps you tap into a few financial assets now and others later. A wealth management firm can help you make those decisions.
Kansas City retirement planning
As you think about retirement planning in Kansas City or another city, remember that the value of a financial planner, wealth manager, or retirement expert extends far beyond the net worth of your investment accounts. That may be where you’re focused as you think about retirement. There are so many other factors, from estate planning to tax implications.
The potential increase in your portfolio performance and tax savings can far outweigh the possible fees of hiring a financial advisor in Kansas City or another city. Don’t forget the time you’ll save and the stress you’ll prevent, too! That’s worth something as well.
Whether you live in Kansas City or elsewhere, we can evaluate whether our True Wealth Management philosophy will work for you!
