Planning for retirement can be overwhelming, especially navigating market wins and losses. Financial advisors help you reach your retirement goals by providing valuable market insights based on years of experience monitoring the market. A do-it-yourselfer may miss investment opportunities, bring emotion and rash decision-making during market volatility, or take too little or too much risk. A financial advisor can give you peace of mind that you're taking the necessary steps to retire from your federal government job or private sector position with a financial portfolio that fits your needs. If you’re wondering why you should hire a financial advisor, learn about 14 financial benefits.
Benefits of a Kansas City financial advisor
Ready to add value to your retirement account?
Studies show that financial advisors can increase your investment returns. This added financial can help you meet your retirement goals or perhaps make it easier to retire early.
In 2023, the value of a financial advisor was estimated at 5.12%, according to A Russell Investments study called the Value of an Advisor.
How does an advisor add 5% to your portfolio? The Russell Investment's formula is based on:
- active rebalancing
- behavioral coaching
- customized experience
- tax-smart insights
5% additional value to your investment account is typically more than the fees you’ll pay for professional advice.
Fees can vary depending on who you hire. There are many types of financial professionals, and knowing how they will get paid or how you will pay for their services is an important question to ask when hiring an advisor.
Do I need a financial advisor?
Even with these benefits, you may be asking yourself if you need a Kansas City financial advisor or one in another city. It depends on if you are a DIY.
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 at some point.
If you invest on your own (DIY), you may or may not gain 5% a year, which is the estimated value 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 it and forget it?
We started with 10 reasons to hire a financial advisor. We updated it to reflect even more reasons in 2023 when the cost of living is so high you need to be mindful about your spending.
Here are 14 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.
There's so much more to consider than just your federal retirement income, and a financial advisor can provide those financial insights.
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.