When to Hire a Financial Advisor and What to Expect

Financial advisors help you make decisions about what you should do with your money, which may include investments or other courses of action.

When to Hire a Financial Advisor and What to Expect

If you are like many people, you have marvellous intentions about growing wealth and planning for the future. Unfortunately, intentions without actions are simply dreams. The reality of financial planning is it takes some effort on your part, even if it is a small step like sending an email to a financial expert to make an appointment to chat.

While there is no set time in your life to meet with a financial advisor, there are several specific points where hiring a financial advisor is an excellent decision. Often major turning points in life lead people to seek financial advice. Times such as,

  • Recent Marriage – Find advice about merging finances and start a plan for your future together
  • The Birth of a Child – Learn how to prepare for your child’s future, including making sure they will have what they need if you are no longer around to provide for them
  • Death of a Spouse – Understanding financial management and plotting a path forward
  • Aging Parent or Parents – Get assistance managing finances from an unbiased source
  • Recent or Impending Divorce -Learn how to financially plan for life as a single person
  • Receive an Inheritance – Get investment advice
  • Nearing Retiremen- Have a financial wellness check to see if you are on the right track

Do I Need Assistance Planning My Financial Future?

People who are familiar with financial dealings will often question whether or not they need to work with a professional. While some people are savvy, consider the following before you decide to go it alone.

  • Do you have the spare time needed to oversee and make necessary adjustments to your portfolio?
  • Are you knowledgeable when it comes to financial workings?
  • How much knowledge do you have about investments?
  • Are you willing and able to invest your time learning the ins and outs of the areas of finance with which you lack familiarity?
  • Do you enjoy reading about wealth management and related topics?
  • Are you interested in researching the latest financial products?
  • Can you make time to keep up with the constant adjustments to the tax codes as well as facets of compliance?

Suppose you feel confident in your abilities to stay on top of these and other topics relevant to financial management and wealth creation. In that case, you may be able to stand alone when it comes to financial planning and management. On the other hand, if your first reaction is no, you will benefit from seeking out a financial professional to work with you.

Active vs Passive Investing

A vital decision you need to make early on in your financial journey is whether you want to be an active or passive investor. The two types break down as follows,

• Active Investor – If you decide to take on the role of an active investor, you will need the time, funds, and knowledge to be successful. Active investing involves more work, a greater risk, and the potential for life-changing rewards or devastating losses. Generally, active investment funds:

    • Are intended to outperform a specific benchmark
    • Have human portfolio managers and analysts
    • Tend to have higher expenses, which can hamper performance

• Passive Investing – As a passive investor, you will not need the time or the in-depth understanding of an active investor. By passively investing, you can enjoy ease of management, stability, and predictability. Investors who choose passive investment funds should be aware that these funds,

    • Are meant to match the performance of a specific index and not outdo them
    • Provide moderate returns
    • Are typically automated but have some human oversight
    • Usually have lower expenses than active funds

Have a frank discussion about your comfort level when getting financial advice from a professional. While some people are geared towards active investing, many more are better off as passive investors.

What to Expect from a Financial Advisor

The role of a financial advisor is sometimes misunderstood. At their core, providing you with wise financial advice to help you make the best financial decisions possible is their goal.

When you meet with a potential advisor, they will likely spend some time asking questions to get to know you and what you want for your future. Some people may find this off-putting. However, an advisor will be able to give you the most comprehensive assistance if they have a grasp of who you are and what is important to you now and in the future. Having this knowledge will make future decisions easier if they are based on an overarching goal.

Some of the information your advisor may ask during your initial visit involve details regarding your situation, such as your age, where you work, and relationship status. Other vital topics include:

  • Assets, like your home, savings, super, car, shares, and investments
  • Debts, including mortgages, loans, and credit card debt
  • Estate plans, such as a will or power of attorney
  • Expenses, either weekly or monthly
  • Income from all sources, including pay, investments, and government benefits
  • Insurance policies and the value

Once your financial advisor understands you and your plans, they will be able to help you with several points, including,

  • Retirement planning
  • Saving for your child’s future
  • Insurance
  • Investing
  • Tax liability
  • Estate planning

What You Need to Ask Your Financial Advisor

You should ask any prospective financial professional several essential questions before you make a contractual agreement. These questions include,

  • What services do they offer?
  • Will they actively manage or work only in the area of planning?
  • How often will they contact you to review your situation?
  • Is there a limit on how often you may contact them?
  • What are their fees?
  • What are the payment options?
  • How much authority will they have to manage your investments and access your money?
  • What is the scope of their advice?
  • How will investments be managed?
  • Will they profit from your money?
  • Are they experienced with helping clients in any specific niche you may occupy, such as retired, newly divorced, Black or Indigenous Persons of Colour, LGBTQ persons, new parents, widows, etc.?

Ongoing Advice

Some financial advisors offer clients an option called ongoing advice. This frequently comes with a fee. If you have such an arrangement, you should expect to meet with your advisor at least once a year. During this meeting, make a point of discussing,

  • Changes to your employment or income
  • New or amended goals
  • If your current personal insurance appropriate, or should you add (or subtract) from the cover
  • New financial products that could benefit you
  • Changes to laws that may impact you
  • If you are tracking against your goals successfully
  • Are there changes that should be made to keep you on track to meet your goals
  • What obstacles may potentially disrupt your goals
  • Changes to the level of risk you are comfortable with for investing
  • Reservations (moral or otherwise) regarding companies in who you have invested
  • Do the recommended products still serve your goals?
  • Are there financial products that will fit into your plan better than the current products?

Myths About Financial Advisors

Misinformation keeps many people from hiring a professional for financial advice. Most of us have a friend whose “neighbour’s uncle lost a fortune from bad financial advice.” Do not allow these types of statements to keep you from seeking professional financial advice. Here are several common myths about financial advisors.

  1. Financial Advisors are Just for the Rich – This is a longstanding fallacy that never seems to go away. The reality is that while there are a handful of advisors who will see clients with a specific income limit, most only require their clients to have funds available for investment. Financial advisors work with people of all ages and stages.
  2. All Financial Advisors are the Same – Aside from obvious similarities (like advising people about money), financial advisors vary. Some limit themselves to corporate work, others help retirees, and mixed practices are very common. It is a good idea to speak with a few advisors and find one who puts you at ease.
  3. Most People Do Not Need a Financial Advisor – While it is likely that you can take care of your daily financial issues, it is difficult to look down the road and make plans. Your financial advisor will assist with setting goals and mapping your plans for future realities.

Regardless of where you are on your journey, sound financial advice can bridge the gap between where you are and where you want to find yourself. If you need some assistance to keep you on the best path, reach out to the experts at Freedom Wealth Services. Our focus is always on helping you find a way to reach your financial goals, and we will be with you every step of the way.

*General Advice Warning – “Any financial product advice is provided by Freedom Wealth Services Pty Ltd AFSL 502934 The advice provided is general and is not personal financial product advice. The advice provided has been prepared without taking into account your objectives, financial situation or needs and because of this you should, before acting on it, consider the appropriateness of it regarding your objectives, financial situation and needs. You should carefully read and consider any Product Disclosure Statement (PDS) that is relevant to any financial product that has been discussed before making any decision about whether to acquire the financial product.”

You can contact Freedom Wealth Services Pty Ltd on 1300 843 400 or by visiting our website at www.freedomwealthservices.com.au