Most people today prefer not to work on their cars themselves. When their vehicle needs routine maintenance or a major repair, they take it to a mechanic who is trained in this kind of work.
Do you have the same kind of thinking when it comes to managing your personal finances? Perhaps you should, if the results of a recent survey are accurate. Just 18 percent of men and 11 percent of women who responded to the survey conducted by Jackson National Life said they believed they had enough financial education to make important investing decisions.
In addition, 40 percent of men and 34 percent of women believe the professional advice of a financial advisor would be beneficial to them when it comes to making financial and investment decisions — even though they believe they possess a solid level of financial knowledge and understanding.
It is telling that this survey was conducted among individuals between 45 and 65 years of age who have at least $200,000 in investable assets. In other words, a majority of relatively affluent, middle-aged Americans think that working with a financial advisor might be a smart move for them, according to this survey.
What About You?
Regardless of whether you have a retirement savings plan like a 401(k) or IRA, savings or investments outside of a retirement plan, or no investments at all, this is an important question to ask. It starts with understanding exactly what a financial advisor is.
A financial advisor is a trained individual who can offer you advice about your entire financial situation, not just about investments (as a stockbroker or investment advisor would). Two of the most important areas where a financial advisor can offer assistance are financial goal-setting and setting financial priorities. Within the context of your financial goals and priorities, a financial advisor may recommend specific types of saving and investing vehicles. Here are a few questions to help you determine whether or not you could benefit by working with a financial advisor:
- Have you taken the time to set financial goals and priorities for yourself and your family? If not, do you have confidence in your ability to do this successfully?
- Can you determine your personal level of investment risk tolerance and choose investment vehicles that are appropriate for this level?
- Do you have a plan in place for how you will save enough money to be able to retire comfortably? If not, are you confident in your ability to create and implement such a plan?
- Can you determine appropriate asset allocation strategies based on your short-, medium- and long-term financial goals and level of risk tolerance?
- Are you knowledgeable enough about the tax implications of different types of investments to be able to make tax-wise investing choices?
- Have you done any planning for how your estate will be distributed to your spouse and/or heirs after you die with minimal probate and tax consequences?
If your answer to most or all of these questions is “no,” then there’s a good chance you could benefit by working with a financial advisor.
Finding the Right Advisor
If you believe that you could benefit from the services provided by a financial advisor, start by asking your friends and associates if they are working with an advisor whom they would recommend. Check the internet for reputable financial experts. Identify at least three potential advisors to interview and ask each one for references you can call to ask about their experience.
If you decide to work with a financial advisor, she or he will become an extremely important professional in your life — so take the time and effort to choose your advisor wisely. The quality of your family’s financial future will be all the brighter if you do.
Winnie Sun is a registered representative with, and securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Sun Group Wealth Partners, a registered investment advisor and a separate entity from LPL Financial.