If you are trying to figure out what to do about saving for retirement or have recently inherited a hefty sum of money, you might appreciate the help of a trained and qualified financial advisor. While there are plenty of things a financial advisor won't do, such as help you create a budget or figure out a way to pay off debt, he or she can help you make sense of your current financial status and put a plan into place for the future.
Evaluate Your Current Financial Status
First things first, you can expect your financial advisor to hold a magnifying glass to your current financial situation. An advisor will help you figure out your net worth, or the difference between your assets and any debts you have. After looking at your current situation, an advisor will discuss your financial goals with you. You can expect an advisor to ask you questions about your ability to tolerate risk, about your values, and about your goals.
An advisor needs to have a full understanding of where you stand from a financial point of view, and also of what you want to do to increase your wealth or make your money work for you. If you are nervous about losing money in the stock market, for example, an advisor should know that, and should be able to recommend alternatives that better suit your tolerance for risk. If you don't want to invest in certain types of companies, your advisor should understand and accept that, too, and offer alternatives.
Create and Put Into Play a Financial Plan
After an advisor has an idea of where you stand financially and what decisions are appropriate for you, you can expect him or her to put together a plan to help you reach your goals. If you are working with on advisor to get your retirement planning underway or to give your retirement savings a boost, he or she can show you where to invest, help you choose the best account, such as a traditional or Roth IRA, or your employer's 401k, and give you a sense of the level of risk of the recommended investments. Alternatively, your advisor can help you figure out the best way to invest a large sum of money, such as an inheritance, to minimize your tax burden and to have the inheritance provide the greatest return on investment.
Keep an Eye on Your Plan
If an advisor has a fiduciary duty to you, he or she needs to act in your best interests. That means that your advisor can't simply show you a plan, tell you where to invest, and be finished with you. He or she also needs to continue to monitor the plan to make sure it is still the best choice for you. Markets change, tax laws change, and your employment or financial situation can change. A plan that was effective one year might not be so great in the years to come. If needed, an advisor can recommend adjustments to your plan so that it continues to be the best fit for you and your financial needs.
