5 Ways Financial Advisors Can Save Your Money from Yourself

The demand for financial advice has grown significantly since the 2020 market collapse. The 2022 Northwestern Mutual Planning & Progress study surveyed 2,381 American adults to find that 62% believe their financial planning needs improvement.

Some 35% of Americans sought the guidance of a financial advisor, and nearly one in five said they either have started working with a financial advisor or plan to do so in the wake of the pandemic.

In addition, a Natixis Investment Managers survey revealed that 72% of millennials in North American with investable assets of at least $100,000 consult a financial advisor. Moreover, 66% work with a traditional advisor, and 46% don’t trust AI-powered digital platforms.

This free quiz can match you with up to three vetted financial advisors who serve your area, each obligated to work in your best interest.

Let’s examine five ways financial advisors could help improve your finances.

1. Financial Advisors Can Help Navigate the New Normal

The world economy appears to be at a tipping point, with fears of a prolonged recession looming amid Europe’s energy crisis, the high cost of living and frequent interest rate hikes. At this juncture, market movements can be unpredictable and continue to demonstrate signs of bearishness.

These new patterns have compelled Americans to take a hard look at their finances. Pandemic-induced job losses, fast-rising household and personal debt, rising investment risks and income fluctuations have collectively led individuals to seek financial empowerment through trusted advice.

Interestingly, people are partnering with advisors to stabilize assets and protect them against market pressures, inflation, rising debt and other impacts of the crisis extending to physical and mental well-being. In such vulnerable times, advisors can help investors stay on track and ride the markets while keeping long-term goals in mind.

2. Financial Advisors Can Help Prevent Emotional Investment Decisions

Suffering market losses isn’t an easy ordeal. In trying to prevent losses, investors can often act on impulse, guided by emotional instincts to protect their wealth. With billions of dollars lost in personal money mismanagement since the start of the new decade, it may behoove investors to work with a financial advisor who could be a sounding board for critical investment decisions.

Financial advisors following fiduciary standards can emphasize using behavioral finance and principles of counseling to understand client attitudes, values and biases to try to help them make the best possible investment decisions. They can help identify emotional patterns associated with your spending, debt, investments and market trades to stay on top of volatile situations that demand a practical approach.

Fiduciary advisors consider your income sources, liabilities, risk tolerance, years until retirement and tax situation to determine retirement needs, withdrawal plans, insurance requirements and the course of estate planning and long-term care.

3. Financial Advisors Could Help With Your Specific Financial Needs

A financial advisor is a broad term for money managers with different specializations. Depending on the part of your financial life you need help with, you may need a wealth manager for managing high-value assets, a chartered life underwriter for life insurance and estate planning, a certified public accountant for taxes or a certified financial planner for overall retirement planning plus all of the above.

Hence, it is essential to be clear about your goals and financial aspirations when looking for a financial advisor. Over 70% of advisors say most clients seek retirement planning advice, according to a 2021 SmartAsset financial advisor survey.

4. Financial Advisors Can Be Better Equipped to Handle Life Events Than Robo-advisors

Automated robo-advisors can organize your finances and recommend trades based on the inputs from your investment profile for a low fee. These digital platforms allow new and seasoned investors to set up, manage, and customize stock portfolios, retirement accounts and monthly budgets for AI-based insights that try to predict the best financial outcomes for different situations.

According to a Qualtrics survey of 300 wealth management clients who consult financial advisors, the top reason for changing an advisor in the last ten years was high fees. Forbes reports that the average human advisor fee stood at 1% of assets under management or $2,318 for a complete financial plan, compared to between 0.25% and 0.50% for robo-advisors.

One way to comprehend the comparatively higher fees is that, unlike a robo-advisor that won’t stop you from making rash financial decisions, a financial advisor could help you financially prepare for life situations such as starting a family, taking out a mortgage and going through a divorce. The Qualtrics survey also highlighted that the average client-advisor relationship lasts more than 10 years.

5. Financial Advisors Can Regularly Monitor Your Portfolio

Fiduciary financial advisors use a comprehensive financial roadmap to make time-sensitive decisions, rebalance portfolios, stop ongoing losses, and capitalize on growth opportunities.

Financial advisors can also help look out for past financial decisions that might impact your present and future goals. At times, advisors could help prevent further damage, for example, by creating a debt repayment plan to lower your liabilities as early as possible.

Advisors follow portfolio movements closely and send regular updates on changes and current status. Additionally, they set up frequent meetings to check on goals, progress, and questions from clients via phone or in-person catch-ups.

This free quiz can match you with up to three vetted financial advisors who serve your area, each obligated to work in your best interest.

How to Connect With a Vetted Financial Advisor

Knowing where to start looking for a financial advisor can be a daunting task. Free advisor databases like the Financial Planning Association, National Association of Personal Financial Advisors (NAFPA), or XY Planning Network could be a good starting point.

These websites allow you to search for advisors based on region, credentials, specialty, and fee structure which can simplify shortlisting and facilitate connections. It is imperative to verify the credentials of each potential advisor, records of which are usually available with the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).

However, the total time spent on finding the right advisor for your needs could be extensive. As a result of the pandemic, fintech companies have notched up their client-advisor matching services keeping in mind client convenience, due diligence and meaningful connections. SmartAsset’s free, advisor matching tool handles more than 65,000 new monthly connections as of October 2022.

A short quiz matches you with up to three vetted financial advisors who serve your area.. Each of the advisors on SmartAsset’s matching platforms are fiduciaries, obligated to work in your best interest.

SmartAsset can also help arrange introductory meetings for you to interview your advisor matches regarding their track record, fees, investment approach, specializations, services offered, minimum investable amount, mode of communication, and scope for gaining financial knowledge.